加载中...
共找到 24,777 条相关资讯
Operator: Good morning, and welcome to the SiriusPoint Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Liam Blackledge, Investor Relations and Strategy Manager. Please go ahead. Liam Blackledge: Thank you, operator, and good morning or good afternoon to everyone listening. I welcome you to the SiriusPoint Earnings Call for the 2025 Fourth Quarter and Full Year Results. Last night, we issued our earnings press release and financial supplement, which are available on our website, www.siriuspt.com. Additionally, a webcast presentation will coincide with today's discussion and is available on our website. Joining me on the call today are Scott Egan, our Chief Executive Officer; and Jim McKinney, our Chief Financial Officer. Before we start, I would like to remind you that today's remarks contain forward-looking statements based on management's current expectations. Actual results may differ. Certain non-GAAP financial measures will also be discussed. Management uses the non-GAAP financial measures in its internal analysis of our results of operations and believe that they may be informative to investors in gauging the quality of our financial performance and identifying trends in our results. However, these measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Please refer to Page 2 of the Investor Presentation and the company's latest public filings with the Securities and Exchange Commission for additional information. I will now turn the call over to Scott. Scott Egan: Thanks, Liam, and welcome, everyone, to our fourth quarter and full year 2025 results call. The fourth quarter rounded out another very strong performance year for SiriusPoint. Our disciplined underwriting strategy, customer-first mindset and relentless focus on delivery means we have a lot to be pleased about as we look back on our progress in 2025. Our top line for the year grew 16%. We improved the quality of our underwriting earnings year-over-year by 1.5 points. We grew our diluted book value per share by 28%. We delivered a 49% increase in operating earnings per share over prior year, and our leverage will reduce to an all-time low of 23% by the end of February. Our 2025 operating return on equity of 16.2% has improved for the third consecutive year and more importantly, outperformed against our 12% to 15% across the cycle target. The performance momentum I have talked about many times in these calls can be seen in the metrics that we've delivered in 2025. Looking at the fourth quarter in isolation, we delivered operating return on equity of 17.1% with a 44.9% return on equity on a GAAP basis as we closed the sale of Armada for $250 million. Our diluted book value increased by $1.70 in the quarter as a result. We continue to produce strong underwriting results with a Core combined ratio of 92.9% despite some historical one-offs in acquisition costs, which Jim will unpack for you. In addition, the fourth quarter saw a strong growth trend continue with gross written premiums growing 18%. Turning back to look at 2025 as a whole, there is much to be proud of beyond the financial headlines. We simplified our ownership structure through the closing of the CM Bermuda transaction in the first quarter. We earned positive outlook upgrades from 3 of our rating agencies. We saw employee engagement scores rise again to an all-time high. We completed the sale of Armada MGA and announced the sale of Arcadian MGA, which crystallized $390 million of liquidity and almost $200 million of off-balance sheet value while agreeing long-term capacity deals on underwriting. Finally, it has been important to attract top talent to the company while growing talent internally. We have had great momentum. And in 2025, we welcomed 18 senior leaders to the company as well as promoting 6 from within. Focusing back on our full year 2025 operating return on equity of 16.2%, there are a number of important points I would like to make. It is ahead of our 12% to 15% across the cycle target, having only set this 12 months ago and is the highest the company has achieved. We have also improved this metric every year for the past 3 years as we execute hard to build performance momentum across all of our business lines. Despite our return on equity target being an annual one, we have managed to deliver either within or above our range in every quarter this year despite impacts from events like California wildfires. We believe this is an important evidence point to our lower volatility portfolio and the track record we continue to build demonstrates our approach to underwriting, risk management and capital allocation. I want to take a moment to briefly focus on Slide 9. Even though it is one that we've included for a while, it is actually a very important one to pause on at the end of another calendar year. It clearly shows the underwriting track record we have been building since we reshaped the portfolio late in 2022. Since the third quarter of 2023, our combined ratio has been relatively stable and benchmarks well against our peers. We do recognize that insurance market conditions will be tougher in 2026, but it is also important to highlight that not in every market. We strongly believe our diversified portfolio and distribution focus on partnering with specialist MGAs positions us well to maintain our current levels of performance. It is worth noting that in 2025, 60% of our growth came from lines that are less correlated with P&C pricing cycles with accident and health being the largest contributor. The last quarter of '25 and the start of 2026 has been in line with our planning assumptions. Our focus will be on underwriting performance first over growth. Slide 10 focuses on volatility. I want to briefly touch on 2 actions, which help us to deliver against our lower volatility strategy, which we've added some new slides for this quarter. Firstly, as part of this strategy, we do target higher growth in insurance over reinsurance. We continue to believe the growth opportunity in insurance is more compelling in order to meet or exceed our target ROE year in, year out, while operating within the risk corridor we are comfortable with. That said, reinsurance is a key part of our business mix and many of our relationships with MGAs can either start as a reinsurance relationship or be a blend of reinsurance and insurance. This mix of capabilities is compelling both for us and for our partners and gives us and them great flexibility. We will also be opportunistic in reinsurance, where we see rates driving returns that are commensurate with the volatility and risk that we take and that fit within our overall portfolio volatility appetite. We are happy to allocate capital for these opportunities, and we'll continue to do so in 2026 as they arise. Our evolution over the last few years has meant that roughly half of our premiums are now U.S. specialty, and this is by far our largest underwriting platform. Secondly, our Accident & Health business is a strategically important part of our portfolio. With a long track record of high returns, its low volatility and low capital intensity acts as a volatility shock absorber to some of the other lines we write outside of A&H. We manage this mix carefully and dynamically to achieve our overall strategic aim of a lower volatility portfolio. Our Accident & Health gross written premiums grew by 23% in 2025 to around $1 billion. And overall, it makes up around 27% of our business mix. It also has a low correlation to wider P&C pricing and market trends. The profit consistency of Accident & Health, which boasts over 20 years of profitability, allows us to plan a wider portfolio mix with high levels of confidence. Following the sale of Armada in October, we now have 100% owned A&H MGA, IMG, which is consolidated into our P&L. IMG is a core part of our future plans. It drives a strong set of fee income profits in its own right as well as providing around 1/4 of the gross written premiums to our accident and health underwriting business, underlining its strategic importance. We believe the combined A&H underwriting business and IMG is compelling strategically. In 2025, we appointed a new CEO for IMG, Will Nihan. We also recently announced a small acquisition of Assist America. Assist America has been privately owned since it was founded in 1990 and provides global emergency travel assistance services to insurance companies worldwide. The client base includes many of the leading insurance companies in the U.S., Asia and the Middle East, widening our worldwide offering in these services and building on the already strong U.S. and European infrastructure we have at IMG. With a target addressable market of around $4 billion in medical and travel assistance services, we believe the acquisition is a great opportunity to further build out our service fees. Following completion and integration in 2026, we expect the fully integrated business to add around $4 million to $5 million of EBITDA annually. More recently, we also announced the acquisition of World Nomads by IMG. World Nomads is a global travel insurance platform with a strong recognizable lifestyle brand and distribution model. The acquisition presents the opportunity to increase our trip cancellation premiums and revenues and meaningfully expand our global distribution capabilities. These are areas that we have grown significantly over the past 12 months under the IMG brand. Following completion and integration in 2026, we expect this business to also increase EBITDA by around $4 million to $5 million annually. I would like to welcome our new colleagues from Assist America and World Nomads to IMG and the SiriusPoint Group. We expect our IMG business to generate over $30 million of fee income and over $35 million of EBITDA in 2026. The [ adding ] value of IMG on our balance sheet at year-end was $77 million. And although this will increase upon completion of the new acquisitions, we continue to strongly believe it is undervalued relative to IMG's enterprise value and as a result, understates SiriusPoint's overall book value. Looking more holistically at the acquisitions, these investments into IMG and our A&H business reinforce the importance of both the specialty as part of our portfolio and our diversification from capital-light fee income. We strongly believe these are additive to our story and performance momentum. Touching briefly on our distribution relationships with MGA partners. The fourth quarter saw us add 3 new partners who we have spent several months getting to know and doing due diligence on. As I have mentioned many times before, we take a very disciplined approach when onboarding new distribution partners. We reject over 90% of opportunities presented to us and we will only partner with MGAs who we believe we will work with on a long-term basis and where we have an aligned philosophy in relation to underwriting excellence and data sharing. As a general principle, we also take our time with new partners and taking underwriting risk. This slide shows this. While roughly 1/3 of our partners have been onboarded in the last 2 years, their premiums make up under 10% of our MGA premium mix. Higher premium volumes with partners where we have greater historical experience is core to our philosophy and approach, which we think makes a lot of sense. Almost all of our partners risk share with us and have skin in the game. We think this is an important part of the relationship. A few points from me to close before I pass across to Jim to go through the financials in more detail. Since our third quarter results, we have now closed on the sales of Armada and Arcadian for a combined value of $390 million and the proceeds have been received. Armada closed in the fourth quarter, and the sale is now included in our financials, whilst Arcadian closed at the end of January and so will be included in our financials in the next quarter. As a reminder, Arcadian will be less significant from a capital and book value perspective, given the $96 million value recognition we took upon deconsolidation in the second quarter of 2024. As we announced last quarter, we intend to use part of these proceeds to fully redeem the $200 million worth of 8% preference shares next week at their upcoming rate reset. We announced this formally via an 8-K filing at the end of January. This will reduce our leverage ratio to 23% by the end of February, which is a historic low for the company and is actually below the levels we were operating at before the settlements agreed with CM Bermuda in 2024. We believe this is a good use of funds, provides us with greater capital flexibility and points to a continued strong balance sheet management. Our overall capital remains strong, and our fourth quarter BSCR ratio has improved to 247%. Pro-forma for the upcoming Preferred Share Redemption, it is still a very healthy 232%. Our standard practice is to assess our capital position at the end of each year. And so today, we are pleased to be announcing our intention to repurchase $100 million of our outstanding common shares over the next 12 months. At our current market price, this represents over 4% of the total shares outstanding. We expect this to be accretive to EPS and ROE throughout 2026 and book value per share by 2027. We believe our strong capital position and the continuing earnings profile of the business leaves us in a very strong position to fund growth opportunities in 2026. Before I conclude, I want to briefly look back to this time last year. 12 months ago, when delivering our 2024 full year results, I commented how our repositioning was materially complete and that SiriusPoint was a business with an earnings profile of $300 million. This year, we have demonstrated that again, delivering operating income of $310 million. Importantly, on an operating earnings per share basis, this is up 49% year-over-year, meaning our shareholders are benefiting from our continued execution and value creation. And with that, I will end back where I started. This year saw consistent and improving underwriting performance, strong premium growth, book value and operating earnings per share growth and significant value brought onto the balance sheet from our ongoing MGA rationalization. We continue to lay further foundations for continued profitable growth, investing in people and technology to improve our performance further. We achieved another record operating return on equity, which could not have been possible without our greatest asset, our people. The team has worked tirelessly to achieve these results, and I could not be more proud of them or grateful to them for their unwavering support. I do not take it for granted. While 2025 was another strong year for the company, complacency is not in our DNA. We are relentless in our ambition to become a best-in-class specialty underwriter, and 2026 is another chance for us to showcase our progress. We remain focused and determined to deliver against our ambitions, and we are positive about our outlook. And with that, I will pass across to Jim, who will take you through the financials in more detail. James McKinney: Thank you, Scott. Let me begin by echoing previous comments on how pleased we are with our financial results this quarter and for the year and the progress we are making to become a best-in-class underwriter. Net income for 2025 increased 141% or [ $216 million ] to $444 million as we delivered excellent financial results on a core and consolidated basis. Return on equity was 22.1%. The full year underwriting results were strong on an attritional and as-reported basis as our diverse portfolio continues to showcase profitable, low-volatility premium growth at attractive combined ratios. Starting with our fourth quarter results on Slide 18. We had a strong quarter, reporting operating income of $86 million or $0.70 per diluted share and net income of $240 million or $1.97 per diluted share. Core gross written premiums grew by $134 million or 18% in the quarter versus the prior year. A continued significant driver of our growth was Accident & Health that year-over-year grew 20%. Apart from Accident & Health, core Gross Written Premiums grew at a strong double-digit rate in aggregate compared to the prior year. Turning to our underwriting results. Our core combined ratio of 92.9% was driven by strong attritional loss results, modest catastrophe losses and a couple of legacy and one-off items that affected our acquisition and OUE ratios. The impact of these items added about 2 points to the acquisition ratio. This was partly offset by a point of favorability within OUE related to the new Bermuda tax credits and a onetime compensation benefit. We earned Net Service Fee Income of $4 million with a service margin of 9.4%. As a reminder, Net Service Fee Income can be a bit lumpy due to seasonality trends. Investment income for the quarter was $69 million, flat to last year despite the lower asset base following the CM Bermuda shareholder buyback. Net investment income continues to benefit from a supportive yield environment. Last, the quarter benefited from a lower effective tax rate due to Bermuda tax legislation and foreign exchange rate changes, partially offset by higher effective tax rate associated with the Armada transaction. On a go-forward basis, excluding potential changes in tax laws and foreign exchange rates, we are modeling an effective tax rate of approximately 19%. In summary, we had a strong fourth quarter that continues to demonstrate our ability to profitably grow and create meaningful value for our shareholders. Moving to our full year results on Slide 19. Themes here are consistent with the fourth quarter. Strong execution, disciplined underwriting and focused capital management is producing profitable growth. Core Gross Written premium, Net Written Premium and Net Earned Premium grew 16%, 19% and 18%, respectively. Common shareholders' equity increased $532 million to $2.3 billion, resulting in diluted book value per share, excluding AOCI, growing 24% or $3.46 to $18.10. Moving to Slide 20 and double-clicking into our underlying earnings quality. Our underwriting first focus continues to deliver strong underlying margin improvement. The attritional combined ratio chart on the left-hand side of the page strips out the impact from catastrophe losses and prior year development as these inherently vary over time. We believe this metric is useful to examine the quality of our underwriting income. Our 91.6% core attritional combined ratio for the year represents a 1.5 point improvement versus the prior year period of 93.1%. The attritional loss ratio improved 0.8 points as enhanced risk selection lowered the attritional loss ratio by approximately 1.6 points, partially offset by 80 basis points of mix headwind. For the year, acquisition costs increased 0.3 points, offset by 1 point of OUE improvement. OUE continues to align with our guidance of 6.5% to 7%. Looking forward, for 2026, we project a similar OUE expense ratio of 6.5% to 7%. The right-hand side provides a bridge from our underlying earnings quality to our core combined ratio. This displays 2.8 points of favorable prior year development in the year, partially offsetting 2.9 points of catastrophe losses that are largely due to the first quarter California wildfires. Turning to our Insurance and Services segment results on Slide 21. Gross written premium increased $106 million or 23% to $556 million in the quarter, driven by strong growth within all of our specialties. Year-to-date, gross written premium increased $473 million or 26% to $2.3 billion. The Insurance and Services segment fourth quarter combined ratio is 93.3%. As mentioned earlier, this contains some one-off noise in the quarter, particularly on acquisition costs. Our full year combined ratio of 91.7% is indicative of the current run rate as we head into 2026. Double-clicking on our Accident & Health book of business. As Scott outlined earlier, this book of business is strategically significant within our portfolio, acting as a volatility shock absorber, allowing us to write more volatile business elsewhere. During the year, premiums for this specialty grew 23% and have now reached almost $1 billion. It accounts for 43% of the segment's gross written premium. The areas we focus on are supported by a market environment that meets our risk-adjusted return requirements. We continue to see growth opportunities within Accident and Health. Turning to casualty. Full year premiums have increased by 8%, driven by strong rate offset by decreased volumes. Casualty is a broad term. And overall, there are many classes we remain cautious on due to pricing challenges, notably public D&O and commercial auto, where, as previously indicated, we have substantially reduced premium and exposure. Correspondingly, there are pockets we are seeing strong opportunity in such as general liability. In terms of pricing, our casualty writings continue to be firm, particularly on excess layers benefiting from rate in excess of trend. Other specialties continue to see strong growth, highlighted by Surety growth in 2025. The focus on these specialties is deliberate as we continue diversifying our portfolio and writing lines that have less correlation to the wider P&C pricing cycles. Within the marine book, cargo and hull generally saw single-digit rate decreases, while marine liability rates saw low single-digit increases. Marine war rates continue to fluctuate due to regional geopolitical tensions. Looking at energy, liability rates remain positive and averaged 5%, while upstream is more challenged. Last, premium for our Property Specialty is strong on both a fourth quarter and full year basis. This is driven by growth from our international business, where we are writing select opportunities, mostly in the U.K. This business has a controlled volatility profile with a focus on lower limit residential and small, medium-sized enterprise properties protected by excess of loss reinsurance for larger events. Moving to our Reinsurance segment results on Slide 22. This quarter, gross written premium increased $29 million or 9% to $341 million. We saw growth in casualty offset a decrease in property premiums with other specialties broadly flat. On a full year basis, gross written premium increased by 3%, while on a net basis, premiums written increased by 2%. The combined ratio for the quarter decreased by 1.1 points to 92.1%, driven by a lower OUE ratio, while the full year combined ratio of 91.8% increased versus the prior year, driven by lower levels of favorable prior year development. Double-clicking into Casualty Reinsurance. Gross written premium increased 7% for the year. At 1/1 renewals, casualty reinsurance saw pricing in line with expectations as underlying rate performance remained stable. The January renewals did not see any deterioration in terms and condition. This quarter, other Specialty gross written premiums was broadly flat and up 4% for the full year. The reduction is the result of reduced aviation premiums. January renewals saw flat pricing for both excess of loss and pro rata treaty classes in aviation, while direct and facultative rates for major airline renewals saw 10% to 50% increases in the fourth quarter with U.S. airlines seeing the greatest rate changes. We welcome the firming pricing environment as we seek further rate increases to achieve rate adequacy. Elsewhere in other specialties, credit and bond pricing continues to be pressured, stemming from favorable historical results and ample market capacity. Within property reinsurance, premiums were down in the quarter and in 2025. At 1/1, we saw U.S. property catastrophe reinsurance rates decreased roughly 15% to 20%. International property catastrophe reinsurance pricing also saw declines at 1/1 with some accounts failing to meet rate adequacy benchmarks. In response, we came off certain programs to reallocate capital to better opportunities. Slide 23 shows our catastrophe losses versus peers and the reduction in the volatility of our portfolio. Following portfolio actions taken before 2022, we have materially decreased our catastrophe exposure in order to deliver more consistent returns to our shareholders. We now boast a 3-year track record of low volatility in our combined ratio due to catastrophes. At 1/1 renewals, we took the opportunity to further strengthen our risk transfer of property catastrophe risk by purchasing a new property aggregate program covering select property catastrophe events. This cover became available with strategic partners at attractive levels based on our underwriting track record. For 2026, our new aggregate cover attaches at $90 million of accumulated catastrophe losses throughout the year. This structure provides meaningful protection against the frequency and clustering of small- to medium-sized events. Furthermore, our 2026 combined retrocession protection is more efficient than 2025, particularly in managing our volatility. Importantly, we were able to achieve this improved efficiency at a lower overall cost than the prior year while also increasing the total limit purchased. Taken together, these actions enhance the resilience of our earnings and capital position and provide us with greater confidence in delivering our financial targets. As of February 1st, we purchased multiline aggregate reinsurance coverage with $100 million annual limit designed to limit retained underwriting volatility in key lines of business of property reinsurance, aviation, marine, energy, among other perils. Catastrophe losses in the year represented 2.9 points of our combined ratio and were largely driven by the first quarter California wildfires. We have a comparatively low loss ratio, demonstrating the benefits of our diversified portfolio. Property catastrophe premiums are just 5% of the overall business mix. Moving to Reserving. Our strong history of prudence is shown on Slide 24. For the quarter, core favorable prior year development was $15 million and $22 million on a consolidated basis. This marks the 19th consecutive quarter of favorable prior year development. Our track record of consecutive favorable releases significantly exceeds the average duration of our insurance liabilities, demonstrating our prudent approach to reserving. Additionally, we show here the strong level of protection we have on each of our 3 loss portfolio transfers that were completed in 2021, 2023 and 2024. In short, we have significant limit remaining on each of these treaties. Turning to our strong investment results on Slide 25. Net investment income for the year was $275 million, down slightly from the prior year period as a result of a lower asset base following the first quarter CM Bermuda transaction settlement. This quarter, we reinvested over $500 million. New money yields were in excess of 4% as we increased cash and treasury holdings in advance of our upcoming preferred retirement. Our portfolio continues to perform well. There were no defaults across the fixed income portfolio. We are committed to our investment strategy that focuses on high-quality fixed income securities. 81% of our investment portfolio is fixed income, of which 98% is investment grade with an average credit rating of AA-. Our portfolio duration was 3.2 years, up from 3.1 years at the end of the third quarter. Moving on to our Slide 26, looking at our strong and diversified capital base. Our fourth quarter estimated BSCR ratio increased to 247%, up 22 points in the quarter following the Armada MGA sale. On a pro-forma basis, accounting for the Series B preference share redemption, the BSCR ratio is 232%. Evidencing the strength of our capital position, we provide a stress test scenario for a 1 in 250-year PML event. Post this hypothetical event, our BSCR ratio is strong and above rating agency capital model targets. Looking at our balance sheet on Slide 27. We continue to have a strong balance sheet with ample capital and liquidity. During the quarter, the leverage ratio fell to 28%, driven by an increase in shareholders' equity. Our leverage levels remain within our target and will fall to 23% following the redemption. As Scott mentioned earlier, today, we are announcing a common share buyback intention of $100 million of shares over the next 12 months. We believe this action will be highly accretive to ongoing shareholders. Lastly, we view our balance sheet to be undervalued in relation to the consolidated MGAs, which we own, namely IMG, that is a core component of our future offering. Our book value now includes the sale proceeds of Armada. In the first quarter, our book value will increase by a further $25 million related specifically to the completion of Arcadian. With this, we conclude the financial section of our presentation. This quarter saw a continuation of strong double-digit growth in our top line that delivered a Core Combined Ratio in the low 90s with continued attritional loss ratio improvement. This is our eighth consecutive quarter of attritional loss ratio improvement. Operating return on equity for the quarter of 17.1% contributes to a full year operating return on equity of 16.2%. 2025 marks another year with a strong return on equity at or above our 12% to 15% across the cycle target. We've built a track record of delivery. This quarter's results further validate the significant progress we have made to becoming a best-in-class specialty underwriter. With that, I hand the call back over to the operator. We can now open the lines for questions. Operator: [Operator Instructions] And our first question comes from Michael Phillips with Oppenheimer. Michael Phillips: Congrats on the quarter and the year. I know you guys are doing. First question would be kind of a summary, I think, of what Scott opened with and that Jim kind of commented on. Scott, you said tougher market conditions in 2026, but maybe maintaining the current levels of profitability. And then Jim was talking on insurance about, I think you said like the 91.7%, 91.8% is a good run rate. And obviously, insurance had an elevated acquisition cost for the year. So I guess, first off, just to confirm for insurance, that 91.7%, 91.8%-ish number, is that what you mean, not much pressure on that over the next year? And then I guess, because the acquisition costs, maybe if you could speak specifically to, I guess, what you call the attritional loss ratio, I think in the year, it was 60.8%. So how do you see that 60.8% for insurance trending over the next year, given your comments? Scott Egan: Mike, thank you. Appreciate the questions, and thanks for your opening comments. Look, the way I think that we're thinking about '26 is in line with what I said, which is, look, we recognize that there are parts of the market that will be tougher. I think Jim gave an example of that in property [ cat ] but he also gave a context for us, which is that's sort of 5% of our overall premium. So I think the way that we're thinking about '26 is where we don't see the opportunity to make a return commensurate with the risk. The great news, Mike, is that we can move capital quickly around the group and seize other opportunities, which then takes us, I think, to a wider portfolio, where I genuinely believe both from the lines of business that we write, Accident and Health, Surety, et cetera, we are able to deploy capital in areas where the rating pressure is not the same and is less correlated, if you like, to the wider P&C. And in addition to that, I do think that the distribution focus we have on MGAs working with what I would call very specialist niche partners who really give true dedicated specialist advice to customers. I do think there's partial insulation from some of the wider market pressures on general rate. So look, I think that's sort of how we're thinking about '26. I think importantly, Q4 and sort of opening of Q1 in Jan was in line with our expectations. So there was no sort of negative surprises. Things like aviation that Jim mentioned for us, I think I highlighted that, Mike, on my Q3 call, I said aviation need rate. I think everyone in the market have been saying that. And we carried high on average, high double-digit teens rate in aviation. More to do, but I think that's really a good step forward. So look, for us, I think we are off and running in '26 in a good space. I think that the combined ratio number that you mentioned for insurance, look, indicatively, that's a good run rate as we go in to 2026. We'll try and do better, I promise you. But we think that's a good level of return for the risk that we're taking. And I think your comment on loss ratio, I think, look, we're not going to trade margin where we don't see return for the risk. The great news, though, is we've got a really strong pipeline of growth opportunities that we'll be very disciplined about in evaluating, but we believe that we've got other opportunities for our capital. So look, I think that gives you, hopefully, my quite a comprehensive answer. I'll pause in case Jim wants to add anything else to that. James McKinney: Yes. So yes, I agree with everything that Scott highlighted. I think those are good comments. I think the biggest thing, Michael, that I would point you to as you think about us and I think the number that Scott highlighted and that I highlighted earlier is the right number to begin with. I'd say there's probably potentially when you think about us on a go-forward basis, maybe 0.5 point that you could kind of shift over time, plus or minus related to mix and how it actually comes in over kind of 2026. I would not be confused by that. One of the comments that I highlighted inside the quote was kind of the component of mix, right? And that we have continued to improve on a loss ratio performance basis, inclusive of that mix element. That's actually a real positive in total because it means that we're getting more leverage actually on our premium to surplus ratio. So different things kind of come in at different ratios. But in short, what I would say is I'd start exactly with that 91.7%. And I would think depending on how mix comes in over the year, where we outperform, where we see the best returns from a capital perspective, that the right way to think of that is maybe plus or minus kind of 0.5 point as a starting position from that kind of given just how things come together. Michael Phillips: Okay. That's very helpful, both of you. Appreciate it. I guess next question is on the fee income side and just trying to think about 2026 here. I guess, first off, can you say of the 2025 number, I think the $42 million, how much of that was Armada? James McKinney: So I would tell you that generally speaking, you're in a range of about $26 million inside there. I would think about it as like a run rate of about $30 million with potential of kind of post completion of everything, I think you're looking at about a run rate base expectation of around $40 million. Michael Phillips: Sorry, Jim, that $40 million is what, what do you mean by that. James McKinney: That include the 2 bolt-on acquisitions, which won't be up to full power, Mike just to be very clear, right? So the guidance that we've given for '26 is that obviously we'll be focused on integration. As an example, World Nomads won't complete until later on this year. But our aim when they're up to full power and fully integrated within IMG is they will be $40 million and hopefully plus of EBITDA. We'll try and do better. In addition to that, for World Nomads, which is obviously underwriting business, we will obviously channel that across over time into a wider Accident & Health underwriting division as well. So hopefully, that knits that together for you as well, Mike. Michael Phillips: It does. Yes. I guess that's what I was trying to get at. So 2026, we'll see probably the 30-ish that you're guiding to, obviously, it is decline from '25 level, but that does not include the 2 acquisitions, right? So you won't see any benefits from, say, World Nomads until 2027? James McKinney: Not materially, Mike. And that's why, look, I mean, plus or minus 1 or 2 perhaps, but not materially. That's why we're trying to be explicit in the guidance going forward. Michael Phillips: Okay. No, perfect. Just want to clarify. And then I guess just last one for me for now is on just the growth. And you've talked a lot about how you've got these lines that are contributing more than 60% in the quarter of the year was from A&H and Surety. I guess if we can focus on Surety for a second. I get a lot of questions on this of how sustainable that is over the next 2 years. How much of your Surety business in 2025 came from either government infrastructure growth or from data centers that was a big boom in 2025 and therefore, how much of that is sustainable over the next year or 2? Scott Egan: I'll make a comment and then Jim can jump in, Mike. So look, I think the sort of data center aspect and stuff like that is a red heading. So look, when we think of the profile of what we have, we view it as sort of pretty sustainable on a go-forward basis, Mike. So we're not projecting any sort of falloff for the 2 areas that you've highlighted, although I recognize within the wider marketplace that those are absolute pressures. But Jim, anything you want to add to that? James McKinney: Yes. I would just say that minimal amounts of kind of our book follow that. I mean, we feel pretty good about where we've entered. Again, we're kind of at the early stages, I would say, in terms of where some of our relationships are inside of that, not from how long we've been partners or other, but we're at, I would tell you, kind of more the early innings of kind of the total build-out from a premium perspective on the Surety side versus necessarily kind of our longer-term kind of run rate stabilized portfolio. So I think we've got some nice tailwinds there and feel pretty good about the growth in 2026. Scott Egan: And Mike, just to amplify the point that Jim made the just now, which I appreciate is a wider than Surety comment, which is, look, the reason we've tried to give some additional disclosure, which we started at Q3, particularly around our MGA relationships is I think you can really see the difference between number and premium from what I would term newer MGAs. Of course, that's not an exact science, which I completely get. But I think you can see that we're being thoughtful and cautious in newer relationships. And so just to amplify the comment that Jim made, that's really the slide that shows we have potential from existing partners as well as a healthy funnel of opportunities to work our way through from a diligence perspective. Operator: Our next question comes from Andrew Andersen with Jefferies. Andrew Andersen: On the insurance segment, I think you talked about casualty growing 8% for the year. I think that's about 30% of the overall segment. Could you maybe just talk a bit more about how you're seeing kind of the rate environment into '26? Are you thinking still kind of staying firm or harden further? What is the outlook for casualty insurance? James McKinney: Yes. So thanks for the question. Generally speaking, relative to the specialties in the areas where we focus, we think -- and what we're seeing is that rate is broadly moving in line with trend. We're seeing relatively disciplined activity, people being thoughtful about the lessons that I think we learned kind of in the 2019, '20, '21 kind of time period and some of the surprises. You've kind of just seen some of the development and other components kind of work their way through the books on those things over the last year. And I think it was more than what folks expected. And so I think people are looking at the environment with a healthy thought process, and we feel pretty good about where we're at and what we expect kind of going forward. Andrew Andersen: And Scott, I think you talked about attracting some more talent and doing some more senior hires. Where have some of these focus areas been on? Is it kind of specific lines of business where you're seeing growth opportunities? Scott Egan: Right across the firm, Andrew. So we're obviously attracting a underwriting talent to the organization, but I would also say we're attracting sort of functional talent, et cetera, as well as we sort of strengthen our capabilities. The great news is we're attracting people from organizations with good caliber and we're attracting really high-caliber individuals. That's very different, Andrew, to when I first arrived when obviously, the company was in quite a different position. Also, and I want to just sort of emphasize this point as well, really pleasingly, the talent from within is also growing and prospering. And so we feel in a really good spot. When we are -- really simply, when we're advertising roles, we've got a really good internal pool to think about and consider, and we're really attracting external people to the organization. I think we've caught people's attention. Andrew Andersen: And maybe last one, back to insurance. The retention rate has been improving over time. I guess, Jim, do you still see some more opportunity to retain a bit more business here into '26 and '27? And is that specific on any one line? James McKinney: Yes. I mean we continue to see opportunity there. I think what I would highlight to you is more a risk management prudence mindset. We start with a really thoughtful kind of composition. We make sure that we get to know our partners as well as kind of the components in the market. And then we -- through time, as we have everything kind of in place, the data feeds, the interactions, just a really great way of kind of forecasting for in the future that we feel like gives us kind of a high confidence, then you see us gradually kind of increase our net in those components. And so that's a trend again that I think is going to continue as we move forward in the future, but it's going to be done with where we see the appropriate returns on capital. It's going to be done with the same type of risk management and prudence that we've kind of taken to date. So we feel good about it. And yes, we think there's additional opportunity there, but it's going to be prudent and disciplined. Scott Egan: Yes. And Andrew, I just want to amplify what Jim said at the end. Look, we think -- I think I called it, it makes a lot of sense when I gave my overview. But we think that approach really is the hallmark of sort of our discipline and should give our investors confidence and comfort. We're not chasing growth right? We could turn taps on if we wanted and take more growth. We think our approach is based around things like underwriting philosophy, getting to know people, data sharing. And we just think that's a really sensible approach. But there's no question we've got potential within the pipes, and we've got new potential to evaluate outside the pipes, but we will be disciplined. Operator: [Operator Instructions] We'll go next to Mitchell Rubin with Raymond James. Unknown Analyst: This is Mitch on behalf of Greg Peters. Congratulations on the quarter and the year. So with roughly 2/3 of premiums now coming from insurance and services, how do you see that mix evolving over the next few years? And is there a longer-term target for where you'd like that balance to settle? Scott Egan: Mitch, thanks for your comments. Very kind, and thanks for your question as well. Look, I think we've given a very strong steer that we want to grow insurance over reinsurance. I think it fits within our sort of strategic ambition of lower volatility, but I wouldn't want that misinterpreted, which is why I elaborated that reinsurance is a very important part of our armory when we approach the market. Not only does it give us flexibility in lines of business to come at them in different ways, but it's actually an incredibly useful tool in working with our MGAs. So I really want to make sure that, that message lands because it's really an important part of how we do business. We haven't given a specific target, and I'm loath to do that. And the reason for that is because it can ebb and flow. But I would say to you that proportionately, insurance is growing much quicker than reinsurance. You can see that in the numbers that we disclosed this year. Insurance and services grew gross written premium 26%, reinsurance 3%. Those can move around quarter-on-quarter, sometimes year-on-year. But I think indicatively, we expect the trend to increase. Unknown Analyst: And just on the $100 million buyback, how should we think about the cadence? Is that going to be front-loaded, more evenly paced or opportunistic based on valuation? James McKinney: So look, I'll kind of -- we'll tag team this a little bit. What I would highlight is likely to be a little bit kind of opportunistic, but also with we feel like we're -- we feel we're in a really attractive position from a market perspective or other. We see a lot of value in the company. We think that there's a good value trade here for our ongoing shareholders. And so we're going to be disciplined and thoughtful about that. But we're going to take a programs [ mount ] and we'll see how things kind of trade from a market perspective. So some opportunistic, but likely to play out throughout the year with potentially some front-loading kind of given where things are at today. Scott Egan: Yes. Look, the same mix actually, which is, look, I think the reason we said over 12 months is want to give ourself some flexibility. I think that's a good thing. The most important part of it is we think it's good for shareholders. And therefore, depending on where the price moves, it could be even better for shareholders. There's no liquidity constraints in terms of when we might do it. The great news is Jim is get the money in the right place to do it when we need to do it, and we'll be opportunistic. And if that means it's more front-loaded than back loaded, then we are very happy to take that. We'll do what's right for shareholders. Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to Scott Egan for closing comments. Scott Egan: Yes. Listen, thank you very much, everyone, for joining. Obviously, the full year results is a very important one for SiriusPoint. I really just want to end with a few key takeaways and messages from our results. Number one, this is our third year of operating ROE improvement, and there really is a strong performance momentum within the organization. That's number one. Number two, our attritional loss ratio improvement, and therefore, our quality of earnings continues to improve year-on-year. We are very proud of that. And I think that's a really important measure for the business as we go forward. Three, there is strong growth momentum within the company, and I think we've outlined our disciplined approach to that. Our book value has increased by 28% in the year. That's added significant value for our shareholders. And we are positioned very well from a balance sheet perspective to take opportunities as they present themselves. So in summary, the future is bright for SiriusPoint. Thank you very much for joining. We appreciate your questions and your attendance. Have a good day. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Welcome to the review of VGP's financial results over full year 2025. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Jan Van Geet: Good morning, everybody, and welcome to the presentation of our full year 2025 financial results. My name is Jan Van Geet, and I'm the CEO of VGP, as most of you know, I think. I'll first start with a little executive summary and the highlights of 2025. We recorded a pre-tax profit of EUR 338 million, an increase of EUR 19 million or 6% higher than the full year of 2024. Our net asset value grew 8.3% up to EUR 2.6 billion, and that's -- the EPRA NTA is up 9%. We have an EBITDA growth of 28% to EUR 454.7 million, 13.5% increase. And what makes me happy is the historic record of EUR 106.7 million of new and renewed leases, which I will go to more detail later on. The annualized committed leases at the year-end stand now at EUR 468.3 million. We have 1,052,000 square meters under construction and our development pipeline is 75% pre-let. I can add to that, that we have signed a lot of LOIs, which are in final negotiation. We think that by the end of the first quarter, most of them will translate into new lease agreements. And if they do, and we expect they do because we are finalizing the lease agreements with them, we will have a new record of more than EUR 80 million of signed lease agreements to be started up in the new year. So we are having a solid pipeline to be started up already, which is fully pre-let. We delivered almost 500,000 square meters last year, 99% let. And the last unit has just been agreed upon. It's a small unit in Koblenz with somebody from the defense industry. We have 1.4 million square meters of land acquired and our total secured land bank stands at 10.3 million square meter, which represents a development potential of at least 4.3 million square meters. We did a net cash recycling of EUR 389 million through a transaction with our joint venture partner in the Saga joint venture, and that led to an additional EUR 60.5 million realized profits in 2025. And we target another material closing with the Saga, as we already announced it in August last year. We announced that we were going to do EUR 1 billion. I think we'll do a bit more in the second half of 2026, for which we have already all of the assets aligned. It will be a material closing. We'll go more in detail also later on that. And then finally, VGP and East Capital have agreed to set up at least EUR 1.5 billion of gross asset value of pan-European fund with an emphasis on Central and Eastern Europe. We know East Capital already for 15 years. They are a very reputable boutique fund manager from out of Sweden, which have quite some track record in Eastern European assets and they manage the fund, management thereof. The Board of Directors proposes an ordinary dividend of EUR 92.8 million, which is 3% higher than the ordinary dividend of 2024, or EUR 3.4 per share. If we look at the summary of the financial results, and you see that the steady growth of the total portfolio value goes up from -- for the full year at 100%, including the joint ventures portfolio at 100% with EUR 900 million almost from EUR 7.8 billion to EUR 8.7 billion. We have a continued strong growth in committed annualized rental income. It grew 13.5% year-on-year. So we're getting bigger every year. It's more and more difficult to beat that, but we're going to do our best this year. I think we're going to be able to set another nice year. We have a lot of demand in the pipeline. And the full year of 2024, we had EUR 412.6 million at the end of the year committed annualized rental income, and at the end of 2025, we had EUR 468.3 million. The EBITDA increased 28% -- Piet will go more in detail later on -- which followed actually a very solid performance in all of our business segments. It went up from EUR 354.4 million in 2024 to EUR 454.7 million in 2025. And then I already told you about the dividend, which will grow with 3% to -- we're proposing, anyway, to EUR 3.4 per share. I'll first go a little bit on the market and the market update. These are not our slides. These are slides which we got from Jones Lang LaSalle. And I will compare our own performance a little bit to that. If you look at demand and occupier segments, then you see the take-up share by sector, and then you see that the third-party logistics are still the biggest one. We have very little third-party logistics inside of our own portfolio. We have most end users and also longer-term lease agreements. And we see a very big comeback from e-commerce. It is bigger than what we have in here. And what we have in the pipeline now, what we are working on, is also very e-commerce determined. So we see them coming back, and we see that there is more and more and more demand from out of that sector. It's not only Chinese companies. Also, they are here. But it's mostly Western European and American people who are coming back to the market. We also see a lot more demand now from the defense sector. We have been able to secure some of them, and we are also currently negotiating with some of them for some new manufacturing things in the pipeline. The vacancy rate has come up a lot over the past quarters. It actually doubled from 3% to 6.2%. But that compares in our own portfolio to -- we are a little bit more than 98% let at the moment. And we see healthy demand. And we also see that there is a lot less speculative construction in the market. So the vacancy levels, we expect them to go down in the future. If you compare to all the markets which you see right next them, there where we are in Budapest, we have 0 vacancy; Madrid, we have 0 vacancy. If you look at Bratislava, we have 0 vacancy at the moment. In Milan, we have 0 vacancy. In Prague, we have 0 vacancy. Of course, some of these are also speculative buildings which have been started up over the last quarters. On the supply, you can see that the build-to-suit over the last 3 years is quite flat. The 2023, '24 and '25 levels have remained stable. But you see that the speculative development is coming down quite a lot, which gives us a good view on that there will be soon not so much available anymore in the market because there is quite some take-up over the last year also. We have 16.2 million square meter space under construction, which is the lowest level in the past 5 years now. Capital markets, I don't know if we can say something intelligent on it. Last year started very well, and we did a very large transaction, EUR 509 million, in the second half year. So that also contributes to it. But we saw that the -- overall, over the whole year, the transactions went up both in volume and in size. And -- but mostly in the smaller markets on the major markets, only U.K., the Netherlands and Poland posted a year-on-year growth. The yields have been relatively flat. You can see that very well. We've had a devaluation on some of our German assets because our valuator takes the view that vacancy levels in Germany should go up -- no, not should go up, but the reletting should take a longer period. He has made that from 12 months to 18 months. Pete will go in detail to it. But we have seen that in Germany what has come available over the year, we have been able to relet on average in 2 days, not more, and we have a 21% uptake on the rental income of what we have relet. So we can't really concur to that view, but it is what it is in the market. That's what our valuator thinks of it. But it's not visible in our own portfolio. I will go through the operational performance for the full year. Maybe I'll just go back. This is our park in Arad, which we've just started. And the building which you see on the right side is a building which we constructed for VAT. VAT is a vacuum valve producer for the semiconductor industry, a very specialized product production. It's got 12,000 square meters of clean rooms inside at a very high level. And we have achieved with that building, BREEAM outstanding score of 96.2%, which is the highest of any industrial building in the world last year -- no, over all the years in BREEAM outstanding. And this is our park in Valsamoggia, which is also fully let and which we've transacted last year through our joint venture with Saga, with our friends from Areim. As I already said, we had a record year in committed rental income, including the JVs at 100%. The group has 465 tenants, but that's divided over more than 650 lease agreements, as you can see. So we have a lot of tenants which come multi times back into our buildings. The committed annualized leases as of 31st of December stand at EUR 468.3 million; occupancy rate, 98%; and it's filling up really very well. At the moment, we really have quite some demand in our portfolio. And if we make the bridge, then you see that the committed annualized rental income started with -- and I think it's 13 -- yes, EUR 412 million and a bit. We signed new leases, almost EUR 57 million. We had EUR 6.5 million of indexations. We had some amendments in leases, people who wanted some other space or differentiate their space. And that EUR 8.9 million of terminations. And we sold one building in Riga to its user, to Jysk, which declined also EUR 2.4 million of rental income. And that brought us to the EUR 468 million, which we had at the year-end. But meanwhile, we've signed quite some leases already, and we're looking forward to be able to report to you after the first quarter, because, as I said, we have quite some nice LOIs in the pipeline. The majority of the new contracts which we signed were within the Logistics segment. I have some examples. Logistics was 67.9%. But as I said, we have very little third-party logistics. You don't see many third-party logistics also in the names here. We signed with Studenac, which is one of the largest retailers in the Balkan, a very nice cooled warehouse, which is delivered this week. We signed with Aldi a very nice new warehouse, which we're going to start construction in a couple of weeks in Frankenthal. That's a big one, 60,000 square meters. We signed a very nice lease with Movianto, healthcare dedicated logistics. That's a third-party logistics. But you see Heineken, Eureka, Duomed, Ursus, Farmol, Studenac, they are all end users and they use their own facilities and sometimes use somebody to operate it. This is something which changes all the time. But e-commerce was last year 16.5%, and I expect it to be quite a bit higher this year. Light industrial, 14%, but that's just a move in time because we also had quite some demand from light industrial over the past year. Our portfolio is leased to a very diversified and blue-chip tenant base. The weighted average lease term is already here stable. It's 7.8 years. As we keep on growing and most of the leases are relatively long term signed, we have -- the top 10 tenants represent 29.7% of committed leases. But also there, we have -- these represent 28 different lease agreements in many different jurisdictions. So it's well spread, the risk of it. And yes, if you look in here -- but this is a little bit longer term. The logistics represent 47% in our total portfolio, light industrial, 34% and e-commerce, 17%. And we have some others. We have some -- it's mainly Siemens, yes, where Siemens is in Nuremberg. It's a site where we have offices and which we are going to start rebuilding this year completely. This year, we have some quite iconical projects which are upcoming and about which I will tell a little bit more afterwards in the outlook, because we are going to really have some land plots coming online which are -- from which we expect really a very nice contribution in the coming 12 to 24 months. If you look at VGP at a glance and you look -- we are always looking forward in how can we grow and where can we grow, in which segments can we grow. And of course, the main part -- the main raw material to be able to grow is the land bank because we always grow organically, we develop everything ourselves. We don't buy any standing assets. And if you look at the December '24 net cash generative rental income, so things which were delivered and really generated cash, it was EUR 350 million or EUR 240 million at share. During 2025, we activated EUR 39 million of new leases. So it went up with 11% to EUR 389 million or EUR 236 million at share, so including 50% of the joint ventures, if you look at it. The signed leases, which are still under construction and which will be added on in the next 12 to 18 months, is another EUR 79 million. And so that's another 18%, and that takes us to EUR 468 million of income-generating activities or EUR 310 million at share of income-generating lease agreements, of which EUR 321.7 million sits in the joint ventures. But if you look at our land bank which we have today and the ERV of the vacancy and the development pipeline which we have, that's another roughly EUR 300 million, which takes us -- the potential up to EUR 766 million, or, at this moment, EUR 602 million at share. And we are trying to accelerate our development pace as much as we can now. The development activity, talking about acceleration, drives our second strongest EBITDA in our history. And if you look, there is a couple of notes which I need to say to this. You see very well the division between East and West. In 2021 and in 2020, we had big start-ups in Western Europe because we had these big leases in Giessen and in Munich, which started up at that time. You see also that in 2022, we delivered and then we started up a lot less because of the big inflation. I told you that I was standing very much on the brake at that point because I was afraid about having too much vacancy with buildings for which we paid far too much. Now we have our costs very well under control. Our margins are going up relatively quickly. We have very sound margins again, which you can also see in the revaluation result, because the revaluation result in this year, I think it's EUR 183 million, is pure and only revaluations from new activities from things which we have started up. And whereas, in 2021, it was a little bit a distorted image because there was also a big uptick in valuations, of course, in the standing portfolio as yields were going down with very steep declining interest rates. Out of the EUR 634 million record EBITDA in 2021, only EUR 81 million was cash -- was really cash income, recurrent income. Out of the EUR 455 million EBITDA in 2025, it's EUR 249 million, which says a little bit also about the resilience of our result going forward. It's more and more regenerative income. The net rental and renewable energy income at share has grown a lot year-on-year with 18% in 2025. If you look at it, we are now at EUR 223.384 million in 2025, which we expect a continuous growth in 2026. In the renewable energy, about which Martijn will tell you a lot more later on, we have now a lot diversified also into battery projects, battery projects which have a very high yielding on their investment, and of which we have foreseen to construct quite a lot in 2026 as now we have the permits coming into place to -- in order to be able to do that. We also thanks to the brownfields which we have been buying over the past years -- most of them have been big factories with enormous electrical connections. For example, we bought Hagen. Hagen has 90-megawatt connection of energy, which not only allows us, if we can, to deliver back very nice battery projects, big in size, but it also opens the potential. And it's very congested today to be able to do a more data center exercise. So we are trying to take a look at it, whether we could implement a data center also in Hagen, whether the location is the right one. And at the moment, we have 2 identified together with Sarah, our new employee who came from Microsoft. One is in Russelsheim and one is in Bodenheim. And on both, we are very well advanced on our permitting. On the permitting side, we are advancing very well. It will take a little bit more time. These are complex exercises also, but we are on a good way to be able to realize them soon. And it's our ambition to have something by the year-end to be able to say something more concrete about our data center developments going forward. The portfolio is virtually let on a long-term basis, and you can see there is very little variance. Combined occupancy of the portfolio stood at 98%, WALT at 7.8 years, with the first brick at 7.4 years. Top 10 customers, as I said, that's 28 lease agreements, and the biggest one is still Krauss Maffei. But when we first contracted them, they were 21%. And now thanks to all this growth, it's only 6% left of the total portfolio which is now Krauss Maffei. And Opel is 5.1%, which is a short-term lease, but it will be replaced. And we are going to redevelop, of course, Russelsheim, and we expect to be able to do quite a significant uptake in the leases going forward. Our own weighted average lease term on our own portfolio is 9.6 years at the moment. On the delivery side. And here, you see our park in Vejle under construction in Denmark. We delivered 21 buildings, which represented almost 500,000 square meters in gross lettable area. That was EUR 32.9 million rental income, 39 new contracts, and they were 99% let. And as I said, we've now have -- we have a tentative agreement with somebody from the defense sector to take the last unit in these buildings, and it will be 100% leased. 100% will be rated BREEAM actually excellent, of which 31% is BREEAM outstanding over the last year, which I think in Europe, at least we believe we have done the best performance with the rating of BREEAM outstanding. You see 2 of our buildings, the VGP Park Parma in Italy, which last year, we delivered to Mutti, the tomato producer, and our Park in Keckemet, where, amongst others, we also have Mercedes as a customer. The deliveries in 2025 trending towards logistics, but you see immediately that there is also some quite big productions inside. Hyundai Mobis was a very nice one. We delivered a 50,000 square meter facility in Pamplona. And we delivered to VAT, as I already said, this building for this vacuum valve producer. On the 2 pictures which you see in the -- you see VGP Park Cordoba, which is a production, by the way. And then you see our VGP Park in Montijo, which we delivered last year and which for the biggest part is a cooled and deep cooled warehouse for Logifrio. The portfolio at share has grown organically and completely organically because we only develop everything ourselves and then we place it in our joint ventures. But it has grown at an annual compounded growth rate of 21.9% and it's gone up from EUR 5 billion to EUR 5.6 billion. We offloaded since 2022 EUR 3.4 billion of gross asset value into the joint ventures. And we aim this model works very well. We aim to continue to do that. Yes, it's -- if you look at it, Germany is still the strongest market, although the others are now growing maybe a little bit faster relatively. The Czech Republic is now almost EUR 1 billion in assets. Spain is growing quite well. And in the Netherlands, this year will be a huge uptick because we already leased out 60,000 square meters, which is under construction. But we are working on a very big new lease agreement in the Netherlands, which will take out our entire park in Nijmegen. The investment portfolio on 100% view has grown to EUR 8.7 million, which is up 11% year-on-year. And Western Europe represents 74% of the total portfolio value as of December 2025. You can see the completed is EUR 7 million. Development land is EUR 770 million or 9% of our total investments. And under construction, we have almost EUR 1.930 billion, which is also 11%. On the development side, the portfolio under construction represents EUR 85.3 million of new leases. And as per today, 43 buildings are under construction, which represents 1 million -- just 1 million of square meters. It's 75% pre-let, including pre-lets on development land. When we finalize these LOIs which we have in the pipeline, it will be well over 80%. So I think it's on a very healthy basis at the moment. We have started last year 761,000 square meter of new buildings in 2025, and we aim -- we have to already start up 450,000 square meters if this materializes, which is already pre-let, which is the highest which we ever had at the beginning of the year, pre-let, to be started up in a given year. So that's a very nice forward-looking thing to have. You can see again on the right side, you see our park in Rouen, which is now virtually fully let. We only have one last unit left. And then -- and a small one, 4,500 square meters out of the total more than 100,000 square meters -- total more than 150,000 square meters, which we are constructing there. And then you see our VGP Park in Veijle, Denmark, where we also have one last unit left, also 4,500 square meters. Yes. Again, it's well spread across our geographical footprint. You saw what is the income-generating assets or the assets overall, which are already that Germany in the income is more than 50%. In the -- what is under development, it's only 36%. You will see that the other countries are relatively growing a little bit faster now. They also are becoming more and more mature. France is a big market. Spain is a big market. The United Kingdom, I'm sure, will come up to speed soon. So we think that we will be able to do some very nice developments all over Europe. 2025 was also the first year where we had buildings under construction in literally every country where we're active in. That's never happened before. So that is now -- we have everywhere now buildings under construction. On the landbank, the picture you see is our beautiful park in Nijmegen, where we have Ahold Delhaize and Bol.com in one of these buildings which you see. And the land bank in front, that's only a very small part of it because we still have more than 20 hectares available, where we now have started groundworks already and we are already under construction for one client which we signed at the end of last year, Pragma Trading. And then we are negotiating -- we have signed an LOI for the rest of the land bank. The land bank, of course, it's something I am very much dedicated to because it is our -- it is the source of our future growth as we develop everything ourselves. And the land bank -- Piet likes to make bridges, so we have also this in a nice bridge. We owned in 2024 when we started or beginning of 2025, 7.4 million square meters, which is fully permitted, by the way. We acquired 1.37 million of square meters, which we always acquire subject to having the permit in place. So that's also fully permitted. We deployed 1.6 million square meters last year. We sold a little bit, a couple of square meters, but that's nothing. And then -- so we owned at the end of 2025 7.09 million square meters. But we committed, and in December, we had 3.15 million square meter of committed. So that's land which we have binding agreements on and which we then buy at the moment when we have the permit in order to be able to use it for its intended purpose. So that brings the owned and committed in December 2025 to 10.25 million. And we have another under option and PV contract of 1.51 million square meters. And this means that roughly -- because the 4.3 million is just the ground floor space, you need to calculate mezzanines and offices to it, but at least 4.5 million can be developed on this total land bank versus the 7 and a bit million of buildings which we currently have either finished or under construction. I also try to take a look -- a very pragmatic look at the land bank. And everywhere, we need to have a nice margin, which, of course, makes it -- in Germany, the yields are a bit lower than the exit yields than they are, for example, in Romania. But we try to target everywhere the same margin. So we -- and we have been able to target lands in all of our countries and the land bank is geographically well diversified. We have some specific countries we really need to take a look at going forward, but we were able to secure quite some really nice land plots, and I will talk a little about it also in the outlook later on. This is the first part of our operational results. I'll come later back to the JVs. But I'm now going to first give the word to Martijn to talk a little bit about our renewable energy company and its income. Martijn Vlutters: Thank you, Jan. First, giving a short overview of how our renewable energy business has now actually developed 2 segments. Jan already mentioned it at the beginning. Photovoltaic has continued to grow, and we added a good 50% to the revenues for the photovoltaic business. But something that is still a bit nascent, but for which we see good prospects is on the battery projects. You see there's in total 258 projects on the photovoltaic side. There's a few less on the battery side. But actually, it's -- in terms of investments, we see a good opportunity both to deploy capital. There's around EUR 4 million invested now, but yes, we see that grow substantially over the coming 2 years. And certainly, if you see the megawatt hour deployment that becomes -- with 173, that's a good 30% of the total in renewable energy. So -- and as Jan mentioned also, the profitability of this business is typically much better than for the photovoltaic. So this will start to add to the EBITDA line for renewable energy in 2026, but even more so in 2027 and onwards. The big constituent of renewable energy remains the photovoltaic business. Certainly, in 2025, we've seen a good growth. As I mentioned, the revenue came from EUR 8.3 million, and we've added another EUR 4 million to the total revenue, which was driven by additional production that was now over 130 gigawatt hours. Energy price at which we've been able to sell has remained broadly constant. If you look at the outlook, we've added another 13% in operational photovoltaic this year. So you will start to see that also in the production figures for 2026. And then there's another 35-megawatt peak that is under construction, which we expect to become operational in the course of this year. And I think the last thing to add is that the overall yield for photovoltaic has now popped over 10%. So the overall investment of the projects that are operational is EUR 110 million. And as said, gross revenues was EUR 12 million. So the gross yield has actually for the first time now popped over 10%. Then maybe also briefly on the corporate responsibility. There is one thing here highlighted on the left-hand side, which was something that was recognized at the end of last year by Time Magazine in cooperation with Statista. They've done sort of a science-based and quantitative assessment of all the listed companies across the globe. And based both on our financial revenue growth as well as the sustainability metrics that we have been able to accomplish in 2025, they've highlighted us as one of the top 100 companies globally in terms of realizing sustainable growth. I think one of the big contributing factors to that is the EU taxonomy, which you see on the third on the left in the smaller boxes. We've now achieved 68% of the total portfolio. But certainly, if you look at the new productions or new construction, we've actually been able to verify EU taxonomy for 95% of the buildings that we are currently constructing. That's all under the EU taxonomy new construction regime. So that's quite a strict regime, which we've set ourselves. And yes, with the 95% you hear, that really has become our internal market practice to adhere to across the group. A couple of other metrics that we've highlighted here that I'll leave to you to read at your leisure. I think we can move on to the joint venture update. Jan, back to you. Jan Van Geet: Yes. Our joint venture model is a little bit the cornerstone of our growth model going forward. And so far -- I'll go to the next slide -- we have -- you can see it's been growing consistently. We have done a new transaction last year with Saga, which is our fifth, sixth, whatever you call it, joint venture. And it's now more than 60% invested. And when we are going to do the next transaction, which is planned for the second half of this year, we will be virtually for a big part already fully invested. There will remain some parts of it, but we foresee a very material transaction in the second half year. And we have very positive and constructive talks ongoing also with Saga to continue with the next stage, next vehicle, which we would like to start up in the course of 2027, then going forward after Saga is fully invested. If you look at Saga -- well, as I said, it's 60% deployed. There remains roughly EUR 600 million of gross asset value. And as some of the parks which we have transferred have some little spaces left, which -- where tenants have expansion option, et cetera, we think that we will do a transaction which will exceed EUR 500 million in the end of the year, where actually everything is already identified. And we have been able to go a lot faster than originally foreseen, also thanks to the fact that we have enhanced the scope of countries in which we do our investments. In the beginning, what you see, the original scope, the dark green, it was Germany, France, Czech Republic, Slovakia and Hungary. And we have added to that Denmark, Austria, Italy and the Peninsula, Spain and Portugal. And so we now have a lot of assets which we can do. We have 989,000 square meters or 39 assets already spread over all these countries which are in site, and that's 60% of the total gross asset value which we have foreseen to deploy over the first 5-year period, which will become a 3-year period, I think, because by the end of this year, we should normally be fully invested. We also announced today for the first time that we are working with East Capital, a company which we know already for a very long time. Very nice people out of Sweden. I don't know if they are looking, but hello. VGP and East Capital is to set up a partnership to launch a Luxembourg-based real estate investment fund focused on European industrial logistics real estate with an emphasis on Central and Eastern European countries, not only but mostly. The targeted gross asset value we have agreed upon is at least EUR 1.5 billion. We hope to be able to do a first closing and we trust to be able to do a first closing in 2026 in the second half of the year. VGP intends to keep up to 50% and the remaining equity should come from third-party investors. The management will be shared between parties. There is no difference between the asset management and property management profile, which we had with the former joint ventures. It will become -- it will be the same. It will be East Capital's responsibility to do the fundraising and to do a little bit of investment advisory. And the portfolio will consist of -- what we are going to buy will be income-generating assets, all ESG aligned in the countries which you see. So it will come a little bit from everywhere, but with an emphasis on Central and Eastern European countries. That's it a bit on the JVs, and I will give the word now to my brother, Piet, for -- to explain the financial performance. And by the way, what you see on the picture is our park in Serbia, where the building on the right side is Ahold Delhaize, which we have built brand new, which has taken into operation. And the second building, the main tenant there is the Metro Group. And both buildings have been also delivered and both buildings also are BREEAM excellent awarded. Piet Geet: You stole my intro Jan. Jan Van Geet: Sorry. Piet Geet: As always, I have prepared for you a usual slide deck with P&L, balance sheet, cash flow movements and some further details. And I'm happy to walk you through and also happy to report an increase in our profitability from pre-tax EUR 319 million to EUR 338 million. And as always, there is really a lot playing through our P&L given the fact that we have a hybrid model between own developments and a JV. So I think the best thing is, as also in former formats, to walk you through it in more line by line. We had an issue with some sound, so... So first and foremost, you see that our net rental and renewable energy income, it has increased with 31% to EUR 88.7 million, basically exists out of the gross rental income or the rental income and the renewable income. The gross rental income on our own balance sheet increased 32.7%, which is EUR 86.7 million --- to EUR 86.7 million. But if you look at it on a proportional basis, meaning this EUR 86.7 million and our share in the joint ventures' gross rental income, this effectively grew from EUR 203 million to EUR 235.5 million of gross rental income. Maybe just to make a quick recap to what has Jan been presenting before, is we have in the group on an annualized basis EUR 468 million of contracted rental income. From that EUR 468 million, EUR 146.6 million is on our own balance sheet, of which EUR 78 million is active. That EUR 78 million could compare to this EUR 86.7 million, but it is, in fact, more. That is because, of course, we had done a transaction with Saga at year-end, and that still delivered us EUR 15 million of rental income that portfolio before we transferred it into the JV. And on an annualized basis, that transfer was actually EUR 29 million of rental income. So that's it about the rental income, a good positive increase, all built up organically. In terms of the renewable income, we also see a strong increase, 43% to EUR 11.9 million, coming from EUR 8.3 million on gross renewable income. As Martijn has presented, this was an effective increase in production from 90 gigawatts to 132 gigawatts or a 47% increase. So that brings it down on the net rental and renewable energy income, an increase from EUR 67.7 million to EUR 88.7 million, but also at share from EUR 189 million to EUR 223 million or up 18% in comparison to 2024. The next line in our P&L is the joint venture management fee or the joint venture fee income. It's EUR 32.7 million last year. That grew with 59% to EUR 52 million. Here, there are also some -- quite some particularities. The joint venture fee income basically exists now out of 3 components. One is our property facility or asset management fee, which on a recurring basis grew with EUR 4 million, and then there is also a provision for EUR 18.4 million on a promote. Just as a quick reminder, we have multiple joint ventures. The first joint venture, Rheingold, comes up to maturity in May 2026. It has already been extended for 10 years. But after the 10-year -- or the lapse of the 10-year period, VGP is entitled to a promote based on the net IRR performance of that joint venture. Now the net IRR performance, and we are particularly proud of it, has been very good, and we have a 12.4%. This is really net IRR really on a cash level basis after all asset management fees, taxes and whatsoever. And since we have surpassed the hurdle, we have now at 31st of December booked a provision of EUR 18.4 million. This provision, of course, will be updated in the first half at 31st of May based on the valuation of the portfolio as of then, plus its operational performance. So it is our best estimate based on the track record until 31st of December. And then finally, the remaining part is the development management income. We perform works on behalf of the joint venture. This decreased with EUR 3.2 million to EUR 2.5 million. But overall -- so the joint venture management fee significantly increased to EUR 52 million. And on a recurring basis, we do expect it to increase further in 2026 because we have done a transaction, for instance, in December, where we also have an asset management fee on, which will be accounted for in 2026. Plus then, of course, all of the transactions that we foresee to do, one with Saga and also with the new East Capital fund, which will also lead into increases of our fee income with the JVs. The next line, that's always a strong influencer on our P&L, that's the net valuation gains that we record on the investment properties. These increased from EUR 187.1 million to EUR 243.6 million, and they are actually composed out of 2. Jan has already hinted to it also that we have an unrealized gain of EUR 183 million, which is an increase of EUR 89 million, which is mainly related to our development activities. That's the profit on our developments. Whereas there's also a second component, which is the realized gains. That means that we have sold assets towards the JVs or, for instance, also the disposal of VGP Park Riga at a higher level than it had been recorded for in our books, versus the fair value in our books. This led to a EUR 6.5 million additional profit. And our own portfolio has a weighted average yield of 7.48% versus 7.22%. Of course, the number, sometimes we get a question, is a bit higher than in our JVs. But in JVs, it's 5.22%. That is because it's more skewed to Western European countries in the JVs and fully stabilized assets, whereas here, we are still having assets under construction and also quite some Central and Eastern European assets, which have a higher yield, on which, of course, we have also now the nice opportunity with East Capital. The next line on our P&L is the administration expenses. They are quite, you could say, broadly in line with last year from EUR 61 million to EUR 63 million. In average, the remuneration went up with EUR 1.6 million. But we also had a depreciation increase of EUR 2.2 million. That is mainly related to our renewable energy installations, which are recognized in a cost model, so at acquisition cost and depreciated. We have a general -- I need to move this -- EUR 5 million increase in general admin. Part of that was also the marketing campaign that we launched in 2025. And then since we have more assets under construction in comparison to previous years, we have also higher capitalized expenses on our assets or investment property, which offsets the extra cost of the above with EUR 6.7 million. And at year-end, we have 434 FTE. Next line is the share in the net profit. And there, we actually see a decline from EUR 92.7 million to EUR 41.3 million. But I can actually explain, I think, what has happened there in the bridge versus last year. First and foremost, the -- and I don't know if you see it also what I'm seeing, but there is a line missing. There is a -- but anyway, the net rental income increased from EUR 121 million to EUR 134.7 million. That's an increase of 10.7%. But the big driver or change in the JVs is the net valuation gains, where it was a positive of EUR 54 million, it actually reduced with EUR 65 million to minus EUR 10 million. This was driven by a number of facts. One is we have done a few settlements with the JVs where the JV had to pay us a top-up on previous closings, which was a negative impact on the valuation in the JVs. But the second element was mainly that there was -- and there is a strong German portfolio inside of the JVs, which was negatively impacted by a valuation change. So the average yield went from 5.05% to 5.22% in the JVs and the German part was a devaluation of approximately 2%. The appraiser effectively reviewed its prime yields for the country, and as Jan was referring to before, also had -- updated also his discounted cash flow model, foreseeing rather an 18-month vacancy period than a 12-month vacancy period when contracts would come to an end. Now as we mentioned before, we do not see that trend at all in our German portfolio. In fact, everything what we released last year was at 21% prices, averagely higher, as well as the average term to release something was 2 days. So we didn't really see this. But nonetheless, it did impact a bit our German portfolio and within the joint ventures. Then the other expenses that you see there, it's actually the promote at share. All of these -- what we see on the bottom table is at share. So it's EUR 18.4 million for us. But it's a cost to the JV. And at share, since we own 50% of the JV, it's EUR 9.2 million. Admin expenses were broadly in line. And I think if we disregard once the valuation movements, then we are actually seeing a very strong set of EPRA results on the joint venture, which is a testament to the very strong operational performance of the joint venture because the EPRA earnings are up 25%, but also our cost ratios are down. So in general, we are actually very satisfied with the performance of the joint ventures. Hence, also, for instance, the above 12% net IRR that we could achieve on the Rheingold joint venture. Next point in our P&L is the net financial result, which went from an income to a cost of EUR 24 million. This is -- of course, we raised the EUR 576 million of debt last year at a coupon of 4.25%, which gives already a delta in a higher interest cost. On the other hand, also in 2024, we profited quite a lot, also in 2025, but the interest came down on interest on cash on hand. We usually put quite some money on term loans and try to optimize it maximally as possible. But last year, this was an income for us of EUR 12 million. Now it was EUR 5 million. So it's a decrease of EUR 7 million. We have some higher capitalized interests of EUR 3 million. That is because we -- just like the capitalization on the admin expenses, we have higher amount of volume of assets under construction. So this leads to a high capitalized interest of EUR 3 million. And we have a decrease in our interest income from the JVs. I would say the shareholder loans in the JVs, they effectively increased. But of course, there have been distributions through repayments of shareholders during the year. And only at the end of the year, we created a new shareholder loan with the Saga joint venture because the transaction only materialized in the second half of December. And also, we partly capitalized part of the noncurrent receivables or the shareholder loans on the Deka JV, which also decreased a bit the interest income. And then finally, as you may recall, we raised EUR 576 million of bonds. But we also bought back in 2025 EUR 200 million worth of bonds, for which we paid EUR 195 million. So we made a profit on that of EUR 5 million. Going to the next slide. He doesn't want to go to the next slide. Jan Van Geet: Yes, he did. Unknown Executive: Okay. Where Jan also already referred to, and it's a particularly good performance over EBITDA. So the EBITDA is up EUR 100 million versus 2024. So up to EUR 455 million or an increase of 28%. And the increase is to be noted in all of our segments. So in the Investment segment, where we show the EBITDA of our completed portfolio, excluding any valuation gains, you see an EBITDA going from EUR 204 million to EUR 249 million. This represents, actually, if you look at into our balance sheet, EUR 2.9 billion of our total assets. In terms of Development, as I explained before, net valuation gains of EUR 243 million, composed of the good development profit traction that we have -- something is happening here on the -- with the -- yes, I'm back here. The good traction that we have on the development profits and realized gains. So our EBITDA also increased from EUR 145 million to EUR 199 million. And then the gross renewable energy also has a nice EBITDA increase given also the 47% extra production that we managed to produce in '25 or a 43% increase in its gross renewable energy income. In terms of the balance sheet, we see a strong increase of our total assets and total liabilities from EUR 4.6 billion to EUR 5.2 billion. The investment property is now EUR 2.4 billion, which, of course, composed of a completed portfolio of EUR 915 million, under construction EUR 777 million versus EUR 579 million. So you see here also the increase versus '24. And then development land, as we did buy quite some very attractive land plots, also increased from EUR 645 million to EUR 728 million. We did about a total CapEx of EUR 660 million, which is composed of about EUR 490 million on assets and EUR 150 million roughly on land acquisitions. And I mentioned already the weighted average yield of our investment property, 7.48%. The property, plant and equipment, the EUR 141 million, it's an increase of EUR 18 million versus last year. This is mainly related to our renewable energy installations, where we had a EUR 19 million CapEx. And the completed installations, where also then the EUR 11.9 million of gross renewable energy income is coming from, is generated from a complete installation of EUR 109 million, and what is still under construction is EUR 18.6 million. And our investments in joint ventures increased quite significantly with EUR 109 million. Now we have done quite some transactions with the JVs, not only the Saga closing, but as I mentioned also before, there were some settlements on previous closings which were to the benefit of us, which increased the equity contribution into our joint ventures altogether with roughly EUR 100 million or EUR 98 million. Then we, of course, have -- since it's reported under equity methods, the allocation of our result or our share in the result of the JVs, which is EUR 41 million. And then we received equity repayments from the JVs, so dividends of EUR 30 million. I will come back on the distributions of the joint ventures in the cash flow statement. I already mentioned the other noncurrent receivables. So they increased with EUR 63 million following the transactions with Saga, but we also got EUR 32 million of joint venture loan repayments. These were the 2 main movements, I would say, on the noncurrent receivables. And then we ended the year with a cash position of EUR 523 million, got EUR 31 million more than we had last year. And on the disposal group held for sale, the EUR 27 million, that is the VGP Park Tiraines, which is going to be sold in H1 '26. That is under a call option of its tenant. It's located in Latvia, and the transaction is about to be materialized. Everything is more or less done. The shareholders' equity increased, as already mentioned before, from EUR 2.4 billion to EUR 2.6 billion, very easy movement, EUR 290 million profit, EUR 90 million dividend going out. So that makes the movement there. And then in terms of our financial liabilities, that increased from EUR 2 billion to EUR 2.360 million (sic) [ billion ]. This follows a EUR 576 million bond that we raised in H1. It was actually EUR 500 million with a top-up of EUR 76 million. Then from out of that, we did a tender on our outstanding bonds of January '27 and '29 of EUR 200 million. And '27 was reduced with EUR 179.9 million. The one of '29 was reduced with EUR 20.1 million. But we effectively paid EUR 195 million on that. And then there was also a bond that came to maturity in March of EUR 80 million, which was also repaid. And then we moved to current financial debt at year-end, now the EUR 190 million bond, which is due in March. I'll come back on the debt also in one of the next slides. But our average cost of debt is now at 2.7% as at 31st of December '25. And as you may recall, we have also revolving credit facilities, which are untapped. They amount to EUR 500 million. We increased them during the year, and we also prolonged to them. There are more -- there's more info to that in our press release on what and to what extent it has been prolonged. But in the end, it comes up to a consolidated gearing ratio of 35% or a proportional LTV of 50%. We also have a Fitch, and also since 2025, an S&P Global rating. Both investment grade with BBB- and a stable outlook. I already made a reference to this I think in -- on the previous slide. So our average cost of debt increased to 2.7%. We have a significant liquidity position. And the bond maturities, I've updated it here already, given the January '26 -- in January '26, a few weeks ago, in fact, or 1 month ago, we raised EUR 600 million bond. And from that bond, we also repaid EUR 100 million on the outstanding January '27 bond, which was originally EUR 500 million. We reduced it with EUR 180 million in '25, and we reduced it again in January with EUR 100 million. So it's now still EUR 220 million. And then the remaining bonds to be paid are listed there. But you can see the one in 2025 has a maturity, the EUR 576 million, in '31, and the new one, which was raised in January, has a maturity in 2032. Speaking of the cash flow statement, we started the year with EUR 492 million. The net cash generated from operating activities is EUR 51 million. Just as a side note, we did an update to our cash flow this year, where interest paid, as you can see now in financing activities, has been moved from operating to financing activities. We felt it's more correct there. It has also been restated in '24. So we go from EUR 33 million to EUR 51 million. I have a bridge on the left. But in essence, we have spent EUR 171 million in investing activities. The proceeds from disposal, the EUR 389 million, is related to the Saga JV and the disposal of Riga, plus some settlements with the joint ventures. From the EUR 660 million of CapEx that we see on investment property, an effective EUR 642 million has been spent. The remaining will move through our working capital on CapEx payables. Loans to JVs is a loan to one of our development joint ventures. And then distributions by joint venture, what I referred to before, EUR 82.7 million, broadly in line with last year. The EUR 82.7 million is a