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Olaf Scholz: Good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones. We have presented, this morning, our preliminary figures for the fiscal year '25. So Krones continued profitable growth in '25, and we forecast also a further revenue and profitable growth for '26. Next to me is Christoph Klenk and Uta Anders, they will give you more details about these figures and also additional information. And we will also talk about the '26 targets. After the presentation, you will have the opportunity to ask questions. I think you also know how the Q&A session works. Please use the function raise your hand in Teams or send me a short e-mail, and then I will hand over to you. Additionally, please be reminded that this meeting will not be recorded and that is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams. So I think we can start with the presentation, and I will hand over to Christoph Klenk, CEO of Krones. Christoph Klenk: Yes, Olaf, thank you. Warm welcome, ladies and gentlemen, on behalf of Uta and myself to our preliminary figures for 2025 and of course, to how we see 2026 and looking forward then in, of course, answering your questions. I will skip, as always, I would say, the beginning of the slides because this has been actually working as a summary for you that you can see all in a condensed way. And here even over the numbers, I will skip because we go in detail anyway. I can say if we see here the numbers at the end of 2025 and seeing the results we are extremely happy. Before I continue, I want to extend a big thank you to the Krones team globally. So 21,000 people having made this success possible because we're dealing with 160 countries around the globe and quite complex lines and businesses. And once somebody is failing, some projects are failing totally. So everybody is important in our team, and that's why we are so thankful that we have achieved those numbers with the team together. Before I go ahead, we had various challenges in 2025. I just want to name them, not all of them because then we would stand here an hour, but at least 3 of them. First of all, is Middle East because we all forgot that in the beginning of the year, Middle East was pretty much under pressure with the strike of Israel and the United States in Iran, which actually affected the whole region. Then of course, we had the tariff issues during the year and should not forget that FX issues will affect and has affected our businesses as well. On the other side, we had a highlight with Drinktec. You have been all being invited to that, seeing the Ingenic line and what we are doing with that into the services we are delivering. And of course, with Prefero, the Netstal acquisition and the, let me say, combination of the Netstal Maschinen and the Krones Maschinen. So that's the highlights. And again, thanks to our team that all those things have been working out. Yes, numbers you see here, and these are the green tick marks that we have actually achieved what we have promised, and that's the most important thing for us, for Uta and myself that we once again have been robust in the statements we have made and that we have been achieving our targets. From this on, jumping into more details, order intake. I mean, we have said all the time that order intake will be around 1 with the book-to-bill ratio, and this is actually what we have achieved. Yes, we have been -- and this is very obvious, we have been short EUR 100 million with order intake in comparison with the sales we have done. But nevertheless, I would like to put that into context what we have seen in 2025. As said in the beginning, I mean, the beginning of the year, Middle East was a bit shaky because of what I have said earlier. Then, of course, we had a tariff issue, which I'm reflecting later on when we go to the split into the regions, how this affected North America, but this has been 2 challenges. And number three, and this is on the positive note, this is very important for us that we have maintained price stability. I mean, for those of you knowing us for a longer period of time, in particular those times before COVID, pricing was all the time an issue. And since I would say the -- let me say, the markets are a bit more under pressure than before. For us, it was very important that we kept a very close eye on pricing and we kept price stability. Some of those let me say, actions have been that we have been losing some of the orders just to make sure that the signal into the market is crystal clear. That's the remark I wanted to do here. If we look to 2026 because Uta and myself, we have agreed on that once we go through the presentation here, we give you all the time, let me say, the view in 2026, of course, you will see a summary at the end. But as you have seen, book-to-bill ratio in 2025, around 1, which is actually 0.98, if you put it exactly on it, the EUR 100 million short, I'm just saying, we are looking about a book-to-bill ratio slightly above 1 for 2026. So that means we will be higher than sales, and we will have in order intake a higher growth than we will have in sales. So that's the statement we are doing. And this is based, of course, always on, let me say, our interviews we have done with our customers by late 2025. And I would say what we see right now in the market looks good for Q1 to confirm what I have just said. So that's for order intake, and I assume you will have later on certainly more questions to it. Order backlog, yes, that has decreased slightly, but only slightly, and this has been on purpose because our point was our delivery times have been too long. Fortunately, we have been able to decrease that to around 40 weeks right now. And in particular, let me say, orders, we are even going further down. So we have shortened that. And we can say that as of today, we don't lose orders because of delivery times. So we have been arrived into the competitive landscape again on where we should be, and that's important for us that this is not a reason that we are going to lose orders. On the other side, it actually provides a very nice and stable fundament for the, let me say, economical development of Krones in 2026. So we are well booked into the third quarter. So very important for us because that gives us the visibility on our statements. But more to say again, by purpose, we are happy to decrease that because we need short delivery times. Now from the market perspective, how do we see things? Number one, we see customers behaving slightly different than what we have seen in the past. I would assume that might be something for Q&A later on once you want to know more details about that. But basically, if you look to the split of the regions, and this is actually sales, it's not order intake. You might see that on the left-hand side that North and Central America in terms of percentage is going significantly down. However, if you look to the absolute numbers, we maintain a quite stable level on sales in North America and roughly -- I mean it's easy to calculate, it's EUR 1.2 billion. So all 3 numbers are reflecting EUR 1.2 billion, and that has to do with the growth of the other regions. And of course, I named it earlier at the beginning based on FX reasons we have in that. So that's one thing. If you look to pure order intake in North America 2025, that was decreasing, in fact, by 10%. Of course, in the second half of the year, influenced by the tariffs. But important for you to know, we plan on, let me say, the levels we had seen the year before last in terms of order intake for 2026 because what we see from our customers since the shock of the tariffs have been going away, the business cases are still even including the tariffs intact. I think we can talk certainly more about that in the future or in the Q&A. Second, what is to remark here, even as South America looks pretty good in sales, we have missed the targets there. We had higher expectation into South America. So this was not going too well, to be honest with you. So this is one critical aspect for 2025. And if you look to Asia Pacific, that has been going down into sales and in order intake. So that as well a critical development in 2025. But now the good news comes for all of the 3 markets, North America and Central America, South America and Asia Pacific, we do assume that 2026 will perform better, and we are looking into achieving our targets for 2026. And this, again, because many projects has been postponed are still active, not lost. And that's the reason why we have hope into those markets. And we will see, from our point of view, a good development in 2026. Remarkable, Europe and Middle East, Africa, both of them in sales and in order intake have been growing significantly. And in particular, Middle East and Africa have helped to overcome the shortage in order intake in North America. And even China from the order intake numbers is an increase in 2026. Sales is declining a bit in the sense of generating revenue, but we are on a good path in terms of order intake. And last but not least, you see Central Asia and Eastern Europe is doing quite well as well. So even good on track here. So that's from, let me say, the markets, the order intake and where we are with that. And with that, I'm going to hand over to Uta. Uta Anders: Thank you, Christoph. Yes. Good afternoon to all of you also from my side. I mean, as always, I will start with revenue development. I mean you have seen it already in our press release, but let me just give you some additional comments also from my side. I mean we said 7% growth. So we are within our guidance of 7% to 9%. And we have mentioned or Christoph has mentioned it earlier already in that 7% is a EUR 99 million effect just coming from currency translation. That was mainly in Q3 and Q4. We didn't see it so much at the beginning of the fiscal year. That's why also we didn't put too much emphasis at the beginning of the fiscal year on it. But if you look now at the whole fiscal year, EUR 99 million is quite an effect. And if we took that out, we would have been -- or we would have recorded a growth rate of 8.9%. Yes, Q4, I mean, we had always said for both order intake and revenue, Q4 will be strong with EUR 1.556 billion. It was strong 9.7% growth compared to 2024. So also there within our expectations. I mean, as Christoph has mentioned, we will highlight already on those slides, on the individual slides, our expectation, our guidance for 2026. Our expectation for 2026 is a growth -- a revenue growth of 3% to 5%, and this is important adjusted for currency translation effects. I mean it's the first time that we are guiding this way. Not only I know that I mean, we also saw, as I said earlier, EUR 99 million is quite a high number for '25, and we expect a similar number for '26. So that's why we believe it's only fair to take that out in our guidance or guide this way. Moving on with EBITDA, EUR 602.3 million. I mean we are not so much into superlatives, but let's say, it's the highest number we have ever recognized. So we are proud on behalf of our team that we have achieved that. And you can see 12.2% growth. So absolute numbers growth compared to '24. And I mean speaking about margin, you can see the 10.6%, so 0.5 percentage point compared to 2024. And we are with that within our guidance of 10.2% to 10.8%. And yes, I'm sure you all have calculated Q4 which was an 11% margin. So versus a 10.3% Q4 2024. And for 2026, I mean, the headline of our press release has stated it already. We continue growth both in top line but also in margin. So that's why our expectation, our guidance is 10.7% to 11.1% for 2026. Moving on with EBT, very similar development to what I had said already for EBITDA. I mean, if we look at the absolute number, EUR 424.1 million,7.5% margin. And I already want to say it at this point, I'm sure a lot of you have calculated the difference between EBITDA and EBT, which is a little bit in terms of growth, lower. So I mean, we had higher depreciation in '25 and also the interest result was a little bit lower because we had special effects in '24. But I'm sure we'll come to that also later in the Q&A. Personnel and material expense, yes. Starting with personnel cost, I mean, you can see that we have increased it by EUR 125 million, which is, I mean, that's logical because of the additional FTE, which we will see in one of the next slides, but also the overall cost increase in payroll per person in general. Important for us, and you know that we have highlighted that also throughout the calls in the fiscal year, 30.1%, so very close to our 30%, which is an orientation for us as payroll, personnel cost as a result of total performance. Material costs, yes, very positive development, as we can see. I mean, overall, we only increased material cost by EUR 110 million. So -- and that brought us then also down to 47.8% material cost ratio, so well below all other years, which is just the result also of the good work of our purchasing team. I already spoke about employees very shortly. I mean you can calculate it yourself. We have an increase by 962 coming to 21,339 employees. So what makes up the difference of the 962? 1/4 of it is service technicians. Then we have some, but that's not 3 digit. So mid-2-digit increase because of M&A. You remember, we have bought CSW. And the rest of the increase is across the globe, as I always say, and also across the functions, also with emphasis, of course, focus on digitalization and IT. Important for us also is, I mean, looking at the ratio of the German workforce in total that is 55.0% compared to 55.5% last year. And also to mention, you can read it in the headline, 1,600 employees in the United States. Now coming to the segments, yes, I mean, for Filling and Packaging Technology, the story is always very similar to Krones in total because it is the largest segment. So I mean, with our EUR 4.774 billion revenue, we had a growth of 7.2%, also here effected or impacted by FX. We have met the guidance 7% to 9%, which is important for us. And we also here had a very strong fourth quarter, EUR 1.294 billion revenue. Looking at absolute EBITDA and margin, you can see EUR 517.8 million and a margin of 10.8%. So also here well within our guidance, which we had given of 10.5% to 11.0% and Q4 was 11.2%. Speaking about guidance, yes, for 2026, we expect revenue growth by 2% to 4% adjusted for currency translation effects and an EBITDA margin of 11% to 11.5%. Moving on to Process Technology. I mean, EUR 514 million revenue, it's a growth by 1.2%. Our guidance was 0% to 5%. So we have met our guidance here as well. Very slight currency translation effects, but as I said, not major. Speaking or coming to EBITDA, you can see at EUR 52.9 million. So another positive development here. And also if we look at the margin, 10.3%. Our guidance was 9% to 10%. So a very positive development also because you know that on the growth side, we are lacking turnkey projects, but that on the other side is beneficial also for the margin. Speaking about guidance, same guidance as we had it for '25, 0% to 5%, a 9% to 10% EBITDA margin. Intralogistics, EUR 376 million revenue, you can see EUR 44 million more than 2024, which is a growth by 13.2%. Adjusted for currency translation effects, it was 14.9%. So very, very close to our 15% to 20% guidance, which we had given. Looking at EBITDA and margin, yes, also if we look longer term, a very positive development here. Overall, 31.6% as an absolute figure, but also 8.4% as the number, which is also a result. You remember that we had said on the CMD that we are having smaller projects, but also new products, which we brought into the market also then with higher margins. And for 2026, growth of 5% to 10% and EBITDA margin of 7.5% to 8.5%. So far for our P&L. Now let's look into our balance sheet and everything which is related to that. I want to start with cash and liquidity. I mean you have seen it already on the first slide. We had a very good cash flow in the fourth quarter again and overall a very good cash flow of EUR 283 million, which brought us then to a cash of EUR 549 million, which was above our expectations. And with free credit lines and used ones, you can see the number, EUR 1.437 billion liquidity. So very solid to manage global economic volatility as also the headline states. Now coming to the right side of the picture, I mean, you see that we have increased equity by EUR 206 million to EUR 2.128 billion. And the EUR 206 million, of course, is the result of EUR 299 million net income, paying out the dividends of EUR 82 million and then a small miscellaneous change brings us to the EUR 2.128 billion, and it's an increase by 11% compared to December '24. And because the total of assets liability only increased by 6%, we increased our ratio to 42.2%. Yes. And of course, I mean, good cash flow, very good cash flow is reflected in stable working capital development, 17.3%. So very much in line with what we had last year, so '24 below our 20% or also 18%, which we have as a hallmark also for the future. And then looking where it comes from, I mean, received prepayments, you see that with 15.6%, this is 2 percentage points lower than we had at end of '24. But if we look at the overall number, it is still about EUR 900 million as we had it also '24. Now looking at inventory, also stable here as an absolute number. And that's why also the ratio decreased slightly to 12.5%, EUR 700 million approximately is the absolute number. And now accounts payable, yes, 15.5%. So on the level as we had at '24. And here, we had an increase in the absolute number, which, of course, then leads to a stable ratio. Receivables, contract assets as last number, a slight decrease, 1 percentage point. If I look at the overall number, also slight decrease -- a slight increase, close to EUR 2 billion we are here now. And if I look at the total working capital, you don't see that number on the slide, EUR 80 million increase. But we see that number on the next slide as change in working capital. But let's start, first of all, with free cash flow in general. We have mentioned that already a few times throughout this call, EUR 282.9 million. So above our expectations because we had a very strong fourth quarter again as we have it usually. And if we look where does it come from or where does the free cash flow before M&A come from, of course, first of all, earnings development, other noncash changes, which is mainly depreciation and then change in working capital, I already mentioned. Other assets and liabilities, the major or the bulk in that is tax payments, EUR 111 million, so income tax payments. And some of you may wonder why that is so much higher than it was in '24. '24, we had some consolidation effects from Netstal included. So that's why it's not 100% comparable. So cash flow from operating activities, very solid, very good with EUR 446 million. And CapEx, EUR 185 million, so 3.3% so slightly below our 4% and then other, which is smaller things, bringing us to our free cash flow without M&A. M&A activities in 2025, you remember Q3 CSW acquisition, that was the largest in here. And then financing activities, other, that is mainly the payout of the dividend of EUR 82 million and then some lease payments. And then you can read it yourself, change in cash, bringing us to our cash of EUR 550 million. Free cash flow as an overview over many years and also then slightly shown what our expectation for '26, yes, we're always a little bit more cautious. Yes, Christoph is smiling because it's always a kind of discussion on how high is the bar. I'm sure that some of you will also measure the bar and have a number there. But what is our message here? Our message is here, we also expect for '26 a solid and a good free cash flow. That's our message. And last but not least, for 2026 -- 2025, of course, ROCE 19.1%, yes, it's logical. EBT increased by 13%. Average capital employed increased only by 8%. So that's why our ROCE increased by 0.9 percentage points to 19.1%. And also to give you the absolute numbers, EBT EUR [ 470 ] million and average capital employed close to EUR 2.2 billion. Yes. So far for the actuals. And now let's just summarize one more time the outlook for 2026. I mean I have mentioned all those numbers already throughout the call, but already -- one more time here as a summary, 3% to 5% revenue growth. Important is the asterisk, adjusted for currency translation effects, EBITDA margin, 10.7% to 11.1% and ROCE, 19% to 20%. And of course, we have the usual disclaimers. And actually, we have added here also reliability of forecasting revenue is impacted because of the volatility of exchange rate. But that's why we have adjusted it in the revenue growth guidance. And for the segments, also here, the summary one more time. I have mentioned all of them already throughout my presentation. So that's why I will not read them out one more time. And that is everything from my side for the presentation. Christoph Klenk: Yes. All right. So let's have -- so let's have a look on the midterm targets. And since we have this morning several interviews with newspapers and journalists, I thought I should give a bit more of a taste on it because if you look to the planned revenue in 2026, you might ask the question, is that target still valid? And I can say it's still valid. And I just want to give some highlights on that. First of all, as we say that always here, we are not talking only with our customers about their 1-year investments. We are even talking about their 3 years investments and how markets might develop into the future. No security on that, but at least we have a pretty good understanding about possible investments in the different regions. So that's one thing. And the investment cases are pretty robust. I mean that you see when you see what, let me say, hurdles we had in the world economy, in the geopolitics in 2025 and still the order intake was good. Then we have our basic growth drivers intact. I don't want to repeat them in detail, is growth of world population, particularly in Asia and Africa and Middle East. It's definitely escaping from poverty in many areas of the world of the people. Then it's in the mature economics. It's definitely product varieties and differentiation. So that helps us a lot for new lines and it's cost pressure of our customers because new lines will simply have a better cost structure than old lines. Then there is, of course, our new factories coming up in China and in India. That has -- if we say new factories, that has to do we can actually better compete with local competition. We are still, for example, in China, the #1 in terms of revenue, but we have, let me say, growing competition, and we need to get on the price levels of our Chinese competitors where we can get really close to and have a bigger scale of, let me say, equipment being built in China. Same is true for India. So on those 2 factories, we have hope and they have to deliver contribution of it. And then the most important one is innovation. And if you look to what you have seen on Drinktec, there is this new line type, but it's not, let me say, a machine or a line because of it's a new line. It's about getting more share of the life cycle revenue of our customers. Of course, we are going to take more responsibility. But if you look to the utilization of our installed base, that is a significant proportion on the growth we have. So if you look to all of that, that's quite a big proportion, which is coming along. I have to add, we all the time had some acquisitions being built in. They are, let me say, on reasonable scale, EUR 30 million to EUR 70 million. That's the ideal sweet spot for us in the sense we do acquisitions, so that might be not overweighted into what we are going to see until 2028. But nevertheless, it's part of it. And then there is one other big thing Uta referred to that already. That's the FX because if we look to that, and if we would see the FX effects in 2025 and 2026, we are close to EUR 6 billion with the guidance in sales with the guidance we have given for 2026. So if you look to all of those factors, I think this is a reasonable number. And if we see then around EUR 7 billion being possible in terms of revenue, that will be a, let me say, a reasonable number from our point of view. Certainly, for the time being, with the FX effects more difficult to achieve. But nevertheless, I would say, for the time being, we have no reason to see that our fundamental underlying, let me say, factors out of the markets would not work. That's the statement I wanted to do here and to express that very clearly. So I would say with that, we are through our presentation. I mean, key takeaways that's a summary of the presentation. I wouldn't say that we are going to refer that once again. I would move directly on to Q&A. Thanks for listening. Olaf Scholz: So thanks to Uta. Thanks to Christoph for these information about the actual figures and the outlook. Olaf Scholz: I already got on my list Adrian Pehl from ODDO with some questions. Adrian Pehl: So actually, first of all, a question on what you mentioned in terms of the dynamics in China. I just want to make sure to get that right. So basically, the development that we saw throughout 2025, is that rather a function of the investment cycle of Chinese customers? Or would you say that you have been losing share? I mean I hear you that the situation on the order book side is improving. But how do you see your market position going forward in China? And the second question is linked to a little bit the slide, obviously, that you showed on the free cash flow development. I just want to make sure on the CapEx side of things, what should we expect for 2026? And how is the phasing of the CapEx given that you are ramping up your capacity throughout the years? I'll start with these 2 and then I jump back into the queue. Christoph Klenk: First to where we are in China and how -- if we look closer to the market, how do we have to see the market there? I mean, first of all, to give general questions of the Chinese market is very difficult because you need to see it different in the different, let me say, beverage categories. And we have to see it, of course, different in the, let me say, various products we have in the Chinese market. So it's a different route. But if I look into channel, I would say China has had over the last 5 years, a bit up and down. So we have been on a higher investment level than it has been a bit going down. It has been a bit going up. But if we look to a long run, it's pretty stable. And I would say the investment patterns of our customers is on a very comparable level. Now if you look to the future, I mean, China is right now in terms of investments dominated by aseptic bottling lines. The Chinese market has some specialties. And if I look back the last, Krones had a bit of a shortcoming because we didn't have aseptic lines localized. What we deliver out of China is PT lines for water and CSD, which was working well and everything included. So from, let me say, the end -- from the beginning to the end. And now the next step, and this is becoming true in 2026 are aseptic lines out of China because the market is significantly growing. Historically, we have been the biggest supplier of aseptic lines over the last 20 years in the Chinese market. We have around 250 systems installed in the market. Then it has been going down a bit and then it has been going up. And we have a disadvantage of what I just said, no local production, but this is coming up right now. So I would say, if I look to the future, there's a better fundamental on which we sit in terms of the local supply, we can supply out of the market. And we have strengthened our technical, let me say, ability in China in addition. So I would say there is a good potential for the future. And second, we have been working on the other side of the product portfolio that we get a bit of, let me say, more simple products out of the Chinese operation to serve -- to begin -- I mean really to say to beginning to serve the market better. Now if you look to the order, let me say, behavior of our customers, this is a quite competitive market. And then I would say this is changing because we have seen customers being good 5 years ago, they have lost really market shares and others have taken them. Fortunately, because of the long term, we are already serving the Chinese market and a good customer relationship, we don't care too much which customer is at the moment investing or not because we have access to all of them. And we have a specific program in place to get customers on board, which we didn't know yet because they are new customers. And we are having a team observing the local competition in detail just to understand what we need to do in order to get with certain customers an order, which is not all the time only the product. It has a lot to do with the services we supply around the product. I hope that gives you a taste where we are in China. Uta Anders: I take the CapEx question? Christoph Klenk: Yes. Uta Anders: Adrian, it is what we have communicated also throughout the conferences. We stick to our 4%. That's also the bottom-up plan we have. And I mean, we have mentioned all the investment cases, but projects we are currently undergoing. Christoph talked about the strategic importance of India, but also of China. We spoke about the U.S. that's where money goes into when it comes to CapEx, but also here in Germany, I mean, investing into a new warehouse here at our headquarters, but also investing more automation into our machining facility close by. So those are the big tickets, and they end up at 4% as we had planned it all the time. Olaf Scholz: So thanks to Adrian. The next question, I just see a phone number starting with 44. I don't know. Christoph Klenk: Somebody from the U.K. that's obvious. Olaf Scholz: That must be U.K. number, yes. It's a U.K. number and then next is 7407. But let me skip to the next one, which is [ Vitor Shen from Iberbell ]. Unknown Analyst: So just regarding the outlook provided, I was just wondering of the composition of it. I mean, is it possible to split it a bit? I understand that it's communicated in local currency. And thereby, can you elaborate a bit more on how much, I would say, it could come from pricing and how much from volumes? And also if M&A is [ loosely ] part of the strategy for 2026 as well, if you could get some color on that? And the next question will be on the EBITDA margin. So you're enhancing them. And is it possible to elaborate a bit more regarding the drivers implying the improvements, notably the cost optimization measures? I have seen in the presentation that personnel expenses were increasing relative to total performance, while material expenses were decreasing. So can you please shed some light on this as well? I mean is this trend going to be the same for the coming year or not? Christoph Klenk: So if you look to the, let me say, a more detailed split of the 2026 perspective we give. I mean, number one, we do not see significant changes on, let me say, the markets we are going to serve, okay? So I would say the composition will be pretty much the same. And that's the reason why we see -- once we see currency on the same levels as of today and the changes that currency impact, and that's what we're actually stating might then be very comparable. If you look to the composition of, let me say, our segments, even this composition will be pretty much the same. I mean, with the growth of what we have said, this will be pretty easy to calculate. If you look now to our main segment in terms of machines and services, which we do not separate there, even there, the composition will be the same. There might be small gainings in terms of the life cycle because that's important for us, but that's the beginning, it will be pretty small. So I would say even this composition will be pretty much the same. And if you look to pricing, there is very little in terms of pricing included. We keep prices stable. And even in those areas where we had historically, I would say, better and fast price adjustments, which is the spare part and life cycle business, even there, prices are pretty stable because customers do not accept that we are raising pricing for the time being. I mean we are fighting -- and I said it in the beginning, we pay a strong attention that pricing is not eroding. That's our target. But