combination of interest payments of EUR 20 million, shareholder repayments of EUR 32 million and equity distributions of EUR 30 million. It depends a bit joint venture-by-joint venture, how we take out the excess cash that is inside. That's why I also group it here for simplification purposes. But we all consider this as distributions. There were no investments in joint ventures. That's mainly then related to development joint ventures. And then in our financing activities, so we paid an interest of EUR 48 million. We paid out a dividend in May of EUR 90 million, which we now propose to increase from EUR 3.3 to EUR 3.4 in '26. So that will go to EUR 93 million as cash out in '26. Then we had proceeds from loans, which is the bond raise of EUR 576 million. After costs and deductions, it's EUR 565 million net cash in. And then the loan repayments, it was a bond that we paid back of EUR 80 million. And then the EUR 200 million that we paid back for EUR 195 million. So EUR 195 million plus EUR 80 million is EUR 275 million that we actually repaid. So that means that we end the year with EUR 523 million of cash. I think I maybe explained all of this already, but maybe there's one more nice thing to note that is that we raised the bond in April of EUR 576 million at a coupon of 4.25%. We did one in January at 4%. But underlying, there is quite a big difference, because the EUR 600 million bond that we raised in January was at our historic lowest spread ever, 150 basis points. Of course, it was a bit upset and offset with the increase of interest versus the previous bond. But nonetheless, it was still at a cheaper and it was a very successful transaction that we've done. And now the maturity profile of our bonds are as follows. I believe this was, I think, my last slide. So I hand it over back to Jan. Jan Van Geet: Yes. Thank you all for listening until now. A summary and the outlook. I am personally very happy that our result is even more and more cash generative and that the profitability of our new developments going forward is going up again. With all that we are going to start up this year, and we are quite bullish on it, we think that we are having a good year in front of us in 2026. On the relettings, as we have seen, our portfolio is -- we've never had to transact something to the joint ventures with a loss. And if you look at our relettings, they were during 2025, 14% higher than the rental price which they were let at before. And as Piet already said, on average, it took us 2 days to relet in Germany, where our reletting was 21% higher than the one before. And we have heard through the former reporting periods a lot of concerns about the German market, where we have a big exposure to. But we feel very confident in site, and we also see a lot of activity. We have a lot of new things going on. So we feel really very confident on that. The margins on our new developments, they are EUR 103 million. But there is really a lot in the pipeline, and I already talked about it. There are a couple of LOIs on which we are now finalizing. So cost reimbursement agreements is a better term for it, where we have agreed with tenants mainly out of the e-commerce sector that we're already going to line up everything so we can negotiate the relatively complex lease agreements because they are also relatively complex buildings. But we are on track to close them all before the end of the first quarter, some of them even in this month. So we're really in final negotiations. We already signed one with [ PE ] Capital last week in Bucharest. And if we look at it, we see that e-commerce is back on track and starting to look really again -- what they had over rented in 2021 and '22 has now been consumed, and they are back on track with growth, which is I think a very positive for us. So if these things materialize, we will at least start 450,000 square meters now in 2026, EUR 80 million which we need to start of rental income, which is already contracted, which is the best position I think we've ever had in our history. So looking forward. And that's very much supported also by the unlocking of some of the historical iconical parks which we have bought and which are mainly brownfields. And brownfields always take a little bit of a longer time to develop. But if I look at it, we're going to start construction this year on La Naval in Bilbao. We are going to start demolishing Nuremberg, for which we have a lot of demand. It's a super location, and we're going to start construction. We also are talking to some people out of the defense industry. We have already paid a visit to Hagen, which we bought just after the year-end with a very big tenant and which has been welcomed. Hagen is Dortmund, right next to Dortmund. It's a very nice site, which disposes of a 90-megawatt peak capacity of electricity, which is active. And so which opens a lot of opportunities for us. We're well proceeding on our Russelsheim development, and we're also very well proceeding on our permitting there because we needed to do a new B plan in Russelsheim, in which we also incorporated our data center and development which we aim to do. And I was puzzled by the presentation which Sarah gave to me about data centers coming from Microsoft. If you look at the actual installed capacities in the big conurbations of Europe where it is -- where everybody talks about, it's actually not that much as you would think. London is 1.7 gigawatts, Frankfurt also. And if you think about us in Russelsheim probably being able to do quite a bit more than 100 megawatts, that gives a total different perspective about the possibilities of our land plots. And we also have a very nice opportunity in Italy, and we're looking at other land plots in Germany. We think that, that would be nice. We also are going to have Verona coming online this year, our new land plot in Velizy, Paris, which is now -- for which we have also received the building permit and for which we're going to sign our first lease in the next couple of weeks. So all-in-all, we think that we have a very sunny future in front of us, as you can see on this picture, which is our park in Montijo, which is in Portugal. And then, of course, we are looking very much forward to the further diversification of our joint venture model. We are in continuous talks with our friends from Areim to do the follow-up of our Saga transaction. And also now we have announced it now publicly and we're very much looking forward to our cooperation with East Capital. And we have 2 legs to stand on them going forward and we hope it's going to be a big success. That's a bit, I think, the summary and the outlook for the next year. And I think that we can now move to questions from your side. Operator: [Operator Instructions] The next question comes from Marios Pastou from Bernstein. Marios Pastou: I've got a question mainly around the new partnership with East Capital. I think on the slide, you mentioned the potential for at least EUR 1.5 billion of gross asset value in scope. So I'm just thinking maybe part of the agreement, if you could give some more details on kind of what that total investment volume could scale to, if you've agreed a time frame or a target to reach that fully invested level? And whether the structure is broadly similar to what you've agreed in your prior partnership? Jan Van Geet: Yes. Shall I take it? We can develop on our total -- on the total land bank at the moment, roughly something between EUR 6.5 billion to EUR 7 billion of new assets, which we are -- including what we have already -- which we still have on our balance sheet. So that is all possible to transfer into new joint ventures going forward. And we have already envisaged and we've already defined quite a large portfolio, which we could transact because it's already income generating and delivered in this year. So we have said we want to do at least EUR 1.5 billion. I think we're targeting more, something like EUR 2 billion. But that is a momentarily view at the moment. When we start, it can also grow bigger. We're very confident on the fact that we are going to be able to deliver -- well, VGP is delivering all the time new assets and all the time starts up new assets. So it will keep on growing in the future. Piet Geet: I think in general, it's indeed more or less a copy of our current joint venture model with an investment period, 3, 4, 5 years. And what we develop, we will offer. And it's broadly similar. We will retain the asset management services on the -- as it is in the current joint venture basically. Jan Van Geet: Yes. Structurally, it's actually the same. What is different is that we are not targeting one single partner per JV, that we are targeting multiple partners at the other side. More something like a fund structure than just a single JV with one single investor at the other side. Operator: The next question comes from Vivien Maquet from Degroof Petercam. Vivien Maquet: I hope you can hear me. I had a follow-up question also on the JV. Just to understand from the fundraising perspective, what kind of precommitment do you have on the third-party investor because I just wanted to see because you mentioned a closing in the course of the year. But do you have the -- I would say, the equity already being raised within the fund? Or what [ commitments ] you have on that fund? And also on the structure. Is it closed-ended or open-ended fund? Jan Van Geet: It's foreseen to be a closed-end fund. And the raising of the funds is an ongoing exercise, which East Capital is predominantly occupied with, knowing that, of course, East Capital has a solid investor base inside of their existing funds. And this is an addition, more of a unique product that they can offer. But it is an addition to what they have in their current fund business. And the exercise is currently ongoing. We are targeting a closing by the end of the year. I think that's about it what we can say today. Martijn Vlutters: Yes. It's a regulated business, Vivien, raising capital. So we can't really say what's been committed already. It's prescribed quite precisely what can and cannot be set in such exercises. Vivien Maquet: Okay. And then just on the shares management agreement. I understand that deviate a bit from the previous joint venture. What does it mean for you in terms of recurring income you're going to drive from that joint venture? Jan Van Geet: We expect a similar income model that we have with our current joint ventures also. There is indeed a sharing of services with East Capital, but it's somewhat similar, for instance, with what an Areim or an Allianz also does with their investors behind who are invested into our joint ventures. So East Capital will mainly look into gathering the funds and also doing the investor relations with the investors that they have been able to target. But other than that, our services remain the same. And we expect broadly the same revenues to be incurred from all of the disposals into the JVs. Operator: The next question comes from Wim Lewi from KBCS. Wim Lewi: I've got 2 questions. One is a small one on East Capital, if I can bother you with, is does the new fund also allow for countries that were not eligible for the other joint ventures to be transferred? I'm thinking, for instance, on Serbia or maybe other countries that you can now offload more into the future? Jan Van Geet: The East Capital fund is a Pan-European fund. So every country where we are active in is, in fact, targeted. But it will be skewed more to the Central and Eastern European countries. But in essence, everything -- all countries are on the target list of the fund. Wim Lewi: Okay. And then a follow-up, if I may. It's really on these valuators increasing yield in Germany and then especially in the JVs to 5.22%, which you explained that it's based on vacancy. Now you obviously have good leasing activity, which you explained many times. But could there be like a timing difference, because they do that at the end of the year, whereas you have done the re-leasing over the year. Can you give an indication of the amount of re-leasing you have to do in '26 and what you expect from that? Jan Van Geet: We have very little re-leasing to be done in 2026. And so far, what we see is that, again, also for the things in 2026, which are coming available, we already know on beforehand and mostly months on beforehand that we are going to have a follow-up tenant. So what the valuators have taken as an assumption from a 12-month vacancy period, which we never had in Germany, to an 18-month vacancy period, we find it -- and we've tried to argue about it, but they take a view of the market. We find -- we can't say that we see that reflected in our own portfolio. I don't know what it is about. Maybe it's about older buildings or maybe it's about the total market view. But in our own portfolio, Wim, we are very confident and very -- that we have solid demand for everything. So we don't see, neither expect any deterioration of that in the months going forward. On the contrary, we have a lot of new lease negotiations ongoing also for new buildings. Wim Lewi: Maybe if I may, because what we see or what we hear from WDP and Montea is that they can't find anything to buy above 5%. So could there be deals maybe in the near future that could review their case, that if we see that yields come down in deals. Is that something that you expect? Jan Van Geet: Well, we hope so. We certainly hope so. Also the promote calculation which we have done is based on our risk valuation at the year-end. So it's just our current valuation, where okay --when we are going to have the valuation in May that's going to be based on the capital markets valuation, where the valuator really looks at the transactions as if we were to really sell -- and that's probably going to be a little bit different. We don't know north or south. But we think it's going to be different than what is our risk valuation. Until now, every transaction which we have done with our joint venture partners when we had a real discussion about the valuation, we always had a better exit yield or we always achieved a better exit yield than what we had it in our books for. So we're trying, of course -- we want to be a fair partner, but we are trying, of course, to defend our position also. That is more than normal, I think, in business. And I don't... Operator: [Operator Instructions] The next question comes from John Vuong from Van Lanschot Kempen. John Vuong: At the end of last year, you had 780,000 square meters under construction. Deliveries came to just short of 500,000 square meters. Were there some delays in the deliveries? And if so, what has been the reason for these delays? And looking at your pipeline going forward, it's currently sitting at a pre-let ratio of 75%, and you're saying that you're seeing quite some strong demand. So how do you think about the size of the pipeline under construction? And what are your thoughts about more speculative developments over the next 12 months? Jan Van Geet: Yes. Yes, when you report, you always have a cutoff, which is at the 31st of December, and you need to take a look at it. Whereas in development, it's not always really linear. You have sometimes customers which have demands for changes in the building, which entail relatively complicated situations and which makes the delivery going over the reporting period. That's one of the things where we are. So I think you need to look over a period of -- a longer period of time to see really the tendency and not just in the cutoff of 1, 6 months period. That's the thing. We -- I want it to be -- although we have a big incentive to construct more because we now have our costs really back under control as inflation has come down tremendously. And in the construction industry, in every country at the moment, we can achieve attractive pricing. At the same time, we're also trying to manage our portfolio, so not to create too many vacancy or too many speculative buildings. So we look at on a country-by-country basis, but we try to limit really our speculative buildings to an acceptable level, which for us is -- it should be -- we should be pre-let above 70%. And ideally, by 8 months under construction, we should be above 80% -- above -- after 6 months under construction, above 80%, which we currently also are. So that's the parameters in which we make the decision internally, do we do speculative developments, yes or no. And it's also depending on the demand which we see in the locations, because not all countries run at the same pace at the moment. So we are also a bit careful in starting up too much square meters where we don't see the demand for it. And on the contrary, where we see a lot of demand, we start up a little bit more. But as I already said, and I hope I was -- it came across enough, at the moment, we really have a very strong pipeline in demand. We divide up our demand, we categorize it in a first contact, a second where we already have commercial negotiations, a third where we have virtually an LOI agreed, and a fourth where we started the negotiations on the lease agreement. And if I take the 2 last things, we have roughly EUR 50 million of negotiations ongoing, which I don't say we're going to sign all of it, but it's a very healthy indication that there is really demand which wants to contract at some point, because people don't engage with teams and with lawyers and with things if they have no intention to close the lease agreement. So from that point of view, we, at VGP, with our current portfolio and our land bank and the quality of what we offer, we feel comfortable to start a bit more construction over the year. But I can't tell you a number. As I already said, we have roughly 450,000 which we need to start up anyway because it's already pre-let if these LOIs also materialize. And then, of course, we'll do a bit more because it will bring our vacancy levels -- our pre-let levels up. And then we have a bit more room to also start a bit of speculative buildings in those jurisdictions where we feel demand is strong and supply is very low. Operator: The next question comes from Francesca Ferragina from ING. Francesca Ferragina: I have 2 questions. The first one is about guidance. I understand that you never disclose the guidance. But can you just give at least some qualitative type of comments on 2026? Consensus is pretty dispersed and it doesn't help. And then the second question is on data centers. You managed to hire a dedicated person. Can you provide an update about the opportunities you see here? Jan Van Geet: We -- indeed, it's a bit difficult for us to give a guidance because we are not a REIT. Our VGP is a multiline model, where we have the development portfolio, where we have the rental income and we have -- it's different than a REIT. If you would only look at a REIT, it would be a little bit more easy to say what it's going to do. And going forward, we can also maybe make a projection of the rental income, what we expect for the year, because there we -- but also there, because we always transact between our own balance sheet and the JVs, it's not so easy to give you a reasonable view because we -- there is always movements from rental income, which is either on our own balance sheet and then it goes into the JVs and then it only accounts for 50%. So we'd rather not say something which we then cannot fulfill. We always give guidance on things where we think that they are achievable and where we feel ourselves also comfortable that we can achieve. And so far, I think, we've never promised something which we haven't delivered. That's something which we are proud of. On the data center things, so we are not actively buying land plots with the aim of developing really a data center. I see too many accidents in the market. Just last week, there was a big announcement in the press in Germany where a EUR 2.7 billion investment in [indiscernible] was stopped by the local authorities. People had paid a tremendous land price for it and done all the efforts and then it was stopped. So it is really a very risky business because we have a huge congestion in electric energy. And starting to build a land plot and then going for it, it is a very difficult business going forward. But VGP has a very big land bank, in the very big land bank, has some brownfields. Those brownfields come with a very big historical electric connection, which is there and available. And that's already a very big part of the transaction. And by coincidence, we are also 10 minutes away from Frankfurt Airport in Russelsheim. We've signed an agreement with Stellantis. That's the only one who can develop a data center on that land plot. They also still have a big reserve. But we have an exclusivity on data centers. And we have an agreement with the city on where the data center will come. And that it is going to be incorporated. It's currently part of the new B plan. And Sarah is working on that one and another one in Milan, where we also have a similar constitution, and where we think that -- and where we also have very intensive negotiations ongoing with most of the hyperscalers and some of the colocation investors, and where she is trying to manage that. And we are trying to take a look at where in the value scale of from just selling the land to core and shell to power shell to completely finished, build-to-suit, and then to completely finished and operational, what we are going to offer and whether we should do that alone or whether we should do that with a partner who has already all the accreditee to -- because he already has done it, something. And as you can hear from me, we are in a very intense process of aligning ourselves in order to be able to bring the best result. But this is a work which is not just -- it's not like developing a logistic warehouse. There are so many parts running around that it really -- it doesn't go so quick. So also the energy connection, it's not from today and tomorrow. Yes, in our case, it is. And then there is also the connectivity, the grid, et cetera, which you need to do for. And then we still have also to demolish in Russelsheim because now there is building standing on it. So it is not for tomorrow. But we're well on track. And that's everything which I can describe about it and disclose about it. Paul? Unknown Analyst: A couple of questions from me. Just wanted to check. Coming back on the pre-letting point, because I think that's been declining since 2022. I think you had a high of 89%. Now you're down at 69%. Just wonder what level are you comfortable going to in terms of pre-letting level? And what gives you the comfort in starting more and more speculative schemes as you have been over the last few years? And second question is, linked to that, is just looking at the yield on cost on completed developments. Did you have to give any rent concessions to lease these up? I think in the past you talked to tenant incentives or rent-free periods. Just to get a sense on that. And if you could quantify those, it would be great. And then I do have a very quick third question, but let's see if you let me ask that one. Jan Van Geet: Paul, on the first one, I think I already answered quite a lot of it. So yes, we've done a bit more speculative construction last year because our construction price came so much down. And we are currently -- after 6 months period, if you look at it, we are 80% pre-let. And we also have a lot of things in the pipeline where we feel very comfortable that we're going to sign it, which will take our pre-lets even more up. So we feel comfortable with today's level of pre-lets of speculative buildings under construction because we also see good activity and good demand on that pipeline going forward. So -- and we've built it for a very good price. On the activity for the -- from the tenants, we are always -- because we did not buy land at excessive prices and because -- at the time when the land was so expensive, I told you all, I don't find this thing sustainable. In 2022, we really stopped. We didn't buy anything, if you look at it going backwards. We only bought Russelsheim, which we bought for a very good price. But the rest, we couldn't make working. So today, we are in a very good position because we can be aggressive on the rental price but still make a very beautiful margin. Our margin is actually going up instead of going down because we have so good control of our construction cost. So we don't see anywhere where we need to give excessive rental incentives more than what we have been doing over the last 5 years. It's still the same. So we are -- it's a healthy market, I would say. Also the vacancy level which we see today in the market, 6%, it's not like we haven't had before, a lot more even than that. And I find it still very healthy that people finally have something they can look at, take a look at. And it's an advantage for us as a developer offering new things, where we can be aggressive on the price, that we can grow in a healthy way going forward. And yes, we can be maybe more aggressive than somebody else on some of our land plots because also we act as a general contractor in every country nowadays. And I think we have our -- I wanted to use the word shit, but it's our things very well under control. So it's really going well. Did you have another question? Unknown Executive: Rent incentive wise? Jan Van Geet: That's what I said, just answered, [ Tom ]. So no special rent incentives, yes. And you had a third question, Paul. No. Operator: The next question comes from Steven Boumans from ABN AMRO, ODDO BHF. Steven Boumans: So I have some questions on what to expect for signing new leases. So on the LOIs that you mentioned, could you please remind me how much in annualized rental income you expect to sign in Q1? And second, to respond to John's earlier question, how does the EUR 50 million in lease discussions you talked about compare to 6 months ago? Jan Van Geet: As we said, we don't give guidance. So you've asked me to give a guidance on the first quarter. Well, we have really, let's say, EUR 25 million of lease agreements in final negotiations at the moment ongoing. Whether it will all be signed in the first quarter? I do think so that there is quite some nice things which are in final negotiations. And that's about the guidance which I can give. And if I look at going backwards, I think that the market today, it's -- last year, we signed a lot of lease agreements, really a tremendous amount of lease agreements, but they were all relatively small to the years before when we always had these 1 or 2 big ones standing out, which were really very big lease agreements. Last year, it was a lot more spread over many, many little -- or not little, but smaller lease agreements. On average, before, we signed 22,000 square meters. I think last year, on average, it was below 20,000 square meters. So that was a bit different in demand than it is maybe today, because today, again, we are looking at some very big leases which we are negotiating on. Yes, the one in the Netherlands is huge. There are a couple of very huge ones in Germany ongoing. There is a very big one in Spain ongoing at the moment in final negotiations, I would say. So that's about what we can say about it. Operator: The next question comes from Thomas Rothaeusler from Deutsche Bank. Thomas Rothaeusler: Just one question on data centers. I understand you plan to provide concrete plans by the year-end, yes. But maybe you could provide a rough idea about the capacity for Milan and Hagen already. And any indications if it will be powered cell or fully fitted? I mean, considering the high-profile recruitment you have announced, I assume it won't be gas powered land. Jan Van Geet: You're asking me difficult questions to answer, Thomas. Yes, we hired a high-profile person, and she's a very lovely lady if you meet her with a lot of ambitions. And that's good because that's why we hired her for. We can do quite big -- I don't want to say anything about numbers because I'm going to say something and then it's going to be different, because we actually don't really know yet. But we have -- at the moment, we have a 50-megawatt connection available in Russelsheim from the grid. There is a power plant on our land plot, which is another 100-megawatt available. The question is, can we use it, yes or no, because it's a gas-powered power plant, and we are looking into it. We can expand that power plant quite significantly with gas turbines, and the gas can come from several ways. And that's an exercise which is ongoing. So it's quite complex to give an answer to your question, as you understand yourself because we are still looking and puzzling the pieces together. And we need to take a look also at what is acceptable for a hyperscaler, which risk he wants to go because he needs to have absolute reliability and the Tier 2 at least supply of energy, which we don't have our things all aligned yet because it's really complex. And the same is ongoing for our land plot in Milan, where, yes, we do have an agreement on the power supply. We know, plus/minus, when the power supply also will be available. But it's -- we are dependent on a third party. And yes, it's a very big capacity which we have been awarded. And the land plot is perfectly suited for it because it lies really on the super location for it. But as I said, there is a bit of work to be done on it. And we are going to disclose in the right time when it's ready to disclose where we are and what we do. And I don't want to overpromise. I just wanted to give you an update on where we stand today. And that's in all honesty what I can tell you today. Frederic. Operator: The next question comes from Frederic Renard from Kepler. Frederic Renard: A lot of questions already been answered, too, on it. Maybe to have a view on Allianz and the intention from here? And anything new with regard to potentially new JV? And then maybe another question. If I look at the sequential increase in H2 from new construction activity, and you mentioned already a good LOI of demand, so should we expect H1 2026 to actually be sequentially even more bigger than H2 '25? Jan Van Geet: I will answer first on your last question, whether it's going to be more in H2... Piet Van Geet: Which one? Jan Van Geet: In H1 versus H2 last year is -- I don't have immediately in my mind. But we are going to start up roughly -- we have to start up quite some buildings in the first half year of 2026 because they are pre-let and we need to deliver within a certain time frame. So we need to start up. But I would need to calculate how much that is that is going to be for sure in the first half of 2026. On general, I expect somewhere between the same amount as last year and a bit more to be started up during the year. I think we feel confident that we are going to start up a bit more than last year. So that's the answer on your last question. And then on the first question regarding the JVs, I think we disclosed -- because it's a regulated business, so we've disclosed on the new JVs where we could. We can't say anything more than what it is. In the current JVs running, actually, everything is running well. There are no divestment plans immediately there. And all partners seem to be very happy with the performance of the things. As Piet said also, the EPRA results of the JVs are outstanding. The relationship -- the day-to-day relationship with Allianz but also with Deka and all the others is going very well. And the only real discussion which is ongoing at the moment is about our promote, where we have now tentatively agreed on the metrics of how we are going to do it. Because originally, it was, of course, foreseen that there would be after 10 years a liquidation of the JV. But that is not going to happen. So now it's an exercise on which we need to agree. And that will crystallize by -- in the next few weeks. But I'm sure we will find an agreement with Allianz about what it is about. And for the rest, operational-wise, everything is running well. We are going to -- we have also a refinancing upcoming in the Rheingold joint venture. That's all agreed. We have the term sheet signed. So there is no -- everything is aligned. So there is no clause on the horizon as far as I can see. Everything is good. I think I answered on your questions. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jan Van Geet: Yes. I want to thank you all first in the first place for being here, both my colleagues and analysts and investors. Thank you very much for listening to what we had to say. I'm looking forward to speaking to you again on our Annual Shareholder Meeting maybe or then in August with the update of our half year results and then we have this year or maybe before on some conference. I hope that I can see all of you soon. As you could have heard from our side, it was a very busy year because we've done so many things and going forward, and it's grown all the time. But all-in-all, I have a good confidence in our sector that it has still a lot of growth capacity and growth possibilities and that VGP can play a significant role in that. And I hope all the others too, there is room enough on the market. Thank you for listening, and goodbye. Unknown Executive: Goodbye. Thank you. Piet Geet: Thank you. Operator: Thanks for participating. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the HOCHTIEF Full Year 2025 Results Conference Call. I'm Morris, the chorus call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mike Pinkney. Please go ahead, sir. Mike Pinkney: Thanks, operator. Good afternoon, everyone, and thanks for joining the HOCHTIEF Full Year Results Call for 2025. I'm Mike Pinkney, Head of Capital Markets Strategy, and I'm here with our CEO, Juan Santamaria; and our CFO, Christa Andresky; as well as the Head of IR, Tobias Loskamp and other colleagues from the senior management team of HOCHTIEF. We're looking forward to your questions, but to start with our CEO is going to run us through the details of another very strong set of numbers and provide you with an update on the group strategy. Juan, all yours. Juan Cases: Thank you, Mike and team, and welcome to everyone joining us for this results call. I'm delighted to present to you HOCHTIEF's results for 2025 a year in which we achieved an outstanding operational and financial performance as well as major advances in our strategic delivery. Let's kick off with the numbers and then I'll give you an update on the important progress we're making with our growth strategy. HOCHTIEF's operational net profit increased by 26% to EUR 789 million, which rises to 35% on an FX-adjusted basis. This result significantly exceeds the guidance we provided to the market 12 months ago of EUR 680 million to EUR 730 million and is even slightly above the updated 2025 target we indicated in November of EUR 750 million to EUR 780 million. Nominal net profit is also higher at EUR 902 million, up 16% year-on-year. The excellent profit trend was driven by strong sales growth of 15% to over EUR 38 billion, 21% adjusting for FX as well as higher margins. The quality of HOCHTIEF's profit delivery is underlined by the strong cash conversion achieved. Operating cash flow in 2025 of EUR 2.1 billion was EUR 248 million higher year-on-year pre-factoring, supported by strong working capital performance. As a result, the group ended the year with a slight reduction in net debt despite significant net strategic M&A investments in dividends. If we adjust for capital allocation effects, we would have finished the year with a net cash position of over EUR 1 billion. A further highlight of 225 was the acceleration in the growth of our project wins. New orders were sharply higher at EUR 52.6 billion, up 32% FX adjusted year-on-year with a strong fourth quarter momentum in key wins across our strategic growth verticals. New work secured during the year represents a book-to-bill ratio of 1.3x and highlights HOCHTIEF's positive growth trajectory. As a result, we ended last year with our order backlog at an all-time high of EUR 72.5 billion, up 18% on a comparable basis and providing a strong and diversified foundation for continued growth. Furthermore, we continue advancing in our derisking drive with around 90% of our project portfolio of a lower risk nature. Reflecting HOCHTIEF very strong performance and taking into account the solid growth prospects we envisage 2026 and beyond, the proposed dividend for last year is EUR 6.6 per share. This represents a 26% increase year-on-year, consistent with the group's operational net profit growth and is in line with our 65% dividend payout policy. The group's operational net profit guidance for 2026 of EUR 950 million to EUR 1,025 million, envisages another year of a strong growth of HOCHTIEF and corresponds to an increase of 20% to 30% year-on-year. Let's take a quick look at our performance at the second level. Turner delivered a standout performance in 2025. Sales increased by 34% year-on-year to EUR 25.8 billion or 40% FX adjusted driven by the very strong growth in our data center business. The acquisition of Dornan Engineering, the rapidly growing advanced mechanical and electrical business further enhanced growth. In other areas such as health care, education, sports and airports were also strong with solid double-digit revenue growth. Turner delivered every strong operational PBT, reaching EUR 921 million, an increase of 62% and above the top end of the recently raised guidance of EUR 850 million to EUR 900 million. And I think it is worth underlying that the original indication we provided to you a year ago of up to EUR 750 million was exceeded by a striking 23%. This profit growth was supported by a further increase in the operational PBT margin 60 basis points year-on-year to 3.6%, meaning that we have already surpassed the 3.5% target we had for 2026, a year ahead of schedule. And Turner's outlook remains extremely positive. New orders rose a very significant 38% to EUR 33.6 billion, with particularly strong growth in data center contracts, which more than doubled as well as increases in areas such as biopharma, aviation and commercial. As a result, the record year-end order backlog of EUR 37.7 billion was up 34% in USD terms. Due to Turner's sustained growth trajectory, we expect an operational PBT increase of 25% to 30% to between USD 1.3 billion and USD 1.35 billion in 2026. Moving on, CIMIC delivered a steady performance in 2025. On a comparable basis, sales were stable year-on-year with solid increases in the key growth verticals, offsetting the completion of large transport projects. I would highlight that data center revenues almost doubled year-on-year. Operational PBT of EUR 473 million was up 5% with a solid margin in line with 2024 and supported by improved operating cash flow development pre-factoring. CIMIC's solid order backlog of EUR 21.8 billion, was up by 6% year-on-year adjusted for the UGL Transport stake divestment and FX. Over half of the year-end work in hand relates to high-growth areas, including digital and advanced tech, defense and further diversification of the group's commodity mix. We expect CIMIC to achieve an operational profit before tax for '26 in the range of approximately EUR 780 million to EUR 830 million, a 4% to 10% comparable rate, adjusting for the UGL transport sale. Next, we have our Engineering Construction segment, which is on a very solid growth path. Sales of EUR 1.7 billion increased by 9% year-on-year, and operational PBT grew by 28% to EUR 98 million, both on a comparable basis and just ahead of our EUR 85 million to EUR 95 million profit guidance range. The business delivered a strong cash conversion with net operating cash flow of EUR 156 million in the period. During the year, Engineering Construction securing the orders of over EUR 6 billion, up a very notable 38%. As a consequence of this strong development, the EUR 13 billion order backlog is 18% higher on an FX-adjusted basis. For 2026, we see our Engineering Construction segment accelerating its growth with an operational profit before tax of between EUR 125 million and EUR 140 million, which implies an increase of up to 42% year-on-year. Let's take a brief look now at Abertis, which achieved a solid operational performance in 2025. Average daily traffic at the toll road company increased by 2% year-on-year with revenues and EBITDA on a comparable basis, up 4% and 6%, respectively, reflecting a solid underlying business performance. The operational net profit pre-PPA amounted to just over EUR 700 million with a year-on-year variation, including adverse tax effects in France. The profit contribution from our 20% stake in Abertis after PPA amounted to EUR 58 million, and we expect Abertis to deliver a similar operational contribution in 2026. Now allow me to update you on the group's strategic delivery and long-term growth opportunities. Active strategy has positioned the group as a uniquely well-placed global provider of engineering-led end-to-end infrastructure solutions. During the last 3 years, we have advanced to become a leader in rapidly expanding strategic growth verticals, including the AI digital and tech sector, energy including nuclear, critical minerals and defense, where infrastructure investments continue to accelerate. This momentum builds on our long-established locally embedded presence in core infrastructure markets in North America, Australia and Europe, which remains the foundation for our competitive strength and our ability to scale into these next-generation markets as a life cycle partner. We command a strong competitive position in the AI, digital tech sector, and we have solidified our global leadership in data center engineering and construction with EUR 16.8 billion of new orders in '25, representing 21% of the group's total backlog. Just last week, Turner was selected as a construction manager for the USD 10 billion 1-gigawatt data center campus from Meta in Indiana. And we have solid medium-term visibility via our order book and our expanding private pipeline in North America, Europe and Asia Pac. Growth in the global data center market remained is strong, showing demand for cloud services and artificial intelligence is expected to quadruple [indiscernible] and compute CapEx by 2035, boosted by the growth of generative AI and further cloud migration. The group has the capacity and capabilities as a firmly established global end-to-end solution provider to address rising demand supported by its ability to attract talent and by number one, leveraging scale and relationships with hyperscalers and subcontractors; two, applying our global sourcing expertise three, by our increasing adoption of modularization and offsite manufacturing to deliver projects faster, safer and with higher quality. As part of the strategy to expand the group's presence in the entire ecosystem, HOCHTIEF is developing a pan-European network of sustainable edge data centers. A few months ago, we inaugurated our first edge data center developed own and operated by HOCHTIEF, a major milestone for the group's data center strategy. Three further data center sites will go live by the end of '27. Our ambition is to have over 30% of them in Europe by the end of the decade. HOCHTIEF will operate this edge data center network with innovative cloud computing solutions that offer digital sovereignty and enormous growth potential. Overall, we're increasing our participation for the full AI stack, including not just data centers, but also semiconductors, cloud infrastructure services and applications as well as moving into longer-term opportunities in areas such as agents and robotics. Energy is a strategic growth market for HOCHTIEF. Rising investment in energy security and the global transition to low-carbon systems underpin sustained demand for energy projects. HOCHTIEF is deeply engaged in these segments, delivering projects spanning electricity generation with scale storage, high-voltage transmission and regional grid fortification. We have several decades of experience designing and building nuclear power plants and facilities across the world, delivering end-to-end services in an industry which could see over EUR 500 billion in investment in Europe by 2050. During the final quarter of '25, we secured a EUR 685 million 50-year framework contract in the U.K. for civil infrastructure work at the Sellafield nuclear site. By the beginning of '26, an important strategic milestone was reached where HOCHTIEF was selected as part of Amentum's global product delivery team for the Rolls-Royce's SMR nuclear program. In renewables, we continue to strengthen our market presence, particularly in Australia, where companies have delivered more than 20 million renewable and storage projects. We're also capitalizing on the accelerating requirement for critical minerals, driven by clean energy technologies, digital infrastructure and defense organization. HOCHTIEF through the combined capabilities of Sedgman and Thiess has built a global position in minerals processing and sustainable mining services with projects across key commodities, including lithium, copper, rare earth, nickel, vanadium, uranium and zinc. In December, the group expanded its partnership with Vulcan Energy with a significant cornerstone equity investment as well as securing an end-to-end role in developing sleeping production and processing infrastructure here in Germany. As part of the agreement, the group has been appointed as the engineering, procurement and construction management contractor and named as preferred supplier for the projects, civil construction works. We have also won a contract to provide a feasibility study in front-end engineering this framework for a major lithium project in France. Defense is in our key growth vertical for the group with investment in related infrastructure expected to substantially increase globally for several years. In Europe, major multiyear defense investment plans, including Germany, present substantial opportunities in defense-related capital works and potentially via the PAP model. And in the U.S. and Australia, governments plan major ramp-ups in defense spending over the next decade. At the end of 2025, the group had a defense order book of over EUR 2 billion, which included the construction of major dry dock at Pearl Harbor for the U.S. Navy, work for the Royal Australian Air Force based in Queensland and defense infrastructure upgrades in South Australia. Furthermore, a North American civil works business, Flatiron has been selected as one of the group of companies for a potential USD 15 billion worth of contract opportunities for the U.S. Air Force Civil Engineering Center. And Yesterday, we announced that HOCHTIEF has secured a major 10-year collaborative contract for the German Armed Forces in Hamburg worth several hundred million euros. Our core infrastructure capabilities are key for the group's ability to fully harness the growth opportunities we have identified. On average, around 85% of infrastructure investment in our growth verticals relates to our core construction know-how. As you know, we're hold leading positions across several core segments, including health care, biopharma, sports stadiums and education. And we have been a global leader in transport infrastructure and sustainable mobility for several decades where the outlook is very positive due to several infrastructure stimulus packages in our key geographies in North America, Asia Pac and Europe. In Germany, for example, the EUR 500 billion infrastructure fund was its first full year deployment in '26. HOCHTIEF is very well positioned to benefit due to the scalability of its business model and its core expertise in bridges, rail and transmission lines with the group's German order book doubling over the last 3 years to over EUR 5 billion. Let me take a moment now to outline our dynamic and disciplined capital allocation approach, which is a key objective for management. 2025 was a very active year for strategic M&A. In January, we closed a EUR 400 million acquisition of Dornan, a major milestone in Turner's European expansion strategy, and we also finalized the FlatironDragados combination, creating the second largest civil engineering construction player in North America. During the year, we strengthened our position in high-quality concessions through an EUR 80 million participation in Abertis, EUR 400 million capital raise to support its acquisition of the A-63 toll road in France, expanding its portfolio duration and enhancing our exposure to stable infrastructure assets. As part of the expanded agreement mentioned earlier with Vulcan Energy, HOCHTIEF agreed in December to an EUR 130 million cornerstone investment in Vulcan shares to become its largest shareholder. The move is aligned with HOCHTIEF's strategy to expand for critical minerals and energy transition value chain, building an integrated presence in investment, extraction, processing and infrastructure. In CIMIC announced the formation of a strategic partnership with Sojitz Corporation under which the Japanese company will acquire a 50% equity interest in UGL's transport business. Our capital deployment remains focused on scalable, high return equity investment opportunities to increase our presence in the value chain for strategic growth markets and [PPPs]. Group-wide cooperation and synergies are critical delivering on this strategy. Over the last 3 years, we have committed EUR 600 million of equity investment in strategic growth markets, including initial investment in our edge data center platform based in Germany as well as the acquisition of the remaining 50% of cloud services provider, Yorizon. Internally, we're optimizing our core tech platform and systems as well as supporting our talent, management, AI and digital systems, transforming how we work and enabling the group to deliver innovative, efficient and smarter solutions for clients. Our third expertise, talent mobility as a collaborative culture, enable HOCHTIEF to operate as one unified global organization, strengthening the quality, consistency and impact of its work. Talent management is critical to create the teams which drive the business forward, and we're proud to have had a 2025 intake of 4,500 engineers in technical employees. Moving to ESG. Our focus on environmental, social and governance initiatives remains on track. On this front, it is notable that HOCHTIEF has been accreted to premise status during the 2025 for its ESG performance and achievements by ISS BSG rating agency. So let me conclude with a few closing remarks. Our strategic agenda is focused on positioning HOCHTIEF for sustained high-quality growth while reinforcing resilient long-term value for the group. Our key priorities are: first, driving top line growth by expanding our value proposition and capturing megatrend demand; two, expanding margins through the delivery of higher value services, engineering capabilities, supply chain and integrated systems, advancing operational integration by simplifying corporate structure and transitioning into a more high-tech enabled efficient organization with a lower cost base, enhancing cash flow stability and sustainability through further derisking the group's business model, generating long-term value creation and sustainable dividend growth drive shareholder remuneration. HOCHTIEF has entered 2026 with a strong financial foundation and with a unique position as a global end-to-end provider of infrastructure solutions across our high-growth verticals, supported by our leadership position in core markets. The group's operational net profit guidance for 2026 was EUR 950 million to EUR 1,025 million target in our year of accelerating growth, implying an increase of 20% to 30% year-on-year. Based on our guidance in 2026, we will have double HOCHTIEF's profit in the space of just 4 years. Looking forward, HOCHTIEF is embracing the future by developing a strategic presence in its growth markets. Our strong and expanding presence in these interconnected sectors is a key competitive advantage and underpins our long-term growth strategy. Combined with our strong balance sheet backed by disciplined cash management, we have created the necessary conditions to pursue further significant growth opportunities and continue delivering substantial value for all stakeholders. Thank you for listening. We're ready now to take your questions. Mike Pinkney: We're ready for questions now, operator. Thank you. Operator: [Operator Instructions] And the first question comes from Graham Hunt from Jefferies. Graham Hunt: I've got 3, if that's okay. First, just on the guidance that you provided at your CMD last year. I just wanted to confirm that's still intact for Turner, so the 3.9% EBITDA margin, I think, and the 30% EBITDA growth. That's the first question. Second question, just trying to reconcile what's been extremely strong order intake in the Turner business. I think up doubling in Q4 and very, very strong outlook from some of your hyperscaler customers with relative to that, maybe growth, which is not as strong as maybe some are expecting or just not reflecting that sort of extremely strong outlook from your customers. And I was just wondering, are you reaching some capacity limits in the Turner business? Is there a reason why maybe that doubling of order intake isn't translating to faster growth in 2026? And then third question, just on operational synergies across the business. Just an update there in terms of how you're progressing with some of those projects. Juan Cases: Thank you, Graham. So let me start with the first one. Let me start with a reflection that pretty much talks about guidance in general. I mean, when it comes to Turner, you're right. I mean, 2025 order book of around EUR 17 million, it's represents a 144% growth and the new orders of EUR 18.1 billion, it's 170% and we had a very strong Q4. Furthermore, there's around EUR 10 billion to EUR 12 billion of work that is not reflected in the backlog for Turner because as we always say, the way we engage into this contract is always through a negotiation, working in design once we are preferred, but before we can really put it in the backlog. So the growth of Turner is [indiscernible]. Now in terms of guidance, we -- there's always at the beginning of the year, a lot of unknowns and uncertainties, geopolitically speaking, et cetera. So we prefer to be conservative as we were last year, and we were the previous year, and we prefer to update throughout the year, right? So Turner is not reaching capacity not at all. We continue seeing very strong growth. We'll continue seeing very strong growth. We're very comfortable with that. We just want to make sure that we secure all that into the balance sheet, that there's no surprises, that there's no geopolitical changes before we provide further updates. And that applies to Turner and that applies to the rest of the business. In terms of operational synergies, we -- I mean, we expect -- I believe that we're going to make progress in 2026. We do have a high target. We're expecting to reach -- I mean, cost reduction first as we streamline the process, release bureaucracy, we upgrade our systems and we're going to be simplifying and decreasing cost. How much we would like to get that update throughout the year, right, especially because we want to make sure that we achieve all those synergies during 2026. And our intention is, by the end of 2026, to update through our Capital Markets Day as we did back in '24 for the following next 3 years. So we want to make sure that we secure we consolidate in all the high-growth areas. We incorporate all these projects. We put all the synergies in place, and then we provide the update. Operator: The next question comes from Marcin Wojtal from Bank of America. Marcin Wojtal: Yes. My first question is on cash flow generation, you had a strong inflow of working capital in 2025. To what extent do you believe this is something that is structural and should continue in 2026 you have strong order backlog. So presumably, we could expect another wave of prepayment. Is that the right way to think about cash flow for 2026? My question number 2, this is just a bit detail on the numbers, if you allow me. I wanted to ask you about your -- in your segmental reporting, you have a line, which is basically referring to Abertis and headquarters expenses and this line remains very negative. So I'm just wondering why such a negative item in that line? And is there any change in that line for 2026? So maybe -- yes, maybe those 2 questions. Juan Cases: Yes. Okay. So starting with the cash flow. We -- I mean, as we continue to grow, we expect to see an improvement in cash flow. So we -- I mean, we are looking to a positive 2026 from a case perspective as well and net operating cash flow has been the last 3 years. The -- I mean a lot of the cash conversion, positive development that we're seeing, it's also a consequence of the change in our strategy, getting into a lot of these high-growth areas, securing all these projects. So we hope that, will continue. When you're asking about holding. That was an Abertis level or at HOCHTIEF level? Just to clarify. Marcin Wojtal: No, no. So that is for segmental reporting of HOCHTIEF, there is a slide, Abertis and headquarters. So that's more at HOCHTIEF level, let's say? Juan Cases: Yes. So what we did was we introduced noncash provisions and some deferred taxes. So the underlying is stable. But I mean we had noncash profits during the year. And typically, we don't want to reflect that in the P&L. Operator: And the next question comes from Dario Maglione from BNB Paribas. Dario Maglione: First of all, congratulations for the results. I mean these are the amazing results stepping back. Yes, I'll start with 2 questions. First, on partner as you said, the margin -- the profit before tax margin, 3.6% already in 2025. Where can margins go for Turner, let's say, in the medium term as the mix of data center increases? The second question is more -- some more details about Turner data centers. And if you could provide us the new order intake in data centers for the full year '25, the backlog and the revenue from data centers in USD terms, please? Juan Cases: So let me start with the first one. So a couple of things. First, on the profit before tax margin, that was 3.6% in 2025. In the capital -- in the last Capital Markets Day in 2024, we anticipated that 3.5% will be reached in '26. So we achieved that 1 year. Now what's going to happen? First, that will continue growing at least at the same pace and has been growing the years, right, as we do more high-tech projects. But two, there's going to be another component, which is we will continue to increase our sales performance capabilities and a portion of the projects through supply chain, but also through modularization. So that's going to increase margins. And that's a big part of our strategy that we did announce last year, and we will want to consolidate during this year. So with Turner, as I said before, we had a strong intake. We're seeing big prospects coming to Turner and the areas of the business. If you go through data center specific question, the backlog right now in data center is EUR 16.4 billion. Just in data centers, there's another EUR 10 billion to EUR 12 billion that is not included in this number, but we've been preferred, but we're going through the design, so therefore, we cannot reflect, right? And that it's a year-on-year increase of 144%. The order intake of data centers during the year has been EUR 18.1 billion, and that's an increase of EUR 170 million. And again, that does include EUR 12 billion that I mentioned, right? If we move to the rest of the areas, we are seeing very much increase in biopharma, in aviation, including aerospace, some increase in -- a significant increase, but it's coming from a much lower base in commercial. And then the rest of the business is stable, except probably other areas like I mean, like hotels or some more traditional that is coming down, okay? But in the rest of the segment, there's another EUR 10 billion that is not reflected in their backlog in the same way that a EUR 12 billion data centers that we are preferred, but it's not in the backlog. So in a sense, there's a total backlog of USD 44.3 billion of Turner, out of which USD 16.4 billion is data centers, and you would need to add an amount of USD 22 billion to that USD 44.3 billion that we are preferred, but it's not in the backlog. Operator: Then the next question comes from Luis Prieto from Kepler Cheuvreux. Luis Prieto: I had 3, if I can. The first one is, if my numbers are correct, there's been a sharp acceleration in the E&C margin in Q4. I don't know if you can shed some light on why that has been. The second question, and apologies if you have mentioned it, there's so much detail and information that I might have missed it. But the operational result contribution was guided -- from Abertis was guided at EUR 81 million for the full year, but it was EUR 58 million in the end. Could you please explain the reasons behind this, behind the miss, if I may call it? And then the third question, there have been press reports in Spain on your potential interest to spend as much as EUR 1 billion in defense technology players, the military driven players, not construction related or anything like that. Should we expect you to be active on this particular M&A front? Juan Cases: Excellent. So let me start with the first one on E&C in Q4. E&C, especially Germany and Europe is going to see a big increase moving forward. And we're expecting a big increase in '26. In '26 certainly, the profit of HOCHTIEF in Europe will start going up and you saw the guidance that we're giving. But more importantly, the order intake and the backlog. And why? Because there's a lot of work coming from Deutsche Bank, there's a lot of work coming from Autobahn, and there's a lot of work coming from defense. And that's going to start coming to the company. Now when it comes to Abertis, I mean, in general, the performance, there's a positive operational performance in '25, right, when you look at the target developments and the traffic. So that continue. There's an impact on the profit because of the corporate tax in France, right? And that's probably what you're looking at when you see the difference. And then the other part could be the foreign exchange rate movement on OBBBA. And then when it comes to the press report in defense, I mean, we don't know where the article came from. Certainly, when it comes to M&A, we're going to continue being selective and making sure that it incorporates additional capabilities to us. We -- I mean, I know that there's a lot of focus on our growth in data centers in the last years and the next years for the right reasons and that will continue to grow significantly. But we would like to grow in the different verticals, right? There's growth in the critical metal sector. There's a lot of growth in the energy sector. We see a lot of growth in the nuclear sector, and we see a lot of growth in defense. Now where do -- how we use our capital allocation among all those verticals to incorporate engineering capabilities and additional capabilities is something that we're deeply analyzing and we will be very selective. But we haven't announced anything. And if we do, you will all be the first ones to know. Operator: Then we have a follow-up question from Graham Hunt from Jefferies. Graham Hunt: Yes. Just one on your nuclear capabilities actually. I don't know if you could provide a little bit more color around the Rolls-Royce SMR program just in terms of the time lines there in terms of when we might see impact on the order book and maybe just scale and just what your thoughts are there on the outlook for that win or that partnership? Juan Cases: So let me start with the main numbers on the project, right, that you saw. So the contract -- the Rolls-Royce contract is in reality a program, right? This is pretty much to deploy the SMR plant from Rolls-Royce across Europe and potentially beyond. We won that incorporation with Amentum to become the program delivery partner and maybe is to start the first ones will be implemented in United Kingdom and other places in [indiscernible]. Now in terms of the contract, the -- right now, they are looking at the deployment of the first 3 to 4, but there's an initial plan of like 15 that will be deployed. The initial ones have a cost of around EUR 6 billion, and this is just an estimate, and the idea is to decrease that over time. We're still working on the different components of that CapEx and how we'll be distributed, et cetera. The initial part is mainly engineering. And our objective, our work will be to help on -- as part of the traction to try to modularize as much as possible to optimize those SMRs and make sure that they can build, I mean, at scale with the right supply chain, right mineralization and standardizing the contact. So for us, it's a very important project. As you know, HOCHTIEF built 13 out of 20 large plants in the past. Since then, we've been basically maintaining and dismantling. You saw that, well, we continue doing all of that work in Germany, and we won't sell a field in eastern countries, but now we wanted to go taking advantage of the new wave of nuclear moving from dismantling and maintaining to building large plants. And there's a big plan that we are deploying with the first contract being this one, but we continue working to enhance our capabilities because we see a lot of potential in Europe, in the U.K., in eastern countries, other places, but then it won't come in the U.S. So we're building our capabilities, and we're creating alliances. We will announce as we evolve in our strategy, we will provide further updates during 2026. Operator: And we have another follow-up question from Dario Maglione from BNP Paribas. Dario Maglione: Yes, maybe 3 more from my side. On the data center revenue, in Turner. I don't know if you provided that detail before. It would be helpful to know the revenue from the percent in Turner in USD terms in 2025. Then second question around the order backlog for data centers. You mentioned before -- sorry, the intake was EUR 16.4 billion. I think, for Turner, that implies another USD 3 billion of intake in data center somewhere else in the business. Is that mainly Asia Pacific? Maybe can you tell us more about these projects? And the last question, strategically, why are you investing in the in the digital cloud infrastructure for the edge data center in Germany and Europe? Like why not just keeping the edge data center, why also investing in the digital part of the infrastructure? Juan Cases: Okay. So starting with revenues of Turner. In 2025, I think that it was USD 10 billion, just in data centers, okay? And we're expecting that figure to continue increasing all the way up to EUR 25 billion to be achieved '29, '30, in conservative. In the case of the -- I mean, let me jump to the last one because I will ask some clarity around the EUR 16.4 billion question. On the digital cloud, I mean the difference between the big ones and the small ones is that the small ones have 2 main purposes. The first one is it's mainly inference processing capability, but also from a data storage perspective is pure colo. So we commercialize among a lot of different clients. The big ones, typically between 1 or 2 clients. And that type of business with the big ones is more kind of a lease of the facility versus the other business that will provide the full package, right? The cloud services, the cyber, et cetera. That's why we -- as we deliver the full service, we are enhancing our capabilities in this area. Now around the second question, can you repeat the question about the EUR 16.4 billion, please? Dario Maglione: Yes. So in Slide 8 of the presentation, at the very top left, it says total order for data centers is EUR 16.8 billion in 2025. So I guess most of it is in Turner, but there is a portion of that orders that is somewhere else in the business. So I was curious to learn more about these projects outside of the U.S. outside Turner let's say. Juan Cases: So I don't have -- I mean the Turner 1 is the figure that I gave before. That was the order intake of EUR 18.1 billion and the backlog EUR 16.4 billion. The difference is mainly [indiscernible] towards the rest of the numbers. But we can provide you with the figures in a follow-up call. Operator: So it looks like there are currently no more questions. So I would like to turn the conference back over to Mike Pinkney for any closing remarks. Mike Pinkney: Yes. Thanks very much, operator. So thanks to everyone for calling in. And obviously, we're delighted to follow up with any further detail offline. Thank you, everyone. Thank you for your time. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Steve Darling: All right. Welcome. We're inside our Vancouver Broadcast Center here at Proactive for another live stream event and this time with Nextech3D.AI and joining us is the CEO of the company, Evan Gappelberg. Evan, it's great to see you again. How are you? We're just -- we seem to be losing your audio there, Evan, for some reason. We got to get your audio taking care of. So we'll take care of that. And we'll tell you that we are here today to talk about Nextech3D.AI's financials that came out recently and also about some of the things that they'll be doing in the future as they sort of transitioned the business a little bit into where they were in the last few years to where they are going to now. Evan's going to talk a lot about that. Also, recent acquisitions as well, Eventdex and also Krafty Labs, Evan will talk about how that changes things and what the next step is towards trying to put this all together. So let's see if we can get Evan back on. Can you hear us now, Evan? No, we're having some technical difficulties with your microphone. So we're going to try to get that all taken care of, Evan. But modern technology, that's what happens when these things go. I can see you attempting to put your microphone on, but... Evan Gappelberg: How about now? Steve Darling: I can hear you now. Yes, just turn it up a little bit, you should be good. So how are you? Evan Gappelberg: I'm good, sorry about that. Steve Darling: That's all right. No problem at all. Good to see you again, as I mentioned, and welcome once again to livestream event here at Proactive. And again, we are with CEO, Evan Gappelberg of Nextech3D.AI. And so Evan, first off, thought I'd give you an opportunity just to say hello to the people that are watching. We always encourage questions from people as well if they want to log those questions on. We've got of a number of them who's asked already. But just overall, your thoughts on where you're seeing as far as your financials are concerned. Evan Gappelberg: Well, I mean, we reported a very strong quarter, but Q3 wasn't just a strong quarter. It really was an inflection point for our company. We delivered 59% year-over-year revenue growth, 20% sequential growth. That's our second quarter in a row of 20% sequential growth, record 95% growth margins, all at the same time. It's a pretty powerful combination. I don't know that we've ever been able to report a trifecta like that where we've had the gross margin sequential and year-over-year growth all coming through at the same time. And so what you're seeing -- what I'm seeing is the beginning of a new sustainable growth curve as our unified AI platform, our event platform gains real traction with enterprise customers. And I just want to stress that enterprise is the main event here. We are doing business now with the largest companies on the planet, including Meta, Microsoft, Netflix, Deloitte, General Motors and many, many, many others, Spotify, Dropbox, Pinterest. And so all those customers are customers that were now talking to about enterprise contracts, and we have multiple enterprise contracts that are just literally waiting for the ink to dry. We expect them to come in, in the next week or two. Steve Darling: So Evan, let's take a step back here and let's sort of -- I don't want to give a whole history lesson, but let's talk a little bit about last year and really what happened last year and sort of led you to this. This has been sort of a transition that you've been making with the company in order to get to a place where you think you could be sustainable and move forward. So why don't you sort of take us back through some of the vision that you saw and where you see things going now? Evan Gappelberg: Yes. I mean this is truly a story of a turnaround to take off where a year ago, we were kind of left for dead by investors. I mean let's be honest. The stock was at the bottom of the barrel, and we were exiting out of our Amazon contract, which was where we made 3D models for Amazon that was a multimillion dollar contract. And so there was a lot of sole searching that went on. And what we realized is that we had AI, which is transformative technology, and we had a very, very strong position in the event space with Map Dynamics, and they have 500-plus customers. And so what we decided to do was to build out that platform and add more features and more functionality. And then we decided you know what, why build it when we can buy it. And so we acquired Eventdex in late 2025 and once we acquired Eventdex, it gave us the ability -- we basically acquired a portfolio of clients, plus a full tech stack, which includes badging, ticketing, trade show app, AI matchmaking, which is a very big deal. We could get into that in a minute. And so that plus our Map Dynamics event floor plan gave us this end-to-end one-stop shop solution that we never had before. And then we optimized and added AI into the mix so that we can have very strong margins. And the business started to turn around. And then Steve, as luck would have it, Krafty Lab showed up on my radar, and we were able to acquire that business. And that's going to really put more wind in our sales for 2026. That wasn't a 2025 acquisition, that was 2026. And we're looking at acquisitions now quite differently because AI is really a game changer. It does allow us to make acquisitions that are additive to our company, where those companies might be struggling. We acquired them, and we're able to streamline them. We're able to add AI. So you might have 40 people that we can run a business with 4 people. And instead of having the other 36, we just use AI agents. So we have like an army of AI agents that take the place, Steve. And so that's kind of where we sit today, where we're using AI massively and it's going to be more and more a part of our story and that's why we call ourselves an AI-first company because without the AI, we probably wouldn't even be here today. Steve Darling: Yes. Talk to us about Krafty Lab because for people not familiar with it, what did you see in Krafty lab that you thought was a really nice fit to what you were trying to build with Nextech? Evan Gappelberg: Well, I mean, Krafty adds something that we didn't have. So as I said, with Eventdex and Map D, we had Expo and live event tech. We had the full end-to-end one-stop shop solution. With Krafty, we now have virtual experiential events as well as live kitted experiential events, essentially team building. And as it turns out, Steve, every single large corporation in America and the world has a budget for team building. It really goes down to employee retention, right? How do you keep your employees engaged when they're spread out across the globe? How do you make them feel like they're part of a very big company. And so these platforms, Krafty offers team building. So you have mixology, you're making cocktails with your coworkers, you have a chocolate making class, you have a candle making. You have Trivia. We've done trivia here at Nextech, actually virtual trivia. It's a blast. It's fabulous. It's so much fun. Here's a good example on -- like Krafty. And I've said this before, but I'll say it again, growing up, I used to love recess. Who didn't love going out and playing with your friends. And so -- but when you grow up, recess goes away. And -- so you go to the office just like you used to go to school, but there's no real interaction with your coworkers. So think of Krafty Labs as that platform that allows you to have that recess. And that is a lot of fun, and it does build camaraderie and teamwork. And so that business we see massive, massive upside, too, because it started out, Steve, just as I've described it, experiential. But we've recently announced a gifting component to that. So it's the same HR person that's now ordering gifts for their employees or for corporate customers. Now they're doing that through the Krafty portal. And we're adding off-site events which are potential multimillion-dollar off-sites where you have 50 or 100 of the top execs that travel to Hawaii or some other remote exotic location, and they hire Krafty to put together the entire event from the flight to the airfare to the hotel to the food and all of that is something that we can do now. And so when you look at Krafty, it's a way bigger platform than when we acquired it just 6 weeks ago. Steve Darling: Yes. Talk to me a little bit about companies you mentioned that you're working with. Krafty had its own client list when it came to you. And these type of organizations are so big, so widespread, it's all around the world that the type of events that you're talking about are something that they -- it's not a -- if they want to, if they have to, in essence, do these events. Evan Gappelberg: Yes. It extends beyond these big companies. So yes, we -- our clients now are Google, Microsoft, Meta, Netflix, General Motors, BNP Paribas, Deloitte, just -- I mean all the Fortune 1000 companies, they're all doing these types of events on the Krafty platform. And we're talking to them now about enterprise contracts and really getting a bigger share of their wallet. And so when you think about government organizations, Steve, we're also talking to them because they're spread out. They have a massive size just like Google, right, Google is basically the size of a government. And so -- or our government's the size of Google. And so we're talking to governments about the same thing. Steve Darling: Okay. Are you -- you mentioned that you're looking at other acquisitions as well. I know you can't get into too much details, but is it augmenting what you already have? Or is it adding things that you think you need to have in order to move forward? Evan Gappelberg: So amazingly on the tech side, Steve, I think we're done pretty much. Like AI is going to be the only thing that we develop in-house. We don't need to acquire that. But we're looking at adding more and more. I'm just going to call them modules or potentially customers to our base, right? We just want to have a bigger slice of the pie. And so we're looking at companies in the same space or companies that are just adjacent to us. We have a lot of orgs associations so there might be a company that we're looking at that works with associations. The events industry is quite fragmented. And so it gives us an opportunity to kind of roll them up under the Nextech banner and integrate them into our ecosystem and really just acquire more and more clients, more and more revenue and then optimize that with our AI. Steve Darling: Okay. Just on clients. We've got a question here. You mentioned actively engaging 200 enterprise customers. What's the realistic breakdown over the next 12 months, Tier 1, 2, 3? And how does that sort of apply it to revenue? Evan Gappelberg: So I mean, when you talk about Tier 1, 2 and 3, I mean, they're all Tier 1 and 2. I don't think there are any Tier 3s. Well, Tier 3, if -- I don't know if this investor is talking about Tier 1, 2 and 3 as far as our pricing calculator because if he's talking about our pricing calculator, they're in all tiers, right? So as I've mentioned, and I think that is what he's talking about. Tier 1 is like $25,000 to $50,000 and then Tier 2 is $50,000 to, I think, $150,000 and Tier 3 is above that. And so as we've mentioned, the way that these clients work is they start at one tier and then they move up the ladder. So we're talking to all of them. But you got to keep this in mind. These customers weren't in any tier. They were in no tier they were spending small dollars, relatively small dollars multiple times a year. And so now we're actually putting them into enterprise contracts. That's the big news. Of course, we want $250,000 contracts, but I'll take $25,000, $50,000 contracts all day long because I know we could grow those into 6-figure contracts. Steve Darling: And Evan on that, these companies that you're talking to and talking about are -- as we mentioned, they're always engaging their employees and there's so much demand for employees these days in certain companies. The company is doing everything they can to hold on to employees and especially the good ones they want to hold on to. And so now as in the past, it used to be, companies would say, okay, well, here's what we've got. And if we have any revenue leftover, we'll do something with the employees, like we'll do a pizza night or something like that. But now they're budgeting in their budgets, large amounts of money in order to -- for simply employee retention and employee engagement. And that's -- I think that's the key to all this, isn't it? That these are not something that's just off the side of the desk. These are people who are specifically hired to make sure their employees stay where they are. Evan Gappelberg: So it's the HR department and they're given budgets, annual budgets. Steve Darling: Big budgets. Evan Gappelberg: Big budgets for -- I mean, big companies have big budgets. Even their pencil budget is big at Google, right? Yes. So it's all big, but they're basically coming to us saying, "Hey, I have $50,000. I have $100,000. How can I spend it with you guys? Give me a road map, show me what you guys have. Let's have some fun. Let's build some experiences that are memorable, let's do some team building." I mean you couldn't ask for a better customer than that, right, where they're eager to buy. And they have a mandate to spend that money. And so they're just looking for a company that can give them the ROI. And so our whole thing is about data and analytics. And so in another week or two, Steve, we're going to come back on your show and we're going to be announcing a new platform that has some very, very exciting data and analytics, and it's all AI. It's all on the Krafty platform play with the crafting credits, et cetera, et cetera. And so there's a lot happening at Nextech that's going to make all of this turn into a reality. There's a lot going on behind the scenes with me and my team, and we're going to be showcasing some of that in the next couple of weeks. But we have the clients. We're rolling out the platform. We have the product. We're really just executing at this point. And the 59% growth, Steve, is a clear sign that it's happening. It's not just talk. Steve Darling: Okay. Another question from an investor who wanted to know about ticketing and contracts, big players. And somebody else asked a similar question about Ticketmaster, StubHub, people like that. I know that we've talked about ticketing in the past and in your brand of ticketing, how you do it is very different than what you're seeing there. So can you talk to us a bit about the ticketing part of the company? Evan Gappelberg: Yes. So what we're going to be doing -- we can't just launch me-too ticketing. Let's be clear on that. We will not win. So we're launching blockchain ticketing. As we've mentioned many times, blockchain ticketing is our hero product in the ticketing market. And so we're beginning conversations. It is going to take a little bit of time, but we're starting to have conversations with the big ticket masters and StubHubs and reaching out to them and getting them engaged and talking to, again, agencies, government agencies about blockchain and how we can use that for certification, not just for concerts, but beyond that. So there's a lot happening here. We're trying to do it all at once. It's definitely a bit of a challenge. Steve Darling: Fair enough. I get it. But more to come is what you're saying? Evan Gappelberg: Yes, more to come. It's happening. It's just -- it's in motion. Steve Darling: Okay. A lot of questions, Evan, about total revenue for the year, guidance, all that. From what I understand and interviewed many times, you have not set any guidance for the company, and that's not something you're prepared to do today, I don't think. But you're happy with where the sequential growth that you're seeing in the quarters and you want to sort of build on that? Evan Gappelberg: Yes. I mean, look, I'm confident that we're going to show triple-digit growth in this year. I'm confident that there's going to be surprises to the upside not to the downside. It is a little early for me to project the numbers, but it's definitely going to be way better than last year, which was the [ trial ] and we think that this is really just the first year of a multiyear growth curve, where it's that hockey stick, and we're just at the bottom turning it up, right? But it starts to go like that. And so we're just at that first year, and this is really the first quarter that we can really talk about that. Steve Darling: Yes. Let's talk about margins because that was a big part of your news release as well talking about company margins and I know there's been a lot of work put in by you and the team to try and get your margins to a certain point to where they are now. And it's significant. So can you talk to us about margins and where they're at? And are you at the point where the -- you can't improve on them anymore because your margins are quite high. Evan Gappelberg: Yes, I don't know that we can improve beyond 95% -- we can't get to 100%. But we are a high-margin business because it's primarily been software that we're selling. So software is the highest margin business. In the past, the 3D models, we were trying to get to pure software. We never actually made it there. We were like 50% there. But yes, because we're pure software, because we've reduced our expenses, those margins are very, very high. And we're very proud of that, that the finance team has done an amazing job. I do want to also -- I don't know if the question has come up, Steve, about the acquisition of ARway. Has that been one of the questions? Steve Darling: Yes, as a matter of fact, that was my next one. The next 3 to 4 months, so you're [indiscernible] 3D models as well. And just is the company sort of moving away from that. And -- but let's talk about ARway first. Evan Gappelberg: Well, I will just grab that 3D model thing. So we have some contracts that are ongoing with 3D models, but it's not a big business. It's not millions, it's like hundreds of thousands, right? So we're just not focused on that because we're chasing after the tens of millions, right? And we just don't see that in the 3D modeling space. So it's still there. It's -- if it does take off, we'll be able to take advantage of it. But we did have Amazon, and we weren't able to turn that into a sustainable business. So I don't know what's bigger than that, right? As far as ARway, let's talk about that. So the deal is done, but there's always a but. The deal is done, but in order to get the regulators to approve it, there's a process, and that process is we need to have audited financials for both companies and Nextech is in its Q4 right now. So we're going to be auditing our financials anyway. We don't want to do two audits because that would unfairly burden the company with additional costs. And this doesn't make any sense for us to do an audit today when we're going to be doing an audit in 6 weeks. And that was the calculus over the last couple of weeks that we've been going through. Do we do the audit or do we wait? And so we've decided to wait because we just don't want to burn our precious cash paying auditors twice. And that's really the bottom line. So once the audit is done for Nextech, we'll be able to quickly move that acquisition into the done deal. And so we're just waiting for our audit and then we move to close. Steve Darling: Okay. Let's talk about this year. And you mentioned the revenue in this particular financials is not related to Krafty lab and only partially of Eventdex as well. So what are sort of the things that investors should look for in 2026 as you continue to build the product out and obviously really push sales? Evan Gappelberg: I mean there's a number of things. One is keep a look out for M&A because we are hunting for new deals that would help us to grow even faster. That's kind of the turbo booster. But also, the enterprise deals are going to start to be announced soon. And then for us, it's really just executing on the business that we have landing and expanding into -- we already landed through acquisitions, the biggest companies. Now we want to expand. And so there's a lot happening. I could tell you that, that these government agencies are quite excited to be working with us. These large companies are quite excited to have a one-stop shop of these enterprise accounts. And we think a little bit out of the box. I'm not a techie so I think in terms of just solutions, and I'm trying to find solutions for our customers that maybe other people haven't thought of. And I think there's some really good opportunities there. We're going to innovate and offer some solutions that is unique to us, is proprietary. And so it's really, Steve, about mining the gold mine that we sit on. We have a gold mine. We really do. And now we're just mining it. We're moving the equipment into place. We're moving the people into place and the results are starting to show up in our quarterly reports. Steve Darling: Okay. Let's talk about the blockchain because I want to just ask a question about that because I'm just wondering in the process that you're building and soon to roll out eventually, has it been easier than you thought it was going to be? More difficult to -- what sort of the process involved in trying to put something like that together? Evan Gappelberg: I mean, it's definitely a process, I mean, but it's a high-margin growth engine for investors. I mean global ticketing is a $100 billion industry. Counterfeit and duplicate tickets unauthorized reselling and scalping all of that is a big issue. And these are not edge cases. This is like a structural flaw in the system and blockchain ticketing really fixes this at the foundational level, each ticket becomes a unique verifiable digital asset that can't be forged, duplicated or altered. And so there's trust, transparency and security all built into blockchain tickets. And it's -- again, it's not just ticket, it goes beyond ticketing. Some people think of it as just ticketing for concerts, but think of it in terms of like certification as well. And there's a lot of certification that these big companies that we have as customers need to do better at in terms of preventing fraud. So that's -- every ticket is -- so anyway, we're going to do a demo of the blockchain ticketing, again, in the coming couple of weeks. So get ready, Steve, it's going to be busy. You and I are going to be busy doing demos. And I'm going to be bringing on my team to do screen shares and show how the tech works. Steve Darling: Okay. There's a lot of questions about, obviously, share price because people always talk about that. I know you've talked about that in the past. Share buyback programs, management buying more shares, a lot of things about sort of the corporate side of things. So I'm not sure how much detail you can get into or if you -- I know you're bound by regulations on what you can or can't say. But just on -- I know you're the largest shareholder of the company, I believe. So just for shareholders, you sort of want to talk to them directly and message them. Evan Gappelberg: Yes. Let's just be clear. I mean, it sucks when the share price is down. It really sucks. And I feel the pain. And I've been through this before, though, with Nextech. When we first launched Nextech as a public company, the stock sat for a year in that $0.25 to $0.50 range. And then it took off, went to $1, $1.50, $2.50, it corrected hard and then it had a massive move up to $10. So I guess what I'm saying is that it's not for the impatient investor. But for the patient investor, I think this is going to be a very, very rewarding journey. I hope we all live long enough because it's been a bit of a roller coaster. It's been a while. I do -- when I say I hope -- I'm talking about rear view. People that have been in the stock since 2018, '19 but going forward, I think this is the year, the breakout year for the stock. I think that it's undervalued at the current share price. I don't just say that. I bought 550,000 shares in November at CAD 0.14. I think it's around the same price today, so you could buy at the same price that I bought it at. I'm considering buying more because it's dirt cheap, in my opinion, based on our growth trajectory and based on the fact that we're probably going to go cash flow positive this year sooner than people think. I'm quite bullish. So yes, I think this is just opportunity knocking. I know that when it comes to turnaround stories, everybody always -- like really? You do -- like that. You kind of look at it, you squint a little, you go "Really. Is it really turning around?" Well, the numbers don't lie, the numbers don't lie. And so when you have the kind of numbers that we showed today, and this is our second quarter of 20% sequential growth. It signals to me and it should signal to you, to our investors that this is real. This is happening, the turnaround has happened. And so we're just in that first quarter. And I think, as I mentioned, the Q4, the next quarter is going to be even better. So you can take that and run with it. Steve Darling: Okay. Lastly, I thought this was a really good question. It just popped up here a moment ago. And from -- and this is from -- given your focus on disciplined growth and minimal dilution, do you expect the company can execute its plan with your existing resources? You also mentioned M&A., but if M&A doesn't happen, do you feel confident that you've got the things in place to execute on that plan you just talked about? Evan Gappelberg: I do. The M&A is additive. It's like a turbo, right? We're going fast. We're going very fast. But like the M&A, just catapults you forward even faster because you just -- instead of it taking you a year to acquire customers and build that revenue, it happens in a day, essentially, right? So that's the benefit of M&A. But we do have the resources without M&A to continue, and that is the plan. If the right opportunity comes along, we are comfortable with M&A. I mean we just made two acquisitions. So I'm bringing it up because it's not something that should be discounted, right? So it's something that you should actually think about as likely at some point in the future. Steve Darling: Okay. Last word, Evan, last final thoughts? Evan Gappelberg: Final thoughts are that opportunity comes along every once in a while that again, you've watched me, heard me, listened to me speak over the years. From where I'm sitting today, this is a tremendous, tremendous opportunity to get in at the very, very beginning of a new multiyear growth curve that's driven by AI that has blockchain wrapped around it and that is in the event industry, which is a $1 trillion global industry, and we're doing a couple of million. So when you think about the upside versus the total addressable market, and you start to realize like there is no real limit to how fast and how far we can grow Nextech. It really does represent a tremendous, tremendous opportunity today for smart investors. Steve Darling: All right, Evan. We'll leave it there. Thanks so much, once again for joining us on our live stream and talk about your financials and other things happening with the company and a look ahead for the rest of 2026 as well. So good to see you again. Evan Gappelberg: Thank you. Steve Darling: All right. There is Evan Gappelberg. He is the CEO of Nextech3D.AI. And I'm Steve Darling here at the Worldwide Broadcast Center for Proactive in Vancouver. Thank you once again for joining us for our live stream and we'll see you next time.