if you look to sales in total, there's no pricing effects being included. So I hope that gives you for, let me say, this category a point. And if you look to the strategy to 2026, I mean, if you look to the overall situation, we have been, let me say, driving the company significantly by growth in a pretty large scale over the last 4 years. Yes, that's a bit less than in the past. But if you look to 2026, we have big initiatives in the markets that we go more in specific cases of the market that we strengthen, for example, namely processing that we say we have -- we are going to attack certain markets stronger. We have for categories of processing, different sales forces being in place, which are coming just to make sure that we maintain the growth. Same is true for Intralogistics. And if we look to our core business, it's about what I said that in 2026, the factories in China and in India are going to be started up. That's an important factor to serve the markets closer. And of course, as always, we are building stronger footprint into life cycle around the globe just to make sure that we are going to harvest on the installed machine base and getting more share in the service section. I would say that's my summary. Okay. Thanks. Uta? Uta Anders: I wouldn't have said it as such. Christoph Klenk: Good. M&A is something which we certainly look into, which might be as well part of it. Did I read it right, what you said? Yes. Good. Then we go to the... Uta Anders: Then let's go -- let's look at margin expansion. I mean, 10.7% to 11.1%. Actually, it's compounded by various developments. First of all, let's look at payroll. I mean I mentioned earlier staying around 30% is important for us. I mean, despite of staying at around 30%, we expect as an absolute number, an increase in payroll just because of, for instance, collective bargaining agreements, which is around, but it's just an approximate number, 3%. Then on the other hand, and I have communicated that also throughout our conferences, we expect decrease in material cost. And why are we certain that we can achieve that? Because already last year, so 2025 in summer, we have actually closed quite some deals in terms of securing steel, for instance. And we are not only securing that for us, Krones, but we have also secured it for some of our suppliers, which then gives us a leverage also on some of the supplies we get. So that is important, and we have also hedged copper. So that's the 2 major components of our cost base. Then I mean, we will not have a Drinktec in 2026, which also has a certain effect. I mean you know it was around, but it's just an approximate number, EUR 10 million last year to EUR 25 million. So we will not have that high amount in 2026. And as a fourth lever, we will have only a moderate increase in FTE in 2026 compared to 2025, so very moderate. And then last but not least, we have always talked about the strategic measures we are executing to secure our margin, to secure our performance. And we have spoken earlier about CapEx. I mean, I have spoken about our machining plant. And there, we are increasing the level of automation, which helps us also then to increase operational efficiency, just to name 5 reasons why we -- or 5 portions why we believe that the EBITDA can increase as a margin. Does that answer your... Olaf Scholz: The next question is coming from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Two quick ones, but I guess the first one you already answered. I mean, looking at your organic growth guidance for this year, 3% to 5%, if I understood you correctly, you said pricing is stable, so that it will be fully and solely driven by volume effects, correct? Christoph Klenk: Yes, correct. Lars Vom Cleff: Perfect. And then, I mean, more and more of my companies are worried or starting to get worried about chip prices rocketing, potential supply chain bottlenecks. Would you see that as a risk for your company as well? And if chip prices stay on this extremely or far elevated levels they are currently or some of them are currently trading on, would you be able to pass on the additional costs to your customers? Christoph Klenk: First of all, I would say we, as a management, and this is maybe one of the learnings out of the last 5 years that you worry all the time about your supply chain. But nevertheless, I would say we see no hurdles at the time being that we are not capable of, let me say, getting those components on board, which we need for our production. And out of this learning from the last 5 years, we have a totally different view on supply chains because we -- our arrangements would have said it earlier that we are going to hedge material and making these on a much longer period than we have been doing that in the past. We have included our suppliers, and this is even to the chip question, even for all the suppliers because we don't buy any chip direct. So if we buy chips, they are either in the PLCs, which we get delivered from Siemens and others or in other electrical components, which we get supplied again from Siemens, from B&R and so on. But what we have is, we are sitting with them and to look deeper into their supply chain. And I would say the fact that we have been all the time concerned that the Taiwan and Chinese issue might come up that we have secured supply chains in, let me say, different quantities and different time periods than we have been doing that in the past. And this will help us over a pretty long period if things go south that we can: a, maintain pricing and; b, can maintain supply. I don't want to go more in detail into what we have done there, but it's at least beyond one business year. That's the important message we sent here. Second, this is another learning once pricing of certain components goes out of the frame, like chip pricing would go up. And we can explain that to our customers. We have gained significant experience in translating material cost increases once they are reasonable and can be not compensated by other sectors of material costs that we can translate that into pricing. This is still, let me say, a procedure. We do every 6 weeks, controlling procurement and sales. Is there anything which we need to translate because that was one of the learnings out of the, let me say, supply chain crisis. Once we look early into that and address it early, we can manage even, let me say, significant price changes in the supply chain reasonably. So I hope this gives you a taste on how we are going to manage that. And I wouldn't say that we are fully protected to all of this because we all know that the prices might come up. But at least we have prepared in a reasonable manner for such kind of incidents which might happen. Olaf Scholz: Christoph Blieffert from BNP. Christoph Blieffert: Can you give us some idea about the revenue contribution for the new Chinese and Indian factory, please in '26? Christoph Klenk: Very simple, India will be very low because these are actually most probably for the time being, what we see today, 2 lines, which are built in India and being then shipped to customers. So if you look to the overall revenue, it's small. It's more for, let me say, if we look to order intake in India and the agreements we are going to do with our customers, and this will actually pay off 2027 and 2028. For China, I mean, today, we are doing a low 3-digit number revenue in China locally. And I would say this is going to be [ extended ] by 10% to 20% in 2026. Why is that? Because the factory goes into operation by July. And I would say, until we have it in really full speed, it will be October. But nevertheless, we are doubling the capabilities in China for 2027. And this is what I said earlier that we are even going to localize our aseptic business there, which is a significant proportion, which can even add then another, let me say, 50% to what we are going to do in China. So it will be quite a significant proportion. I think there will be a chance in one of the next meetings to show you some slides how this looks like. This is a factory, which is really big. And at the end, we are talking about increasing our headcount in China until mid-2027 from today, roughly 1,000 to 1,500. Uta Anders: But small in 2026. Christoph Klenk: Small in 2026. Yes. Christoph Blieffert: You have been highlighting the negative FX impact of again, some EUR 99 million in '26. This is based on the current exchange rate levels? Uta Anders: So the EUR 99 million is '25. That's what we have highlighted. And this was just the difference between the average exchange rates '24 to '25. So translated them with the same exchange rates. And actually, most of it comes from the U.S. dollar, about half of a significant portion. And '26, yes, we expect a similar level. Does that answer your question? Christoph Blieffert: Similar level means again [indiscernible] close to EUR 100 million? Yes? Uta Anders: Like we had it in '25, yes, around EUR 100 million. Christoph Blieffert: And if the exchange rate remain on the current level, would you have to adjust your 2028 targets? Christoph Klenk: That's a good question because we can answer that when we know how the exchange rate will remain, let me say, later than 2026. But I told you earlier, I mean, we are keeping this target of around EUR 7 million in place, okay? And how much we might be short because of FX effects, I can't tell you today. We always the statement, we believe in the growth of our market. There are potentials which we can actually lift ourselves. It's not only market related. And since I have been explaining that, we would not make the statement at all that we are, for the time being, skip any of those targets. I mean there are many unpredictable things in front of us, but we have seen that world economy is for us, in our market is quite stable. And we believe we have talked that up and down. We still believe in that target, and we stay with that even with the FX effects in place for the time being. And please allow me that do not take the notions in for the time being. I have to be really careful because there any word is interpretated. So we stay with the targets of around EUR 7 billion in 2028. That's important. Olaf Scholz: Now we identified the number from U.K., Constantin Hesse from Jefferies. Constantin Hesse: Yes. Sorry, I had some issues with Teams. All right. So I have 3 questions. I would love to start with the medium-term guidance, one. So I already heard that on the call, you talked about order intake in Q1 looking good. So what I want to understand for '26 because clearly, there has to be some kind of growth cadence into that about EUR 7 billion figure in '28, meaning that order intake clearly has to be above 1x book-to-bill this year. So what I want to understand is what visibility? And are you actually seeing a pick up in order intake where you could today already give confidence that '27, we could see an accelerated growth relative to what we're seeing currently, obviously, assuming no further FX headwinds? Christoph Klenk: Well, visibility is certainly not up to 2027. I mean visibility, if I might explain that, how we -- what kind of visibility we have and how we deal with that. We have 3 measures: number one, discussion with our customers to understand those our own analytics. That's one package, why we actually look into the markets and how we think that we see investments coming. Then second, we have the more short-term view, which might go, let me say, until end Q2, beginning of Q3. And this is how many quotes we have out and how the pipeline looks like. And saying that this includes as well that we look into how much is the lost order rate we have because it's important, is there enough volume in the market and we are losing because of other reasons? Or is the market, let me say, as such not intact? But what I can say as of today, and this was true even for 2025, volume is not an issue. If my sales colleague would stay here, would say, Christoph volume is no issue at all, just pricing is a problem. But this is my second statement. We want to maintain pricing. So this is all the time a bit of a, let me say, a different balance we need to keep. And number three, short term, why I say Q1 is okay, we are mid of February. We know the orders we have already on hand. We know what is out there, and we know what we usually gain or lose. So I think this is something where we are usually pretty good in predicting that. But 2027 is staying significantly on the measures we have in our own hand. What I said earlier, the factories we are going to build, the innovations we see, the life cycle we want to extend, the processing where we see big potentials in the market that we can grow further and even Intralogistics, which has been doing great for us, where we can grow on. And we have then, let me say, Netstal, what we call advanced molding technology, where we see options and some smaller, let me say, growth areas where we are going to grow. So if we put it only on what we know from the market, this would be not enough for us to see really the case. And yes, order intake, of course, has significantly increased in 2027. That's no doubt about. And this is something we have in mind once we look into the statements we have just given. Constantin Hesse: Fair enough on '27. But then just rephrasing the question, keep it simple, Q1, Q2, Q3, which is what you have visibility on, you're confident that book-to-bill is above 1? Christoph Klenk: As confident as you can be with all the history and, let me say, the know-how we have. We have not yet the orders for Q2 and Q3 in our hand. But again, pipeline is good. We have been, I would say, any week in discussion, is that sound what we have planned to? Do we -- can we stick to it? Is there other reasons why it should not work? But from all what we know, things are looking pretty good for the time being. I promise I wouldn't give too long being in the business because we all know that Iraq, Iran -- sorry, Iran and the Middle East is, let me say, under pressure for the time being for us, an important market. I would predict that there is a reasonable reason -- or let me say, it's reasonable that there will be a strike, which would be then serious for our business. So that might be some of the downside. But if things could go normal, yes, I'm quite confident that we are going to get our order intake. Constantin Hesse: So second question, just on cash levels. We're reaching close to EUR 550 million in net cash. So I'm wondering, is there -- in terms of M&A pipeline, is there anything potential coming up that could be larger? And if not, at what level of cash would you start considering returning cash to shareholders? Christoph Klenk: First of all, I mean, we have proven over the period that we have been using the cash for possible M&As. And I would say, on the other side, we are very careful in terms of our cash positions because we all know that this is something very comfortable once you have it in particular on times get a bit more shaky. But I can say we are -- how to say, we are working on M&A projects. However, we do speak only in case they are just before becoming true. So these are things which might come up. And we have -- sorry, when I say that not yet considered to pay extra dividend to our shareholders because we believe the reinvestment in the company is going to happen. We see things which could be done in the market in terms of M&A, and let's see how this continues through 2026 and 2027. So I don't think we come into the question whether we have to use our -- or we have to give our cash to pay it out to the shareholders. Uta Anders: Yes. And also with the profitable growth, we believe our forecast shows that the payout ratio or payout per dividend is going to increase. So that is the lever where we believe that this is beneficial for our shareholders as well. Constantin Hesse: And then just curious around the free cash flow development. I mean, you said that you're being conservative for 2025 -- 2026, sorry. But just to understand the dynamics of it because from today's perspective, I mean, because you basically confirm the '28 guidance, I would assume that orders start accelerating in '26 in order to have the book to grow in '27. So looking at the free cash flow development, what is holding you back from generating a free cash flow that is similar or even above 2025? Uta Anders: I mean, yes, we're going to invest further 4% of revenue. That's also what we plan for 2026 and also the years beyond. I mean for working capital, I mentioned earlier, a level of about 18%, which is an absolute increase also for 2026. Of course, we're going to generate good levels of cash flow from operating activities. And so we expect a good level. And why is it in our expectation lower than it is for 2025? I mean, you may remember that for 2025, our expectation actually was a bit lower as well. So that means we have generated more cash flow. And I mean you can cash flow only generate once. So there's maybe also some effect -- some small effect from '26. But overall, we expect a very good cash flow development for '26 as well. Some, as my colleague may say, also conservatism in here, but we believe it's going to be a good one as well. And we don't guide it. I mean it's, of course, indirect part of our ROCE guidance, but the free cash flow, we don't guide. We just give an indication on the expected development. Constantin Hesse: Christoph, can I quickly just -- Christoph, can I just ask very quickly? You said Iran, obviously, is an important part of the business. If there is potentially a strike there, is there any -- what's -- I mean, any idea that you could give us in terms of what the potential impact could be? Christoph Klenk: First of all, when I look to Iran, I mean, I'm looking more to the countries, let me say, aside from Iran, like Saudi Arabia and Israel. So I do not talk about Iran. That's from a business perspective, not important. So I was more looking to the uncertainty which brings that to the region because if you look to our Israelian and Saudi Arabian friends and customers, I mean, if such a strike would go to happen, they are concerned whether their countries would be attacked. That's the reason behind it. And I would say our customers are in this region quite robust to whatever weaponized conflict they are going to see. Nevertheless, a bit of an uncertainty might be if, let me say, such a counter-attack of Iran might jeopardize those areas. And I would say it's limited to those being around Iran. And -- but if I really can figure out what the impact would be, I can't tell you. I would take it around. I mean, if you look too, we have digested a 10% decrease in order intake in North America because of the tariffs. And we have been able to compensate that in other areas. And I would see that other, let me say, areas of the world, and I would name Asia in particular, have a big potential for 2026. And again, I wouldn't promise it, but I would see potentials to compensate in other areas as well. And that's the reason why we still stay pretty sound on our statement, book-to-bill ratio will be slightly above 1. Olaf Scholz: And the next questions come from Sven Weier from UBS. Sven Weier: I'm sorry, I have to follow up on the revenue guidance, and I'm probably the only person on the call who hasn't understood it yet. But the 3% to 5% guidance that you give, is that already after the EUR 99 million? Or do we have to deduct it so the real guidance is 1% to 3%? Uta Anders: So first of all, the EUR 99 million is '25, but I said it's a similar number for '26 and the 3.5% is not after the EUR 100 million, the similar number, you have to deduct it. Sven Weier: Okay. Good. That's what I thought, but I just wanted to confirm that. And then the other question also on currency because you said U.S. is down 10%. I mean, is that an organic figure? Or is that including the negative currency effect? Because otherwise, I guess, you would be kind of... Christoph Klenk: Yes, yes, including. Including. Including. Sven Weier: So organically, you've been actually quite flat in the U.S. despite all the trouble? Christoph Klenk: No, it's half-half. It's half-half. It's half-half. If you look to the numbers on order intake, what I just said, I would say a bigger proportion is tariffs, but it's certainly a proportion is currency. Yes. But nevertheless, this is not -- you have to look into -- currency is an order intake, not so big issue. It's just a translation effect, which we usually have once we translate P&Ls from the U.S. into Germany. Because on the orders, we are dealing with the numbers we have in the quotes, very simple. And we don't translate them because if we quote bottling lines to the U.S., we have here a euro quote, so if we count. We have not the U.S. count. Once we quote out of the U.S., of course, it's U.S., and we do not translate that at all. It's just a number we see. So order intake has not so a big effect of FX than actually the sales because we don't have the, let me say, exact translation. Sven Weier: And final question for me is just if you could share what kind of beer exposures do you still have left? I mean we all can obviously see... Christoph Klenk: That's a good question. Sven Weier: The issues that the beer makers have and it doesn't seem to keep getting better, the generational issue, I guess. So has it become quite small already? Or what's left in beer? Christoph Klenk: First of all, I have to say, complement how you phrased the question in the sense of what beer percentage we have left and beer exposure. This is really good. 2025 was really bad on it. If you look to it, I think it would have been around 20%, maybe beyond -- below that. But interestingly, we have received this year quite good orders from the beverage -- from the beer industry. So I would -- if you look to purely Q1, this would be on old levels, maybe between 25% and 30%. But all in all, we do expect that beer is, I would say, on a 22% to 25% level in our portfolio. And it's still decreasing since Intralogistics is growing, and we have been actually in processing, not growing at all in the beer that has become a pretty small business in the processing. I would say -- and I can say the number that's pretty easy. We have around EUR 120 million in the processing business being exposed to beer, not more anymore. Where we are coming from, I would say, EUR 300 million. So that has been compensated all by other, let me say, activities outside of beer. And in the core, I would say it's pretty stable because bottling lines are more replaced than brewhouses. Sven Weier: And what is the nature of the order that you got? I'm just curious, I mean, if these guys invest, what are they still investing? Is this an emerging markets order or developed markets? Christoph Klenk: To be honest, it's all over the place. So we have orders from Europe where we have very old equipment being replaced from well-known breweries, but it's as well in Asia, where we have received orders, and there is still some orders out there in Southeast -- in South America, where we believe those orders are going to materialize in the next 3 months as well. So it's all over the place. And I have to say maybe that's interesting for you in the audience that in particular, the German brewers have been quite active in ordering equipment and getting on better cost levels. So I would say they have been -- had a lot of courage into what they are going to do. So in particular, in Germany, investments in breweries have been pretty good in 2025. And the same looks like for 2026, even if you look to the market development, which is not so good all over the globe, it's, I would say, a lot of hesitation for investments into breweries. Sven Weier: And is that around also a lot of energy efficiency and those environmental topics, let's say? Christoph Klenk: I would say it's more economical reasons that they, in many cases, bring 2 lines down to 1 with higher speeds, higher efficiency, getting better, let me say, economics because they have less people in. That's more the investment scheme we see right now. And there is still some very old equipment out there in case you look to bottle washers, which have, in their case, they are 25 years old. They have a significant amount of energy consumption where they just because of energy reasons, go to reduce that energy consumption of pasteurizers; if they are old, they are horrible in terms of what they consume in water and heating. Olaf Scholz: And a little question, I think I see from Adrian, Adrian Pehl. Adrian Pehl: Actually, a very quick one on Intralogistics. Obviously, I mean, you want to grow the business still quite substantially. So you achieved 8.4% margin in this segment last year. So I was wondering why should we assume that the margin is not going to see more momentum on this one? Is that due to mix? Or how should we see this? Christoph Klenk: Yes. I mean Intralogistics from a, let me say, profitability standpoint, let me say, and I would call it commodities, which I call hybrid warehouses has been over the years under pressure. And what we did and this we stated as well on our Capital Market is that we looking into, let me say, more advanced order picking systems and that we have moved, let me say, the portfolio significantly. Then we have, let me say, a momentum that we are exploring new markets in Asia, while we have on the other side, the mature markets in the U.S. But I would say, if we look in comparison with, let me say, comparable product portfolio structures, we are doing pretty well in terms of the profitability. And we wouldn't see Intralogistics necessarily being in the short run on the same profit levels than we see the core. That's a fact. And I wouldn't say anything wrong in case I would make the statement that's going immediately in the right direction. So I would say the profitability we see we are quite happy with. It was quite an effort to be there. And I would say we can grow certainly further because and this adds on the margin because even our service business is growing, and this is not parts in this particular point. This is more software upgrades and helping people -- customers out with crews running their installation. So there's a different business model. Again, if we grow an installed base, I think we have a better chance in grabbing the aftermarket business, which is highly profitable in that section. And in the long run, I see a good development in terms of profitability as well, but it will be not in the short term. Adrian Pehl: All right. And very last follow-up, actually on the service share in general for the group. I take it that actually the service share increase is probably more pronounced as of 2027 as well and more or less like -- I think the line of communication so far has been 2025, 2026 rather not a significant increase on the service side. Is that correct? Christoph Klenk: Yes. I mean if we talk about significant, it's a question of what is significant, but we are growing our service business. So it's still growing. It has a very solid fundament. And if we look to the first 2 months, things are in line. Is it, let me say, that you see a huge momentum in sales? No, it's a kind of a very constant development. And we would see that even over the period of 2027, 2028. In life cycle, there is no, let me say, big jump. It's more an evolution rather than really an explosion what you might see. Even with the new lines we bring up, I mean, we are going to ship 8 of those by the end of the year, beginning of next year, which we are harvesting on. But if it's really completely having scale, and we stated that all the time, it will be 2027 to 2028. Olaf Scholz: So let me check the channels or ask a [ community side ]. I don't see no hand raising, also no mails from my mail server, so Christoph [indiscernible]. Christoph Klenk: Again, thank you very much. We are beginning of the year. As always, there is, let me say, a realistic optimism. We see and you have heard from the statements we have made. We are, I would say, as we have been always quite committed to the numbers we have given. A lot can happen, of course. But nevertheless, we managed that and compensated that with the markets we have. So we are looking with realistic optimism forward and even looking to listen to our 2028 numbers. Thanks a lot for staying with us and having your questions. It was a pleasure, as always. Thank you. Uta Anders: Thank you very much. Olaf Scholz: Thank you.
Operator: Good day, and welcome to the Industrial Logistics Properties Trust 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 Kevin Barry, Senior Director of Investor Relations. Please go ahead. Kevin Barry: Good afternoon, and thank you for joining ILPT's Fourth Quarter 2025 Earnings Call. With me on today's call are President and Chief Executive Officer, Yael Duffy; Chief Financial Officer and Treasurer, Tiffany Sy; and Vice President, Marc Krohn. In just a moment, they will provide details about our business and quarterly results, followed by a question-and-answer session with sell-side analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws, including guidance with respect to certain first quarter 2026 financial measures. These forward-looking statements are based on ILPT's beliefs and expectations as of today, February 19, 2026, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision of the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be accessed from our website, ilptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP financial measures during this call, including normalized funds from operations or normalized FFO, adjusted EBITDAre net operating income or NOI and cash basis NOI. A reconciliation of these non-GAAP measures to net income is available in our financial results package, which can be found on our website. Lastly, we will be providing guidance on this call, including estimated normalized FFO and adjusted EBITDAre. We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all. I will now turn the call over to Yael. Yael Duffy: Thank you, Kevin, and good afternoon. We ended the year with robust demand for our high-quality portfolio of Industrial and Logistics Properties, consistent with the trends we saw throughout 2025, delivering one of the strongest quarters in ILPT's history. We achieved record quarterly leasing volume, executing nearly 4 million square feet at a weighted average rent roll-up of 25.7%, marking our fifth consecutive quarter of double-digit rent growth. Normalized FFO grew 113% year-over-year and same-property cash basis NOI increased 5.2%. Our improved performance resulted in ILPT generating a total shareholder return of more than 55% in 2025, ranking us third in the U.S. across all REITs. Additionally, we made notable progress on our strategic priorities including improving our balance sheet and positioning ILPT for future growth. In June, we successfully refinanced $1.2 billion of floating rate debt into fixed rate debt, resulting in annual cash savings of more than $8 million. Shortly thereafter, we announced a material increase in our annualized dividend from $0.04 to $0.20 per share. Turning to our portfolio. As of December 31, 2025, ILPT owned 409 properties across 39 states, totaling approximately 60 million square feet with a weighted average lease term of 7 years. Our well-diversified portfolio is further highlighted by our unique Hawaii footprint consisting of 226 properties totaling 16.7 million square feet. More than 76% of our annualized revenues come from investment-grade rated tenants or from our secure Hawaii land leases. Consolidated occupancy at year-end was 94.5%, representing a 40 basis point increase over from the third quarter. During 2025, we completed 42 new and renewal leases and 2 rent resets totaling 7.3 million square feet. This activity is expected to generate an increase of approximately $10.6 million in annualized rental revenue, of which approximately $5.8 million or 55% has not yet commenced and will contribute to cash flow in 2026 and beyond. Additionally, we continue to expand our relationships with FedEx and Amazon, our 2 largest tenants, which accounted for 2.8 million square feet or 38% of our annual leasing volume. These results showcase our ability to realize mark-to-market rent growth through leasing and continued strong tenant retention. Looking ahead to 2026, we remain focused on our leasing priorities, specifically the 2.2 million square foot land parcel in Hawaii and a 535,000 square foot