Operator: Good day, and thank you for standing by. Welcome to the Targa Resources Fourth Quarter 2025 Earnings Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Tristan Richardson, Vice President of Investor Relations and fundamentals. Please go ahead. Tristan Richardson: Thanks, Liz. Good morning, and welcome to the Fourth Quarter 2025 Earnings Call for Targa Resources Corp. The fourth quarter earnings release, along with the fourth quarter earnings supplement presentation for Targa Resources that accompany our call are available on our website at targaresources.com in the Investors section. An updated investor presentation has also been posted to our website. Statements made during this call that might include Targa's expectations or predictions should be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our latest SEC filings. Our speakers for the call today will be Matt Meloy, Chief Executive Officer; Jen Kneale, President; Will Byers, Chief Financial Officer. Additionally, the following senior management team members will be available for Q&A: Pat McDonie, President, Gathering and Processing; Scott Pryor, President, Logistics and Transportation; Bobby Muraro, Chief Commercial Officer; and Ben Branstetter, Senior Vice President, Downstream Commercial. I'll now turn the call over to Matt. Matt Meloy: Thanks, Tristan, and good morning. Before we discuss our results, given this is Scott's last earnings call before his retirement in a couple of weeks, we wanted to thank Scott for his 35 years of service to Targa and our predecessor companies. Scott will leave a lasting legacy at Targa. And while we are going to miss him, we are excited about this next phase for Scott, Marcy and the rest of his family. On behalf of the whole Targa team, thank you, Scott. You leave the team in great hands with then taking over for you. And Ben, we're really excited to have you on the executive team. D. Pryor: Matt, thank you for your comments about my retirement. It's been an extreme pleasure to work alongside the Targa management team for the past many years. I look forward to watching our continued success while in retirement, knowing that our employees and this management team will continue to focus on safety, customer service and reliability and do so with a high level of integrity. Thank you to my friends and colleagues in our offices and field operations. I've been a part of a great team here at Targa, and it's been my pleasure to stand on your shoulders. Thank you. Matt Meloy: Thank you, Scott. And now turning to our results. 2025 was another exceptional year for Targa with record volumes across our integrated footprint, which drove record financial performance. Permian volumes grew 11% for the year, an increase of more than 600 million cubic feet per day. NGL transport volumes increased by almost 170,000 barrels per day. Frac volumes increased more than 120,000 barrels per day, and we also had record LPG export volumes. Our operational performance translated into a record $4.96 billion of adjusted EBITDA, more than $800 million higher year-over-year. We are almost 2 months into 2026, and our momentum continues as we estimate another year of low double-digit Permian volume growth. Our expectations for 2026 are consistent with our previous commentary and our outlook for '27 and beyond has only improved. We had strong commercial success in the Permian in 2024 and 2025, adding several billion cubic feet per day of gas volumes over and above our existing volume growth from long-term acreage dedications. Our best-in-class footprint generates significant growth opportunities as we continue to expand our system and bolt-on growth projects. This commercial success further adds to our long-term growth rate and gives us confidence in our capital program. Our returns on investment over the last several years have been best-in-class, and we're investing in the same types of projects that generated those attractive rates of return. So with this outlook for strong volume growth, we are announcing 2 new projects today, our next Delaware processing plant, Yet II and our 13th fractionator in Mont Belvieu. We are also ordering long lead items for 2 additional plants in the Permian planned for early 2028. That is 8 plants over the next 2 years, giving us line of sight to an incremental 2.2 billion cubic feet per day of additional processing capacity and gross NGL production of approximately 320,000 barrels per day. For perspective, this incremental plant infrastructure alone would amount to the fifth largest processor in the basin. This type of volume growth and commercial success we're experiencing is driving more plant and field capital in the Delaware than in previous years. These projects represent more of the same from Targa, attractive investments across our integrated system. As we have talked about throughout 2025, we are in an elevated growth capital environment as we invest in G&P and Downstream infrastructure. Our larger Downstream projects, including Speedway and our LPG export expansion are set to come online in the second half of 2027. Following the completion of these projects, we expect to have lower downstream capital spending for years to come -- sorry, for years to come, while our EBITDA is expected to be meaningfully higher, which results in a strong free cash flow profile. In a high single-digit to low double-digit Targa Permian volume growth environment or about 3 plants per year, we would expect multiyear growth capital spending to average around $2.5 billion annually post Speedway. This compares to approximately $1.7 billion in the illustrative case we shared in 2024. Our updated illustrative case is higher because we assume around 3 plants per year versus 2 plants previously. We also assume proportional G&P field capital and Downstream spending, including fracs, residue projects and some carbon capture investment. We would note our post-Speedway multiyear growth capital assumes minimal NGL transport and LPG export capital for years. And based on our current visibility, we expect Targa reaching run rate adjusted EBITDA of over $6 billion following the completion of Speedway. This combination puts us in a position to continue to invest in growth while generating significant free cash flow for years to come. This continues to align with our focus at Targa, grow adjusted EBITDA, grow our common dividend per share, reduce our common shares outstanding, all with an investment-grade balance sheet and once Speedway is complete, also generate significant and growing free cash flow. Before I turn the call over to Jen, I want to thank our employees for their ongoing commitment to safety, reliability and delivering best-in-class service to our customers. Your efforts were essential to another record year for Targa in 2025, and we have already seen you rise to the challenges of managing successfully through the cold winter weather in January. With that, I'll turn the call over to Jen. Jennifer Kneale: Thanks, Matt. Good morning, everyone. In the fourth quarter, our Permian volumes averaged a record 6.65 billion cubic feet per day. up 10% from last year as strong producer activity continued across our systems. We indicated on our November earnings call that we had seen some producer shut-ins from sharply negative Waha pricing in the fourth quarter, but those volumes came back on our system, so we ended up with slightly higher fourth quarter volumes. In January, the impacts of winter storm fern reduced volumes across our operations. But thanks to the hard work of our employees, our assets proved resilient, remaining online and ready to receive volumes once temperatures improve. Our volume outlook is a result of the continued strong activity we are seeing from our customers across our G&P footprint. And as Matt mentioned, we had strong commercial success in 2025, adding approximately 350,000 dedicated acres. Also, we completed the acquisition of Stakeholder and 2 bolt-on producer transactions, adding approximately 2 million acres in areas of mutual interest and nearly 500,000 dedicated acres, adding to our long-term growth rate. In 2026, we look forward to placing our next 3 processing plants in service, including Falcon 2 in the Permian Delaware and East Pembrook and East Driver in the Permian Midland. We continue to expect our new plants will be much needed at startup. Our Falcon 2 plant is expected to come online ahead of schedule and is currently in start-up and our remaining announced plants underway for 2026 and 2027 remain on track. Also, we announced a new plant in the Delaware to accommodate the activity that we are seeing from our customers. Our Yeti II plant is scheduled to be in service in the fourth quarter of 2027. And as Matt mentioned, we are ordering long lead items associated with our next 2 Permian plants for early 2028. Additionally, we continue to add connectivity and redundancy to our Permian residue capabilities with our announced in-basin natural gas projects, including the Bull Run extension, Buffalo Run and Forza, which all remain on track, subject to the receipt of the necessary regulatory approvals. As demonstrated over the last number of years, we have taken a deliberate approach towards enhancing flow assurance for our customers and have a portfolio of gas takeaway to access multiple premium markets. The Blackcomb and Traverse pipelines, where we have a 17.5% equity interest are currently under construction and Blackcomb is expected to be in service in the fourth quarter of 2026 and to traverse in 2027. While we do see the Permian natural gas egress environment improving as we exit 2026, we expect natural gas prices at Waha to remain volatile throughout much of the year. Importantly, the prospects for sustained higher Waha prices with improved egress are a long-term positive for Targa and our Permian producers. Turning to our Logistics and Transportation segment. NGL transportation volumes in the fourth quarter averaged a record 1.05 million barrels per day, and our NGL transportation system continues to run full. Fractionation volumes averaged a record 1.14 million barrels per day, and our LPG export volumes averaged 13.5 million barrels per month. Our Delaware Express project, frac Trains 11 and 12, Speedway and our LPG export expansion all remain on track and will be much needed at startup. Train 13, which we announced today, will support continued NGL supply growth from our Permian systems as we look to 2028 and beyond. We are well positioned operationally for the near, medium and long term and believe that our leading customer service-driven wellhead-to-water strategy puts us in excellent position to continue to execute for our shareholders. Our strategy is unchanged as we execute the same core projects with strong returns along our integrated value chain in the same core areas where we have been building Targa for years. I will now turn the call over to Will to discuss our fourth quarter results, outlook and capital allocation. Will? William Byers: Thanks, Jen. Targa's reported quarterly adjusted EBITDA for the fourth quarter was $1.34 billion. a 5% increase over the third quarter. The sequential increase was attributable to higher system volumes and greater optimization opportunities in our marketing business. Full year 2025 adjusted EBITDA was a record $4.96 billion, a 20% increase over 2024, supported by record financial and operational performance across the company. We also benefited from stronger marketing with approximately $150 million of higher-than-expected optimization opportunities across 2025. We invested approximately $3.3 billion in growth capital projects in 2025 as we executed on our Permian and downstream expansions. Net maintenance capital was $226 million. We continue to return meaningful capital to our shareholders, opportunistically repurchasing $642 million of common shares at a weighted average price of $170.45 during 2025. Over the past few months, we have been focusing on completing and integrating our recent bolt-on transactions and our long-term capital allocation strategy is unchanged. We continue to expect opportunistic repurchases to remain part of our all-of-the-above framework in 2026 and beyond. At year-end, our net consolidated leverage ratio was approximately 3.5x, well within our long-term target range of 3 to 4x. Our available liquidity as of January 31, 2026, which includes funding the stakeholder acquisition and redeeming the 6.875% notes due January 2029 was approximately $1.9 billion. Turning to 2026. We estimate full year adjusted EBITDA to be between $5.4 billion and $5.6 billion, an 11% increase over 2025 based on the midpoint of our range. We expect approximately $4.5 billion of growth capital spending in 2026, supporting our major projects and continued volume growth. Our cash flows are greater than 90% fee-based, and we have hedged the majority of our non-fee margin for the next 3 years. The increasing fee-based margin and fee floors in our G&P business continue to provide cash flow stability and preserve the upside when commodity prices increase. To highlight the fee-based nature of our business, a 30% move higher or lower in commodity prices based on recent strip pricing would represent less than a 2% change relative to the midpoint of our 2026 adjusted EBITDA guidance. We expect to end 2026 with our leverage ratio comfortably within our long-term target range, even with our recent acquisitions and a strong growth environment driving higher growth capital spending, highlighting the continued flexibility and strength of our balance sheet. Additionally, as a result of the return of bonus depreciation and based on our current assumptions, we do not expect Targa to pay meaningful cash taxes for the next 5 years. We are in excellent financial shape with a strong and flexible balance sheet, and we are well positioned to continue to create value for our shareholders. And with that, I will turn the call back to Tristan. Tristan Richardson: Thanks, Will. Operator, please open the line for Q&A. Operator: [Operator Instructions] Our first question will come from Jeremy Tonet with JPMorgan. Jeremy Tonet: Just wanted to kind of start off with the outlook ahead for 2026. You've seen steady growth there, double digits, where as others in the industry, we've seen kind of some retrenchment in forward expectations. I'm just wondering if you could walk us through a bit more what's driving Targa resiliency and the growth outlook in '26 and versus others? And I guess, what do you see post '26 that gives you confidence in future above average growth? Matt Meloy: Yes. Thanks, Jeremy. I'll start and then if Jen or Pat want to jump in. For us, it kind of starts with our largest footprint across both the Delaware and the Midland, our strong producer relationships and just our existing customers that we have that have just continued to drill across our footprint. We've had a lot of commercial success as well in 2024 and 2025, which is kind of continuing to add to our already existing strong growth rate on existing dedicated acreage. So I think it's a combination of just existing customers continuing to drill and continuing to add to our footprint. And you saw that with kind of our 2 bolt-on acquisitions and some of the larger projects we talked about in 2024, just continuing to add volumes for us. So 2026 looks very strong. We're pointing to low double digits, and that's really pretty similar to what we saw at this time last year when we kind of guided to that growth rate for 2026. but all the commercial success we're having and just the activity we're seeing from our bottoms-up forecast from our producers is giving us even -- I'd say we're more positive on '27 and beyond from what we see today. Jeremy Tonet: More positive great to hear. I think that might tie into my next question. When you talk about the $2.5 billion of CapEx kind of like that mid-cycle, if you will. It's higher than before and has another plant, I think, than where you were before? And just wondering if you could bridge us through what the drivers are there? And is this an expectation of even better growth in -- versus what you thought before, which is what it sounds like? Jennifer Kneale: Jeremy, this is Jen. I think that what we wanted to do with that slide was really put on one page what we've been spending a lot of time talking to investors and potential investors about, which is really that next transformation for Targa.when our EBITDA is, as Matt said in the scripted remarks, over $6 billion once Speedway is online on an annualized basis. And as we think about growth from there, just the amount of free cash flow that we would be able to generate across the scenarios that we would consider to be reasonable for us thinking about the future in terms of, call it, high to low double -- high single-digit to low double-digit growth across our footprint. So I think we're supported by all the growth that we have seen from our existing contracts over the last couple of years. And then as we talked about on our February call last year and then on this call, we've just had a ton of commercial success. So hats off to our commercial team who, of course, are supported by our operations, but are just doing a really good job of identifying incremental opportunities for us to grow our already very large footprint. And as we think about the, what I'd call sort of multiyear average growth capital spend post Speedway and post our LPG export project coming online. What we wanted to demonstrate is that, one, we're growing off a bigger base. So when we previously put that information out, we've now grown for the last 2 years at a pretty good clip. So one, it's just off a larger base. And that's why we're now saying it could be, call it, 2.5 to 3 plants of spending in there, and that requires incremental field and compression spending as well. And then there's also incremental spending for residue, which has become a bigger part of our business versus where we were 2 years ago. And also, there's some carbon capture and other things. But I do think it's a really good indicator of just the amount of free cash flow we are going to be in a position to generate as we get Speedway and our LPG export expansion completed as those are really the 2 chunkiest projects that we have in our purview. Operator: Our next question comes from Theresa Chen with Barclays. Theresa Chen: I'd like to unpack that 2027 plus inlet growth assumption that high single-digit to low double-digit rate. How much of this growth is a result of growing with your producers for their plans? Are there key commodity price assumptions here that underlie this range? Is it contingent upon additional commercial wins or further tuck-in M&A? Any color here would be great. Matt Meloy: Yes, sure. And as we kind of look at our multiyear forecast, we'll get bottoms-up individual forecasts from our producers. And our larger independents and majors will typically get several years of forecast. Really, over the last 90, 180 days, we've continued to get revisions higher. And it's not just from one producer, it's from several producers. And I'd say that is more in the Delaware side than it is in the Midland. There's just kind of more activity and a more diverse customer set over there. So we're becoming -- the outlook is becoming stronger and stronger in the Delaware. We announced another Delaware plant today and 2 long lead -- additional infrastructure for 2 long lead plants. Both of those are likely to be in the Delaware. So that would make just a lot of infrastructure going in over there. And so that gives us just more confidence as we look to '27, '28 and even further out in our longer-term growth outlook. And when I said I think 2027 is going to be stronger, it's I would say it's going to be stronger than what we previously had expected at this time last year. We're not commenting relative to '26 or '25 growth. It's just as we look out for multiple years, we see a stronger growth rate than where we sat at this time last year. Theresa Chen: Understood. And just looking at the results to date, so much of the momentum recently has been a result of commercial success executed a while ago and now coming to fruition. And is a loaded term given the competitive environment in which you operate. On a go-forward basis, how should we think about the durability of your commercial success and your ability to replicate it over time? Matt Meloy: Well, I mean, I'd say what's great is even if we don't have a significant amount more commercial success, we're going to have really strong growth for years to come. If you just look at the millions of acres, we have dedicated. So what we've done is we've just added to our existing really robust growth profile from our existing customers, and we have a really good commercial team. And so if we can find accretive either bolt-on acquisitions or step-out projects, we'll continue to add to that. But I would say we don't need it to fill the plants up that we've announced, and we don't need it to continue to grow in the Permian. I think further commercial success would just be additive to the growth rate that we're looking on now. Jennifer Kneale: I'd just add, Theresa. We reached final investment decision on the projects that we move forward with based on the contracts that we have in hand. There is an assumption of future growth from contracts to be identified in the future or anything else. It's based on what is already executed and how we best position ourselves to service those already executed contracts as we move forward through time. Operator: Our next question comes from John Mackay with Goldman Sachs. John Mackay: I think I'll pick up on this thread a little bit more. You are -- it looks like you're pointing to continuing to effectively take share in the basin. I think Theresa kind of asked on this, but maybe I'll follow up. Are you guys still seeing the same level of margins you've seen historically? Or maybe more broadly, you can kind of talk about that margin per M trajectory you've been seeing? Jennifer Kneale: John, this is Jen. I think that, yes, you should expect that we will continue to be able to execute consistent with our track record as it relates to our returns. We've got excellent producers already under contract with long-term contracts. And I think we're doing a really good job of hopefully executing at a very high level for them. So it really all starts with our operations team, our engineering team, supply chain, getting all the assets that we need in hand that we can build so that we're in position to execute for our producers. And I really think it's some of our advantages around having the largest sour system in the Delaware, having the largest footprint across the entire Permian that puts us in position, as Matt said, to be able to do step-outs from a very economic perspective -- from a capital perspective and continue to generate returns, again, commensurate with the track record that we've been able to demonstrate. So this isn't us taking lower returns to continue to execute. I think it's really working very well with our producers to continue to show a track record of being in position with the assets they need to ensure that their volumes flow and doing a really good job for them is what continues to put us in a really strong position. And that's operations all the way from the wellhead down to the water, and we're really proud of how well our team is continuing to execute. John Mackay: That's absolutely clear. Maybe just a follow-up is you guys are talking about a lot of gas here. Maybe to share your kind of medium- and longer-term view on Waha at this point? Robert Muraro: This is Bobby. Yes, I think we are excited. There's been a lot of public commentary about the pipes that are coming online later this year. We'll be excited to see those pipes come online as well as others further out the calendar in '28. I think it's going to be what it's been in the last 10 years, which is going to be a bumpy ride as assets come online, we'll be in good shape on differentials, and then we'll fill those pipes up and new ones will come online. So when you think about the medium and longer term, I think we see in our view, more pipes coming after the ones that have already been announced. But it will be kind of the same oscillating mechanic where we felt the pipes basis gets rough and then new pipes come online and fix it and more people will have to underwrite more pipes going forward after the ones that have already been announced. John Mackay: Sorry, just to make sure we're hearing you right. I guess your view right now is the current set of pipes coming should be mostly filled kind of as they come online? Robert Muraro: I don't think that's right. I think they will fill up over time. I think they'll fill up probably, I'll say, faster than people expect at the end of the day with the results we're seeing in the Permian from our customers. But it is a ramp over time. At the end of the day, the day you turn on a 2 or 2.5 Bcf pipe, there is an all of a sudden 2 Bcf or 2.5 Bcf of new residue that day. So they do take a little bit of time to ramp up. Maybe you see a little bit more this time with shut-ins that we've heard about the Permian on other systems. But at the end of the day, they will take time to ramp up, but it's the same thing every time. It's the same story, just a different year. Operator: Our next question comes from Keith Stanley with Wolfe Research. Keith Stanley: First, I just wanted to clarify, I think you said $150 million of upside from marketing last year. What are you assuming on marketing for this year relative to 2025? And what potential opportunities do you think there could be to capture this year? Jennifer Kneale: Keith, this is Jen. That's right. In our scripted comments, Will said that for 2025, we had about an extra $150 million of marketing benefits. I'd say that consistent with what Bobby just answered, we believe that this is going to be a little bit of a bumpy ride as we move through 2026 around Waha pricing, particularly to the extent we have planned and/or unplanned maintenance from pipes that are taking Permian gas volumes out of the basin to the extent that, that occurs, that will create additional marketing opportunities for us. We're largely focused on making sure that our producer volumes move. We're in an excellent position to do that. And so as you think about our 2026 guidance, I think consistent with our past practice, we're very conservative about how we forecast marketing gains. We've got, call it, 1.5 months here of the year where we have really good visibility. And then we've got the balance of the year where I think there could be some incremental opportunities, but we haven't factored that in, in a material way. Keith Stanley: Got it. And second one, kind of following up on some of the earlier ones, but just taking the Delaware by itself, for example, you're building 4 plants now. You just said the long lead items for the next 2 plants here also in the Delaware, so that's 6 plants in the Delaware. How much of the growth outlook there would you attribute to the Delaware just booming versus Targa is taking market share or getting a disproportional amount of the market, given a competitive advantage? Matt Meloy: Yes. I mean it's hard for us to really know how much is market share gains. I don't know what's happening on other systems as we look out several years. I'd say what we've seen from several of our producers where we've had some underlying acreage dedications come back to us with revisions to the upside. In one producer, it might be 50 million a day, it could be 40 million a day, it could be 150 million a day. We've had several of those over the last 6 months. which is just adding to our outlook. I would suspect others are having that on other systems as well. So it's a little hard for us to know how much is just total growth from the Delaware versus share gains. We kind of learned a little bit about that in hindsight. I'd say we're pretty aware of all the opportunities out there. We don't win everything. I think we win our fair share, and we have really strong and active producers and just a lot of acreage already dedicated to us, and there's just a lot more activity on. Jennifer Kneale: I would just add that I think that the acreage that we have dedicated to us has shown a resiliency as well. As you've seen rig counts drop in the Delaware. I think we've had really good consistency as we've moved forward through the last couple of years, which we would expect to continue going forward. So some of it is also that we've gained market share as rigs have dropped from other areas, but it's not necessarily that we've had a lot of adds to our acreage that is already existing. It's more than -- I think we've had just consistency. And then just better results in that consistent activity on our acreage. Operator: Our next question comes from Manav Gupta with UBS. Manav Gupta: I wanted to ask you something which is more of an upstream question, but two of your biggest customers are very actively talking about it. They're basically saying, look, our Permian recoveries are improving as we put more science into it, whether it's AI, whether it's lightweight proppants, whether it's surfactants. And so they're basically saying, the Permian rates of returns are improving because our wells are performing better as more science is going into that. I'm just trying to understand based on what you're seeing out there, are you also seeing that as more of these newer technologies are going into Permian, the well recovery is improving, which is obviously very positive for Targa? Jennifer Kneale: Manav, I would just say that I think it's a combination of factors. It's, I think, really exciting for all of us to hear about the technological developments that our producer customers are making and their excitement about the implications for their improved efficiencies going forward and improved rates of return because of the success that they're having. I think that's part of what we're seeing. I think we're also seeing just the benefits of improving GORs in certain areas of operation, frankly, just more gas coming out of wells than was forecasted as well being a factor too. So for us, I think it's a combination of factors. The technological developments and the impact on individual wells, I think we really have to look to our producer customers and what they are saying for the real commentary around that. But I think there's a variety of factors that are contributing to us seeing more gas coming out of wells than were previously forecasted. Manav Gupta: Perfect. My quick follow-up is you did announce two small bolt-on deals, very interesting opportunities. Can you help us understand those two a little better how they came about and why they fit perfectly into Targa? Robert Muraro: Yes. This is Bobby. Both those acquisitions were from producers that we have really strong relationships with and have for a long period of time and discussing their plans going forward and how they're going to work at it seemed to make more sense for us to own those assets and build out the systems. And we're excited about it because it also gives us some assets in areas where we can go leverage and -- leverage the footprint and grab more acreage as we move through time. At the end of the day, it was kind of a testament to relationships we have with producers and working with them on a day-to-day basis to make sure they've got what they need to drill their wells and bring gas to us. Operator: Our next question comes from Michael Blum with Wells Fargo. Michael Blum: Maybe just to stay on the conversation around growth and what's going on out in the Permian with your producers. I was wondering if you could talk a little bit more about Slide 16, which references deeper zone development and maybe what your producers are seeing there and how that may be contributing to your robust outlook? Matt Meloy: Yes. What we've seen is, I'd say, some early activity from some of our producers in that zone. So most of our growth is from traditional formation, traditional zones, but we are starting to see more activity from a number of our producers in the deeper zones. So what we wanted to highlight is, as you look out over the longer term, this, as the Barnett, Woodford gets developed, it could add to our longer-term growth rate. There's some piece of that, there's a little bit that's in '26. And as you move out, there's some more potential as you go forward. But we kind of view that as more of an upside over the next several years that could get developed. And we're seeing more producers get active, and we've seen early well results be pretty positive there. Michael Blum: Okay. Got it. And then just in light of the volatility we've seen at Waha over the last few months and the marketing profits you captured in 2025. Can you just remind us how much open pipeline capacity you have to take advantage when spreads widen? And then I guess on the flip side, in your prepared remarks, you said you're going to benefit as Waha prices improve. So -- can you just, again, there just tell us, a, how much direct Waha price exposure you have at this point, which, at least I understand you hedge most of it? So just wanted to understand both sides of that coin. Matt Meloy: Yes, Michael. So we have, I'd say, significant transport positions to multiple locations. And as Jen kind of talked about this earlier, it is for flow assurance for our customers to make sure we can get it out. Our primary concern is making sure our customers can produce the gas and we can move that gas to market. So that's kind of where we start. Now a lot of that does create a basis position for us. And so we have the opportunity when there is some price spread to capture some of the differential on those transport positions. We do hedge a lot of that and try and reduce that risk over multiple years. We haven't outlined an exact amount of what that position is because it's frankly always changing, too. We're always hedging it. We're always trying to just make sure we have transportation to multiple markets, it's a fluid number. But that is what you see from us is when you see weak prices and even some volume downside from shut-ins, we do have an offset in the transportation position. For us, longer term, I think we benefit more by having plenty of takeaway higher Waha prices because a lot of our contracts are fee-based, but also fee floors. And so when Waha moves higher and we have NGL prices around where they are, you could see us benefit from some upside from higher Waha prices. And I would say I think we have more length there. So it's just kind of that in-between area where we're not really benefiting from marketing and we have low prices. That's really how we guide and factor in our multiyear forecast is in not being above the floors and not having a lot of marketing. So to the extent it moves up or moves down, I'd say we have some upside really in either direction. Operator: Our next question comes from Jean Ann Salisbury with Bank of America. Jean Ann Salisbury: One kind of bear case, I guess, what I've heard is that you've seen ethane recovery go up pretty materially as Waha price has been distressed over the last year or 2. Do you see any risk that once the Permian gas pipelines come on, Waha price is a little better that, that could be a headwind, at least a noticeable headwind, I suppose, to ethane recovery and therefore, volume growth? Matt Meloy: No. I mean, Permian is generally in recovery. You have a really significant dislocation. I mean what we see when there's -- when economics change is rejection out in other areas, whether you're in Mid-Continent or Rockies or a little away. But generally speaking, Permian has been mostly in recovery even in periods of kind of price dislocation. We've been in recovery, we would expect to be in recovery, and that's how we have kind of baked it into our forecast. Operator: Our next question comes from AJ O'Donnell with TPH. Andrew John O'Donnell: I was hoping I could just give a little bit more detail on the bridge on the new CapEx budget a step-up of $1.2 billion. Apologies if I missed this during the prepared. But curious if you could provide some detail on how much is being driven by the new plants and frac 13 versus additional field capital compression for the legacy system and your recent acquisitions? Jennifer Kneale: Sure, AJ. This is Jen. I think the easy items to bridge are the ones that you mentioned, right? You've got the Eddy 2 plant in the Delaware and you've got frac Train 3. And I think the cost of those are very much consistent with the costs that we've outlined before in terms of what a new plant or frac costs us. I think we also announced that the -- that we are ordering the long lead items for our next 2 plants in the Permian Delaware. You can assume that in our guidance, we've assumed that we move forward with those. Our general track record is we announced we're getting long lead items as we finalize location and some other key decisions and then we move forward with the final investment decision. So you can assume that there's spending around that as well. I think that we've also got a lot of field gathering and compression -- gathering lines and compression spending, and that's both to service what I'd call kind of our core contracts already in place and then incremental spending associated with the commercial success that Matt outlined in his commercial remarks, and we've got some hopefully pretty good information in our slides around our commercial success as well. I will say that we've also seen the lead times for items like pipe, compression and even some power generation assets get longer. So part of this is also we need to accelerate our spending to be in position to ensure that we can handle the growth that we expect coming to us in '27, '28 and really beyond. So we're also just trying to make sure that we don't put ourselves in a position where we can't continue to provide exemplary service to our producers. Andrew John O'Donnell: Great. And then maybe if I could just sneak one more in. Just the overall basin thinking about some of the higher GORs that you outlined in your deck. And just kind of wondering from that context, if we see overall Permian oil production flat in 2026, can you give us your latest updates on how you think overall rich gas production could trend in an environment like that, maybe exit to exit? Matt Meloy: Yes. I mean we've outlined in our investor presentation, we kind of talk about if crude is growing x, that means gas is going to grow y, and then we've outperformed that. And so if you look at the latest forecast that we use, we're not necessarily saying it's right, but there's a 4% spread would suggest if crude is growing x, gas is going to grow 4% higher than crude. If you look at recently, it's maybe even a little bit higher than that. So maybe it's even potentially more than that. And then we've typically, over the last several years, have outperformed basin. So that would point to our growth rate being even higher than that. So I think even in an environment where we have flat to modest crude growth, gas should grow higher from higher GORs and some of the zones that they're targeting just are more gassy and from our continued strong performance in the basin. So I think it points to a really pretty strong growth outlook for us even in a slow to modest growth for crude. Operator: Our next question comes from Ameet Thakkar with BMO Capital Markets. Ameet Thakkar: Just one quick one for us. It looks like you guys had a nice sequential increase in fourth quarter export volumes, but it's I think about 3% or 4% lower than it was a year ago. So as we think about the initial export capacity coming online in '27. Is your confidence of growing kind of export volumes ended with that any kind of based on success you've had in kind of your commercial commitments you've been able to procure already? Or is it somewhat kind of based on your forward view of kind of where the kind of the SB balance in national market? Benjamin Branstetter: This is Ben. We had a very nice fourth quarter on the exports, but we were impacted a little bit by fog there. And honestly, we're shaping up for a really nice first quarter as well. But as I think about how we view the export business, that's really part of our integrated value chain. And so as you see us announcing 8 plants coming across the Permian, those are integrated molecules that are flowing through our pipe, our frac and our export. And so we're really excited to have that export project coming online. We remain generally very well contracted across the dock. And honestly, we're having as many conversations that we've ever had about long-term supply kind of globally coming out of the Gulf Coast. Operator: Our next question comes from Brandon Bingham with Scotiabank. Brandon Bingham: Just wanted to touch on the EBITDA guidance for this year. Just especially where you came in on full year '25 and just the recent strong performance track record here. Just wondering what it would take to see you come in at the higher end and what you kind of see as some of the various puts and takes there, and specifically thinking about the commentary around continuous volatility in Waha and what that might do for the year? Jennifer Kneale: Brandon, this is Jen. I'd say the range is based on a number of cases that we run. So as we think about what would get us to the upside, I think the 2 biggest variables there would be if we just have volume growth be stronger than we are currently forecasting, wells come online more quickly and/or more volumes come from wells than we are currently forecasting, that would certainly be something that would, I think, potentially drive us higher. And then the other one, I think you appropriately mentioned at the end of your question, which is we haven't factored in a lot of marketing gains, and that's across NGL, gas and exports. So to the extent that we are able to move more volumes across any of those and benefit more than we're currently forecasting, that would also drive us, I think, higher -- to the higher end of the range. Brandon Bingham: Okay. Makes sense. And then just quickly wanted to go back. You mentioned in prepared remarks a comment about kind of commodity price sensitivity. Just kind of wondering if you could maybe break that out between oil, NGLs and gas, especially you have a dollar budgeted for 2026 for Waha prices. But I think Calendar '27 is trading nearly 3x that. So just trying to think through over the near term as these pipes come online? And just the commentary around Waha, what maybe some upside could look like as far as that's concerned and how the sensitivity might change between the 3 commodities? Jennifer Kneale: I would just say that we are really well hedged as it relates to our equity volumes. So when you think about our direct price exposure, we're really well hedged. So the move higher in prices, we'd be a big beneficiary there if prices moved above our fee floor levels. We haven't described where our fee floors are, but we've been essentially below fee floors for the vast, vast majority of months over the last 2 years. So that would result in EBITDA being higher. I'd say that we've had a point of view that I think has worked well for us over the last couple of years that we were going to have a lot of tightness in Waha pricing, and that's why you saw us hedge as much as we've hedged. So I would say that when you think about the streams, we probably have more exposure directly on our equity volumes to changes in natural gas liquids prices. But when you think about marketing opportunities in 2024 and 2025, we talked about the fact that because we do have a lot of transport to ensure our molecules flow, we have benefited from what we would call outsized marketing gains on the gas side the last couple of years. To the extent we see contango in the NGL markets, there, we've got good opportunity to utilize our storage in Bellevue to potentially be a beneficiary of that. We haven't really had that in some time, but we're sitting there with a really attractive position of assets if we do get those opportunities to be a beneficiary. Operator: Our next question comes from Jason Gabelman with TD Cowen. Jason Gabelman: I wanted to ask about the Downstream growth. You don't really talk about much additional capital into the Downstream part of the business after 2027. But it does look like, I guess, you'll be a bit short on Y-grade pipeline capacity. So how do you plan on managing those molecules as new fracs come online later this decade? And then any thoughts on additional fracs that you would need to build beyond the one announced today? Matt Meloy: Yes. Jason, I think as we look at our Downstream infrastructure, what we kind of talk about is as we get into the back half of '27 is having operating leverage and excess capacity on our NGL transportation once Speedway comes online. And then with building trains 11, 12 and 13, it should put us in a nice balanced position of having some excess capacity, but not too much on the frac side. So I think we'll be pretty well balanced on the frac side, and we'll have some capacity on the transport side when Speedway comes up. And as we're expanding our export facility, that should create some nice operating leverage for us as well as there's significant available capacity with LAP 4 when it comes up. So then as we're growing and these volumes are ramping, it will provide some period of time before we'll need another expansion on the export dock. So I think with our downstream side, the reason we're pointing to a little bit lower CapEx post '27 is we're going to have some operating leverage kind of through the footprint on the Downstream side. D. Pryor: But the last case that we put out there talks about additional potential fracs in those numbers as well as other downstream complement assets just not the bigger transport or frac... Matt Meloy: Yes, that's right. So then as you go forward post '27, it's really ratable fracs will be the large piece of the Downstream spend. William Byers: I'd just add for the bridge for us just remember, we have multiple medium-term flexible offloads in place right now as you see Grand Prix running full, and that ramps into when Speedway comes on in the third quarter of '27, a baseload of volumes to drive just very good project returns. Jason Gabelman: SP1 Got it. My quick follow-up just on Speedway CapEx, can you remind us how much of that is concentrated in '26 versus how much spend will be less than '27? Jennifer Kneale: Total project cost is $1.6 billion. I'd say we had a pretty good amount of spending on it in 2025. Spending in 2026 is more, and then we'll just be finishing it up in 2027. So we haven't broken out the cost publicly by year. But I'd say spending this year is more than it was last year. And then, call it, the balance of that will probably look more like 2026 than 2025 and 2027 as we finish up that project. Operator: Our next question comes from Sunil Sibal with Seaport Global. Sunil Sibal: So I wanted to start off on the LNG segment. It seems like operating costs have been trending pretty low there. I was kind of curious if there is any kind of onetime factors, which have helped you in 2025? Or is that more of a secular trend in terms of operating cost control? Jennifer Kneale: I think that their costs are really consistent with volumes moving through the system and when we bring new assets online. Any of the lumpiness that you see is really around when we've got turnarounds, and I think we do a really good job of disclosing that. So as you look quarter-to-quarter, that is what might be creating some of the variability that you're talking about, Sunil. Sunil Sibal: Total project cost is $1.6 billion. I'd say we had a pretty good amount of spending on it in 2025. Spending in 2026 is more, and then we'll just be finishing it up in 2027. So we haven't broken out the cost publicly by year. But I'd say spending this year is more than it was last year. And then, call it, the balance of that will probably look more like 2026 than 2025 and 2027 as we finish up that project. Matt Meloy: Yes, I'm sorry. I don't know that I followed that. Do you think -- could you say it again? Sunil Sibal: Yes. I was curious with all the acreage dedications that you are growing. Is there a way for us to think about the total inventory of volumes that you have or that you are building because of the virtue of the acreage dedications versus the current volumes that you are moving on your sales terms? Jennifer Kneale: Sunil, this is Jen. I think that part of why we described the incremental acreage dedications and with the bolt-on transactions, the very large area of mutual interest that is now dedicated to us is just really highlighting the fact that there is decades of drilling inventory on acreage that is already dedicated to Targa. So it goes a little bit back to some of Matt's earlier comments in Q&A that we are just sitting in a really strong position. We don't need to continue to execute commercially, but I know we've got the best commercial guys that are continuing to work day in and day out for their producers and for new producers. So we would expect to continue to add to that. But even if we didn't, we've got decades of really attractive inventory on our system, and that's necessitating the infrastructure that we are putting in place today. And that's really what is continuing to support this view that Targa has an exceptional strong medium- and long-term outlook. Operator: That concludes today's question-and-answer session. I'd like to turn the call back to Tristan Richardson for closing remarks. Tristan Richardson: Thanks, Liz. Thanks, everyone, for joining the call this morning. We appreciate your interest in Targa Resources. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2025 Q4 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Keith Neumeyer, Chief Executive Officer of First Majestic Silver. Keith, please go ahead. Keith Neumeyer: Well, welcome, everyone, to an excellent day for the company, and nice to see our analysts coming out with some good reports today on an update in silver prices, which is obviously nice to come out with fantastic results on an updated in metals. So thanks everyone for joining us today to discuss our fourth quarter and our year-end financial statements. And I hope that you've all read the news release prior to today's call. We have a full room here in Vancouver. We have Mani Alkhafaji, President and Chief Corporate Development Officer, here with us today; David Soares, our CFO; Steve Holmes, our COO; Samir Patel, our General Counsel and Corporate Secretary. We also have Darren Fernandes, Director of Finance. We also have Darrell Rae and Joel Faltinsky at Investor Relations of our team here. So if there are any questions, we will be passing the questions on to the relative staff that are currently present today in the room. And I'd like to pass the call over to Samir Patel before we continue. Samir Patel: Thanks, Keith. Before we begin today's call, I would like to remind you that we will be referring to certain non-IFRS measures when making certain statements regarding First Majestic Silver and its operations that constitute forward-looking statements in accordance with applicable Canadian and U.S. securities laws. All statements that are not historical facts such as statements regarding future estimates and plans or expectations of future performance constitute forward-looking statements that reflect the company's current views with respect to future events. These statements are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. We encourage you to refer to the cautionary language included in our news release that was disseminated earlier this morning and the disclosure on non-IFRS measures in our most recently filed management's discussion and analysis as well as the risk factors set out in our most recently filed annual information form. As a reminder, these documents, along with all of our continuous disclosure documents are available on SEDAR+ and on EDGAR. Investors are cautioned against attributing undue certainty or reliance on any forward-looking statements made during today's call, and the company does not intend or assume any obligation to update these forward-looking statements or information, other than as required by law. With that, I will turn the call back to Keith. Keith Neumeyer: Thanks, Samir. We do have a presentation that's available. It will be put on our website. But for those online today, you can see it as we go through the presentation. I'm going to pass the call on to Mani, who will be going through the presentation. So take it away. Mani Alkhafaji: Great. Thanks, Keith. Again, good morning, everyone. I appreciate you guys taking the time to join us. I'm going to start with the slide with the highlights titled. We did have a wonderful year. 2025 was transformational. We set out some key milestone, stretch targets, and we came with wonderful end to the year and a great year overall. We produced 4.2 million pure silver ounces in the quarter, just over 15 million for the year. From an equivalent stance, we came in with just over 31 million silver equivalent ounces. That's -- we'll touch on that in the next slide, but that came in higher than our revised guidance, which is great to see. Revenues, big milestones. We broke to $1.2 billion, almost $1.3 billion this year. That gives us obviously a lot of financial strengths that we see that trickling down to the bottom line. Again, you would have seen that in the news release. Our realized price, we came in for the quarter higher than the average, which, again, is a big testament to our strategies. Q4 average was just under $59 and for the year was $41.52. Interesting to see as well, our Mint, that's our new [ update ] to the business, had record after record quarters throughout the year and ending the year on a wonderful note. We generated just under $23 million from that operation. Cash flows, again, combined with the metal prices and the production, no surprise to see record cash flows coming into the business and hitting on these milestones. Our exploration program, again, was quite aggressive at the start, and we came in nicely with that, over 250 kilometers of drilling, great results that we've disclosed throughout the year and will be reflected in our annual information form at the end of this quarter. Just a quick second on that bar that you guys see on the slide. That's a very important KPI to First Majestic. We are the purest silver producer among our peers. About 50 -- for the year, it was 58%, but this number continues to improve, in Q4, was actually north of 60%. So as silver price continue to improve, our leverage materializes. Okay. Moving on to the next slide. Another big milestone for us is our free cash flow. And you see over the last few quarters, it's been steadily increasing. But in Q4 2025 was a step change for the company. Again, due to the operational discipline, the metal improvement and cost containment. We're very pleased with the performance. This gives us a lot of flexibility and obviously, capital allocation, providing -- investing back into the business, whether it's exploration, whether it's plant expansion, which we can touch on a bit later. But a wonderful trend to see, and we look forward to continuing this. Moving on to the next slide. Our guidance, if you recall, we did update our guidance. We set up the preliminary guidance in January of 2025. And in halfway through the year, we've updated it. We revised it upward. We've increased the production targets and improved costs. Nice to see that we came in pretty much at or better than guidance on both silver and gold. Silver equivalent came in right in the middle. One thing I do want to highlight that's impacted our silver equivalent as well as our all-in sustaining costs, which we do recognize that it was a miss on the cost side, but that's purely related to the conversion of byproduct metal to silver. The silver equivalent ratio did collapse towards the end, which is wonderful for silver, telling us that silver outperformed gold and base metal, but it did have about -- to put numbers on it, about 1 million -- 1.4 million silver equivalent ounces reduction in our production as well about a $1 increase in our all-in sustaining. So without that, our all-in sustaining would have been in the $20, which would have been right in the middle towards the lower end of the guidance, had we used the guidance assumptions. Okay. Moving on to the next slide, which is our 2026 guidance. So similarly, we are investing heavily, and we're continuing with our robust production for the year. We're targeting about 13 million to 14 million pure silver and just 110,000 to 130,000 ounces of gold and the balance is lead and zinc. We did change things a little bit for 2026. We have locked in the conversion ratio to 75:1 to avoids the noise that we were seeing pretty much in 2025. So that should -- we're going to lock in pretty much the assumption ratios on the metal prices. So we're not susceptible to external factors. The next slide. Some operational highlights. This is obviously throughout the year, we have been providing updates, but it's nice look back on the accomplishments. Gatos was a key highlight for the business. We did close this transaction in January of 2025, and we spent about half the year integrating this asset and it could not have gone any better. Smooth transition, smooth integration, and we're pleased to say that it's fully completed at this point, and it's nice to enjoy the dividends that we're getting from this operation. Beautiful assets, massive land position and lots of opportunities. We're still targeting a lot of low-hanging fruits in terms of cost reduction, in terms of near-mine reserve and resource growth. So look for more news on that. Santa Elena, it has been the gift that keeps on giving. We say this almost every news release and every now and then, we still have exciting stuff to talk about here. Obviously, we've had fantastic discoveries in this district. In the 10 years that First Majestic has owned Santa Elena, we've had 4 new discoveries, and these are massive achievements. The map on the right gives you a sense of what they are. So we've obviously had the Ermitaño mine that we're currently producing from. We've had Luna, but the more recent discoveries is Navidad and Santo Niño. We have put out a maiden resource at the end of last year on Navidad. Plenty of drilling and results have come through throughout the year, and that will be reflected in our 2025 annual information form, which will be published before the end of the quarter. We are also investing in plant expansion at Santa Elena. Again, we see a lot of value, a lot of growth opportunities in this operation. It is a massive district. It comes with 102,000 hectares. And again, with the exploration success that we've seen, it gives us confidence in investing. So we're taking the plant from about 3,100, 3,200 tonnes per day to 3,500 at a sustainable level. we're expecting to get to this level in H2 of 2026. I did touch on Gatos. We're also expanding the throughputs at this operation. So we have a contractor that's been engaged at the end of last year and continuing, obviously, right now, we're targeting mine throughput of about 4,000 tonnes per day at a sustainable level from about 3,500. San Dimas, same thing, massive districts, plenty of exploration success that we'll be discussing in our annual R&R updates. And La Encantada has been an exciting turnaround for the story or for the portfolio. It is our smallest mine, but it is our purest silver producer, 100% silver. Came in with a beautiful Q4, produced about 1 million ounces, which is nice to see this operation turning around after the water challenges and the haulage issues that we've experienced. We are internalizing haulage as well over here. So we're anticipating further cost improvements and operational efficiencies. Okay. Moving on to the next slide. Just some further consideration. We do obviously focus on safe production, and it's nice to see us coming in with our TRIFR and LTIFR for numbers for the year, putting us in really truly world-class measures. Safe production gives us the production milestones that we're getting. So we're continuing with that. Financials, a couple of things to mind. We did hold some inventory at end that wasn't reflected in our revenue. That becomes part of -- it's either raw material for the Mint or just timing differences that would have gone flushed out in Q1. The Mint, I did touch on that, did have a wonderful year and quarter. For the year, the revenue was just under $50 million, but the profitability was about $24 million for the year. One thing that we don't -- that's not reflected in our income statement, but it's important to recognize is the marketable securities that we hold. It did have an impressive movement in the year and in the quarter. So for the year, our position has increased by about $140 million. That's not included in our income statement. It is reflected in our balance sheet. So just keep that in mind. And we did recognize the provision that was disclosed at the end of last Q3 results. We did take a provision on that in the income statement. Important to recognize that this amount has not been paid as we do continue conversation with SAT, and we're cautiously optimistic about where things are going there. A couple of things we want to highlight again, nothing new. Being in Mexico, there is obviously some cash payments that will be hitting us in Q1 and delivered in Q2 related to 2025. We obviously had a wonderful year in 2025. We have some cash true-up payments that will be made before the end of the quarter. So that will be reflected. Moving on to the financial strengths. The slide speaks for itself. The cash flow is trickling to the treasury, which is wonderful to see. We're sitting with just under $940 million in the bank between unrestricted and restricted cash position. Our working capital is $733 million. That is including some marketable securities that you see on the slides. Like I said, we've done very well with those, and we're pleased to be shareholders of these companies. We did close the best terms in the mining industry when it comes to convertible notes that we've done in December. The coupon rate on this is 0.125%, which is wonderful. So we're glad to have the support in the market. Moving on to our dividend policy. So we did declare dividends for Q4, but it's important to recognize we're also seeing a lot of confidence in our balance sheet and our cash flow to the point that we have declared an increase. We've effectively doubled our dividend policy effective 2026. So that will be reflected on revenue earned for Q1 of 2026. So that went from 1% of the top line to 2% of the top line being revenue. And lastly, some of the catalysts it's -- we're blessed to have 3 world-class districts in our portfolio, and we see a lot of value in the drill bits. So you see we're coming -- we have declared 266 kilometers of drilling across all the operations, which we're quite excited about, plenty of targets that we'll be chasing. Our updated reserve and resource will reflect a lot of the success that we've had from 2025. So look for that, that will likely go out before March 31. And continued strengthening of the balance sheet. Metal prices have obviously -- are better than they were in Q4. Q4 is wonderful. You can imagine what Q1 and hopefully, the rest of 2026 will look like for First Majestic. With that, that concludes our prepared slide deck. We'd like to open it up for Q&A if there's any. Keith Neumeyer: Well, thanks, Mani, for doing that. And anyone who wants to ask any questions, we're available. Operator: Thank you, Keith. [Operator Instructions] And the first question today will come from Heiko Ihle with HC Wainwright. Heiko Ihle: Keith and team, congratulations on a good quarter here. Keith Neumeyer: Thanks, Heiko. Heiko Ihle: We're close to 2/3 through Q1 right now or at least we're in the second half of the quarter. Metal prices have obviously been extremely volatile, a bit of unprecedented times here. I heard that some of the refineries have been putting off taking products from some sellers for capacity reasons. Cost wise, obviously, there are some changes. I guess the question is, is there anything quantifiable that you're willing to point out on this call that you encountered this quarter related to costs or shipments or anything unexpected that maybe we don't yet account for in our models? Keith Neumeyer: Well, the refineries have suspended financing, and that's really the biggest issue. So I think it's if you're a small retail store in Miami, for example, and you're used to -- people are walking in their front door and selling you silver, that small retail store would collect x amount of ounces over a period of a few days. And it's a cash flow issue, right? So they would then phone up the refinery that they would normally use for -- that would buy that metal from them to melt it into other products, and they would get financing for that. So that would keep that business operating and cash flow coming in. What's happened is because of the tightness in the market and the volatility in the market, the refineries have told everyone, they're no longer financing. So it's really hurt the retail buyers of metal because they just simply can't buy the metal anymore because they have to wait 30, 45 days and sometimes even longer than that, depending on the quality of the metal that they're buying. For us, it doesn't affect us in any way. We don't finance our metal. We -- if you're a smaller producer, you may be affected because you need the cash flow to finance your business. For us, we don't have to do that. So we wait for outturn. And so yes, it doesn't affect us. Heiko Ihle: Fair enough. And then just to clarify, you got 266,000 meters of exploration plans this year. Just the costs that you're seeing and availability of rigs, I assume, is no issue. Mani Alkhafaji: Yes. The beauty thing with that, sorry, this is Mani. We have a contractor who basically does most of our drilling with long-term contracts. So our costs are relatively contained. With that being, obviously, First Majestic with a big footprint in Mexico, we have -- we're able to have access to resources. So the number of rigs are available to us. So no concerns. Operator: The next question will come from Alex Terentiew with National Bank. Alexander Terentiew: Nice quarter. Nice to see your cash jump as much as it did there, which kind of leads me to my question. It's a nice problem to have or you can debate whether it's a problem or not, but cash is going up. I know you guys are spending a bit more on development this year and bumping your exploration or keeping your exploration nice and strong. But how are you guys thinking about the cash and what to do with it at these silver prices, your free cash flow is going to be -- should be strong again in 2026. Is there other thoughts for additional capital returns to investors? Or -- and obviously, Jerritt Canyon might play into this as well. So maybe just kind of wrapping a question on your thoughts on Jerritt Canyon in there as well here. Keith Neumeyer: Sure, Alex, and thanks for your report today. It was quite good to see. Yes, capital allocation there is a tax issue that is still pending. And the market is well aware of that issue. And it's something that the team is actively in discussions with to solve. And we hope that 2026 is going to be the final year that, that issue will be behind us after that starting back in 2012 that we inherited in 2018. [ So that's one issue that we hope to see. ] We haven't done any share buybacks in Q4, but we always have that option to do that as well. We did increase the dividend. There will be some news coming on Jerritt Canyon over the next couple of months. So I would suggest people wait for that. And being the CEO for 20 some, 23 years, it's kind of nice to see $1 billion [ in cash ]. So we're not about to spend it anytime soon. Alexander Terentiew: Okay. Fair enough. And just one little accounting question. Realized silver price came at $59,, average price in the quarter, I think it was $54. So is that -- I'm guessing part of that could be just timing of sales, but it's also -- do you guys factor in final sale on provisional pricing settlements into that? So if there's a positive adjustment, you kind of factor that into the quarter's realized price. Is that how your accounting works? Mani Alkhafaji: Yes. That's one part of it, Alex, due to the concentrate sales. But also we do have a weapon that not many -- no one else really has. We have the Mint. The Mint's recognized $69 average price [ result and that accounts for the overall number ] -- that's about 12% of our production that went to the Mint in Q4, of the doré production, I should say. Operator: I will now pass the floor over to Mr. Darrell Rae, Investor Relations at First Majestic Silver to take us through questions submitted through the webcast. Darrell Rae: Yes. We just have a few more, team. One relates to a couple of questions on this, but congrats on the solid results at the Mint, do you have any plans to expand First Mint? And do you want to elaborate on that for us? Mani Alkhafaji: Yes. So keep in mind, the Mint is less than a year, is about a year old. So the ramp-up has been pretty exciting, pretty quick. The answer is yes, we do plan on expanding. The facility is capable of further expansion. We're working diligently on obviously a marketing strategy to get the name out there, and it's been quite effective. So we'll keep working on that. Darrell Rae: Okay. Then we had a few questions on -- along the lines of congrats on the strong average selling price versus the COMEX in the quarter. Are you hedging prices? And would you consider a direct-to-market selling in the future? Keith Neumeyer: We have interestingly enough, been contacted by our direct buyers over the last month or so. We did assist one U.S. buyer with some ounces in Q4. It's not a strategy that we normally follow. It doesn't really make a lot of sense for us to do that, and we don't hedge. We're fully exposed. I think our investors, our shareholders who own First Majestic would not quite appreciate us hedging. So we just simply don't do that. Darrell Rae: Okay. And probably the last question, just kind of looking through these is around silver purity. Nice to see your silver purity at 60%. Do you have any plans to buy a late-stage developer? Or what are your plans to maintain your focus on silver? Keith Neumeyer: Well, as Mani said in the presentation, our silver purity is very important to us. It's a major KPI for us. So it's nice to have gold. Gold is a very stable, more stable than silver, as I'm sure all the listeners are aware of. But the -- we're always going to maintain as much purity in silver as we possibly can. But silver mines are hard to come by. They're pretty rare animals. So we're always looking around for the next big acquisition. So stay tuned. Darrell Rae: That's great. Okay. And I know we're getting close to the top of the hour. Maybe one last one. Any update on Jerritt Canyon, when a restart may happen or any general update on Jerritt? Mani Alkhafaji: Yes. So we'll -- Keith touch on that. We're going to be putting a stand-alone update on Jerritt Canyon once we have the plans and numbers finalized. We're hoping for the end of the quarter. That's still the plan. You can imagine First Majestic, our management team is focused on Jerritt Canyon now, now that Gatos is integrated and closed. So we're putting a lot of attention, and we'll be sharing that once ready. Darrell Rae: Okay. That's it from the Q, Nick. Operator: Showing no further audio questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Keith for any closing remarks. Keith Neumeyer: Thanks for everyone to join us today. And if there are additional questions, please feel free to contact us. I think you know who you are and how to contract us. So we're always available. So Darrell and Joel and Mani and myself, feel free to reach out. We'll be at the PDAC coming up in the next few weeks as well. We hope to see you at [ an important ] event on the Monday evening for further contact or questions. Operator: This brings today's conference call to a close. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Welcome to the Invitation Homes Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead. Scott McLaughlin: Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Scott Eisen, our Chief Investment Officer; Tim Lobner, our Chief Operating Officer; and Jon Olsen, our Chief Financial Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our fourth quarter 2025 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com. Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other nonhistorical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2024 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas. Dallas Tanner: Good morning, everyone, and thanks for joining us today. I want to start by thanking our residents for the trust they place in us. That trust is central to our business, and we work every day to earn it through strong service, clear communication and a better resident experience. This morning, I'd like to spend a few minutes on 3 areas: First, housing affordability; second, our recent acquisition of ResiBuilt Homes, which gives us in-house development capability; and third, our long-term objectives as we head further into 2026. Let me begin with housing affordability, an issue that continues to draw significant attention and represents a significant challenge for many Americans. Renting provides an attractive alternative for many households, which is why since 1965, about 1/3 of all Americans have rented their home. Yet with only 10% of multifamily apartments offering 3 bedrooms or more, there is a clear gap in family-oriented rental options. This is where we're proud to lead, providing homes for growing families seeking value, services and convenience in the neighborhoods they care about. As a result of this focus, we have a clear view of the needs of our customer base, including many first responders, health care workers, teachers, veterans and other vital community members. We are committed to providing them with well-maintained, high-quality homes. And that commitment matters even more today as higher home prices, elevated interest rates and large upfront costs have put buying a home out of reach for many households. According to data from John Burns, residents in our markets save nearly $12,000 a year on average by renting their homes, helping families manage their budgets, build savings and access schools and neighborhoods that might otherwise be out of reach. And for residents ready to take the next step, we help them prepare for it. Historically, more than 20% of our move-outs have been residents who purchased their own home. One way we support that journey is by offering a free company-funded credit building program that reports positive rent payments to the credit bureaus. This allows our residents to build credit from the rent they already pay with us, a benefit most smaller landlords don't or can't offer. We have more than 160,000 residents today currently enrolled, with residents having seen an average credit score increase of 50 points. This strengthens their financial foundation, lowers borrowing costs and improves their ability to qualify for a mortgage when the time is right. Of course, housing affordability is fundamentally a supply issue, which brings me to my second point. One of the most constructive ways we can help is by adding more homes to the markets we serve. While our homebuilder partnerships have supported that effort for years, our acquisition of ResiBuilt expands it even further and improves our control over cost, product quality and delivery pace. ResiBuilt is already delivering homes at a pace of over 1,000 homes per year in its Fee-Built business. We expect to grow on that foundation over time to add even more high-quality homes for Americans where demand remains strong. And that leads me to the third topic I outlined this morning, which is our long-term objectives. We laid these out at our November Investor Day, and they continue to guide how we're going to operate in the future. They include: first, delivering attractive same-store NOI growth; second, allocating capital thoughtfully across accretive growth opportunities and share repurchases; third, using our scale and technology to drive efficiencies and elevate the resident experience; and fourth, maintaining a strong balance sheet. Looking back over the past year, we made meaningful progress on each of these priorities. We continue to strengthen our platform and improve the resident experience. We took an important step toward expanding future housing options with the ResiBuilt acquisition. As we move further into 2026, we are reaffirming these objectives with a focus on controlling what we can control. That discipline will continue to guide our decisions as we work to deliver value for residents and shareholders, while expanding housing choice and flexibility in our communities. At the center of our work is a commitment to the people we serve and the people who make our progress possible. To our residents, associates and shareholders, thank you for your continued trust and partnership. Now before we turn the call over to Tim to discuss our operating results, I've asked Scott Eisen to share a few more details on the ResiBuilt acquisition. Scott? Scott Eisen: Thanks, Dallas. We're excited to welcome the ResiBuilt team to Invitation Homes. This acquisition accelerates our in-house development capabilities while keeping our upfront approach asset and capital light. ResiBuilt is a best-in-class builder of single-family rental homes, having delivered over 4,000 homes since 2018 in Georgia, Florida and the Carolinas. Around 70 ResiBuilt employees have joined us, and the team will continue operating under the award-winning ResiBuilt brand. Leading the platform is Jay Byce, a highly respected leader in the build-to-rent development space. Jay will continue serving as President of ResiBuilt and report directly to me. Today, ResiBuilt has 23 active fee built contracts with over 2,000 home starts planned for 2026 and beyond. We expect nearly all near-term activity to remain third-party fee-based, generating capital-light earnings and providing modest accretion to 2026 AFFO. Beyond this currently contracted work, ResiBuilt offers opportunities to develop around 1,500 lots in Atlanta, Charlotte and Orlando. Over time, we expect to selectively develop homes for the Invitation Homes balance sheet and for our JV partners. Together, ResiBuilt capabilities elevate our long-term supply strategy by giving us greater command over product, location and timing. We expect to unlock new operational efficiencies, achieve more seamless integration and gain stronger control and foresight across our growth pipeline. These capabilities also provide additional flexibility while complementing the strong relationships we maintain with our national homebuilder and joint venture partners. In short, ResiBuilt strengthens our foundation for future growth and expands the housing options available to families across our markets. With that, I'll turn it over to Tim to walk through our fourth quarter and full year operating results. Tim Lobner: Thank you, Scott, and good morning, everyone. Our fourth quarter and full year operating results highlight the strength of our platform, the dedication of our associates and the trust our residents place in us. For the full year 2025, we delivered solid same-store performance with same-store NOI growth of 2.3%, finishing above the midpoint of our guidance range. This was driven by 2.4% core revenue growth and 2.6% core expense growth. In the fourth quarter, same-store NOI grew 0.7% year-over-year, supported by 1.7% growth in core revenues and a 4% increase in core expenses. Resident satisfaction continues to be a central focus and a differentiator for Invitation Homes. Turnover remained low during 2025 at 22.8%, consistent with the prior year and average length of stay remained well over 3 years. In addition, same-store average occupancy for the year was 96.8%, landing at the high end of our 2025 guidance. These metrics all underscore the stability of our resident base and the quality of the service we provide. Turning now to same-store leasing performance. Fourth quarter blended rent growth was 1.8%. This reflected strong renewal rent growth of 4.2%, which more than offset a 4.1% decline in new lease rates, given that renewals account for about 75% of our total lease book. In January, occupancy held just under 96% and blended lease rate growth improved by 30 basis points from the prior month to 1.5%. Renewal growth was roughly flat with December at about 4%, while new lease rates were down 4.2%. Performance over the past few winter months was broadly in line with our expectations for this time of year and reflects the effect of targeted specials in some of our slower markets where supply has exceeded near-term demand. These concessions helped support steadier occupancy through the softer seasonal period, which should better position us as we move into the spring leasing season. Looking ahead, we remain fully committed to achieving the $0.14 to $0.20 of incremental AFFO per share growth over the next 3 years that we expect on top of our baseline growth as we outlined at our Investor Day. Operational enhancements are expected to provide roughly half of the projected AFFO growth, and our team remains focused on executing the initiatives to unlock this incremental value. In the meantime, our mission of elevating the customer experience continues to guide our decisions and our daily execution. We are making steady progress modernizing our service model, expanding the use of centralized functions where they can improve speed, consistency and quality and giving our teams better tools to serve our residents more effectively. These efforts also tied directly into how we control the controllables across the business. There's still more work to do, but we continue to believe our initiatives will drive higher satisfaction and stronger long-term operating performance over the next few years. I'd like to thank all of our teams for their commitment to this work and for the progress they're delivering. With that, I'll turn the call over to Jon. Jonathan Olsen: Thanks, Tim. This morning, I'll cover 3 topics: First, our balance sheet and liquidity position; second, our fourth quarter and full year financial performance; and third, our 2026 guidance. Starting with the balance sheet, we continue to maintain a conservative leverage profile that supports our investment-grade ratings. We ended the year with $1.7 billion in total liquidity, including unrestricted cash and undrawn capacity on our revolving credit facility. In addition, our year-end net debt to adjusted EBITDA ratio remained at 5.3x. Approximately 94% of our total debt was either fixed rate or swapped to fixed rate and approximately 90% of our wholly owned homes were unencumbered. We have no debt reaching final maturity before June 2027. As previously announced, in October, our Board of Directors authorized a $500 million share repurchase program. Since that time, we've repurchased 3.6 million shares totaling approximately $100 million. We see meaningful value in our shares and expect to continue repurchasing as opportunities permit. Turning now to our financial results. Core FFO for the fourth quarter increased 1.3% year-over-year to $0.48 per share, while core FFO for the full year was up 1.7% to $1.91 per share, primarily due to NOI growth. AFFO for the fourth quarter was generally flat year-over-year at $0.41 per share, while AFFO for the full year grew by 1.8% to $1.63 per share. The last thing I'll discuss is our full year 2026 guidance. This includes our expectation for same-store NOI growth in a range between 0.3% and 2%, driven by expected same-store core revenue growth in a range between 1.3% and 2.5% and same-store core expense growth in the range between 3% and 4%. Our same-store core revenue growth guidance assumes average occupancy of 96.3% at the midpoint, while we expect same-store blended rent growth in the mid-2% range. In addition, our outlook incorporates approximately $550 million of dispositions at the midpoint, which we expect to serve as the primary funding source for additional share repurchases and $250 million of anticipated wholly owned new home deliveries at the midpoint. Together, these assumptions result in full year 2026 core FFO guidance of $1.90 to $1.98 per share and AFFO of $1.60 to $1.68 per share. For complete details of our 2026 guidance assumptions, including a bridge from 2025 core FFO to our 2026 guidance midpoint, please refer to last night's earnings release. As we embark further into the new year, we believe our operating discipline, capital allocation strategy and strengthened development capabilities support our ability to remain nimble and focused while continuing to serve residents with quality and genuine care. Combined with a solid balance sheet, clear priorities and steady progress across the business, we believe we are well positioned to deliver long-term value for our shareholders and the families who call our homes their own. That concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Jana Galan with Bank of America. Jana Galan: Thinking about your expectations for same-store blended rent growth in the mid-2% range. Just curious kind of the kind of quarter-to-date. It sounded like you said 1.5% so far for blended lease growth. Just how does that track? And then how are you kind of anticipating the peak leasing season to play out this year? Jonathan Olsen: Jana, it's Jon. I'll take the first part and then see if Tim wants to add any color. I think the mid-2% blend aligns with where our guidance is coming out. I think 6, 7 weeks into the year, we've only just gotten into peak leasing season. So I think it's a little bit premature to draw any conclusions based on what we've seen thus far. I would note that in terms of top of funnel demand, lead volume feels very healthy compared to last year. I think the challenge for us at the moment, and this was true in the fourth quarter as well, was just the amount of available inventory on our book and in some of the markets where we operate. So I think time will tell. We'll know a lot more about how peak season shapes up the next time we get together. But I would note that each of the last few years, the nature, timing and kind of shape of the demand curve in peak season has changed. So we just want to be we want to be judicious in terms of the assumptions we make about the blend. Tim Lobner: Thanks, Jon. And I'll add, look, supply and demand dictates our pricing. Supply, we talked about this on past calls, has been slightly elevated in a few of our core markets, namely Florida, Texas and Arizona. But we are seeing those supply levels come down. And as Jon mentioned, our peak season really starts right after Super Bowl, goes into mid-summer. We're seeing healthy demand, and we look at that through a variety of different metrics, but our lead volume remains strong, clearly a strong indicator that there is demand for single-family housing. We will continue to see over the next couple of months, our spreads between renewal growth and new lease growth narrow as our new lease growth expands. Right now, I'll add that we don't have any concessions on our scatter site product. We use that tool as we have in years past to incentivize residents during our slower season. Right now, the only specials that we have going are on our build-to-rent communities, and that's pretty customary for developers and investors during lease-up to achieve stabilization. So we're really happy with the supply and demand fundamentals as they're heading into peak season right now. Operator: Your next question comes from the line of Eric Wolfe with Citi. Eric Wolfe: I think some drafts of the institutional investor ban have been circulating through Congress. I was just curious if you could comment on sort of what you would like to not see in that bill versus what you're advocating for, sort of how you hope the legislation ultimately looks? Dallas Tanner: Eric, this is Dallas. Thanks for your question. We're certainly all over it, as you'd expect. And I'd just, at a high level, say that we've been encouraged by the discussions with policymakers on both sides of the aisle through this process. Obviously, the well, the tweet, I should say, and then the EO was something that I don't think the industry really expected. That being said, we have a sensitivity and appreciative nature of the focus being on this issue around affordability. I believe through the trade association, also the work that we've been doing with the companies in the NRHC, I believe we've been able to highlight appropriately where SFR and more importantly, professionally operated single-family rental lives in this -- in the broader ecosystem. That being said, I think it's a little too early to speculate on what we what we do or don't want to see. In some regards, I think the industry is hoping for clarity. I think we like the idea of having some clarity of what you're able to do versus maybe what you're not able to do. It certainly feels like BTR and the production of new product is something that feels pretty favorable based on the conversations we've been having. So we view that as a positive. We're excited about that and what it means for both the way we work with our current builder partners and also what we can do now with our own platform and ResiBuilt. During these conversations, the focus has certainly just been on affordability, path to homeownership and to create sort of lanes for folks that want to transition into homeownership over time. And as you guys are well aware, we've been hyper focused on that latter point really for a couple of years now and making sure that we have positive credit reporting. We have currently about 160,000 residents enrolled in positive credit reporting. We've seen credit scores go up by 50 basis points. So I think all these facts have also been very helpful as we've been talking with policymakers around how SFR can fit into the broader ecosystem. And I think the important part here is that we want to meet customers where they are. And there's certainly a number of customers, we see it in our business day in and day out that transition from rental to homeownership. I think in the last quarter, it was around 16% or 17%. Traditionally, it's been between 20% and 25%. We view that as normal. But with the differential in costs being about $1,000 a month cheaper to rent than to own, not including the down payment burden and then the other things that go into homeownership, we know we offer a pretty attractive value to customers, and they continue to tell us that, both in our surveys and as we work for ways to refine and improve our processes. So I think that's all I can say from a legislative perspective. We're certainly engaged. We're having great discussions, and I feel like it's been candidly pretty collaborative. Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin Wurschmidt: So I appreciate kind of the decision to step in and buy your shares here and comments around being a net seller and using some of those proceeds to buy back shares. But I guess, Dallas, given your comments about being encouraged with what's happening on the regulatory front, Tim mentioned you're starting to see supply moderate. What would it take for you to really ramp up the buyback even further given that meaningful value that you referenced you see in shares today? Dallas Tanner: Thanks for the question, Austin. I want to echo what Jon said in his prepared remarks. I mean we see real value there in terms of where the shares are currently trading. We are clear about that at Nareit at the end of the year. Now we certainly have limited windows where you can sort of operate. And then at the end of the day, and I think you guys know us about us, from a capital allocation perspective, we also want to be moderate. We know that we have opportunities on the horizon, both with external growth and some of the opportunities that we'll look at over the coming year. But I think for us, it will be about when the opportunities are available to us, as Jon said, with always thinking about where our current cost of capital is and highest best use on a risk-adjusted basis for economic returns that make sense for our shareholders. So you can certainly argue that if the shares continue to trade in this range that on a risk-adjusted basis, it can make sense to continue to be active there. Operator: Your next question comes from the line of Steve Sakwa with Evercore ISI. Steve Sakwa: I was wondering if you could provide a little more commentary around your expense growth assumptions. I know that you guys did a very good job containing expenses and I think handily beat your initial expense outlook for '25. I know you put a few assumptions around taxes and insurance for '26. But maybe just speak to some of those numbers, and they seem a little bit elevated, but maybe there's some tough comps going on. So any clarity around expense growth would be helpful. Jonathan Olsen: Yes, Steve, thanks. I think a couple of things going on there. With property taxes, obviously, the outcome in 2025 was pretty favorable relative to our guidance. I think it's worth pointing out that we had a fairly sizable good guy in Texas last year. And absent that, property tax growth would have been closer to the mid-4s. So the range we've articulated in our guidance, I think, is generally consistent year-over-year. With respect to insurance, a couple of things going on there. 2025 was a very favorable year for us. It creates a bit of a tougher comp. I think if you look at the property market, we think that, that is going to be a very constructive renewal. It's in the general liability, excess casualty and auto market that has become materially harder and where we think we'll see some outsized increases year-over-year. So when you put it together, that's the driver around the insurance expense growth. Now our policy year runs from March 1 to March 1. So we'll be buttoning that up in the next 1.5 weeks, and we'll have more information that we can share. Certainly looking at all the levers we can pull to try to drive a better outcome, but we're not going to change the way our program is constructed. We want to make sure that we are well insured. And the insurance market has sort of ebbs and flows similar to other markets. If you look at what that implies for overall controllable expense growth or all other expense growth, I guess, I should say, it's really in the range of 1% to 2%. So we think our cost controls continue to be effective. We continue to be laser-focused on trying to make sure that we are being as efficient as we can be. I think the other thing I would call out with respect to expenses is something that we included in our earnings bridge. I think several of you noted it, but I would just point out that we have incorporated in our bridge an estimate of $0.02 per share related to advocacy and other costs. I want to be clear that, that is an estimate. We've incurred some limited costs to date and the timing and magnitude of any additional costs we incur is a bit of an open question. But we wanted to include something there in the bridge just to be transparent about the likelihood that there will be costs associated with navigating the current regulatory backdrop. Operator: Your next question comes from the line of Brad Heffern with RBC. Brad Heffern: On the repurchase, I was wondering if you could talk about what the rough maximum amount is that you can accomplish in any given year without running into tax issues or needing to issue a special. I know it varies based on what exactly you're selling with the gains on sale, et cetera. But I'm kind of wondering if the guidance assumes a number that's sort of close to what the annual maximum might be or if there's upside to that? Jonathan Olsen: Thanks. I would just point out that we're not going to get into any specifics about the quantum of share repurchase embedded in guidance. But I would say that as Dallas noted and as I think I touched on in my prepared remarks, when we see a material disconnect between where our shares are trading and what that implies as far as the value of our portfolio and what we view the actual value of our assets to be, we have to evaluate that as an opportunity for capital deployment, right? And if we look at the relative risk-adjusted returns of the various alternatives available to us, it is hard to conclude that share repurchases aren't a very, very compelling use of funds. So I think what we've outlined in our guidance in terms of capital allocation activity sort of suggests that there will be excess disposition proceeds that should the shares continue to trade at a level that is meaningfully dislocated from the value of our assets, suggest that we'll be active in the market buying back shares. Operator: Your next question comes from the line of Haendel St. Juste with Mizuho. Haendel St. Juste: I wanted to follow up on Jana's question on blend. I appreciate the color, Jon, but I'm still having trouble, I guess, getting to the mid-2% that you mentioned. So maybe some more color on what you're implicitly expecting for turnover, renewal, new lease rates? And then while you're at it, maybe some color on bad debt and ancillary as well. Jonathan Olsen: Sure. Thanks, Haendel. We are assuming turnover at the midpoint that is slightly higher than last year. We expect our renewal rate will remain healthy given the favorable value proposition that we talked about in our prepared remarks. But I think the guide also acknowledges that there is a larger volume of rental product competing on the basis of price, and we anticipate that will lead to slightly higher turnover year-over-year. As far as days to re-resident, I would note, again, the supply pressures we're facing in certain of our markets are likely to have a flow-through occupancy impact primarily through longer days on market. We have done a very good job, I think, and tip of the cap to Tim's team in keeping days and turn pretty consistent. But the days in market number has certainly elongated. I think we did about 48 days to re-resident in '25. And my expectation is that in 2026, it will take us a few days longer on average over the course of the year to get new residents into homes and getting them cash flowing. With respect to sort of the components of the revenue growth guide, I would just point out that I think the earn-in from '25 will represent about 105 basis points. Blended rent growth this year is about another 105 basis points. And then the increase in other income contributes about 20 basis points. And so then if you net against that about a 40 basis point deduct for lower occupancy year-over-year, that's how you get to the 190 basis points at the midpoint. Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Unknown Analyst: This is [ Emily ] on behalf of Juan. I wanted to ask if you could talk about what you've seen so far in January across the new lease renewal and blended rates as well as occupancy. Tim Lobner: Yes. This is Tim. That's a great question. Yes, we've seen what we would expect to see in early February heading into the new year. Typically, you start to see a higher demand, higher lead volume across the assets. And so we're seeing that materialize in a stronger new lease rent growth. On the renewal side, look, the renewal side of the business is a very consistent part of our business. It represents 75% of the book. The renewal rates continue to remain very firm. And I think residents are generally very satisfied with what they're experiencing. We do expect to see, as I mentioned earlier on the call, we do expect to see our spreads start to narrow as we get deeper into spring, and we expect to see that continue until mid-summer. So you can expect to see that blend continue to pick up in these next couple of months. Operator: Your next question comes from the line of John Pawlowski with Green Street. John Pawlowski: Jon, a follow-up question on property taxes. Just given a lot of markets are seeing flat to declining home prices now. Outside of the Texas kind of tough comps associated with Texas, are you seeing signs where municipalities are assessing property taxes more aggressively on investor-owned homes versus owner-occupied because I still think the 4% to 5% guide strikes us is really high given home prices are declining, not really rising that fast. Jonathan Olsen: Yes, Jon, it's the right question. Thankfully, we are not seeing a differential treatment of investor-owned homes versus owner-occupant-owned homes. I think any approach to "property tax relief" that benefits owner occupants at the expense of SFR operators effectively transfers costs from the families that own their homes to families that choose to rent. Our hope is that the folks making those decisions recognize that renters are voters, too. I think with property tax overall, Jon, we just want to be cautious. I think as we've talked about at length, Florida and Georgia are 2 of our 3 biggest markets. and we have seen a continuing catch-up in terms of assessed values relative to what we view true market value to be. Just as a reminder, from '22 to '25 in Florida, we saw over 22% home price appreciation. And in Georgia, over that same period, it's over 23%. And so the ability of assessed values to catch up to that market value when it has expanded as rapidly as it has is somewhat limited. In Florida, in particular, a portion of property tax bills are capped such that assessed values on a percentage of the total tax bill can only go up 10%. So structurally, it sets up a multiyear catch-up. And so I think as I take it all together and we look at property taxes, certainly, we're hopeful that we will do better than that. I think, as you know, we've had some nasty surprises if you go back enough years, and that's something that we want to make sure we avoid by just being thoughtful about what is likely to happen at that line item. Operator: Your next question comes from the line of Jamie Feldman with Wells Fargo. James Feldman: I guess, first, thinking about development with the ResiBuilt platform, do you think you'll need to buy more platforms if you're going to grow your development platform across the country? Or do you think ResiBuilt -- you'll stay within the ResiBuilt platform to expand into other markets? And maybe a little bit more color on where you think you can be building going forward. Dallas Tanner: Jamie, thanks for the question. This is Dallas. And I'll also let Scott add anything he wants to add to this. I think at a high level, we feel really comfortable about the capability we just brought in-house. Jay is a seasoned operator in the space. We've known him for over a decade. We've been impressed with the work they've done. They've built out a really remarkable platform in terms of both capability and scale. Scott talked about the 20-plus existing projects they have ongoing, which, by the way, we didn't underwrite this initially, but has led to a lot of great synergies with our lending efforts in terms of opportunity sets and things we're getting an opportunity to look at on that perspective. I don't know that you necessarily have to go out and acquire other platforms to try and grow your development business. I think we've got the capability in-house. It's just a question around which markets do we want to be in and why. And we have a ton of experience prior to the ResiBuilt acquisition of understanding sort of what our costs are in particular parts of the country as we build with partners and the like. And so I think for us, we feel pretty confident that we don't really need to do much outside of manage the mature organization we just brought on and find ways to sort of blend and extend in the right parts of the country over time and over distance. The nice thing about this is this is really accretive in terms of how we think about it. They have a cash flow positive business that does great work in the marketplace with multiple parties. And we can start to look at opportunities, as Scott mentioned in his earlier remarks, that are already sort of in front of us, and we can also sit on the sidelines if we want to until we decide that a particular opportunity makes sense. Scott, anything you want to add to that? Scott Eisen: No. Thanks, Dallas. Thanks, Jamie. This is Scott. I think at our Investor Day in November, we shared our long-term vision to create value through our BTR growth strategy that combines construction lending and development. And our announcement of buying the ResiBuilt platform was months of thoughtful planning to advance that vision. The acquisition of Resi is a great step forward for us. They're a best-in-class developer that enhances our execution capabilities, expands our capacity to address the nation's most pressing challenges on housing affordability. We're focused on adding supply in desirable markets and creating communities that families are proud to call home. They're currently focused in the Carolinas and Florida and Georgia, and we're going to continue to leverage their capabilities and boots on the ground in those markets. And that's really where our efforts are going to be focused for the foreseeable future. Operator: Your next question comes from the line of Michael Goldsmith with UBS. Ami Probandt: This is Ami on with Michael. The homebuilder partnership pipeline has been moderating and cap rates on acquisitions have also been slowly ticking down. So I was wondering how have your relationships with the homebuilders evolved? And what factors are leading to the slower pipeline and potentially maybe a little bit lower growth from this avenue? Scott Eisen: Thanks. Great question. As far as the homebuilder dialogue, it continues very strong, right? We have great relationships with both the national builders and the regional builders. But given our cost of capital, we have been less aggressive in terms of committing to future transactions with the builders, mainly as a signal because of our cost of capital. I will tell you, we continue to receive substantial opportunities, in particular, the end of month tape from the builders. For the first 2 months of this year, we've received a lot of deal flow from them. So there's still opportunities out there, but we're trying to be a little less aggressive and obviously listening to the signal in terms of our cost of capital and the balancing act between acquisitions and share repurchases. And so I think -- but that being said, I think our relationship continues to be strong. We obviously purchased more than 2,000 homes last year from the homebuilders. We continue to have a daily dialogue. We're very selective. We are looking at opportunities for our joint venture partners. But again, given our cost of capital right now, I think we've just been less aggressive in terms of acquiring from that pipeline. Operator: Your next question comes from the line of Jason Wayne with Barclays. Jason Wayne: The release mentioned that ResiBuilt could serve as an in-house development contractor. Can you just give some more color around how their team will assist in the process as you're growing out the build-to-rent platform? And then just the longer-term growth profile of the ResiBuilt fee-based business specifically? Scott Eisen: Sure. This is Scott. Great question. Look, this platform, the ResiBuilt, we've known these guys for a long time. They commenced operations 6 or 7 years ago in terms of building up their platform. And they're essentially a general contractor that has the capabilities to source land and do construction management oversight of projects. They have a business that historically had built for one particular institutional partner where they acted as a GP. But they also have acted as a fee builder on behalf of other third parties where they've done general contracting work and receive payment for performing services on behalf of other equity investors and developers. We will continue to have them work in that business and generate revenue by working with third parties. And over time, they're going to explore opportunities to also perform work both for our joint venture partners and eventually for ourselves when our cost of capital improves. And so I think that they're a full-service GC developer, and they're going to continue to do what they've been doing. Operator: Your next question comes from the line of Linda Tsai with Jefferies. Linda Yu Tsai: Just on ResiBuilt delivering 1,000 homes per year, and I know you're going to grow that more over time. But how long would it take to, say, doubling it to maybe like 2,000 homes per year? Scott Eisen: I think it's too soon really for us to be speculating on that. These guys have a platform and boots on the ground in place that gives them the ability to perform at least 1,000 home starts a year on behalf of their joint venture partners and customers. And over time, we'll kind of see where the business goes. But I think it's just too soon. We closed on this acquisition 5 weeks ago. We're still working on integration of them into the platform. I think it's too soon for us to be speculating on things like that. Operator: Your next question comes from the line of Jade Rahmani with KBW. Jason Sabshon: This is Jason on for Jade. So homebuilders are offering rates below 4% in markets such as Phoenix. Can you comment on the supply-demand balance in key Sunbelt markets and whether you're seeing an increase in move-outs to buy? Dallas Tanner: Jason, thanks for the question. This is Dallas. As I mentioned earlier, we're only seeing about somewhere between 16% and 17% of our move-outs say that the reason they're doing so is because of homeownership opportunity. Now that being said, and we're not mortgage experts, we clearly follow it. There's plenty of supply on the market for sale today. There certainly feels like there's a bid-ask spread between where homes are selling, where a home can be financed at. And you're certainly right in highlighting that builders have had an opportunity to buy down rate, which has helped candidly, probably keep home prices somewhat stable over the last couple of years. That being said, on a seasonally adjusted rate, we're still seeing somewhere, I think, just less than 4 million total transactions in a given year. That's really low. Like most economists would tell you that we should probably see somewhere between 5 million, 5.5 million transactions. The amount of inventory in the MLS is almost 2x this year of what it was last year. So all of these fundamentals sort of suggest a couple of things to us as we look at the macros. One, there is just a cost of ownership that is pretty egregious at the moment when you consider all things being loaded in. And we pick on mortgage quite a bit, but I think we need to be honest about property tax and insurance. Jon just talked about it. Property tax has been egregious in most states over the last 4 or 5 years as it's caught up with the inflationary pressures put on housing prices. And then on the insurance side of the equation, it's been equally as tough, I think, as people think about that fully loaded cost. So that probably has something to do that. And then you -- the fourth multiplier here is at what price can you finance this. And so you're right in the highlight that the builders have an advantage in terms of how they're buying down rate. But it feels like with the 30-year being around 6 or low 6s, it's got some room to go probably to peak enough curiosity. But let's see how the spring and summer play out. Operator: Your next question comes from the line of Jesse Lederman with Zelman. Jesse Lederman: Can you talk through what you're seeing on the supply side of things? Now of course, new move-in rent growth of negative 4% during the quarter, coupled with a sequential decline in occupancy. We know development starts for BFR down, multifamily has also come down. What are you seeing from a supply perspective in terms of those pressures alleviating? Tim Lobner: Yes. This is Tim. Great question. Look, supply in a lot of markets is higher than we've seen in the history of this industry. And there's a couple of different factors, right? And you mentioned some of them, right? There's build-to-rent product that has come online. Most of the peak deliveries in our markets are in the rearview mirror. And so it's a matter of time before the demand kind of eats that up. You're also seeing scatter site SFR, both institutionally owned and mom-and-pop SFR that's out there. We're seeing slightly higher levels of mom-and-pop SFR as people choose not to sell, they enter that product into the rental market. And there also is, as Dallas talked about earlier, there's the market for newly built products. So there is a supply -- a slight oversupply right now. We're not seeing that grow right now. What we are seeing is that kind of chip away based upon the demand. Everybody talks about homeownership as being kind of the end. There's a lot of people, and we see this in our data with our residents, they choose to rent. And so we believe that there is a long-term healthy demand for our product across our markets. And again, we talked earlier about the specific markets where we do see higher supply, namely the Sunbelt, you've got Florida, you've got the Texas markets in Arizona, and we do see that in our numbers. But at the same time, lead volume is still there. A lot of people entering that age. Our average age of residents is about 38, 39 years old. So there is just a wave of demand for our product. And when you look at our renewal rates at 75% of -- renewal rate of 75% roughly of our book of business, it's pretty obvious that people who are renting want to continue to rent. And so does the supply backdrop concern us? Well, it's there, and I think it's a little bit of a cycle. It's transitory in nature, and we're going to let demand continue to gobble that up over the coming months and quarters. Operator: Your final question comes from the line of John Pawlowski with Green Street. John Pawlowski: I have a 2-parter, forgive the 2-part question. Tim, your comments that there are 0 concessions on your scattered site portfolio, does that represent a meaningful improvement from this time last year? And then secondly, for renewals that have already gone out for, I guess, March and April, are we expecting the achieved renewal rate to still hover in this 4% plus or minus range? Or should it be worse or better? Tim Lobner: John, great questions. I'll tackle each of them. The first question on concessions. Look, we offer specials through the winter months historically. And that ranges depending on kind of what we're seeing in the marketplace in terms of the supply and demand fundamentals. We're very nimble. Our pricing structure allows us to do that to target those specials. And our specials are not significant. They're really around -- historically, this cycle, we've offered $500 off. And then for a 2-year lease, we've thrown an extra $250. Those specials are off. We are seeing demand tick up. And so there's not the reason to deploy tools like that right now. But again, we've offered them in years past. And then on your second question, can you remind me the second question? John Pawlowski: Yes. Again, maybe a clarification on the first one. Again, are concessions a lot lower than this time last year across your platform? The second question is on achieved renewals that are for renewals that are due, that become effective in March and April? Do we expect effective renewal increases still in the 4% range? Or should it be better or worse? Tim Lobner: I think it will hover around the 4% range in answer to your renewal question. It could go a little bit low, it could go high, but 4% has been very consistent for us, and we continue to see about 75% of the book, maybe a little bit more renew. And getting back to your concession question, look, it's not any more or less than last year. This is typical for what we do, and we take it off this time of the year as we see the market return into our peak leasing season. Operator: That concludes our question-and-answer session. I will now turn the call back over to Dallas Tanner for closing remarks. Dallas Tanner: We want to thank everyone for their participation today, and we look forward to seeing everyone at the upcoming investor conference. Talk soon. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good day, and welcome to the Coeur Mining Fourth Quarter 2025 Financial Results Conference Call [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mitchell Krebs. Please go ahead. Mitchell J. Krebs: Good morning, everyone, and thanks for joining our call today to discuss our fourth quarter and full year results. Before we start, please note our cautionary language regarding forward-looking statements and refer to our SEC filings on our website. One housekeeping item. You may have noticed we shifted our reporting to metric units starting this quarter based on feedback we received and to better align with our peers. You'll see that prior period figures in the earnings release have been recast for comparability and additional details are provided. Our record fourth quarter results capped off an incredible year for the company that was full of all-time bests and record achievements. I want to take a couple of minutes to run through a few of them, some of which are shown on Slide 4. Record full year silver and gold production increased 57% and 23% year-over-year, respectively, driven by the impact of the Rochester expansion, the acquisition of SilverCrest in February and consistent performance from our 3 other North American operations. Full year record EBITDA increased 200% to over $1 billion and full year free cash flow increased to $666 million versus negative $9 million in 2024. Slide 8 does a nice job summarizing how far we've come in just the last couple of years when EBITDA was just $142 million and free cash flow was negative $297 million. Our year-end cash increased more than 10x to $554 million, and net income last year also increased tenfold to a record $586 million. Our 3 U.S. operations accounted for nearly 60% of our 2025 revenue and silver represented about 35% of total revenue last year. Rochester made consistent progress toward achieving steady state levels throughout 2025, with full year silver and gold production increasing 40% and 54% year-over-year, respectively. In the fourth quarter, Rochester made a strong statement by delivering record quarterly crush tons and placed tons, along with $78 million of free cash flow, which sets us up for an even stronger 2026 at America's largest source of domestically produced and refined silver. Las Chispas finished the year as our top cash flow generator with $286 million of free cash flow in only 10.5 months of contribution. Just as important was the successful and safe integration of Las Chispas last year, which deserves a big shout out to the entire team. On the exploration front and our year-end reserves and resources that we issued yesterday, it's really gratifying to see the success of our sustained exploration investments and how they continue to drive up our overall ROIC and extend our mine lives, which Slide 16 does a good job of highlighting. The Wharf reserve and inferred resource increases and the near doubling of its mine life to 12 years was especially eye-popping and the Palmarejo results that drove a 5-year extension to its mine life were also very impressive, especially the resource growth off to the east. It was also great to see that we replaced a year of mine life at Las Chispas to remain at approximately 7 years. Looking ahead to 2026 and beyond, it's clear that Coeur is in the strongest position it's ever been in its 98-year history and is poised to deliver another record year this year. Our newly issued stand-alone production guidance summarized on Slide 6 reflects solid year-over-year growth, especially in silver with a 10% expected year-over-year increase, which incorporates a full year of production at Las Chispas and another expected step-up in performance at Rochester. Between higher silver prices and this expected growth in our silver production, silver is expected to contribute approximately 42% of our total 2026 revenue based on current prices and the midpoint of guidance. And with the expected first half closing of the New Gold transaction, 2026 will represent an even more significant step change in the quality, scale and resiliency of Coeur, which is highlighted on Slide 7. Adding New Gold's 2 Canadian operations will further reduce our cost profile and enhance our geographic footprint for investors seeking lower-risk silver and gold exposure and peer-leading margins. This new and unique platform is emerging at precisely the right time and will be ideally positioned as the industry's only all North American senior producer with a cash flow, liquidity and market profile that is unmatched in the precious metal sector. As we said on the November conference call when we announced the New Gold acquisition, we expect the combined company to generate approximately $3 billion of EBITDA and $2 billion of free cash flow on a full year run rate basis based on consensus commodity prices from last October. I'll note that the guidance we issued today does not yet include contributions from the New Gold assets, which will be incorporated into Coeur's production profile following the close of the transaction. Looking out over the next few weeks, we anticipate an active flow of news, including the close of the New Gold transaction, which remains on track and we believe has a good chance to close by the end of the first quarter. Updated S-K 1300 technical reports for New Afton and Rainy River will be filed upon closing of the transaction, which will incorporate year-end 2025 reserves and resources for both assets including a maiden resource at New Afton's K-Zone. We will also provide updated guidance for the combined company and share details of our updated capital return priorities once the transaction closes. Before handing the call over to Mick, I'll close with a big thank you to the team for the incredible amount of work that has gone into getting the company to where it is today. Closing out strongly in the fourth quarter is always a challenge and year-end reporting is always a heavy lift, but these efforts are even more impressive this time around in light of the New Gold transaction and the related integration planning process. Higher prices certainly help, but there is absolutely no doubt that we're as well positioned as we are because of the talent, resiliency and dedication of our people across the entire organization. Mick, over to you. Michael Routledge: Thanks, Mitch. Our fourth quarter was a tour de force of the Coeur portfolio with all 5 mines hitting the straps in a safe and environmentally sound manner. Strong finishes at all of the mines, especially at Rochester, helped ensure the achievement of our annual 2025 production and cost guidance. Consolidated production for the quarter totaled 112,000 ounces of gold and 4.8 million ounces of silver. Adjusted cost per ounce for gold and silver also continued to be well managed with an impressive $1,207 per ounce and $17.29 per ounce, respectively, and allowed for strong margin expansion across the business. Turning to the assets and beginning with Las Chispas. The team turned in another solid quarter to cap off a great 2025 in its first year in the core portfolio. Silver production of 1.4 million ounces and gold production of 15,000 ounces led to $79 million of quarterly free cash flow. The operation's 2026 guidance reflects a full year of production compared to the approximate 10.5 months of 2025 contributions. Turning to Palmarejo. The mine followed up one of its strongest quarters in terms of tonnes milled with an even better result in the fourth quarter with over 470,000 tonnes milled averaging over 6,000 tonnes per day. Together with strong grades and recoveries, Palmarejo's free cash flow totaled $63 million. The team in Chihuahua has demonstrated great results with its fill-e-mill strategy, a unique skill set that we expect to leverage at Rainy River in the future, which is undergoing a similar transition from open pit operations to underground. Our 2026 guidance points to another great year ahead for Palmarejo. Turning to Rochester. Key performance metrics along the crusher circuit saw marked improvement versus the prior quarter, concurrent with the fourth quarter completion of planned modifications and belt improvements. We exceeded 7 million tonnes or 6.4 million metric tons crushed this quarter, which was a nice achievement for the team. It has been impressive to see the mine's steady improvements in silver and gold production as the power of the new crusher train continues to drive results, reaching their highest levels in 2025 at 1.7 million ounces of silver and 17,000 ounces of gold, respectively, in the fourth quarter. On an annual basis, the positive impact of Rochester's larger scale really stands out with silver and gold production increasing 40% and 54%, respectively, compared to 2024. I'm pleased to report that the average particle size continued to beat the budget level for material passing through all 3 stages of crushing at a P80 around 0.84 inch in the fourth quarter. Importantly, related recoveries continue to track our PSD models as expected. The team is also hard at work on the next phase of the leach pad 6 expansion, most of which we expect to complete this year. Rochester is well positioned for an even stronger 2026. We are off to a great start with over 2.3 million metric tons crushed in January. Grades are expected to be lower in the first half of the year, consistent with the mine plan, which is reflected in our 2026 guidance. Our long-term focus remains on building consistency and momentum through the 3-stage crushing line and continuing to deliver quarterly crush tonnes in the 6.2 million to 7.2 million metric tons per quarter range as we drive towards our ultimate objective of a top size of 5/8 inch. Based on the midpoint of our 2026 guidance ranges, we expect silver and gold production to increase substantially compared to 2025. Moving to Kensington. The positive benefits of their multiyear underground development program continue to manifest in the form of new efficiencies and operational flexibility. The team knocked it out the park with its highest tonnes milled and gold grade of the year in the fourth quarter, leading to gold production of 30,000 ounces and the mine's lowest quarterly cost of the year at $1,533 per ounce. This led to quarterly free cash flow of $51 million, Kensington's best result ever. Coupled with the successful reserve additions announced yesterday, the mine remains on excellent footing and well positioned to deliver a strong 2026. Finishing up at Wharf, quarterly gold production totaled 25,000 ounces, leading to free cash flow of an impressive $62.3 million. These good results were overshadowed by a fire in the mine's tertiary crusher following routine maintenance in the fourth quarter. The tertiary crusher area sustained some damage in the upper levels impacting conveyor belts, ancillary equipment like the hoist, crane and electrical systems, and those parts will need to be repaired or replaced. There was no damage to the 4 tertiary cone crushers in that area on the ground floor. The team quickly mobilized temporary mobile crushing units at site in January to supplement crushed ore tonnes. Repairs are expected to be completed over the course of the second quarter. Slide 6 provides an indicative expectation for 2026 quarterly production, showing a second half weighted crushed tonnes as the site returns to normal operations throughout the year. As highlighted in yesterday's reserves and resources update, the future at Wharf is more exciting than ever, thanks to the resounding success of recent exploration and technical work that have unlocked new gold reserves, leading to a near doubling of mine life with additional upside remaining from a significantly larger resource pipeline. We look forward to many great years ahead at this one-of-a-kind asset. With that, I'll pass the call over to Aoife. Aoife McGrath: Thanks, Mick. 2025 was a very successful year for explorations with great results seen across the board. Key highlights include not only replacement of depletion across the portfolio, but growth of reserves by 10%. As Mitch and Mick have mentioned, Wharf and Palmarejo were standout contributors in this regard. Inferred resources also grew by a whopping 40% across the portfolio, led by a 216% increase at Wharf, an 86% increase at Palmarejo and 30% growth at Rochester. Moving to key highlights for the year. At Wharf, the Juno, North Foley and Wedge exploration and technical programs were very successful. In addition to increasing gold reserves by 500,000 ounces, 1 million ounces of inferred resources were added. This is a phenomenal result for relatively modest levels of investment, and it has set us up for another year of conversion to reserves in 2026 and in the future. Earlier stage scout work will also restart this year to help build an even longer-term future of this operation. We had a very busy year at both Mexican operations with up to 26 rigs across both sites. At Palmarejo, reserves saw a very large increase of almost 40%, moving from 1.4 million ounces on a gold equivalent basis to 2 million ounces. Our other key aim of bolstering the inferred pipeline was very successful with over 1 million gold equivalent ounces added, and this is in addition to 400,000 new ounces in the measured and indicated categories. The non-Franco-Nevada area of interest deposits of La Union, San Miguel and Independencia Sur were key contributors along with Hidalgo on the main mine corridor. All these deposits will continue to undergo aggressive exploration in 2026, along with ongoing early-stage work across the district. At Las Chispas, exploration programs resulted in maintaining mine life in addition to the discovery of multiple new veins, including Augusta, La Promesa and Lupita. The exploration pace is expected to continue at similar levels in 2026, involving a healthy mix of scout expansion and infill drilling. Programs at the other sites also fulfill their aims as laid out at the start of 2025, with depletion more than replaced at Kensington and nearly replaced at Rochester. Our understanding of the system at Silvertip is progressing rapidly and program successfully grew the mineralized footprint by another kilometer to the south. This gives a new focus area for infill drilling over the coming years in order to support the study programs underway. Looking ahead to 2026, total exploration investment is expected to increase to between $120 million and $136 million to continue pursuing the high-return opportunities we have across the portfolio. With that, I will turn the call over to Tom. Thomas Whelan: Thanks, Aoife. Beginning with the financial summary on Slide 10, we are excited to reveal the record-setting full year results that Mitch highlighted a few minutes ago. It was truly a transformative year. There were so many highlights in quarterly financial records to choose from, but here are a few of our favorites. It was particularly gratifying to see every mine deliver at least $50 million of free cash flow in the quarter. We saw a 66% increase in free cash flow to $313 million during Q4, highlighted by Rochester's $78 million of quarterly free cash flow. Adjusted EBITDA margin increased 63%, which was a 60% increase quarter-over-quarter. Our return on invested capital was a peer-leading 26% in 2025. Quarterly realized gold and silver prices increased 21% and 40%, respectively, and have only continued to strengthen in 2026. We are expecting another record-setting year in 2026 for the CDE stand-alone portfolio and look forward to providing updated guidance, including Rainy River and New Afton once the transaction closes. One note of caution, Q1 is always seasonally low from an operating cash flow profile with significant year-end payments primarily related to Mexican tax and our annual incentive plans. As shown on Slide 9, you can see the net effect of this cash deluge coursing through Coeur's balance sheet. As previewed during last quarter's call, we achieved our long-standing goal of being net cash positive. Total debt declined $250 million or 42% year-over-year, and we ended the year with a cash balance of $554 million and now have total liquidity nearing $1 billion in climbing. We made some progress on our $75 million buyback program that we announced during the second quarter. We were fairly limited in our ability to execute the buyback program during the second half of the year due to trading restrictions related to the New Gold transaction. This limitation will end upon the closing of the transaction when we intend to announce a robust update to our return of capital strategy. Our capital allocation framework will remain disciplined with a continued focus on generating strong returns on invested capital and deploying excess cash where it creates the greatest long-term value for stockholders. Concurrent with the strengthening price environment, we enhanced our annual guidance related to cash taxes and royalties to reflect the champagne problems of higher commodity prices. One final update for me. We look forward to the closing of the New Gold transaction and welcoming our new Canadian colleagues to the Coeur team. Robust integration planning has been underway since mid-November, and we are prepared for day 1 after closing. With that, I will now pass the call back to Mitch. Mitchell J. Krebs: Thanks, Tom. Before we open it up for Q&A, I just want to touch on several key priorities and themes for the year ahead on Slide 18. Of course, continuing to build on our safety and environmental performance always remains priority #1. Successfully closing the New Gold transaction and accomplishing a smooth integration is obviously a critical priority for the year. A full year of steady contribution from Las Chispas, a further step-up at Rochester and delivering on Wharf's back half weighted plan are also key drivers for the year ahead. And as Aoife mentioned, we are allocating a record amount of capital to exploration investments in 2026, a 47% increase compared to 2025 levels. Delivering the expected results from these programs to keep driving our ROIC higher and adding mine life is also a key priority in 2026. At Silvertip, we plan to continue advancing the project with a potential transition into a pre-feasibility study based on the results of the initial assessment that is now wrapping up. With higher silver prices, continued drilling success, solid project front-end loading and Canadian support for critical minerals projects like Silvertip, there could be an attractive path forward to adding to our future silver profile that we look forward to evaluating together with our Board. And finally, we look forward to updating you on the impacts of the New Gold transaction once it closes with combined full year guidance, reserve and resource updates from New Afton and Rainy River and details regarding the path forward for returning capital to stockholders. With that, let's go ahead and open it up for questions. Operator: [Operator Instructions] And the first question today comes from Wayne Lam with TD Securities. Wayne Lam: Congratulations on a good quarter. Maybe I just want to start off with a question on the reserve grades at Las Chispas. It seems as though there was a bit of taking on the grades now in the past couple of years. Is that a function of a lower cutoff grade or reinterpretation there? And then just given the mine grades have been well ahead of reserves since the start-up of the mine, when will we start to see a bit of a normalization of the grade profile there? Mitchell J. Krebs: Yes, sure. Wayne, thanks. Thanks for those questions. I'll start and Mick, Aoife, if you want to chime in. I think on the Las Chispas grade profile, it really reflects a more conservative approach to modeling that we took here after taking the reins last February. It's consistent with how we do it at our other mines. It's something we had identified in the diligence actually that grade was being overestimated, tonnes underestimated. And so after operating it for 10.5 months, we incorporated that into the year-end resource model. But Mick, anything you want to add to that or Aoife? Michael Routledge: Yes. From an operational perspective, that is what we expected. And after running the site for a year, that's exactly what we found. It reconciled very well to the due diligence that we saw. We tested the plant to make sure that it could run at those slightly higher run rates to make sure we could still deliver against the budget, and we did exactly that. Aoife, any thoughts? Aoife McGrath: Yes. And I think on -- it's certainly not due to disappointing drill results. I think we've actually seen the opposite to that this year, particularly at Las Chispas where we had in our due diligence and our expectations were for lower grades on that block. So we've been very pleasantly surprised with the tenor of the grade out there as well. Mitchell J. Krebs: And so to Wayne's second question about just go-forward grades, should we see more of a tighter fit between reserve grades and actual results? Michael Routledge: Yes. And as we're seeing that, we saw some of that, and we thought would trend in that direction, and that's what we did. So going forward, we should see that normalize to the expected planned levels. Mitchell J. Krebs: Does that help, Wayne? Wayne Lam: Yes, that's really good color. Maybe on the exploration results, a pretty good update on the resource additions across the portfolio. Just wondering on the maiden resources you guys report at East Palmarejo, are those all outside of the Franco stream? And when could we envision those being brought into production? And then just wondering with the guided sales under the stream in the 40% to 50% range this year, which is slightly lower year-over-year. How should we be thinking about that number over the next few years? And should we expect that to continue to decline? Mitchell J. Krebs: Yes. Yes, I'll start off and then maybe Tom on the -- or Mick, on the shape of the percentage inside and outside over time. But in short, Wayne, all of those ounces are outside of the area of interest that the Franco-Nevada gold stream covers. The bulk of them were further off to the east out there in that [indiscernible] area that Aoife mentioned. And so the nearer-term stuff, the Independencia Sur kind of extension of Independencia down there to the South and East, that represents a nearer-term opportunity for us. And then in the meantime, we'll continue to expand and extend, hopefully, those resources off there further to the east, and that can develop a potential future source of ore or maybe even a stand-alone operation depending on where we end up with that additional drilling here over the next few years. In terms of percentage inside, outside, how should we think about that? Thomas Whelan: Yes. It's virtually all inside the AOI for the next couple of years until we get some more success in the areas that you just described, Mitch. Mitchell J. Krebs: But exploration-wise, we will be this year, 70% or so of the exploration budget at Palmarejo will be outside of the area interest over there to the East, Wayne. Michael Routledge: Do you want me to comment on [indiscernible], Mitch? Because that is -- the [indiscernible] area is close to infrastructure underground. And so there's some ventilation work that we'll need to do to develop that and some minor permitting. But as Aoife and the team characterize that better, then that will certainly fall into the nearer term next few years as we get a little bit off the AOI and look at that balance. Aoife McGrath: And in terms of the upside at Guazapares is we have a number of deposits out there, like San Miguel is a mix of gold and silver, and La Union is predominantly gold. So it's really going to give us some nice operational flexibility as we develop that further in the next number of years. Wayne Lam: Okay, perfect. Yes. It sounds like quite a considerable future opportunity. So I appreciate the detail on that. Maybe just last one for me. Just on the cash tax guidance of $400 million to $500 million this year, do you have any additional color on what a breakdown of that looks like between Mexico versus the other operations? And just wondering if you still have tax pools to draw on, particularly in the U.S.? Or does that guidance assume at some point, full depletion of those capital pools? Mitchell J. Krebs: Tom, do you want to take that? Thomas Whelan: My favorite. Thanks, Wayne, for asking the tax question. I would think 80% of the taxes are in Mexico. And so we are going to be paying some cash tax in the United States. And it's just mainly because of the way the tax pools or the tax losses work. We will be sheltering the bulk of the net income, but there's still going to be a little bit that ends up being paid. So if you want to use that 80-20 breakdown and apply that to the guidance, that would be mine. That's the guidance. Wayne Lam: Okay. Great. That's really good color. Congratulations again on a good quarter and looking forward to seeing the closing of the New Gold transaction. Operator: And your next question comes from Josh Wolfson with RBC. Joshua Wolfson: Just looking forward at the upcoming closing and the capital returns comments that were made earlier, is there any kind of preference the company has in terms of dividends or buybacks here? And sort of how is the company thinking about those 2 aspects? Apologies, not to totally front run your upcoming announcement. Mitchell J. Krebs: Yes. We don't want to steal our own thunder before we get to the closing when we'll roll out a more -- a clearer path forward on return of capital. But suffice to say, those are the 2 levers that we're -- we've been looking at and thinking about and talking about with our Board. Obviously, a slight preference more for the buyback route just given the flexibility that, that provides. But recognizing that, look, as on a combined basis, you look at across the peers, and we're sensitive to making sure that we're benchmarking well against the peers as far as how we think about returning excess cash back to our stockholders. Joshua Wolfson: And then another question sort of along the same lines. Given the financial positioning and free cash flow outlook, the company has been active in increasing the exploration budgets and investment across the portfolio. How are you thinking about that for the New Gold assets? Is there anything that you can look to accelerate in 2026 there? Any specific opportunities at least some of the early integration analysis? Mitchell J. Krebs: Yes. No, thanks, Josh. Good question. I think let's get past the close and the integration, ensure continuity. But we are looking at how can we allocate some additional capital to exploration at both sites, in particular, probably Rainy River as you think about some of the regional opportunities there on that big land package. But I think we'll want to take a little bit of time, make sure we've got our ducks in a row, got the team aligned and then we take the next step as far as potentially ratcheting up the level of investment in exploration, in particular at Rainy River. Aoife, anything you want to say? Aoife McGrath: No, that's pretty much covered, isn't it? Mitchell J. Krebs: Yes. Some great opportunities there. I mean, both, obviously, both operations. But I think at Rainy River, we'll apply that same playbook, Josh, that we've used successfully at our other operations, and it takes time and capital and some commitment. But I think over time, there's a lot of potential there. Operator: And your next question today comes from Joseph Reagor with ROTH Capital Partners. Joseph Reagor: So just got to ask on Rochester, and I know Mick touched on it a bit, but I know that the model seems to be internally matching the recoveries as we see them seem a bit light on the silver side, particularly. At what point do you guys have to like go back and kind of like reassess the economics of the project? Or is it just a matter of getting the crush size to where it's supposed to be and then you expect the recoveries will improve accordingly? Mitchell J. Krebs: Yes, it's much more the latter there, Joe, and Mick, you can add to anything that I say. But you're right, the actual results are tracking model for the product size that we're putting out there on that Stage 6 leach pad. As we continue that progression from a P80 7/8 down to P80 5/8. We'd expect to see the recoveries continue to track model and improve. Gold is less sensitive. But in particular, on the silver, we'd expect to see as we get closer to that 5/8, those recoveries ratchet up to just shy of 60% level. It's just, as you know, Joe, it's lower and longer on the silver recovery curve relative to gold. Mick, anything you want to add? Michael Routledge: Yes. And the focus in '25, as we said a few times, was really around getting that throughput level up above the 7 million tonnes or the 6.2 million tonnes per quarter. And we're starting to get really into that range and look to make that sustainable. There were some really good development projects that we did in November to help us with that and to focus on the reliability of the crusher. And so that 2026 is really about trying to hone that in and drive those crush sizes down with the equipment that we've got and then a few small projects throughout the year to get that into. But yes, it's a good path forward, and we're really in the range of what it said it would do on the packet. We've now just got to match the ore body knowledge with the capability of that crusher and make sure that it's doing it every day. But overall, really happy about the progress so far. Joseph Reagor: Okay. And then one other one. Some of your peers have been maybe not successfully, but purchasing puts on things like gold and silver as a way to hedge downside given we've seen some record high prices. Is that something you guys are going to consider doing? Or I think in the past, you've used some collars or you guys, given the cash flow situation of the company, just going to kind of leave it exposed to the market? Mitchell J. Krebs: Yes, you're right. As you recall, Joe, we did use some hedging during the Rochester capital project to kind of help shore up the cash flow and the balance sheet. We're always looking at those things. But as we sit here today, we're going to let -- remain unhedged, keep focusing on what we can control on the cost side to keep pushing ourselves down the cost curve and retain that full exposure to prices. Operator: [Operator Instructions] Your next question comes from Brian MacArthur with Raymond James. Brian MacArthur: So might go back to what Wayne was asking. I had the same question. Just on the tax pools, you made a comment that they're slightly different. I thought there were fairly substantial NOLs. Will they last like a number of years? Or are they something that -- obviously, we've got pretty good profitability now that we're going to use them up in 2 or 3 years? Or can I continue to think that on the U.S. operations, those will last like 3 or 4 years and you only pay fairly low taxes. Is that fair? Or is there something different in the structure of the NOLs based on your comments that it's not going to work that way? Thomas Whelan: Yes. So in the 10-K, you can look to the tax note. So we're down to $530 million year-over-year. It was $630 million. So that gives you a sense that we used up about $100 million last year. And so again, at these prices, that's probably 2 years, Brian, and we've blown through them. But again, just the way the limitations worked, some of the years, you can only shelter 80%. And so that's why we're in a cash tax position in the United States this year. So I hope that gives you a sense. Brian MacArthur: Yes, that's quite helpful. And just on the question about Palmarejo, if you find all this new ore that's off ground. I mean you mentioned we're going to stay up at 40 or 50 for the next couple of years, let's say, does that drop -- I mean, in the past, you've been down as low as 35%. Does that drop pretty substantially though, as we go out 5 years? Or you're still just finding so much or at different areas, you just don't know what your sequencing is going to look like yet. Mitchell J. Krebs: Tom, do you want to... Thomas Whelan: Yes. Look, I mean, Aoife and Mick are absolutely focused on finding as much off the AOI as possible. At this stage, we do not have it, but we've highlighted all of the opportunities that are emerging, and I feel really excited about getting less of that production coming from the area that's covered by the Franco stream. But for the near future, expect virtually all of the production to be subject to the stream. Mitchell J. Krebs: And Brian, what's great there is, obviously, the Palmarejo reserve and resource increases were quite significant and in particular, that extension to the mine life. That's just building out more runway for us as we continue to allocate more and more of our exploration dollars off to the East to, over time, develop that next chapter of Palmarejo more and more to the east over time, starting with the Independencia Sur extensional stuff. But then while we do that, we'll, in parallel, work to better define what that -- those further east deposits mean in terms of the future production profile at Palmarejo. So it's a good strategy. It's taken a long time to kind of put all the pieces in place, but we just need to stick with it. And hopefully, over time, like Tom said, we'll see more and more opportunities open up to the East. And over time, we'll make that slow transition. Brian MacArthur: No, I totally agree with that. I guess I was just trying to push a little bit to see when you saw that transition just when I was looking at those additional years we were adding out. But that's okay. We can take that offline. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mitchell Krebs for any closing remarks. Mitchell J. Krebs: Okay. Well, we appreciate everybody's time today, and we look forward to speaking with you again in the spring to review our first quarter results. Thanks a lot, and have a great rest of the day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Fourth Quarter 2025 CVR Energy, Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Richard Roberts, Vice President, FP&A and Investor Relations. You may begin. Richard Roberts: Thank you. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy Fourth Quarter 2025 Earnings Call. With me today are Mark Pytosh, our Chief Executive Officer; Dane Neumann, our Chief Financial Officer; Mike Wright, our Chief Operating Officer; and other members of management. Prior to discussing our 2025 fourth quarter and full year results, let me remind you that this conference call may contain forward-looking statements as estimate a defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures are included in our 2025 fourth quarter earnings release that we filed with the SEC and Form 10-K for the period and will be discussed during the call. With that said, I'll turn the call over to Mark. Mark Pytosh: Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. For the full year 2025, we reported consolidated net income of $90 million and EBITDA of $591 million. At the segment level, we generated EBITDA of $411 million in the Petroleum segment, $211 million in the Fertilizer segment and a loss of $22 million in the Renewable segment. For the fourth quarter, consolidated net loss was $116 million and EBITDA was $51 million. Our fourth quarter results were impacted by the accelerated depreciation associated with the reversion of the renewable deal unit at Wynnewood back to hydrocarbon processing along with extended downtime at the Coffeyville fertilizer facility due to 3 weeks of start-up issues at the third-party air separation plant. We continue to believe the refining and fertilizer market fundamentals look constructive for the next several years, which I will discuss further in my closing remarks. Now let me turn the call over to Dane to discuss our financial highlights. Dane Neumann: Thank you, Mark, and good afternoon, everyone. For the fourth quarter of 2025, our net loss attributable to CVR shareholders was $110 million losses per share were $1.10, and EBITDA was $51 million. Our fourth quarter results included unfavorable inventory valuation impact of $39 million, a $9 million unfavorable change in our RFS liability and unrealized rate of gains of $10 million. Excluding the above-mentioned items, adjusted EBITDA for the quarter was $91 million and adjusted losses per share were $0.80. Adjusted EBITDA in the Petroleum segment was $73 million for the fourth quarter of 2025 compared to $9 million for the fourth quarter of 2024. Higher crack spreads and increased throughput volumes drove the majority of the increase from the prior year period. Combined total throughput for the fourth quarter of 2025 was approximately 218,000 barrels per day. Crude utilization for the quarter was approximately 97% of nameplate capacity and life product yield was 92% on total throughput volumes. Benchmark cracks for the fourth quarter softened from the third quarter levels as they typically do in the winter with the Group 311 averaging $22.70 per barrel. Cracks were unseasonably strong in October and November, which we believe led to higher than average U.S. refining utilization levels that partly drove the decline in crafts in December. Our fourth quarter realized margin adjusted for the change in RFS liability inventory valuation and unrealized derivative gains was $9.92 per barrel, representing a 44% capture rate on the Group 3 2-1-1 benchmark. RIN prices declined approximately $0.18 per barrel from the third quarter 2025 levels, averaging $6.05 per barrel for the fourth quarter. Net RINs expense for the quarter, excluding the change in RFS liability, was $90 million or $4.49 per barrel, which negatively impacted our tax rate for the quarter by approximately 20%. The estimated accrued RFS obligation on the balance sheet was $72 million at December 31, representing 59 million RINs mark-to-market at an average price of $1.21. As a reminder, we will continue to recognize 100% of Wynnewood Refining Company's RIN obligation in our financials as EPA has not yet ruled on our pending petition, which for the fourth quarter of 2025 was approximately $34 million. Direct operating expenses in the Petroleum segment were $5.40 per barrel for the fourth quarter compared to $5.13 per barrel in the fourth quarter of 2024. The increase in direct operating expenses per barrel was primarily due to increased personnel and utilities costs. Adjusted EBITDA in the Renewable segment was breakeven for the fourth quarter, a decline from fourth quarter of 2024 adjusted EBITDA of $9 million. The decline in adjusted EBITDA was driven by a combination of the loss of the blenders tax credit, a decline in the HOBO spread and reduced throughput volumes. We ceased operations of the renewable diesel unit at the end of November and the reversion of the unit to hydrocarbon processing was completed in December. Adjusted EBITDA in the Fertilizer segment was $20 million for the fourth quarter of 2025 compared to $50 million for the prior year period. ammonia utilization rate was 64% for the quarter, which was impacted by the planned turnaround and subsequent delayed start-up at the Coffeyville facility. While the turnaround was completed in early November as scheduled, we experienced additional downtime following approximately 3 weeks of start-up issues at the third-party air separation plant. The Board of Directors of CVR Partners' general partner declared a distribution of $0.37 per common unit for the fourth quarter of 2025. As CVR Energy owns approximately 37% of CVR Partners common units we will receive a proportionate cash distribution of approximately $1 million. Cash flow from operations for the fourth quarter of 2025 was breakeven and free cash flow was a use of $55 million. Significant uses of cash in the quarter included a $75 million payment on the term loan, $68 million of RIN purchases related to Wynnewood Refining Company's 2024 and 2025 obligations, $55 million of capital spending for the noncontrolling interest portion of the CVR Partners third quarter distribution and $26 million of cash interest. Total consolidated capital spending for the full year 2025 was $197 million, which included $135 million in the Petroleum segment, $57 million in the Fertilizer segment and $4 million in the Renewable segment. Turnaround spending in the petroleum segment was approximately $190 million in 2025. For the full year 2026, we estimate total consolidated capital spending to be approximately $200 million to $240 million and turnaround spending in the petroleum segment to be approximately $15 million to $20 million. Growth capital spending of $75 million to $90 million in 2026 is expected to be slightly elevated relative to the past few years as we hit the peak spending year for the alkylation project at Wynnewood along with a host of reliability and debottlenecking projects in the Fertilizer segment. As a reminder, the growth capital spending in the Fertilizer segment will be funded from cash reserves taken at CVR Partners over the past few years. Turning to the balance sheet. We ended the quarter with a consolidated cash balance of $511 million, which includes $69 million of cash in the fertilizer segment. Subsequent to year-end, we completed a $1 billion senior notes offering with maturities in 2031 and 2034. The proceeds of the offering were used to repay the remaining balance of the term loan redeem all of the outstanding 8.5 senior notes due in 2029 and redeemed $217 million of the 5.75% senior notes due in 2028. With these transactions, we are able to significantly extend our debt maturity profile while retaining the ability to pay down the remainder of the outstanding 2028 notes as we work to get back to our current target of $1 billion of gross leverage. Total liquidity as of December 31, excluding CVR Partners, was approximately $690 million, which was comprised primarily of $442 million of cash and availability under the ABL facility of $248 million. Subsequent to year-end, we also completed an upsize and extension of our asset-based lending facility, increasing the commitments from $345 million to $550 million and extending the maturity to 2031. While we have not historically drawn on the ABL, we believe the increased liquidity is a benefit and provides additional financial flexibility if needed. Looking ahead to the first quarter of 2026 for our Petroleum segment, we estimate total throughput to be approximately 200,000 to 215,000 barrels per day. We estimate direct operating expenses to range between $110 million and $120 million and total capital spending to be between $30 million and $35 million. For the Fertilizer segment, we estimate our first quarter 2026 ammonia utilization rate to be between 95% and 100%. We estimate direct operating expenses to be approximately $57 million to $62 million, excluding inventory impacts, and total capital spending to be between $25 million and $30 million. With that, Mark, I will turn it back over to you. Mark Pytosh: Thank you, Dane. As this is my first earnings call as the CEO of CVR Energy, I wanted to take a few minutes to highlight some of the strategic priorities that we will be focused on over the next few years. First and foremost, our primary focus will continue to be the safe and reliable operations of our facilities. Reliability is key in this industry as we need to make sure the facilities are running well to be able to capture whenever margin opportunities present themselves. Second, we are reevaluating our commercial optimization opportunities to drive margin capture improvement in the petroleum segment. While we are still at the beginning phases of this analysis, we believe there are opportunities in our existing asset base to capture more of the crack than we have been over the past few years. These include the reversion of the RDU back to hydrocarbon processing, which should expand the crude slate flexibility at Wynnewood and allow us to repurpose rail assets for additional feedstock security and product shipment optionality. At Coffeyville, we have started ramping up our WCS processing and believe we may be able to get throughput up to 20,000 barrels per day compared to less than 1,000 barrels per day in 2025. I would also like to take this opportunity to introduce our new Chief Commercial Officer, Travis Capps. Travis brings over 30 years of leadership experience in the refining and petrochemical industries. Most recently having served as Chief Commercial Officer at Motiva. We're excited to have Travis leading our commercial team as we look to better optimize our refining portfolio. Third, we plan to take a more proactive approach in pursuing opportunities to expand our asset footprint. Our portfolio would benefit greatly from additional geographic diversity and increased scale, and we plan to be more active in the marketplace and trying to identify these opportunities. And finally, we will maintain a disciplined approach to capital allocation. We've made significant progress on our deleveraging efforts, reducing debt on the balance sheet by over $165 million in 2025. Making progress on deleveraging, along with maintaining a cash balance of $400 million to $500 million excluding CVR Partners and generating free cash flow in the current environment are some of the key metrics the Board evaluates each quarter regarding a potential return of the dividend. Looking ahead, we believe fundamentals in the refining sector continue to look constructive over the next few years. Global refining capacity additions are set to slow down in 2026 and 2027 and compared to the past few years, while refined product demand growth is expected to remain steady, particularly for diesel. Within the Mid-Con where we operate several new refined product pipelines are under construction or development that should offer additional outlets from the Mid-Con and the Gulf Coast to the Denver area, the Southwest and potentially on to California. On the crude oil side of the equation, recent developments in Venezuela could lead to additional heavy barrels coming to the Gulf Coast, which in turn may pressure Canadian crude oil differentials. Wider Canadian crude debts would be a benefit to our system as we increase our WCS processing at Coffeyville, which was part of the facility's upgrades over a plus turnaround cycle. Although RINs continue to weigh on our margin capture in refining, we remain cautiously optimistic after the actions taken by EPA last year to clear the backlog of outstanding SRE petitions. We believe Wynnewood refining company should continue to receive full or partial SRE grants as it has for the 2017 through 2024 period. And we will continue to fight for the right 21 refining companies entitled to. Far from being the windfall that large integrated refiners and the RFA claim, there is no doubt that Wynnewood Refining company suffers disproportionate economic harm as a result of complying with the RFS. Any attempt to force the shutdown of small refineries is nothing more than a maneuver to increase the market share of large integrated refiners to align their own pockets at the expense of the American driving public. In Fertilizer segment, despite a record crop year for corn in 2025 and preliminary estimates are calling for up to 95 million acres of corn to be planted in 2026, which should drive continued strong demand for nitrogen fertilizers through the spring. In addition, global inventories of nitrogen fertilizers appear to still be tight and pricing has been robust so far to start the year. We are continuing to invest in plant infrastructure for reliability in addition to increasing our DEF production and load-out capacity. We are also progressing the feedstock diversification and ammonia expansion project at the Coffeyville facility and the brownfield expansion at East Dubuque. Although we experienced some unplanned downtime in the fourth quarter due to the third-party owned air separation plant at Coffeyville. Both facilities are running well today. And as Dane noted in our guidance, we are currently expecting a long utilization rates back above 95% for the first quarter. Looking at quarter-to-date pricing metrics for the first quarter, [ Group 3 2-1-1 ] cracks have averaged $17.09 per barrel with the Brent WTI spread at $4.57 per barrel. And the WCS differential at $14.84 per barrel under WTI. Prompt fertilizer prices are $700 per tonne for ammonia and $350 a tonne for UAN. With that, operator, we are ready for questions. Operator: [Operator Instructions] Your first question comes from the line of Manav Gupta with UBS. Manav Gupta: I wanted to first start on a little bit on what you mentioned in the opening comments, looks like more pragmatic M&A, but more persuasive approach to M&A than the prior management team. Can you talk a little bit about that, your expansion plan? What kind of assets are you looking? Which fats would you be interested in? Is it only refining? Anything on those lines would really be helpful. Dane Neumann: Thanks for the question, Manav. So our focus is when we say proactive means that try to engage with other players to discuss kind of where things are headed strategically and looking for places where people are thinking of doing something different going forward looking at a portfolio evaluation and really just trying to engage in discussions and see what may be out there and trying to see if there are opportunities to do bilateral acquisitions as opposed to participating in the auction process. So we're really just more trying to engage in being in the dialogue. We're looking at both sides of the business, so both our refining business and our fertilizer business. So we are looking at opportunities to grow in both areas. And what I want to say is while we're going to be more proactive, we're not going to lose our discipline. So it's not that we feel pressure that we have to do something, but we think there's going to be opportunities. We think the industry is sort of at an inflection point where there's going to be changes in portfolios out there, and we would like to see if there's opportunities to participate in that and -- but we're going to be disciplined. And I would give you kind of two thoughts on metrics or guideposts. One is we won't stretch the balance sheet. So we're not going to try to leverage up to do anything in either business. And the other is that any deal that we would consider has to be accretive to our shareholders or our unitholders. So we are going to try to see if opportunities present themselves, but we are going to be disciplined in our approach. Mark Pytosh: Perfect. That's very reasonable. My quick follow-up, sir, is, you said you were going to pay down term loan and you have paid a portion of it, should we expect that you will first pay down the full amount of it? Or can we expect that as you are paying it down, you could institute like a small, modest dividend, refining shareholders always appreciate some kind of cash returns. I'll turn it over. Dane Neumann: Yes. Thanks, Manav. This is Dane. As we've said in our prepared remarks, cash -- free cash flow, minimum cash balances and progress deleveraging have been our priorities. We don't believe that we have to be back to our base $1 billion target before a dividend can return, and we've obviously made a lot of progress on the deleveraging. So again, we don't think we have to be at 0. We want to see a clear path to paying it down further before we consider returning to a modest level of dividend. Mark Pytosh: Yes. And just to add to that, Manav, because we do get that question quite a bit as when we return with the dividend, we want a dividend that's going to be sustainable in any part of the cycle. So we want to be -- have -- be able to do that and not yoyo the dividend. And so we -- one of our major goals is to bring the dividend back. We understand that the shareholders would like us to be paying a dividend. But we want also something that's sustainable. So we'll pick that spot. The sweet spot Dane's described where we can be sustainable in paying it again, in good crack markets and bad. Operator: Your next question comes from the line of Matthew Blair with TPH. Matthew Blair: Great. you talk a little bit more about ramping up the WCS runs at your Coffeyville refinery. I think previously, you were shipping those WCS barrels and then reselling them in Cushing. So you're still getting some economic benefit. But I think on -- earlier, you mentioned that you're looking to ramp up rents at 20,000 barrels a day versus just the one that you did in 2025. So -- can you talk about like why -- like what's spurring this change? Is there anything different going forward in your kit? Why are you doing this? Dane Neumann: So Matt, we were -- we had sort of gotten prepared for this day. The last two turnarounds, we had upgraded our metallurgy there and so we were prepared for this day. And quite frankly, when Maduro was removed in Venezuela, that started changing the dynamics in the Western Canadian market. And we saw dips widen out. And the biggest bang for our buck in the portfolio was to run those barrels as opposed to there were some -- the sales price was the most attractive. So the most attractive option was to be able to run the barrels, and we moved very quickly. So I was very happy with quickly our team acted on that, and we've been ramping up in January and into February. So we're taking advantage of that market opportunity. And -- but the best economic value of the barrel was to run it at Coffeyville rather than shipping it all down to the Gulf Coast. Matthew Blair: Okay. It sounds good. And then could you talk about the steep rise in RIN prices since the start of the year and basically, how are you dealing with it? Are you looking to blend more of your own barrels? Or are you in the market purchasing those RINs? And as part of the M&A effort, would you think about acquiring more blending capacity or potentially retail to offset some of your RIN exposure? Dane Neumann: Sure. There's a few questions in there, so I'll try to parse that. But rent prices have increased quite a bit in the first 6 weeks of the year. I think we believe that the -- it's not finalized, of course, we're in already in '26, so we don't even have to finalize '26 RVO. So apart from the course there. But there has been a proposal made. It's supposed to be finalized any day now, back in September, and we think that it's a much higher RVO than we've had historically, and we think that, that's lifted the rent market. Just to give you a fact there, the RIN obligation at Wynnewood is our financial obligation is 2 to 3x what we pay everybody who works at the facility. So just to level set how what a steep cost it is to us it is 2 to 3x when we pay all the employees at the facility today. And yes, we are trying to blend more, we're trying to take steps to reduce our overall exposure. And in the acquisition world or develop world, we're going to be looking for ways to either get more blending capacity or moving fuel around or all of the above and try to minimize the impact on us. But there's no doubt that we can't hide from the full effect of the RVO. We're going to have some exposure there, but we're going to try to do everything we can to minimize the cost to the company. Operator: Your last question comes from the line of [ Alexa Petrick ] with Goldman Sachs. Unknown Analyst: I wanted to start maybe back on Coffeyville. Would love your perspective, there's been more initiatives there on improving capture rates, and you've also talked about increasing jet fuel production. Any thoughts on how we can think about kind of the capture rate uplift and some of the moving pieces there going forward? Mark Pytosh: Sure. And we have a similar number of initiatives going on in winning wood. So I don't -- we did talk about Coffeyville a lot today, but we're pursuing it on -- at both facilities. And we're not -- we're pretty early and not ready to get targets. We're going to continue to be talking about all of our capture opportunities that we've either done or pursuing over the coming quarters. So we'll be communicating the way we are thinking about it is rather than putting a fixed number out there and saying that's what our -- it's really, from my perspective, a cultural shift where we are constantly looking for those margin capture opportunities. Because they come in different forms in January, the two forms that were -- that appeared that were not on the radar screen or the winter storm and the Venezuelan situation. And we're working together to being able to respond to changes in the market and take advantage. And the issue is the window is open and close, and they're generally open for short periods of time. And so you have to be fast and you have to respond. And we are working to speed it up and respond to opportunities across the whole platform to be able to take advantage of it. So we're not putting a target out there at this point, but we will be communicating with you as to our progress on improving our margin capture, and we wanted to show up in the results. Obviously. Unknown Analyst: Okay. That's helpful. And then maybe one follow-up. It's been a few months in some of these product pipeline projects were announced, bringing products from the Mid-Con to the West Coast. Any updated thoughts on how this could change the operating environment dynamic in the Mid-Con and how you guys are thinking about the next few years there? Dane Neumann: Yes. Sure. We're -- I would just say I'm very optimistic about the Mid-Continent for the next several years because I think with the pipelines that are being developed to go to the West and then the Denver I feel like our -- the Group 3, the Southern and the Southern Plains, well, it's going to begin to look more like the other parts of the geographies and refining in other parts of the country where you have other outlets. The biggest issue in the Mid-Con is seasonally, we have a wide basis. And if we had more outlets for what we're producing, I think that basis would not be as wide. And so I look out as the infrastructure is being developed as the Mid-Con being a pretty attractive place to be and give us opportunities to be moving fuel to other regions. And especially in times of the year where seasonally it's softer in the Mid-Con. So I'm very optimistic about it. It's going to take some time for all the infrastructure to be put in place. But I think the upside for our company in the Mid-Con is very good. And I think the Mid-Con as a market is going to be a lot more attractive in the coming years. So very optimistic about what's ahead there. Operator: There are no questions at this time. I will now turn the call back over to Mark Pytosh for closing remarks. Mark Pytosh: Again, I'd like to thank all of you for your interest in CVR Energy. Additionally, I wanted to thank our employees for their hard work and commitment delivering safe, reliable and environmentally responsible operations, and we look forward to reviewing our first quarter results in a couple of months. Thank you. Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.
Elizabeth Wilkinson: Good morning, everyone. Thank you for joining us to discuss Mineros' fourth quarter and full year 2025 results. I am Ann Wilkinson, Vice President, Investor Relations, and I am joined today by Daniel Henao, President and CEO; Sergio Chavarria, Interim CFO; and Juan Obando, Director of Investor Relations. Before we begin, please note that today's presentation includes forward-looking statements based on management's estimates and assumptions. These involve inherent risks and uncertainties as detailed in our cautionary note. We encourage you to review our management's discussion and analysis and the 2025 year-end financial statements available on our website in order to understand the risks inherent. Following our formal remarks, we will hold a question-and-answer session. You may submit questions at any time through the webcast portal. Please be advised that this call is being recorded, and a replay will be available on our website within 24 hours. With that, I will turn the call over to Daniel Henao, President and CEO. Daniel Villamil: Thank you, Ann, and good morning, everyone. 2025 was a pivotal year for Mineros, defined by a disciplined approach to our mine plans and a focus on high-quality production. We are pleased to report that we exceeded our full year guidance, delivering 227 gold equivalent ounces. This achievement reflects the steady performance of our technical teams and continued commitment to maximizing the value of our existing ore bodies through operational excellence. Our operations in Nicaragua continued to deliver. In December alone, the asset reached a production milestone of 16 gold equivalent ounces, demonstrating the steady progress we are making in optimizing throughput, recoveries and grade management at the site. The combination of higher production volumes and a positive gold price environment resulted in exceptionally strong financial performance with revenue reaching $800 million, a 48% increase year-over-year. This operational outperformance generated a record adjusted EBITDA of $358 million, a 71% increase over 2024. That represents approximately $1 million in EBITDA for every single day of the year. We also delivered on our lengthy track record of returning capital to our shareholders through the payment of $30 million in dividends, $12 million through buybacks. And on top of that, we delivered an impressive 275% share price appreciation and received the TSX 30 designation. That means that Mineros outperformed 98% of all companies listed in the Toronto Stock Exchange in the last couple of years. We were also the top performing equity in the Colombian Stock Exchange for the second consecutive year. Beyond our record financial metrics, I am most proud of our team's commitment to delivering these results safely and reliably. In our view, there is nothing more important than keeping our people and our communities safe. And this year's performance reflects that core value across all of our operations. I will now turn the call over to Sergio to discuss in more detail our financial results. Sergio Chavarria Munera: Thank you, Daniel, and good morning, everyone. Turning to our financial results. 2025 was defined by record growth across every major metric. This growth was driven by a favorable gold price environment with the average realized price per ounce sold reaching $3,474 for the full year and $4,179 in the fourth quarter. This represents exceptional price realization. Our full year average surpassed the market benchmark, reflecting our disciplined approach to maximizing value in a constructive gold price environment. As per our financial results for the full year 2025, as Daniel mentioned it earlier, our annual revenues hit a record of $800 million with an increase of 48% compared with 2024. Our gross profit reached $326 million, up by 77% of our net profit amounted of $145 million, a 68% year-over-year improvement. I would also like to highlight that Mineros surpassed $145 million in net profit, representing a 68% increase over 2024, as mentioned before. We had adjusted EBITDA of $358 million for 2025, representing a 71% increase over fiscal year 2024. Also, our net free cash flow hit a record of $138 million for the year with $32 million of net free cash flow in the fourth quarter alone, as we previously highlighted. As per our quarterly results, the fourth quarter saw revenues of $261 million, a 74% increase compared with the same period in 2024. This growth influenced the entire income statement as our gross profit reached $106 million, up by 94% and our adjusted EBITDA doubled to $115 million, a 101% increase year-over-year. Net profit for the fourth quarter was $9.4 million. We generated free cash flow of $32 million in the quarter. These results for the quarter are particularly strong when you consider the strategic investments and legacy items we addressed. Even after accounting for the acquisition of an 80% interest in the La Pepa Project and the settlement of the Nicaraguan tax authority dispute, the business generated a record-breaking value. Moving to our cash position. Our balance sheet remained exceptionally strong. We ended the year with $108 million in cash and cash equivalents, a very strong net position of $93 million, composed of cash and cash equivalents of $108 million, as previously mentioned, and on top of that, account receivables from our refineries of $26.3 million, offset by credits and loans of only $15.4 million. It is important to highlight that this exceptional result was achieved after significant onetime outflows, including $40 million for the acquisition of the La Pepa Project, $49 million in payments to the Nicaraguan tax authority, $12 million allocated to our share buyback program. At this time, I'd like to turn the call back to Daniel to discuss our operations. Daniel Villamil: Thank you, Sergio. These financial results were, of course, propelled by a very positive gold price environment. As Sergio mentioned, the ounces we produced were sold at approximately $3,500 an ounce. But most importantly, we have delivered on the metrics that we can control. In the fourth quarter of 2025, we produced 61,000 gold equivalent ounces. The average price of the gold in the fourth quarter of 2025 was $4,179 per ounce, a 57% increase compared with the fourth quarter of 2024. While we benefited from these record gold prices, we were not immune to sector-wide rising cost environment. Our consolidated all-in sustaining cost for the quarter was $2,486 per ounce. This was primarily due to the Nicaragua operations, where the higher gold price directly correlates to increased payments with our Bonanza Mining Partners. In Colombia, the weaker U.S. dollar negatively impacted our local cost base as well. Turning to a breakdown of our mines. Our Colombian operations performed well with an all-in sustaining cost of $1,891 an ounce. Production remained steady at 23,000 ounces for the fourth quarter. Most importantly, we successfully saw the new Aurora Plant start production. The continued strong performance at the Aurora unit remain a highlight of our Colombian operations. Given the excellent results we're seeing, we believe that additional Aurora units will be the primary engines for long-term growth and operational success in Colombia. At our Nicaragua operation, we produced almost 36,000 ounces of gold in the fourth quarter. And while all-in sustaining costs here are higher at $2,828 per ounce, this is largely due to the high proportion of mining partner contributions, which are paid as a percentage of the spot gold price. Cost, volumes and efficiencies in Nicaragua will be a significant part of our focus in 2026, which I will talk about more shortly. Finally, in Mineros, safety is a core value. Our lost time injury frequency rate remains low at 0.9 in Colombia and an impressive 0.16 in Nicaragua. In practical terms, this means that for every 100 people working at Mineros over the course of the year, including both employees and contractors, there was less than 1 injury significant enough to prevent our colleague from returning to work the following day. This metric is a primary benchmark for how effectively we are protecting the safety and integrity of our workforce. Looking ahead, our strategy is focused on securing the future by removing historical bottlenecks, delivering growth and investing in exploration. For the coming year, we're projecting consolidated gold production between 213,000 and 233,000 ounces of gold. On average, we're guiding 10,000 more than in 2025. In Colombia, we're expecting our production to be between 83,000 and 93,000 ounces for 2026 with a margin of 11% from our contract mining partners. As for Nicaragua, we are expecting production within a range of 130,000 to 140,000 ounces of gold with a margin of 35% with our Bonanza Mining Partners. As for our 2026 capital investment program, we will be investing a total record of almost $114 million for CapEx and exploration. A significant portion of our growth CapEx will be focused on Nicaragua. We will be investing in the Hemco Plant expansion, which will take us from 1,800 tonnes per day to 2,500 tonnes per day. That's almost a 40% increase in processing capacity this year. We will also be investing in mine development to support this increased throughput. Additionally, we're also evaluating adding 1,000 tonnes per day mill to the Hemco Plant. In Nicaragua, we have significantly more mineral that we can process. This is a very big focus for us at the moment. We are also working hard on improving plant recoveries, which have gone up from 87% to above 90% in recent months. Finally, we will also be investing in technical studies at Porvenir, a deposit situated along strike and just southwest from our 2 operating underground mines. The Porvenir technical study will be released with the resource statement of our operations before the end of March 2026. In Colombia, capital expenditures will be focused on increasing recoveries and achieving operational effectiveness. Sustaining CapEx for Mineros will be focused on ensuring operational continuity. Regarding exploration, I am very excited to also announce the launch of the most aggressive exploration program in the history of our Nicaraguan asset. We will, of course, be working on resource-to-reserve conversion, near-mine follow-up drilling from the drilling completed in 2025. But for the first time in the history of the property, we will be exploring very exciting greenfield targets within our very prospective Nicaragua portfolio. We will also release a comprehensive resource and reserve update for Nicaragua in the first quarter of 2026. Finally, we'll be investing in the La Pepa Project in Chile with the objective of increasing the size of the deposit, as well as an overall derisk of the asset on multiple levels. 2025 has been a year of exceptional execution across the board, demonstrating the strength of our operating model and a proven track record of achieving our production guidance. We had a record-breaking financial year with $800 million in revenue, $360 million in adjusted EBITDA. This robust cash flow allowed us to maintain a very healthy cash position while at the same time, returning $42 million to our shareholders through dividends and buybacks. With the acquisition of La Pepa, we secured full control of a high-quality asset in the Maricunga Gold Belt in Chile, one of the most prolific gold districts in the world. With a clean balance sheet, a safe and productive workforce and the continued success of units like Aurora and the expansion of the Nicaragua processing facilities in Nicaragua, we're very well positioned to carry this momentum into 2026 and deliver long-term value for our shareholders. Thank you for your time, and thank you very much for your trust in Mineros. Elizabeth Wilkinson: Now with that, we'd like to open the floor to questions. And our first question this morning will come from Ben Pirie. Thanks, Ben, for joining us on this call. So what kind of cost pressures are you seeing for the 2026 guidance? Is much of this increase a result of the higher gold prices and the higher cost to purchase ore? Or are you seeing cost pressures elsewhere as well? Daniel Villamil: Thanks, Ben, for your question. The answer is yes. A big part of it is related to gold price. As you know, our Bonanza Mining Partners are paid a percentage of spot price. Therefore, as the gold price goes up, our cost basis on the Bonanza side goes up as well. However, we're also working in several other initiatives to increase volumes and recover our economies of scale in the mine -- in our mines. So as I described before, we're going to be investing a lot in our processing facilities. Processing right now is the main bottleneck of our Nicaraguan operations. We're constrained at 1,800 tonnes per day, so we're going to be going to 2,500 tonnes per day this year itself. And that will bring -- with that, we will bring tremendous economies of scale, particularly in our mines. Historically, the Bonanza Mining program has been very profitable for the operations. So what the company has done is to give -- it has given priority to that side of the business and our own mines have suffered because of that. So we have -- just to give you an example, in 2024, we produced close to 35,000 ounces in our industrial mines. And last year, we went down to around 22,000 ounces. So that makes no sense. That's the immediate priority. That's what we're working on. We're going to go full steam ahead with our own industrial mines, recover the economies of scale, and we're going to be achieving that through the increased throughput at our processing plant and investing in mine development. All of that is included in the capital program that we have for this year. As I mentioned before as well, we're working hard on recoveries. That is important because we have paid for the mining costs. We have paid for the processing cost. And this is -- it goes straight to the bottom line. This is extra profit that we make. So that 3% extra recoveries that we have already achieved translate into tens of millions of dollars of extra benefit for our Nicaragua operations. So that's on recoveries. And last but not least is grade. We are working very hard on increasing our grades, not only in our industrial mines, where we're putting a lot of attention now to things like dilution, having a very smart mine plan, but at the same time, incentivizing our Bonanza Mining Partners to deliver higher quality ores. We are already seeing that. We're removing historical bottlenecks in our operations, historical barriers for these high grades to be delivered to our plants. And we're starting to see grades denominated in ounces per tonnes, not grams per tonne, which is very exciting. It speaks to the quality of our portfolio in Nicaragua. And that's actually guiding our exploration efforts as well. This is a 150,000 hectare, very prolific district, and everything is to be done from an exploration perspective there. So just to mention or go back to your question on cost. The main goal is recovering our economies of scale, particularly in Nicaragua. In Colombia, we have suffered from a weakening dollar. Our costs are in pesos, so that's putting some pressure. The main drivers of increased costs on the Bonanza Mining side is higher gold prices, but we will recover economies of scale, and we will be working very, very hard on costs in 2026. That's the main agenda. Elizabeth Wilkinson: Moving forward. So Ben has a follow-up question. And also, we have a question from [ Nicolas Luiz Reyes ] that are related. So Ben and Nicolas asked, could you comment on the elevated taxes in Nicaragua in 2025? And what can investors expect in 2026? And a very related question, Nicolas asked, is that a onetime charge? Daniel Villamil: Perfect. Thank you very much for your question. So the size of it, the close to $50 million payment is a onetime event. This is a legacy issue. These were -- the claim was unpaid taxes from 2019 to 2024. As you noticed in the CapEx that we're guiding, we will be investing a lot in Nicaragua. We see a lot of growth opportunities in Nicaragua, and it is very important for us to have a constructive relationship with the governments that host us. So that was just not a positive situation. We wanted to focus in our operations. We wanted to focus in our mines, do what we do. So we thought it was best just to resolve that legacy issue, pay that money and go back to our mines. So that's what we're doing. It is a onetime event. However, there is going to be an impact in costs going forward. Sergio, what's going to be the impact? Sergio Chavarria Munera: Yes. For -- going forward, we're going to have an effect of additionally around $8 million in ad-valorem tax in Nicaragua. Elizabeth Wilkinson: Excellent. So moving on, [ Michael Matheson ] has a question, and I think that we probably partially answered this. All-in sustaining cost per ounce were up significantly in 2025. Much of that was just the increase in the price of gold reflected in the price you paid our mining partners. But there are some increases in labor costs. Do you think labor costs, specifically, will be stable in 2026? Or should we expect further increases? Daniel Villamil: Thanks, Mike, for your question. So okay -- so I mentioned the main agenda already, so volumes, recoveries, grades, those are going to be the main drivers of lower costs in the coming years. But you're right, there is significant cost pressure as well from a labor perspective. What we're doing there is that we are optimizing our teams. We already actually did that recently. But we're working more on being more productive, more efficient, so incorporating AI tools, automating parts of our processes, we are adopting technologies in our operations, so we become more competitive. So that is happening. The increased cost, particularly in Colombia is significant. But, as I mentioned, we already took measures to lower the impact of that going forward. Elizabeth Wilkinson: Okay. And Michael had a follow-up question. So we recently increased our stake in La Pepa to 100%. Do you have a forecast of when mining operations will begin at La Pepa? Daniel Villamil: Perfect. So La Pepa is an exciting new jurisdiction for Mineros. As you all saw, we acquired that last year from Pan American Silver. We're starting at a very good base with about 2 million ounces in resources, but it is an exploration stage asset in a very prolific gold district surrounded by producing mines, surrounded by advanced development assets. It's looking very interesting. We think there's a lot of growth potential there. But we have to do the work, we have to explore, and we have to derisk the project. Particularly from an environmental perspective, this is a sensitive part of the world, and we want to do -- we're doing all the work we can do right now to fast track this asset. This year, we're going to be working on producing the natural time line that -- one that we can deliver on. But right now, it's at the assessment stage from a time line perspective and from a production perspective. Elizabeth Wilkinson: Next question is from Justin Chan and he's talking -- he asked about, from a modeling perspective, when would you suggest modeling the ramp-up to 2,500 tonnes a day at Hemco? And how many months do you expect it to take to reach steady state of 2,500 tonnes a day? Daniel Villamil: Justin, thanks for your question. So already, we're working on that. So we are already at above 2,000 tonnes per day. So we -- the very fast adjustment that we could do to our processing facilities we've done. And we expect to be at 2,200 tonnes per day by June and then by December be at 2,500 tonnes per day. So that's -- it's going to be incremental increases. In parallel, we're going to be working on the engineering to add 1,000 tonnes per day mill to the Hemco Plant. We have an incredible situation in Nicaragua, where we have way more mineral than we can process at the moment. So as I mentioned before at the call and previous answers, that's our focus, debottlenecking that so we can take advantage of this abundance of mineral that we see all over our properties at Hemco. Elizabeth Wilkinson: So Justin has a follow-up question for Sergio on a cash flow basis. So on the $83 million income tax liability, should we assume this is paid equally quarterly? Or if not, could you provide some color on the timing of tax payments? Sergio Chavarria Munera: Yes. Actually, for timing on taxes, we are going to pay taxes during the first semester of 2026, expected to be major payment during February. And at the end of May, we're going to have the remaining balance to be paid to Colombian tax authorities. Elizabeth Wilkinson: And we have a follow-up question from Ben Pirie. 2025 was a strong year for shareholder returns, which speaks to a supremely healthy balance sheet. Do you expect this will continue into 2026? Or will capital allocation be focused on growth? Daniel Villamil: Thanks, Ben. And I think that connects with other questions that we have received. Return to our shareholders is a priority for us for sure. And Mineros has an impressive track record of delivering a lot of value to its shareholders for decades. So ideally speaking, we do want to continue with that, delivering strong dividends. Last year, we had our inaugural buyback program, which was also successful. So last year, we delivered about $42 million to our shareholders. And in Colombia, just to be clear, that is actually a shareholder decision. That's something that we will take to the shareholder assembly that is going to happen soon, and shareholders will decide on that. From a management perspective, we think we can do both. We can continue delivering good dividends. But we think shareholders and the company itself is -- should invest in its growth, should invest in its assets. We are already seeing what investment in our own operations can do. So that's the plan. I think -- personally, I think we can deliver good value to our shareholders, both in the form of dividends and buybacks. But at the same time, invest in our assets, and we're being rewarded by doing that. You saw the performance of our stock in the last 2 years. We've gone up above 1,000%. That's very impressive. So that's also capital return to our shareholders. And so that should be appreciated as well. So that's long story short, what we think we can do both. Elizabeth Wilkinson: So the next 2 questions kind of flow naturally into that. So [ Rahul Arora ] asked, does the company plan to acquire Tier 1 assets in exploration stage to further our global growth strategy? Daniel Villamil: Thanks, Rahul, for your question. The answer is, yes. But I'm going to give you some context. We are prioritizing ideally producing assets. But that -- it's become -- it's a very challenging environment from an M&A perspective. Assets are trading at very high valuations. So we're being very cautious, very disciplined as well. We want to preserve our per share metrics. So we don't want to dilute ourselves a lot and just grow because we want to grow. We want to be very cautious with the return to our shareholders on a per share basis. So our focus right now is producing assets. But as I mentioned, that it's looking challenging to find value in that segment. So we are now scouting for advanced development opportunities throughout the Americas, and in some cases even looking at some other parts of the world, good jurisdictions where we can grow. So advanced development opportunities, assets that we can take into production and take advantage of this very positive gold price environment are the second priority. But of course, we are opportunity driven. This is -- the new vision of Mineros is to take the good opportunities that present. So if a good high-quality exploration asset comes, we would love to take a look at it. And if it makes sense for Mineros, we would love to do it. We need a strong -- we are building a strong pipeline of assets as we move into a growth phase. Elizabeth Wilkinson: So next up, we have 2 kind of related questions, one from [ Jaime Alvarez ] and the second one from [ Andre Pulido ], and they relate to knowing more about Nicaragua, the initiatives that we have to augment our production there, the work that we're doing on exploration and a little bit more about Porvenir. And additionally, Andre has kind of expands on that, trying to understand the Bonanza model and the success there and how we may be working to reduce our reliance on our Bonanza Mining Partners to process more of our own tonnages from our underground mines. Daniel Villamil: Okay. Perfect. So I think I spoke enough about our main initiatives in Nicaragua, again, increasing volume, increasing recoveries, improving the grade that we feed to our plant that, of course, is the main driver. We don't want to be in the historical position that the company had. That we had to choose between A or B. We believe we can do A and B. We can mine our mines full steam ahead, and we can process our partner minerals. That's the main agenda. We don't want to have to take that decision. We want to take advantage of all the opportunities, both from our mines and from the Bonanza Mining Partners. Speaking about Porvenir, which is -- it's also an exciting opportunity that we are working on right now. The latest information that was published to the market was back in 2023. That was a pre-feasibility study. It was already looking attractive at $1,500 gold price. So after putting a lot of work into that asset, we've explored. We've been investing a lot in engineering, and we've been pushing hard on permitting as well. So hopefully, that becomes our -- one of our next mines. Just for everyone's context, this was an asset according to the pre-feasibility that we had published that was going to produce about 60,000 ounces of gold, 110,000 ounces of silver and then about 40 million pounds of zinc. And it had an all-in sustaining cost below $1,000 an ounce. Again, it was a project that was economic. It was looking good at $1,500 gold price. So at the current gold levels, it should be a very attractive asset. Things have changed a lot in Porvenir. We, as I mentioned, we've been exploring. We are doing a lot of engineering. The layout of the processing facility is going to change. We're designing it in a way that it can grow beyond the current -- beyond what we're seeing. And we're going to be adding very likely a copper gold flotation circuit at the beginning, which will produce a high-quality copper, gold concentrate and will simplify our metallurgy for the rest of the process. So this is the update on Porvenir is going to come out in the first quarter this year together with the resource update for our Nicaragua operations. So stay tuned for that. It should -- it's an exciting asset, and we want to push it forward as soon as possible as well. Elizabeth Wilkinson: So back to the balance sheet, and Justin Chan follows up. So the tax payments -- Sergio, the tax payments will be paid in Q1 and Q2 to just follow up on your answer? Sergio Chavarria Munera: Yes. To follow up on that question, yes, we will be paying that amount during the first semester. Daniel Villamil: Just to -- something very valuable, Justin, that we do in Colombia. We have this mechanism called [Foreign Language] that Mineros has pioneered. And basically, it's a regulation that allows Mineros to pay its taxes by delivering infrastructure projects. So we -- this year is going to be exciting from that perspective. We're going to start building a large school in El Bagre. So it's going to -- we're going to be covering about 1,000 students in our community by paying our taxes. It takes a lot of management bandwidth because it's building a large school, but it's totally worth it. We will be investing in our communities, and this is an amazing mechanism that we have in Colombia. So that's taxes, but it's also the kind of social work that we like to do at Mineros. Elizabeth Wilkinson: So we have some important questions coming in about Nechi, but I think we'll stay focused in Nicaragua just for the next minute or so. We have a question in from [ Walter Bacerra ] [Foreign Language] and Walter asks, he wants to dig in a little bit more comment about our objectives around about recovering silver. Daniel Villamil: Thank you. Thanks for the question. So that's actually quite exciting as well. We're seeing a lot of silver in our Hemco Plant. Before we were not paying attention to that in our efforts on the recovery side of things. So as we started taking a good handle of the processing side of things in Nicaragua, we said, well, there's a lot of silver coming through our plant. Silver is having record prices, trading at above $100 an ounce, so we started paying a lot of attention to silver. Silver became a significant portion of our revenues last year, and we expect that it will continue that way. We're investigating this a lot because to be totally honest with you, we do not know exactly where the silver is coming from. It's coming from our Bonanza Mining Partners for sure. But exactly from what part of our portfolio, we don't fully understand yet. So that connects to the whole exploration initiative and what we're doing from that side, which is also the most aggressive exploration program. So we're understanding the plant is becoming a very valuable tool for us to explore our district. Elizabeth Wilkinson: So I think we covered Nicaragua. And I think we can turn now to Nechi. And we have a question from [ Manuel Rodriguez ]. With respect to Nechi and with respect to gold grades and recovery rates in our operation, what are our expectations would be in relation to the new Aurora Plant and our scavengers? Daniel Villamil: [Foreign Language] Manuel. Perfect. So in Nechi, that's the focus, efficiencies, recoveries. We are adding more recovery circuits to our operations. We are not expecting -- right now, given the situation in Colombia, we're exercising a lot of caution. So very large investments in our Nechi operations are not expected yet. We would be happy to double down if we see a more constructive environment. So the focus right now is exactly what you mentioned, improving recoveries, being more efficient in our operations. We're evaluating multiple alternatives to improve our revenues and our profitability in Nechi. So initiatives, as you mentioned, like the scavenger, like the Aurora Plant, they're all being worked on. We're doing a lot of engineering, optimizing studies to improve the recoveries in Colombia as well. Elizabeth Wilkinson: And to follow up, and this is probably more broad-based with the 2 operations. Sergio Torres has a question about the -- about our efforts to increase the number of ounces of production in 2026. And asking about inorganic growth or will the focus be solely on technical improvements? Daniel Villamil: Thank you. So the answer is both. These 10,000 ounces are going to come from our own assets. But we have added a lot of muscle to our technical teams, and we're scouting for opportunities globally that make sense for Mineros. So if inorganic opportunities come at the right valuations, we would love to exercise those. Elizabeth Wilkinson: So moving to our newest asset, the 100% interest that we own in La Pepa in Chile. [ Jorge Pareja ] asks, how are the results for La Pepa going? When can we hope for production from La Pepa? Daniel Villamil: That's actually a very good question, one that we're trying to answer. But to be totally honest with you, as I mentioned, it's an advanced exploration asset. We need to explore more. We need to derisk the asset, and we need to understand better our time lines. We hope it becomes a mine in the near future. But at this point, we're working on the plan to bring that to our time line. So that it's a new asset. We have a new team, and they're working in producing that time line for us. Elizabeth Wilkinson: So just as a follow-up, Sebastien [indiscernible] asked, are there any additional studies for La Pepa Project, PFS, PEA, are they planned for this year? Daniel Villamil: So it connects to the previous question, not to this year. We're doing all the -- we are doing all the environmental studies. That's actually the starting point. And we're going to be drilling as well, understanding the landscape, understanding all the regulatory process there. We're going to start imagining how a mine would look like there. We have very clear benchmarks. The Phoenix deposit just north immediate to us, just went into production, and they're showing us how it can be done. So that's a good benchmark for us. But at this point, it's an advanced exploration asset for us. Elizabeth Wilkinson: So moving just kind of up to the company in general. There are a number of questions about our dividend policy going forward and our propensity to buy back our own shares, and this is just coming from 5 or 6 individuals. So I put that to you in a bulk question, Daniel. Daniel Villamil: Okay. Perfect. No surprise there, and thank you very much. Look, from a dividend perspective, as I mentioned before, that's actually a shareholder decision, not a management decision. The policy -- the current policy is to distribute about 15% of our net profit. That translates to an annual regular dividend of approximately $30 million with the latest financial results. That's just the policy from a management perspective. We think, as I mentioned earlier, that we can continue delivering dividends. We like the buyback mechanism. We think it's very efficient for -- especially for our North American shareholders, which are becoming increasingly important in our story. And then we will work very hard in continuing returning these impressive capital returns to our shareholders. So it's a package. And as we invest in our assets, as we invest in our company, we expect that, that will translate in more value to our shareholders as well. Elizabeth Wilkinson: Okay. So a much broader-based question from [ Sebastian Carvajal ]. Considering the volatility in the price of gold and the cost of our operations in a macroeconomic context, what is our strategy -- what is Mineros' strategy to protect shareholder value in the medium and longer term? Specifically, what do we intend to implement to increase our revenues and sustainable value for our shareholders? Daniel Villamil: [Foreign Language] Sebastien. So that's actually an important question. So when somebody started getting involved with Mineros, the mandate was actually to remove all hedging policies that the company had before. We were swimming against the current. We were swimming against a very strong bull market. So for the last couple of years, the company have been enjoying this impressive gold rally. As you said, that has translated into -- as you saw, that has translated into record economics for our operations. And so right now, we don't have any active hedging policies. We are enjoying the prices that we're seeing right now. But of course, at $5,000 gold, our Board is already evaluating hedging instruments as part of our broader risk management approach. So it's something that we're looking at cautiously. We're monitoring. We're talking to our finance teams, our advisers. But the market, in general, is guiding a very constructive gold price environment. So I think we are, generally speaking, in agreement with most large banks that are seeing a very positive gold price environment. Recently, we have been more active in the market with certain financial instruments to protect ourselves. But generally speaking, we're mostly exposed to the gold price. Elizabeth Wilkinson: So we have 2 related questions from Sergio, Daniel, Torres Otero and Walter Bacerra about, can you elaborate on our investigation of redomiciling the company and the investors would like to know a little bit more about that. Daniel Villamil: For sure. So look, the company has been pushing very hard on converting into an international story. We no longer want to be the company in Avenida El Poblado that is very well known to Medellin and to Colombians. We want to be a company that people recognize in the gold space internationally. So the company took the first step listing in TSX back in 2021. That was a very positive step that the company took. But still, we are mostly ignored by the market. We are -- we actually have a very aggressive marketing agenda this year to get the story out, to get our investors throughout the world to get to know the story of Mineros, which we are convinced is a great story. It's a great opportunity for them. So we expect to go to other markets, get -- hopefully get listed in other exchanges. And as part of that, we need to explore the redomiciliation initiatives, so we -- our company can be recognized in other exchanges. Elizabeth Wilkinson: So turning to [ Alina Islam ]. Can you clarify your comment on acquiring assets? Are you prepared to look outside America or... Daniel Villamil: Yes. Thanks, Alina. And this is something that we have changed. Look, we are not in a market where we can be very picky anymore. The reality is that we can -- we want to take the advantages -- the best advantages that the world has to offer for Mineros. So if it happens to be in Australia or in Europe, why not? If it's the right opportunity, at the right price, with high-quality asset in a decent jurisdiction, we're happy to go there, do the homework. And if it makes sense for Mineros, then do it. So we are no longer constrained by Latin American assets. We're looking globally for opportunities. Elizabeth Wilkinson: And there are 2 questions that came in that, in my mind, are opposite sides of the same coin. [ Gustavo Zapala ] asks, what are our investment plans for the year? And Sebastien [indiscernible] asks, are there any plans to reduce debt or to increase our leverage during the current fiscal year? Daniel Villamil: So reduce debt, like we've done that. We have negative debt at the moment. The debt that we have is debt that makes sense because of the -- just the tax benefits that we get. These are leasings and stuff like that. So we've paid all the debt that made sense to pay. We have a very healthy cash position. As Sergio mentioned, over $100 million. We have very significant account receivables from our buyers, from our refineries. So we have a very healthy liquidity situation. So there's no more debt payments coming. We paid what we can pay. From an investment perspective, as we have mentioned throughout the call, we are going to be investing over $100 million in our assets. A big portion of it is going to go to Nicaragua, where we're hopefully going to convert that into immediate ounces, immediate return. So we're prioritizing the investment that make most sense to our company from a capital allocation perspective. And that's the discipline that we have at Mineros. We're going to put our money where we will get the best return for it. Elizabeth Wilkinson: So -- and my mistake, I misread. So are there any plans to issue debt or to increase our leverage. My mistake. Daniel Villamil: Okay. Perfect. No problem. So yes, that's something -- we don't have a very efficient capital structure. We have no debt. So for the right opportunity, the answer is yes. As we grow, if there is an attractive project and that requires some leverage, some debt component, we would be happy to take some debt. Again, we have $360 million in EBITDA this year and virtually no debt. So the company can take some leverage for its growth initiatives. Elizabeth Wilkinson: So we left the trick question for last. What are our projections for revenues, profits and adjusted EBITDA for 2026? Daniel Villamil: So the answer to that is our guidance. We are guiding 10,000 ounces more this year. The math is going to be -- is going to address that depending on the gold price that we end up getting. But the cost is what we guided, the production is what we guided and the gold price is what the market delivers to us. What I can tell you is that from a gold price environment, we're seeing a very constructive situation that should translate into -- hopefully, another record year for Mineros, but we'll see what we get, but it's looking very positive. Elizabeth Wilkinson: And that's our last question for today. So we want to thank you very much for joining us on our year-end and fourth quarter conference call. I'm going to turn the call back over to Daniel, to you have any last words? Daniel Villamil: Perfect. No, thank you very much, everyone, for your interest, for your time, and thanks for your trust in Mineros. We're going to be working with our team to continue delivering impressive results to you. So thanks, everyone, for connecting.