property in Indianapolis. We believe there is continued opportunity to generate organic cash flow growth and reduce leverage, which has declined from 12.4x to 11.8x over the last year. We are pleased with the strong performance and momentum we are building at ILPT, and we look forward to delivering long-term value for our shareholders. I will now turn the call over to Marc, who will provide further details into our fourth quarter leasing results within our Mainland portfolio as well as our pipeline. Marc Krohn: Thank you, Yael. And good afternoon, everyone. During the fourth quarter, we executed nearly 4 million square feet of leasing at a weighted average lease term of 9.5 years and a roll-up in rent of 25.7%. Given the limited available space within our portfolio, renewals represented the majority of the activity this quarter, reflecting a tenant retention rate of 96%. Notable leases include 3 lease renewals totaling 2.3 million square feet with Amazon, our second largest tenant for a weighted average lease term of 11.5 years and a roll-up in rent of 26.8%, a 1.2 million square foot renewal with Restoration Hardware, our fourth largest tenant for a weighted average lease term of 7.4 years and a roll-up in rent of 29% and 3 lease renewals totaling 152,000 square feet with FedEx, our largest tenant for a weighted average lease term of 4.6 years and a roll-up in rent of 11.7%. These results are a testament to the quality of our portfolio, showcase our commitment to fostering strong tenant relationships and underscore our collaborative and strategic approach to leasing. As we look ahead, 8.8 million square feet or 11.8% of ILPT's total annualized revenue is scheduled to expire by the end of 2027, which provides meaningful embedded rent growth opportunities. Today, our leasing pipeline consists of 6.4 million square feet, of which 3.8 million square feet is in advanced stages of negotiation or lease documentation. Based on current discussions, we expect this activity to generate average rent roll-ups of approximately 20% on the Mainland and 30% in Hawaii. I will now turn the call over to Tiffany to review our financial results. Tiffany Sy: Thank you, Marc. Yesterday, we reported fourth quarter normalized FFO of $18.9 million or $0.29 per share, which was at the high end of our guidance. This represents an increase of 9% on a sequential quarter basis and 113% compared to the same quarter a year ago. Same-property NOI was $88.2 million and same-property cash basis NOI was $85.7 million, both increasing on a year-over-year and sequential quarter basis, driven by strong tenant retention and rent roll-ups. Adjusted EBITDAre totaled $85.1 million. During the quarter, we recognized $14.6 million of earnings from our unconsolidated joint venture, which was primarily driven by an increase in the fair value of the underlying real estate owned by this joint venture. Additionally, we sold 2 vacant unencumbered properties totaling 286,000 square feet for total proceeds of $3.9 million, resulting in a $1.4 million net loss. In January 2026, we paid our manager an incentive fee of $5.7 million incurred for the year ended December 31, 2025. This payment resulted from ILPT outperforming the total return of the industry benchmark over the trailing 3-year measurement period by more than 60%. Turning to our balance sheet. We ended the quarter with cash on hand of $95 million and restricted cash of $88 million. Our total net debt to total assets ratio declined modestly to 69%, and our net debt leverage ratio improved to 11.8x. As of December 31, all of ILPT's debt is either fixed rate or fixed through an interest rate cap with a weighted average interest rate of 5.43%. We continue to monitor capital market conditions as we evaluate opportunities to refinance our consolidated joint ventures $1.4 billion floating rate loan. Including its remaining extension option, this loan does not mature until March 2027. We currently expect to exercise this extension option and purchase a related interest rate cap for approximately $4 million. Looking ahead to the first quarter, we expect interest expense to be $61.5 million, including $57 million of cash interest expense and $4.5 million of noncash amortization of deferred financing fees and interest rate cap costs. We expect normalized FFO to be between $0.29 and $0.31 per share and adjusted EBITDAre between $84 million and $85 million. In summary, ILPT ended 2025 with strong operating momentum, improving financial performance and less exposure to market and interest rate volatility. Our leasing results, stable tenant base and focus on strengthening ILPT's balance sheet has us well positioned for 2026. That concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] The first question today comes from Mitchell Germain with Citizens Bank. Mitch Germain: Tiffany, you were speaking a little too fast for me. What's the noncash interest amount for the year -- for the quarter, I mean? Tiffany Sy: For the quarter -- well, for the forecasted quarter is $4.5 million. Mitch Germain: So $61.5 million starting out next year. Is that the way to think about it? Tiffany Sy: That's correct. Mitch Germain: Okay. Great. I believe there was another asset that was under contract or maybe in discussion for sale. Can you provide an update there? Yael Duffy: Mitch, yes, we had another property under LOI for about $50 million, and the tenant was actually going to be the buyer of that property, and they decided that they prefer to engage in a renewal discussion versus buy the property. So we have a signed LOI for them for a 7-year renewal now that we're negotiating. Mitch Germain: Okay. That's helpful. Marc's talked about expirations for the next 2 years. Are there any known move-outs we need to be aware of? Marc Krohn: Mitch, nothing material in nature at this point. We've got -- we're making really good progress on our '26 expirations and '27 as we kind of move into beyond 2026. So we feel good about kind of where we're landing right now. Mitch Germain: And Marc, while I have you, is there any changes that you're making in the marketing process for the Indi and Hawaii vacancies? I know it's been north of a year that you've been sitting on them now. Have you kind of looked at possibly changing the concession package or some sort of adjustments there? Marc Krohn: Well, I'll touch on Indi, and then I'll let Yael touch on Hawaii. But Indi, we made some really good progress, and we're actually exchanging lease comments right now. So that could be as early as next quarter that we would be in a position to maybe provide some positive news about the lease-up of that space. Yael Duffy: Then as it relates to Hawaii, we're continuing -- we're in discussions with the same tenant that we've talked about the last couple of quarters. As I think you know, it's just the size of that parcel and the complexity of it just provides some timing delays, but we're hopeful we'll be able to be able to lease that one. But in terms of concessions, there really -- for that site specifically, there really isn't anything we can do just given it's a ground lease. So it's just finding kind of that unicorn that wants to take such a big parcel. Mitch Germain: Got you. I guess last one for me, maybe just Tiffany, like bridge me from -- I think it was around $64 million or $63 million in interest expense in 4Q to the forecast that you just laid out for 1Q? How do we get there? Tiffany Sy: That's really a number of days. There were 92 days in this quarter, and there's only 90 in the next quarter. Mitch Germain: So does that suggest that it goes up again in 2Q? Tiffany Sy: Well, if you -- no, it doesn't because if you consider what we think we would pay for a cap, $4 million, we'll have the impact of that in Q2, which should lower interest expense. Operator: Your next question comes from John Massocca with B. Riley. John Massocca: So maybe looking at the same-store NOI growth in the quarter, a little higher versus kind of your past 3 quarters. Was there anything specific that drove that beyond kind of leasing and addressing some of the vacancy in the Mainland portfolio? Just curious if there's any kind of cash rent coming online or anything like that, that may have caused that to be elevated relative to the last 3 quarters of the year? Yael Duffy: So I mean, Tiffany might want to expand, but I think really the reasoning is we do a lot of our leases ahead of time. So it could be 12 to 18 months ahead of a natural lease expiration. So it does take a little while for the cash impact of the new leases to kind of hit. And so I think that's the majority of the increase. Tiffany Sy: Leasing. John Massocca: Okay. And I mean, would that be something then as some of those new leases keep hitting that this level of same-store NOI growth is sustainable long term? Or is it really going to be a product of just addressing some of the maturing leases that are still left in '26 and '27? Yael Duffy: So I'll give you as an example. This quarter, we did -- I think the impact of that -- of our leasing was about $10 million of cash growth. And most of that hasn't been -- we haven't seen that yet this quarter. A lot of that, I mean, I would say at least 50% is going to hit probably in the back half of '26 and into '27 because that's when the leases we renewed this quarter are going to actually go into effect, so later. So I will say -- I would say that it's sustainable to continue to see that growth. John Massocca: Okay. And then outside of the transactions closed in 4Q and the transaction that was potentially going to be disposition but became a lease renewal. What's the outlook for disposition activity for the remainder of 2026? Yael Duffy: I don't see it being a huge part of our business plan, at least in the near term, but we do get a lot of inbounds and sometimes they appear really good, and we kind of investigate them further. So I think it will be -- any sales will really be opportunistic, but not a material part of our business plan. John Massocca: Okay. And then with regards to the Mountain JV loan, it sounds like you're going to utilize the extension. But what's kind of the thought process around refinancing? How are you think about timing there? Is there something you want to see in the markets or something else kind of structurally with the JV you want to see before looking to address that refi? Just kind of curious how we should think about that. Tiffany Sy: We're actively evaluating refinance opportunities. The good thing is with the extension option that we have, it gives us flexibility to really not have to rush into anything because it's no extra fees. The only thing we have to do is purchase the interest rate cap, which we can later sell when we refinance -- if we refinance before the maturity date. John Massocca: So I guess is there -- I mean, is it just you want to see what kind of macro environment shapes out in terms of where we are with kind of base interest rates? Or is there something within the portfolio or within the JV you're kind of looking to see before you go out there to kind of maximize the best pricing? Tiffany Sy: No, I wouldn't say that. I think we're currently looking at macroeconomic factors and what's available to us. And these types of things do take some time, and we are aware of that. Yael Duffy: Yes. And I would just add, John, I think the portfolio, it's 100% leased. It has -- we've been seeing really good tenant retention. Even if we get a vacancy, we're able to lease it up. So from an operating perspective, it's -- there's nothing to do to put it in a position to refinance. John Massocca: Okay. And then lastly, I mean, how do some of your kind of core markets look, particularly on the Mainland in terms of kind of competing supply -- is that at all kind of a near-term concern? Or is that something that given where interest rates moved in the last couple of years and et cetera, that that's not really a big issue going forward? Yael Duffy: We haven't seen it be a big issue. I think the construction has slowed, and I think the vacancy increase from a macro perspective has just been new supply coming to the market. But I think tenants are realizing that it costs money to relocate and is also disruptive to their operations. So I think we've had some tenants that have looked into potential relocations and then have come back and wanted to do a lease renewals. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Yael Duffy, President and Chief Executive Officer, for any closing remarks. Yael Duffy: Thank you for joining today's call, and we look forward to meeting with many of you at industry conferences this spring. Please reach out to Investor Relations if you're interested in scheduling a meeting with ILPT. Operator, that concludes our call. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Greetings, and welcome to Gladstone Commercial Corporation Year-End and Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone, Chief Executive Officer. Please go ahead. David Gladstone: Well, thank you for that nice introduction, and thanks to all of you who called in today to hear from us. We always enjoy these times with you and on the phone and wish there were more times to talk about it. Now we'll hear from Catherine Gerkis first, our Director of Investor Relations, to provide a brief disclosure regarding certain regulatory matters. Catherine, go ahead. Catherine Gerkis: Thanks, David. Good morning, everyone. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstonecommercial.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-K and earnings press release for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X, @GladstoneComps as well as Facebook and LinkedIn. Keyword for both is, The Gladstone Companies. Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses on property plus depreciation and amortization of real estate assets. We may also discuss core FFO, which is generally FFO adjusted for certain other nonrecurring revenues and expenses. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance. Now let's turn the presentation to Buzz Cooper, Gladstone Commercial's President. Arthur Cooper: Thank you, Catherine, and thank you all for joining today's call. We are pleased to update you on our results for the year ended December 31, 2025, our current portfolio and our 2026 outlook. 2025 was a productive year for our portfolio. During the year, we acquired over $206 million of industrial assets across 10 facilities totaling 1.6 million square feet with a weighted average cap rate of 8.88%. At closing, these properties had a weighted average lease term of 15.9 years. We increased portfolio industrial concentration as a percent of annualized straight-line rent to 69% as of December 31, 2025, as compared to 16 -- excuse me, 63% at the same date in 2024. We invested $21 million in existing portfolio towards renewing or extending 1.2 million square feet of leases at 18 of our properties. These leases resulted in a $2.1 million net increase in GAAP rent. We sold 2 properties consisting of 1 office and 1 industrial property and executed an agreement to sell another industrial property in the coming months. We amended, extended and upsized our syndicated bank credit facility from $505 million to $600 million. We closed on an $85 million private placement at 5.99% senior unsecured notes due December 15, 2030. As we have discussed in the past, we remain steadfast in several key focus areas: growing our industrial concentration, adding value in our existing portfolio through renewals, extensions and strategic capital investments and disposing of noncore assets and strategically redeploying those proceeds into quality industrial assets. By executing on these focus areas, we expect to achieve increased portfolio WALT, strong occupancy rates, streamline rental growth across the portfolio, continue to delever and decrease the cost of capital. Our asset management team continues to effectively manage the existing portfolio as evidenced by 100% collection of cash-based rents in the period, and occupancy of 99.1% across the portfolio, average remaining lease term of 7.3 years and a 4% same-store lease revenue increase compared to 2024. Each of these milestones is a testament to the mission-critical nature of the assets in our portfolio, the quality of tenant credits in our portfolio and our underwriting capabilities. We are grateful to our lenders for their continued trust and partnership with us. These long-standing relationships are critical to our continued investment in the current portfolio and the addition of mission-critical industrial real estate going forward. In short, our relationships with our tenants, the capital market community and our financial capacity have allowed us to execute upon our focus areas at a high level. Looking ahead to 2026, we remain focused on evaluating opportunities to acquire higher-quality industrial assets that are mission-critical to tenants and industries and accretive to our long-term strategy. As I mentioned a moment ago, we are working toward our near-term goal of 70% industrial annualized straight-line rent. We will look to achieve this goal and push past it in the coming year. While we do not have a time line for the disposition of all of our office properties, we are keenly focused on growing the industrial concentration of our portfolio. At the same time, we will continue to work with our existing tenants to extend leases, capture mark-to-market opportunities and support tenant growth through targeted expansion, capital improvement initiatives and build-to-suit opportunities. While we remain aware of the challenging office environment, we will be strategic and intentional in evaluating our specific portfolio, seeking opportune times to dispose of office and noncore industrial as part of our continued capital recycling efforts. With the availability via our increased line of credit, access to the private placement bond market, cash on hand and the ATM, we are positioned to deploy capital into accretive industrial acquisitions and portfolio improvements. In closing, 2025 was a great year for the company, and the team is focused on continuing their efforts as we head into 2026. I will now turn the call over to Gary to review our financial results for the quarter and liquidity position. Gary? Gary Gerson: Thank you, Buzz, and good morning, everyone. I'll start my remarks regarding our financial results this morning by reviewing our operating results for the fourth quarter of 2025. All per share numbers referenced are based on fully diluted weighted average common shares. FFO and core FFO per share available to common stockholders were both $0.37 per share, respectively, for the quarter. FFO and core FFO available to common stockholders during the fourth quarter of 2024 were both $0.35, respectively. FFO and core FFO for the 12 months ended December 31, 2025, were $1.38 and $1.40 per share, respectively. FFO and core FFO for the same period in 2024 were $1.41 and $1.42 per share, respectively. Same-store lease revenue increased by 4% in the 12 months ended December 31, 2025, over the same period in 2024 due to an increase in recovery revenue from property operating expenses and an increase in rental rates from leasing activity subsequent to the year ended December 31, 2024, partially offset by a settlement received at one of our properties related to deferred maintenance in the prior period. Our fourth quarter results reflected total operating revenues of $43.5 million with operating expenses of $26.4 million as compared to operating revenues of $37.4 million and operating expenses of $25 million for the same period in 2024. Operating revenues were higher in 2025 due to an increased portfolio size, increased recovery revenues and higher rental rates. Expenses were higher in the fourth quarter of 2025 versus 2024, mainly due to the higher depreciation from a larger portfolio, partially offset by an impairment charge and crediting back of all the incentive fee in the fourth quarter of 2024. At the end of the quarter, we had one industrial property and a portion of a land parcel held for sale. During the quarter, we extended and upsized our bank credit facility to $400 million in term loans and a $200 million revolver. The revolving credit facility maturity was extended to October 2029 and the maturity dates for Term Loan A and Term Loan B components were extended until October 2029 and February 2030, respectively. The amended credit facility also provides the company with options to extend the maturity dates of the revolving line of credit and Term Loan C components until October 2030 and February 2029, respectively. The transaction led by KeyBanc as joint lead arranger and book manager as well as Bank of America, the Huntington National Bank, Fifth Third Bank National Association as joint lead arrangers, Synovus Bank and S&T also renewed their commitments. In addition, PNC Bank and Webster Bank both joined as lenders. In Q4, we also issued $85 million of 5.99% senior secured notes due December 30, 2030, in the private placement market. Investors included Nuveen and New York Life. This is our second issuance in this market, which allows us to decrease our cost of capital and simplify our balance sheet. As of today, we have $27.6 million of loan maturities in 2026. As of the end of the quarter, we had $37.4 million in revolver borrowings outstanding. Looking at our debt profile. As of December 31, 48% was fixed, 47% was hedged floating rate and 5% was floating rate, which is the amount drawn on our revolving credit facility. As of December 31, our effective average SOFR was 3.87%. Our outstanding bank term loans are all hedged to maturity with interest rate swaps. We continue to monitor interest rates closely and update our hedging strategy as needed. During the 12 months ended December 31, 2025, we sold 4.4 million shares of common stock under our ATM program, raising net proceeds of $61 million. We continue to manage our equity activity to ensure that we have sufficient liquidity for upcoming capital requirements and new acquisitions. Taking in the year as a whole, we increased net assets from $1.1 billion to $1.25 billion, which was the result of the net portfolio acquisitions and revenue-generating portfolio CapEx during the year. As of today, we have approximately $4 million in cash and $60 million of availability under our line of credit. We encourage you to review our quarterly financial supplement posted on our website, which provides more detailed financial and portfolio information for the quarter. Our common stock dividend is $0.30 per share per quarter or $1.20 per year. And now I'll turn the program back to David. David Gladstone: Thank you, Gary. That was a good report, and it was a good one from Buzz and Catherine did her part as well. The team has performed very well overall in a very nice quarter indeed that we have for our shareholders. As you've heard today, in summary, during the fourth quarter, we amended and extended our bank credit facility, which is now $600 million. We issued $85 million of 5.99% senior unsecured notes in the private placement marketplace. For 2025, we acquired $206 million of industrial properties that we are gradually becoming a fully industrial real estate investment trust. We increased our industrial percentage on annual straight-line rent to 69%. And here's one you always love to hear, increased occupancy to 99.1%. That is we've got tenants, almost 100% of our stuff is leased out. Gladstone Commercial's team is growing the real estate that we own at a good pace, and the team is doing a great job managing the properties we own, especially during these challenging times. We don't have a lot of industrial property that's somehow related to the Internet or to the M&A that's going on the stock, but we certainly hope to hit some of those big numbers that are out there. My team of strong professionals continues to pursue potential quality properties on the list of acquisitions they are reviewing. We've got a good strong list of acquisitions that we're looking through. Okay. I'm going to stop here and let the operator come in and help us listen to some of the questions that people always ask us. Operator: [Operator Instructions] Today's first question is coming from Dave Storms of Stonegate. David Storms: I wanted to start with the occupancy. It looks like occupancy remained the same, though you did lose a tenant. I was just hoping to get a little more color on what happened there. Arthur Cooper: David, nice to talk with you. Relative to the occupancy, we're at an all-time high, if you will, since 2019. We renewed a tenant and have increased our occupancy. And we -- obviously, the portfolio management team has done a great job relative to that. We see continued maintaining that occupancy. Certainly, there'll be some fluctuations as we add property or dispose of property. David Storms: Understood. I appreciate that. And then one more. I know you mentioned that you're looking to get the portfolio up to 70% industrial. You don't have a time line for that. Just curious as to what you're seeing in the transaction environment and if anything has changed now that we have a little more clarity about the incoming Fed share and the potential plans to reduce the Fed's balance sheet. Arthur Cooper: It's a very competitive market. And almost every day, you see somebody else coming into the space of triple-net. We play in the middle market and our value-add is underwriting middle market credits. We're not playing in the high range, if you will, both size as well as A-rated credits. So we are working hard at adding good properties, good tenancy focused upon the quality of the tenant and quality of the real estate, not just going for the highest return. So we're going to be very discerning as it relates to what we're going to put on our books and what we are going to chase. Well, David, if I could, relative to just thinking through it on your question, the first question, we did have a tenant with a fee we received that may be answering your question relative to the payment as well as the effect on occupancy at that point, but we did have a fee received. Operator: Our next question is coming from John Massocca of B. Riley Securities. John Massocca: Sorry if I missed this maybe earlier in the call, what's the size of the pipeline today roughly? And I guess if you think about maybe cap rates in the pipeline or how cap rates are trending, where do those stand today? And maybe where you think they're going to trend over the course of the year? Arthur Cooper: Thank you, John. And we are continually looking at somewhere in the neighborhood of $300 million in transactions. Obviously, we would love to do them all. We can't do them all. We won't do them all. Cap rates generally from where we are competing are at a floor of 7.5%. And certainly, for us, we look between 7.5% and 8.5% is realistic. But the competition is great. One of our -- again, our value add, as we always say, is our underwriting capability, plus we're able to purchase all cash. So we are also competitive in the market. It was a little slow coming out of the gate at the end of 2025 as it relates to opportunities, but we do see that picking up currently. John Massocca: And maybe kind of cap rate ranges is roughly where you're kind of seeing those today for your target assets? Arthur Cooper: Going in 7.5% and up with an average cap rate north of 9%. John Massocca: Okay. And then in terms of the in-place portfolio, how are you looking at kind of lease maturities over the course of the year? I know you have a relatively sizable one at the very end of the year, but anything else that's kind of noteworthy before then or even maybe in early 2027. Arthur Cooper: Sure. Happy to address that. And as mentioned previously, all the property management team, portfolio management has done a great job. We've been in contact with every tenancy that's coming due in the next 2 years. We have 8 in 2026, half for office, half for industrial. Of that, it represents a total of approximately 8% of straight-line rent. But in our discussions with the tenancy and as we have projected out with some agreements in place relative to waiting just having a signed document or their ability within their lease to just automatically have a right to exercise, we are concentrating on 2 out of those 8 because 6 of them have been, in all honesty, we believe very, very much in the barn. But we have certainly our asset in Austin, where GM is the tenant, which represents approximately 3% of our straight-line rent. It does lease mature at the end of the year. The team is in place and has -- creating a plan that we are going to work relative to leasing, of which we had 2 tours here in the coming week of approximately 50,000 square foot each. But one way or the other, that property will be taken care of. And the other is an industrial -- excuse me, office building of which we do have 2 tours as well. That lease matures at the end of 2026 and 2 full building users are touring in the next 2 weeks. As it relates to 2027, we have 14. Again, half are office, half are industrial. Of those, we are very confident that all but 3 are, for lack of a better word, perhaps not -- I don't want to say not going to happen, but we don't have the clarity we wish. But again, that only represents 1.2% of the straight-line rent of those maturities. Others, again, have the right to extend, and we have every confidence they will and have been in contact with them, but their notice date is not yet upon us, upon them, so they haven't given us notice. and we are diligently working the other small amount of approximately 85,000 square feet in 2027. John Massocca: Okay. And then last one for me on the balance sheet. How are you thinking about the need for additional debt capital given some of the activity at quarter end? I mean, does that provide you think sufficient runway for what your kind of target acquisitions are for the year? Or should we be looking for any kind of additional activity in the debt markets? And I guess, how would you maybe look to spread that between either term loan debt or additional kind of private placement or even mortgage debt? Gary Gerson: John, this is Gary. Really, the way we look at debt right now, our kind of goal is to use our revolving credit facility to acquire properties and then clean up that facility with an issuance in the private placement market. And so that's what we've done in the last 2 years. That's what we intend to do going forward. As you know, we actually have a couple of mortgages coming due. And once those -- once we pay those off, we'll then put those properties into the unencumbered pool, which will increase our availability. So right now, our liquidity is about $60 million on the credit facility that we expect to go up over time, given new properties. We have plenty of room under the facility to grow our availability. So I think right now, that's our general look on debt going forward. Operator: [Operator Instructions] Our next question is coming from Craig Kucera of Lucid Capital Markets. Craig Kucera: I think last quarter, you mentioned that you were working on a couple of transactions that you thought might close in the fourth quarter. Are those still in the mix? Or are those transactions you don't think you're going to execute on? Arthur Cooper: We have one that we believe we can hopefully get done by the end of this quarter. Still some diligence work to do on that. So yes, some bled over, did have one fall out. Actually, the seller pulled back on it, I believe. So we're hopeful of one and a pickup in activity into the second quarter. Craig Kucera: Got it. And can you give us a sense of the dollar amount that might close here in the first quarter? Arthur Cooper: I would say it's in the range of $10 million. Craig Kucera: Okay. That's helpful. And you mentioned a fee earlier. I know we had a discussion about this last quarter about some lease termination income or accelerated rent, but was that recognized here in the fourth quarter at about $1.5 million? Gary Gerson: Yes, it was. That was a termination fee, and we had a tenant that came right in after that tenant left. So the building is occupied the same level of occupancy. So there's no loss there. And that -- yes, that was a onetime fee. Craig Kucera: Got it. I appreciate that. Another for me. I guess just thinking about the incentive waiver, philosophically, I mean, looking at it, it looks like the Board is sort of targeting maybe a core FFO payout ratio of something around 85%, plus or minus. Is that how we should think about that? Or is there any color that you think you can give us on that? Gary Gerson: I mean that's reasonable. I think going forward, we'd like to lower that going forward, but I think that's a reasonable assumption, yes. Operator: Our next question is a follow-up from Dave Storms of Stonegate. David Storms: I just wanted to ask one around average lease terms. It looks like they're trickling up to the mid-7s. Is this by design? Is this something that you're seeing in the market? Maybe just any more color on that. Arthur Cooper: Sure, Dave. And obviously, the longer WALT, the better. So we do look at transactions that allow for that. It gives us more stability within the portfolio. And so yes, we will look at transactions 7 years and up, prefer 15 and up. Of course, that leads to our wheelhouse of sale-leaseback transactions. So yes, the longer we can do, the better. David Gladstone: Okay. Do we have any more questions? Operator: We're showing no additional questions at this time. Mr. Gladstone, I turn it back to you for closing comments. David Gladstone: Thank you very much. And that was pretty puny in terms of number of questions. We like more questions from our folks out there. This really makes a meeting go faster and easier and straight to the point for all of these. So thank you all for calling in, but save up your questions for the next meeting. That's the end of this call. Thank you. Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.