Operator: Good morning. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead. Daniel Jenkins: Thank you. I'm glad you could join us today for Western Midstream's Fourth Quarter 2025 Conference Call. I'd like to remind you that today's call, the accompanying slide deck and last night's earnings release contain important disclosures regarding forward-looking statements and non-GAAP reconciliations. Please reference Western Midstream's most recent Form 10-K and other public filings for a description of risk factors that could cause actual results to differ materially from what we discuss today. Relevant reference materials are posted on our website. I'm pleased to inform you that the Western Midstream Partners K-1 will be available via our website beginning Wednesday, March 11. Hard copies will be mailed out the following week. With me today are Oscar Brown, our Chief Executive Officer; Danny Holderman, our Chief Operating Officer; and Kristen Shults, our Chief Financial Officer. I will now turn the call over to Oscar. Oscar Brown: Thank you, Daniel, and good morning, everyone. 2025 was another incredibly successful and strategically meaningful year for Western Midstream that can be defined by record adjusted EBITDA and free cash flow generation, primarily driven by throughput growth across all products and from the Delaware and DJ Basins while focusing on cost competitiveness to support our long-term growth plans. Throughout the year, the Delaware and DJ Basins set multiple quarterly throughput records, enabling WES to meet or exceed our annual throughput expectations and full year financial guidance ranges. Additionally, the Aris acquisition in late 2025 further enhanced our asset base by expanding our produced water solutions capabilities and establishing a more substantial presence in New Mexico. Taken together, our 2025 achievements, including successful organic growth projects, accretive M&A, efficiency gains and cost reduction successes as well as contract renegotiations, all strengthen our operating leverage and position us for sustainable growth while maintaining a strong balance sheet and low leverage profile. As we progress later into 2025 and now into 2026, macroeconomic and commodity price-driven volatility have increased. Kristen will provide more details on our 2026 guidance metrics shortly, but based on recent discussions with our producing customers and taking into account their updated forecast, it has become clear that many of our producers will reduce previously expected activity levels on acreage that we service, including portions of the Delaware Basin. This, in combination with lower adjusted gross margin per unit for our natural gas assets, driven by changes in contract mix and lower commodity prices are expected to result in more moderate rates of growth for overall throughput and adjusted EBITDA in 2026 relative to our initial expectations. While we had already anticipated and communicated lower activity levels and declining production in the DJ and Powder River Basins, Oxy has recently reallocated a portion of their activity from acreage that we service in the Delaware Basin. Based on Oxy's most recent forecast, we expect a portion of that activity to begin returning to our acreage starting in 2027, although scenarios are still being evaluated and will continue to maintain flexibility. This activity shift moderates our expected 2026 throughput growth in the Delaware Basin relative to earlier expectations, and we now expect partnership-wide natural gas throughput to be flat and crude oil and NGL throughput to decline by low to mid-single digits on average year-over-year. With that said, our long-term outlook of mid- to low single-digit adjusted EBITDA growth remains intact as evidenced by our 6% adjusted EBITDA growth reported in 2025 and our expectation of 5% adjusted EBITDA growth in 2026 at the midpoint of our guidance range. We remain confident in our producers' long-term development plans, especially when you consider the fact that the majority of undrilled inventory within Oxy's Delaware Basin portfolio remains located on acreage that we service. While 2026 is proving to be more of a transition year than we initially anticipated, our business remains underpinned by stable long-term contract structures, many of which include minimum volume commitments that support financial stability in a lower activity environment. As you can see from the reduction in our 2026 capital expenditure program from at least $1.1 billion in prior communications to $925 million at the midpoint of our updated guidance range, we are able to quickly modify our capital program to align our spending with revised producer activity levels. In short, our long-term growth strategy is unchanged. The Aris acquisition will contribute meaningfully to adjusted EBITDA in 2026. And by issuing equity for a portion of the Aris consideration, we preserve the financial flexibility necessary to continue pursuing value-accretive opportunities and commercially creative solutions such as the restructuring of our Oxy Delaware Basin natural gas gathering contract in exchange for WES units. Additionally, our cost reduction initiatives are making WES a leaner, more efficient organization, positioning us to better compete for new business and to benefit from operational leverage when activity levels recover, especially considering extremely bullish power-driven natural gas demand fundamentals expected in the coming years. Returning to our recent accomplishments and focusing specifically on the fourth quarter, we generated record adjusted EBITDA of $636 million, even after $29.5 million of negative noncash cumulative revenue recognition adjustments. Excluding these adjustments, we would have recorded adjusted EBITDA of $665 million, representing an approximate 5% sequential quarter increase. Our fourth quarter performance was primarily driven by increased crude oil and NGL throughput in the Delaware Basin, the contribution of 2.5 months of produced water volumes from the Aris acquisition and reduced operation and maintenance expense from legacy WES's assets, which excludes the impact of Aris. The Delaware Basin remained our primary growth engine during the quarter with crude oil and NGL volumes rebounding as more wells came online and produced water volumes increased driven by the Aris acquisition. However, this was mostly offset by lower natural gas volumes in the Delaware Basin, largely due to third-party curtailments tied to low Waha hub pricing throughout the quarter as well as expected volume declines in the Powder River Basin and lower crude oil and NGL volumes in the DJ Basin. Waha Hub pricing remains a persistent industry-wide challenge affecting producers and midstream providers. While WES's direct commodity price exposure to Waha is limited, some of our third-party producers are more directly tied to Waha pricing, which led to throughput curtailments throughout the fourth quarter. These curtailments have continued intermittently in the first quarter of this year and near-term Waha pricing remains volatile. We expect continued pricing pressure through at least the first half of 2026 which will likely impact Delaware Basin natural gas throughput over the next 2 quarters. However, we expect new egress coming into service in the second half of the year to begin alleviating some of this pricing pressure. With that said, our marketing team is actively working with our producing customers to identify more diversified near-term pricing exposure to maintain economic production as well as to secure longer-term solutions, including long-haul capacity to the Gulf Coast. For full year 2025, throughput increased across all 3 products and was driven by throughput records in both the Delaware and DJ Basins, which resulted in some of the highest levels of adjusted EBITDA and free cash flow in our partnership's history. Other key operational and financial milestones include the sanctioning of the Pathfinder Pipeline and the execution of long-term produced water gathering and disposal agreements, the completion of North Loving Train I, which was brought online ahead of schedule and under budget in the first quarter and expanded our West Texas complex processing capacity by 250 million cubic feet per day to approximately 2.2 billion cubic feet per day. The sanctioning of North Loving Train II, which is still expected to commence operations early in the second quarter of 2027, the acquisition of Aris Water Solutions, which materially increased our produced water solutions capabilities, established a more substantial presence in New Mexico and provided a much stronger foothold in the produced water gathering and disposal, recycling and treating for beneficial use businesses. A 4% year-over-year increase in the distribution, which allowed WES to maintain a strong capital return profile and leading total capital return yield and maintaining our strong balance sheet with net leverage around 3x throughout 2025, including the financing of the Aris acquisition. Focusing specifically on the Aris acquisition, integration has progressed exceptionally well and is ahead of schedule and mostly complete. The acquisition has strengthened our commercial organization, expanded our capabilities and increased direct engagement from our producing customers now that the platform has been fully brought under the WES umbrella. WES now has one of the largest and most integrated water footprints in the Delaware Basin with the ability to provide all of today's water solutions, including freshwater, recycling, gathering, long-haul transportation and disposal as well as a leading position in the emerging beneficial reuse treatment technology business. We have also achieved $40 million of targeted cost synergies and approximately 85% of those savings should be realized by the end of the first quarter, with the remainder by year-end 2026 as legacy contract and license terms expire. To date, we have completed several major integration milestones including the full consolidation of ERP and purchasing systems, the consolidation of operations and project management systems, vendor contract harmonization and the complete integration of IT and HR systems, which includes the migration to WES's payroll and benefit plans. I would like to extend my sincere appreciation to all teams across both WES and Aris. This was an extremely complex undertaking, and our teams rose to the challenge with tremendous professionalism and dedication. In addition to the successful integration of Aris and the associated cost savings, we made substantial progress enacting process efficiency improvements across the organization under our multiyear cost reduction initiatives. Kristen will provide more details later, but when excluding the Aris acquisition impact, we achieved 3 consecutive quarters of declining operations and maintenance expense in 2025. In fact, when excluding mostly reimbursable utility costs and the Aris acquisition impact, operations and maintenance expense decreased by more than $100 million when annualizing the first quarter of 2025 relative to the fourth quarter of 2025. Additionally, excluding acquisition-related expenses and noncash equity-based compensation, 2025 general and administrative expense would have been flat year-over-year even after strategically retaining select personnel and functions from Aris, like beneficial reuse and commercial operations and taking routine annual compensation growth into account. Our engineering and construction team has also reevaluated certain facility designs, which will lower a portion of our expansion capital outlay in 2026 and beyond. This demonstrates the continued commitment from all teams to lower costs while pursuing our growth mandate and maintaining operational excellence. You will continue to see the benefits of our cost reduction efforts throughout this year as our teams fully execute on already identified initiatives and advance the next set of opportunities. As the legacy WES and Aris operations, engineering and construction teams continue to integrate, we expect to unlock additional efficiencies beyond the previously communicated $40 million of targeted synergies. The teams have already identified several incremental opportunities across both produced water systems, and we will continue evaluating and prioritizing these throughout the first half of 2026. With that, I'll turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance in the fourth quarter. Daniel Holderman: Thank you, Oscar, and good morning, everyone. Our fourth quarter natural gas throughput decreased by 4% on a sequential quarter basis as a result of lower volumes from the Delaware Basin due to certain customers curtailing volumes in response to low Waha Hub pricing and lower volumes from the Powder River Basin. These decreases were partially offset by record throughput from the DJ Basin. Our fourth quarter crude oil and NGLs throughput decreased slightly on a sequential quarter basis, primarily due to decreased throughput from the DJ Basin, which was mostly offset by increased throughput from the Delaware Basin as expected wells came online in the fourth quarter. Our fourth quarter produced water throughput increased 121% on a sequential quarter basis as a result of 2.5 months contribution from the Aris acquisition. Our fourth quarter per Mcf adjusted gross margin for our natural gas assets decreased by $0.01 compared to the prior quarter, mostly due to contract mix associated with Delaware Basin volumes and lower overall throughput from the basin. Going forward, we expect our first quarter per Mcf adjusted gross margin to decline modestly, and we now expect our average natural gas adjusted gross margin to be approximately $1.22 per Mcf in 2026, driven mostly by a change in contract mix in the Delaware Basin and lower overall commodity pricing. Our fourth quarter per barrel adjusted gross margin for our crude oil and NGLs assets decreased by $0.33 compared to the prior quarter, mostly due to an unfavorable revenue recognition cumulative adjustment recorded in the fourth quarter associated with lower cost of service rates at our DJ Basin oil system and South Texas system. Going forward, we expect our first quarter per barrel adjusted gross margin to range between $3.05 and $3.10 and our average crude oil and NGLs adjusted gross margin to range between $3.10 and $3.15 per barrel in 2026. Our fourth quarter per barrel adjusted gross margin for our produced water assets decreased $0.11 compared to the prior quarter, driven by 2.5 months contribution from the Aris acquisition. We expect our first quarter per barrel adjusted gross margin to increase slightly and our average produced water adjusted gross margin to be approximately $0.85 per barrel in 2026 due to increased throughput expectations and associated contract mix. Turning to our full year results. For the second consecutive year, average throughput across all 3 products increased year-over-year, adjusting for the sale of several noncore assets that closed in the first half of 2024. For full year 2025, natural gas throughput averaged 5.2 billion cubic feet per day, representing a 4% year-over-year increase, in line with our expectations of mid-single digits growth. For full year 2025, crude oil and NGLs throughput averaged 514,000 barrels per day, representing a 1% year-over-year increase, in line with our expectations of low single digits growth. Full year 2025 produced water throughput averaged 1.6 million barrels per day, an increase of 40% compared to full year 2024, driven by 2.5 months contribution from the Aris acquisition. Produced water throughput from WES' legacy assets averaged 1.2 million barrels per day, representing a 7% year-over-year increase and in line with our original expectations of mid-single-digit growth. Turning our attention to 2026. We expect that most of our throughput growth will occur in the Delaware Basin and will be driven by the Aris acquisition. As Oscar discussed, due to lower overall customer activity levels across our asset base, we now expect our growth rates for crude oil and NGLs and natural gas in the Delaware Basin to moderate to low to mid-single digit average year-over-year growth in 2026. Overall throughput decreases in the DJ and Powder River Basins are now expected to result in portfolio-wide average crude oil and NGLs throughput to decline by low to mid-single digits and natural gas throughput to remain relatively flat year-over-year. For produced water, we estimate that the throughput will increase by over 80% year-over-year, driven by the Aris acquisition. More specifically, in the Delaware Basin, even though we expect the number of rigs to decline year-over-year and the resulting number of wells that we expect to come to market to decrease by a little more than 1/3, we still anticipate throughput growth mostly due to drilling efficiencies that continue to be achieved by our producing customers. As we mentioned on our third quarter call, we expect a more challenging environment in the DJ Basin that should result in average year-over-year throughput declining for both natural gas and crude oil and NGLs in the mid- to high single digits range as we expect the overall number of wells that come to market to decline. With that said, we expect natural gas throughput to be supported by steady onload activity from Phillips 66. We also expect Oxy's Bronco CAP development to offset basin-wide crude oil and NGLs throughput declines with volumes that are expected to come to market in the second quarter of 2026. Once we begin to see results from the initial production of the Bronco CAP, we will be in a better position to provide a clearer view of year-over-year trends in the basin in 2026 relative to 2025. Also, as previously discussed, we expect average year-over-year throughput for natural gas in the Powder River Basin to decline in the range of 10% to 15% based on the most recent producer forecast. The Powder River Basin tends to be more commodity price sensitive, but several of our producing customers have indicated the return of rigs to the basin in 2027. We will remain in close contact with our producing customers and continue monitoring the commodity price environment before making any decisions to allocate additional growth capital back into the Powder River Basin. Finally, we expect average natural gas throughput for our other assets to increase in the mid-single digits range year-over-year. This is mostly due to a full year's contribution from Williams Mountain West Pipeline expansion, the tie-in of Kinder Morgan's Altamont pipeline into our Chipita processing plant in Utah in early 2025 and steady throughput levels at our Versad plant in South Texas. With that, I will turn the call over to Kristen to discuss our financial performance during the quarter. Kristen Shults: Thank you, Danny, and good morning, everyone. During the fourth quarter, we generated net income attributable to limited partners of $187 million and adjusted EBITDA of $636 million. Our net income was negatively impacted by $120 million of transaction costs from the Aris acquisition that were added back to adjusted EBITDA for comparability purposes and due to the onetime nature of those costs. Relative to the third quarter, our adjusted gross margin increased by $60 million. This was primarily driven by the incremental gross margin contributed from the Aris acquisition, which was partially offset by the recording of approximately $30 million of unfavorable noncash revenue recognition cumulative adjustments associated with redetermined cost of service rates on certain contracts associated with our assets in South Texas and at our DJ Basin oil system. In fact, without these fourth quarter adjustments, we would have recorded adjusted EBITDA of $665 million, a 5% increase relative to the prior quarter. Our operation and maintenance expense increased by $40 million or 19% sequentially, which was primarily driven by the inclusion of 2.5 months of Aris. When excluding Aris, our fourth quarter operation and maintenance expense decreased by 12% compared to the fourth quarter of the prior year, and our full year operation and maintenance expense decreased by 2% on average year-over-year, demonstrating the success of our cost reduction plan that we commenced in the second quarter of 2025. In fact, excluding Aris and utility costs, the majority of which are reimbursed through producer contracts, operation and maintenance expense decreased by more than $100 million from the first quarter to the fourth quarter of 2025 based on the difference between the first and fourth quarter annualized run rates. As we transition into 2026, we estimate further year-over-year reductions in operation and maintenance expense related to our legacy asset base, acknowledging the normal seasonality we typically see in quarterly spend. Going forward and including the full year's contribution from Aris, we expect our operation and maintenance expense to increase by approximately 10% to 15% on average year-over-year. This is significantly below the combined company's pro forma operation and maintenance expense, reflecting the realization of identified cost reductions and additional efficiencies we continue to capture. On a reported basis, our general and administrative expense increased quarter-over-quarter, primarily due to transaction costs associated with the Aris acquisition. When excluding those costs, the modest quarterly increase mostly pertained to higher personnel costs. Excluding acquisition-related costs, 2025 cash G&A expense would have been approximately $235 million, essentially flat compared to 2024, even after taking into account the increased size of the business and strategically retaining select personnel and functions from Aris, like beneficial reuse and commercial operations. Going forward, we expect our 2026 cash, general and administrative expense to again remain flat year-over-year due to continued cost reduction initiatives even after accounting for a full year of the retained functions from Aris and accounting for routine annual compensation increases. Turning to cash flow. Our fourth quarter cash flow from operating activities totaled $558 million, generating free cash flow of $341 million. Free cash flow after our third quarter 2025 distribution payment in November was a use of cash of approximately $39 million. Distributable cash flow in the fourth quarter was approximately $527 million compared to $547 million in the prior quarter. In January, we declared a distribution of $0.91 per unit, which is consistent with our prior quarter distribution that was paid on February 14 to unitholders of record as of February 3. Turning to our full year results. We recorded $1.15 billion of net income attributable to limited partners, generating record adjusted EBITDA of $2.48 billion, exceeding the midpoint of our 2025 adjusted EBITDA guidance range of $2.35 billion to $2.55 billion. Our record adjusted EBITDA performance was primarily driven by increased throughput across all 3 products, several quarters of record throughput from the Delaware and DJ Basins, successful cost reduction initiatives and 2.5 months of contribution from the Aris acquisition in the fourth quarter. This growth positioned WES to deliver record cash flow from operations of approximately $2.22 billion in 2025. Our capital expenditures totaled $722 million, within our 2025 guidance range of $625 million to $775 million and consisted of capital largely associated with the construction of both North Loving Train I and II, the Pathfinder produced water pipeline and associated systems and other expansion projects to support the growing needs of our customers, primarily in the Delaware Basin and in our other core operating basins, but to a lesser extent. We also generated record free cash flow that totaled $1.53 billion in 2025, exceeding the high end of our guidance range of $1.275 billion to $1.475 billion. This was primarily driven by our strong adjusted EBITDA performance, diligent working capital management and capital expenditures coming closer to the midpoint of the guidance range, less than our most recent expectations from the third quarter. Finally, WES declared distributions that totaled $3.64 per unit for 2025, including our recent fourth quarter distribution of $0.91 per unit. Distributions paid within calendar year 2025 were in line with our full year distribution guidance of $3.61 per unit. Turning to our 2026 financial guidance and taking producer forecast into account, we expect our adjusted EBITDA to range between $2.5 billion to $2.7 billion for the year, implying a midpoint of $2.6 billion, which represents growth of approximately 5% year-over-year at the midpoint. We expect that the Delaware Basin will remain the primary driver of throughput growth, especially considering the full year's contribution from the Aris acquisition and will help offset expected throughput declines in the DJ and Powder River Basins. Our range also includes continued cost reduction initiatives and first quarter winter storm impacts of approximately $10 million to $20 million. We now expect our 2026 capital expenditures to range between $850 million and $1 billion, implying a midpoint of $925 million, which is significantly less than our previous estimate from the third quarter of at least $1.1 billion. Due to the shifting commodity price environment and recent changes in producers' forecast, we have remained disciplined and reduced our expansion-oriented capital expectations for the year. Approximately half of our expected 2026 capital program is directed towards the construction of the Pathfinder produced water pipeline and associated systems and North Loving II, both of which are still expected to come online in the first and second quarters of 2027, respectively. Our actions also demonstrate our ability to materially reduce the remainder of our expansion-oriented capital expenditure program when needed, thereby limiting the impact on free cash flow. As we enter a year with elevated expansion capital spending, we are also providing distributable cash flow or DCF guidance, which we expect will range between $1.85 billion to $2.05 billion in 2026, implying a midpoint of $1.95 billion. On a per unit basis, we expect DCF to range between $4.59 and $5.08 per unit. While we continue to believe that free cash flow is a meaningful indicator of the partnership's financial strength, DCF also provides investors with an additional measure of our capacity to fund the distribution and a substantial portion of our expansion capital program. As such, we will continue to provide both metrics going forward, and we estimate that our 2026 free cash flow will range between $900 million and $1.1 billion, implying a midpoint of $1 billion. Turning to the distribution. We intend to recommend a distribution increase of $0.02 per unit starting with our first quarter distribution to be paid in May. And as such, we are guiding to a full year distribution of at least $3.70 per unit, which includes distributions to be paid within calendar year 2026. This represents an approximate 3% increase compared to our prior year's annual distribution of at least $3.61 per unit, and the distribution increase will equate to approximately $3.72 on an annualized basis. Going forward, we will continue to target mid- to low single-digits annual percentage adjusted EBITDA growth, but we will most likely pursue a rate of growth slightly less for the distribution in order to increase distribution coverage naturally over time. With that, I will now turn the call over to Oscar for closing comments. Oscar Brown: Thanks, Kristen. In closing, our 2025 achievements, which included organic growth, accretive M&A, meaningful efficiency gains and cost reductions and constructive contract renegotiations, all strengthen our operating leverage and reinforce the durability of our business. Our performance reflects the strength and resilience of our diversified asset base, the dedication of our teams, the execution of our strategic growth plan and our commitment to disciplined capital allocation and operational excellence. Despite near-term activity shifts, our long-term strategy of mid- to low single-digit growth remains firmly intact supported by producers' development plans and the depth of undrilled inventory on acreage that we service. In short, our strategy hasn't changed. The Aris acquisition will meaningfully contribute to 2026 results. Our reduced cost structure will inure to our benefit. Our balance sheet remains a source of strength and issuing equity for a portion of the Aris consideration preserve the flexibility needed to continue pursuing value-accretive opportunities and creative commercial solutions. With an expanded footprint in New Mexico, we now service some of the most economically attractive acreage in the Delaware Basin, and we will continue to see this basin grow within our portfolio, while the DJ Basin continues to generate strong free cash flow. Additionally, as natural gas demand rises, particularly to meet growing power generation and LNG demand, we expect to call on natural gas production from basins beyond the Permian and Haynesville, which should result in increased capital allocation and throughput growth in the Powder River Basin in the years ahead. WES's leading position as the #1 gatherer and processor in the basin, in combination with a large inventory of undrilled locations, all provide a strong foundation for future throughput growth and success. Combined with the progress we have made on cost reductions, WES is a leaner, more resilient organization and is well positioned to capture operational leverage as activity recovers. With that said, I am confident in our ability to deliver sustainable value for our stakeholders over time, and I look forward to another year of growth and operational success. I would also like to thank the entire WES workforce for all their continued hard work and dedication to our partnership, which enabled us to achieve landmark accomplishments in 2025. I look forward to seeing what we can achieve in 2026 and updating our stakeholders on our progress toward our goals on our first quarter call in May. With that, we will open up the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Gabe Moreen with Mizuho. Gabriel Moreen: Just had a quick question, I guess, in terms of -- in light of the cost of service restructurings, the foray into water, your balance sheet and where it stands right now, just how you're thinking about M&A and inorganic growth as it stands currently? Oscar Brown: Thanks, Gabe. That's a shocking question. But I appreciate the query. So yes, I guess, number one, nothing's changed. As I said in our -- in the prepared remarks, our strategy is unchanged, and that goes for the way we think about M&A. So again, our capital deployment strategy is clear and it's tight. We only deploy capital, whether it's organic or inorganic to sustain or grow the distribution. We have demonstrated that discipline clearly last year. It is unchanged going forward. So I'm a little annoyed that people seem to be questioning that a little bit by virtue of what's happening in the marketplace. But second, the way we think about M&A, again, is really our preference is bolt-on M&A where we have opportunities for synergies. So it fits with our assets, our geographies. We have some way a reason and competency for owning the asset. So that's unchanged. And especially as a relatively new CEO, I guess I'm kind of popular. We have had -- I've met every CEO, private and public in this space. I'm pretty sure I haven't missed anybody. If somebody wants to buy me coffee and tell their story, they're welcome to do it. We'll listen. So we have an obvious strategy in terms of how we intend to grow the business. I hope you'll agree with the Aris acquisition, we did it in a very disciplined fashion. We took a little grief for issuing equity in that transaction given it was a bolt-on. But if you look at the big picture of the last 16 months, I hope you can see it all came together. We were able to claw back 15.3 million units of the 26.6 million we issued based on the Aris transaction relative to the contract renegotiations that gave us that flexibility. And so we'll continue to execute. If you step back a year, I'd also say we were super clear on updating and clarifying our strategy and providing for the first time long-term guidance on our growth. We are not NVIDIA. So we're not growing at crazy rates. We're just trying to post up around 5% every year, plus or minus over the long term. And I think hopefully, you can see how we're setting up for 2026, despite a few headwinds from some customers in terms of their drilling outlook this year and so forth, that the model holds. We'll be able to deliver something like that again this year. And then with our organic projects in terms of Pathfinder and North Loving II, we're setting up for a very strong 2027. The final comment I'll make on all of this is when you look at how we were setting up for sort of giving you the visibility of sort of that consistent growth rate over time, the 2 big organic projects sets up '27 pretty nicely. Aris really gave us at least a 2-, 3-year pretty clear visibility runway on supporting that growth as we believe the water part of the business is going to grow faster than gas. Gas will probably go faster than oil, et cetera. So we've got a pretty good runway. So there's nothing that we need to do to change our strategy in terms of how we deploy capital, and we're going to consistently continue to be disciplined about it. And my final comment is we're not going to take this call to be the opportunity to start participating in the silliness of the rumor mill. So I hope that helps, but happy to answer any questions in terms of anything specific about a shift in how we look at the world or the M&A market in general. Gabriel Moreen: Very comprehensive. And maybe if I can just pivot to 2 follow-ups around, one is Waha. I think you mentioned sort of trying to ameliorate some of the negative pricing impacts. Can you maybe just elaborate on that a little bit more? And would that also imply down the line that maybe you feel WES needs to participate in some of the egress solutions coming out of the basins for commercial reasons? And then just wondering if I can get an update in terms of further commercialization on Pathfinder with additional third-party interest. Oscar Brown: Yes. No, those are perfect. Thanks, Gabe. Yes, on the Waha situation, again, I think we're aligned with the market and believing that the egress that's coming in the second half and then beyond that should help immensely with sort of at least dampen down some of the volatility in Waha pricing. Again, the majority of our customers, we tend to serve very large and often public integrated oil types and large independents. Most of those folks have found solutions along the way in either bypassing or getting exposure to other pricing hubs, et cetera. So we do have some other companies that do have direct Waha exposure, and that's where you've seen some of the production sort of the shut-ins and the volatility. We do think the Waha solution, if this is it, in the second half, is going to be great for everybody in the basin. I think it just taps down uncertainty whether you have exposure there or not. And then in terms of what we're doing, we're -- we've been working with those customers that still have significant exposure and coming up with sort of commercial solutions where we can help them commit to downstream solutions where they might not be comfortable doing it themselves, if we can aggregate the right situation or bundle the right services for the right number of customers that WES is willing to sort of support them in commitments in aggregate that maybe they can't do on their own. So we're working on those kind of solutions to help our customers in the near term and ensure whether this egress is enough over the next 5 years that there's backup plans related to that for our customers. With respect to Pathfinder. Yes, it's been interesting, right? I think we had a little bit of post Aris, our customers and the conversations we've been having kind of changed a little bit because we just have a much larger footprint and now the complete full array of solutions to what you want to do with your water, whether it's recycling or long-haul transport disposal, whatever. And then in the longer run, right, we're a leader in solving the sort of water treatment and desalinization beneficial use opportunity, which is going to be massive, we think, in the coming years. So that all kind of that dynamic kind of changed the conversation. And then when you add in Pathfinder, which is the first long haul to be -- which will be the first one to be completed, the dynamic changed. I think what we're seeing here recently is a significant pickup in interest in both more integrated solutions depending on where you are in sort of New Mexico and Texas that may or may not include a long-haul piece of the solution, where producers want sort of the water to go is becoming more specific, where they want to disposed of, and we can sort of provide that visibility. And then ultimately, just straight up commitments to the pipe, whether it's our customers or even some of our peers, and we have to think through how we manage that. So interest is really high. We're also excited, Gabe, from a capital perspective on that project with the sort of commercial-related transaction that we did late last year, which gave us better access to some of the land opportunities and SWD opportunities. It allowed us to sort of adjust sort of the path of Pathfinder and optimize some of our well costs related to that. So the cost of Pathfinder is coming down meaningfully. So even with the MVCs we already have in place, we see the returns on that project going up. But indeed, we're seeing a lot more interest in that pipe than even in the last couple of months. Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan. Jeremy Tonet: Just wanted to dive into the water side, maybe a little bit more, but thank you for all that color. I was wondering, you talked about for the business, low to mid-single-digit EBITDA growth. But if you parsed out the water side, what would that look like? Oscar Brown: Probably the lower end, right? So in terms of the core, like that part of the business, long-term growth, I mean, we're going to closely follow just general basin growth given our size and our footprint, and we're kind of in the core areas. So barring any sort of producer-specific movement, I would think the long-term growth when we sort of combine gas and oil assets is a couple of 2%, 3% sort of on average over time. We're going to have cyclicality and all that related to it. Again, gas will be higher than oil. But we do believe water is for at least the next several years is going to have a higher growth rate than both those businesses. The wildcard, of course, and I think what you're seeing in the general exuberance of the market for infrastructure here in the last few weeks is sort of the realization that the gas pull demand is going to be real. And so that may change the dynamic, especially as we have sort of solutions for Waha and things like that. So if gas demand really does pick up meaningfully, there will be a producer response. So you might see gas do a little better than even we think in that sort of blended hydrocarbon throughput growth rate. But water will follow that along as well because you're going to get lots of water with that production, too. I don't know if that's your question, but I hope it helps. Jeremy Tonet: That is helpful. And just pivoting here, looking at the industry as a whole, we've seen a lot of midstream consolidation over the years here. And I was just wondering, how do you feel WES stacks up given a lot of competitors have significant scale at this point? Would it make sense for WES to scale up more to be -- to compete more effectively with larger players? Or do you feel like you're at a good size? Oscar Brown: Yes. Sorry, I got you [indiscernible]. No, I think -- look I think we're at a good size. We can always grow. Given the consolidations on our customers, right, and then the consolidation in the midstream space, scale is going to continue to matter. I mean one reason we're going to continue to be the leader, for example, in the water business is we're an order of magnitude, 10x the size of our next meaningful competitor as an enterprise in the business, and it allows us to go after projects that would strain their systems in terms of size that they can't compete with. So there's an analogy across the streams that we compete in, in that. So scale matters for sure. But I think our enterprise value, it's not -- we're not going to get bigger just to get bigger. We're going to continue to execute sort of the strategy that we've laid out in terms of our growth. I think where we're constrained, we don't compete. We're a G&P company, so we're not competing in long-haul pipe and the like. So if you think about the kinds of projects that fall naturally in our wheelhouse in terms of gathering systems, new compression, gas processing plants, hopefully, we expand more into the business of CO2. We'll have a solution on power at some point, et cetera. Beneficial reuse, even all those projects that will sort of drive our growth just in what is in our competency today are all absolutely manageable at our current size. North Loving II is a great example, right? We told everybody last summer that we were leaning in a little bit on that plant. We weren't doing our usual way to build up a portfolio -- a plant size portfolio of offloads, then sanction a plant, then take 18 months to build it, et cetera, that we had enough view of our customers and sort of our processing stack that we could go ahead and start building that plant. And if we were on time, great, if we're a little early, fine, $200 million to $300 million project, which is what most of our projects are in the box. Even on the water side, the $25 billion enterprise can probably handle if we're a quarter or 2 early on some of those. Operator: Your next question comes from the line of Keith Stanley with Wolfe Research. Keith Stanley: First question, now that you've modified the Permian G&P cost of service contract with Oxy, are there other contracts that you're interested in amending at all in the near term? Or is that not a priority at this point? Oscar Brown: Yes. In terms of -- well, one, we don't have any left. As you'll recall, something like 8% or 9% of our revenues post that restructuring are cost of service contracts. So it's pretty small. Ironically, right, the cost of service revenue recognition noncash adjustment we had this year, 2025 of $29.5 million. When you compare that to $3.8 billion of revenues, it's about proportional sadly. So I think these are -- it would be nice that if those were simplified if we could find an economic way. But given it's pretty small now, and there's a lot of effort, as you can imagine, for all parties involved. It's not necessarily something that is high on the priority list. Then again, everybody likes to do forecasts to the last dollar, but these things are pretty small in the grand scheme, and they certainly don't impact sort of the important stuff. So a little bit low on the list. Keith Stanley: Got it. And then wanted to follow up on distribution coverage. So the strategic recontracting with Oxy cleaned up contracts and dealt with an overhang, but came with an upfront cash flow headwind. And now you're in a bit of a down cycle this year. So how are you thinking about distribution coverage right now? And how would you kind of characterize some of the levers you can use to improve upon your distribution coverage over time? Oscar Brown: Yes. No, that's a good point. So I mean, we talked about distribution coverage now for more than a year in terms of our plan to sort of grow our distribution a bit behind our EBITDA growth in particular. So I think the outlook that we're going to recommend to the Board, the go-forward outlook with the $0.08 increase kind of nails it in a way, right? So we're expecting 5% EBITDA growth this year. On a go-forward basis, sort of run rate to run rate, it's a bit over a 2% increase. So we got 300 basis points of spread. Normally, we probably wouldn't have that much spread necessarily. But as you say, it's a bit of an uncertain market. But I think that all of this sort of kind of proves the model works taken holistically, right? So we had -- growth was a little bit lighter than we thought. So our distribution growth, we pulled that back a little bit. We have low leverage. We're in good shape and a lot of confidence for the future so we can continue that forward. But we also, as you noted in your note, we pulled back in response to sort of the activity, we pulled back a bit on our capital where we were originally guiding for in excess or at least $1.1 billion. We're now at the midpoint of $925 million. And so it just underscores the flexibility of the model. So again, we're -- the levers you have, of course, are how you deploy capital, CapEx, et cetera, our success or not on the commercial side in terms of organic growth. And then if you can supplement that with other kind of growth, inorganic or otherwise that, again, can build up the distribution coverage, which is sustaining the distribution or even better grow the distribution, then we'll do that. So everything we did in 2025 set us up for a resilient model kind of going forward and really sort of was an attempt to give you the visibility that while we might hit a speed bump here and there, that we should be able to deliver this on average sort of kind of mid-ish single-digit growth rate. Operator: [Operator Instructions] Your next question comes from the line of Wade Suki with Capital One. Wade Suki: Just wondering if you might be able to comment on sort of the commodity price backdrop here. Obviously, budgets set in a lower price environment than where they are today. So maybe if you could help walk us through how that dynamic might play out this year, if you want to parse it out by basin or operator type, that would be great. Oscar Brown: Yes. Maybe I'll let Kristen just sort of reemphasize sort of the basin look in general. But I'd say I agree, right, the budget we've built and responding to are based on customer forecasts that we've got over the last many weeks. It does feel strange because it does feel like at least the sentiment at the moment, is more bullish than that. So there could be upside. But if you want to walk through sort of the basis in terms of. Kristen Shults: Yes. I think -- so when you kind of go basin by basin, PRB is obviously your most commodity price-sensitive basin. We talked in the script about thinking about a natural gas decline there from 10% to 15%. I think some of that just depends on -- if you see a little bit of a tick up in commodity prices, maybe you get a little bit more activity on that acreage, but you'd really see throughput coming in, in the back half or the back even quarter of the year, if that's the case. So DJ Basin, we talked about in the script the decrease there. I think the wildcard in the DJ is, as we've discussed previously, Oxy moving into their Bronco CAP area. That's a new area for them. And so whether or not actuals look like their expectations. That's what we're using in our forecasting is their expectations of that area. And so we'll just have to see how that plays out. In the Delaware Basin, specifically, as we mentioned in the prepared remarks, we've got some producers that are just more Waha price sensitive. And so even if you see an uptick in oil, it will really depend on what's going on at Waha and whether or not they curtail volumes, not if they push activity more and the privates are really the more wildcard in the Delaware Basin just because they can accelerate or pull back on capital more quickly. So I hope that helps. Wade Suki: No, that's great. Thanks So much, Kristen. Oscar, you mentioned, you made a couple of comments, I think in passing a couple of questions ago, maybe in Jeremy's question. But I heard you say something about expanding more into CO2. And I think I heard you also say you will have a solution for power at some point. I'm wondering if you could maybe elaborate on those 2 comments, if you don't mind. Oscar Brown: You bet. So a year ago, we set up a new ventures group to make sure we were thinking very long term. So we're trying to make sure, as we talked about, addressing the near term, the next several years in terms of visibility on the growth rate, but recognize the oil and gas business is pretty dynamic. And so while we think water is just a core piece of that for obvious reasons, we wanted to make sure we weren't missing other opportunities. So we've definitely been exploring, trying to understand the opportunity set around unconventional EOR. And if that is something that if it turns into kind of the next big thing for shale, so to speak, over the next however many years, are we well positioned to help support and build out that infrastructure. We also, with our obvious relationship with Oxy, who's a leader in CO2, we've always been very interested in figuring out how we could support them or others in terms of anything related to enhanced oil recovery. So it's something that we know how to handle molecules and turn valves and deal with pressure and all that stuff. So CO2 would be a clear core competency for us. So we're definitely encouraged by what we're seeing by Oxy and others in the unconventional EOR space and very hopeful that, that's something that will be a big thing in the Permian in coming years and other basins for that matter. So that's that. On the power side, of course, with all the -- I guess, a couple of things, right? So the Permian grid is notoriously unstable. You add in the dynamic around potential for data centers and other pulls on power. We certainly use a lot of power. We share wires with Oxy. We have competency in building transformers and the compressor, the turbine, they're all very similar. So again, we feel like the power sort of build, operate, generate business is something that we can certainly participate in. But we're going to -- with all these opportunities, we're going to -- just like with water, we waited for a long time on that to go from our legacy system to building up something new. The commercial models need to move in a direction that makes sense for us in the midstream space and as an MLP. So to the extent we get commercial contracts that support, again, sustained growth and distribution to sort of support our returns requirements and our business model, we'd look to participate in things like CO2 power, et cetera, and other ventures where, again, it's -- it will be clear to you all that it's right down the fairway of our competencies and what we know how to build and operate. But again, that last piece is really important, that commercial aspect that needs to make sense for us before we kind of go chase unicorns in general. The one place we are leaning in on that's still -- it's a scaling challenge, not a technology scale, not a challenge to speak, but scaling as hard as people in the tech business know is that beneficial reuse business. And that's one where, given our size, we can certainly have a real impact there and accelerate what Aris was trying to do. Operator: There are no further questions at this time. Mr. Oscar Brown, I turn the call back over to you. Oscar Brown: Great. I want to thank everybody for their interest. Thank our teams for really a great year in 2025, and we're really looking forward to continuing to deliver consistent results for our investors. So we look forward to seeing folks on our next call and on the investor conference service. Thanks again. Operator: This concludes today's conference call. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Gold Fields' Q4 Results Presentation. [Operator Instructions] Please note that this event is being recorded. I will now hand the conference over to Chief Executive Officer, Mike Fraser. Please go ahead, sir. Michael Fraser: Thank you very much. Good afternoon, good morning and good evening for those that have joined the presentation of our financial year 2025 results. And on behalf of the team at Gold Fields, I'm really pleased to deliver a very strong set of results for the group. Going into the presentation, I have with me our Chief Financial Officer, Alex Dall. Also joining in the room is Jongisa Magagula, our Executive Vice President of Corporate Affairs; as well as Chris Gratias, our EVP of Strategy and Business Development. As going into the presentation, we will run through a short presentation that will be shared between myself and Alex, and then we will spend some time at the back end addressing questions. I would like to first draw your attention to the disclaimer on the forward-looking statements. Just going into some of the highlights. I think, first and foremost, as I said, we are very proud to deliver a strong operating and financial performance for 2025. I think firstly and most pleasingly, we delivered a safe delivery during the year. And it's quite clear that our safety improvement plan is starting to deliver positive outcomes for the group. In terms of production, attributable production was up 18% year-on-year to 2.44 million ounces, and that was at the upper end of our guidance of 2.25 million to 2.45 million ounces. That was assisted by a strong performance across many of our assets, but most importantly, through the strong contribution and ramp-up of our Salares Norte mine in Chile. Our all-in costs and all-in sustaining costs were within guidance and were marginally higher than 2024. Most of the impact was due to higher sustaining capital, but also due to royalties and stronger producing currencies. If we look at the work that we've done on improving our portfolio, as I said, calling out Salares Norte achieved commercial production in quarter 3 2025 and steady-state production during quarter 4. And certainly, Salares' ramp-up has been a very pleasing part of the delivery during 2025. In addition, during the year, we completed the acquisition of Gold Road Resources that was completed in quarter 3 that allowed us to consolidate 100% of Gruyere and the surrounding tenements and I will touch on the outlook for Gruyere in a short while. We also continued the progressing of Windfall towards FID. We worked on updating the execution plan as well as advancing conversations with our host community on advancing the impact and benefit agreement as well as progressing the final environmental approvals. In addition, in terms of our portfolio and as communicated at our Capital Markets Day in November, we've identified a number of asset optimization opportunities across our assets, and we have started embedding those into our plans for 2026. Also to -- finally to talk to the fact that we have significantly increased returns to shareholders, and that has been communicated in our results today. This follows our decision to revamp our capital allocation policy in November, which we communicated as part of Capital Markets Day, where we now are delivering 35% of free cash flow before discretionary investments. In addition, we announced a special dividend of ZAR 4.50 per share as well as a share buyback of $100 million to be delivered during the course of the next 12 months. And that delivers a total shareholder return of ZAR 31.85 per share, which, in our view, delivers an upper quartile yield of over 6%. We also have decided to allocate an additional $250 million to our top-up program over the next 2 years, which increases that total program to around $750 million, of which $353 million is delivered now in this result. So overall, I think the key message is that we've had a safe, reliable operating delivery during 2025, and that has delivered a strong cash flow generation, which has allowed us to continue to reinvest in our business and return additional cash to our shareholders. Just again, to remind everyone of our portfolio, Gold Fields today is a global gold miner with assets in high-quality jurisdictions. We have 9 mines and 1 project across 6 countries, and these are all in attractive mining jurisdictions. We have delivered adjusted cash -- free cash flow of just under $3 billion during 2025 with around 44% of our production from Australia and key growth in Chile and Canada through Salares Norte and our Windfall Project. If we move on to the operational performance for 2025. Again, just most importantly, we're proud of the fact that we've been able to get everyone home safe and well at the end of every day. We have had, however, 7 serious injuries across the year, which again just galvanizes us to focus even more on delivering safer outcomes across our business. Pleasingly, we have also completed all 23 of the Elizabeth Broderick & Co recommendations. These have now been implemented. And now we are working on continuous improvement of our culture. As I mentioned, attributable production at 2.44 million ounces above 18% improvement year-on-year. And that meant that we were able to deliver within our original production and cost guidance that we set at the beginning of 2025. Our costs -- all-in costs were up 3% and all-in sustaining costs up 1%, largely due to increases in royalty paid as well as strengthening producer currencies, offset by dilution of higher ounces produced as well as higher quality ounces coming out of Salares Norte. I think the highlight is, again, we call out is despite the challenges we had in 2024, the safe ramp-up at Salares Norte meant that we were able to deliver well above the market guidance during 2025. That enabled us to deliver a 175% increase in cash flow from operations. As Alex will show a little later, some of that is just allocation differences from Salares Norte between operational cash flow and group cash flow. So when you look at our net group cash flow, that is up nearly 4x from 2024. Just going on to our ESG performance briefly. We've spoken about the impact of our -- positive impact of our safety improvement plan that we're implementing. We also had 0 serious environmental incidents and that's been consistent for the last 7 years. We have also made good progress on our gender diversity with now 27% of our employees being women with 28% in leadership. And of that, 20% of our women are in core operating roles. Due to the strong cash generation, we were able to share significantly to our stakeholders and ZAR 1.4 billion of the total ZAR 5.7 billion that has been created was delivered to host communities. We have also delivered significant work in building out our group legacy programs in Peru, Ghana, Chile and in South Africa with the Australian legacy program currently being scoped. In terms of decarbonization, we've delivered 15% absolute emission reduction against our '26 baseline and a 5% net increase against the '26 baseline. We've also been able to achieve full conformance against the global GISTM on tailings management. And under water stewardship, we've had 74% water recycling against our target of 73%. We've also completed our midterm review in -- of our 2030 targets. I think 2 key changes that we are considering is changing our decarbonization target to an intensity reduction target which will allow us to more actively move in line with the portfolio changes and also setting context-based water targets, given that some of our water -- our operating areas, we certainly have saline and hypersaline operating environments. Just calling out our production very briefly. We have a couple of things to call out. Gruyere, you see an increase of 42,000 ounces, mainly due to the inclusion of 100% in quarter 4 as well as an increase in tonnes milled. Granny Smith was down in line with our business plan, but what we are seeing is increasing grades as we're mining deeper. St Ives, we saw the benefit of higher tonnes milled and an increase in the yield because of more fresh material going through the mill than stockpiles. South Deep, pleasingly, we're up 16%, largely driven by improved mining grades as well as improved stope turnover, which allowed us to get greater consistency and feed through the system. Damang was down largely due to the fact we were mining -- processing stockpiles through the year, and that was due to lower yield. And Tarkwa were down largely due to the fact that we had prioritized stockpile feed through the mill rather than fresh material. And then the other big kicker for us is obviously Salares Norte giving us a 16% increase. I'll now hand over to Alex to give us a rundown on the cost changes year-on-year. Alex Dall: Thanks, Mike. We've seen a 3% year-on-year increase in all-in costs. This is higher volumes offsetting inflation as well as investing in our future at Windfall. The higher operating costs are driven by the inclusion of Salares Norte as it reached commercial levels of production, the accounting for Gruyere at 100% for the fourth quarter of the year as well as higher mining costs driven by both volumes and contractor rate increases. The higher sustaining capital is primarily due to the investment in the winterization project at Salares Norte to ensure that we got through the winter. And the higher growth expenditure at Windfall is due to a full year of consolidated costs after the acquisition of Osisko Mining in Q4 2024. And then we see the significant impact of the higher gold volumes on decreasing our cost base. Thank you, Mike. Michael Fraser: Thanks very much, Alex. So just moving on very briefly then to the -- some of the individual assets before I hand over to Alex for a more detailed financial overview. I think just starting with Gruyere, we're very pleased to have consolidated Gruyere. I think it gives us an unconstrained opportunity to unlock the potential of the asset. I mean, clearly, during 2025, we didn't entirely deliver all of the ounces that we would have liked to, but we made significant progress. We were able to deliver record material movements. So we're up 37% year-on-year on tonnes mined, largely due to a focused attention to accelerating the Stage 5 waste strip. And that really translated into where we're seeing the higher cost due to larger development capital at the site. But the other thing that was pleasing is that our mill achieved record throughput rates at 9.6 million tonnes. That was a significant achievement in getting the mill running close to its potential. Moving on to Granny Smith. Again, Granny Smith continues to be an important asset in our portfolio and delivers consistent results. The reduction in production was in line with our plan as we prioritized development and in particular, significant effort going into catching up on some of the infrastructure spend, particularly ventilation and energy reticulation capital. St Ives had a very pleasing year, where we were able to lift production by 12% and that meant that we were able to really see those higher grades coming through the mill. All-in cost was up 14%, but that was largely due to the higher capital spend, in particular, as we bore the brunt of the capital spend on the renewable energy micro grid during the year. On an all-in sustaining cost basis, they were down 5% year-on-year. Moving on to Agnew. Agnew was -- saw a 7% increase in attributable production. And that was largely due to an increase in improvement in mine grades and processes grades. But we did see a 21% increase in capital spend, which translated into a 14% increase in costs. And that, again, was largely due to the development of the Barren Lands underground mine and related brownfield exploration. South Deep, we've touched on this, production up nearly 16%, which had the effect of diluting the cost increase by only 3%. And this shows us the leverage at South Deep because of the fact that it's a highly fixed cost operation. And that translated into a significant growth in free cash flow, which is really pleasing to see. The improvement at South Deep was really driven by an improving stope turnaround. And that really is the key focus for us to improve rock on ground. And once we have rock on ground, we're able to get that through the system and deliver higher yields through the plant. So from our point of view, South Deep has really had a good 2025 and has positioned itself for a good start into 2026. Damang, we had production down 28%. That's largely due to the fact that we stopped mining in the beginning of 2025 and have really been processing stockpiles with the associated yield loss through the mill. Despite that, they did continue to deliver reasonably good cash flow on much lower volume. Moving on to Tarkwa. Tarkwa had a 12% reduction in production ounces against 2024. That was largely again due to the fact that we had prioritized a lot of waste stripping activities during the year and prioritized waste movement over ore mining. That meant that our grades were down over the year as we use low-grade stockpiles to supplement feed into the mine. That had a direct translation into higher costs as we capitalized a lot of the mining activities as well as the fact that we had lower production ounces during the year. Despite that, we saw free cash flow up over 100%, largely due to the benefits of the tailwind of gold prices. Salares Norte, without adding a lot more to that, really pleased with the performance at Seladas Norte. The mill is running really well. We're also seeing recoveries above what we had anticipated. And everything at Salares largely going on track. We did have some slightly higher capital, which Alex can talk to during the additional winterization during 2025, but that certainly has paid us back well. Cerro Corona has performed well. And although we see the all attributable production down 3%. That's largely due to the copper gold price factor. And on a specific commodity basis, we saw copper and gold being delivered above our plan, largely due to better-than-expected grade yields. All-in costs were slightly higher on an all-in equivalent basis due to some of that lower production. With that, I hand over to Alex to take us through the detailed financial performance. Alex Dall: Thank you, Mike. On the back of the higher production as unpacked earlier by Mike, and an average gold price for the period of about $3,500 per ounce, headline earnings are up 117% year-on-year to $2.6 billion. Adjusted free cash flow is just shy of $3 billion for the year or up 391% year-on-year and $3.32 per share. This has enabled us to declare a record base dividend the full year of ZAR 25.50 per share, comprising the interim dividend of ZAR 7 per share and a final dividend payable in quarter 1, 2026 of ZAR 18.50 per share. In addition, we are also in a position to announce additional returns to shareholders of $353 million, comprising a special dividend of ZAR 4.50 per share, taking the total dividends for the year to ZAR 30 per share, and a share buyback program of $100 million, which will be executed over the next 12 months. I'm also pleased that our balance sheet is in a strong position after funding both the Osisko and Gold Road transactions, and we are sitting in a net debt-to-EBITDA ratio of 0.26x. This slide unpacks our cash generated over the period. The operations before tax generated cash of $5.5 billion. After tax and royalties as well as interest and certain working capital adjustments, we generated cash flows from operations before investing activities of $4.5 billion. After capital of $1.4 billion, lease payments of $100 million and certain rehab outflows, we have generated free cash flow of $3 billion or approximately 5x the free cash flow of $600 million in 2024. This slide is the capital allocation framework that we communicated with the market as part of our Capital Markets Day in November 2025, which is all about ensuring we continue to invest in our assets to ensure safe, reliable and cost-effective operations, maintain our investment-grade credit rating and pay a sector-leading base dividend. After this, it is all about getting that competitive tension right in allocating our free cash flow generated between investing in our future, building balance sheet flexibility and delivering industry-leading returns to shareholders. Unpacking the allocation of our cash that we generated in 2025, our free cash flow before capital and dividends generated is $4.4 billion, This enabled us to deliver on our capital allocation priorities in a disciplined manner, ensuring that we got the tension right between the 3 core pillars. We reinvested in the business through spending over $1 billion on sustaining capital. And we also delivered on our growth objectives by spending growth capital and exploration expenditure of $665 million. This was to bring Salares Norte to commercial levels of production, advance the Windfall Project and to increase life and lower costs at our existing operations, in particular, at St Ives. We delivered strong shareholder returns through $1.4 billion through our base dividend, which is aligned to our revised policy and additional returns of up to $353 million. After this, we had $944 million of cash, which was used to delever and build balance sheet flexibility on the back of the debt raise to fund both the Osisko and the Gold Road transactions. We ended the year with net debt of $1.4 billion, which includes leases of around $500 million. As communicated at the CMD through the change to our base dividend policy, we are declaring a full year dividend of $1.4 billion, special dividends of USD 253 million and a buyback of $100 million. This enables us to deliver total shareholder returns of $1.7 billion over the period, which is 44% of free cash flow before growth and 54% of total free cash flow. This is in excess of half of all our cash being returned to shareholders. On the back of the additional returns, we are also -- on the back of the stronger gold price, we are also in a position to top up our program that we announced at the CMD from $500 million to $750 million over the next 2 years. After both the special and the share buyback, this leaves $400 million under the program. This graph shows our dividend history over the last 5 years. In 2025, we are able to deliver record shareholder returns of ZAR 31.90 per share, a 220% increase from 2024. And this, we believe, equates to an industry-leading yield of 6.3%. Thanks, Mike, and back to you. Michael Fraser: Thanks very much, Alex. And look, I think just what the work that was done on revisiting our capital allocation framework has certainly given us a lot of clarity on how we position the business going forward. And what I can honestly say is that, that does not limit our ability to continue to improve the quality of our portfolio. So now we will move on to what we are doing and the 3 levers of growth that we consider around improving our portfolio. So I think during the year, despite the significant cash generation and what we have returned to shareholders, we continue to make disciplined investments across the 3 growth levers during 2025. In terms of our bolt-on M&A, we did complete the Gold Road acquisition, which allowed us to consolidate 100% of Gruyere and the surrounding land package. We also significantly advanced our Windfall Project in preparation for FID, which we are still planning for mid-2026. In addition, we have been hugely successful in extending life our assets through our brownfields exploration program. And in a short while, a few slides, we'll touch on the success we've had in reserve replacement at our assets, but we spent USD 129 million in our brownfields program in '25, which allowed us to deliver a 9% increase in reserves across the year. In addition, we have really revitalized our greenfields exploration program. We have spent $101 million during 2025. This is inclusive of a USD 35 million investment -- equity investment in Founders Metals to gain a significant exposure to Antino Gold project in Suriname. In addition, we spent $21 million on our broader land package at Windfall, which is beyond the brownfield spin. And also what we did in quarter 4, we integrated the Gold Fields exploration portfolio, which gave us a significant additional exposure for our Gruyere mine. I think one of the other things to call out is, again, not speaking it up, but Salares is going to continue to be an important part of our value accretion over the coming years. we were able to have uninterrupted operations during 2025 despite the same weather conditions that we experienced in 2024, which again spoke to the effectiveness of the work that we did to prepare it for winter. We achieved commercial level of production in quarter 3 with steady-state production achieved during quarter 4. We were also able to continue to progress the Chinchilla capture and relocation program to derisk the development of the Agua Amarga extension. In 2026, our focus is to continue to maintain the steady-state throughput and stability through the plant. We still have around 2 years of mine material sitting in front of the plant. So we're certainly not mine constrained or at risk in the mining in any way. We will continue to advance the Chinchilla capture and relocation program. and starting to prepare the second half of the year, the Agua Amarga pioneering and pre-strip activities. We will also continue to undertake near-mine exploration to identify potential additional ore bodies and ore sources for the mill. Our 2026 guidance remains intact against our CMD disclosures of 525,000 to 550,000 ounces of gold equivalent with an all-in sustaining cost of between $450 and $600 per ounce. The next big growth lever for us is really progressing Windfall to final investment decision. Our key deliverables really for 2026 is finalizing the execution plan, getting the main environmental completed and awarded during the end of H1, continuing the secondary permitting approvals, which we also require by the end of June, getting the impact benefit agreement signed and really ensuring that these are all in place to take the most advantage of the weather windows ahead of the next weather -- the winter season at the end of 2026. So our plan at this stage is to really advance those key deliverables during the first half of this year. That will ensure that we have all of the site cleared and core infrastructure in place for the start of 2027, which allows us to start plant construction during the first half of 2027, with commissioning to start commencing the back end of 2028 with first gold due in 2029. So the critical path for us over the next few months is really around the key permitting and approvals, and we are confident that we remain on track at this point in time, but we'll provide a good update at the Q1 operating update in early May. Just moving on to the Gold Road acquisition very briefly. Again, we think that this was a very well-executed transaction. We got the timing right. This was always something we wanted to do, and we feel very pleased with the outcome of what this has delivered. So for a net $1.4 billion, we were able to consolidate 100% of this asset. And that allows us to really deliver on the full potential of this asset and optimize the full life of mine. It also allows us to bring in 100% of Golden Highway and that entire Yamana land package, which we have already identified a number of targets to build into our longer-term plan. So the key focus for us in 2026 is advancing the studies to optimize the deposit, obviously, looking at ways of accelerating access to some of those high-grade material to supplement the lower-grade Gruyere deposit as well as investing in further drilling across the Yamana package. Just going on to reserve replacement. This is ultimately how we measure the health of our -- the life of our portfolio. Pleasingly, we were able to deliver additional 4 million ounces in reserves over the year, which gave us a 9% improvement in our overall reserve position. So with the 2.5 million ounce reserve depletion, we saw an increase on the Gruyere addition from the other 50%. Granny Smith, we've included the Z150 discovery. We've also added additional ounces for Santa Ana and Invincible at St Ives. Agnew replaced depletion, and this is the nature of that ore body where they just continue to replace depletion on an incremental basis, and Tarkwa, we were able to convert resources to reserves through that additional price assumption adjustment as well as removing some of the key operational constraints. And this is going to be a key focus for us to continue to replace reserves. Just moving on then to the outlook and conclusion. For 2026, our guidance really is completely in line with our guidance that we provided at Capital Markets Day for 2026 with production targeted between 2.4 million and 2.6 million ounces. Total capital is between $1.9 billion and $2.1 billion. All-in sustaining costs between $1.8 (sic) [ 1,800 ] and $2,000 and all-in cost $2,075 million to $2,300. We've included the capital markets guidance next to those numbers and the only deltas that we've adjusted for in 2026 guidance is really foreign exchange and royalties, and that we've just run through on the cost numbers. I think for our focus this year is really about continuing to improve safety performance, ensuring the predictable delivery of our plan and continue to improve the portfolio quality by advancing our greenfields program and advancing Windfall to FID. Key priorities we've set out for each of our assets are really in line with the Capital Markets Day plan for each of our assets. We have a number of studies and activities and capital investment going into each of these assets. to improve the quality of these individual assets and also clearly progressing 2 key permitting and lease renewal processes. Firstly, the Tarkwa renewal and secondly, the permitting around Windfall. So we have a very clear plan, and we are progressing against our strategic plan that we set out in our Capital Markets Day in November. So with that, we've come to the end of the presentation. Thank you for listening. And now we hand over to Jongisa to facilitate the questions. Jongisa Magagula: Thank you so much, Mike. We've got participants that are joining on the webcast as well as on the Chorus Call. So to keep it balanced. I'll take 2 questions from the webcast and then switch over to the voice-only Chorus Call questions. The first one comes from [ E Adeleke ] from [ Marotodi ] Capital Markets. He says, congratulations on your stellar set of results. The first question, what is the most troublesome KPI on your radar at the moment? And how are you anticipating moving the needle on it? His second one says, could you outline the current exploration road map and clarify if excess liquidity is being prioritized to these operations? Okay. So those are the first 2. Michael Fraser: Thank you very much for those questions. Look, I think just on the key issues undoubtedly, and I'm sure many words are going to be written about it. But across the industry, we are facing cost inflation, not just the impacts of producers, strengthening producer currencies, increasing royalty rates, but there is some pressure on costs. Pleasingly, we have a number of opportunities to really arrest that. And that was really what we were trying to unpack at our Capital Markets Day and what we try to present in here. So many of those costs are an outcome of the things that we do to improve the structure of our business, and we're very focused on that. But that's a very important focus. And I think the second one, undoubtedly is with the changes that are going on in Ghana is to really progress that the Tarkwa lease renewal and the safe and reliable transition of the Damang mine. So those would be, I think, in the top of our mind, the things that are really important for us to progress. I think in terms of exploration, I absolutely think if you think about the levers of growth and the opportunities in front of us, M&A is always really expensive, but you have to be opportunistic to really grab things that present themselves to improve the quality for future generations. Obviously, our brownfield exploration continues to be the lowest cost per ounce replaced of discovery, and we'll continue to prioritize our brownfields program, in particular, at Windfall, where we have a very, very significant land package that we're trying to identify the next Windfall opportunity. But then in terms of our greenfields program, really ramping that up because we've seen what success looks like. Salares Norte was a product of our greenfields exploration strategy. And you can just see the multiplier of that. So we are very much focused on finding ways of really building our longer-term pipeline through our greenfields program, and you've seen that through the investment in the Antino project through Founders Metals, where we've been able to put our foot on what we think is a highly prospective next horizon opportunity for us. So as you rightly identify, I think more value is going to be created through the drill bit for the next generation than it is necessarily by buying assets, although we're always going to have to be mindful of being able to be agile when those opportunities present themselves. Jongisa Magagula: Good. I'm going to pause and hand over to the operator on the Chorus call to see if there's any questions. I'm not hearing that there are any questions on the Chorus call, so we'll just carry on. The next one, sir, is from Luca Grassadonia, from VSME report. He says, good afternoon, could you please explain the rationale for a $100 million buyback on a market cap of $47 billion? Michael Fraser: Thanks for that Luca. And I think I'm going to probably hand that question to Alex to take. Alex Dall: Certainly. Thanks, Mike, and thanks, Luca, for that question. I think what we need to bear in mind is that we have competing shareholder priorities depending on the jurisdiction that they are in. We have North American shareholders who prefer buybacks and have been looking for them. So I think what we've done here with the buyback program is it is small relative to the total returns to shareholders. It approximates about 6% of the total shareholder returns. So we think it is just finding the right balance of mixing our returns between both dividends -- special dividends and buybacks, top-up returns. Michael Fraser: Alex, and I would just say that the views amongst shareholders about buybacks are quite polarized at times. This would be the first time that we've really been in the market buying back shares. And it really is an opportunity for us to just see how it goes with a very low-risk entry. Jongisa Magagula: Okay. Just the second question, also on the webcast is, do you plan on doing any joint ventures with Zijin Mining? Michael Fraser: Yes. Look, I think firstly, I would want to say that Zijin has been shown really remarkable growth. And we engage them in all of our industry bodies in the countries that we operate. And we see them as a very credible miner who've really developed their business very, very well. So we have a very productive relationship with them. And certainly, we are not closed to working with any of our peer groups around the world. Our point is always clear. We're here to exist to create value as long as we can find partners who share our values and are willing to work in line with our standards and what our expectations are of ourselves and the priorities for our shareholders. Then, frankly, it would be incumbent on us to be constructive about any potential working relationship. Jongisa Magagula: I'm going to pause again and just see if there are any questions on the Chorus Call, operator. So I'm hearing that there are, please go ahead. Operator: We have a few questions. The first question we have comes from Chris Nicholson of RMB Morgan Stanley. Christopher Nicholson: I've just got 2 questions, please. So I know we touched on it on our call this morning. So can you just go back to the current situation in Ghana. My understanding that royalty bill is now before the parliament. So is it your base case that royalties will be lifted on Tarkwa in particular? And then in relation to the ongoing lease renewal negotiations you're having with the government there. I know that there's a couple of things at stake. Could you talk to the fact whether the 10% government ownership is one of the issues that are at stake in relation to lease renewal? And then just the final one, just -- I mean, obviously, we're looking at roughly about $2 billion of CapEx this year. I mean I've been going through my model today. And the one region I'm specifically interested in is in the Australian region. It looks like you spent somewhere close to about $600 million in 2025. Could you give us what the CapEx number would be for 2026 in the Australian region? It looks to me like it's going to be north of $1 billion? Michael Fraser: Thank you, Chris. I'll come back. Alex can take the CapEx question, but let me just start with Ghana. You're quite right. The royalty bill is in front of parliament. Under that, the parliamentary procedure unless it's withdrawn, it will be passed into law within weeks. So you would expect it during the course of March, I expect to be announced as law. Under our current lease agreement at Tarkwa though, we won't be immediately impacted because our lease agreement does include some stability provisions, which means that it won't apply to us at least until the end of our lease, which expires in April of 2027, which, as we know, is not that far away, but it does provide some protection during the course of 2026. But I think the issue around the royalty rates and will it apply going forward, I think is something that is still not yet entirely clear because as you rightly call out, there's also a debate about, well, is the 10% ownership appropriate? And it's not just for -- for Tarkwa, there's many other assets don't have any local participation or any state ownership in the asset. And I think the way that we're having the conversation with government, and it's very early days. So there's nothing is hard on the table from proposals either from our side or their side, just to be clear, we're really talking about the process at the moment is it's really about how we share value here. And today, there's already a significant sharing of value with the government of Ghana. And the conversation we're having is to say, look, you can pull many levers here. But just bear in mind that you can't put all the levers because otherwise, you end up in a world where there's -- it makes very little sense for companies like ours to continue to invest. So I think the conversation is really to try and be quite broad and pragmatic. And I do think the government is aware of the fact that now that you've pulled -- you shot 1 of the arrows in terms of royalties that you've got to be quite pragmatic about how you think about the rest of the package. And I also don't think it's off the table to think that there could be potentially some other movements. The ministers and the Minister of Finance have already been talking about reducing the stability levy from the current 3% to 1%, for example, to mitigate some of those impacts to the higher royalties. So there's a degree of pragmatism. But I think as the bill stands today, we will see that new royalty rate coming through. But we certainly think that the door is now not closed to continue to talk about what a fair sharing of value looks like going forward. Alex? Alex Dall: And thanks, Chris. To just go to your capital, you are right, there are going to be significant increases in Australia. The first one is at Gruyere, an increase of about $150 million. That is just purely due to consolidating at 100% versus 50%. Then at Granny Smith, we've seen close to $100 million increase, and that's as we invest in ventilation, cooling and power upgrades to access the Zone 150 ore body that you saw Mike talk about the additional reserve of 0.5 million ounces there. And then at Agnew, we're also seeing a $50 million as we invest in tailings, paste plant construction as well as ventilation and cooling upgrades. And then also St Ives about a $50 million increase at the Invincible complex development and on the materials as we advance the materials handling system. So you're right. If you also add the strong Australian dollar that moves your $600 million closer to the sort of $1 billion mark. Jongisa Magagula: There are quite a few questions still on the Chorus Call. And I understand that there was an issue with connectivity. I'm going to take another one on the Chorus Call. Operator: [Operator Instructions] The next question we have comes from Rene Hochreiter of NOAH Capital. Ren Hochreiter: Very nice cost control, especially. Mike, you have a dividend policy, and I get that one. But would you consider having a special dividend policy? Like it looks like at the moment, a special dividend is declared depending on what your capital allocation is. But would you like have a more rigid policy going into the future some time? Michael Fraser: Look, Rene, thanks for that question, and I'll ask Alex to contribute it to as well. I think from our point of view, we look at whatever we provide in top-ups is really a function of probably 3 things. Firstly, are we maintaining a good balance sheet? So are we maintaining an investment-grade balance sheet. Secondly, are we limiting the opportunities to reinvest in our business for the future generation? And thirdly, what does the total dividend look like in relationship to our peers? And that's why we always talk about targeting upper quartile total returns to shareholders -- total dividends to shareholders. So that special dividend in my mind will always be something that is a function of those other 3 elements. And so being very precise about it, in terms of formula, I don't think really serves us well. And that's why in the way that we've described capital allocation it really is about sharing the cash flow that we generate between those 3 elements of maintaining a strong balance sheet and keeping a strong balance sheet to give us flexibility for the future, making sure that we are in the upper quartile of total dividends payable to shareholders. And then thirdly, making sure that we've got cash to reinvest in the future. So that's how we thought about it. But I don't know, Alex, if you got any other thoughts. Alex Dall: Well, I think that's right, Mike. And we also obviously benchmarked our base dividend policy, and we do believe that it is one of the top ones in the sector. And we were very strategic in how we thought about, do we allocate it purely on free cash flow, but we actually decided to go with free cash flow before growth investments that we don't penalize shareholders returns on us investing in the future. So we honestly believe giving back 1/3 of all free cash flow before growth investments will deliver strong returns to shareholders at sort of consensus gold prices. If we see gold prices above those consensus prices, I think there will be room to deliver special dividends. Ren Hochreiter: Okay. Just a couple of other questions. Under underground drilling results at Gruyere. Is there any update on that? Michael Fraser: No, early days yet, Rene. So we'll probably only be in a position to provide more detail maybe in 12 months. We've got a pretty good program during the course of this year. We know that the ore body is there. It's really just trying to size it up. And in parallel, we'll be doing the trade-offs of the additional cutback versus moving into the underground. The underground will happen at some point. But pretty early days. We know what the grade is largely. It's pretty consistent, but it's really now sizing up the size of the ore body. Ren Hochreiter: Okay. And just 1 more question, if I may. St Ives grades, mine grades were down 29% and the yield was up 3%, and Gruyere's mine rates were down 18% and the yield was down 6%. The yield was down or quite a lot different from what the mine grades were. Can you sort of explain that a little bit? I'm a mining engineer, but I still don't understand that. Michael Fraser: I think what always happens is that it's a function of how much of the stockpile material that we're processing. At St Ives, we also had an impact where we were actually processing the Swift Shore and Invincible Footwall South, which were 2 open pit operations, which come in at a slightly lower average grade than our underground material. So it really becomes a mix. And that really meant that our mining grades were slightly lower year-on-year, but we had more mined material going through the plant and therefore, you saw yields being slightly higher as it replaced -- as it replaced stockpile material. And then I think on Gruyere, it's also a function of higher stockpile processing because even though we moved massively more material in the year, we weren't able to get all of that through the mill because the mill was also stepping up in terms of its volume of process. They moved up nearly 1 million tonnes year-on-year. So that's kind of what you're dealing with. Jongisa Magagula: I'm going to come back into the webcast questions, and we're going to have to pick up pace because I'm just mindful of the time. The next one is, can you discuss any outstanding permits that might be needed for Agua Amarga? The incoming Chilean administration has hinted at easing some regulatory burdens. Do you see any potential that such executive actions could ease issues at Salares? I'm going to cluster a few of Ghana-related questions just so that we can speak to it in one go. The next 1 is from Cornelius from Robeco. He says, do you expect the proposed royalty increase in Ghana will lead to higher royalty payments for us in the next 5 years? And then the other one that is related to Ghana is for Tarkwa, how are you treating the lease renegotiation for your reserve calculation? What outcome on the lease renewal do you assume in the reserve calculation? And that's from Reinhardt van der Walt from Bank of America. Shall we do those 2? Michael Fraser: Thank you. So just on Agua Amarga, I think we feel quite confident. There's nothing additional that we require. So we are now -- it really is -- the progress is largely aligned to our Chinchilla capture and relocation program. So that's the only thing. But it's not permit related. I think in Ghana, yes, if the royalty payments -- the royalty regime would apply to us, currently, we pay what the industry pays, which is around 5% royalty. Under the new sliding scale that's 6% to 12% even if you offset 2% of the stability levy at worst -- sorry, it's likely at these kind of gold prices to still mean an additional 5% royalty payment, if that's what gets applied under our new lease conditions. So whilst in the next 12 months, it doesn't impact us. It could impact us beyond 2027. And in terms of, Reinhardt, the question that you've asked on reserves, we have applied the full life of mine reserves into our declaration, and that's what the application is for. So anything that would limit our horizon on our lease could potentially impact that. But we're certainly confident that we'll find the right path on the term of lease. Jongisa Magagula: If I can tag one on, Mike, from Shaib, which is along the same lines. Could you quantify the increase once it starts affecting Tarkwa the impact to unit costs of increased royalty? Michael Fraser: Alex, do you want to take that? Alex Dall: Yes. So at current spot prices, that would be $350 an ounce increase -- $5,000 an ounce. Jongisa Magagula: Great. I'm going to go back to the Chorus call to take an additional question or 2. Operator: The next question we have comes from Adrian Hammond of SBG. Adrian Hammond: Just to follow up a bit on Windfall. The project as it stands, you've given us a CapEx number at Capital Markets Day, although there is still due in EIA and IBA as well. And obviously, the most importantly, the feasibility study. So I guess the question is, what's your confidence in the CapEx number given the feasibility has yet to be done? And I'm assuming that your reserve gold price increase to 2,000 will have a large influence on the project and the reserves, et cetera. So I guess, should we be looking forward to a -- I'd like to call it a Tier 1 asset for Windfall, but I don't see it as a Tier 1 yet, not because of it's jurisdiction, but because of its size and cost profile, but perhaps you can enlighten us? Michael Fraser: Adrian, maybe just a couple of things. So this investment in Windfall is what we look at as almost the first phase of the development of this entire property. So the first phase of this was always designed to be -- to fit in with provincial approvals, which was always going to be the fastest process, fastest pathway to get this project started. That is going to really deliver us at 300,000 ounces for the next 10 years and banks it in. But we're already starting the next second phase of studies, which will help us to further optimize the asset. That's about looking at potential additional material handlings, potentially a shaft for the long term. We know this is a 20-year plus asset. In addition, we're looking at ways of improving the yield of that asset. But today, we have a fairly tight footprint that is within the current approval that we -- that is being developed. And so just to be very clear, the feasibility study for this asset that supports the environmental approval was actually done 2 to 3 years ago. So the only thing that we're really working on is optimizing our underground mining. So even with a change in reserve price assumptions because of the nature of our footprint, in this first phase of the project delivery, it's not going to have a material impact on the reserves in the near term. But the bigger opportunity really is to go into that second phase of permitting, which hopefully will allow us to widen the footprint and create further opportunities to mine this ore body. And then we've got the opportunities of all the nearby resource that we haven't even started including in this. So we absolutely do believe that in the long term, it's Tier 1. Yes, you may look at it today and it might be too small. But the potential of this asset is -- and the footprint is really huge, and it's up to us to now migrate to that. But the first approval is really this. In terms of the capital cost, we felt that when we got to November, we put a lot of work into understanding the underground mining. We've put a lot of work in updating our cost estimates and the execution plan. And certainly, that presented the best view of it. In terms of the IBA, that's largely going to be translated into some form of royalty equivalent-type participation, I suspect. But I do think that that's not going to necessarily hit our capital number. I think the biggest risk on capital is possibly likely to be any significant changes in exchange rates, U.S. dollar Canada, but also just an underlying contractor and project productivity. I mean we've seen and we've been engaging with some of the peers who are delivering big projects in Canada. And the biggest concern is just like as years passed, productivity rates are dropping off. So that's probably one of our bigger concerns. But Chris is on the line. I don't know if, Chris, you want to add anything to that? Chris Gratias: No, Mike, I think you covered it extremely well. Maybe I just -- the one point I would add as to the prospectivity that we see. This gets to a related question before about additional investments in exploration. Well, obviously, are prioritizing increased spend at Windfall. And as we think about future pipeline management and people always ask us, what's next after Windfall, we kind of say, we highly are excited about the next Windfall Project will be found at Windfall. Jongisa Magagula: I'm just mindful of time. I'm going to take 2 questions from... Adrian Hammond: Thanks for the color there, Mike and Chris. That's very useful. And then to follow-up, if I may, for Alex on inflation rates, which follows on about the CapEx. We've seen some incredible increases with some of your peers as well. And it sort of reminds me of the price cycle where competition for labor has become a thing. Are you able to put some color to us on what the labor landscape is like for you out there right now, given where record prices are at? Just so that we can get a sense of when we're looking at these companies, on a cost basis, what is actually a real cost increase versus a real -- an inflationary increase. It's quite nuanced. Alex Dall: Thanks, Adrian. And we're not quite seeing -- we're not seeing the inflation we saw during COVID, but I mean we are probably seeing CPI plus a couple of percentage point inflation across the board. We are continuing to see labor pressure in Australia. I think luckily with the Windfall construction, we've actually modeled sort of all the labor and other construction projects in -- that are going on in Quebec, and we think we actually fall in quite a good window from labor availability from some projects ramping off before others ramp up in that construction phase. But I think the real labor pressure we're experiencing in Australia at our mining contractors in particular. Jongisa Magagula: Thanks for that, Adrian. I'm going to take questions from Josh Wolfson, and we are on time. So I do note that there's still quite a few from the webcast. We'll take note of them and then reach out to answer them directly. The first one from Josh says, can you provide more details on turnover at Gruyere? How would the operating trends there differ from GFI's other operations in Australia? I'm assuming he's talking labor turnover. And then can you speak to high-level indications of quarterly expectations for 2026 production, thinking about sequencing and seasonality? Michael Fraser: Yes. Thanks very much, Josh. Good to chat. Look, I think Gruyere absolutely has been a challenge with our contractor. They've seen in the fourth quarter, turnover rates of up to nearly 50% amongst their workforce. That's been a combination of certainly some of the iron ore producers really being quite aggressive in hiring. But it also demonstrated that when we looked at it, that probably our contractor wasn't really being market competitive. And so we have rectified that and tried to address that trend. And we're certainly hopeful with that intervention, we'll start seeing a recovery on that number. In terms of seasonality, I think we should see, given the portfolio effect, while some of the assets have a little bit of a second half weighting that probably would be within 5% of the kind of variation by quarter. So I don't think we're going to see a huge variation across the year. And 1 of the things we're working really hard to do is to eliminate that hockey stick effect that we've had in years gone by, where we've had a lot of production weighted to the second half, which is really a function of the fact that we weren't having high degrees of mine plan compliance, which we're really working back into our system to deliver more predictable outcomes. Jongisa Magagula: Thanks, Mike. I'll hand back to you for closing comments because we are over time. Michael Fraser: Great. Yes. Thanks very much, Jongisa, and thanks so much for all the great questions that have come up. Thank you very much for the interest in Gold Fields I think we've made very good progress on our strategy last year, and we'll continue to deliver more of the same. That's our objective for this year. So thanks all for listening and look forward to engaging you in the coming weeks.