Operator: Good morning, everyone. Thank you for standing by, and welcome to Cenovus Energy's Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the meeting over to Mr. Patrick Read, Vice President, Investor Relations and Internal Audit. Please go ahead, Mr. Read. Patrick Read: Thank you, operator. Good morning, everyone, and welcome to Cenovus' 2025 Year-End and Fourth Quarter Results Conference Call. On the call this morning, our CEO, Jon McKenzie; and CFO, Kam Sandhar, will take you through our results. Then we'll open the line for Jon, Kam, and other members of the Cenovus management team to take your questions. Before getting started, I'll refer you to our advisories located at the end of today's news release. These describe the forward-looking information, non-GAAP measures, and oil and gas terms referred to today. They also outline the risk factors and assumptions relevant to this discussion. Additional information is available in Cenovus' annual MD&A and our most recent AIF and Form 40-F. And as a reminder, all figures we reference on the call today will be in Canadian dollars, unless otherwise noted. You can view our results at cenovus.com. For the question-and-answer portion of the call, please keep to one question with a maximum of one follow-up. You're welcome to rejoin the queue for any other follow-up questions you may have. We also ask that you hold off on any detailed modeling questions. You can follow up on these directly with our Investor Relations team after the call. I will now turn the call over to Jon. Jon, please go ahead. Jonathan McKenzie: Great. And thank you, Patrick, and good morning, everyone. I want to begin by recognizing our safety performance. Safety remains the cornerstone of everything we do at this company and every decision we make. At our Sunrise Oil Sands asset, our teams have now gone through 2 full calendar years and more than 1.8 million hours worked without a reportable incident. Now this is particularly notable because 2025 represented the highest activity level at Sunrise in the past 6 years with close to 950,000 hours worked as they completed 2 turnarounds and advanced the asset's growth program. This outcome reflects our deep commitment to safety even during periods of elevated activity. Personal safety for each of our employees and contractors remains a critical priority, which must underpin everything we do. We are working to build on our strong performance and continuously improve to ensure that our people come home safely each and every day. So now to our results. 2025 was a very important year for Cenovus in which we executed a long list of priorities across the company. Our performance in 2025 is a testament to the great people and assets we have at Cenovus. When I look at all the things that we accomplished this year, I couldn't be more impressed by the way our people met the challenges we faced. We had a very ambitious agenda, and we collectively delivered against it. Operationally, our teams delivered exceptional performance, including setting multiple upstream production records across our assets and executing consecutive quarters of top quartile downstream reliability and profitability. Our upstream production of 834,000 BOE per day in 2025 was the highest ever for Cenovus and up 3% from 2024, excluding the impact of the MEG Energy acquisition. We also reduced total upstream nonfuel operating costs by approximately 4% from the year before. In the Downstream, our refineries ran well through the year with a combined utilization rate of 95% across the Canadian and U.S. segments. This included the impact of a major 59-day turnaround at Toledo, which was completed 11 days ahead of schedule. Now at the same time, we lowered costs, delivering a reduction in operating costs of around $4 per barrel in the Canadian Refining segment and $2 per barrel in our U.S. operated refineries. We recognize there's more work to do as we continue to drive down costs and leverage our commercial capabilities to enhance our market capture. We also achieved major milestones across our growth projects in 2025. This included completing the Narrows Lake tieback to Christina Lake, a first of its kind extended steam reach pipeline. Completing the facilities work on the Foster Creek optimization project, which delivered production growth well ahead of schedule and completing the construction and installation of the tie-ins on the West White Rose platform. These projects reflect an enormous amount of effort, determination, and ingenuity from all parts of our organization that I couldn't be -- and I couldn't be more proud of what we've delivered. Now 2025 also saw us complete 2 significant transactions. Starting with MEG Energy. We have long recognized the quality of the resource and the synergy opportunity available if we consolidated the Christina Lake area. When MEG became available, we responded accordingly. The acquisition was successfully closed on November 13, adding over 100,000 barrels a day of top-tier resource located directly within our largest producing SAGD asset. The addition of MEG's assets and people have strengthened our industry-leading heavy oil portfolio and solidified our position as the preeminent heavy oil producer, not just in the Western Canadian Sedimentary Basin but globally. We also sold our interest in the WRB refining joint venture at the end of the third quarter. As a result, we now have full operational, commercial, and strategic control of our Downstream business, which remains critical -- which remains a critical component to our heavy oil value chain. Together, these transactions position the company for continued material value growth over the long term. So now turning to our fourth quarter results. Upstream production in the fourth quarter was 918,000 BOE per day, headlined by oil sands production of 727,000 BOE per day, both records for the company. Including the full benefit of the MEG acquisition, which closed in mid-November, we exited the year with production over 970,000 BOE per day in December, including nearly 786,000 BOE per day from the oil sands. We are encouraged by the recent performance and expect our operating momentum to continue into 2026 and beyond. At Christina Lake, production averaged 309,000 barrels a day in the fourth quarter. That includes roughly 6 weeks of production from the newly acquired Christina Lake North asset, which achieved its highest ever production rates of over 110,000 barrels a day in the quarter. The combined Christina Lake is the largest and highest quality thermal asset in the industry with a reserve life measured in decades. The integrations of systems and people is largely complete, and we have delivered a majority of the expected corporate synergies already. Work is now progressing at pace to capture operational synergies. We have begun a delineation and seismic program at the Christina Lake North asset, which will allow us to optimize our go-forward development plans for this resource. Our technical groups have begun leveraging our scale and operating practices to deliver near-term production and cost savings. We have also begun drilling a 42-well redevelopment program, which will support additional production volumes in 2026 and 2027. We are very comfortable in our ability to deliver the $150 million of annual synergies in 2026 and '27, and over $400 million of annual synergies by the end of 2028. We are delineating additional synergy opportunities as we fully integrate our future development plans for the broader Christina Lake region. Now at Foster Creek, we achieved a production record of 220,000 barrels per day in the quarter, reflecting the impact of the Foster Creek optimization project. Incremental steam capacity of approximately 80,000 barrels a day was brought online in mid-2025. And in the fourth quarter, the water treatment and deoiling facilities were commissioned and put into service. With these milestones behind us and production largely ramped up, we have successfully delivered around 30,000 barrels a day of growth at Foster Creek well ahead of schedule. Looking forward, new well pads associated with the optimization project will be brought online at Foster Creek this year, which will support increased production levels or support the increased production levels we have seen. We also continue to progress our enhanced sulfur recovery project that will reduce operating costs by about $0.50 to $0.75 per barrel when it comes online midyear. At Sunrise, following the turnarounds executed in Q2 and Q3, production rose to over 60,000 barrels a day in the fourth quarter. The first of the new well pads from the East development area, incorporating Cenovus well pad design for the first time at Sunrise is currently steaming and expected to start up in early 2026. We will bring on a total of 3 well pads in this high-quality reservoir in 2026 and at least one more in 2027. This development will deliver the next phase of growth as we progress our plans to increase production to over 70,000 barrels a day by 2028. Now with the work we completed earlier this year, we have also extended the turnaround cycle from 4 to 5 years at Sunrise. That means there is no major cycle ending turnarounds at Sunrise until 2030, providing an extended runway while we grow volumes and optimize the asset. The Lloydminster thermals had an exceptional fourth quarter, partly as a result of the highly successful redevelopment well program that significantly exceeded our expectations. In tandem with strong base well optimization, production averaged over 107,000 barrels per day in the quarter, more than 10,000 barrels higher than the previous quarter. This includes the impact of the sale of Vawn at the beginning of December. And building off the success we had in 2025, we'll be deploying an even larger redevelopment program in Lloydminster in 2026. Now turning to the Atlantic. At West White Rose, we're currently conducting systems integration testing, and we're in the final phase of commissioning. Our teams have done a fantastic job of safely progressing the scope in spite of particularly challenging weather in the North Atlantic. We've seen an abnormally severe winter storm season with waves as high as 17 meters and winds up to 170 kilometers per hour. Through this, our people have continued to make steady progress. We have completed the welding and coating of the platform legs and the main power generators are fully commissioned. We also opened the living quarters on the top side prior to year-end, transitioning staff from using a flotel vessel to fully manning the platform. Now we've guided you to expect first oil in the second quarter. With the weather disruptions we've seen, that timeline will be tight but our people are determined and do incredible work as we push this forward at pace. Also in the offshore, in conjunction with our partners in Asia, we successfully extended the gas sales agreements in China for both Liwan 34-2 and Liwan 29-1 subsequent to the quarter. The extensions will enable sales through the end of the field's production periods in 2034 and '40, respectively. This increases sales volumes within our 5-year plan and add nearly $2 billion of incremental free cash flow to these assets over the life of the fields. Now moving to the Downstream. Fourth quarter results underpin the profitability and competitiveness of our assets in a relatively weak crack environment. In the quarter, the Canadian Refining business ran at its highest rates of production through the year with crude throughput of 113,000 barrels per day or utilization rate of about 105%. in U.S. Refining, our results in the fourth quarter reflect not only our operated -- sorry, reflect only our operated assets as our interest in the WRB refining was divested effective September 30. Our U.S. refining business delivered crude throughput of 353,000 barrels per day or approximately 97% utilization. While the market crack spreads in Chicago area deteriorated significantly in early December, which is typical for this time of year, we're able to capture a larger share of the margin available. Excluding the receipt of onetime pipeline settlement, our adjusted market capture was around 95% in the quarter. This reflects both seasonal product mix impacts related to our configuration as well as our ability to capitalize on commercial opportunities we saw in the market during the quarter. Now I'm going to pause for a minute, and I will turn this over to Kam to walk through our financial results. Kam Sandhar: Thanks, Jon. Good morning, everyone. In the fourth quarter, we generated approximately $2.8 billion of operating margin and $2.7 billion of adjusted funds flow. Operating margin in the Upstream was over $2.6 billion, in line with the prior quarter with record production in the oil sands more than offsetting declining benchmark oil prices. Oil sands nonfuel operating costs decreased to $8.39 a barrel in the fourth quarter, over $1.25 lower than the prior quarter due to higher production volumes and reduced maintenance activity. As Jon mentioned, our Downstream business continued to demonstrate strong performance in the quarter. Downstream operating margin was $149 million despite deteriorating regional crack spreads in the U.S. towards the end of the year. This included $138 million of inventory holding losses and $15 million of turnaround expenses, partially offset by a onetime pipeline settlement receipt. Excluding these impacts, downstream operating margin would have been approximately $235 million in the quarter. In the U.S. Refining, operating costs, excluding turnaround expenses, were $11.57 a barrel, reflecting higher fuel and electricity prices, planned maintenance activity and modestly lower throughput quarter-over-quarter. The fourth quarter environment was particularly favorable to our configuration with heavy crude differentials widening, diesel and jet fuel advantage relative to gasoline and lower benchmark crude prices benefiting asphalt and other product margins. Our marketing teams were able to capitalize on market opportunities in the quarter, while at our Lima and Toledo refineries, we continue to leverage and enhance the interconnectivity of the sites. On a sustained basis, we continue to guide to adjusted market capture of around 70% at a $14 WCS heavy oil differential with opportunities to improve this over time. Capital investment in the fourth quarter was nearly $1.4 billion, resulting in full year capital spending of $4.9 billion. This spend supported sustaining activity across the business, along with investment in growth and optimization, including capital directed to our 3 of our major capital projects at Narrows Lake, Foster Creek and West White