Operator: Good day, and welcome to the Pool Corporation Fourth Quarter 2025 Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Melanie Hart, Senior Vice President and CFO. Please go ahead. Melanie M. Hart: Welcome, everyone, to our fourth quarter and year-end 2025 earnings conference call. During today's call, our discussion, comments and responses to questions may include forward-looking statements, including management's outlook for 2026 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ from projected results are discussed in our 10-K. In addition, we may make references to non-GAAP financial measures in our comments. A description and reconciliation of any non-GAAP financial measures included in our press release will be posted to our corporate website in the Investor Relations section. Additionally, we have provided a presentation summarizing key points from our press release and today's call, which can also be found on our Investor Relations website. Peter Arvan, our President and CEO, will begin our call today. Pete? Peter Arvan: Good morning, everyone, and thank you for joining us. Let me begin with a look back at 2025. This was a year of continued industry developments, shifting demand patterns, persistent customer uncertainty, and evolving customer expectations. We stay true to our long-term strategy, investing in new capabilities, expanding our exclusive brands and advancing our digital and distribution platforms. These efforts allowed us to address current market pressures while maintaining a strong foundation for future growth. One important industry theme this year was the ongoing decline in general construction activity, including new pool construction. It's important to note that this trend is not unique to our business, but is felt across the broader construction sector. In 2025, we estimate that just under 60,000 new pools were built in the U.S., a mid-single-digit decline from last year. This is about half of what we saw at the height of the pandemic and 40% lower than in 2022. Even in this environment, we maintained our position and gained share in several important areas, driven by our differentiated offering and commitment to service. While new pool construction remains down, maintenance spending proved resilient. Also see the likelihood of pent-up demand in the pool industry, although it's difficult to predict the timing, we do believe that as consumer confidence returns, deferred pool projects and upgrades will come back to the market. This opportunity encourages us even though it remains difficult to put a time line on it. Operationally, we took a disciplined approach to 2025. While the broader industry continued to add capacity, we slowed our own facility expansion and focused instead on driving more value from our existing network. While early, we are seeing measurable benefits from our strategic investments, including increased efficiency from our technology upgrades, improved customer experiences through digital platforms and enhanced profitability from our supply chain initiatives. The progress underscores the effectiveness of our approach, and we expect these gains to become even more significant in 2026 as our initiatives continue to scale and evolve. Moving to financial performance. Our annual revenue was $5.3 billion, holding steady year-over-year. This stability was supported by steady maintenance demand with early indications of improvements in some discretionary categories, even with lower new pool starts. In the fourth quarter, our sales totaled $982 million, just 1% below last year's level, a period that, as a reminder, benefited from significant hurricane-related repairs in Florida and thus was a particularly tough comparison. We delivered strong gross margin performance in 2025, reaching 29.7% for the year, up 20 basis points from the prior year when adjusted for onetime items. This reflects the strength of our market leadership, disciplined pricing strategies and operational excellence through our supply chain. In the fourth quarter, gross margins rose to 30.1%, an improvement of 70 basis points year-over-year. We delivered our commitment to shareholder returns, distributing $530 million in cash this year, a 10% increase over last year. This includes $341 million in share repurchases and a 4% increase in our quarterly dividend, underscoring our confidence in the business and our disciplined capital allocation. Inventory, as we have done successfully in the past, we acted opportunistically to secure pre-price increase purchases. This proactive investment positions us to protect and expand our gross margins, and we expect to sell through this inventory in the normal course of business. When we look at our performance by region, Florida sales declined 2% for the year and 9% in the fourth quarter, reflecting last year's post storm activity. However, on a 2-year basis, fourth quarter sales in Florida were still up 2%. Texas showed early signs of recovery late in the year. Sales grew 1% in the fourth quarter, which helped offset a 3% decline for the full year. California declined 3% for the full year and 4% for the fourth quarter. Arizona was flat for the full year and down slightly in the fourth quarter. Elsewhere, Horizon sales declined 2% for the year. In Europe, we posted local currency growth for the first time in 3 years, including a 4% increase in the fourth quarter. If we look at our results by product category, chemicals were down 1% for the year, mostly due to price and 3% in the fourth quarter driven by tough comps with post-hurricane cleanup. Building materials finished flat for the year and were up 4% in the fourth quarter, driven by demand for our national pool trend products and our differentiated customer experience. Equipment sales, excluding cleaners, were flat year-over-year and down 3% in the fourth quarter, cycling against prior year hurricane recovery comps. Commercial pool products rose 3% for the year. Now let me highlight performance in 2 important channels: independent retail and Pinch A Penny franchise network. Sales to our independent retail customers decreased 3% for the year and 4% in the fourth quarter. This reflects softer retail demand compared to hurricane-driven surge we saw in -- late in 2024, which created a high benchmark for year-over-year comparisons. Additionally, we did see pressure on chemical pricing, which is why the team is focused on proprietary product differentiation. For Pinch A Penny, sales from franchisees to their end customers declined 2% for the full year and 9% in the fourth quarter. It's important to remember most Pinch A Penny stores are in Florida, and last year's fourth quarter saw a 15% jump in franchise sales due to the hurricane activity. At year-end, our Pinch A Penny network grew to just over 300 locations after adding 10 new stores during the year, including 5 in Texas and 1 each in Arizona and North Carolina. Our franchisees continue to provide essential services to customers and remain a key growth driver for our business. Turning to the digital side, we continue to make investments in technology, the launch of POOL360 unlocked new artificial intelligence features, expanded customer access to our products and improved their experience across our network. Digital sales reached 13.5% of total revenue in the fourth quarter, up from 12.5% last year and peaked at a record 17% during the pool season. For the full year, we finished at 15% of sales, which is an all-time high, and we believe this will continue to grow. We also expanded our physical footprint, opening 8 new locations and acquiring 3, bringing our total to 456 sales centers at the end of the year. Between these investments in digital and our distribution network, we remain well positioned to support both the professional and the DIY end markets moving forward. Looking ahead to 2026, we anticipate net sales will grow in the low single-digit range. This outlook assumes new pool construction will stay close to the 60,000 units we saw in 2025. Maintenance revenues should remain resilient, and we expect to continue to capture share through exclusive brands, enhanced technology and differentiated services. We expect our work to drive greater efficiency, especially the network optimization and operational improvements launched at the end of 2025 will produce more meaningful gains in 2026 as those initiatives scale. We will continue our disciplined approach to capital allocation, focusing on investment -- focusing investments on opportunities with the highest returns. With all these factors in mind, our diluted EPS range for 2026 is $10.85 to $11.15. Melanie will provide further details on our financial outlook in just a moment. To summarize, our focus in 2026, we'll have 3 priorities that guide us as we move forward. First, delivering an unmatched customer experience through exceptional service, tailored solutions and the reliability our customers count on. By raising the bar on customer engagement and satisfaction, we reinforce our position as the partner of choice in the industry. Second, expanding our exclusive brands and deepening our OEM relationships to offer innovative, differentiated products that set us apart in the market. And third, fully leveraging our technology and network investments from POOL360 to our distribution platform, driving greater efficiency, reach and agility across our business. We will continue to exercise strict discipline in execution and investment, ensuring we generate strong returns and stay nimble as the market conditions evolve. Feedback on our new products and digital tools have been very encouraging. We look forward to providing more detail on our strategic road map and innovation plans at our upcoming Investor Day. Investing in our people remains fundamental to our long-term strategy and culture of excellence. We are relentless in attracting, developing and retaining top talent, empowering our team members to lead, innovate and drive meaningful results. Their expertise and commitment not only fuel our current success, but also ensure we are well positioned to seize future opportunities and shape the next phase of our growth. Before I conclude, I would like to thank our employees, our vendor partners and our customers for their ongoing commitment and trust. Through another demanding year, we delivered solid results and laid the groundwork for further progress. I am confident that together, we are well positioned to drive continued leadership and value creation in the years ahead. I will now turn the call over to Melanie Hart, our Senior Vice President and Chief Financial Officer for her commentary. Melanie M. Hart: Thank you, Pete, and thanks to everyone for joining us on today's call. I'll begin with a summary of our fourth quarter results, discuss our full year 2025 achievements and then look ahead to 2026 expectations. For the fourth quarter, sales decreased by 1% compared to the prior year. The prior year's fourth quarter included a 2% benefit from increased maintenance activity and weather from hurricane recovery efforts, primarily in the Florida market. We continue to see an effect from lower discretionary spending which had a drag on sales of 2% this quarter, including the results from Horizon. However, the impact has continued to moderate throughout the year as we have seen permit declines across most of our markets begin to improve. Net pricing benefit for the quarter was approximately 2%. Fourth quarter gross margin was 30.1% and reflects a 70 basis point improvement over the prior year's margin of 29.4%. The improvements to gross margin were a result of pricing, supply chain benefits, expanded private label sales activity and a favorable product mix. The favorable product mix includes the fact that the prior year's weather impact led to increased equipment sales, which generally have lower margins than our overall product mix. Operating expenses in the fourth quarter increased by $14 million or 6% compared to the prior year. This year-over-year expense increase is higher than the trend to date, primarily due to incremental technology investments made in the fourth quarter to ensure that POOL360 unlocked, as Pete outlined, was ready and available for use across the network. In addition, we have our new sales center openings and sales transformation expenses. We also saw self-insured medical costs continue to rise significantly outpacing general inflation rate. We reported operating income for the quarter of $52 million compared to $61 million in the prior year and diluted earnings per share of $0.85 as compared to $0.98 in the fourth quarter of 2024. For the full year of 2025, we maintained sales of $5.3 billion, consistent with the prior year despite having 1 less selling day. Discretionary activity related to remodels continue to make progress with the new pool construction remaining a challenge, resulting in approximately 2% to 3% lower sales for the full year. We have successfully implemented both pool season and mid-season price increases while effectively managing evolving market pricing for chemicals, resulting in a 2% net pricing benefit. Maintenance activity overall for the year was positive. In 2025, we estimate that maintenance items accounted for roughly 64% of our pool product sales, while renovation and remodel projects made up 22% and new pool construction contributed 14%. These are consistent with our 2024 estimate. Our sales of products primarily used in new pool construction and remodel finished the year flat, which was better than the overall new build market, we have estimated to be down 3% to 5%. Gross margin for 2025 was 29.7%, up 20 basis points compared to the prior year reported margin, which was also 29.7%, but included a 20 basis point benefit from import taxes. This improvement reflects effective supply chain management and disciplined pricing practices. These results were achieved through a consistent focus on operational execution and proactive engagement with customers. Regarding product mix, building materials accounted for 12% of sales in 2025 and 2024. Operating expenses increased $34 million, bringing the total to $992 million. Key investments this year included in the 3.5% expense increase are approximately 1% for incremental costs related to the 8 new greenfield locations and 1% in incremental technology spend. These increases were partially offset by ongoing improvement from our capacity creation efforts, which helped mitigate the impact of broader cost inflation. For the year, operating income reached $580 million compared to the $617 million in the previous year. Interest expense decreased by $3 million year-over-year benefiting from lower overall rates, including benefits from refinancings during the year. We have continued to benefit from our treasury management efforts and mix of fixed and variable rate debt. The effective tax rate was 23.8%, slightly higher than last year's 23.4% with ASU benefit. On a full year basis and excluding the impact of ASU, the tax rate was 24.7%. Diluted earnings per share of $10.85 compares to $11.30 in the previous year and includes an ASU benefit of $0.12 per diluted share for the full year versus $0.23 in 2024. Adjusted diluted EPS was $10.73 compared to $11.07 last year, representing a 3% decrease. The $11.07 includes the $0.25 import tax benefit. Moving to our balance sheet and cash flow. Inventory at year-end was $1.45 billion, an increase of $165 million or 13% from last year's balance of $1.29 billion. In anticipation of estimated cost increases for certain products for the 2026 season, we evaluated early buy opportunities and made strategic purchases. We expect normal inventory seasonality for 2026 with a peak in March ahead of the season and lower inventory levels by the end of the third quarter. This is an area where our team has proven to excel, and we are comfortable with the lift in the inventory that is focused on our faster-moving product line. Total debt increased $249 million to $1.2 billion at year-end. Debt balances were primarily used to fund incremental working capital and share repurchases. Our year-end leverage ratio was 1.67, consistent with our target range of 1.5 to 2x. As expected, our cash flow from operating activities was $366 million representing 90% of net income of $406 million. Cash flow in 2025 was reduced by the $69 million in deferred tax payments made in the first quarter of 2025 related to those impacted by the hurricanes in 2024. Cash flow from operating activities in 2025 would have been 107% of net income without the deferred tax payment. We finished 2025 with solid earnings performance. We continue to invest forward into the business with 8 new greenfield locations, 3 acquired sales centers, 10 new Pinch A Penny franchise stores, including 2 new states and enhanced capabilities within our POOL360 ecosystem. We have invested capital in inventory, dividends and increased share repurchases to benefit the business and the shareholders. Next, we'll move on to our discussion of 2026. Heading into 2025, we faced a challenging macro environment, including higher than historical interest rates, increased cost, continued inflation, impacts from tariffs and uncertainty around when consumers will return to more typical discretionary spending in the pool and irrigation market. While we saw some improvements in the comparative trends, we are still awaiting more positive consumer spending. Our focus has been on improving the business outside of the macro trend, and we accomplished that in 2025 as we were able to realize benefits from pricing and maintenance activity that offset the decline in discretionary spending. In 2026, we expect our maintenance business to remain resilient, supported by the addition of approximately 60,000 new pools built in 2025. We also anticipate vendor cost increases and corresponding pricing pass-throughs to result in a 1% to 2% pricing benefit. Given that we have not yet observed a positive inflection in discretionary spending trends, we will continue to monitor these dynamics before projecting the timing of any significant recovery. Overall, we expect 2026 to continue to be a challenging market. However, we anticipate our market position and execution will allow us to achieve low single-digit sales growth. In 2026, we will have the same number of selling days each quarter and for the full year compared to 2025. Our gross margin for 2026 is projected to be consistent with 2025. We expect ongoing positive contributions from the effective supply chain, pricing strategies and increased private label sales offsetting continued shift to larger customers. At this time, we do not anticipate a significant increase in new pool construction or remodel activity, so product mix is not expected to have a material positive impact on 2026 gross margin. For 2026, we estimate we will incur approximately $5 million in additional costs to open 5 to 8 new sales centers. As part of our commitment to being an employer of choice, we also plan to increase employee rewards in line with higher earnings. This means that assuming we achieve low single-digit growth revenue, incentive-based compensation expenses are projected to rise by $10 million to $15 million. As we have proven over the last several years, this incentive compensation reload only occurs in line with improved results and has not yet been normalized through 2025. The management team remains confident in our ability to generate returns from recent investments in technology and infrastructure. These investments have positioned us to proactively manage staffing and facility needs more efficiently across our network. With low single-digit sales growth, we expect operating margin to improve in 2026, although this improvement will be partially offset by the onetime increase in incentive compensation. We are also seeing positive momentum at the more than 50 new greenfield locations we've opened since 2021. The operating costs associated with new locations added in 2025 will result in higher year-over-year expenses in the first quarter. However, we expect expense growth to moderate as these sites reach scale and efficiency gains are realized throughout the year. Our continued focus on operational excellence and process optimization provides us with confidence that we can leverage our growing platform, drive productivity and achieve further cost efficiencies as the year progresses. We expect interest expense to approximate $50 million in 2026 based on current rate. Interest expense is typically higher in the first and second quarters due to inventory buildup for the swimming pool season. For depreciation and amortization, we have included estimates of $55 million to $57 million. In 2026, we do not anticipate any significant changes to our capital allocation. It would include reinvesting roughly 1% to 1.5% of net sales back into the business, and we plan to allocate between $25 million and $50 million toward acquisitions. Subject to approval, dividend payments are expected to use around $200 million in cash and we intend to continue repurchasing shares on an opportunistic basis. We project that cash flow for 2026 will be aligned with our goal of achieving 100% of net income. Annual tax rate is estimated to be approximately 25% excluding the impacts of ASU. This rate typically runs closer to 25.5% in the first, second and fourth quarters and lower in the third quarter. We do not expect to see a significant benefit from ASU in the first quarter when restricted shares, vest and stock options expire and, therefore, have no projected ASU benefit in our 2026 guidance. We estimate approximately 36.8 million weighted average shares outstanding at the end of the first quarter and 36.9 million for the remainder of the year. Our guidance for 2026 is a diluted EPS range of $10.85 to $11.15 with no ASU tax benefit. The improvement in earnings at the midpoint would be approximately 2% to 3%. Looking ahead, we remain confident in our strategy to drive performance through steady maintenance activity, disciplined pricing and ongoing operational improvements. While we continue to monitor broader macroeconomic conditions for signs of sustained recovery in discretionary markets, our strong balance sheet positions us well to capitalize on future opportunities. We remain committed to delivering exceptional cash returns to shareholders through a balanced and disciplined approach. We will now begin the Q&A portion of our call. Operator: [Operator Instructions]. Our first question comes from David Manthey with Baird. David Manthey: First question on SG&A. Melanie, you pointed out that the low single-digit growth rate that you're guiding to is enough to trigger the incentive comp reset. So I assume that, that -- whatever that is, 25 or 30 basis points of a drag is factored into your earnings guidance. The question is if revenue were to come in flat, let's say, unexpectedly what -- would that imply that you would not trigger the incentive comp reset? I'm trying to get an idea, is this a sliding scale? Is it binary? How should we think about how that layers in or doesn't layer in given various ranges of revenues? Melanie M. Hart: It's definitely a sliding scale. So within kind of that range of low single digits, we would expect different points of recovery. With flat sales, the way that our incentive programs are structured, we would not see any change to the overall incentive compensation from '25 to '26. Peter Arvan: And what I would say is that additionally, if sales -- aftermarket lags even more and sales do come in flat, then, frankly, from a cost perspective, we would do other things to be in line with the market. David Manthey: Okay. Yes. And then on gross margin, you're guiding that flat. I'm just -- as you're going through scenario planning and setting your budgets, what are some factors that you think about where that could come in above or below flat with 2025 some of the key things that you're considering? Peter Arvan: That's a good question. It's a broad topic, as you know. So when I think about the drivers of gross margin, certainly, customer mix and product mix are part of that. Our work in pricing optimization, which continues to improve factors into that. I was particularly encouraged with the fourth quarter gross margin expansion. And I think that was driven by a couple of things. It was driven by a great effort by our supply chain teams. I think it was partially driven by the pricing work that the field is doing. I look at product mix. Now on one hand, I would say if renovation and remodel, which continues to outpace new pool construction, frankly. If that continues on the same path that it's on, that will create some lift for us from a product mix perspective. And then I look at the proprietary or exclusive brands that we have been building over the years and our continued work in those areas as, I would say, tailwinds that would help drive the number. The other side of that is that in a market like we are in, there's always, I would say, competitive pressures, which, again, I don't really get too concerned about because we have them -- I don't expect the competitive pressures to be, frankly, any different in 2026 as they were in 2025. And as you can see by the numbers, I think, the business did a very good job of more than offsetting that. So yes, they're there, but does it really drive our behavior? No. I mean we did see some deflation on chemicals. But again, in my comment, I mentioned, that's why we're kind of focused on the chemical side that we have some products that are exclusive and proprietary where we don't see that type of headwind that we are also leaning into. So overall, when I look at gross margin, I think the team did a very good job in '25. And I also think we have the same levers plus more to pull in 2026, which will help us out in that area. Operator: Our next question comes from Ryan Merkel with William Blair. Ryan Merkel: Thanks for all the thoughts on '26. I also wanted to ask on SG&A. When I plug in some of the parameters that you gave, I'm coming up with like 1.5% SG&A growth for '26. Just given some of the things you talked about with the employee rewards and new sales centers. Is that -- am I in the right ballpark there? Melanie M. Hart: Yes. So I would say, if you're thinking about sales growth and expense growth and trying to match those, we would expect that the expense growth would come in slightly less than the sales growth to give us a similar operating income margin, maybe slight leverage for next year. So we're going to be looking to offset the -- some of that incentive comp recovery overall by looking at utilizing the capacity that we have put into the market. So the term that you made here for 2026 will be capacity absorption. As we've talked about the investments that we've made in technology and the investments that we've made in building out our footprint on the greenfield side, we feel very well positioned with what we've done to date. And so our actions in 2026 will primarily be focused on starting to further enhance the generation of returns that we have on those investments. Peter Arvan: Ryan, I'll give you a couple of thoughts in this area. So I think we are particularly focused on the SG&A of the business because I think in the last couple of years, rightfully so, we invested in order to make sure that we maintained our market leadership position in terms of capabilities and customer experience. At the same time, we also have opportunities from -- as Melanie mentioned, now from a capacity absorption perspective, we made some investments. We're starting to see positive traction on those investments. And I believe that the new facilities as they continue to mature with a great degree of focus from the management team that our operating leverage on those facilities will continue to improve. I mean if you look at our operating margins across the fleet, if you will, we have some -- most of our facilities, frankly, are in fantastic shape. They're doing well. We added new which mixes us down. But it's the same formula that propelled the fleet to a high average is now being applied to the 50-some-odd new facilities that we've added over the years, and a focus on our lower-performing locations, which you've been covering us for a long time, implies our focus list. They're getting a particularly high level of attention right now. So when I look at SG&A, and I say, will we be in line with the market from a top line perspective, if the market improves, then SG&A will be easier to deal with from a percentage basis. If the market doesn't improve, then we're going to have to do other things to make sure that we stay in line. But we're okay with that because we believe that the investments that we've made over the last couple of years don't need to be repeated and we should start to harvest the benefit. Ryan Merkel: Got it. Okay. That's very helpful. My second question is just on 1Q. Are you assuming the first quarter is also up low single digits like the full year? Just want to just see if there's any cadence things we should be thinking of and there is a bit of weather in 1Q, I'm not sure if that had an impact or not. And then could you also comment on chemical prices, will those be down in the first quarter? Peter Arvan: So I'll take the first one on how 1Q is performing. I think -- so as you know, 1Q is our least significant quarter. That's not to diminish that the contribution to the business. I mean when I look at first quarter, we're not -- we're basically halfway through it. But March is bigger than January, obviously. So at this point, I would tell you that I am encouraged with what we've seen. Too soon for me to tell you that hey, we're going to blow the doors off of first quarter. But what I will say is that if we have a normal weather pattern for March and the rest of this month, then I think our expectations for the first quarter will be in line. And then your second question about chemicals. A little too soon to tell because remember, in the first quarter, this is when there's some noise in the system with chemical pricing. I can tell you, I'm not particularly concerned about deflation at this point on chemicals. I think things are fairly steady. So I don't -- I'm not at this point spending a lot of time thinking that chem prices are going to get worse. But what we are focused on is getting customers introduced to and using the proprietary chemicals where we have a differentiated value proposition, which makes us less susceptible to swings in the market on anything but pure commodities. Operator: Our next question comes from David MacGregor with Longbow Research. David S. MacGregor: Yes. I guess just a question on store ops. And what's the opportunity? You made passing reference a moment ago to the focus list, but just what is the opportunity to improve the profitability of the bottom performing quintile stores? And what are some of the actions that you're taking there? Maybe you could talk about that? And I guess related to that, just given the near-term market outlook, does it make sense to begin consolidating some of these locations and just achieve better 4-wall economics? Peter Arvan: Yes. I'll take that, and then Melanie can chime in. So part of our work at the focus list level, which is our bottom-performing branches, and this is nothing new for POOLCORP, but the branches that fall into the focus list, which I would argue what is a focus list branch for us would be considered by most others to be a very well-performing branch, because our standard is pretty high on what we consider a focus branch. I mean the leverage that you have there are a couple. One, obviously, the biggest lever that you have is sales growth. Are you growing -- are we growing sales? Are we becoming more important, more relevant to the customers. And that's done with creating a best-in-class customer experience and frankly, customer engagement. So from a lever perspective, the biggest one we have for the focus branches is just that. Then there's the operational execution side of that. So the teams are focused on exactly what we do, how we do it, how efficient we are in doing that and making sure that we're utilizing all of the competitive advantages that we have to give us the most efficient cost to serve those customers. Your last comment as it relates to is there some opportunity for consolidation? And the answer is maybe. So when we look at each individual market, we look at our footprint, and there are a couple of markets where I would say, as we have expanded our capabilities in some areas, we may have opportunities to consolidate some of those, if we don't see the market, an individual particular market continuing to grow and expand, those would be ones where we look at how else can we most efficiently serve the market without letting down our customers and ceding any share. So I mean, you've known us for a while, so this is nothing new. This is what we do. We've been focused the last couple of years on continuing to build out the network and making sure we were where the pools were going to be built and where our customers needed us to be. We've added capabilities as it relates to technology and supply chain, which allow us to be, frankly, more efficient. And now we're starting to see the gains from that. To put an opportunity to size it, if you will. I mean, when I look at the -- our focus list branches, I would just say that when I look at the overall operating margin improvement, I think, there's plenty of opportunity to work there to achieve our goals, really kind of independent of the market improving. So when I look at our operating margin improvement and expansion, yes, would the industry growing make that easier, yes, but it still wouldn't mean that we wouldn't do what we're doing on focus list branches to make them more profitable and contribute more to the business. David S. MacGregor: Got it. My second question, really just with respect to kind of the longer-term growth algorithm, and you've included within that growth of 2% to 3% above the market, mostly through store openings and private label, I guess, a little bit of acquisitions. I guess how are you thinking about your ability to achieve that above market growth in 2026? Peter Arvan: Yes. I think part of it is there is still plenty of opportunity. When I look at our market share across the fleet, we have plenty of markets that are still below the median. So I think just improving our customer engagement, frankly, our customer experience and our operational efficiency helps. I also think that there is an opportunity from a demand creation perspective because, pragmatically, when I look at the market overall and the products that are still being sold into the market, there is still a more than significant opportunity to expand the TAM, if you will, by selling the more technologically advanced products, which are ultimately very, very good for the homeowner. And I think our job is to help expand the adoption of those. So you're going to see at the Investor Day presentation, something we call the [ Prozone ], which is designed to do just that. To teach the builders and the service professionals when they come into the branch to be able to see the full range of products, to be able to see the benefits from the more innovative and technologically advanced products that have more full-feature automation and are, frankly, more efficient for the homeowner. So rather than take a more passive approach on that, we're going to take a much more active approach on that in the showrooms to make sure our customers understand all of those new products and what benefits they provide either them as a servicer or for hopefully -- so that they can explain to the homeowner, I should say. Operator: Our next question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is on the gross margin. Just thinking about the path for that as we look over the year. Can you talk about what that inventory build that you made in the fourth quarter will mean for profitability? And how we should be thinking about that relative to the guide for the pricing to be up 1 to 2 points this year? Melanie M. Hart: Yes. So one thing, so we do expect that we will see some continued pricing benefits from the investments that we've made in inventory. We would expect that, certainly, we would see that in first quarter. As a reminder, when you look back from a comparable standpoint for 2025, we did have that mid-season price increase in 2025. So starting kind of May 4, there were some benefits from that mid-season price increase, which at this point in time, we wouldn't anticipate would occur again in 2026. So I would say that we would see slightly better margins in first quarter. The remaining of the quarters would be relatively comparable with fourth quarter because it's so -- is a smaller portion of the year, we may not see as many benefits. The only thing that we've seen to date is we have seen a second wave of price increases on certain products for salt cells. But when we look at it kind of consolidated wise, we don't think that will have a significant impact on margins overall. Peter Arvan: Susan, this is Pete. Let me add just a little bit to that, if I could. I think the team did a very good job of exercising good financial judgment with the investment in inventory. And I think they were very surgical about it. So when we allocate capital to something, one of the things that is a hallmark of the company is that we have been very judicious allocators of capital, whether that is investment in long term or whether that is investment in working capital. So I think the team did a very good job and was very surgical about making investments in areas that will help us through the 2026 season. Now obviously, given the amount of inventory that we have and what our COGS are on a full year basis, that we will burn through most of that benefit by mid-season, and then, of course, we will be reordering. But I think we feel very good about realizing benefits, but they'll be more weighted to the beginning of the year than the end of the year, subject to what happens in the industry from a pricing perspective. Susan Maklari: Yes. Okay. And then I wanted to go back to thinking about the growth for the business over time. Can you talk about how you're thinking of organic growth, given the investments that you've made in the last several years relative to the inorganic growth opportunity that's out there. Are we really sort of shifting now to this period where it's going to be driven by your initiative, a lot of these efforts that you've implemented in the business, whereas the inorganic piece will just inherently become just a smaller and smaller part of that algorithm. Just any thoughts around that and what that would mean for capital allocation? Peter Arvan: Sure. I would tell you that from an organic growth perspective and what gives us confidence in the long-term growth algorithm for the business is that -- we believe that the product that -- the industry that we serve and the product that we primarily sell either through new pool construction or remodel and renovation is still highly desirable. And we've been talking about -- we're kind of bumping along the bottom. There was a slight drop in new pool construction in 2025. I can't tell you that I think that, that was driven by any wild change in consumer sentiment. I think it's more a function of certain geographies and the housing market per se. So when I look at our opportunity to grow and I look at our market share, and I look at that on a market-by-market basis, I would tell you that we have opportunity to continue to grow even if the market continues to stay towards the bottom. I would also tell you that there's a couple of things that are going to -- we're going to start to see benefit from as it relates to equipment. So when the industry switched to -- from single-speed motors to variable speed motors, they inherently lasted longer. But now we're starting to get close to the period where when we started selling a lot of single-speed motors or single speed pumps to variable speed pumps that they will start coming into their replacement cycle, number one. Number two, I still believe that there is a significant opportunity to modernize the pad. If I looked across the -- we talked to many, many customers. We talk about what they're seeing in the backyard when they go into these backyards and they look, what we were seeing over and over again was ultramodern pads, fully adopted, everything that is available to the consumer, I would say, okay, so now we're more in a replacement cycle. But today, what I would say is there is still an outsized opportunity to modernize the pads with the new equipment. Now part of this demand creation is incumbent upon us, I believe, in order to teach the servicers, right, and get word out, so to speak, through marketing programs and demand creation in conjunction with our OEMs that says, "Hey, you can improve your customer experience in the backyard if you adopt and use these new products versus just replacing what's there." So I think there is still an opportunity. The installed base is going to continue to grow. I think that there is pent-up demand on renovation and remodel, and we're starting to see some of that realized as evidenced by the building material sales increasing and the fact that we have -- I believe we've taken share in the new construction area for those as well. And then lastly, your question on inorganic growth, I think that there are still opportunities for inorganic growth out there. And I think the team is very focused in that area as well as just one of our long-term growth levers. And I don't know that anybody in the industry is any better positioned to do that than POOLCORP. Operator: Our next question comes from Scott Schneeberger with Oppenheimer. Daniel Hultberg: It's Daniel on for Scott. Could you please discuss the key factors that would put you at the low end versus the high end of the EPS guidance range? Melanie M. Hart: Yes, the range is primarily going to vary depending upon overall market conditions and the resulting sales growth from that standpoint. Daniel Hultberg: Got it. And as far as the assumptions on new pool to be flat year-on-year as well as renovation and remodel flat to slightly up. Could you speak to the -- what you're hearing from your customers regarding backlog and how confident you are in those projections? Peter Arvan: Yes. I'll take that. So we've just come out of our show season. So January, there's a lot of shows. We spent a lot of time with dealers in January and frankly early February even as recent as this week. So I will tell you that the level of optimism from the customers right now is pretty good. I don't know that -- I've talked to many customers that say we're going to build just as many pools as we built last year and the phones are ringing. So we feel comfortable in that assessment. Is that as many pools as they built during the peak? Absolutely not. But I would tell you that the general sentiment on new pool construction is that based on the dealers we have spoken to, which is a sample size of the total, is actually pretty good. So it's not a doom and gloom. The phone is not ringing. It's basically, yes, I think we'll build at least as many pools as we built last year with many dealers saying that, hey, you know what, we're actually optimistic. But saying that they're optimistic in February and actually having those contracts come to realization, during the season are two different things. But I will tell you, it feels much better to me that the dealers are saying, "Hey, I'm going to build at least as many pools that I built last year," and there's many of them that are optimistic. And then like every sample, right, you have opposite ends of the spectrum. You have people at the high end that they would tell you, "Hey, business is great. I'm turning customers away. I have -- I'm going to build as many pools as I can this year, and I'm taking orders into next year." And at the low end, you have people that would be struggling. But by and large, I would say, the industry confidence level is more encouraging than not. Operator: Our next question comes from Trey Grooms with Stephens. Ethan Roberts: Melanie, this is Ethan on for Trey. I wanted to dive deeper, maybe digging into more of a market-by-market look. So directionally, what are you seeing on the new pool or broader discretionary side? From a market-by-market standpoint, some of these more challenged markets on the new residential construction side like Florida and Texas, maybe starting to show signs of a potential trend improvement? I know you called out in the prepared remarks, improving trends in Texas in the back half of 2025. Obviously, these are important markets on the new pool side. So any more color on market specifics would be really helpful. Peter Arvan: Sure. The information coming out of Florida right now is still encouraging. As I mentioned, even with the storm issues that we had in Florida, and housing prices and insurance and costs and everything else in Florida. If you do a 2-year stack on Florida, in the fourth quarter, they were still up 2%. So again, very encouraging for me. Builders in Florida, I really think it depends on where you are. So for instance, if you're in -- there's a lot of people moving into South Florida, into Miami. Miami is -- that market is very good. But it runs the spectrum, if you will. But overall, Florida is a cornerstone market for us. I think very soon, will be the largest market that we have in terms of the installed base, and it's still a destination for homeowners. So I'm encouraged with that. Texas is the one that was, I think, surprising for a lot of people. The slowdown that we saw in Texas, but it's also a bit bifurcated too, because it didn't -- it wasn't universal in let's call it, DFW in Austin, San Antonio and Houston. They all move kind of at different rates. We're starting to see the Dallas market improve, the Austin market improved. Houston lags a little bit, but the near-term commentary on Houston is that there is some optimism on the new build side. Arizona and California, Arizona is -- was encouraging. And if you remember during the -- when the [ pools ] really started to die out, Arizona was one of the first ones to drop. They have -- they seem to have firmed up. And California it's okay. I don't look for a big change in California. In my mind, California is much more of a renovation market than it is going to be a new pool construction market. Ethan Roberts: Got it. That's super helpful color. And second question, just putting a finer point on an earlier question on the top line cadence. It sounds like 1Q trending pretty well, but it's still early. But just wanted to clarify, was hurricane repair activity still a major contributor to the 1Q '25, perhaps to a lesser degree, than the 4Q, but perhaps still enough to call out because if 1Q is trending well in spite of this comp dynamic, obviously, that would be a positive. And then maybe any thoughts on first half versus second half weighted top line profile relative to broader new res expectations, which at this point, appear to be skewed more towards a modest second half uptick. Peter Arvan: Yes. We -- you're correct in your assumption that fourth quarter was a bigger lift, fourth quarter of '24 storm related. They were still working into first quarter. So there was still some work that most of which is repeat has been finished. The only exception to that would be the areas where the houses were completely destroyed and they had to get permitted and built to do house and the pools come last. So there's still some of that. But by and large, I would say, the storm work or anything, but complete destruction is certainly done by now. Most of it was done in the fourth quarter and some lagging. So when I look at first quarter, it's not like we had a huge comp to overcome. There are some. But again, that makes our results even more encouraging from a firmness of the market perspective. And then your comment on second half -- first half, second half, it's really -- frankly, it's just too early to say. There's so many factors in there that can affect the discretionary, so I'm talking about new pool construction and renovation and remodel. But rest assured that the majority of our business is driven from the maintenance and repair and I think that there is more than ample opportunity. And quite frankly, I think the business performs well in that area, and we've also added capabilities, which should allow us to continue to take share. Operator: Our next question comes from Garik Shmois with Loop Capital. Garik Shmois: I'm wondering if you could update us on what you're assuming for new sales center openings in 2026. And just given the more muted demand environment, have your expectations on the ROI on the new sales centers changed at all versus more normalized demand periods? Peter Arvan: Yes. So when I look at the number of locations, I mean, Melanie gave a range of 5 to 8. I would tell you, I don't know that it will be more than 8. I mean, it could be a scenario, I guess, where it could be, but it's highly unlikely at this point based on the capacity investments that we have already made and the footprint that we have. I think our focus is more about execution this year and driving growth in the facilities that we have. As you know, we have a very disciplined process that goes with every new facility open. There is a pro forma. There's a budget. That pro forma and budget are carried forward. So the facility that we've opened in the last couple of years, the operating expectations and budgets associated with them were not adjusted. I looked at some of the facilities that we would have opened in 2022 when things were -- when there was a lot more new pool construction. If I look at some of those, we had to go back and say, well, maybe our expectation on new pool construction growth was a little bit too aggressive. But basically anything in the last couple of years, the number is the number. So I think the team is really focused on execution and realizing what the commitments were in the pro formas that were submitted to fund those. And when I look at new ones, so I look at the anything that we may do this year. I mean we -- as I mentioned in my comments, I think we've kind of sharpened our expectations on return on investment and making sure that when we go out and do a branch, I mean we're going to open new branches again in 2026 without a doubt. Are we going to open as many? No, we're not going to open as many. Will there be a lot of attention paid to the ones that we opened for the last couple of years to make sure that we're realizing benefit on those? Absolutely. So the amount of attention and scrutiny on new locations right now is and should be pretty high. Garik Shmois: Okay. That makes sense. Thanks for helping with that. And follow-up question is just on Horizon. It's a smaller part of your business now, but just curious as to the deceleration in growth or the negative 5 in Q4? And also, what are you assuming for 2026? Peter Arvan: Yes. I mean the Horizon business is tied mostly to new construction. The biggest product line that we have in the Horizon business is irrigation, which, as you know, most of that goes in when the housing business or when the house is constructed. There's some that happens around big, large renovation and there's also a commercial portion of the business. When I look at the overall results for the full year, I would tell you that they're not terrible. I look at -- they didn't have the same benefit of price that we had in other parts of the business. I think we have a limited footprint. I think that we have an opportunity to continue to improve from an execution perspective with Horizon. We have a focus list for Horizon just like we do the rest of the business. So do I think that we're going to see outsized growth for Horizon? I do not, but my expectations were there, execution and return on capital for them, they don't get any break as compared to from an expectation perspective, and are under the same scrutiny as the rest of the business as it relates to performance. I mean the irrigation market is -- I would tell you, it's not booming. The maintenance business is good, similar to what you see -- what we see in the pool side. And I think the business has been over the last couple of years trying to focus more attention and gain a better foothold in the maintenance and less focus on just the new construction piece. Operator: This concludes our question-and-answer session. I would like to turn the call back over to Pete Arvan, President and CEO, for any closing remarks. Peter Arvan: Just like to thank you all for your interest in POOLCORP, and we look forward to updating you on April 23 when we will announce our first quarter 2026 results. Have a fantastic day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Nordson Corporation First Quarter Fiscal Year 2026 Conference Call. [Operator Instructions] I will now hand the call over to Lara Mahoney. Please go ahead. Lara Mahoney: Thank you. Good morning. This is Lara Mahoney, Vice President of Investor Relations and Corporate Communications. I'm here with Sundaram Nagarajan, our President and Chief Executive Officer; and Dan Hopgood, Executive Vice President and Chief Financial Officer. We welcome you to our conference call today, Thursday, February 19, to report Nordson's fiscal 2026 first quarter results. You can find both our press release as well as our webcast slide presentation that we will refer to on today's call on our website at www.nordson.com/investors. This conference call is being broadcast live on our investor website and will be available there for 30 days. During this conference call, we will make references to non-GAAP financial metrics. We've provided a reconciliation of these metrics to the most comparable GAAP metric in the press release issued yesterday. Before we begin, please refer to Slide 2 of our presentation, where we note that certain statements regarding our future performance that are made during this call may be forward-looking based upon Nordson's current expectations. These statements may involve a number of risks, uncertainties and other factors as discussed in the company's filings with the Securities and Exchange Commission that could cause actual results to differ. Moving to today's agenda on Slide 3. Naga will discuss first quarter highlights. He will then turn the call over to Dan to review sales and earnings performance for the total company and the 3 business segments. Dan will also discuss the balance sheet and cash flow. Naga will then share a high-level commentary about our enterprise performance and provide an update on the fiscal 2026 second quarter and full year guidance. We will then be happy to take your questions. With that, I'll turn to Slide 4 and turn the call over to Naga. Sundaram Nagarajan: Good morning, everyone. Thank you for joining Nordson's Fiscal 2026 First Quarter Conference Call. We entered 2026 optimistic about end market demand trends, and we achieved a record first quarter sales of $669 million. This is a 9% increase over the prior year and reflects 7% overall organic growth. Organic growth was broad-based across our segments with notable strength in our ATS segment, which grew over 20% compared to prior year due to momentum in the semiconductor end market. Solid execution and volume leverage drove strong profit performance for the quarter, increasing EBITDA by 8% and increasing adjusted earnings per share by 15% compared to prior year, both first quarter records. I would also like to highlight our free cash flow of $123 million and consistent cash flow conversion over 100% of net income during the quarter. We strategically deployed this cash to repurchase shares, return dividends to shareholders and maintain our debt leverage while continuing to invest in the company. I'll speak more about the enterprise performance in a few moments. But first, I'll turn the call over to Dan to provide a detailed perspective on our financial results for the quarter. Daniel Hopgood: Thank you, Naga, and good morning, everyone. On Slide #5, you'll see first quarter fiscal 2026 sales were a first quarter record of $669 million, up 9% from the prior year first quarter sales of $615 million. Total organic sales increased 7%, driven by robust demand in Asia across most of our end markets. And while all of our segments contributed to growth, we saw particular strength in our advanced technology product lines, responding to growing demand in the semiconductor space. Favorable currency translation added an additional 4% to the top line in the quarter and was partially offset by the small divestiture that we completed in the fourth quarter of last year. Adjusted operating profit increased 10% year-over-year to $166 million, driven by increased SG&A leverage on the organic sales growth as well as benefits from the divestiture of our medical contract manufacturing business. EBITDA was up 8% year-over-year at a first quarter record of $203 million. EBITDA margins as a percentage of sales were 30%, in line with the prior year as our sales growth was concentrated in Asia, where our gross margins are generally lower, particularly on system sales. As a result, we saw lower incrementals during the quarter, which we would expect to normalize over time. Looking at non-operating income and expenses. Net interest expense during the quarter was $23 million, a decrease of $3 million versus the prior year, driven by lower year-over-year debt levels and a stable to declining rate environment. Other income increased $19 million year-over-year, principally related to a non-cash gain on a minority investment. To give a little color on this since this is a new item, this relates to a small, but strategic technology investment that we've accumulated over a number of years. The company we invested with completed an initial public offering in December of 2025 on the Korean Stock Exchange. As a result of this offering, we're now required to mark this investment to market value each quarter. The initial gain that we recognized was $22 million in the quarter before tax. We've excluded this non-cash gain from adjusted earnings, and we'll continue to treat future adjustments to mark-to-market as such going forward. Excluding this non-cash gain, year-over-year changes in other income and expense were driven by foreign currency contract fluctuations. Our tax expense on a U.S. GAAP basis was $31 million for an effective tax rate of 19%, inclusive of the impact of the non-cash gain that I just mentioned. Excluding this impact, our effective tax rate on an adjusted basis was 18%. This result is slightly below our annual guidance range for fiscal 2026 due to some discrete benefits that hit in the first quarter, primarily tied to stock compensation. We still project our full year tax rate to be at the lower end of our initial guidance range of 18.5% to 19.5%. Net income in the quarter totaled $133 million or $2.38 per share. Excluding intangible amortization and the noncash gain, adjusted earnings per share totaled a first quarter record of $2.37 per share, $0.02 above the midpoint of our quarterly guidance and a 15% increase from prior year adjusted earnings per share of $2.06. This improvement in year-over-year earnings reflects solid operating leverage from the organic sales growth as well as benefits from the divested medical contract manufacturing business. Now let's turn to Slides 6 through 8 to review the first quarter 2026 segment performance. Industrial Precision Solutions sales of $327 million increased 9% compared to the prior year first quarter. Organic sales increased 3% compared to the prior year with a favorable currency impact of 6%. Growth was broad-based across most product lines with particular strength in Asia Pacific markets. Notably, demand for polymer processing and automotive product lines have stabilized as we expected. EBITDA was $110 million in the quarter or 34% of sales, down 2% over prior year, largely due to the geographic product mix of organic growth and the lower incremental leverage on foreign currency changes. Turning to Slide 7, you'll see Medical and Fluid Solutions sales of $193 million were relatively flat compared to the prior year's first quarter. Organic sales increased 3% in the quarter, led by strength in our engineered fluid solutions product lines. Divested sales from the medical contract manufacturing business had a negative impact of approximately 4% compared to the prior year. The 3% growth was a slower start than we expected for the segment, but we remain confident in the mid-single-digit outlook through the year. It's worth noting that the winter storms at the end of January did impact some of our production as well as some of our medical supply chain on a temporary basis. We estimate to the tune of about a 1% impact on our sales in the quarter. EBITDA for Medical and Fluid Solutions was $70 million or 36% of sales, which was an increase of 9% from the prior year EBITDA of $64 million. EBITDA margin improved driven by the divestiture, organic sales volume and strong incremental performance. Now turning to Slide 8. You'll see Advanced Technology Solutions sales were $149 million, a 23% increase, compared to the prior year's first quarter. The 21% organic sales increase was driven by double-digit growth in electronics dispense product lines related to semiconductor applications as well as recovering demand for our X-ray systems. First quarter EBITDA was $33 million or 22% of sales, an increase of 43% compared to the prior year first quarter EBITDA of $23 million or 19% of sales. The improvement in EBITDA margin compared to the prior year reflects stronger sales volume and volume leverage. The team did an outstanding job of maintaining SG&A during the quarter as a result of sustainable operational and footprint changes that they made within their segment in prior years, guided by the NBS Next growth framework. Finally, turning to the balance sheet and cash flow on Slide 9. At the end of the first quarter, we had cash on hand of $120 million and net debt was approximately $1.9 billion. Our leverage ratio of 2.1x remained consistent with year-end results and is in line with our long-term targets, allowing us to continue to strategically deploy capital and giving us plenty of firepower for acquisition of strategic assets. Our free cash flow generation was $123 million during the quarter, resulting in a 105% conversion rate on net income, excluding the non-cash gain. This represents the third consecutive quarter above 100% conversion despite the accelerated revenue growth we achieved. As noted on Slide 10, during the quarter, we invested $18 million in capital projects to drive future organic growth. We paid $46 million in dividends to our shareholders and repurchased $82 million in shares on the open market. We also modified and extended our existing $1.2 billion credit facility. As part of that transaction, we consolidated a term loan coming due in fiscal 2026 into the new facility to provide greater overall financial flexibility to pursue strategic opportunities with no change in our total outstanding debt. At quarter end, we have about $800 million available under the new facility. So to summarize the quarter, we achieved high single-digit organic sales growth while maintaining our strong 30% EBITDA margins despite some geographic and product mix headwinds. Our cash conversion remains strong, allowing us to strategically deploy capital to sustainably grow the franchise and return value to shareholders. Our team delivered on their commitments for the quarter and worked to grow backlog to position us for success in the second quarter. While market conditions have improved for most of our businesses, we remain balanced and vigilant for more meaningful recovery in select end markets, which is reflected in our updated guidance for the full year that Naga will cover in a moment. With that, let's turn to Slide 11, and I'll turn the call back to Naga. Sundaram Nagarajan: Thanks, Dan. This strong first quarter performance has set the stage well for fiscal 2026. Now 3 months into the year, our end markets are playing out as we expected. Within IPS, investments in packaging and product assembly are sustaining. Precision agriculture investments continue to grow over prior year and automotive and polymer processing applications have stabilized. Medical end markets are returning to more normalized growth, and we expect to see these benefits continue as the year progresses. Growth in engineered fluid solution product lines is being driven by electronics and industrial applications. Within advanced technology, our dispense and surface treatment product lines for semiconductor application continue to drive growth, while our X-ray systems that ensure the quality of semiconductor packaging are starting to inflect. Growth in general and automotive electronics is more muted, but there are early signs of growing capacity needs in these end markets. Because it is such an important growth driver, I want to take a moment on Slide 12 to remind our investors about why Nordson wins in the semiconductor space. Semiconductor applications account for approximately 50% of revenue in the ATS segment and drove the overall double-digit organic growth in the first quarter. ATS core competency is in the advanced packaging process of semiconductor manufacturing. Our precision dispense applications, including our market-leading Vantage and Spectrum S2 electronics dispense systems enable underfill and encapsulation applications that allow the stacking of increasingly small chips on printed circuit boards. Our close to the customer model positions Nordson as a partner when customers start developing advanced manufacturing processes for semiconductor packages. Our technology enables these increasingly sophisticated manufacturing processes. Quality control of these costly and complex chips is also creating more opportunities for our test and inspection portfolio. Current investments are primarily in Asia Pacific, and we are well positioned across the semiconductor supply chain, both technologically and geographically as investments grow into other regions. Clearly, I am pleased with the momentum across our end markets and our ability to meet our customer needs. Turning now to our outlook, starting on Slide 13. We entered the second quarter with continued order momentum and increased backlog, up approximately 4% over the prior year. Order entry momentum was broad-based in the quarter with strength in our ATS segment. These trends position the company to deliver second quarter fiscal 2026 sales in the range of $710 million to $740 million. Second quarter adjusted earnings are forecasted to be in the range of $2.70 to $2.90 per diluted share. Based on strong start to the year, the second quarter outlook and the current foreign exchange rate environment, we are increasing our full year guidance as noted on Slide 14. Sales are now expected in the range of $2.860 billion to $2.980 billion, which is an increase of 4.5% at the midpoint. The top end of our range assumes continued momentum from electronics end markets as well as modest improvement in our industrial and automotive product lines. The bottom end of our guidance would assume some broader pullback in end market demand in the second half. While we certainly don't see signs of that today, we still believe it is prudent to plan for this potential scenario. Adjusted earnings will be in the range of $11 to $11.60 per diluted share, which is an increase of 10% at the midpoint. As always, I want to thank our customers and shareholders for your continued support. In particular, I want to thank our Nordson employees who are passionate about meeting the needs of our customers. Our focus on innovation and operational excellence continue to position us well to serve our customers. With that, we will pause and take your questions. Operator: [Operator Instructions] Our first question comes from Jeff Hammond with KeyBanc. Jeffrey Hammond: So really just want to -- can we just unpack kind of the margin dynamics around this kind of systems geographic mix? And do you think that continues over the next few quarters? Do you see mix improving? Maybe what's showing up in the order book that would support kind of a mix change or staying the same? Daniel Hopgood: Yes. It's a good question, Jeff. Yes, I would say, number one, if I step back, we saw very strong incrementals in our medical business, I would say, normal incrementals in our ATS business. Really, the primary segment where we saw the mix challenges was in IPS. But I think more importantly, what we would say is there's been no fundamental change in the margin outlook for our business. We've always said 40% is kind of the normal ongoing incremental expectation for our businesses. There's been no change in our gross margin profile. It's really just a mix issue in the quarter. So we see things moving back to normal certainly as the year plays out. Sundaram Nagarajan: And maybe just to add to it, if you think about our second quarter guide and our full year guide, both contemplates Nordson delivering strong best-in-class EBITDA margins like we have done in the past. Jeffrey Hammond: And then can you just expand on kind of the slow start in medical ex, I think, the weather issues and just what you're seeing that gives you confidence that, that business starts to pick up as you move through the year? And if you can just give us kind of underlying incrementals in that business if you exclude kind of the divestiture impact? Sundaram Nagarajan: So we'll take the incremental first, Dan go and then I'll talk about the trends. Daniel Hopgood: Yes. And as I said, incrementals were actually quite strong. I mean our incrementals all in are essentially off the chart. I think when you kind of strip out the impact of the CDMO divestiture, our incrementals are still north -- well north of 50% in the quarter. So quite strong and reflective of a good strong outlook in that business. From a growth standpoint, I mean, I'd say our 3%, while it's a slower start than we would have liked, part of that was weather related. We mentioned about 1% impact. But we're, frankly, very comfortable with the mid-single-digit outlook kind of return to normal growth. We see strong underlying demand in the business and our backlog and our project activity with our customers. So it's really just a slightly slower start and really not that much slower than we expected, not far off that mid-single digit if you adjust for the weather impact. Sundaram Nagarajan: Maybe add additional color to it, Jeff, is that supply chains in the interventional businesses have stabilized. We see some pretty good movement in order entry momentum in our fluid component business. Our ongoing demand for the Atrion businesses look good. I would just remind you that the Atrion businesses are going to be lower than our interventional businesses. But all in all, if you take the current order entry and you take the backlog and take the healthy pipeline of customer projects, we feel pretty good about delivering on the mid-single digits for MFS for the full year. Operator: Our next question comes from Mike Halloran with Baird. Michael Halloran: Can we start on the ATS piece and maybe just give some more context to the moving pieces in the larger buckets there. The dispense piece, it seems like it's tracking the right way, starting to see some signs on X-ray. Maybe broadly on the T&I piece, what are you seeing? And just maybe put it all together, talk about the 3 pieces, the order trajectory and where you're the most confident? Sundaram Nagarajan: Yes, sure. Overall, strong momentum on order entry as well as revenue shipments in the quarter for these businesses. Clearly, our dispense businesses were the strongest, and that is to be expected, right? If you think about our dispense businesses and their applications in these complex chip manufacturing processes driven by AI computing power needs of our customers, we see tremendous amount of investment going on in this business, and that is reflective of the revenue performance as well as the order entry. If you think about our T&I, you want to think about it in 2 pieces. One is our X-ray businesses and the other one is our what we call as AMI businesses. And so these are acoustic emission-based inspection techniques and optical techniques. So if you think about the X-ray, we are beginning to see some pretty nice momentum in our X-ray business. Remember, last year, this business was a little bit down. We are beginning to see that business starting to inflect and feel really good about where we are. Think about these complex chips. These complex chips are now both combined logic and memory on the same stack. And so these are very expensive chips and yield rates are everything here. And so the test and inspection applications continue to expand for us in these manufacturing processes. And so we feel good about the long term, but also feel good about the near term where we are seeing these orders starting to inflect. One thing that is -- we also have our AMI business, which is our acoustic emission business. There, we are coming off of 2 really strong years of growth. We still have pretty decent growth planned for them this year. But in general, we feel really good about ATS segment, and that is reflected in our second quarter outlook. If you get into the second half, you need to remember that this business started to inflect in the second half of last year. The comps get a little bit difficult. But yet, based on what we can see in terms of backlog and order entry momentum, we feel still good about this year, this business being north of its long-term targets of mid-single digits. Michael Halloran: And maybe you can just have the exact same conversation around the IPS segment, given all the moving pieces there? Sundaram Nagarajan: Yes, sure. If you think about the IPS business, what we feel -- the headline really is we returned to growth with IPS. We posted a 3% organic growth in the quarter, expect that we will do so in the rest of the year. That's sort of what we contemplate in our midpoint of the guide. Investments in packaging and product assembly end markets are sustaining. We see -- we continue to see growth in our Precision Ag or ARAG business in Europe and South America, where we are market leaders. Stable aftermarket demand. Remember, this is a business where we are -- aftermarkets are a significant part of their revenue, which is north of 55% or so. Polymer processing and automotive end markets, we expect a nominal recovery through the year. They're stabilized, but not meaningfully inflecting yet. Daniel Hopgood: The only other thing I would add is as the growth that we are seeing -- I'm sorry, go ahead. Michael Halloran: I said the exact same thing. I apologize and said, go ahead. Daniel Hopgood: Well, the only other thing I was going to add, Mike, is that the growth that we are seeing back to our kind of prepared remarks is largely in Asia today or in Asia Pacific. Again, that's not just China, that's broad Asia Pacific. And so opportunity, we're still not seeing much inflection in the European and North American market demands. I think certainly, there's some early signs, as Naga mentioned in his comments, but we're really not seeing that yet. And I think also being very cautious to call when that's going to happen. Operator: Our next question comes from Matt Summerville with D.A. Davidson. Matt Summerville: Just a quick follow-up. On the medical side of the business, can you just give a little bit more granularity as to the weather impact you saw in the quarter, which business line was impacted? And if you kind of normalize for that impact, what would the medical organic performance, medical-only organic performance have looked like in the quarter? Daniel Hopgood: Yes. It was primarily in our interventional products and then also to some extent, in our fluid components, particularly some of our Atrion-related businesses. We had several businesses that have operations on the East Coast as well as supply chains that are East Coast based. And the long and the short of it is we lost a few days of production because we had literally operations that were mandated to be shut down because of the weather impacts. And so we estimated about a 1% impact. It's -- think of it as 2 to 3 days of production, very temporary in nature. We're back up and obviously fully running, but did have an impact on our ability to deliver during the quarter, especially with that happening late in the quarter. So again, I think the simple math is 3% overall growth. Normalized, that would have been about 4% in the quarter without that late storm impact. Matt Summerville: And then maybe if you can just comment on what you're seeing from an M&A standpoint, multiples, potential deal sizes, actionability and where you see most activity across the company. Sundaram Nagarajan: Just a reminder, in terms of our acquisitions, we continue to work our pipeline, pretty active pipeline. Lots of different opportunities they will pursue. What you don't want to look at lack of announcements and relate that to lack of activity, right? Because we remain financially and strategically disciplined. The areas we are continuing to work on are continue to expand our medical component portfolio. We're working on test and inspection opportunities and any core technology, any technology that would add to our core offering in industrial. So that is sort of the 3 areas that we are looking at and working on. Yes, the multiples look a little elevated in some cases. In some places, it look reasonable. I think for us, it is -- we're going to continue to be pretty disciplined around what we buy. And our criteria has remained the same. We're looking for businesses that would add to our growth portfolio, businesses that are differentiated, businesses that have strong technology plays. And from a financial perspective, we're looking for Nordson-like gross margins. And maybe EBITDA was in the 20% range with meaningful opportunity to expand margins and an appropriate return. So all our criteria, both strategic and financial, remain the same. Healthy pipeline, continue to work on. lack of announcement shouldn't be assumed for lack of activity or work on our part. Operator: Our next question comes from Christopher Glynn with Oppenheimer. Christopher Glynn: Just wanted to -- you mentioned, I think, seeing some initial signs of the general electronics of ATS starting to show signs of life that pretty consistent with what we're hearing from kind of adjacent companies or exposures to yours. But I just wanted to spend a minute exploring that topic. Daniel Hopgood: Yes. I guess maybe just to add a little bit of color. I would say we're not really seeing inflection in those businesses. I would say stable demand at low growth levels. I think the early signs that I would say we're pointing to is -- and you guys see the announcements as much as anybody else, you're starting to see some of the semiconductor -- I'll say, the high-end semiconductor demand and investments seem to be trickling into the lower level electronics applications. If you think of memory and general electronics requirements, we're starting to see announcements and discussions around capacity investments. We're not seeing those yet, but certainly, those are early signs that we may see inflection coming at some point in the future. Right now, what I would say we're seeing in those markets is stable demand at low growth rates. Christopher Glynn: And then just want to explore also when emerging technologies in the semi application space start to hit you, say, in the case of both packaged optics, is that a meaningful opportunity? Is that down the line? Or are you seeing some early action derivative of that technology. Sundaram Nagarajan: Are you talking about optical modules? Is that what you're talking about, Chris? Christopher Glynn: Yes, exactly. Sundaram Nagarajan: Okay. Yes. That is an area of -- we have some interesting products there that helps our customers manufacture those optical modules. It's certainly an area that we are playing in, and it's an area where we are beginning to see orders directly related to that. Christopher Glynn: And last one for me. What was -- as I recall from back in the past, it's been a while, but FX can have a substantial impact on ATS, IPS margins. And they were certainly well below the steady state that you've delivered for a long time there. I know you talked about mix, but ahead of the call, I was certain it would be FX. So I just wanted to ask about that. Daniel Hopgood: Yes. And we mentioned that as well. FX is certainly -- if you think of the incremental performance for IPS, that's certainly one of the items that impacts us. And the simple math I would give you is because FX was about a 6% positive impact on IPS sales. We -- obviously, we don't get the same incrementals on FX movements. In fact, we would give you the math of use a 25% to 30% range for a normal incremental on FX, both on the upside and downside. And so with 6% growth coming from FX at a lower incremental, certainly, that's a contributor to the performance in the quarter. Operator: Our next question comes from Robert Jamieson with Vertical Research Partners. Robert Jamieson: Just really wanted to follow up quickly on that FX incrementals. Should we be assuming the same sort of incremental drop-through of those 25% up or down across the other segments as well for FX? Daniel Hopgood: It varies a little bit by segment. But yes, generally speaking, that's a good benchmark. And again, the only thing I would maybe caution you on is the outlook for the year, that FX impact will lessen at current rates as you saw FX rates improving throughout the year last year. So Q1, we get a pretty big lift, but that will lessen as the year plays out at current rates. But yes, the drop-through should be pretty similar. It moves a few points one way or the other, but not significantly different by segment. Robert Jamieson: And then I just want to talk about full year guidance. Really solid performance in 1Q, nice 2Q guide. Just taking Naga's comments, and I think it's wise here to have a level of conservatism baked in. And hopefully, I'm reading those comments right. But what I'd like to kind of understand is what end markets and areas would you expect to outperform your base case estimates to get us at or above the high end of your sales range? Does it need to be an acceleration in like auto? I mean, I've been watching auto CapEx for 20-plus global auto OEMs. And even since December, we've seen auto CapEx revised higher by like 5% growth in '26 from flattish in December. So would it be kind of like a mix of that plus more of an acceleration in some of the minimally invasive and specialty medical business? Would that be like kind of like a fair assessment if we were to -- things -- everything were to align and get us towards the high end of your guidance range? Sundaram Nagarajan: Rob, thank you for your comments. That exactly mirrors our thinking. What we are trying to be is balanced and prudent in our thinking for the rest of the year. And in terms of the details of how we're thinking about each of these end markets, I'll have Dan talk to you about the high end and the low end. Daniel Hopgood: Yes. And I'll start with, frankly, I think the easier one. Medical, we see, as we mentioned, good ongoing stable growth in the mid-single-digit range. Is there potential for upside there? Potentially, but we're not really -- I would say that's not a market that we expect to inflect further necessarily. If I think of what would drive the higher end, it would be exactly what you're talking about, some further inflection in general industrial and automotive demand. And then the other key factor that I would say is if you look at our ATS performance, as we've highlighted a number of times, ATS deliveries being 70% systems tend to be lumpy. We're not factoring in a 20% run rate and growth in this business. We know that there will be some lumpiness quarter-to-quarter. But one potential upside is if we see continuing ongoing strength in demand, that would be upside versus our kind of base case thinking. Sundaram Nagarajan: Maybe let me just add one thing there, particularly on ATS. Some of the demand and the exact delivery depends on our customer, right? So we are part of somebody else's large manufacturing supply chain that they're bringing a process up to speed. So occasionally, there may be a pull ahead and sometimes a pullback. Postponing is the way to think about it. So think of our lumpiness also from a customer demand delivery requirement. Daniel Hopgood: Yes, it's a good way to think about it. Robert Jamieson: No, that makes perfect sense. And then just one last one. Just I don't see this being an issue for you all, but DRAM pricing, have there been any impacts? Or how much is that of like your bill of materials? Is it pretty de minimis? And then I guess another question would be, with just some of the capacity constraints there, could that be a potential opportunity for you all if -- like on the back-end processes, if they need to increase capacity? Or am I not kind of on course there? Sundaram Nagarajan: Robert, could you repeat your -- the early part of your question before the pricing, we missed something there. We just... Robert Jamieson: Yes. Sorry. So I was just talking about DRAM pricing, and I was wondering just with like memory costs going up, do you have any significant exposure there that would be related to margin? Sundaram Nagarajan: Yes. We don't have a significant amount of exposure, but we do have exposure in the memory space, in the traditional memory. And when there are capacity adds there, we will benefit. Operator: Our next question comes from Andrew Buscaglia with BNP Paribas. Andrew Buscaglia: Just wanted to check on -- within ATS, I know you said about half of your sales tied to semis. But we're seeing that test and inspection piece maybe start to recover with X-ray. Can you just talk a little bit about how -- I know that your test and inspection stuff is quite niche. So I'm wondering what a cycle looks like for that side of your business? And is this X-ray piece sort of a precursor for a lift in that chunk of your ATS business? Sundaram Nagarajan: Yes. If you think about our X-ray business, this is one is a little slower to recover when compared to our dispense business and when compared to our Acoustic Emission. And so if you think about year-on-year, our X-ray has some automotive exposure as well. the semi side of X-ray is doing really well and the auto is flattish is the way to think about it. Does that help the question that you asked? Andrew Buscaglia: Yes. Sundaram Nagarajan: Sorry, as automotive comes back, we will continue to see X-ray do well. Andrew Buscaglia: On the MFS, you run into some pretty tough margin comps in the back half of the year. Can you just remind us I guess, is that something when you -- when we come to lap that, you expect to expand off of such a high base? I mean there are pretty impressive margins you're kind of running into? And maybe what -- why would that be? What would lift that demand if you don't -- or margins if the demand is not really accelerating? Daniel Hopgood: Yes. No, it's a good question. And I mean, maybe I'll even go back to our fourth quarter. We printed a very strong margin in the fourth quarter. And I think we made comments during that call that, that was a high point and not necessarily an ongoing run rate. And so we think margins in the MFS segment are very much sustainable in the 37%-ish range. And we may have some selective quarter-over-quarter comp issues like the fourth quarter where we had a really strong performance. But we think maintaining that margin performance and continuing to generate reasonable incrementals as we grow is very much attainable in the medical business. It's worth pointing out, maybe just to reiterate, the divestiture that we completed in the fourth quarter is kind of a, call it, a onetime adjustment that impacts our ongoing margins. And so you're certainly seeing that in the year-over-year margin comparisons in Q1, and you'll see that through the year until we hit Q4. Sundaram Nagarajan: And I think, Andrew, the most important part we, as a company, are focused on, and this message sort of reiterates across all of our businesses. In -- given Nordson's high gross margins, high best-in-class EBITDA margins, it is super important for our businesses to stay focused on growth at reasonable incrementals. So as you think about us, be it MFS, yes, the margins are pretty strong. But day in, day out, what our teams in the divisions are focused on is to drive organic growth, innovate, deliver products at the time the customer is asking us, have the best quality there is, meet our customers' needs in the market where they need us to be, just being agile. That's sort of how we are thinking about it. And I would say the margin is just a byproduct of all of the work, right? So that -- if you want to think about us, I would think about above-market growth at reasonable incrementals. That's what we're focused on. That's what you will see us deliver. Operator: Our next question comes from Chris Dankert with Loop Capital. Christopher Dankert: Just looking at the ATS segment, I guess I'm fully appreciating that a lot of that business is just lumpier by nature. But was any of that growth a pull forward around Lunar New Year? Or was that just kind of how the orders just happen to fall serendipitously? Daniel Hopgood: Yes. No, nothing that we would say is tied to the Lunar New Year. In fact, to be honest, we've kind of looked at this and the Lunar New Year, it has a pretty de minimis impact, and we've kind of proven that out looking at history. So it's really tied to, as Naga said earlier, customer demand requirements when they want the machines on their floor for installation into their broader lines. And what you're seeing is reflective of, I would say, normal customer demand and requirements. Sundaram Nagarajan: We do hear that our customers are investing for the demand, right? And so this increased demand for AI chip capacity is playing out, and it's playing out in the packaging area right now. And that's why you see our dispense business benefit. You start to see our X-ray business start to inflect. So this is based on what people are asking. And the lumpiness comes from our customer, both investment pattern as well as installation requirements. So... Christopher Dankert: Yes. It was certainly encouraging to see the strong start to the year and the good shipments in 1Q here. So congrats on that. I guess as my follow-up, any comments on kind of the machine builder activity in core Europe and kind of what that demand has been within the IPS segment? Sundaram Nagarajan: They seem to be pretty stable and our packaging business has had a pretty good quarter, expect to continue to have a pretty good quarter. If you think about the nonwovens business, we're coming off of 2 years of incredible capacity adds. A lot of capacity adds for nonwovens came in the last year from a lot of our mid-tier OEMs based in Asia, building out in Africa, Middle East, India, so global middle income growth, still a big secular growth driver for this business, albeit reasonable low single-digit growth, stable aftermarket demand, all the things that makes this business great, still intact, still continuing to do well. Christopher Dankert: Congrats on the nice start to '26 year. Operator: Our next question comes from Walter Liptak with Seaport Research. Walter Liptak: Let me try one on the ATS segment. And if I'm recalling this right, in past positive cycles around consumer electronics for dispensing, the visibility was pretty short, like the customers would place orders and then you'd have to cycle through and ship very quickly already. And it sounds like with this kind of data center build-out for advanced chips that lumpiness is still there. Do you -- can you help us understand, is there any differences between prior kind of consumer electronics-led cycles versus this one? Do you get any more visibility into the capacity that might be going in and those order lead times, if you can just comment. Sundaram Nagarajan: The order lead times are not very different. But the size or the growth differences are -- they are smaller rather than significantly huge chunks and then nothing. So I would say it has dampened. The amplitude of the cycle is dampened is maybe one way to think about it. But the order lead times are no different. But we have built in some new advantages here in the last couple of years. If you remember, this business went through a relocation of capacity to be in geographies where we are closer to our customer and where the customer needs us to be. So that has helped us to be able to respond to this lead time. The other is our NBS -- next application within our factories certainly has improved our own on-time delivery capability. We are consistently in the low 90s starting to march towards a 95% on-time delivery based on customer requirements. So this type of delivery capability that the teams have built over the last couple of years and having capacity where our customer needs us to be is a game changer for this business. Daniel Hopgood: I'll just add, by the way, I mean, your comment is spot on. If you think of our backlog, and this is why we think looking at our backlog quarter-to-quarter or year-over-year is a good indicator, we're turning our backlog pretty quickly. As you think about our backlog, yes, we have some selected areas with longer lead times, but the majority of our backlog turns in the quarter. And so our starting backlog is really an indicator of current demand for Q2. To your point, we also have -- we maintain robust pipelines. We know what we're talking to our customers about on new projects. I think the piece that's harder to pin down sometimes just because of customer requirements is when those turn into orders and delivery, which is dependent on when the customers need them for their factory floor. Walter Liptak: And then you called out the wise Nordson Advanced Electronics winning. I wonder if -- is there a win rate? Like -- it sounds like you might be gaining market share here with some of the quick delivery. Is there a way of quantifying it with the win rate? Sundaram Nagarajan: Walt, we don't share that on the outside. I would definitely tell you our work around growth drivers in each of our businesses, including ATS, around focus on innovation, focus on delivery, having the best in quality and finally meeting where our customers need us to be in the market are 4 core growth drivers that each of our businesses are working on. And what you're seeing in ATS, certainly, there is a market momentum, but to be able to leverage the full potential of the market opportunity, clearly, our teams are doing it. Fantastic job. And I think we're getting rewarded for that in the market. Operator: [Operator Instructions] Our next question comes from Brad Hewitt with Wolfe Research. Bradley Hewitt: So IPS revenue was much better than typical sequential seasonality. Of course, you called out the strength in Asia Pacific. But just curious if you could elaborate a little bit more on what drove that strength in Asia. How much of that was a function of an easy comp? And then how do you think about growth by region for the year in IPS? Sundaram Nagarajan: Yes. As I shared earlier in one of the answers, I would tell you, it is a broad-based demand that we are certainly seeing in IPS. IPS returns to growth, returned to growth in the quarter, expect to have a good growth for the rest of the year. Clearly, you can see growth in packaging, product assembly. Our Precision Ag business is also growing nicely. Polymer Solutions has stabilized. So there is some of that negative going away, right? If you think about polymers and automotive, where last year, we were dealing with still demand going down. That has stabilized. So from that perspective, the comps are better there. So it's a combination of our businesses that were negative last year are stabilized. They've not inflected yet. But our businesses that are having good growth demand in packaging, product assembly and precision ag are contributing to the growth in this segment. Daniel Hopgood: I think that's maybe a good way to think about it, Brad, is what you're seeing in our first quarter growth of 3% is really the underlying growth that we've been seeing in this segment, if not for the drag that we saw in the automotive and polymer space last year. Bradley Hewitt: And then maybe switching over to the ATS side. Given AI demand continues to accelerate in recent months, does that give you confidence that perhaps your electronics business as a whole can outperform the mid-single-digit long-term outlook you discussed at the Investor Day? Sundaram Nagarajan: I think it's really important to remain balanced on this business. We have seen the cycle of this business. And that's the space we play in, and we fully appreciate it, and we capitalize and fully participate in the market when the market is up. So yes, in years when there is going to be significant investment like now, we are going to see higher than the mid-single digit. But then through the cycle, we're going to be in places where this business will go down. And that's something you have experienced. You've seen us. So you want to think through the cycle, mid-single digit in the up cycle, certainly higher, right? And so that's what we are experiencing now, and that's what we are planning for and that's embedded in our guide. Operator: There are no further questions at this time. I will now turn the call back to Naga for closing remarks. Sundaram Nagarajan: Thank you for your time and attention on today's call. We have several upcoming investor events over the next month where our team would be happy to meet with you, including the Loop Industrial Conference on March 10 in New York, the Bank of America Conference on March 17 in London and at the APEX trade show in Anaheim, California on March 18, featuring our electronics product lines. Nordson is well positioned as a diversified precision technology company, our close to the customer model, proprietary and niche technology, diversified geographic and end market exposures, High level of recurring revenue and strong balance sheet are among the many attributes that make us a quality compounder. Have a great day. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Hello, and welcome to Broadstone Net Lease's Fourth Quarter 2025 Earnings Conference Call. My name is Emily, and I'll be your operator today. Please note that today's call is being recorded. I will now turn the call over to Brent Maedl, Director of Corporate Finance and Investor Relations at Broadstone. Please go ahead. Brent Maedl: Thank you, everyone, for joining us today for Broadstone Net Lease's Fourth Quarter 2 Earnings Call. On today's call, you will hear prepared remarks from Chief Executive Officer, John Moragne, President and Chief Operating Officer; Ryan Albano; and Chief Financial Officer, Kevin Funnell. All 3 will be available for the Q&A portion of this call. As a reminder, the following discussion and answers to your questions contain forward-looking statements, which are subject to risks and uncertainties that can cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements. For a more detailed discussion of risk factors that may cause such differences, please refer to our SEC filings, including our Form 10-K for the year ended December 31, 2025, and note that such risk factors may be updated in our quarterly SEC filings. Any forward-looking statements provided during this conference call are only made as of the date of this call. With that, I'll turn the call over to John. John Moragne: Thank you, Brent, and good morning, everyone. Before I dive into our results and outlook, I want to briefly reflect on what we accomplished in 2025 because I believe it was an important year in Broadstone's history. 2025 was pivotal in terms of proving out the promise of this company and our strategy. and was crucial in terms of establishing a strong foundation for B&L's future. We successfully executed our Investor Day and used it to reinforce who we are as a company and why we believe our differentiated strategy is built to generate consistent and attractive long-term shareholder value. Delivering on our strategic objectives last year required significant effort across the entire organization, and I couldn't be prouder of what our team accomplished. As a reminder, our strategy continues to be driven by our 3 core building blocks: First, solid in-place portfolio performance, anchored by our top-tier contractual rent escalations, same-store growth potential and revenue-generating CapEx; second and most importantly, a laddered pipeline of committed build-to-suit development projects that provide attractive yields, value creation and derisk future AFFO per share growth; and third, stabilized acquisitions, including sale leasebacks and lease assumptions particularly those that are directly sourced and relationship-based that supplement and enhance our built-in growth profile. In 2025, we made meaningful progress across each of these building blocks. And as we look ahead, we believe our build-to-suit strategy will provide meaningful embedded long-term growth and value creation. With high-quality mission-critical facilities with attractive economics and high-quality tenants, our portfolio and pipeline provide a powerful driver of durable growth that is unique within the net lease space. With our differentiated strategy established and our team firing on all cylinders, we delivered a strong year on all fronts, including generating $1.49 of AFFO per share, representing 4.2% growth year-over-year. We also maintained solid portfolio performance ending the year 99% leased and 99.8% of rents collected. We also incrementally disposed of some of our remaining legacy clinical health care assets, and we continue to tightly manage expenses and grow cash flows. On the investment side, we deployed $748.4 million, including $429.9 million in new property acquisitions, $209.3 million in build-to-suit developments, $100.8 million in transitional capital and $8.3 million in revenue-generating capital expenditures. The new property acquisitions and revenue-generating capital expenditures had a weighted average initial cash capitalization rate of 7%, a weighted average remaining lease term of 14.2 years and weighted average annual rent increases of 2.6%, providing contractual growth that is 50 basis points above our portfolio average. On a weighted average basis, these investments also carried a straight-line yield of 8.4%, reflecting attractive growth-oriented returns while extending the duration and embedded rent growth profile of our portfolio. Alongside our investments, we also successfully navigated multiple headline tenant situations throughout the year, and I want to give our team all the credit here. These situations require a lot of work, and our organization has tangible tested experience in managing them to completion. Our team brings a creative and solutions-oriented mindset to find outcomes that work for us and our tenants. It's the ability to find mutually beneficial solutions to difficult problems that helps us build long-term relationships with our tenants and clients. which you hear us talk about often. Despite the headlines, the actual financial impact from tenant situations last year was limited with bad debt for 2025, amounting to only 31 basis points. That outcome underscores the strength and reliance of our portfolio as well as our team's ability to manage through these events and should serve as a reminder that while credit events are bound ahead. In most cases, the underlying impact on the business is minimal and does not necessitate the outsized swings in our share price that we have experienced historically. A recent example of this disconnect was when American Signature filed for bankruptcy over a weekend in November last year, a filing that was not communicated to us in advance. In response, our share price declined over 5%, representing approximately $150 million of market capitalization despite American Signature representing only approximately 1% of our total ABR. As you saw in our earnings release last night, through the court supervised process, Gartner White Furniture has assumed all 6 of our American Signature leases at current rents effective as of February 6. We realized no bad debt throughout the process, and we now have a strong retail furniture operator in all 6 of our locations with what we expect will eventually be a new and structurally improved long-term lease. Overall portfolio performance remains solid, and our credit and underwriting platform, paired with our proactive relationship-based focus allows us to stay close to our tenants and anticipate issues early. We've also been intentional about communicating potential tenant concerns as transparently and as early as possible. With that backdrop, we want to provide an update on what we are seeing across our Red Lobster sites. The tenants post-bankruptcy operating performance has been mixed. With its turnaround strategy positively impacting some sites, while others have experienced weaker traffic and profitability. We are monitoring this closely and remain in active dialogue with Red Lobster while we continuously assess each of our sites to understand our highest value pathways forward, which could simply mean maintaining the status quo. Given the continued underperformance at some of our sites, however, we are in the process of evaluating potential mutually beneficial 4 sale or 4 lease paths that could reduce our exposure to the brand over time. We remain highly confident in our ability to navigate our exposure to Red Lobster as we have proven with this and other distressed tenants time and time again. Turning to 2026. And as we previously outlined in connection with our Investor Day, we are reiterating our 2026 AFFO guidance of $1.53 to $1.50 per share or 4% at the midpoint. Kevin will walk you through our key guidance assumptions in his remarks. But I think it's worth reminding everyone that the success we had in 2025 and establishing our build-to-suit pipeline provides for a very strong foundation for 2026. The incremental investment activity required to achieve our 2026 guidance targets is relatively insignificant. And our primary focus on our investment committee conversations centers around what we are seeing that will deliver in 2027. We remain in a great position to start the year with approximately $350 million of high-quality build-to-suit developments scheduled to reach stabilization during 2026, adding nearly $26 million of incremental ABR. Additionally, we have approximately $142 million of additional build-to-suit developments that are under executed LOIs consistent with what was previously provided in conjunction with our Investor Day. We are also excited about some opportunities to continue to add to our transitional capital bucket. As many of you have been focused on since our third quarter earnings call and from our Investor Day presentation, our transitional capital investment in Project Triboro is top of mind and we have now invested approximately $100 million in the project through December 31. As I've said previously, we are very excited about this project, and we intend to use 2026 to evaluate all available paths for this investment opportunity, while staying actively involved in the development work to preserve optionality and ensure we maximize value for shareholders. Ryan will provide more details on Project Triboro in a few moments. Finally, while we have been encouraged by improving market sentiment around REITs and some improvement in our equity multiple, we remain frustrated with our relative valuation. We continue to focus on disciplined execution to close the remaining gap versus our peer average and expand our ability to fund growth opportunities over time. As you saw in our earnings release last night, we raised a small amount of equity under our ATM since November. In total, on a forward basis, we have raised gross proceeds of approximately $43 million. While the market setup has been incrementally constructive, we do not expect to raise significant amounts of additional equity at these levels. So we will remain opportunistic in our decision-making. As we have made clear over the last 3 years, we will control our own destiny and look to opportunistic dispositions and alternative opportunities for capital when we do not believe the equity markets are properly valuing our shares. That being said, we know that publicly traded net lease REITs like B&L work best when they are in the virtuous cycle and raising accretive equity capital to be redeployed into attractive investments, and we look forward to the day when we're able to consistently raise equity in that manner again. As I said at the beginning of my remarks, I couldn't be prouder of what our team accomplished in 2025, and I look forward to sharing with you all that we will accomplish in 2026. With that, I will hand the call over to Ryan and Kevin to take you through some of these themes in greater detail. Ryan Albano: Thank you, John, and thank you all for joining us today. As John mentioned, 2025 marked a pivotal year for the strategic road map implemented following the executive team transition in early 2023. Our differentiated approach in core building blocks are firmly established, supporting robust growth in 2025 and enabling visibility into embedded growth through 2027, well ahead of most net lease companies. . Over the course of the year, we had approximately $4.5 million of ABR commenced from build-to-suit projects, featuring weighted average annual rent escalations of 2.9% and a weighted average lease term of 15 years, further strengthening our robust portfolio metrics. Furthermore, our UNFI build-to-suit project, which began generating rent in late 2024, contributed a full year of ABR during 2025. At present, we have 9 in-process developments, representing an estimated total project investment of $345 million. These projects offer strong estimated initial cash yield of 7.4% and estimated weighted average straight-line yield of 8.6%, driven by weighted average lease term and annual rent escalations of 12.9 years and 2.7%, respectively. Notable, these tenant-driven projects are structured to mitigate traditional development risks such as construction timing and cost pressures. Of equal importance, our pipeline building methodology serves as a strategic differentiator. We primarily source opportunities through existing and direct relationships facilitating repeat transactions and expanding access to new investment opportunities. Our development partners value certainty of execution, expertise, creativity and flexibility while assisting them in securing investment opportunities and advancing their businesses, setting us apart in the market. Aligned with our Investor Day announcement on December 2, we maintain approximately $142 million in advanced stage projects under executed LOIs, sustaining a pipeline that supports our target of $350 million to $500 million in committed build-to-suit projects for the foreseeable future. In 2025, while focusing on developing our initial build-to-suit pipeline, we also pursued stabilized acquisitions primarily through direct sourcing efforts. We invested approximately $430 million in new property acquisitions, achieving initial cash yields of 7% and strong weighted average rent escalations of 2.6%, resulting in straight-line yield of 8.4%. Regarding the transaction market, we observe healthy activity, including some notable portfolio opportunities, especially within the industrial property segment. However, we remain disciplined. In many cases, pricing levels do not align with our targeted risk-adjusted returns, and we refrain from prioritizing volume over quality. We continue to exercise caution regarding tenant credit, considering broader economic conditions and sector-specific constraints. Consequently, we prioritize opportunities involving strong relationships and investment structures that protect downside risk, whether via our build-to-suit platform, revenue-generating capital expenditures or stabilized property acquisitions. Turning to dispositions. We sold 28 properties in 2025, yielding gross proceeds of $96 million at an average cash cap rate of 7.3% on tenanted properties. These transactions were primarily focused on routine portfolio sales and risk mitigation efforts, including the sale of Stanislaus Surgical, which further reduced our exposure to nonreimbursable expenses associated with clinical assets. Now focusing on our in-place portfolio. We completed 19 lease rollovers during the year, addressing over 1% of the total portfolio ABR. This resulted in a weighted average recapture rate of 110% at an average new lease term exceeding 7 years. For 2026, 3.3% of our in-place ABR is scheduled for rollover with negotiations already underway and positive outcomes anticipated. Regarding our watch list, our team successfully managed key tenant events in 2025, including positive outcomes with At Home, Claire's and Zips. Following year-end, Gartner White assumed all 6 of our sites through the court-approved American Signature bankruptcy process. As a strong Michigan-based furniture retailer, they were already familiar with these locations and a logical candidate to operate these sites into the future. Additionally, in January, Claire's exercised its lease termination right effective June 30. We are collaborating with Claire's to facilitate a seamless transition and optimize our leasing and disposition efforts, having already attracted interest in the property. As John indicated, we are increasingly cautious regarding our exposure to Red Lobster, given the slower-than-anticipated return to historical foot traffic patterns. Red Lobster currently represents approximately 1.3% of total ABR across 18 sites under a single master lease that runs through 2042, offering meaningful protections as we move forward. We are evaluating strategies to gradually reduce exposure over time, retaining flexibility to pursue optimal outcomes while continuing to monitor the company's operating performance. On a forward-looking note, I'm excited to update you on Project Triboro, our primary transitional capital investment. Triboro is a fully entitled industrial development site in Northeastern Pennsylvania distinguished by its strategic location, a highly attractive market demand backdrop, coupled with limited near-term supply and committed power capacity totaling 1 gigawatt with supporting infrastructure. These attributes have generated considerable interest from several market participants and multiple paths to value creation. Consistent with John's remarks, we are focused on maintaining optionality for Project Triboro as we progress through 2026. Today, given the substantial power commitment, the primary path we are evaluating is a future hyperscale data center campus with potential transaction structures ranging from powered land to powered shell configurations. Importantly, we have a clearly established floor. If the data center path does not produce the optimal outcome, the site is already fully entitled and designed to accommodate multiple industrial build-to-suit developments, ensuring attractive alternative investment opportunities. Phased execution serves as a cornerstone of this project, enabling a deliberate and systematic approach that delivers incremental value at each stage. This framework permits advancement towards future milestones while preserving adaptability at every juncture to facilitate additional investment, partial monetization or complete monetization of our investment. To date, we have received unsolicited proposals, reflecting valuations significantly higher than our capital invested. Site work commenced in the fourth quarter and remains ongoing with multiple concurrent work streams underway and initial power delivery anticipated as early as the third quarter of 2027. We look forward to providing additional updates each quarter as the project progresses. Triboro demonstrates our relationship-focused, value-driven conditional capital approach. Relationships port through this transaction continue to yield additional investment opportunities. With that, I will now turn the call over to Kevin. Kevin Fennell: Thank you, Ryan. During the quarter, we generated adjusted funds from operations of $75.8 million or $0.38 per share, a 5.6% increase over Q4 of 2024. For the full year, we generated $296.3 million or $1.49 per share, a 4.2% increase year-over-year, driven by strong same-store rent growth of 2% and approximately $430 million in stabilized investment activity throughout the year. The year's results also benefited from lower nonreimbursable property expenses from re-leasing activity that occurred at the end of 2024 and lower carrying costs from health care-related dispositions that occurred at the beginning of 2025. Lost rent totaled 31 basis points for the year, down from 67 basis points during 2024. Core G&A was well managed once again during the year, with expenses totaling $7 million during the fourth quarter and $28. 7 million for the full year, down 2% year-over-year. These were partially offset by higher interest expenses associated with our revolving credit facility driven by an increase in acquisitions activity. With respect to the balance sheet, we ended the year with pro forma leverage of 5.8x, approximately $11 million of unsettled equity and over $700 million available on our revolver. In December, we amended our bank term loans, resulting in a 10 basis point reduction to each of the loans all in rates, and an incremental 25 basis point reduction to the 2029 term loan rate. We also amended the 2029 term loan maturity date, providing a fully extended maturity into February 2031. With limited debt maturities through 2027, we maintain sufficient financial flexibility as we look ahead. Regarding the capital markets more generally, our posture remains opportunistic. Example of what you saw with our $350 million September bond issues. More recently, our decision to issue a small amount of new shares via the ATM was similarly situated as we evaluate our robust pipeline of investment opportunities and approach rent commencement on a number of our build-to-suit projects. Including incremental sales after year-end, we currently have approximately $43 million in unsettled equity that we expect to sell at the end of the year. As John alluded to, we are not interested in raising equity and significant scale at these levels, and we'll look to self-fund our investments if or as needed. Last week, our Board of Directors approved a quarterly dividend of $0.2925 per share, representing a $0.25 or approximately a 1% increase over the prior dividend. The dividend is payable on or before April 15, 2026, to shareholders of record as of March 31, 2026. This increase reflects our return to growth in 2025 and visibility to additional growth in 2026 and 2027, and we are excited to be in a position to translate that momentum into dividend growth while continuing to target a mid-70% payout range at the end of 2026. We are reiterating our 2026 per share guidance range of $1.53 to $1.57 per share with the following key assumptions: investment volume between $500 million and $625 million. disposition volume between $75 million and $100 million. And finally, core G&A between $30 million and $31 million, revised down from $30.5 million to $31.5 million in our initial guide given better-than-expected core G&A for 2025 and our continued success in managing these expenses. As previously mentioned, we also include 75 basis points of lost rent with our 2026 guidance and we'll revisit this assumption throughout the year. It's always worth reminding everyone that our per share results for the year are sensitive to the timing, amount and mix of investment and disposition activity as well as any capital market activities that may occur during the year. Please reference last night's earnings release for additional details, and we will now open the call for questions. Operator: [Operator Instructions] Our first question today comes from Anthony Paolone with JPMorgan. Anthony Paolone: My first question relates to just the competitive landscape for build-to-suit opportunities. We've seen since you all have ramped this up a couple of the net lease name also lean into that strategy. I'm just wondering if you're starting to see any more competition or others enter into the space. John Moragne: Invitation certainly is the sincere form of flattery, right? We're pleased to see that others are finding the same value in build-to-suits that we do. That being said, we have not seen an increase in the level of competition on the deals that we're looking at. And that goes to what Ryan was discussing in his remarks, the relationship-based nature of the way that we source our deals. . Our goal is to find partners who are looking to help us grow our business where we're helping them grow theirs. And so in the same way that we look for mutually beneficial solutions to tenant issues. We're also looking for mutually beneficial relationships on the build-to-suit side. So by contrast, we've actually seen a big uptick in the amount of build-to-suit activity that had come across our teams desks, particularly in the last 10 days of new opportunities that we're excited about with potential completions in 2027 and even out into 2028. So certainly more attention and activity in the area, but it's not impacting the top of our funnel or the way that we're able to source deals that we'll be able to add to our pipeline over time. Anthony Paolone: Okay. And then just my second question relates to Project Triboro. You mentioned maybe an initial delivery in 3Q '27 for power. Like how much of the 1 gigawatt would that be? I mean the gigawatt is a lot, and it seems like the capital investments could be quite sizable. And so just trying to get a little bit more context around that time line and what that means? Ryan Albano: Sure. I'd say it's a little too early to tell. We are looking at different load ramps in talking with PPL about it, I would say that when we think about the power, we really kind of think about it in 2 phases, and the first phase is 300 megawatts. And the second phase takes you up to the gigawatt. It would likely be some portion of that initial 300 megawatts and probably somewhere over 100. Operator: Our next question comes from Eric Borden with BMO Capital. Eric Borden: You talked about different types of capital sources that you may potentially be using in 2026. One of those was the potential opportunity to recycle assets. I just want to talk about UNFI. If you were to sell UNFI today, how would you expect to deploy those proceeds? Would it be towards traditional acquisitions or funding new developments? And then additionally, how are you guys thinking about the potential leverage implications if the proceeds were used to fund new development activity? John Moragne: Sure. couple of questions, I guess, to answer. The first is UNFI as a capital source most optimally later this year as that becomes more tax efficient. So as you think about. Your question on use of proceeds, I think there's a timing component to introduce as well. And so we think about all the dollars we're deploying, our commitment in the build-to-suit is sort of a known number today. It will grow over time. And similarly related, we've got a lower target for stabilized acquisitions. And so I'd say, it's less about the mix of the deployment dollars and more about the timing of those dollars is the first answer. And then second, on leverage, you've heard us the last couple of quarters, especially get really comfortable talking about our sustained target of 6x on a pro forma basis. I think with where we're trading today, we're still dancing around those levels and evaluating what that next capital source is. And to the extent that its equity, it certainly helps the leverage equation. To the extent is a dispo, you sort of maintain that leverage target where it is. So a little bit more to come as the year plays out, but intend to be opportunistic and maintain that level of flexibility. Eric Borden: Okay. And then just on internal growth. I understand you don't provide like formal same-store revenue guidance, but how should we be thinking about internal growth for '26 and beyond is that 2% annual growth rate, a reasonable run rate assumption for B&L? John Moragne: Sure. I think that's reasonable. I mean you'll see, particularly these disclosures come out quarterly, maybe a little bit of upper momentum around that number, but we look back historically, when we started to disclose this information and for probably 8 or 9 quarters relying on that 2% as a go-forward assumption is reasonable, and then you'll see us move around that and really move that higher over time. . Operator: Our next question comes from Upal Rana with KeyBanc. Upal Rana: On Red Lobster, I understand all 18 sites were under a long-term single master lease. Just wondering how many of your sites are under consideration to either sell or re-lease? And how that impacts the master lease itself? And if there could be some terminations coming in there as well? John Moragne: Early days in this discussion. We've been, as you've heard us say before, we've reduced our exposure to Red Lobster over the years. We originally had 25 sites were down to 18. We've been interested in reducing the 18 even further, but that was held back by the bankruptcy process, you weren't in a place where you'd be able to reduce it further. We've been actively looking to do that for a while now. . We're having good productive conversations, but hit a theme over the head multiple times. We are looking for mutually beneficial solutions here. We want to be able to help Red Lobster in their efforts to improve. These sites were performing well on an aggregate basis prior to the bankruptcy. The bankruptcy unfortunately, has had a pretty harsh impact on foot traffic, although Red Lobster CEO was recently interviewed in the Wall Street Journal and talked about 10% increases in brand-wide sales, 18% increases in placer data from a foot traffic standpoint. So there has been some recovery, not to the pre-bankruptcy levels. we are currently below that 2x rent coverage where we were prior to the bankruptcy. We have seen efforts that they've had in terms of cutting costs and changing up their market strategy. They've had some success with some of those things and particularly attracting young people back to the brand. So we're hopeful that we'll continue to see that. We're open to ideas for re-leasing, moving on from some of the sites, selling them, working with them to improve here. but it has to be something that's mutually beneficial and is helpful to us in our efforts to continue to grow our AFFO per share and not take a big at that is otherwise unwarranted. So early innings, not sure that we'll see any real movement here in the near term, but we'll continue to have conversations and keep an open mind. Upal Rana: Okay. Great. That was helpful. And then on American Signature, I know you're still negotiating a new master lease there. What do you think rents could potentially end up relative to the current rents? And how does this impact the bad debt that you have embedded into full year guidance? John Moragne: No change. Rents will stay what they were when we win. We're not negotiating a change in those rent levels. The only thing that we're looking at right now is a handful of small lease issues, including consolidating the individual leases into a master lease as you referenced. Upal Rana: Okay. And then the bad debt portion for maximizer for this year? John Moragne: No change in our assumptions on it. we take a conservative position early in the year with the things that we're looking at. And as Kevin said, we'll revisit that over the course of the year. So if we continue to do as well as we have historically, you'll see that 75 number come down. I mean we were 31 basis points last year, 67 the year before, '24 and '23, and 3 in '22. So our bad debt experience on an actual incurred basis is substantially below what our reserve is. Operator: The next question comes from Caitlin Burrows with Goldman Sachs. Caitlin Burrows: On the build-to-suit pipeline today and for the future, it sounds like you're targeting to announce and complete $350 million to $500 million of projects per year going forward. So I guess, first, is that right? And then can you give any detail on your pipeline of unannounced build-to-suit projects today maybe versus a year ago? And what portion is new versus repeat business? John Moragne: So the $350 million to $500 million, we think of it as more of like a rolling target. That's how much we'd like to have in the active development stage at any particular point. starts may vary year-to-year depending on what we started the prior year and what we have sort of in the hopper for active developments. So a little bit of a nuance there, but essentially $350 million to $500 million on a rolling basis, which is where we sit today. with what we have under LOI. It's almost entirely a repeat business, either from a developer or from a tenant standpoint. So folks that we have worked with in some capacity previously. There is one new project in there. We started a new academy sport after our Investor Day at the end of December. We actually started another Academy Sport deal yesterday. And then we have 2, a little bit larger industrial deals that we expect to start here in Q1 that we should have an announcement out about shortly when those are finished up. Caitlin Burrows: Got it. Okay. And then maybe back to Claire. So totally hear you guys on how bad debt has come out relatively attractive over the past few years. You mentioned that you're now expecting or they did exercise their lease termination right for you in 2026. So just wondering what your current expectation is maybe what's assumed in guidance for -- is there a lease termination fee there or maybe not because of the bankruptcy history and then expectation on re-leasing versus selling and what you're seeing kind of in terms of those options right now? John Moragne: Yes, you're right. There's no termination fee because of the bankruptcy history there. So they exercise the right, they'll walk away under the current structure at the end of June. We know they're in the process of negotiating for new space a little bit further down on I-90, but that hasn't been finalized yet. So this is still a little bit up in the air. But we're working under the assumption that the property will be vacant on June 30, and we're looking to re-lease it or sell it on July 1. And we've had some good discussions so far with potential counterparties on it, so we're fairly confident. And then any impact from that has already been baked into our view from a guidance standpoint and our view of bad debt for the year. So no change in the way that we would think about the performance over the course of the year relative to Carson. Operator: Our next question comes from Ronald Kamdem with Morgan Stanley. Ronald Kamdem: Just two quick ones. Going back to Project Triboro. I guess, when do you think the Domino's fall in place that you could have a sort of a tenant in hand, willing to take the space. Does that make sense? Like what more do you need to do on your end? And when do you get to the point where you can have a tenant committing to that project? Ryan Albano: Sure. I'd say as we're looking at it, the real 2 focal points right now, or I guess I'd say 3 are zoning, which we expect in the near term second being sort of power ongoing conversations with PPL, really working out sort of T&D line paths to the site, their substation, our substation. So significant progress there. And then overall, some say work that commenced in Q4, keep things sort of progressing from a time line perspective. So I would say that I think we'll officially be in market, looking for tenant and leasing activity in the fairly near term, I call it, first half of this year. But that said, that hasn't stopped folks from calling us. I think -- as well as I do, they're probably like 6 to 10 hyperscale companies that would be interested in the site, they know all these sites, especially those that are a gigawatt of power plus in the country. I don't need to really advertise it for them to find me. So they're calling, and -- but I think to your exact question, we'll be in market in the near term. Ronald Kamdem: That's really helpful. My second question was just sort of, I guess, sort of a capital recycling question, right, in terms of, of course, you're not sort of forced seller of anything here, but given sort of the activity, given some of the market, does it make you want to sort of push more in sort of the noncore sales this year? And then as your sort of capital recycling that, can you just talk about cap rates and return trends both on the acquisition and the sort of build-to-suit side? Like are we seeing those hold? Are we seeing those compressed? Just any sort of high-level color would be helpful. Kevin Fennell: Sure, I'll take the capital recycling point and hand it back to John for the second. Look, I think with a lot of what's going on in the portfolio, particularly some recent lease renewals and whatnot, some legacy assets are incrementally more attractive. And so we have some interesting opportunities to think about older assets that have a different value equation today. So there's a source there. And then obviously, the sort of flush the equation lever is the build-to-suit. So the spectrum is quite wide in terms of which assets could be able. We're not forced sellers, we are opportunistic sellers and the trade needs to make sense. And so that range of outcomes when you pair that with some portfolio management probably puts you in a singular outcome of something in the mid-5s to, call it, into the 7s of a range of opportunity, and we'll look to wait that out certainly in the lower end of the spectrum. And so as we get through the year, you'll see us make those decisions and print those numbers. But accretive is the answer and ideally 100 basis points or better. So on the cap rate side, from a build-to-suit standpoint, we're continuing to find good opportunities in that on an upfront initial cash capitalization yield standpoint in the mid-7s down to the high 6s that then blends to a place in the low to mid-7s just like our existing pipeline. As Ryan mentioned, our existing pipeline is at 7.4% on the upfront cash yields and 8.6% on a straight line yield. So we're still continuing to find things in the build-to-suit that fit well within that, including being able to structure things in a creative way to drive the yields for our benefit when we're still helping our developers close on these projects and start new ones. Where we have seen a little bit of compression, and I'm sure you've all heard this, other places is particularly on larger portfolio deals and regular way acquisitions. There's been a handful of industrial food processing deals that have been out there that have traded at cap rates that haven't made a whole lot of sense to us given the overall risk-adjusted profile of those investments. We've been pleased to see that there was an uptick in overall traditional acquisition volume towards the end of 2025 and seeing that going into 2026 as well, not get back to sort of the pre 2023 levels in the same level, but it's been good to see more volume. But as I've been talking about for quarters and quarters now, the demand level for regular way deal flow, sale leasebacks and lease assumptions is significant. And so the dry powder and the demand that's out there is still continuing to put some pressure on those regular way cap rates, which makes us feel even better about our opportunity in the build-to-suit core vertical that we have and the success that we've been having. Operator: The next question comes from Mitch Germain with Citizens Bank. Mitch Germain: How should we think about the guidance for deployment, $500 million to $625 million. I mean, what do you consider to be the breakdown between the various diverse ways that you can allocate capital in that number? John Moragne: Yes. Look, I think you saw it through last year as we were building this pipeline. You walk into 2026 and a bulk of the dollars slated for deployment this year are going to be related to the build-to-suit investments. Certainly, you've heard John say also the last year, especially that we're not interested in saying no to partners who are bringing us strong deals on a stabilized opportunity set. So the answer is both. But I'd say starting this year, it's definitely weighted towards build-to-suit dollars versus kind of the inverse last year. Mitch Germain: Great. And then any competition that you're seeing -- increasing competition you're seeing on the traditional acquisition side? John Moragne: For us, at least, it's just as high as it's been over the last 2 years. I think I've been sort of ringing the bell on the competition for a little while now. We've been in a place where supply-demand characteristics in that lease haven't really matched up for a while because of the steep drop that you saw in net lease transaction volumes in '23, '24, '25. . Thankfully, that's starting to change a little bit, and you're starting to see that number come up. So hopefully, it will leave you a little bit of the pressure, but we haven't seen that yet. There's been a huge amount of competition. And for us, as an industrial focus, net lease REIT in those industrial assets, they're a little bit chunkier when you can find a portfolio. They're very interesting, and it's a great way for particularly a lot of the private institutional net lease investors to deploy a lot of capital in a very short period of time. So it can sometimes drive a little bit more pressure on those cap rates. Operator: The next question comes from Ryan Caviola with Green Street Advisors. Ryan Caviola: There's been a lot of noise in the political landscape because of the midterms. But have you seen any of the tailwinds from onshoring start to materialize over the last year, particularly on the industrial development demand front? John Moragne: We've certainly seen in the build-to-suit pipeline. We've had lots of conversations with developer partners and with potential tenant clients who are all looking actively at ways in which they can bring more of their production capacity here in the United States or to sort of rework an existing logistical chain, you name it. So it's going to be slow going. These are not decisions that get made overnight. We see it often the conversion time line for a build-to-suit deal is much longer than a regular way deal because of the amount of work that has to go into it. going back from site selection, the entitlement process, permitting, working through the design build process, all of the various components that have to go in to make this work. It takes a long time to get there. So we're excited by the tailwind that we expect that will come from this effort to sort of onshore, nearshore, reshore or whatever, but it's going to take some time to build. But because we've already had so much success in building this strategy and in building the pipeline that we have today, we can be patient and wait for that to come, and we'll use that as a continued opportunity to build this out in the years to come. Ryan Caviola: Got it. Appreciate that. And then just a quick one on casual dining. Being mindful that Red Lobster challenges are mostly operator-specific. But what commentary have you heard from other casual dining tenants going into 2026, just on sector strengths and their appetite to expand? And is it a bucket that you'd want to add to in your portfolio? Are you kind of built up there? John Moragne: It's -- I think you hit on it in your question, it's very operator and brand specific. There are casual dining brands that have struggled in recent years, Red Lobster being one of them. And there are other casual dining brands that have done exceptionally well. We've seen both of those in our portfolio with the Red Lobster exposure in years and Applebee's being 2 that have had a little bit of hard time. On the flip side, J. Alexander is a casual dining brand in our portfolio that is doing exceedingly well with coverage as well north of what we would want to see on a stabilized but on a regular basis. So it really depends, to your point on whether or not we would invest more, it would be very operator and brand specific. We are not actively looking at new casual dining as sort of a focused strategy. But the ones that come across our desk, we'll take a look at it. It's very easy to sort of make a quick decision on, all right, this is something that we would want to do or not. And it's far more of the latter than the former. Operator: The next question comes from Michael Gorman with BTIG. Michael Gorman: Maybe just one more on Project Triboro. Just trying to understand when you think about it, kind of we've seen the press reports about the land rush in the data center space. And I'm curious kind of what the incremental value had is from the site work that you're undertaking now versus just looking to be in the market for the raw land to the hyperscalers as it is right now. . And then maybe just the second point, how do you think about that in the terms of maybe some rising political headwinds around data center development or concerns about AI CapEx into the future and kind of the time line into 2027. So maybe you could just talk a little bit about how that plays out in your underwriting and thought process. Ryan Albano: Sure. I think I can take this. John, feel free to jump in. I think there are several questions there. The first is sort of value creation and various milestones along the way from raw land through Powered wind. And then how hyperscalers sort of fit into the mix versus developers and typical real estate investors. I would say that there is certainly value creation we're seeing it kind of play out and some of the unsolicited offers that have come through. When we think about what our invested capital is to date in the project versus the level at which the office are coming in are coming in, in line with what we'd expect from a power land perspective. So certainly significantly higher than our invested capital to it. A lot of it really focuses on the time and quantum of power delivery. And sooner rather than later is obviously more valuable. Hyperscalers are certainly competitive in the mix, trying to get in at earlier stages from a land perspective. Like I had mentioned sort of in my other remarks that this is in sight that needs to be highly advertised. They know it's there, they know it's a gigawatt of power and they're certainly circling on it. So I'd say that they although attempted to get in earlier, we just happen to be's there sooner than them. That is playing out across the country. I think some of the other parts of this question relating to CapEx spend in the future related to AI and data centers and then just political es around it. I would say, we haven't really seen any slowdown despite whatever the headlines are on CNBC. Certainly, a lot of continued chase and investment, especially when you're getting into the quantum of power we're talking about here. That said, at lower stages, maybe it's a different market, just not as in tune with it. And then from a political headwind perspective, I think you're going to have that with various new things that are occurring. I don't really see a whole lot of challenge with that with respect to this site. Frankly, one of the primary activist groups in the area that have been critical of data center expansion, have even made public commentary about if you're going to do it, this is the type of site that you do it with where it's off the highway, up a hill set apart from residential and not very disruptive. So hopefully, I covered everything. I'm not quite sure, but I think I covered most of what you're looking for. Operator: The next question comes from Michael Goldsmith with UBS. Michael Goldsmith: First question, you invested $750 million in 2025. You're guiding to $500 million to $625 million. I think you talked a little bit about maybe the outlook for '26 being a little bit conservative or doesn't require that much incremental investment. So just trying to reconcile those 2 facts and just trying to understand, assume why point to -- you sell an investment at this point in the year, just kind of given some of your -- also your earlier comments on just the opportunities that you're seeing out there. John Moragne: I think you sort of touched on it in your question there. We usually start the year a little conservative. Our guide for investment activity. to start 2026 is consistent roughly with what our guide was last year for 2025. And then we revised and updated over the course of the year as we saw more opportunities. With our focus being on this rolling $350 million to $500 million build-to-suit pipeline, we know going into a year that we've already got the majority of our investment activity taken care of. . We're always going to leave a little bit of room there for opportunistic regular way deals, sale leasebacks and lease assumptions as partners come and approach us for direct deals. And so right now, that's what we've built into this is that we're going to execute on the plan that we already have. We're going to be sticking to the script and moving forward with what we have told you that we were going to do and execute on that. But we are very open to the idea of opportunistically increasing that if we see the right opportunities with the right people, the right economics over the course of the year, and we've got the capital to do it. So we'll start conservative and we'll build over time. So if that should hopefully help reconcile the way you're thinking about year-end activity for '25 and sort of how we started '26. Michael Goldsmith: Exciting. And then just as a follow-up, you amended some of the term loan agreements. How much of a benefit do you expect to see -- how should that translate to 2026? How much savings do you anticipate from that? John Moragne: Yes. I mean the $1 billion of term loans that are impacted by the 10 basis points and then $300 million by the 25 basis points. So you got about $2 million. . Operator: The next question comes from John Kim with BMO Capital Markets. John Kim: John, you mentioned raising equity in significant scale is not really what you're interested in at this time. That's consistent with what you said at your Investor Day in December. But since then, your stock price has improved, your multiple has gone up about a turn. Can you just remind us what levels you feel comfortable raising equity? And how do you view the potential for multiple expansion if your balance sheet improves back to -- towards the 5x leverage that you've historically operated at. John Moragne: Yes. So I think it is fairly consistent with what I've been saying. I am thrilled with the improvement that we've seen. Trading where we are getting a full multiple turn above is good. We're still below average. So as I said in my remarks, I'm still pleased and very proud of the total return that we've delivered to shareholders over the last 3 years and in 2025, in particular, and the resulting increase in our equity multiple. But sitting where we are, the relative valuation still frustrates me, not even being at the average level is something that -- we'll continue to frustrate me until we get there. And when we do, you're talking even at an average equity multiple, you're talking about a stock price that's in that like $21 to $22 range. The word constructive is probably overused in our space on these calls, but I'll use it here. The setup is certainly more constructive today than it was even 6 months ago. And my hope and belief is that with the execution that we delivered in '25 and the execution that I know we're going to deliver in 2026. It will be even more constructive hopefully towards the end of the year or into 2017, where we can more consistently raise equity at a place that's going to be attractive and getting us into that virtuous cycle. Until we get there, we'll continue to control our own destiny. Kevin has been dabbling, as he said, on the ATM with the $43 million that we've got on a forward basis through the end of the year with an effective price in the mid- to high 18s, which feels good. relative to the opportunities that we have in front of us with 8.6% straight-line yield on these build-to-suits, the acquisitions that we're seeing, as you heard us talk about earlier. So the place where we're investing the capital relative to what we've been raising makes these dollars work even though it's not sort of the dollars that make my heart go pitter patter. So we will continue to evaluate. And I think the efforts that we've had should justify pushing this multiple up, even though I know that, that takes time and consistent execution, but that's what I know we're going to deliver, and I think we'll be having a different conversation about this towards the end of the year and into '27. John Kim: I appreciate that. But just to clarify, is this a relative multiple that you're looking at relative to your peers, which could be kind of moving around or a total WAC concept? I know you gave the '21 to '22 as a guidepost, but what metric is more important to you? John Moragne: Both. I mean the answer is both, right? I mean the absolute value is on the second part of John's comments is all measured against what the opportunity set is. And so the answer is both. I think I would apply the concept of sale to the former, meaning relative valuation and levels that are a bit further from the absolute number that works maybe in a different set of circumstances. . So I'm not trying to give you a not to answer. It's just -- to your point, it is a moving target, and our posture remains opportunistic. Operator: The next question comes from CAitlin Burrows with Goldman Sachs. Caitlin Burrows: I had a quick follow-up question on American Signature, sorry to bring it up again. But just to clarify, I figured all together. You mentioned that they filed in November, and I think the new tenant is paying the unchanged rent as of February 6. So I was just wondering if you could clarify what went on between November filing and February 6? John Moragne: It was a fairly small assumption. So we had 6 leases that were part of the bankruptcy process. I think we probably have this conversation with folks. There was a handful of them that were identified for rejection as a part of bankruptcy process, but Gartner White was very interested in our sites. . They have been looking to expand in the last 2 years and this was a great opportunity for them to do it. So as it stands today, they have simply stepped into our 6 leases. And then the conversation that I alluded to earlier is that we're looking to leverage that into a new master lease as well as some additional minor changes in the lease structure itself. But in terms of the lease dynamics, we didn't lose any -- there was no bad debt associated with American Signature because we were able to collect off of our letters of credit for the [ misrent ] in November. We collected debt -- excuse me, we collected our rent on an administrative basis in the bankruptcy proceeding. And then Gartner White has picked up the tab going forward. So we're in a great spot on that and just want to sort of make some incremental improvements. Caitlin Burrows: Got it. Okay. And then changing topics. You mentioned a few times about seeing what comes across your desk and that kind of inbound type of activity. which is great when it happens. I guess as you think about your investment targets build-to-suit or acquisitions, how active is Broadstone today on that outbound effort either on the build-to-suit of the acquisitions? And how has that changed over time? Ryan Albano: Extremely. I would say that a lot of it -- all of it is outbound. I think what John was referring to is they also call us. So a lot of this is direct sourced its relationship that we're talking to multiple times a week. So whether the call is coming in or call is going out, I'd say that it's sort of a 2-way street and it's constant communication. In terms of new relationships that we're mining, I'd say the majority of those new relationships are on an outbound basis versus an inbound. . Operator: Thank you. We have no further questions. And I'll hand the call back to the management team for any closing comments. John Moragne: Thanks, everybody, for joining us today, and we're getting into the conference season. So we're looking forward to seeing many of you in person in the coming months. Enjoy the rest of your day. Thanks all. . Operator: Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.
Steve Darling: All right. Welcome. We're inside our Vancouver Broadcast Center here at Proactive for another live stream event and this time with Nextech3D.AI and joining us is the CEO of the company, Evan Gappelberg. Evan, it's great to see you again. How are you? We're just -- we seem to be losing your audio there, Evan, for some reason. We got to get your audio taking care of. So we'll take care of that. And we'll tell you that we are here today to talk about Nextech3D.AI's financials that came out recently and also about some of the things that they'll be doing in the future as they sort of transitioned the business a little bit into where they were in the last few years to where they are going to now. Evan's going to talk a lot about that. Also, recent acquisitions as well, Eventdex and also Krafty Labs, Evan will talk about how that changes things and what the next step is towards trying to put this all together. So let's see if we can get Evan back on. Can you hear us now, Evan? No, we're having some technical difficulties with your microphone. So we're going to try to get that all taken care of, Evan. But modern technology, that's what happens when these things go. I can see you attempting to put your microphone on, but... Evan Gappelberg: How about now? Steve Darling: I can hear you now. Yes, just turn it up a little bit, you should be good. So how are you? Evan Gappelberg: I'm good, sorry about that. Steve Darling: That's all right. No problem at all. Good to see you again, as I mentioned, and welcome once again to livestream event here at Proactive. And again, we are with CEO, Evan Gappelberg of Nextech3D.AI. And so Evan, first off, thought I'd give you an opportunity just to say hello to the people that are watching. We always encourage questions from people as well if they want to log those questions on. We've got of a number of them who's asked already. But just overall, your thoughts on where you're seeing as far as your financials are concerned. Evan Gappelberg: Well, I mean, we reported a very strong quarter, but Q3 wasn't just a strong quarter. It really was an inflection point for our company. We delivered 59% year-over-year revenue growth, 20% sequential growth. That's our second quarter in a row of 20% sequential growth, record 95% growth margins, all at the same time. It's a pretty powerful combination. I don't know that we've ever been able to report a trifecta like that where we've had the gross margin sequential and year-over-year growth all coming through at the same time. And so what you're seeing -- what I'm seeing is the beginning of a new sustainable growth curve as our unified AI platform, our event platform gains real traction with enterprise customers. And I just want to stress that enterprise is the main event here. We are doing business now with the largest companies on the planet, including Meta, Microsoft, Netflix, Deloitte, General Motors and many, many, many others, Spotify, Dropbox, Pinterest. And so all those customers are customers that were now talking to about enterprise contracts, and we have multiple enterprise contracts that are just literally waiting for the ink to dry. We expect them to come in, in the next week or two. Steve Darling: So Evan, let's take a step back here and let's sort of -- I don't want to give a whole history lesson, but let's talk a little bit about last year and really what happened last year and sort of led you to this. This has been sort of a transition that you've been making with the company in order to get to a place where you think you could be sustainable and move forward. So why don't you sort of take us back through some of the vision that you saw and where you see things going now? Evan Gappelberg: Yes. I mean this is truly a story of a turnaround to take off where a year ago, we were kind of left for dead by investors. I mean let's be honest. The stock was at the bottom of the barrel, and we were exiting out of our Amazon contract, which was where we made 3D models for Amazon that was a multimillion dollar contract. And so there was a lot of sole searching that went on. And what we realized is that we had AI, which is transformative technology, and we had a very, very strong position in the event space with Map Dynamics, and they have 500-plus customers. And so what we decided to do was to build out that platform and add more features and more functionality. And then we decided you know what, why build it when we can buy it. And so we acquired Eventdex in late 2025 and once we acquired Eventdex, it gave us the ability -- we basically acquired a portfolio of clients, plus a full tech stack, which includes badging, ticketing, trade show app, AI matchmaking, which is a very big deal. We could get into that in a minute. And so that plus our Map Dynamics event floor plan gave us this end-to-end one-stop shop solution that we never had before. And then we optimized and added AI into the mix so that we can have very strong margins. And the business started to turn around. And then Steve, as luck would have it, Krafty Lab showed up on my radar, and we were able to acquire that business. And that's going to really put more wind in our sales for 2026. That wasn't a 2025 acquisition, that was 2026. And we're looking at acquisitions now quite differently because AI is really a game changer. It does allow us to make acquisitions that are additive to our company, where those companies might be struggling. We acquired them, and we're able to streamline them. We're able to add AI. So you might have 40 people that we can run a business with 4 people. And instead of having the other 36, we just use AI agents. So we have like an army of AI agents that take the place, Steve. And so that's kind of where we sit today, where we're using AI massively and it's going to be more and more a part of our story and that's why we call ourselves an AI-first company because without the AI, we probably wouldn't even be here today. Steve Darling: Yes. Talk to us about Krafty Lab because for people not familiar with it, what did you see in Krafty lab that you thought was a really nice fit to what you were trying to build with Nextech? Evan Gappelberg: Well, I mean, Krafty adds something that we didn't have. So as I said, with Eventdex and Map D, we had Expo and live event tech. We had the full end-to-end one-stop shop solution. With Krafty, we now have virtual experiential events as well as live kitted experiential events, essentially team building. And as it turns out, Steve, every single large corporation in America and the world has a budget for team building. It really goes down to employee retention, right? How do you keep your employees engaged when they're spread out across the globe? How do you make them feel like they're part of a very big company. And so these platforms, Krafty offers team building. So you have mixology, you're making cocktails with your coworkers, you have a chocolate making class, you have a candle making. You have Trivia. We've done trivia here at Nextech, actually virtual trivia. It's a blast. It's fabulous. It's so much fun. Here's a good example on -- like Krafty. And I've said this before, but I'll say it again, growing up, I used to love recess. Who didn't love going out and playing with your friends. And so -- but when you grow up, recess goes away. And -- so you go to the office just like you used to go to school, but there's no real interaction with your coworkers. So think of Krafty Labs as that platform that allows you to have that recess. And that is a lot of fun, and it does build camaraderie and teamwork. And so that business we see massive, massive upside, too, because it started out, Steve, just as I've described it, experiential. But we've recently announced a gifting component to that. So it's the same HR person that's now ordering gifts for their employees or for corporate customers. Now they're doing that through the Krafty portal. And we're adding off-site events which are potential multimillion-dollar off-sites where you have 50 or 100 of the top execs that travel to Hawaii or some other remote exotic location, and they hire Krafty to put together the entire event from the flight to the airfare to the hotel to the food and all of that is something that we can do now. And so when you look at Krafty, it's a way bigger platform than when we acquired it just 6 weeks ago. Steve Darling: Yes. Talk to me a little bit about companies you mentioned that you're working with. Krafty had its own client list when it came to you. And these type of organizations are so big, so widespread, it's all around the world that the type of events that you're talking about are something that they -- it's not a -- if they want to, if they have to, in essence, do these events. Evan Gappelberg: Yes. It extends beyond these big companies. So yes, we -- our clients now are Google, Microsoft, Meta, Netflix, General Motors, BNP Paribas, Deloitte, just -- I mean all the Fortune 1000 companies, they're all doing these types of events on the Krafty platform. And we're talking to them now about enterprise contracts and really getting a bigger share of their wallet. And so when you think about government organizations, Steve, we're also talking to them because they're spread out. They have a massive size just like Google, right, Google is basically the size of a government. And so -- or our government's the size of Google. And so we're talking to governments about the same thing. Steve Darling: Okay. Are you -- you mentioned that you're looking at other acquisitions as well. I know you can't get into too much details, but is it augmenting what you already have? Or is it adding things that you think you need to have in order to move forward? Evan Gappelberg: So amazingly on the tech side, Steve, I think we're done pretty much. Like AI is going to be the only thing that we develop in-house. We don't need to acquire that. But we're looking at adding more and more. I'm just going to call them modules or potentially customers to our base, right? We just want to have a bigger slice of the pie. And so we're looking at companies in the same space or companies that are just adjacent to us. We have a lot of orgs associations so there might be a company that we're looking at that works with associations. The events industry is quite fragmented. And so it gives us an opportunity to kind of roll them up under the Nextech banner and integrate them into our ecosystem and really just acquire more and more clients, more and more revenue and then optimize that with our AI. Steve Darling: Okay. Just on clients. We've got a question here. You mentioned actively engaging 200 enterprise customers. What's the realistic breakdown over the next 12 months, Tier 1, 2, 3? And how does that sort of apply it to revenue? Evan Gappelberg: So I mean, when you talk about Tier 1, 2 and 3, I mean, they're all Tier 1 and 2. I don't think there are any Tier 3s. Well, Tier 3, if -- I don't know if this investor is talking about Tier 1, 2 and 3 as far as our pricing calculator because if he's talking about our pricing calculator, they're in all tiers, right? So as I've mentioned, and I think that is what he's talking about. Tier 1 is like $25,000 to $50,000 and then Tier 2 is $50,000 to, I think, $150,000 and Tier 3 is above that. And so as we've mentioned, the way that these clients work is they start at one tier and then they move up the ladder. So we're talking to all of them. But you got to keep this in mind. These customers weren't in any tier. They were in no tier they were spending small dollars, relatively small dollars multiple times a year. And so now we're actually putting them into enterprise contracts. That's the big news. Of course, we want $250,000 contracts, but I'll take $25,000, $50,000 contracts all day long because I know we could grow those into 6-figure contracts. Steve Darling: And Evan on that, these companies that you're talking to and talking about are -- as we mentioned, they're always engaging their employees and there's so much demand for employees these days in certain companies. The company is doing everything they can to hold on to employees and especially the good ones they want to hold on to. And so now as in the past, it used to be, companies would say, okay, well, here's what we've got. And if we have any revenue leftover, we'll do something with the employees, like we'll do a pizza night or something like that. But now they're budgeting in their budgets, large amounts of money in order to -- for simply employee retention and employee engagement. And that's -- I think that's the key to all this, isn't it? That these are not something that's just off the side of the desk. These are people who are specifically hired to make sure their employees stay where they are. Evan Gappelberg: So it's the HR department and they're given budgets, annual budgets. Steve Darling: Big budgets. Evan Gappelberg: Big budgets for -- I mean, big companies have big budgets. Even their pencil budget is big at Google, right? Yes. So it's all big, but they're basically coming to us saying, "Hey, I have $50,000. I have $100,000. How can I spend it with you guys? Give me a road map, show me what you guys have. Let's have some fun. Let's build some experiences that are memorable, let's do some team building." I mean you couldn't ask for a better customer than that, right, where they're eager to buy. And they have a mandate to spend that money. And so they're just looking for a company that can give them the ROI. And so our whole thing is about data and analytics. And so in another week or two, Steve, we're going to come back on your show and we're going to be announcing a new platform that has some very, very exciting data and analytics, and it's all AI. It's all on the Krafty platform play with the crafting credits, et cetera, et cetera. And so there's a lot happening at Nextech that's going to make all of this turn into a reality. There's a lot going on behind the scenes with me and my team, and we're going to be showcasing some of that in the next couple of weeks. But we have the clients. We're rolling out the platform. We have the product. We're really just executing at this point. And the 59% growth, Steve, is a clear sign that it's happening. It's not just talk. Steve Darling: Okay. Another question from an investor who wanted to know about ticketing and contracts, big players. And somebody else asked a similar question about Ticketmaster, StubHub, people like that. I know that we've talked about ticketing in the past and in your brand of ticketing, how you do it is very different than what you're seeing there. So can you talk to us a bit about the ticketing part of the company? Evan Gappelberg: Yes. So what we're going to be doing -- we can't just launch me-too ticketing. Let's be clear on that. We will not win. So we're launching blockchain ticketing. As we've mentioned many times, blockchain ticketing is our hero product in the ticketing market. And so we're beginning conversations. It is going to take a little bit of time, but we're starting to have conversations with the big ticket masters and StubHubs and reaching out to them and getting them engaged and talking to, again, agencies, government agencies about blockchain and how we can use that for certification, not just for concerts, but beyond that. So there's a lot happening here. We're trying to do it all at once. It's definitely a bit of a challenge. Steve Darling: Fair enough. I get it. But more to come is what you're saying? Evan Gappelberg: Yes, more to come. It's happening. It's just -- it's in motion. Steve Darling: Okay. A lot of questions, Evan, about total revenue for the year, guidance, all that. From what I understand and interviewed many times, you have not set any guidance for the company, and that's not something you're prepared to do today, I don't think. But you're happy with where the sequential growth that you're seeing in the quarters and you want to sort of build on that? Evan Gappelberg: Yes. I mean, look, I'm confident that we're going to show triple-digit growth in this year. I'm confident that there's going to be surprises to the upside not to the downside. It is a little early for me to project the numbers, but it's definitely going to be way better than last year, which was the [ trial ] and we think that this is really just the first year of a multiyear growth curve, where it's that hockey stick, and we're just at the bottom turning it up, right? But it starts to go like that. And so we're just at that first year, and this is really the first quarter that we can really talk about that. Steve Darling: Yes. Let's talk about margins because that was a big part of your news release as well talking about company margins and I know there's been a lot of work put in by you and the team to try and get your margins to a certain point to where they are now. And it's significant. So can you talk to us about margins and where they're at? And are you at the point where the -- you can't improve on them anymore because your margins are quite high. Evan Gappelberg: Yes, I don't know that we can improve beyond 95% -- we can't get to 100%. But we are a high-margin business because it's primarily been software that we're selling. So software is the highest margin business. In the past, the 3D models, we were trying to get to pure software. We never actually made it there. We were like 50% there. But yes, because we're pure software, because we've reduced our expenses, those margins are very, very high. And we're very proud of that, that the finance team has done an amazing job. I do want to also -- I don't know if the question has come up, Steve, about the acquisition of ARway. Has that been one of the questions? Steve Darling: Yes, as a matter of fact, that was my next one. The next 3 to 4 months, so you're [indiscernible] 3D models as well. And just is the company sort of moving away from that. And -- but let's talk about ARway first. Evan Gappelberg: Well, I will just grab that 3D model thing. So we have some contracts that are ongoing with 3D models, but it's not a big business. It's not millions, it's like hundreds of thousands, right? So we're just not focused on that because we're chasing after the tens of millions, right? And we just don't see that in the 3D modeling space. So it's still there. It's -- if it does take off, we'll be able to take advantage of it. But we did have Amazon, and we weren't able to turn that into a sustainable business. So I don't know what's bigger than that, right? As far as ARway, let's talk about that. So the deal is done, but there's always a but. The deal is done, but in order to get the regulators to approve it, there's a process, and that process is we need to have audited financials for both companies and Nextech is in its Q4 right now. So we're going to be auditing our financials anyway. We don't want to do two audits because that would unfairly burden the company with additional costs. And this doesn't make any sense for us to do an audit today when we're going to be doing an audit in 6 weeks. And that was the calculus over the last couple of weeks that we've been going through. Do we do the audit or do we wait? And so we've decided to wait because we just don't want to burn our precious cash paying auditors twice. And that's really the bottom line. So once the audit is done for Nextech, we'll be able to quickly move that acquisition into the done deal. And so we're just waiting for our audit and then we move to close. Steve Darling: Okay. Let's talk about this year. And you mentioned the revenue in this particular financials is not related to Krafty lab and only partially of Eventdex as well. So what are sort of the things that investors should look for in 2026 as you continue to build the product out and obviously really push sales? Evan Gappelberg: I mean there's a number of things. One is keep a look out for M&A because we are hunting for new deals that would help us to grow even faster. That's kind of the turbo booster. But also, the enterprise deals are going to start to be announced soon. And then for us, it's really just executing on the business that we have landing and expanding into -- we already landed through acquisitions, the biggest companies. Now we want to expand. And so there's a lot happening. I could tell you that, that these government agencies are quite excited to be working with us. These large companies are quite excited to have a one-stop shop of these enterprise accounts. And we think a little bit out of the box. I'm not a techie so I think in terms of just solutions, and I'm trying to find solutions for our customers that maybe other people haven't thought of. And I think there's some really good opportunities there. We're going to innovate and offer some solutions that is unique to us, is proprietary. And so it's really, Steve, about mining the gold mine that we sit on. We have a gold mine. We really do. And now we're just mining it. We're moving the equipment into place. We're moving the people into place and the results are starting to show up in our quarterly reports. Steve Darling: Okay. Let's talk about the blockchain because I want to just ask a question about that because I'm just wondering in the process that you're building and soon to roll out eventually, has it been easier than you thought it was going to be? More difficult to -- what sort of the process involved in trying to put something like that together? Evan Gappelberg: I mean, it's definitely a process, I mean, but it's a high-margin growth engine for investors. I mean global ticketing is a $100 billion industry. Counterfeit and duplicate tickets unauthorized reselling and scalping all of that is a big issue. And these are not edge cases. This is like a structural flaw in the system and blockchain ticketing really fixes this at the foundational level, each ticket becomes a unique verifiable digital asset that can't be forged, duplicated or altered. And so there's trust, transparency and security all built into blockchain tickets. And it's -- again, it's not just ticket, it goes beyond ticketing. Some people think of it as just ticketing for concerts, but think of it in terms of like certification as well. And there's a lot of certification that these big companies that we have as customers need to do better at in terms of preventing fraud. So that's -- every ticket is -- so anyway, we're going to do a demo of the blockchain ticketing, again, in the coming couple of weeks. So get ready, Steve, it's going to be busy. You and I are going to be busy doing demos. And I'm going to be bringing on my team to do screen shares and show how the tech works. Steve Darling: Okay. There's a lot of questions about, obviously, share price because people always talk about that. I know you've talked about that in the past. Share buyback programs, management buying more shares, a lot of things about sort of the corporate side of things. So I'm not sure how much detail you can get into or if you -- I know you're bound by regulations on what you can or can't say. But just on -- I know you're the largest shareholder of the company, I believe. So just for shareholders, you sort of want to talk to them directly and message them. Evan Gappelberg: Yes. Let's just be clear. I mean, it sucks when the share price is down. It really sucks. And I feel the pain. And I've been through this before, though, with Nextech. When we first launched Nextech as a public company, the stock sat for a year in that $0.25 to $0.50 range. And then it took off, went to $1, $1.50, $2.50, it corrected hard and then it had a massive move up to $10. So I guess what I'm saying is that it's not for the impatient investor. But for the patient investor, I think this is going to be a very, very rewarding journey. I hope we all live long enough because it's been a bit of a roller coaster. It's been a while. I do -- when I say I hope -- I'm talking about rear view. People that have been in the stock since 2018, '19 but going forward, I think this is the year, the breakout year for the stock. I think that it's undervalued at the current share price. I don't just say that. I bought 550,000 shares in November at CAD 0.14. I think it's around the same price today, so you could buy at the same price that I bought it at. I'm considering buying more because it's dirt cheap, in my opinion, based on our growth trajectory and based on the fact that we're probably going to go cash flow positive this year sooner than people think. I'm quite bullish. So yes, I think this is just opportunity knocking. I know that when it comes to turnaround stories, everybody always -- like really? You do -- like that. You kind of look at it, you squint a little, you go "Really. Is it really turning around?" Well, the numbers don't lie, the numbers don't lie. And so when you have the kind of numbers that we showed today, and this is our second quarter of 20% sequential growth. It signals to me and it should signal to you, to our investors that this is real. This is happening, the turnaround has happened. And so we're just in that first quarter. And I think, as I mentioned, the Q4, the next quarter is going to be even better. So you can take that and run with it. Steve Darling: Okay. Lastly, I thought this was a really good question. It just popped up here a moment ago. And from -- and this is from -- given your focus on disciplined growth and minimal dilution, do you expect the company can execute its plan with your existing resources? You also mentioned M&A., but if M&A doesn't happen, do you feel confident that you've got the things in place to execute on that plan you just talked about? Evan Gappelberg: I do. The M&A is additive. It's like a turbo, right? We're going fast. We're going very fast. But like the M&A, just catapults you forward even faster because you just -- instead of it taking you a year to acquire customers and build that revenue, it happens in a day, essentially, right? So that's the benefit of M&A. But we do have the resources without M&A to continue, and that is the plan. If the right opportunity comes along, we are comfortable with M&A. I mean we just made two acquisitions. So I'm bringing it up because it's not something that should be discounted, right? So it's something that you should actually think about as likely at some point in the future. Steve Darling: Okay. Last word, Evan, last final thoughts? Evan Gappelberg: Final thoughts are that opportunity comes along every once in a while that again, you've watched me, heard me, listened to me speak over the years. From where I'm sitting today, this is a tremendous, tremendous opportunity to get in at the very, very beginning of a new multiyear growth curve that's driven by AI that has blockchain wrapped around it and that is in the event industry, which is a $1 trillion global industry, and we're doing a couple of million. So when you think about the upside versus the total addressable market, and you start to realize like there is no real limit to how fast and how far we can grow Nextech. It really does represent a tremendous, tremendous opportunity today for smart investors. Steve Darling: All right, Evan. We'll leave it there. Thanks so much, once again for joining us on our live stream and talk about your financials and other things happening with the company and a look ahead for the rest of 2026 as well. So good to see you again. Evan Gappelberg: Thank you. Steve Darling: All right. There is Evan Gappelberg. He is the CEO of Nextech3D.AI. And I'm Steve Darling here at the Worldwide Broadcast Center for Proactive in Vancouver. Thank you once again for joining us for our live stream and we'll see you next time.
Operator: Good morning, and welcome to the Host Hotels & Resorts Fourth Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Jaime Marcus, Senior Vice President of Investor Relations. Jaime Marcus: Thank you, and good morning, everyone. Before we begin, please note that many of the comments made today are considered to be forward-looking statements under Federal Securities Laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO, adjusted EBITDAre and comparable hotel level results. You can find this information together with reconciliations to the most directly comparable GAAP information in yesterday's earnings press release and our 8-K filed with the SEC and in the supplemental financial information on our website at hosthotels.com. The operational results discussed today refer to our 76 hotel comparable portfolio in 2025, which excludes Alila Ventana Big Sur, The Don CeSar and St. Regis Houston, which we sold in January. With me on today's call are Jim Risoleo, President and Chief Executive Officer; and Sourav Ghosh, Executive Vice President and Chief Financial Officer. With that, I would like to turn the call over to Jim. James Risoleo: Thank you, Jaime, and thanks to everyone for joining us this morning. 2025 was another strong year for Host. We delivered operational improvements across our portfolio driven by rate growth and out-of-room spending, and we continue to successfully allocate capital through dispositions, portfolio reinvestment, share repurchases and dividends. We also maintained an investment-grade balance sheet while positioning Host to take advantage of future opportunities. Turning to our results, we finished 2025 meaningfully above our most recent guidance estimates. For the full year, we delivered adjusted EBITDAre of $1,757 million, a 4.6% increase over 2024, and adjusted FFO per share of $2.07, a 3.5% increase year-over-year. Comparable hotel total RevPAR grew 4.2% and comparable hotel RevPAR grew 3.8% compared to 2024. Comparable hotel EBITDA margin of 28.9% was down 40 basis points year-over-year, driven by $21 million of business interruption proceeds that we received in 2024 for the Maui wildfires. Our full year RevPAR and adjusted EBITDAre exceeded our initial 2025 guidance by 2.3 percentage points and 8.5%, respectively. Notably, our portfolio outperformed the upper tier industry RevPAR growth by approximately 200 basis points for the year. During the fourth quarter, we delivered adjusted EBITDAre of $428 million and adjusted FFO per share of $0.51. Comparable hotel total RevPAR improved 5.4% compared to the fourth quarter of 2024, and comparable hotel RevPAR was up 4.6%, driven by strong leisure transient demand, higher room rates and increased out-of-room spending. Comparable hotel EBITDA margins declined by 30 basis points to 28% as these operational improvements were offset by certain onetime benefits in the fourth quarter of 2024. Turning to business mix. RevPAR growth in the fourth quarter was better than expected, driven by resilient transient demand, particularly at our luxury resorts. Transient revenue grew by 6%, driven almost entirely by rate increases. In terms of markets, we saw particularly strong transient performance in Maui, New York and San Francisco. In fact, Maui was a standout market, contributing more than 1/3 of the transient revenue growth in the fourth quarter. RevPAR grew 15% and TRevPAR grew 13%, driven by strong demand growth. For context, Maui contributed $111 million of EBITDA for the year, which was slightly ahead of our most recent forecast and significantly ahead of our initial $90 million expectation at the start of 2025. Looking forward, we expect Maui to contribute approximately $120 million of EBITDA in 2026. Turning to business transient. Revenue was up 1% in the fourth quarter as increases in rate offset a decline in room nights. Group revenue for the quarter was up approximately 1% year-over-year as rate increases offset group room night declines, which were driven by renovations and citywide softness in several markets. Our properties sold 900,000 group rooms in the fourth quarter, bringing our total group room nights sold for 2025 to $4.1 million. Ancillary spending remained strong in the quarter with continued growth in food and beverage revenues and out-of-room spending. Comparable hotel F&B revenue grew 6%, driven by strong outlet performance and banquet contribution per group room night. We also saw particularly strong growth in other revenue, which was up 10% in the quarter, including growth in golf and spa. Taken together, we continue to benefit from the strength of the affluent consumer across properties in our portfolio. Turning to capital allocation. In 2025, we sold The Westin Cincinnati and Washington Marriott at Metro Center for a combined $237 million. We also provided $114 million of seller financing for the Washington Marriott at Metro Center transaction at a 6.5% interest rate. Yesterday, we announced the sale of the Four Seasons Resort Orlando at Walt Disney World Resort and the Four Seasons Resort and Residences Jackson Hole for $1.1 billion, which represents a 14.9x EBITDA multiple on trailing 12-month EBITDA. The multiple includes approximately $88 million of estimated foregone capital expenditures over the next 5 years. We purchased the hotels in 2021 and '22, respectively, for a total of $925 million with no significant capital expenditures required under our ownership. The $1.1 billion sale price represents an 11% unlevered IRR and an EBITDA multiple that is more than 4 turns higher than our company's recent trading multiple. The IRR includes $58 million of capital expenditures, which was funded within the FF&E reserve as well as transaction costs. These items negatively impacted the IRR calculation by approximately 170 basis points. We are retaining the ongoing condo development at the Four Seasons Orlando, which is excluded from the sale. In 2025, we recognized $17 million of net adjusted EBITDAre from the sale of 16 condo units, and we expect to recognize an additional $20 million to $25 million when the remaining units are sold. As we assess the best use of capital in the current environment, our investment-grade balance sheet provides meaningful financial flexibility to pursue the highest return opportunities. We expect to recognize a taxable gain of approximately $500 million from the sale of the 2 hotels, subject to final prorations, and we have 45 days to identify a potential like-kind exchange. If we are unable to identify an accretive acquisition within that time frame, we would intend to return the taxable gain to shareholders through a special dividend. For the remaining sale proceeds, we will evaluate the best path forward based on market conditions, which could include returning additional capital to shareholders through special dividends or share repurchases, reinvesting in our portfolio or pursuing accretive acquisitions. We also completed the previously announced sale of the St. Regis Houston for $51 million. The sale price represents a 25x EBITDA multiple on trailing 12-month EBITDA. The multiple includes approximately $49 million of estimated foregone capital expenditures over the next 5 years. Finally, the Sheraton Parsippany is under contract to sell for $15 million with an expected close in the second quarter. Since 2018, we have disposed of approximately $6.4 billion of hotel assets at a blended 16.7x EBITDA multiple, including estimated foregone capital expenditures of $1.2 billion. This compares favorably to the $4.9 billion of acquisitions we completed over the same period at a blended 13.6x EBITDA multiple. In addition to successfully allocating capital through dispositions, we also returned capital to shareholders through share repurchases and dividends. In 2025, we repurchased 13.1 million shares at an average price of $15.68 per share for a total of $205 million. For context, we have repurchased 69.2 million shares at an average price of $16.63 per share for a total of approximately $1.2 billion since 2017. In the fourth quarter, we declared a quarterly common dividend of $0.20 per share and announced a special dividend of $0.15 per share, bringing the total dividends declared for the year to $0.95 per share. In total, we returned nearly $860 million of capital to shareholders in 2025, including share repurchases. Turning to portfolio reinvestment. In 2025, we invested approximately $644 million in capital expenditures, resiliency initiatives and hurricane restoration across our portfolio. As of the end of the fourth quarter, the Hyatt Transformational Capital Program is more than 75% complete and is tracking on time and under budget. Transformational renovations have been completed at the Grand Hyatt Atlanta Buckhead, the Hyatt Regency Capitol Hill and the Hyatt Regency Austin. We are nearing completion of the Hyatt Regency Reston and Grand Hyatt Washington D.C., both of which are expected to be finished in the first half of 2026. The Manchester Grand Hyatt San Diego, the final asset in the program has been phased to mitigate business interruption and is expected to be substantially complete by the end of 2026. Additionally, we started the transformational renovation of the New Orleans Marriott in the third quarter of 2025, which is part of the second Marriott Transformational Capital Program. In the fourth quarter, we received $3 million of operating guarantees related to our Transformational Capital Programs, bringing the total received to $26 million in 2025. We also completed several major ROI projects over the course of 2025, including the oceanfront ballroom expansion at The Don CeSar, villa development at The Phoenician, Canyon Suites; the new AVIV Restaurant at the 1 Hotel South Beach, and the meeting space expansion and reopening of The View Restaurant at the New York Marriott Marquis. We are nearing completion of the condo development at the Four Seasons Orlando, having completed the 31-unit mid-rise building, and we began closing on unit sales in the fourth quarter. To date, we have deposits and purchase agreements in place for 28 of the 40 units, including 8 of the 9 villas, which are expected to complete in the first half of this year. In 2026, our capital expenditure guidance range is $525 million to $625 million. This includes approximately $250 million to $300 million of investment focused on redevelopment, repositioning and ROI projects. As I just mentioned, we expect to substantially complete the Hyatt Transformational Capital Program renovations by the end of 2026. The second Marriott Transformational Capital Program is also well underway. We expect to start construction at The Ritz-Carlton Naples, Tiburon and Westin Kierland in the second quarter. As a reminder, we expect to benefit from approximately $19 million of operating profit guarantees in 2026 related to our Transformational Capital Programs, which we expect will offset the majority of the EBITDA disruption at these properties. In addition to our capital expenditure investment, we expect to spend $15 million to complete the condo development at the Four Seasons Orlando in 2026. Looking back on our portfolio reinvestments, we completed 23 transformational renovations between 2018 and 2023, which continue to provide meaningful tailwinds for our portfolio. Of the 21 hotels that have stabilized post renovation operations to date, the average RevPAR index share gain is 8.7 points, which is well in excess of our targeted gain of 3 to 5 points. As evidenced by our results, the continued reinvestments we have made in our portfolio yield strong returns and drive value creation for our shareholders. We continue to be recognized as a global leader in corporate responsibility over the course of 2025. As part of our climate risk and resiliency program, we completed the purchase and preinstallation of modular flood barriers that exceed FEMA 100-year flood elevation for 8 high-risk properties. We are also working to formalize the connection between our climate risk program and our property insurance premiums to validate proactive resilience investment opportunities, quantify the impact and return on investment and scale efforts across our portfolio where we see elevated climate risk. Wrapping up, we are very proud of the continued outperformance we delivered in 2025, which reflects the disciplined capital allocation decisions we have made since 2017. Our recent transactions represent an important step in advancing our capital allocation strategy and underscore our ability to generate meaningful shareholder value by monetizing assets at attractive returns and accretive multiples with an eye towards maximizing total shareholder returns. Looking ahead, we are optimistic about the travel environment, particularly at the upper end of the chain scale, and we are confident that Host is well positioned to capitalize on future opportunities. With our geographically diversified portfolio, ongoing reinvestment in our properties and fortress balance sheet, we will continue to leverage our competitive advantages to create value for our shareholders in 2026 and beyond. With that, I will now turn the call over to Sourav. Sourav Ghosh: Thank you, Jim, and good morning, everyone. Building on Jim's comments, I will go into detail on our fourth quarter operations, full year 2026 guidance and our balance sheet. Starting with total revenue trends. Total RevPAR growth continued to outpace RevPAR growth as transient guests maintained elevated levels of out-of-room spending. Comparable hotel food and beverage revenue for the quarter grew approximately 6%, driven by outlet revenue and banquet contribution per group room night. Outlet revenue grew 9%, driven by resorts and new restaurants at the 1 Hotel South Beach and the New York Marriott Marquis. Resort outlet growth was led by the ongoing recovery in Maui as well as the Ritz-Carlton Naples and the continued ramp-up of the Singer Island Oceanfront Resort and the Ritz-Carlton Turtle Bay. Comparable banquet and catering revenue increased 4% in the fourth quarter, driven by 6% growth in banquet contribution per group room night. Other revenues increased 10%, propelled by sustained strength in golf and spa operations. Spa revenue was up 6%, driven by higher occupancy at luxury resorts and improved capture, particularly at the Ritz-Carlton, Amelia Island and Fairmont Kea Lani. Golf revenue grew 14% due to strong performance at our Maui and Naples golf courses. Shifting to rooms revenues. Overall transient revenue grew 6% compared to the fourth quarter of 2024, driven by improving leisure transient demand and rate growth across the portfolio. Notably, resorts generated 80% of the transient revenue growth in the quarter. Transient revenue at luxury properties increased by more than 10%, underscoring the strength of high-end demand. The Ritz-Carlton Naples and Fairmont Kea Lani delivered double-digit room night growth while maintaining rates above $1,000, representing a 5% increase year-over-year, further validating the meaningful impact of our transformational reinvestment strategy. Looking at holidays in the fourth quarter. Thanksgiving revenue grew 3%, while festive season revenue grew 9%. Festive season revenue growth, which includes the 2-week period around Christmas and New Year's, was broad-based across the portfolio but led by resorts with 4 resorts generating more than $1 million of incremental revenue over the festive period. Looking at recent and upcoming 2026 holidays, transient booking pace is up meaningfully. For President's Day weekend, transient revenue pace was up approximately 8% compared to the same time last year, driven by rate and occupancy growth at our convention properties. For the spring break and Easter period, which runs from the end of March through the end of April, transient revenue pace is up 17%. Strength is broad-based across property type and led by hotels in Maui, Orlando and New York. Business transient revenue grew approximately 1% versus the fourth quarter of 2024, driven primarily by rate growth as our managers continued shifting towards corporate negotiated business. Group revenue in the fourth quarter was up 1% year-over-year as 3% rate growth outpaced group room night declines. Corporate groups led growth in the quarter, particularly at our properties in New York, Boston, San Diego and San Francisco. For 2026, we have 3.1 million in definite group room nights on the books, representing a 16% increase since the third quarter of 2025 and putting us slightly ahead of where we were this time last year. Total group revenue pace is up 5% over the same time last year, driven by rate and banquet growth. More specifically, we are seeing meaningful total group revenue pace in San Francisco, Washington, D.C., Nashville, Miami, New York, Austin and Atlanta. Group booking pace is strongest for the second and fourth quarters, driven by World Cup bookings and a beneficial holiday calendar shift in October. We are encouraged by citywide room night pace in key markets such as San Antonio, San Francisco and Washington, D.C. Shifting gears to margins. Full year 2025 comparable hotel EBITDA margin of 28.9% was 40 basis points below 2024, driven by the $21 million of business interruption proceeds that we received for the Maui wildfires as well as certain onetime benefits in 2024. Turning to our outlook for 2026. The midpoint of our guidance contemplates a stable operating environment with a continuation of trends seen through the second half of 2025. This includes leisure transient strength driven by special events such as the World Cup, modest improvements to short-term group booking trends and stable business transient demand. At the low end of our guidance range, we have assumed no improvement in short-term group booking trends and weaker special events demand. And at the high end, we have assumed improving short-term group booking trends and increased demand around special events. For full year 2026, we anticipate comparable hotel total RevPAR growth of between 2.5% and 4%, and comparable hotel RevPAR growth of between 2% and 3.5% over 2025. Year-over-year, we expect comparable hotel EBITDA margins to be down 20 basis points at the low end of our guidance to up 20 basis points at the high end. In 2026, our 74 hotel comparable portfolio now includes the Alila Ventana Big Sur, but excludes The Don CeSar due to its closure in 2025. Our 2026 comparable portfolio also removed the Four Seasons Resort Orlando at Walt Disney World Resort, the Four Seasons Resort and Residences Jackson Hole and Sheraton Parsippany, which is under contract and expected to be sold in the second quarter. In terms of comparable hotel RevPAR growth cadence for the year, we expect the first quarter to be the weakest with growth in the low single digits due to tough comparisons related to the presidential inauguration and pickup from the Los Angeles wildfires last year. January 2026 performance exceeded expectations with comparable hotel RevPAR declining only 40 basis points despite challenging comparisons to January 2025. We expect the second quarter to be the strongest of the year with mid-single-digit RevPAR growth driven by the World Cup and an earlier Easter. RevPAR growth in the second half of the year is expected to be between first and second quarter growth. At the midpoint of our guidance range, we anticipate comparable hotel RevPAR growth of 2.75% compared to 2025. This includes an estimated 40 basis point net benefit from special events for the full year with an estimated 60 basis point lift from the World Cup, partially offset by a 20 basis point headwind from last year's presidential inauguration. In addition, Maui is expected to contribute approximately 35 basis points to our full year RevPAR growth. At the midpoint, we expect a comparable hotel EBITDA margin of 29.2%, which is flat to 2025. Our margin performance reflects our continued success in partnering with our operators to drive productivity gains across our portfolio as well as the value-enhancing capital allocation decisions we have made over the past few years. In 2026, we expect wage rates to increase approximately 5%. For context, in 2025, wages grew at slightly over 6%. As a reminder, wages and benefits comprise approximately 50% of our total comparable hotel operating expenses. Our 2026 full year adjusted EBITDAre midpoint is $1,770 million. On a year-over-year basis, this reflects an expected 1% increase despite a decline of $87 million from dispositions, a $17 million net decline in business interruption proceeds and a $7 million net decline in transformational renovation program operating profit guarantees. Our adjusted EBITDAre midpoint includes $28 million of estimated EBITDA from operations at The Don CeSar, which is excluded from our comparable hotel set in 2026, as previously mentioned. It also includes approximately $7 million of business interruption proceeds related to Hurricanes Helene and Milton, which we already received in January. Lastly, our 2026 full year adjusted EBITDAre midpoint includes between $20 million and $25 million of estimated net EBITDA from the Four Seasons condo development, which we expect to recognize concurrent with condo sale closings. Turning to our balance sheet and liquidity position. Our weighted average maturity is 5.1 years at a weighted average interest rate of 4.8%. We have no debt maturities in 2026. We ended 2025 at a leverage ratio of 2.6x, and we have $2.4 billion in total available liquidity including $167 million of FF&E reserves and $1.5 billion of availability on our credit facility. Our fortress balance sheet continues to be a distinct competitive advantage for Host. Wrapping up, in January, we paid a quarterly cash dividend of $0.20 per share and a special dividend of $0.15, bringing the total dividends declared in 2025 to $0.95 per share. On February 17, the Board of Directors authorized a quarterly cash dividend of $0.20 on our common stock to be paid on April 15 to shareholders of record on March 31. As always, future dividends are subject to approval by the company's Board of Directors. To conclude, we are proud of our accomplishments in 2025, and we believe that our diversified portfolio, continued reinvestment in our assets and strong balance sheet uniquely position Host to capitalize on future opportunities. With that, we would be happy to take your questions. To ensure we have time to address as many questions as possible, please limit yourself to one question. Operator: [Operator Instructions] Our first question comes from Michael Bellisario from Baird. Michael Bellisario: Jim, on the Four Seasons sales, certainly great execution there and you're proving out value. So of two parts here. One, how deep is that buyer pool today? And then two, can you, and next maybe, would you sell more of your top assets? Or what's the outlook and thinking around more high-value dispositions going forward? James Risoleo: Sure, Mike. Good questions. As you always have good questions for us, and we appreciate that very much. Before I talk about the Four Seasons specifically, I just want to take a moment and go back and highlight our performance in 2025 and our guide in 2026. We -- Sourav said it. I said it as well. We're very proud of our '25 performance. TRevPAR of 4.2%, RevPAR of 3.8% and adjusted EBITDAre of $1,757 million. And our '26 guide, I think, is very strong with TRevPAR at the midpoint of 3.25% and RevPAR of 2.75%, and adjusted EBITDAre of $1,770 million. I think it is worth noting again, saying again that, that $1,770 million is after we sold $87 million of hotel EBITDA, and we won't benefit from BI proceeds and operating partner guarantees, disruption guarantees of $24 million. So the run rate is really closer to $1.9 billion for 2025. And that didn't happen by accident. That's a result of all the capital allocation decisions that we made over the last 9 years. And as you know, we have been exploring ways to unlock the value embedded in our shares. In other words, looking for ways to expand our trading multiple with the goal of maximizing total shareholder returns. In addition to acquiring $4.9 billion of assets at 13.6x, we sold $6.4 billion of assets with $1.2 billion of avoided CapEx at 16.7x. The shares haven't really responded. We haven't received credit for portfolio recycling despite buying well below where we were selling on a blended basis. So I think it goes back to a healthy amount of skepticism with regard to some of the large acquisitions that we made, starting with the 1 Hotel South Beach, which in 2018, had $46 million of EBITDA. And in 2025, we ended the year with $65 million of EBITDA. So the story is solid, and it holds together very well. But to answer your question, is there a market for these assets? If so, at what valuation? Are we sellers of "the crown jewels" to realize the value that we've created. And the short answer is, yes. I mean you've heard us say that we're constantly testing the market with dispositions and that everything is for sale at the right price, and we mean it. This was an opportunistic transaction to create immediate and tangible value for our shareholders. We were looking for an opportunity to realize that value and we found one and we executed on it. So even though the 2 Four Seasons were top performers for Host, and we fully expect luxury to continue outperforming. We believe that it was prudent to maximize value for our shareholders by selling these assets at an attractive profit and accretive multiple. Quick summary of the transaction. We sold these 2 assets for $175 million more than where we bought them. A 14.9x multiple, which is a 5.9% cap rate that is 4 turns higher than where Host shares have been trading. And we think that provides a really favorable read-through on the value of our portfolio. We generated an 11% unlevered IRR for our ownership period, which clearly demonstrates our ability to create value. That includes $58 million of CapEx, which was funded within the FF&E reserve as well as transaction costs that hit the IRR by 170 basis points. We kept the condos in Orlando, and we expect the IRR and the condos to be above 11% with our guide to roughly $40 million of net EBITDA in total. And as you said in one of your notes, Mike, we sold 6.5% of enterprise value, but only 4.7% of our consolidated hotel EBITDA. So we think this was a really fantastic trade, the Four Seasons Orlando, based on 2019 year-end EBITDA saw an 18.4% CAGR from the time we bought it to our ownership period through '25, so it's performed very well. And we're very, very happy with the round-trip investment we made with these 2 resorts. Not only we feel that the transaction demonstrates the value of our portfolio, it also shows the value that we create for shareholders as a management team, including our unwavering focus on maximizing total shareholder return, which is what we've done here, we believe. So are there other opportunities to maximize value within the portfolio? I think there is, we'll be opportunistic. The buyer pool for these types of assets is, I think, a lot deeper than people realize. There are a lot of sovereigns out there who are very interested in luxury hotels. There are high net worth individuals who are interested in luxury properties as well. And there are a couple of big private equity firms that have a lot of capital that have been sitting on the sidelines waiting to -- waiting for the inflection point to jump back into the market. And we're hopeful that this is the inflection point that we can prove out that there is value here, value to be created, and we're certainly hopeful that we're going to get the read through and see some multiple expansion as a result of not only this decision, but all the capital allocation decisions that we've made over the last 9 years. Operator: Our next question comes from David Katz from Jefferies. David Katz: I apologize if I missed it in your prepared remarks, but the Transformational Capital Program you included in the release with Marriott. Can you just put a little more color around that and sort of why those hotels, why now and what we can expect on the back end of that endeavor? James Risoleo: Sure. Why those hotels, David. They're great assets, and they need to be repositioned, and we believe that by investing in these assets in a transformational way that we're going to meaningfully increase our yield index and realize mid-teens cash-on-cash returns as a result of our incremental investment that will benefit our shareholders. So the thesis is that we prove this out very strongly in our first Marriott Transformational Capital Program, which was 16 assets as well as 8 additional assets. We underwrote 3 to 5 points increase in yield index. On the stabilized hotels to date, we've picked up 8.7 points in yield index, which means other hotels in the market have lost yield index to our properties. And we think that this is a very, very solid use of our capital, and it's a clear read-through to our ability to really invest wisely for the benefit of our shareholders and see the proceeds drop right to the bottom line. And the brands see it as well with Host. I mean we have -- not only is this our second Transformational Capital Program with Marriott. After we did 16 in the first round, we did 4 in this round. But we are in the midst of finishing up 6 properties with Hyatt. So it's great to be able to partner with the brands. And they provide the support that we need to effectuate these transformational renovations while covering off anticipated disruption involved with the renovation and providing enhanced owner priority returns. So we couldn't be happier with our relationship with the brands and the support that they give us and the fact that we are investing in these assets, which elevates not only the EBITDA profile for Host, but the EBITDA profile for the brand as well, and we benefit from that all the way around. It's a round-trip investment, if you will. David Katz: And have you shared with us what the sort of reimbursement for Marriott will be and sort of how that cadence works for our model? James Risoleo: Well, I'm sorry, the reimbursement, when we talk about the operating profit guarantees, sure. And Sourav can give you color on what they are, what we got last year, what we'll get this year. And the -- our anticipated property performance is reflected in our guidance. So that's already there for you. Sourav Ghosh: And just to expand on the guarantees. In 2025, we did receive some operating guarantee from the MTCP2, that was about $2 million. It was $1 million in the third quarter, $1 million in the fourth quarter. But remember, we did get a $24 million for HTCP, the Hyatt Transformational Capital Program, throughout 2025. In 2026, we will get operating profit -- guarantee for HTCP that's about $7 million, and that's really for the Hyatt Manchester in San Diego. And the MTCP2, we will get about $12 million through the year. So that's a total of $19 million. So in other words, it's about a $7 million delta in terms of what we'll get for '26 versus '25, so $7 million lower. Operator: Our next question comes from Dan Politzer from JPMorgan. Daniel Politzer: I wanted to touch on Maui a bit here. You came into last year forecasting, I think, $90 million of EBITDA, ended at $110 million, and now you're forecasting $120 million for 2026. I guess what's -- is there some element of conservatism in there as we think about the path getting back to $160 million? And what are the puts and takes to that 2026 outlook? Sourav Ghosh: Sure. So when you look at -- you're right, we started off like last year at forecasting $90 million for 2025, and we ended up at $111 million. And now we are forecasting an additional $9 million. Based on the current booking pace and how things are shaping up, we feel pretty confident in terms of the $120 million guide. The reality is, as we had talked about earlier, that the Hyatt Regency, that's the one in Ka'anapali, that's the one which is going to take a little bit of time to come back because of the lead time required for the groups to come back in a meaningful way. I will say that the Wailea Hotel, the Fairmont Kea Lani actually reached a high watermark in 2025 with $49 million of EBITDA, and Andaz as well on the way there as well. So the Wailea side is almost completely recovered, if you will, relative to pre-fire. The Hyatt Regency has a little ways to go and has made meaningful progress, and we are expecting a significant amount of growth for the Hyatt Regency Maui. I mean just to put it into perspective, that property, we're expecting to go from about $28 million of EBITDA to close to $34 million for 2026. So significant growth there, and we're making considerable progress. At this point in time, we feel comfortable with the $120 million. Does that change over the course of the year as we see potential group pace pick up and short-term pick up? Absolutely. So we will provide an update on the next call. So there could be potential upside in those numbers. Operator: Our next question comes from Smedes Rose from Citigroup. Bennett Rose: I just wanted to ask a little bit about as these CapEx programs that you're doing with the brands kind of finish up over the course of this year, and it looks like total CapEx spending is kind of on a downward trend. Is it fair to think that, that could continue to kind of move down slightly? And does that change the way you're thinking about -- you and the Board are thinking about your quarterly dividend payments versus kind of year-end true-ups? James Risoleo: See, Smedes, we're always looking for opportunities to invest in our assets if we can generate an acceptable return on that investment. So we have done a lot of transformational renovations in the portfolio. I think it's a total of 33 assets will have been transformationally renovated now, and that excludes the Washington Marriott at Metro Center, which we sold, or would have been 34, that was one of the original 16 programs. So I think stay tuned. We'll look for other opportunities after we complete these assets going forward. The portfolio is in terrific shape given the amount of capital that we put in it. And you can see that in the performance that we've been able to generate. So with respect to the dividend, our objective is to pay out our taxable income and to pay a sustainable dividend going forward. So it's something that we will revisit from time to time. And if a policy change is warranted, that's something we'll discuss with the Board of Directors, and we will inform you at that point in time. But at this point in time, we are on track for our $0.20 dividend that's paid this quarter coming up and stay tuned for the next dividend announcement. Operator: Our next question comes from Aryeh Klein from BMO Capital Markets. Aryeh Klein: Jim, you talked a bit about selling the Four Seasons and your general view on realizing value within the portfolio. I was hoping maybe you can talk a little bit about the other side of that and what you're seeing out there on the acquisition side, particularly with the $500 million of capital gains that could theoretically go towards acquisition. James Risoleo: Sure, Aryeh. I would say that the acquisition market generally is better than it was last year, but it's still not robust. And we do have an opportunity to effectuate a reverse like-kind exchange. If we were in a position to identify assets, accretive asset acquisitions within 45 days, and I want to make that point very clear. If we do a reverse like-kind exchange, it's going to be an accretive transaction. We're not going to acquire an asset just to effectuate a like-kind exchange. I think the proof is in the pudding, and I've talked about it earlier today and talked about it in the past. So we are going to look at what's out there relative to our current trading multiple. And generally, most of the deals that we've done, Aryeh, have been based on relationships that we have in the industry. So we're thinking about it as a team, the investments team and others here at Host are thinking about what assets might be available to us to effectuate this. But we're perfectly comfortable returning $0.5 billion in the form of a special dividend to our shareholders. I mean that is tangible. It's $0.72 a share roughly, it's meaningful, and it is a piece of total shareholder return. So I'd say, stay tuned. But at this point in time, I think it's more likely than not that we will pay the special dividend. Operator: Our next question comes from Cooper Clark from Wells Fargo. Cooper Clark: As we think about the $600 million in proceeds outside of the taxable gains, you noted a few options as it relates to allocation in terms of returning capital through dividend, buybacks, reinvesting in the portfolio and potentially acquisitions. As you sit here today, can you talk about which one of those options looks most attractive and where you're seeing the best opportunity? James Risoleo: Cooper, this is going to evolve. It's not something that we have to -- we don't have to act on the balance of the proceeds in any short-term time frame. So we're going to sit back and take measure of how the market evolves, how our operating performance evolves over the course of the year, what happens in the acquisition market. And at the appropriate point in time, we will make some decisions with respect to what we do with the incremental cash that's left over. But I can't sit here today and tell you what the highest and best use of that cash is. It's something that we're going to take a measured approach to as we always do, and we'll just have to wait and see how the year plays out. Operator: Our next question comes from Chris Darling from Green Street. Chris Darling: Jim or Sourav, I'd like to dive a little bit deeper on the expense outlook for the year. I think you mentioned wage and benefit expected to grow about 5%. Anything you can share on labor availability, whether you're seeing sort of an easing in the market? And then if you're able, it'd be helpful to break down some of your other expenses, any other major line items where you have visibility. Sourav Ghosh: Sure thing, Chris. So obviously, given at the midpoint, we're expecting flat margins. Our expense growth is -- total expense growth is assumed at 3.3% with total revenue growth of 3.3%. Yes, the wage rates are expected to go up 5% for the year. But obviously, we do have certain other benefits that our overall expenses can be lower for the year. That's being driven by a few things. It's productivity enhancements. There's a lot of focus on really honing in on what the best labor standards should be. And we literally are going position by position and working with our managers to make sure that there is keen focus on the ideal standards that drive scheduling and forecasting for labor. So that's a big piece of it. The other thing is insurance should be down for the year. Obviously, we did not have any weather-related events in 2025. So hoping for a good outcome for our insurance renewal. So that stuff should help our overall expense growth as well. In terms of labor availability, we have not seen any challenges. And honestly, didn't see any challenges at all even coming out of COVID. And that's primarily because, as we have stated earlier, we are really predisposed to brand-managed hotels, which really do a great job with talent acquisition and talent retention. So from that perspective, we haven't really had any issues being able to sort of staff at the hotel level. Operator: Our next question comes from Duane Pfennigwerth from Evercore ISI. Duane Pfennigwerth: Just headwinds and tailwinds from a market perspective. You've talked pretty consistently about Maui tracking better, maybe San Francisco. Maybe you could just comment on group pacing in Maui and for those 2 markets, what you expect the level of improvement to be? And then, I guess, away from those 2 markets, any markets you'd highlight in your portfolio that you think are going to be a material driver this year? James Risoleo: I'll let Sourav get into the pacing on Maui and some of the other markets, Duane. But one thing that we're excited about for the year that should be a benefit for our portfolio is the World Cup matches. So World Cup, we expect 60 basis points of full year RevPAR benefit from the World Cup. That's a net 40 basis point pickup if you take into consideration that 2025 benefited from the inauguration to the tune of 20 basis points. So we have -- given the geographic diversification of our portfolio, we have World Cup matches in 10 of our markets, which is, I think, really quite attractive for us going forward. So we would expect a benefit in quarter 2 as there are more matches in more markets in quarter 2 than in quarter 3. At this point in time, we don't have a good handle on how things are going to evolve because we believe that the booking pace is going to be 30 to 60 days out. And we'll have a much better indication in our May earnings call how World Cup is going to affect our performance for the year. So that's a big plus for us. I'll let Sourav talk about pace in Maui and maybe pace in San Francisco as well because those are 2 other really strong markets for us in 2026. Sourav Ghosh: Yes. Overall, just as a reminder, group makes up about only 22% in Maui. So the big push is really getting that group at the Hyatt Regency, and our RevPAR expectations right now for the Hyatt Regency is north of 10%, it's close to 11.5%. And we are pleased with how that is pacing. Overall, Maui pace is relatively flat to last year, but that's just given how well Wailea performed and where pace was last year for the 2 hotels in Wailea. But Hyatt Regency where the group matters meaningfully, we are pacing really strong. In terms of other markets where we're pacing really well, and this is specifically for the Host portfolio, we did mention Nashville, Atlanta, Miami, San Francisco, D.C. and Austin, which is benefiting just from the reno at the Hyatt Regency. Nashville, we were expecting to pace up 13%. Atlanta, we are pacing up right now close to 10%. Miami is double digits, close to 15%. And San Francisco is almost pacing 20%. This is all total group revenue. D.C. is double digit as well at 10%. And Austin is at 26%. And the ones which are pacing behind are where there is a citywide impact. So specifically, San Diego, which you all know about, to some extent, Chicago, Boston and Seattle. Operator: Our next question comes from Robin Farley from UBS. Robin Farley: Great. Most of my questions have been asked already. But just circling back to what you're looking to do with the proceeds from the Four Seasons sale. I know you mentioned you're maybe even leaning towards the dividend. But just wondering if you could talk a little bit about what type of assets you're looking at to use those proceeds for? James Risoleo: Robin, it's a broad question. So let me answer it in the context of the types of assets that we feel that we can create value with and also think about as we're deploying capital, maintaining our geographic diversification, which has served us very well over the course of the last 9 years or so. So it's an asset that we believe will have meaningful upside opportunities from our asset management platform and our enterprise analytics platform. It will have diverse demand generators, a combination of group, leisure transient and business transient, and in a market that we feel has strong growth drivers going forward. So I can't get more specific in that because I don't have a specific asset in mind today, but those are the types of properties that we would be looking to acquire. Operator: And we are out of time for questions. I would like to turn the call back over to Jim Risoleo. James Risoleo: Well, thank you again for joining us today. We always appreciate the opportunity to discuss our quarterly results with you and our, in this case, our full year 2025 results, and we look forward to seeing many of you at conferences in the coming weeks. Have a great day, and thanks again. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to the Community Health Systems Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. I would now like to turn the conference over to Anton Hie, Vice President, Investor Relations. Please go ahead. Anton Hie: Thanks, Rocco. Good morning, and welcome to Community Health Systems Fourth Quarter 2025 Conference Call. Joining me on today's call are Kevin Hammons, Chief Executive Officer; and Jason Johnson, Executive VP and Chief Financial Officer. Before we begin, I'll remind everyone this conference call may contain certain forward-looking statements, including all statements that do not relate solely to historical or current facts. These forward-looking statements are subject to a number of known and unknown risks which are described in headings such as Risk Factors in our annual report on Form 10-K and other reports filed with or furnished to the SEC. Actual results may differ significantly from those expressed in any forward-looking statements in today's discussion. We do not intend to update any of these forward-looking statements. Yesterday afternoon, we issued a press release with our financial statements and definitions and calculations of adjusted EBITDA and adjusted EPS. We've also posted a supplemental slide presentation on our website. All calculations we will discuss today exclude gains or losses from early extinguishment of debt, impairment gains or losses on the sale of businesses, expense from business transformation costs and changes in estimate for professional claims liability in the prior year period. With that said, I will turn the call over to Kevin Hammons, Chief Executive Officer. Kevin Hammons: Thank you, Anton. Good morning, everyone, and thank you for joining our fourth quarter 2025 conference call and for your continued interest in CHS. First, I'd like to say I'm honored to speak to you today as CEO of Community Health Systems. I want to express my sincere gratitude to our Board of Directors for their support and their confidence in appointing Jason and myself to our permanent roles as CFO and CEO, respectively. I would also like to thank many of the people on this call for offering your support and congratulations, which has meant so much to me personally. And of course, I want to acknowledge our employees and physicians and everyone else who contributes to the quality care provided for our patients every day. It is my honor and privilege to lead CHS forward at this point in time and to serve all of you in this role. Reflecting on these past few months, I use my time as interim CEO to speak with many of our employees and physicians. And most importantly, to listen to their thoughts about our current state and future potential of our company. The feedback was candid and enlightening and encouraging. And I entered this year excited and very optimistic about what lies ahead for CHS. Today, I want to share some highlights of our 2025 operating results, but I also want to spend a minute talking about our vision and our top priorities for this year before turning the call over to Jason. Starting with our operating performance. The fourth quarter was in line with our updated expectations, reflecting sequential margin expansion with higher acuity and a slight improvement in payer mix and continued cost controls. Same-store net revenue for the fourth quarter increased 2.1% year-over-year, reflecting a 2.4% increase in net revenue per adjusted admission. Some of our milestone achievements in 2025 were very much the result of focusing on the unique opportunities available in each of our markets. For example, ER visits were up more than 13% in our Knoxville hospitals over the past 2 years following a major investment and ER expansion at Tennova North Knoxville in 2024. The current investment at Tennova Turkey Creek in Knoxville, which will be completed this summer, will add more ER beds to the community and drive even more growth to our Tennessee hospitals. A 20% increase in births, more than 4,000 babies born at Grandview Medical Center in Birmingham, Alabama in 2025 was made possible by a recent $10 million investment in women's services. That is the third expansion of women's services and maternity care services since we opened Grandview 10 years ago. In Carlsbad, New Mexico, more than 450 inbound transfers a nearly 35% increase over the prior year, brought patients into our hospitals for higher acuity care coming from outline communities as far as 30, 50 and even 100 miles away. And in Longview, Texas, heart surgeries were up 16% in 2025 as we develop a top-notch heart program that keeps patients close to home for high-quality, high acuity cardiac care. These are just a few examples of how we seek to understand and address the health care needs in our communities and invest in our core portfolio for long-term growth. We also made several divestitures in 2025, enabling us to invest proceeds back into our core portfolio or use them to reduce debt. We continue to make improvements to our capital structure with leverage down from 7.4x at year-end 2024 to 6.6x at year-end 2025, thus making materially more value available to our stockholders. And with proceeds from transactions completed or to be completed in 2026, we are creating a path for additional debt reduction and deleveraging, which will further strengthen our balance sheet and continue to improve our capital structure. As we discussed in prior quarters and has been discussed more broadly across our industry, we saw some disruptions in 2025, both from an economic standpoint impacting patient behavior as well as a regulatory standpoint, creating uncertainty in both reimbursement and insurance coverage. We believe these disruptions are temporary and there are plenty of things we can be doing and that we are doing to mitigate risk and ensure we are well positioned for the future. Finally, our vision at CHS is to make the health care experience exceptional for our patients, our communities and each other. We know this is aspirational, but also believe it's possible and attainable. To achieve this goal, the health care experience that is exceptional, we have adopted 5 priorities. We intend to improve quality, physician experience, patient experience and employee satisfaction and to grow our cash flows, enabling us to continue to invest in additional growth opportunities. We are working to differentiate ourselves in our markets. And we believe doing so will lead to even greater consumer confidence and choice of our health systems, retention of our workforce, growth and ultimately, enhance financial performance and long-term success. At this point, I will turn the call over to our Chief Financial Officer, Jason Johnson to review financial results in greater detail and discuss our initial guidance for 2026. Jason? Jason Johnson: Thank you, Kevin, and good morning, everyone. For the fourth quarter, CHS delivered results generally consistent with the expectations. The company continued to execute well on the controllable aspects of the business and was able to deliver expansion in adjusted EBITDA margin on a sequential basis. thus achieving the midpoint of our updated guidance for the full year 2025. Adjusted EBITDA for the fourth quarter was $395 million with a margin of 12.7%. When adjusting for divestitures and out-of-period items, adjusted EBITDA was up slightly versus the fourth quarter of 2024. Same-store net revenue for the fourth quarter increased 2.1% year-over-year driven primarily by rate growth and a slight improvement in acuity as net revenue for adjusted admission was up 2.4% year-over-year. Same-store inpatient admissions and adjusted admissions were each down 0.3%. Same-store surgeries declined 1.9% and ED visits were down 3.6%. When excluding the Pennsylvania operations that were divested on February 1, 2026, same-store admissions and adjusted admissions were flat year-over-year and surgeries were down 0.4%. Meanwhile, CHS again performed well on cost controls. Labor was well managed with growth in average hourly wage rate coming in within our expected range for the quarter and the full year, and contract labor spend was essentially flat on both a sequential and year-over-year basis. With live expense continued to be well managed, declining 110 basis points year-over-year to 14.4% of net revenue in the fourth quarter and down 50 basis points for the full year 2025. Medical specialist fees were $169 million in the fourth quarter, which was up 4.6% year-over-year on a same-store basis and held steady with recent quarters at 5.4% net revenue. We continue to expect upward pressure on medical specialist fees in excess of typical inflation, likely in the range of 5% to 8% growth for 2026 driven by radiology and anesthesia. As we previously noted, we have seen operational improvements in areas such as throughput and safety metrics and physician practices that the company has in-sourced. And we'll continue to evaluate in-sourcing opportunities to combat this upward cost pressure when appropriate. Cash flows from operations were $266 million for the fourth quarter, bringing the full year total to $543 million versus $480 million in 2024. Cash flows from operations for the full year of 2025, as reported includes $169 million in outflows for taxes on gains until the hospitals which are paid out the divestiture proceeds that are reported as investing cash flows. When excluding these cash taxes on divestiture gains, our adjusted cash flows from operations were $712 million for 2025 and adjusted free cash flows were $150 million. As expected, during the fourth quarter, CHS received $91 million in contingent cash consideration related to the 2024 divestiture of Tennova Cleveland and net cash proceeds of approximately $152 million from the divestiture of our outreach lab assets. We used a portion of these proceeds to redeem $223 million of the 10.78% (sic) [ 10.875%] senior secured notes due 2032 at 103% via the special call provision and also redeemed the remaining $14 million outstanding principal amount of the 2027 notes in mid-December. Subsequent to year-end and early February, we completed the divestiture of our 80% ownership in Tennova Healthcare, Clarksville in Tennessee for $623 million in gross proceeds and the 3 Pennsylvania hospitals for $33 million in cash plus a $15 million promissory note and additional contingent consideration. We used a portion of these proceeds to redeem another $223 million of the 2032 notes at 103% via the special call provision on February 2. As Kevin previously noted, our leverage at year-end 2025 was 6.6x down from 7.4x at year-end 2024 and has since been further reduced by the second partial redemption of the 2032 notes earlier this month. We have simplified our capital structure by effectively eliminating unsecured notes in the second quarter of 2025. Our next significant maturity is in 2029. And as of December 31, 2025, we had no amounts drawn on our ABL. The previously announced divesture of our Huntsville, Alabama assets is on track to close in the second quarter and is expected to bring in an additional $450 million in gross proceeds, further enhancing liquidity to fund growth investments and/or further reduce net debt and leverage. It is worth noting that once the Huntsville divestiture is complete, our net debt will be approximately $9.2 billion, down from the $10.1 billion at year-end 2025 and the $11.4 billion at year-end 2024. Now moving on to our initial 2026 financial guidance. We anticipate net revenue of $11.6 billion to $12.0 billion, adjusted EBITDA of $1.34 billion to $1.49 billion, cash flows from operations of $600 million to $700 million and capital expenditures of $350 million to $400 million. The guidance range with net revenue and adjusted EBITDA both coming in below full year 2025 levels reflects the impact of divestitures completed in 2025 and those that have been announced and have been or are expected to be completed in early 2026 as well as the exclusion of onetime or out-of-period items that benefited 2025 results and are not expected to recur in 2026. In bridging from 2025 actuals to 2026 EBITDA guidance, the biggest factors are, of course, the divestitures. For those we completed during 2025, which includes Cedar Park, Lake Norman and ShorePoint, the partial year impact that you have to take out of our as-reported EBITDA in 2025 is about $30 million to $40 million -- I'm sorry, yes, $30 million to $40 million. For the class of 2026 divestitures, which includes Clarksville, Pennsylvania and Huntsville, it's in about $80 million to $90 million reduction to the baseline. And then as you recall, we had the retroactive piece related to Tennessee SDP and the opioid settlement, which together added about $45 million of EBITDA in 2025. So after adjusting for all these factors, we view the starting point for '25 as EBITDA of about $1.36 billion. Of that base, our initial guidance range for 2026 reflects core operations of about 4%, which is net of an estimated $20 million to $30 million EBITDA impact resulting from the reduction of HICS enrollment. Our guidance does not include impacts from any new or enacted state-directed payment programs that may still be waiting approval and likewise, does not include any benefits from the rural health transformation program. as the states in which we operate are still in various stages of finalizing their program designs. Additionally, the guidance considers only the impact of divestitures that have already been completed or announced to date. Any such additional transactions is completed during 2026, which reduced net revenue and EBITDA for the year and the associated proceeds would enable the company to further reduce net debt and leverage. A final note for many employers on a biweekly pay schedule, 2026 will include an extra pay period, meaning there will be 27 payment dates compared to the normal 26 payment dates. CHS is in this category. So while this has no impact to adjusted EBITDA, it will be an approximate $140 million headwind to cash flows from operations in 2026 and is reflected in the guidance range. This concludes our prepared remarks. So at this time, we'll return the call back over to the operator for Q&A. Rocco? Operator: [Operator Instructions] Today's first question comes from Brian Tanquilut with Jefferies. Brian Tanquilut: Thanks for all the color on the bridge. So maybe in already gave us that, I'll shift my question to just as I think about the divestitures, right? I mean you've announced a few that are pending here, obviously baked in the guidance. But how do we think about your perspective in terms of further divestitures? And as you've pruned the portfolio, you now have an asset base that is comprised of fairly good hospitals. So how do you -- what's a philosophical view in terms of what is left to sell and how that impacts go-forward performance and then just how much more are you willing to prune the hospital base from here? Kevin Hammons: Brian, this is Kevin. I'll kick this off, and thank you for your question and for joining us today. We are getting, I would say, closer to the end of our programmatic divestitures. We still have some inbound interest as we continue and probably we'll always have some inbound interest because we have some very good markets. There are a couple transactions right now that we are in some early stages of discussions, but we are not sure yet whether those will proceed or whether we will be able to get those across the finish line. But I would say in terms of what we have interest in selling is certainly dwindling. We're very comfortable with our portfolio as it stands, and we really want to be just opportunistic about transacting hospitals that if there were ever to be a change in the economic environment or environment in which we're operating that would cause us to want to make a decision to divest or if it's just an opportunistic transaction at a price point that would allow us to materially deleverage then I think we would want to take advantage of that. Brian Tanquilut: I appreciate that. And then, Jason, as I think about your bridge that you provided, when I think of the HICS adjustment there, just curious if you could share with us the assumption that you've embedded in that number, whether it's shifting to bronze and employer plans? Or just curious if there's anything you can share with us on that. Jason Johnson: Yes. Sure. Thank you for the question. As a reminder, health care exchanges represent less than 5% of our total adjusted admissions and net revenue. And our guidance does attend to account for the potential impact from the reductions in enrollment in health care -- health insurance exchanges related to the administrative reforms, expirations of enhanced premium tax credits, et cetera. Obviously, it's difficult to predict currently what the ultimate outcome will be, which will be highly dependent upon the ACA plan effectuation rates, potential uptake into the employer-based plans, shifting into lower middle tier plans or becoming self-pay. And the success of our company is the eligibility, screening services and assisting uninsured patients with obtaining coverage. We acknowledge that the other peers have, there could be some negative impact to volume trends and payer mix. A 20% reduction in fixed volumes would have resulted in a $100 million to $120 million reduction in net revenue based off of that, where we're kicking off 2025 after excluding the divestitures. And we think that could translate into a $20 million to $30 million reduction in EBITDA. Operator: And our next question today comes from A.J. Rice at UBS. Albert Rice: Maybe first, just to ask -- I don't think I've asked about this in a while. The portfolio is obviously quite diverse. You have midsized city markets that make up a lot of the portfolio, but you also have a number of small community properties still. Has there been a meaningful difference and the way one side or the other of the portfolio, I probably get asked it geographically as well. Do you see meaningful difference as to how within the portfolio assets are performing over the course of the last quarter to last year. Any thoughts on that? Kevin Hammons: Thanks, A.J. We do have a fairly wide range of performance across our portfolio. But as we have trimmed and focused on networks of care, most of those hospitals and even the smaller, more rural hospitals fit within a network that includes a hospital in a larger suburban or midsized metropolitan area in those smaller hospitals, although individually or on their own may operate at a different level, also serve as an access point or transfer point for higher acuity services that we're still able to capture within the network. So really, as we're looking at and evaluating our portfolio, we've been divesting many more of the hospitals that kind of stand on their own where we don't have a network of care build up around it and focusing our efforts on those networks. Albert Rice: Okay. And then maybe for the follow-up, I know you swung free cash flow positive. Congratulations. It's been a while for that. So that's a good thing. I wonder when you look at that, does that change your view on capital spending, and we certainly are hearing a lot about AI and how hospitals could benefit from AI. What are you doing there? And will that be a focus of spending? Kevin Hammons: Sure. Happy to address those. So -- and thank you for recognizing that. It has been something we've been working towards and knowing we needed to get there and we're glad to say that we kind of turned free cash flow positive this year as a result of a number of initiatives, including the divestiture program, which has helped us reduce some of our cash interest and has gotten rid of some of our cash flow headwinds. As we move forward and as you saw in the guidance, our capital spending levels really are not changing from an absolute dollar amount from what we have spent these past couple of years, even though we have a smaller footprint of hospitals, so we're spending more per hospital going forward. And I think we're able to do that now that we're improving our cash flow. Those improvements allow us to invest in some additional growth opportunities. And then as you mentioned, as we look at AI, there's a number of use cases that we're already investing in for AI that we're already using and some additional ones on the horizon. Many of those focus in some administrative areas that are -- should drive some cost savings, even in our revenue cycle, whether it's in the -- we're using some AI in an appeals process some autonomous coding in our prior authorization process. We've also implemented some AI or an AI augmented tool for virtual patient sitters that has helped prevent falls and serious safety events. That's a little more on the clinical side. We're in the process of rolling out the ambient listening and some AI virtual assistance to improve documentation accuracy. And then we have some even more on the clinical side with some AI-enabled maternal fetal early warning systems that improve obstetric outcomes. So we're looking at it across the portfolio. And then as we've talked a lot over the last couple of years about our ERP, the Oracle tools from an administrative standpoint and process transactions are having more and more AI built into the software that will be available to us as we continue to mature our processes with our ERP. Operator: And our next question today comes from Ben Hendrix at RBC. Benjamin Hendrix: I wanted to step back to the guidance bridge a little bit and kind of back it up those elements to revenue. Just so we can get an idea of the pass-through provider tax on that onetime Tennessee DPP item and then also profitability of the divestitures. If we could just get the bridge for revenue. Jason Johnson: Sure, Ben. Thank you for the question. So I'll kind of walk through starting with the divestitures. For 2025, the partial year impact that again, that's ShorePoint that was divested on March 1, Lake Norman on April 1 and Cedar Park on June 30. It's about $210 million to $230 million of net revenue to take out of 2025. And then for those divestitures that have been announced and have been completed or expected to be completed in early 2026, that's about a $1 billion reduction to net revenue. Keep in mind the 3 Pennsylvania hospitals that we divested on February 1, generated a lot of net revenue, about $0.5 billion annually, but they were basically breakeven to EBITDA. And then the 2 onetime items, the Tennessee SDP, the retroactive piece there and the opioid settlement, that was about $60 million net revenue. So if you kind of factor in all those items, then the jump-off point for 2025 net revenue was about $11.2 billion. Benjamin Hendrix: Great. That's very helpful. And then just in terms of the core growth that you're projecting, if we think about the kind of consumer confidence issue that Kevin raised on his prepared remarks. How are we thinking about the impact there of that kind of early year mix shift and how it could impact the pacing through the year? Kevin Hammons: Ben, this is Kevin. Yes. So coming out of 2025, we saw a dip in consumer confidence in December, down to the level that the last time we saw that, I think, was in March of 2025. And following that, we had kind of a pretty soft quarter in terms of volume. So starting off the year, I think you're going to see a little bit of headwind, not only with the reset of co-pays and deductibles, but consumer confidence being light. We do think that's temporary. We think that will improve throughout the year. As I think about kind of cadence throughout the year, although we don't give quarterly guidance, I would expect the back half of the year to be a little stronger than the first half of the year in terms of EBITDA production. Operator: And our next question today comes from Jason Cassorla with Guggenheim. Jason Cassorla: Great. Maybe just going back, you noted the exchange headwind on EBITDA to be $20 million to $30 million. I guess if you were just to back that out, you're suggesting close to, call it, like 6% same-facility EBITDA growth for the remaining business. Can you walk us through that growth rate? Is that more in power flow through? Is that favorable Medicare rates? Just any thoughts there when you kind of back out the exchange in the remaining business would be helpful. Jason Johnson: Sure. Thanks, Jason. The kind of the pure rate increase assumption there is about 2.5% to 3.5% of the growth. And the remainder is the mix of payer mix, acuity and volume to get to that, but sort of about 5.5%, 5.3% increase. Kevin Hammons: Yes, I might just add, if I can jump in with some color too, if you think about Medicare rates this year, we're looking on the inpatient side, about a 4% Medicare rate increase for 2026. That's the highest rate we've seen or the highest increase we've seen in Medicare as long as I can remember. So that's going to be helpful that will help drive. We did see some pretty good rate increase in fourth quarter that Medicare inpatient rates went into effect October 1. So we do think that will pull through and as well as some of the capital growth investments that we've made throughout this past year will also be helpful in driving some higher acuity services and some payer mix improvements. Jason Cassorla: Great. Very helpful. And maybe just a follow-up on the divestiture front. I mean, your hospital footprint is down about 1/3, right, since 2019. I guess as you evaluate the future deals or opportunities, like how are you factoring any potential headwinds that may come from fixed cost leverage leakage as your facility base gets smaller? Just curious how you're thinking about that and how you're factoring that as you look to perhaps sell more assets? Kevin Hammons: Yes. We keep a close eye on our overhead costs here. And I think our overhead costs, we've been very efficient with those costs. Many of our centralized services are volume related, like revenue cycle, like our new shared business center where we've moved accounting, finance, HR, now that we've put in a new ERP. All of those things can be flexed because they're very transactional related. So as we divest facilities and reduce the number of transactions we're processing. We can scale those accordingly. Also keep in mind, we've been adding significant numbers of beds to our existing hospitals, even though we've been divesting some hospitals with our capital projects over the last several years. I think over the last maybe 3 to 4 years, we've added 500 to 600 beds to our core portfolio. We're adding freestanding EDs, surgery centers, clinics, and we would continue to be looking at opportunities to do that. If you go back in 2019, our net revenues, I think, were approximately $13 billion. And to your point, we've sold about 35% of our portfolio but our net revenues this past year were $12.5 billion. So -- and the EBITDA is also relatively close, even though we have 35% fewer facilities. So that's kind of how we're looking at it. Operator: And our next question today comes from Josh Raskin at Nephron Research. Joshua Raskin: I just wanted to go back to that technology agenda that you're talking about. And maybe if you could give a little more details around some of the system changes, the ERP and how that's gone? And where you're targeting more additional efficiencies and savings in light of some of the divestitures. And then I'm curious, any new efforts around revenue optimization or anything else on the revenue side? Kevin Hammons: Thanks, Josh. The ERP implementation and transformation, I would say, went extremely well. It was a multiyear process and 1 that was a big heavy lift for us as an organization, but we did complete that on time. And we went -- fully went live across the entire portfolio effectively January 1, 2025. So we've been up now for a full year on the new systems. They are working as designed. We did not have any issues in terms of closing our books or any expense issues that were of a surprise or they came through that got identified as often as times the case when you go through a big system conversion like that, you find things and we did not find any big surprises. We are still in the process of what I would call maturing the new system. We've had some big successes. We -- by our tracking, it has saved us approximately $50 million this past year. And I think there's runway over the next couple of years for us to continue to increase the savings as if we're getting out of that. Now those savings have come from a couple of different areas. One, it's been reducing the number of other systems. So we've replaced multiple systems, multiple financial platforms with a single platform. And as we get rid of some of those duplicative systems, we're saving money. We are getting better decision support. We have better insights now that we have a single integrated system and standardized data across the entire enterprise. So we're able to see more for instance in the supply chain area. We have a single item master across the entire enterprise and pick an item that you purchased, we have almost instantaneous visibility into how many of those items are purchased across the entire system as opposed to trying to cobble together multiple systems to see what we purchased of a single item. So that all provides better decision support allows us to leverage our scale better. And as that whole process matures, we believe we'll be able to extract more savings going forward. Then with the AI components that are baked into the new platform and that are being rolled out. A lot of this AI was not in Oracle when we initially acquired and began implementing it. But as Oracle is building out their product and now that we're in a kind of a cloud environment, we get updates every quarter with new functionality. They're rolling out new functionality that we can then take advantage of going forward. That will allow us to be able to gain significant efficiencies that I would expect in 2026 and forward that we'll be able to take advantage of. Joshua Raskin: Perfect. And anything new on the revenue side from a tech perspective? Kevin Hammons: Yes. On the revenue side, we're continuing to -- and as I mentioned, we're already using some AI in our appeals process, in some autonomous coding. We're looking at some additional use cases to further expand some of those products. And some of the software that we're using in our revenue cycle is also those vendors are building out some AI technology or components within their products that we'll be able to take advantage. That should help us with charge capture and as well as some prior authorization. Operator: And our next question today comes from Andrew Mok with Barclays. Andrew Mok: Wanted to follow up on the ACA headwind, the $20 million to $30 million EBITDA call out strikes me as a bit low on a potential $100 million to $120 million impact to revenue. So can you help us understand the offsetting factors there and whether that headwind figure is net of any planned cost reductions? Jason Johnson: Yes. Sure. So I mean, first, the deductibles and co-pays that those patients have or generally, we don't collect many of those. And so the $20 million to $30 million was -- we started by applying what our normal 12% EBITDA margin, but then recognizing that there's some fixed costs that remain, we ticked that up to more of the $20 million to $30 million range because, obviously, you don't incur the cost if those patients don't present and supplies, salaries, et cetera. Kevin Hammons: Yes. I would just add on to that, and I think Jason brought up a very good point that our experience has been that a number of the utilization of health care exchange of patients is in the ED and oftentimes those individuals do not pay their co-pays and deductibles. Our collection of co-pays and deductibles is very low on that group of patients. So factoring that in, we don't believe that there is as big a headwind for that business being lost. Andrew Mok: Got it. Okay. And if I could follow up on the cash flow. The operating cash flow guidance seems to embed a meaningfully positive contribution from working capital. Despite the negative callout on the extra payroll cycle. Can you help us understand what's driving that favorable contribution? Jason Johnson: Sure. There's probably 5 to 7 different items that we've identified categories to step over that additional pay period. One is improving our AR collections and the goal to reduce by a day. AP remains a focus. We did have in 2025 some payments of AP from our conversions from old systems that built up and were paid earlier in the year that we shouldn't have to step over in 2026. And then also just focusing generally on AP management. Inventory turnover is a focus of ours, again, this is kind of that next step of being on a single ERP and maturing our processes. We've got -- we expect a lower amount of payments in medical malpractice and there's continued collections on the divested AR that we don't sell to the buyers. So while we don't have that income coming in, we'll continue to collect on the AR, the cash will still come in. And then there's always a State Directed Payment program timing as to when the payments come in versus the recognition of the revenue. Operator: And our next question today comes from Steve Baxter at Wells Fargo. Stephen Baxter: Not to belabor the exchange points too much. I guess I'm just trying to understand a little bit better. On one hand, I think everyone kind of understands that this exchange population does feel like there is a great deal of ER utilization happening. I guess I'm just wondering when you think about sort of the decremental margins here, just philosophically, it seems like in a lot of these situations, you might actually keep the cost, people continue to use the ER but just don't actually have the revenue anymore associated with that. So just trying to understand, I guess, why you wouldn't see a much potentially higher decremental revenue drop through on that? And then maybe just to help kind of square it, like what percentage of the exchange enrollment loss do you assume goes to other covered sources? Jason Johnson: I'm sorry, I didn't catch the last part of that. Kevin Hammons: Yes, the last part was what percentage do you expect to... Stephen Baxter: Yes, like if you expect the exchange market to shrink 20%, like of that shrink, how much of that do you think ends up in another source of coverage? Therefore, like what percentage of this starting 100 to 120, just kind of does not an issue to deal with at all. And then of what's left, that's kind of what the question on the avoided cost and the decremental margin comes in? Jason Johnson: It's frankly a little too early to really accurately predict what's ultimately going to happen with these folks if they'll just be able to pay their own premiums or if they'll downgrade, all the things that we talked about earlier, they'll just go self-pay and not be able to get coverage. So we didn't attempt to determine exactly how much it's going to come back in because it kind of came back to ultimately -- it's less than 5% of our net revenue. So we were kind of sizing it, we took an approach of starting there and then using -- starting 20% and trying to apply what kind of margin that could end up flowing down to. Kevin Hammons: Yes. We think we're generally relatively low margin on that business to begin with. And to your point, some of those folks that lose or drop out of the exchange will actually come back with commercial coverage that we'll get a better margin on as they're commercially covered. Some of them may move into Medicaid, some of them may move into uninsured status. We took a blended rate of 20%. But as we think about given the fact that a lot of the co-pays are not collected, our current margin on that business is pretty low. So that's where we came up with a 20% to 30% EBITDA hit on that revenue. Stephen Baxter: And then just to follow up, I think you might have said this, but just to clarify, the same-store volume growth assumption that's embedded in this guidance. And then as we think about the step from the same-store volume growth this year to what you're looking for in 2026? Like what payer category should we think about as driving that step-up? Jason Johnson: We -- the same-store volume growth would be low single-digit expectation for 2026. Kevin Hammons: And what was the second part of that question, Stephen, sorry. Stephen Baxter: Yes. Just to the extent you were looking for improvement, like what payer classes you might call out is expecting a better volume performance than what you actually realized in 2025? Kevin Hammons: Certainly, commercial. I think we saw some improvement in commercial mix this year. And as we think about where we are making some of our capital investments and service line investments, we would anticipate capturing both some additional Medicare, but also commercial business continuing to ramp up. Operator: Thank you. And that concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Hammons for any closing remarks. Kevin Hammons: Rocco, thank you, and thank you, everyone, for joining the call today. I want to close by reiterating my thanks for our team members for their commitment to our shared vision for CHS and their combined efforts in putting our values into action. If you have additional questions, you can always reach us at (615) 465-7000. Have a good day, everyone. Operator: Thank you, sir. And that concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Operator: Ladies and gentlemen, welcome to the HOCHTIEF Full Year 2025 Results Conference Call. I'm Morris, the chorus call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mike Pinkney. Please go ahead, sir. Mike Pinkney: Thanks, operator. Good afternoon, everyone, and thanks for joining the HOCHTIEF Full Year Results Call for 2025. I'm Mike Pinkney, Head of Capital Markets Strategy, and I'm here with our CEO, Juan Santamaria; and our CFO, Christa Andresky; as well as the Head of IR, Tobias Loskamp and other colleagues from the senior management team of HOCHTIEF. We're looking forward to your questions, but to start with our CEO is going to run us through the details of another very strong set of numbers and provide you with an update on the group strategy. Juan, all yours. Juan Cases: Thank you, Mike and team, and welcome to everyone joining us for this results call. I'm delighted to present to you HOCHTIEF's results for 2025 a year in which we achieved an outstanding operational and financial performance as well as major advances in our strategic delivery. Let's kick off with the numbers and then I'll give you an update on the important progress we're making with our growth strategy. HOCHTIEF's operational net profit increased by 26% to EUR 789 million, which rises to 35% on an FX-adjusted basis. This result significantly exceeds the guidance we provided to the market 12 months ago of EUR 680 million to EUR 730 million and is even slightly above the updated 2025 target we indicated in November of EUR 750 million to EUR 780 million. Nominal net profit is also higher at EUR 902 million, up 16% year-on-year. The excellent profit trend was driven by strong sales growth of 15% to over EUR 38 billion, 21% adjusting for FX as well as higher margins. The quality of HOCHTIEF's profit delivery is underlined by the strong cash conversion achieved. Operating cash flow in 2025 of EUR 2.1 billion was EUR 248 million higher year-on-year pre-factoring, supported by strong working capital performance. As a result, the group ended the year with a slight reduction in net debt despite significant net strategic M&A investments in dividends. If we adjust for capital allocation effects, we would have finished the year with a net cash position of over EUR 1 billion. A further highlight of 225 was the acceleration in the growth of our project wins. New orders were sharply higher at EUR 52.6 billion, up 32% FX adjusted year-on-year with a strong fourth quarter momentum in key wins across our strategic growth verticals. New work secured during the year represents a book-to-bill ratio of 1.3x and highlights HOCHTIEF's positive growth trajectory. As a result, we ended last year with our order backlog at an all-time high of EUR 72.5 billion, up 18% on a comparable basis and providing a strong and diversified foundation for continued growth. Furthermore, we continue advancing in our derisking drive with around 90% of our project portfolio of a lower risk nature. Reflecting HOCHTIEF very strong performance and taking into account the solid growth prospects we envisage 2026 and beyond, the proposed dividend for last year is EUR 6.6 per share. This represents a 26% increase year-on-year, consistent with the group's operational net profit growth and is in line with our 65% dividend payout policy. The group's operational net profit guidance for 2026 of EUR 950 million to EUR 1,025 million, envisages another year of a strong growth of HOCHTIEF and corresponds to an increase of 20% to 30% year-on-year. Let's take a quick look at our performance at the second level. Turner delivered a standout performance in 2025. Sales increased by 34% year-on-year to EUR 25.8 billion or 40% FX adjusted driven by the very strong growth in our data center business. The acquisition of Dornan Engineering, the rapidly growing advanced mechanical and electrical business further enhanced growth. In other areas such as health care, education, sports and airports were also strong with solid double-digit revenue growth. Turner delivered every strong operational PBT, reaching EUR 921 million, an increase of 62% and above the top end of the recently raised guidance of EUR 850 million to EUR 900 million. And I think it is worth underlying that the original indication we provided to you a year ago of up to EUR 750 million was exceeded by a striking 23%. This profit growth was supported by a further increase in the operational PBT margin 60 basis points year-on-year to 3.6%, meaning that we have already surpassed the 3.5% target we had for 2026, a year ahead of schedule. And Turner's outlook remains extremely positive. New orders rose a very significant 38% to EUR 33.6 billion, with particularly strong growth in data center contracts, which more than doubled as well as increases in areas such as biopharma, aviation and commercial. As a result, the record year-end order backlog of EUR 37.7 billion was up 34% in USD terms. Due to Turner's sustained growth trajectory, we expect an operational PBT increase of 25% to 30% to between USD 1.3 billion and USD 1.35 billion in 2026. Moving on, CIMIC delivered a steady performance in 2025. On a comparable basis, sales were stable year-on-year with solid increases in the key growth verticals, offsetting the completion of large transport projects. I would highlight that data center revenues almost doubled year-on-year. Operational PBT of EUR 473 million was up 5% with a solid margin in line with 2024 and supported by improved operating cash flow development pre-factoring. CIMIC's solid order backlog of EUR 21.8 billion, was up by 6% year-on-year adjusted for the UGL Transport stake divestment and FX. Over half of the year-end work in hand relates to high-growth areas, including digital and advanced tech, defense and further diversification of the group's commodity mix. We expect CIMIC to achieve an operational profit before tax for '26 in the range of approximately EUR 780 million to EUR 830 million, a 4% to 10% comparable rate, adjusting for the UGL transport sale. Next, we have our Engineering Construction segment, which is on a very solid growth path. Sales of EUR 1.7 billion increased by 9% year-on-year, and operational PBT grew by 28% to EUR 98 million, both on a comparable basis and just ahead of our EUR 85 million to EUR 95 million profit guidance range. The business delivered a strong cash conversion with net operating cash flow of EUR 156 million in the period. During the year, Engineering Construction securing the orders of over EUR 6 billion, up a very notable 38%. As a consequence of this strong development, the EUR 13 billion order backlog is 18% higher on an FX-adjusted basis. For 2026, we see our Engineering Construction segment accelerating its growth with an operational profit before tax of between EUR 125 million and EUR 140 million, which implies an increase of up to 42% year-on-year. Let's take a brief look now at Abertis, which achieved a solid operational performance in 2025. Average daily traffic at the toll road company increased by 2% year-on-year with revenues and EBITDA on a comparable basis, up 4% and 6%, respectively, reflecting a solid underlying business performance. The operational net profit pre-PPA amounted to just over EUR 700 million with a year-on-year variation, including adverse tax effects in France. The profit contribution from our 20% stake in Abertis after PPA amounted to EUR 58 million, and we expect Abertis to deliver a similar operational contribution in 2026. Now allow me to update you on the group's strategic delivery and long-term growth opportunities. Active strategy has positioned the group as a uniquely well-placed global provider of engineering-led end-to-end infrastructure solutions. During the last 3 years, we have advanced to become a leader in rapidly expanding strategic growth verticals, including the AI digital and tech sector, energy including nuclear, critical minerals and defense, where infrastructure investments continue to accelerate. This momentum builds on our long-established locally embedded presence in core infrastructure markets in North America, Australia and Europe, which remains the foundation for our competitive strength and our ability to scale into these next-generation markets as a life cycle partner. We command a strong competitive position in the AI, digital tech sector, and we have solidified our global leadership in data center engineering and construction with EUR 16.8 billion of new orders in '25, representing 21% of the group's total backlog. Just last week, Turner was selected as a construction manager for the USD 10 billion 1-gigawatt data center campus from Meta in Indiana. And we have solid medium-term visibility via our order book and our expanding private pipeline in North America, Europe and Asia Pac. Growth in the global data center market remained is strong, showing demand for cloud services and artificial intelligence is expected to quadruple [indiscernible] and compute CapEx by 2035, boosted by the growth of generative AI and further cloud migration. The group has the capacity and capabilities as a firmly established global end-to-end solution provider to address rising demand supported by its ability to attract talent and by number one, leveraging scale and relationships with hyperscalers and subcontractors; two, applying our global sourcing expertise three, by our increasing adoption of modularization and offsite manufacturing to deliver projects faster, safer and with higher quality. As part of the strategy to expand the group's presence in the entire ecosystem, HOCHTIEF is developing a pan-European network of sustainable edge data centers. A few months ago, we inaugurated our first edge data center developed own and operated by HOCHTIEF, a major milestone for the group's data center strategy. Three further data center sites will go live by the end of '27. Our ambition is to have over 30% of them in Europe by the end of the decade. HOCHTIEF will operate this edge data center network with innovative cloud computing solutions that offer digital sovereignty and enormous growth potential. Overall, we're increasing our participation for the full AI stack, including not just data centers, but also semiconductors, cloud infrastructure services and applications as well as moving into longer-term opportunities in areas such as agents and robotics. Energy is a strategic growth market for HOCHTIEF. Rising investment in energy security and the global transition to low-carbon systems underpin sustained demand for energy projects. HOCHTIEF is deeply engaged in these segments, delivering projects spanning electricity generation with scale storage, high-voltage transmission and regional grid fortification. We have several decades of experience designing and building nuclear power plants and facilities across the world, delivering end-to-end services in an industry which could see over EUR 500 billion in investment in Europe by 2050. During the final quarter of '25, we secured a EUR 685 million 50-year framework contract in the U.K. for civil infrastructure work at the Sellafield nuclear site. By the beginning of '26, an important strategic milestone was reached where HOCHTIEF was selected as part of Amentum's global product delivery team for the Rolls-Royce's SMR nuclear program. In renewables, we continue to strengthen our market presence, particularly in Australia, where companies have delivered more than 20 million renewable and storage projects. We're also capitalizing on the accelerating requirement for critical minerals, driven by clean energy technologies, digital infrastructure and defense organization. HOCHTIEF through the combined capabilities of Sedgman and Thiess has built a global position in minerals processing and sustainable mining services with projects across key commodities, including lithium, copper, rare earth, nickel, vanadium, uranium and zinc. In December, the group expanded its partnership with Vulcan Energy with a significant cornerstone equity investment as well as securing an end-to-end role in developing sleeping production and processing infrastructure here in Germany. As part of the agreement, the group has been appointed as the engineering, procurement and construction management contractor and named as preferred supplier for the projects, civil construction works. We have also won a contract to provide a feasibility study in front-end engineering this framework for a major lithium project in France. Defense is in our key growth vertical for the group with investment in related infrastructure expected to substantially increase globally for several years. In Europe, major multiyear defense investment plans, including Germany, present substantial opportunities in defense-related capital works and potentially via the PAP model. And in the U.S. and Australia, governments plan major ramp-ups in defense spending over the next decade. At the end of 2025, the group had a defense order book of over EUR 2 billion, which included the construction of major dry dock at Pearl Harbor for the U.S. Navy, work for the Royal Australian Air Force based in Queensland and defense infrastructure upgrades in South Australia. Furthermore, a North American civil works business, Flatiron has been selected as one of the group of companies for a potential USD 15 billion worth of contract opportunities for the U.S. Air Force Civil Engineering Center. And Yesterday, we announced that HOCHTIEF has secured a major 10-year collaborative contract for the German Armed Forces in Hamburg worth several hundred million euros. Our core infrastructure capabilities are key for the group's ability to fully harness the growth opportunities we have identified. On average, around 85% of infrastructure investment in our growth verticals relates to our core construction know-how. As you know, we're hold leading positions across several core segments, including health care, biopharma, sports stadiums and education. And we have been a global leader in transport infrastructure and sustainable mobility for several decades where the outlook is very positive due to several infrastructure stimulus packages in our key geographies in North America, Asia Pac and Europe. In Germany, for example, the EUR 500 billion infrastructure fund was its first full year deployment in '26. HOCHTIEF is very well positioned to benefit due to the scalability of its business model and its core expertise in bridges, rail and transmission lines with the group's German order book doubling over the last 3 years to over EUR 5 billion. Let me take a moment now to outline our dynamic and disciplined capital allocation approach, which is a key objective for management. 2025 was a very active year for strategic M&A. In January, we closed a EUR 400 million acquisition of Dornan, a major milestone in Turner's European expansion strategy, and we also finalized the FlatironDragados combination, creating the second largest civil engineering construction player in North America. During the year, we strengthened our position in high-quality concessions through an EUR 80 million participation in Abertis, EUR 400 million capital raise to support its acquisition of the A-63 toll road in France, expanding its portfolio duration and enhancing our exposure to stable infrastructure assets. As part of the expanded agreement mentioned earlier with Vulcan Energy, HOCHTIEF agreed in December to an EUR 130 million cornerstone investment in Vulcan shares to become its largest shareholder. The move is aligned with HOCHTIEF's strategy to expand for critical minerals and energy transition value chain, building an integrated presence in investment, extraction, processing and infrastructure. In CIMIC announced the formation of a strategic partnership with Sojitz Corporation under which the Japanese company will acquire a 50% equity interest in UGL's transport business. Our capital deployment remains focused on scalable, high return equity investment opportunities to increase our presence in the value chain for strategic growth markets and [PPPs]. Group-wide cooperation and synergies are critical delivering on this strategy. Over the last 3 years, we have committed EUR 600 million of equity investment in strategic growth markets, including initial investment in our edge data center platform based in Germany as well as the acquisition of the remaining 50% of cloud services provider, Yorizon. Internally, we're optimizing our core tech platform and systems as well as supporting our talent, management, AI and digital systems, transforming how we work and enabling the group to deliver innovative, efficient and smarter solutions for clients. Our third expertise, talent mobility as a collaborative culture, enable HOCHTIEF to operate as one unified global organization, strengthening the quality, consistency and impact of its work. Talent management is critical to create the teams which drive the business forward, and we're proud to have had a 2025 intake of 4,500 engineers in technical employees. Moving to ESG. Our focus on environmental, social and governance initiatives remains on track. On this front, it is notable that HOCHTIEF has been accreted to premise status during the 2025 for its ESG performance and achievements by ISS BSG rating agency. So let me conclude with a few closing remarks. Our strategic agenda is focused on positioning HOCHTIEF for sustained high-quality growth while reinforcing resilient long-term value for the group. Our key priorities are: first, driving top line growth by expanding our value proposition and capturing megatrend demand; two, expanding margins through the delivery of higher value services, engineering capabilities, supply chain and integrated systems, advancing operational integration by simplifying corporate structure and transitioning into a more high-tech enabled efficient organization with a lower cost base, enhancing cash flow stability and sustainability through further derisking the group's business model, generating long-term value creation and sustainable dividend growth drive shareholder remuneration. HOCHTIEF has entered 2026 with a strong financial foundation and with a unique position as a global end-to-end provider of infrastructure solutions across our high-growth verticals, supported by our leadership position in core markets. The group's operational net profit guidance for 2026 was EUR 950 million to EUR 1,025 million target in our year of accelerating growth, implying an increase of 20% to 30% year-on-year. Based on our guidance in 2026, we will have double HOCHTIEF's profit in the space of just 4 years. Looking forward, HOCHTIEF is embracing the future by developing a strategic presence in its growth markets. Our strong and expanding presence in these interconnected sectors is a key competitive advantage and underpins our long-term growth strategy. Combined with our strong balance sheet backed by disciplined cash management, we have created the necessary conditions to pursue further significant growth opportunities and continue delivering substantial value for all stakeholders. Thank you for listening. We're ready now to take your questions. Mike Pinkney: We're ready for questions now, operator. Thank you. Operator: [Operator Instructions] And the first question comes from Graham Hunt from Jefferies. Graham Hunt: I've got 3, if that's okay. First, just on the guidance that you provided at your CMD last year. I just wanted to confirm that's still intact for Turner, so the 3.9% EBITDA margin, I think, and the 30% EBITDA growth. That's the first question. Second question, just trying to reconcile what's been extremely strong order intake in the Turner business. I think up doubling in Q4 and very, very strong outlook from some of your hyperscaler customers with relative to that, maybe growth, which is not as strong as maybe some are expecting or just not reflecting that sort of extremely strong outlook from your customers. And I was just wondering, are you reaching some capacity limits in the Turner business? Is there a reason why maybe that doubling of order intake isn't translating to faster growth in 2026? And then third question, just on operational synergies across the business. Just an update there in terms of how you're progressing with some of those projects. Juan Cases: Thank you, Graham. So let me start with the first one. Let me start with a reflection that pretty much talks about guidance in general. I mean, when it comes to Turner, you're right. I mean, 2025 order book of around EUR 17 million, it's represents a 144% growth and the new orders of EUR 18.1 billion, it's 170% and we had a very strong Q4. Furthermore, there's around EUR 10 billion to EUR 12 billion of work that is not reflected in the backlog for Turner because as we always say, the way we engage into this contract is always through a negotiation, working in design once we are preferred, but before we can really put it in the backlog. So the growth of Turner is [indiscernible]. Now in terms of guidance, we -- there's always at the beginning of the year, a lot of unknowns and uncertainties, geopolitically speaking, et cetera. So we prefer to be conservative as we were last year, and we were the previous year, and we prefer to update throughout the year, right? So Turner is not reaching capacity not at all. We continue seeing very strong growth. We'll continue seeing very strong growth. We're very comfortable with that. We just want to make sure that we secure all that into the balance sheet, that there's no surprises, that there's no geopolitical changes before we provide further updates. And that applies to Turner and that applies to the rest of the business. In terms of operational synergies, we -- I mean, we expect -- I believe that we're going to make progress in 2026. We do have a high target. We're expecting to reach -- I mean, cost reduction first as we streamline the process, release bureaucracy, we upgrade our systems and we're going to be simplifying and decreasing cost. How much we would like to get that update throughout the year, right, especially because we want to make sure that we achieve all those synergies during 2026. And our intention is, by the end of 2026, to update through our Capital Markets Day as we did back in '24 for the following next 3 years. So we want to make sure that we secure we consolidate in all the high-growth areas. We incorporate all these projects. We put all the synergies in place, and then we provide the update. Operator: The next question comes from Marcin Wojtal from Bank of America. Marcin Wojtal: Yes. My first question is on cash flow generation, you had a strong inflow of working capital in 2025. To what extent do you believe this is something that is structural and should continue in 2026 you have strong order backlog. So presumably, we could expect another wave of prepayment. Is that the right way to think about cash flow for 2026? My question number 2, this is just a bit detail on the numbers, if you allow me. I wanted to ask you about your -- in your segmental reporting, you have a line, which is basically referring to Abertis and headquarters expenses and this line remains very negative. So I'm just wondering why such a negative item in that line? And is there any change in that line for 2026? So maybe -- yes, maybe those 2 questions. Juan Cases: Yes. Okay. So starting with the cash flow. We -- I mean, as we continue to grow, we expect to see an improvement in cash flow. So we -- I mean, we are looking to a positive 2026 from a case perspective as well and net operating cash flow has been the last 3 years. The -- I mean a lot of the cash conversion, positive development that we're seeing, it's also a consequence of the change in our strategy, getting into a lot of these high-growth areas, securing all these projects. So we hope that, will continue. When you're asking about holding. That was an Abertis level or at HOCHTIEF level? Just to clarify. Marcin Wojtal: No, no. So that is for segmental reporting of HOCHTIEF, there is a slide, Abertis and headquarters. So that's more at HOCHTIEF level, let's say? Juan Cases: Yes. So what we did was we introduced noncash provisions and some deferred taxes. So the underlying is stable. But I mean we had noncash profits during the year. And typically, we don't want to reflect that in the P&L. Operator: And the next question comes from Dario Maglione from BNB Paribas. Dario Maglione: First of all, congratulations for the results. I mean these are the amazing results stepping back. Yes, I'll start with 2 questions. First, on partner as you said, the margin -- the profit before tax margin, 3.6% already in 2025. Where can margins go for Turner, let's say, in the medium term as the mix of data center increases? The second question is more -- some more details about Turner data centers. And if you could provide us the new order intake in data centers for the full year '25, the backlog and the revenue from data centers in USD terms, please? Juan Cases: So let me start with the first one. So a couple of things. First, on the profit before tax margin, that was 3.6% in 2025. In the capital -- in the last Capital Markets Day in 2024, we anticipated that 3.5% will be reached in '26. So we achieved that 1 year. Now what's going to happen? First, that will continue growing at least at the same pace and has been growing the years, right, as we do more high-tech projects. But two, there's going to be another component, which is we will continue to increase our sales performance capabilities and a portion of the projects through supply chain, but also through modularization. So that's going to increase margins. And that's a big part of our strategy that we did announce last year, and we will want to consolidate during this year. So with Turner, as I said before, we had a strong intake. We're seeing big prospects coming to Turner and the areas of the business. If you go through data center specific question, the backlog right now in data center is EUR 16.4 billion. Just in data centers, there's another EUR 10 billion to EUR 12 billion that is not included in this number, but we've been preferred, but we're going through the design, so therefore, we cannot reflect, right? And that it's a year-on-year increase of 144%. The order intake of data centers during the year has been EUR 18.1 billion, and that's an increase of EUR 170 million. And again, that does include EUR 12 billion that I mentioned, right? If we move to the rest of the areas, we are seeing very much increase in biopharma, in aviation, including aerospace, some increase in -- a significant increase, but it's coming from a much lower base in commercial. And then the rest of the business is stable, except probably other areas like I mean, like hotels or some more traditional that is coming down, okay? But in the rest of the segment, there's another EUR 10 billion that is not reflected in their backlog in the same way that a EUR 12 billion data centers that we are preferred, but it's not in the backlog. So in a sense, there's a total backlog of USD 44.3 billion of Turner, out of which USD 16.4 billion is data centers, and you would need to add an amount of USD 22 billion to that USD 44.3 billion that we are preferred, but it's not in the backlog. Operator: Then the next question comes from Luis Prieto from Kepler Cheuvreux. Luis Prieto: I had 3, if I can. The first one is, if my numbers are correct, there's been a sharp acceleration in the E&C margin in Q4. I don't know if you can shed some light on why that has been. The second question, and apologies if you have mentioned it, there's so much detail and information that I might have missed it. But the operational result contribution was guided -- from Abertis was guided at EUR 81 million for the full year, but it was EUR 58 million in the end. Could you please explain the reasons behind this, behind the miss, if I may call it? And then the third question, there have been press reports in Spain on your potential interest to spend as much as EUR 1 billion in defense technology players, the military driven players, not construction related or anything like that. Should we expect you to be active on this particular M&A front? Juan Cases: Excellent. So let me start with the first one on E&C in Q4. E&C, especially Germany and Europe is going to see a big increase moving forward. And we're expecting a big increase in '26. In '26 certainly, the profit of HOCHTIEF in Europe will start going up and you saw the guidance that we're giving. But more importantly, the order intake and the backlog. And why? Because there's a lot of work coming from Deutsche Bank, there's a lot of work coming from Autobahn, and there's a lot of work coming from defense. And that's going to start coming to the company. Now when it comes to Abertis, I mean, in general, the performance, there's a positive operational performance in '25, right, when you look at the target developments and the traffic. So that continue. There's an impact on the profit because of the corporate tax in France, right? And that's probably what you're looking at when you see the difference. And then the other part could be the foreign exchange rate movement on OBBBA. And then when it comes to the press report in defense, I mean, we don't know where the article came from. Certainly, when it comes to M&A, we're going to continue being selective and making sure that it incorporates additional capabilities to us. We -- I mean, I know that there's a lot of focus on our growth in data centers in the last years and the next years for the right reasons and that will continue to grow significantly. But we would like to grow in the different verticals, right? There's growth in the critical metal sector. There's a lot of growth in the energy sector. We see a lot of growth in the nuclear sector, and we see a lot of growth in defense. Now where do -- how we use our capital allocation among all those verticals to incorporate engineering capabilities and additional capabilities is something that we're deeply analyzing and we will be very selective. But we haven't announced anything. And if we do, you will all be the first ones to know. Operator: Then we have a follow-up question from Graham Hunt from Jefferies. Graham Hunt: Yes. Just one on your nuclear capabilities actually. I don't know if you could provide a little bit more color around the Rolls-Royce SMR program just in terms of the time lines there in terms of when we might see impact on the order book and maybe just scale and just what your thoughts are there on the outlook for that win or that partnership? Juan Cases: So let me start with the main numbers on the project, right, that you saw. So the contract -- the Rolls-Royce contract is in reality a program, right? This is pretty much to deploy the SMR plant from Rolls-Royce across Europe and potentially beyond. We won that incorporation with Amentum to become the program delivery partner and maybe is to start the first ones will be implemented in United Kingdom and other places in [indiscernible]. Now in terms of the contract, the -- right now, they are looking at the deployment of the first 3 to 4, but there's an initial plan of like 15 that will be deployed. The initial ones have a cost of around EUR 6 billion, and this is just an estimate, and the idea is to decrease that over time. We're still working on the different components of that CapEx and how we'll be distributed, et cetera. The initial part is mainly engineering. And our objective, our work will be to help on -- as part of the traction to try to modularize as much as possible to optimize those SMRs and make sure that they can build, I mean, at scale with the right supply chain, right mineralization and standardizing the contact. So for us, it's a very important project. As you know, HOCHTIEF built 13 out of 20 large plants in the past. Since then, we've been basically maintaining and dismantling. You saw that, well, we continue doing all of that work in Germany, and we won't sell a field in eastern countries, but now we wanted to go taking advantage of the new wave of nuclear moving from dismantling and maintaining to building large plants. And there's a big plan that we are deploying with the first contract being this one, but we continue working to enhance our capabilities because we see a lot of potential in Europe, in the U.K., in eastern countries, other places, but then it won't come in the U.S. So we're building our capabilities, and we're creating alliances. We will announce as we evolve in our strategy, we will provide further updates during 2026. Operator: And we have another follow-up question from Dario Maglione from BNP Paribas. Dario Maglione: Yes, maybe 3 more from my side. On the data center revenue, in Turner. I don't know if you provided that detail before. It would be helpful to know the revenue from the percent in Turner in USD terms in 2025. Then second question around the order backlog for data centers. You mentioned before -- sorry, the intake was EUR 16.4 billion. I think, for Turner, that implies another USD 3 billion of intake in data center somewhere else in the business. Is that mainly Asia Pacific? Maybe can you tell us more about these projects? And the last question, strategically, why are you investing in the in the digital cloud infrastructure for the edge data center in Germany and Europe? Like why not just keeping the edge data center, why also investing in the digital part of the infrastructure? Juan Cases: Okay. So starting with revenues of Turner. In 2025, I think that it was USD 10 billion, just in data centers, okay? And we're expecting that figure to continue increasing all the way up to EUR 25 billion to be achieved '29, '30, in conservative. In the case of the -- I mean, let me jump to the last one because I will ask some clarity around the EUR 16.4 billion question. On the digital cloud, I mean the difference between the big ones and the small ones is that the small ones have 2 main purposes. The first one is it's mainly inference processing capability, but also from a data storage perspective is pure colo. So we commercialize among a lot of different clients. The big ones, typically between 1 or 2 clients. And that type of business with the big ones is more kind of a lease of the facility versus the other business that will provide the full package, right? The cloud services, the cyber, et cetera. That's why we -- as we deliver the full service, we are enhancing our capabilities in this area. Now around the second question, can you repeat the question about the EUR 16.4 billion, please? Dario Maglione: Yes. So in Slide 8 of the presentation, at the very top left, it says total order for data centers is EUR 16.8 billion in 2025. So I guess most of it is in Turner, but there is a portion of that orders that is somewhere else in the business. So I was curious to learn more about these projects outside of the U.S. outside Turner let's say. Juan Cases: So I don't have -- I mean the Turner 1 is the figure that I gave before. That was the order intake of EUR 18.1 billion and the backlog EUR 16.4 billion. The difference is mainly [indiscernible] towards the rest of the numbers. But we can provide you with the figures in a follow-up call. Operator: So it looks like there are currently no more questions. So I would like to turn the conference back over to Mike Pinkney for any closing remarks. Mike Pinkney: Yes. Thanks very much, operator. So thanks to everyone for calling in. And obviously, we're delighted to follow up with any further detail offline. Thank you, everyone. Thank you for your time. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Good morning or good afternoon all. Thank you for joining us for the Expro Q4 2025 Earnings Conference Call. My name is Carly, I'll be your conference call coordinator today. [Operator Instructions] I'll now hand over to our host David Wilson, Investor Relations, the floor is yours. Dave Wilson: Thank you, operator. Good morning, everyone, and welcome to Expro's fourth quarter call for the year ended 2025. I'm joined today by Mike Jardon, CEO; and Sergio Maiworm, CFO. Both Mike and Sergio will have some prepared remarks, after which we'll open the call for questions. As part of today's call, we have an accompanying presentation and supplemental financial information on our fourth quarter and full year results. Both of these are posted on the Expro website, expro.com, under the Investors section. Before we begin today's call, I'll remind everyone that some of today's comments may refer to or contain forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These statements speak only as of today's date, and the company assumes no responsibility to make such forward-looking statements. The company has included in its SEC filing cautionary language identifying important risk factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings, which can be found on the SEC website, sec.gov, or on our website, again, expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measures in our fourth quarter and full year 2025 earnings release, which was issued this morning and can also be found on our website. With that said, I'd like to turn the call over to Mike. Michael Jardon: Good morning, everyone, and welcome to Expro's fourth quarter call. I'll begin by reviewing the fourth quarter and full year 2025 financial results from today's press release. Next, I'll cover Expro's strong backlog, the macro environment and our current outlook for the year ahead as well as give some input on some guidance. We will conclude with operational highlights for the quarter. Sergio will then provide some further details on our financial performance and address the company's ongoing capital allocation framework. So let's begin on Slide #3. For the year, 2025 marked another year with several successes for the company. We delivered on expanding margins, cost efficiencies, higher free cash flow generation, a strong balance sheet, technology deployments and not least of all, returning cash to shareholders. The company generated just over $1.6 billion of revenue and $353 million of adjusted EBITDA, representing a 22% margin. This financial performance was within the guidance ranges previously provided. Additionally, it represents the progress we have made in expanding our margins, moving us closer to our longer-term goal of EBITDA margins at 25%. A key metric that registered above the guidance range was adjusted free cash flow, which came in at $127 million for the year, more than doubling the amount generated in 2024. Going forward into 2026, we expect another sequential increase in the amount of free cash flow that the company can generate. For the quarter, the company reported quarterly revenue of $382 million and adjusted EBITDA of $88 million, representing a 23% margin in the quarter. Adjusted free cash flow for the quarter was $28 million or 7% of revenue. These quarterly and annual financial results reflect the ongoing operational efficiency gains, technological product advancements and their impact on margins and cash flow and the continued impact of our globalization strategy. Moving to Slide 4. Expro's $2.5 billion backlog reflects a $196 million increase during the fourth quarter. Our current backlog provides robust revenue visibility heading into 2026 and reinforces the strength of our diverse portfolio and operations across our geographic regions. Within our backlog, our long-term contracts, which provide a solid base and some stability in our revenue generation. One such recent example was a 4-year $380 million contract for a customer in North Africa. This achievement represents one of Expro's largest single customer awards, and I'll address this in a little bit more detail in some of my comments later on. Now as we've mentioned before, this level of backlog is encouraging and supports our strategic planning and visibility on revenue, but it does not represent a guarantee of future outcomes. Rather, we view our backlog as a reasonableness test and health check for our business one that offers insight into the business going forward. As we look to the year ahead, we consider the evolving market landscape, which continues to shape demand, investment and opportunity across the sector. Global demand for oil and gas remains resilient, supporting long-term investment, particularly in the international and offshore markets to which Expro is well positioned. We believe the current macro environment will result in a modest recovery in upstream investment with growth concentrated in international and offshore projects, particularly deepwater developments. This will be supportive of demand for Expro's well construction, well flow management, subsea and digital solutions. While brownfield optimization and production enhancement requirements from our customers continue to provide prospects for our well intervention, production optimization and digital offerings. Expro's diverse service portfolio, strong international footprint, technology differentiation and operational efficiency position us to capture opportunities across our geographic segments. To summarize, Expro maintains a cautiously constructive outlook for 2026 and beyond allowing us to continue supporting customers throughout the full well life cycle of their assets. Turning to Slide 5. We are providing our 2026 financial guidance based upon what we currently see in the global market. For the year, projected revenue for 2026 look to be at similar levels to 2025. And although revenue expectations remain relatively flat this year, Expro remains strongly committed to further expanding EBITDA margins and free cash flow generation. We plan to achieve this with the full year benefiting from our DRIVE25 initiative, our increased capital efficiency and further improving our wallet share with existing customers. To that end, we expect our 2026 CapEx to be similar to that of the 2025 level. Looking more near term and specifically at our first quarter guidance, you will notice that we expect our first quarter results to be impacted by the normal seasonal factors that we experienced almost every year in our business. The U.S. activity and revenue levels for the first quarter are projected to decline from fourth quarter due to the winter season in the Northern Hemisphere, where the U.K. or Norwegian North Sea as well as the U.S. Gulf activity tends to be lower due to ongoing winter storms and rougher than normal seas, which makes it harder to operate in the offshore environment. Additionally, the seasonal dip is due to some customers' CapEx and operational spend that tend to be lower at the start of their annual budget cycles, which tends to be the case with most of our NOC customers. To be clear, the lower level of projected revenue and margins for the quarter is due to the normal seasonality of our business and not representative of our overall expectations for the year. Overall, based on our activity outlook and our position today, I'm confident in our ability to achieve these 2026 objectives. Before turning to our customer and technology highlights, I want to revisit a few things that sets Expro apart and that we think are important attributes for investors to consider. You see these on Slide #6. Due to our exposure to across the well life cycle, we see opportunities to expand our wallet share with existing customers. We can do this by providing additional or enhanced services to customers leveraging our installed base to help expand margins, especially with the deployment of new technologies. Another theme central to Expro is our commitment to technology and innovation. While the rate of technology adoption varies greatly among customers, geographic regions and the different parts of the well life cycle, it's importance cannot be overstated. Without technology and innovation, we think it is very difficult to remain competitive or relevant in this industry. We put a lot of emphasis on this as we know it creates value for both our customers as well as our shareholders. Additionally, our global footprint enables us to leverage technologies internally developed or acquired through M&A in one geographically to then deploy them to another geography where we operate. For example, our acquisition of Coretrax in 2024. That business was primarily in roughly 18 countries at the time of the acquisition, but now we are deploying those technologies that we've acquired across roughly 31 countries. Moving to our customer and technology highlights for the quarter on Slide 7. During the fourth quarter, Expro continued to deliver safe and reliable performance to our customers across our global portfolio. We secured several major contract wins, advanced key technology deployments and demonstrated our commitment to safety for both our employees as well as our customers. While there have been several notable operational achievements and customer successes for the quarter, I will just quickly highlight 4. This quarter, Expro secured one of the company's largest single customer awards, a 4-year $380 million contract across multiple fields in North Africa for production optimization and well management services. Also during the quarter, the company successfully deployed its proprietary extended range drilling or XRD Spider is the first and only 1,250-ton spider of its kind. This innovative technology supports drilling, tripping and landing string operations, significantly reducing tool change outs. Consequently, it saves substantial rig time and minimizes red zone exposure, thereby enhancing both operational efficiency and safety. Expro plans to deploy the XRD Spider to more customer operations and expand the fleet in accordance with customer demand. In Australia, Expro successfully supported a major operator in delivering one of the region's largest offshore campaigns completing multiple subsea wells with 0 QHSC incidents. The campaign involved integrating subsea, well testing and sampling capabilities, resulting in over 2,200 man days of activity in which we received job performance review scores of 100%. In Indonesia, our CaTS ATX system enabled real-time wireless downhole data and remote valve control during drill stem testing. This product offering again demonstrates Expro's commitment to innovation and risk reduction in well operations. Before moving on, I would like to address another geography that has been topical as of late, and that is Venezuela. Having lived and worked earlier in my career in Venezuela, I'm intimately aware of the geological reservoir and production challenges in the country. These high technology and challenging conditions are where the Expro solutions approach really shines. While we don't currently see any near-term opportunities in the country, we do believe we are well positioned should opportunities arise in the future. Expro has operated in Venezuela for many years previously, still having a facility and some stranded equipment in the country related to both our tubular running services as well as our well flow management product lines. For now, we will stay engaged with our customers that may have opportunities there to develop, but also realize that this will take time and a significant amount of industry investment in order to mature these opportunities. Before turning over to Sergio, I'd like to remind everyone of Expro's long-term strategic pillars. These that we adhere to, to drive value for our shareholders, we see on Slide #8. Expro's long-term strategy is to build a large diversified company with a compelling business and product mix and market leadership positions. We are striving to build a company that is able to generate healthy levels of free cash flow, which will be used to achieve our various capital allocation goals, which Sergio will expand on in his comments later on. One of these strategic pillars is our commitment to continually improving the company's financial profile. The avenues used to achieve this goal are our relentless focus on margin expansion and free cash flow generation, our ability to drive cost efficiencies and reduce capital intensity and our ability to return cash to shareholders all backed by a strong balance sheet. Another pillar is our technical leadership and innovation. We continually develop and deploy new technologies into the market across our global footprint. This footprint also enables us to globalize technologies that we have acquired through acquisitions and then implementing those technologies in one geography location to another. Finally, Expro looks to grow through inorganic scalable acquisitions. We seek opportunities to target international and offshore opportunities that have adjacent product offerings and are accretive to the company's financial position. We have made several successful and accretive acquisitions and have developed a proven blueprint for integrating acquired businesses in an efficient and cost-effective manner. With that, I'll turn the call over to Sergio to review our financial results in detail. Sergio Maiworm: Thank you, Mike, and good morning to everyone on the call. As Mike noted, Expro executed well on its financial results for both the quarter and full year. While annual revenue was at the lower end of guidance, the free cash flow generated surpassed expectations and exceeded the high end of guidance. Specifically to Q4, our adjusted EBITDA was $88 million with a margin of 23.1% up about 30 basis points from last quarter and 10 basis points year-over-year. For the year 2025, adjusted EBITDA was $353 million with a margin of 22%, up 170 basis points year-over-year. Slide 9 illustrates our annual margin growth for the past few years. We remain confident that we will experience further margin expansion in 2026 driven by a full year impact of our DRIVE25 cost efficiency initiative, increased customer wallet share at higher margins and continued international growth resulting from previous acquisitions like Coretrax. Moving to Slide 10. Longer term, EBITDA margin expansion is not the goal in and of itself, but rather a means of increasing free cash flow generation. And in Q4, Expro posted its quarterly free cash flow generation of $28 million on an adjusted basis, bringing full year 2025 free cash flow generated to $127 million. which, again, was above the high end of the $110 million and $120 million guidance and more than double the amount generated in the prior year. Along those lines, we expect even stronger free cash flow in 2026, both as a percentage of revenue and in absolute terms as we plan to further reduce the capital intensity of the business, holding 2026 projected CapEx relatively flat. Turning to liquidity. The company closed the quarter with $551 million in total liquidity. That includes $198 million in cash in the balance sheet after accounting for the voluntary prepayment on the revolving credit facility, which totaled $20 million during the quarter. This voluntary repayment reduced the outstanding drawn balance on the revolving credit facility from $99 million to $79 million as of December 31, 2025, further enhancing the company's net cash position. Before turning to our segment performance, I do want to reiterate and summarize our financial outlook for 2026, as Mike previously addressed in Slide 5. Overall, we're cautiously optimistic with our 2026 outlook, recognizing the seasonal impacts on our projected first quarter results with noticeable improvement in the subsequent quarters with a stronger back half leading to a good start for 2027. Any anxiety over the flattish revenue guidance should be viewed in conjunction with projected sequential increases in adjusted EBITDA and EBITDA margins and free cash flow generation. The achievements will continue us on the path of one of the strategic pillars that Mike just mentioned, that of continued financial improvements which we believe will ultimately translate into increased shareholder value. Now I'd like to quickly address our segment performance this quarter before finally addressing our capital allocation framework. A reminder that details around our segment performances can also be found in the appendix of this presentation. Turning to regional results for North and Latin America or NLA. Fourth quarter revenue was $130 million or down $21 million quarter-over-quarter, reflecting lower subsea well access and well construction revenue in the U.S. where projects have shifted into 2026 offset by higher well intervention and integrity revenue in Argentina. Segment EBITDA margin at 24% was flat as compared to prior quarter. For Europe and Sub-Saharan Africa or ESSA, fourth quarter revenue decreased $10 million to $116 million sequentially, primarily driven by lower subsea well access and well construction revenue in Angola and Central and West Africa partially offset by higher well flow management revenues in Bulgaria. Segment EBITDA margin at 34% was up approximately 120 basis points sequentially, reflecting a favorable product mix. The Middle East and North Africa or MENA delivered another solid quarter, sequentially higher as compared to Q3 with revenues at $93 million driven by an increase in well flow management revenue in Algeria and Saudi Arabia. MENA segment EBITDA was 39% of revenues, an increase of 400 basis points from the prior quarter reflecting the higher well flow management activity and more favorable activity mix. Finally, in Asia Pacific, or APAC, fourth quarter revenue was $43 million, a decrease of $6 million relative to the third quarter, primarily reflecting the lower well flow management activity in Indonesia and India, lower well construction revenue in Australia, and offset by higher subsea well access activity also in Australia. Asia Pacific segment EBITDA margin at 16% of revenues decreased approximately 400 basis points from the prior quarter, reflecting decreased activity and mix. Now I'd like to briefly revisit Expro's capital allocation framework on Slide 11. Expro's capital allocation framework is designed to maximize long-term value creation by maintaining a disciplined and balanced approach across 4 equally important capital deployment priorities. Our philosophy is that every dollar of capital must be deployed where it can generate the highest risk-adjusted returns. And as such, each of these 4 areas continuously compete for capital on an ongoing basis. As a consequence, it may appear that priorities shift and they are, but only to those that we believe will generate the highest risk-adjusted return. One of our capital priorities is to continue to invest in our business to drive organic growth with superior return profiles. This includes funding projects and initiatives through CapEx deployments that enhance our core capabilities, improve efficiency and support technology innovation across our service lines. Every organic investment is rigorously evaluated to ensure it meets our standards for superior returns throughout the business cycle. As a reminder, the vast majority of our capital expenditures are geared towards specific projects with known return profiles that meet our standards. I would reiterate these are not speculative investments. Another area where we can deploy capital is inorganic growth opportunities. We pursue selective, highly accretive mergers and acquisitions that complement our existing capabilities and customer relationships. Our M&A strategy is focused on opportunities that offer clear industrial logic, scalable technologies and synergies and the potential to expand our presence in attractive markets. We applied the same disciplined capital allocation criteria to acquisitions as we do to organic investments, ensuring that only the most compelling opportunities receive funding. The company has a successful track record of executing on this strategy. We're also committed to returning capital to shareholders. Our framework targets the return of at least 1/3 of free cash flow to shareholders annually, primarily through share repurchases. This commitment reflects our confidence in the company's ability to generate sustainable free cash flow and our focus on delivering direct value to our investors, particularly over the long term. During the fourth quarter, we were unable to repurchase as many shares as we intended, causing the total percentage of free cash flow return to shareholders for the year to come just short of 32%. Finally, maintaining a strong fortress balance sheet ensures that we have the financial flexibility and resilience to act on our other capital allocation priorities. Additionally, preserving a strong balance sheet enables us to navigate market cycles, invest in growth opportunities as they arise and protect the company's long-term stability. Importantly, these 4 priorities constitute our capital allocation framework, organic investments, M&A, shareholder returns and balance sheet strength, and again, are not ranked in a set order of priority. Instead, they're managed dynamically with each area continuously competing for capital based on the quality of the opportunities available. This disciplined, balanced approach ensures that Expro remains agile, resilience and focused on maximizing value for all shareholders. And with that, I'll turn the call back to Mike for a few closing comments. Michael Jardon: Thank you, Sergio. As we conclude our prepared remarks and before opening for questions, I'd like to conclude with the following comments. I'm excited about what was achieved by Expro's employees in 2025. I'll reiterate, we collectively implemented cost efficiencies as part of our DRIVE25 initiative, increased our EBITDA margins moving closer to our long-term goal, successfully deployed new and innovative technologies, generated a high level of free cash flow and return of cash to shareholders and improve the company's net cash position. We executed on multiple priorities that Sergio just referred to in our capital allocation framework. Looking ahead, I'm also excited about what the company plans to achieve in 2026 even in a macro environment where we are cautiously optimistic. We acknowledge a somewhat softer start to the year related to the normal seasonal factors that impact both the industry and Expro. But we expect sequential improvements in the latter quarters, especially as we head into 2027 and beyond. We do expect to generate improved EBITDA margins and free cash flow in 2026 and anticipate executing again across our strategic pillars. I remain confident in Expro's resilience and ability to continue to deliver on operational and financial performance. Finally, we thank our employees, our customers and our shareholders for their continued support and look forward to building on our momentum in the quarters and years ahead. With that, we can open up the call for questions. Operator: [Operator Instructions] Our first question comes from Ati Modak from Goldman Sachs. Ati Modak: Mike, can you talk more about the increase in wallet share comment? It sounded like there's some inherent cross-selling opportunities? What exactly are those opportunities? And is this a little bit more geographical expansion? Any color you can provide around it? Michael Jardon: No, Ati, thanks for joining us and appreciate the question. This really is especially in some of our well construction operations, where we're providing TRS services, and we're also providing cementation services. We're adding additional services in there. Some of our Cure Technologies is a great example where we're already on the rig. We're already running TRS operations. We run our cementation operations significantly reduces the weighting on cement cure time. And we use the same personnel that are out there running our TRS services. So it's -- when I say expanding the wallet, it's we're already on the rig. We're already providing services. We provide some incremental services or products to our customers that help drive efficiency for them, and we're utilizing the same what we call installed base, but really the same personnel on the ground. So it's something that we can do across geographies. We're doing similar things in well construction. We're also doing that across our well flow management product lines as well. Ati Modak: That's very helpful. And then as you think about the EBITDA range you provided for '26, what are the puts and takes that you're focused on, whether it's activity-wise or idiosyncratic for you as you think about the bottom and the high end of the range? Michael Jardon: Yes. I mean, I guess how I would frame it Ati is, the market's going to do what the market is going to do this year. We're going to maintain our market share. We're going to expand our customer wallet exactly how many offshore floating assets are going to be operational in Q3 and Q4, that can always ebb and flow. We're just really focused on -- laser focused on making sure that even if we're in a flattish climate, we can still expand our margins. And that's really kind of what our guidance is framed up to give. It's not that we look at a massive step-up in activity in the second half of the year. It's more around the visibility we see today, and that's why we've given the guidance range that we have in there. Operator: Our next question comes from Eddie Kim from Barclays. Eddie. Edward Kim: Just staying on the full year 2026 guidance, EBITDA of $365 million at the midpoint, which reflects a modest improvement year-on-year. Just wanted to understand better understand the market assumptions behind that guide. Is the guidance sort of, I guess, valid at Brent in this kind of $60 to $70 range for the year? And could there even be further upside if commodity prices firm up from here. And on the flip side, if market conditions were to deteriorate, is there an oil price at which you expect operators might maybe push back or delay some programs? I know there was lot in there, but any color that would be great. Michael Jardon: No, Eddie, thanks for joining us and really, really good question. It's one that we talk a lot about internally. I guess how I would try to frame it up for you is our activity set is really based on what we're seeing with current commodity prices. I still think we've got a range here where even if commodity prices were to be compressed a little bit more, I don't know that we're so active in offshore deepwater projects that have a long investment cycle. And our customers are not going to throttle that down significantly here in the short term. I do think that we're cautious on how we're viewing the total activity set this year. I do quite frankly, think that there could be some potential things are going to ramp up more. We've heard some positive commentary from the drilling guys and those kind of things. It really depends on how that some activity translate into turning to the right, so to speak. So I think there could be some upside in the back end of the year. We're not going to rely on that. We're going to get our fair share. We're going to stay focused on technology rollouts and those kind of things. We'll kind of look at that as upside potentially, I guess, is how I'd frame it up. But we are laser-focused on even if we're in a situation in 2026, and I hope I'm wrong, but even if we're in a situation in 2026, where we're in a flattish revenue climate to even slightly down meaning the market is flat to slightly down. We're still going to be able to expand our margins modestly, and we're going to expand our cash generation as well. That's what we're really focused on. Edward Kim: Got it. Got it. That's very helpful color. And just wanted to touch on the offshore activity inflection. As you mentioned, there's kind of growing maybe consensus or optimism about an activity and collection back half of this year into 2027. Just from a regional perspective, could you talk about which regions you expect will sort of drive the recovery in which you expect or remain flattish or maybe take longer to ramp up. Michael Jardon: Sure. No, it's -- so I think one of the -- and this is something we've been consistent about talking about for a number of quarters. I think the subsea tree outlook has continued to be very positive and very strong and very robust. You look at the order backlog that some of our peers are adding in, that's been quite positive. That's a good leading indicator of what's to come. But those are things when they add backlog today, they're not -- those aren't trees that are going to be installed tomorrow. Those are trees that are going to be installed 9, 12, 18 months down the road. So I think that's been a good set of breadcrumbs that's been laid out there. And it's one of the reasons why we've been consistent. We think the second half of this year is more robust, especially going into 2027. And I think you're going to see this -- the U.S. Gulf is probably going to be a flattish year in 2026. I think good potential as we go into 2027 for some expanded investments. South America is going to be strong. West Africa is always the one that -- it's going to take a little bit more time to ramp up, but that's the one that will really kind of help start to move the needle when that happens. So I think West Africa in particular is why we're going to start to see the '27 and beyond, that's when we're going to start to see more of that real inflection point. And those are bigger projects. Those are multi-rig campaigns, those are significant drilling and completion -- drilling complete operations. Operator: [Operator Instructions] Our next question comes from Colby Sasso from Daniel Energy Partners. Colby Sasso: I just wanted to ask, given the current administration has been favorable to pushing deals through, have you got other meaningful deals announced in the offshore space a few weeks ago. I'm curious seeing the increased transactions go through. Has that changed your strategy at all? Or maybe could you update on the surrounding thoughts given M&A that you've done, and they haven't done anything in a while. Michael Jardon: Sure. No, Colby, it's a great question. I mean I think it's -- yes, the current administration is probably more amenable to M&A and those types of things. Quite frankly, our -- the things that we have an appetite in and we have an interest in aren't -- they're going to have a global nature. They're going to have a global presence and we don't have a significant concern around our ability to -- for those that go through antitrust or those kind of things. So for us as a company, the type of things we're interested in looking at aren't really being influenced heavily by whether the administration is more or less amenable. I think there continues to be -- they're still over the last 5, 6 years, there still has only been a handful of consolidations of size in the services space, whether that was hours back in 2021 or what Patterson has done, it was nice to see the rig and the Valaris transaction here. I think that's a good move for the industry. I think we'll continue to see those type of things happen. And we are working on those kind of things every day of the week because it really is about helping us become more relevant to our customers, helping them more solutions and more efficiencies and those type of things. And we're absolutely convinced if we're more relevant to our customers then we're going to become more relevant to our shareholders as well. So it fits in, but it's something we continue to work really, really hard on because we have a great platform. We're offshore, we're international, we have touch points with our customers all the way from exploration through appraisal, through development, through production all through P&A. So we have a lot of flexibility and latitude on a type of things that would fit into our portfolio and that we could help drive value with. Colby Sasso: And just another follow-up. One of the themes over the last 2 quarters of large operator calls has been increased need for exploration offshore. Any thoughts on what you're seeing in the areas geographically that could surprise the upside over the next couple of years? And how do you see yourself taking advantage of what you're seeing and hearing? Michael Jardon: No. Colby, it's a great question. It's a really perceptive question. So kudos for you for picking up on that. Our customers, yes, we're having more and more exploration project discussions. Part of that's because they need to add more and more into their portfolio for future production and future reserves. We provide a lot of services in the exploration activity set. So whether it's well construction or it's well flow management, when we start flowing these wells back to evaluate the reservoirs or it's being able to help provide the connectivity in a subsea application from the rig to the sea floor. So it's a great opportunity for us. We play a lot of those kind of services. And I think as we see more and more of that translate into activity, I think we'll continue to see more exploration opportunities, and that means more exploration revenue in dollars for us. So it's -- we've been really over the course of the last really since 2012, there hasn't been a lot of meaningful exploration activity going on globally. So I'm excited to see that potential. We'll see how much of it translates into 2026. I think more of what we're going to see in 2027. Operator: Our next question comes from Derek Podhaizer from Piper Sandler. Derek Podhaizer: I just want to go back to the conversations around the 2026 guidance. So just going up to the top line revenue here. I know the prior guide was for '26 to be flat, but down now the new guidance is flat to up. So I was hoping you could help us understand some of the puts and takes there. Why our outlook has improved maybe from a regional standpoint? And then just thinking about how the guidance ties to the implied sequential growth on the top line, the second, third, fourth quarter because it looks pretty meaningful. Michael Jardon: Yes. And Derek, thanks for joining. I guess what I would -- we're more -- and I kind of alluded to it in one of the earlier questions, we are laser-focused on if the market grows, 2% or 5% or 10%, we will absolutely get our fair share of projects. We have a very high bid win rate. we have great customer relationships. So what the market does, we're going to benefit from that as well as anybody else. And I don't want to say we don't have any control over that, but we -- the timing of somebody adding a rig in Angola or the timing of additional rigs and activity in the U.S. Gulf, we're not going to have an influence over that, but we're going to be able to provide those services. So it's not so much that our view has become more positive or more negative. What I have the organization focused on is execution, service delivery, HSE performance, continuing to win our fair share of activity and fundamentally driving more efficient operations. We expanded margins in 2025, and we expanded cash flow generation significantly in 2025 because we were focused on the things we could control, and we're going to do that again in 2026 and even if the market is flat to slightly down, that's not to say I think it's going to be slightly down. My message is even if the market is under a little bit more pressure, we will still expand our margins and expand our cash flow generation. So that's -- really that's a little bit of a subtle difference, but it's much more around I want my team and myself to focus on what we can control. And if the market grows, that's fantastic. We'll have some upside potential to what our forecast looks like going forward. Derek Podhaizer: Yes. That makes sense. And I appreciate the color. Maybe just follow-up there is, could you maybe break down the geographies, where do you see maybe the points of strength as we work second, third, fourth quarter, maybe you can rank order them just your geographic regions? Michael Jardon: Sure. So I do think that for us, Middle East, North Africa is going to be solid this year. We're going to have some projects that will deliver in the fourth quarter that we're already actively engaged in. So I think that's going to give us some -- that's part of the reason why we see and anticipate a solid Q4. South America, we've got some similar just projects and activity that's going to happen there as well. I suspect that when we do a look back on 2026, I would be very surprised if there's not some surprise to the upside in the U.S. Gulf. I think for operators access to those reservoirs, the carbon advantage nature of it, the ability to get access to rigs that are working for one operator today, and they come to another operator tomorrow. So I think that's going to be another one that could be strong potential. I would probably put Asia Pacific is continuing to be just because of the cycle time and some of the -- where they're at in the sequence of activity in places like Australia, I think that's going to be more of a 2027 phenomenon. I kind of view Asia Pacific in that same kind of context. It's going to be a little bit more -- it's going to be a little bit more of a laggard than the others. And then West Africa is one in which I think by the time we're talking in 2027, it's going to be quite robust, and it's really, for me, it's the transition of does that start to happen in the third quarter of 2026 or the middle of the fourth quarter, the end of the fourth quarter, I think that's just a little bit more of a timing for when they take delivery of rigs and when they really kind of start solid drilling and completions activity. Operator: [Operator Instructions] Our next question comes from Josh Jayne from Daniel Energy Partners. Joshua Jayne: I apologize if you covered this earlier. I just wanted to hit on pricing quickly. So we've been in this period, I guess, over the last 24 months where we saw a pretty sharp acceleration in rig rates. And then things have come off, but I would say, stabilized over the last 6 months. How does potentially a tightening rig rate environment frame your pricing conversations and allow customers to see some more value in a lot of the things that you offer. Maybe you could just elaborate on that a little bit. Michael Jardon: Sure. No, Josh, thanks and appreciate that. I guess, how I would frame it up is I think it's been a -- I think the pricing climate we have had, although we're not getting, we don't have a lot of ability to raise prices right now. I think there's not been downward pressure on pricing. And I think a lot of it has been the rig guys and the rig rates and those kind of things, they really kind of -- they kind of set the tone, so to speak, they kind of set expectations for customers. And so the fact that those guys have been extremely disciplined. They've demonstrated a willingness, they're going to stack rigs or they're going to retire rigs or those kind of things before they're going to move rates down materially. I think that's been helpful and constructive, our prices aren't indexed or directly correlated to the rigs, but I think it kind of sets an expectation or a tone within the space and within the sector. So I think as we're seeing consolidation with those guys and we're seeing more demand for those rigs, hopefully, we go back to a climate which there's actually some discussions around rising rig rates. And I think that kind of conversely starts to set some of the -- starts to set some of the opportunities there as well. I think the other flip side for us is really around as we expand and roll out new technology, our new technology, especially the ones that help us -- that allow us to expand our wallet share. Those typically come at more of a premium because we're generally out there servicing it with the same crews we have who are already running services. So when you add incremental services, that's what helps us expand the wallet share and also really kind of helps us expand the margins. So -- at the same time, we're very disciplined on we're going to roll out technology at the right rate. We have pricing expectations, we have value creation expectations. When you run Cure Technologies in an offshore application, you save almost 24 hours of rig time not waiting on cement, we have a value expectation of the time savings and we're not going to try to increase the technology adoption rate by lowering our prices. We're going to stay disciplined. We'll take a longer period of time because over the course of the next couple of years, rig rates will rise, things will tighten and you get an opportunity to price things only once. So we're going to be disciplined about that. Joshua Jayne: And then just one, if I may. And again, if you covered this already, apologies, understanding that offshore Venezuela isn't projected to be something massive. I'm just curious as things calm down geopolitically within that country. How does that potentially open up areas like Colombia or Trinidad or Guyana, just given the geographical proximity to those areas? Any thoughts there. Michael Jardon: Yes. No. It's -- and Josh, thanks for bringing it up. I commented in the prepared remarks earlier that for myself, having lived and worked in Venezuela, my kid spent a number of years growing up and going to school in Venezuela, it is -- I'm really, really excited to see the opportunities that are going to happen in country. It's going to be interesting. It's going to be unique because you're going to have land opportunities. You're going to have shallow water Lake Maracaibo opportunities. You're going to have potentially deepwater offshore, there's FPSOs, there's infrastructure that already exists with Guyana and what's going to happen with Suriname. I mean I think it's tremendously positive. I'm really excited about it. And especially for us as a company because we're really, really good at the high technology component, the things that are difficult producing environments or difficult drilling environments. That's where we really can shine. So I'm super excited about it for us. The question is, when is that going to happen? It's not the question of if there's an opportunity, it's when is it going to materialize? So no, I think it's fantastic. I think it will really provide a real growth engine for the industry because of the close linkage between Guyana, Suriname, Trinidad even into French Guyana, I think it's just -- it's a great opportunity. So I'm super excited about it as you can probably pick up. Operator: We currently have no further questions. So I'd like to hand back to the management team for any closing remarks. Dave Wilson: Okay, everybody, thanks for joining us today. This is Dave Wilson. If you have any follow-up calls, please reach out to me. Again, I appreciate your participation. Thank you. Operator: As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your lines.