Rose. As we look forward, growth spend in 2026 -- in the 2026 plan is approximately $300 million lower at the midpoint year-over-year. This growth spend includes commencing the drilling at West White Rose, advancing the Christina North expansion project, which will support growth at Christina Lake to around 400,000 barrels a day. Net debt was approximately $8.3 billion at the end of the fourth quarter, an increase of approximately $3 billion due to the MEG transaction, partly offset by the receipt of $1.9 billion of cash proceeds from the sale of WRB. Shareholder returns in the fourth quarter were $1.1 billion, including $714 million through share buybacks and $380 million through dividends. After closing the MEG transaction, we've adjusted our framework to balance deleveraging and shareholder returns while we move towards our long-term net debt target of $4 billion. When net debt reaches $6 billion, we will aim to increase shareholder returns to around 75% of excess free funds flow. Also in the fourth quarter, we recognized a current tax recovery of $189 million, primarily driven by the integration of MEG's business with Cenovus. Full year 2025 current taxes were approximately $780 million, well below our original guidance of $1.2 billion to $1.3 billion. Our cash tax guidance for 2026 remains unchanged at $1 billion to $1.3 billion at around a USD 60 WTI price. With the strong operational performance, meaningful progress towards capturing MEG synergies and a robust balance sheet, we are well positioned to continue to deliver value from our opportunity-rich portfolio. I'll now turn it back to Jon with some closing remarks. Jonathan McKenzie: Great. And thank you, Kam. 2025 was a great year for this company by any measure and a testament to the dedication and determination of the people that we have in this organization, including those who most recently joined us from MEG. Our disciplined execution and focus on operational excellence enabled us to deliver significant milestones across the major projects this year while setting numerous production records at all our oil sands assets. In our Downstream business, we've continued to demonstrate the potential of the assets as evidenced by consecutive quarters of top-tier reliability and meaningful cash flow contribution. Completing the strategic acquisition of MEG has materially extended our industry-leading low-cost, long-life resource base. Through the integration of our highly complementary assets and the focus on the ingenuity of our combined teams, we expect to create significant value from this business for years and decades to come. Anchored by our strong financial framework and balance sheet, and the many opportunities ahead of us, Cenovus is more resilient, competitive and durable than ever before. And with that, we're happy to answer any questions you might have. Operator: [Operator Instructions] Our first question will come from the line of Dennis Fong from CIBC World Markets. Dennis Fong: First and foremost, congrats on a really strong quarter and year. My first one here focuses really on the MEG assets that you've now taken over. I was hoping to find out what some of the next steps happen to be in terms of obviously turning the asset over to your teams? And then how are you looking at applying, we'll call it, Cenovus' best practices and technical understanding on the asset to really drive stronger performance and realize the synergies that you outlined or more with the initial presentation. Jonathan McKenzie: Sure. So maybe I'll take a crack at it, and then I'll turn it over to Andrew Dahlin to give you some of the details on the production side. But I think we've had this asset now for, I guess, it's about 3 months now. And I'd say that particularly during the first 6 weeks since we acquired this, we moved really, really quickly on getting after all the corporate synergies that we had outlined in our investment case. So everything from the HR synergies through the commercial synergies, the finance synergies, getting the amalgamation done to realize some of the tax synergies. That was all done before year-end. And so we kind of look at that run rate of [ $150 million ], and we're very, very comfortable that the [ $120 million ] that is sort of the corporate component of that is very realizable and has largely been captured now. So as we kind of move into 2026, we're really focused on the operations proper. We have started a lot of work on delineating the reservoir in advance of doing our redevelopment program, which will kick off next month and really looking at the well pad development and seeing where we can insert ourselves to impose some of our operating practices and well design on that. And Andrew will give you a bit more detail. But we haven't lost sight, Dennis, of the bigger picture and the view of how do we bring more synergy forward and how do we go beyond the $400 million that we had articulated in the business case. And we're comfortable there's a lot more there, and that's what we're working on now. But Andrew, maybe you can talk a little bit about some of the things you're doing in the field to get additional production synergy out of those operations. That's right. Andrew Dahlin: Yes, it's Andrew Dahlin speaking. Yes, maybe just focusing on production itself. So the first thing we're going after here in the first half of this year is the start of the redevelopment campaign. So the plan is to drill 40 redevelopment wells that ultimately get after heated bitumen zone that sits below our current production wells. We will get production from our first redevs here in Q2 of this year. And I think as Jon has spoken to, that would benefit and see a production uplift both here in 2026 and into 2027. So that's the kind of the first production lever we're pulling. Second one would be our development methodology. So those of you that came to our teach-in, you'll know that our focus or our sort of way of developing it is the field is with wider well spacing and longer wells. So we are moving to implement that already here latter part of 2026. We'll be steaming the first pad in 2027 and seeing a production ramp-up and actually much lower development costs starting in '26 into '27. And then the team is working really hard on facility debottlenecking and expansion. So there's a debottlenecking program, actually 3 MOCs taking place right as we speak to be able to push more volume through the plant. And then, of course, we have a facility expansion project that will see the facility expanded and production taken to an excess of 150,000 barrels a day by 2027, 2028. So that was kind of the immediate production focus. And then on top of that, of course, if I look further out, we have things like boundary land, so the boundary land that existed between ourselves and MEG. As Jon alluded to, we're delineating that opportunity and then putting that into an optimized long-term development plan for the asset. So I'll stop there. Jonathan McKenzie: If I were to sum it up, Dennis, I'd say there's really no surprises in what we put out as our investment case on this. And I think we'll be bringing forward additional upside as we go through the coming quarters and months. Andrew Dahlin: Fantastic. No, I really appreciate that -- the depth of that context there, both Jon and Andrew. Shifting my focus towards Lloyd for my second question. In your slide deck, you showcased development, both from the thermal as well as the, we'll call it, conventional assets towards over 145,000 barrels a day over the next couple of years. But I did draw a little bit of notice to the use of solvent enhanced oil recovery techniques. Can you elaborate a little bit more on that opportunity and what that could mean for the field? Jonathan McKenzie: Yes. So we've got a solvent project going on at what we call Spruce Lake North, which we think is an ideal reservoir for the application of solvent. And I think you know that we've been kind of leaders in this and kind of developing that technology. So it's not a, I'd say, a step change from our strategy but it is something that we think is an opportunity for us, and this is kind of an ideal place to do this. I think, Andrew, maybe you can talk a little bit about the development of that and when we can expect to see that project come online. Andrew Dahlin: Yes. No, happy to. So indeed, Spruce Lake project, we've taken FID on the project. Its spend is in the order of $250 million. We'll spend that here in 2026 and through into 2027 when the project will come on stream, I know. Essentially, what we do is we inject condensate along with the steam but less steam. And what it does is it lowers our SOR, it drives higher production and it drives higher ultimate recovery. So we see an immediate benefit to Spruce Lake. And frankly, we see the future application of this in the rest of our oil sands assets. and potentially also in some of our lower quality reservoirs. So we very much have a view of how could we deploy this technology into the next 2 to 3 decades. So that's where we are on that. Operator: Our next question will come from the line of Menno Hoshoff from TD Cowen. Menno Hulshof: I'll start with maybe just on the Downstream side of things. One big thing that jumped out for a lot of people in the quarter was the big uptick on a quarter-on-quarter basis for U.S. market capture. Yes, just a big increase. And you did touch on this to some degree in your opening remarks, but can you just elaborate on what drove that because nobody was even close to that in their models, I don't think. And maybe your expectation for market capture through the middle of the year, especially given limited planned turnaround activity. Jonathan McKenzie: Well, I'll tell you what I'm going to turn it over to Eric to give you a view on that. Eric rarely smiles but he is smiling this morning. So I think we're really pleased and happy with the work that he and his team have done. But Eric, why don't you talk a little bit about how you got the market capture you did? Eric Zimpfer: Yes. Thanks, Jon, and thanks, Menno, for the question. Yes, really pleased with the performance. I would say it's a combination of a number of things. I think certainly, fundamentally, just having the reliability in place that gives you the ability to capture the market when it presents itself. And so what we saw in the fourth quarter was some market opportunities where there were some supply disruptions in the region and our reliability allowed us to capture that. I think you put on top of that some of the real commercial optimization work that we've been doing between finding the synergies between Lima and Toledo, using dock access to find new markets for our products, just really helped underpin the improvement that we've been driving, and you got to see that in the fourth quarter. The other nuance to market capture that I would highlight is there is seasonality to it. So what happens in the fourth quarter when you see the gasoline cracks start to fall off as you expect in PADD 2, there is some benefit to our portfolio where we have some GDD flexibility. It also helps relative to some of the other secondary products that we make, so asphalt and some of those products are able to kind of price better relative to the crack, which shows a higher market capture. What I would say going forward is we'll continue to guide to that 70%, but we do see seasonality in it but I would continue to steer towards that 70% at the $14 dip that we've talked about. Menno Hulshof: So we are starting to see a bit of an impact from the PADD 2 egress initiatives, that you've talked about in the past? Eric Zimpfer: Yes, absolutely. We've seen some real good improvements around our ability to utilize the Toledo dock. We set an annual record in the volumes we've been able to move. And that just really helps us find new markets and be able to really get after some better opportunities for us, and we'll continue to explore all sorts of options to continue to take advantage of that. Menno Hulshof: Okay. That's helpful. And I'm going to assume that's part of the first question, cutting off if it's not. But just on West White Rose, really good to see that the Q2 timeline is still intact. But can you just give us an update on the status of drilling? And what should we be modeling for an exit rate for 2026 if everything goes according to plan? Jonathan McKenzie: Yes. No, you're quite right, Menno, we're still guiding to Q2. I did mention in my notes that it's tight. So we had hoped to be drilling by this time. We are in the final stages right now of commissioning, and that will make the time frame, again, tight for the end of Q2. But Andrew, maybe you can talk a little bit about exactly where you are and how you're seeing production through the end of the year. Andrew Dahlin: Menno, it's Andrew speaking. Yes, indeed, maybe I'll just sort of make sure that we all sort of level on where we are in terms of status of the project. So major construction is complete. The platform is commissioned and inhabitable. All the subsurface work connecting the platform to the SeaRose is completed. And as Jon talked about, we're in the final throes of commissioning and sit testing. So that's where we are today, and then we move into drilling. I think in terms of how do I look at it from a production and the CapEx for the year, we absolutely to guidance, both for production. Our production guidance was 20,000 to 25,000 barrels a day and actually don't have CapEx handy but we're also within that CapEx guidance. And so what you'll naturally see is as the first and the second well come on stream, you'll see a -- sorry, I'll start again. You'll have a base production from SeaRose and from Terra Nova, and that will continue through the year. I tell you that we're seeing good uptime and availability on production from both of those facilities here in Q1. And then obviously, in the second half of the year, you'll get a production ramp-up as each new well comes on. Jonathan McKenzie: So the final push is on, Menno, and we've increased the number of people on the platform, and we look to be drilling very, very shortly. Operator: Our next question will come from the line of Neil Mehta from Goldman Sachs. Neil Mehta: And Jon, you addressed this in a couple of different ways, but maybe you can dig a little deeper, which is you're getting to be a 1 million barrel a day producer, and you've got a lot of growth here coming in the next couple of years. I think there's a lot more questions about egress coming out of Canada and apportionment is a factor and you have a little bit less WRB as a hedge. And so just maybe you can address this concern head on. Is Cenovus a lot more exposed to potential volatility in WCS? Or do you feel confident about your ability to navigate that potential risk? Jonathan McKenzie: Yes. No, it's something we obviously think about Menno or Menno -- Neil. Since I came to this company, the 2 things that we obviously highlighted were egress and having a strong balance sheet. And when you kind of think about this company growing from a standing start to 1 million barrels a day over 20 years, those 2 things have really been front and center for us. So Geoff Murray , who's our EVP of Commercial, he deals with this every day. But Geoff, maybe talk about some of the egress options that we have and where we sit as a company in terms of our balances. Menno Hulshof: No, it sounds great, Jon. Neil, great question. If we wind the clock way back when to 2018, we sold 80% of what we made in Alberta. Where we stand now is maybe 40% of the crude oil we make is sold in Alberta and exposed to that diff. So we've moved a very long way, as you point also the growth on that front. So that's a really big shift over the past 7, 8 years. Probably more importantly is looking forward in the near term. We've been saying for a while, Trans Mountain is here. It's working. It's performing as expected, and you will see that through the stability of the Alberta diff as compared to global points, and that's proven to be true. We've also said we're not going to rest on our laurels. And we and the industry at large haven't. I think we've disclosed entering into opportunities for 150,000 barrels a day of export over the next 2 years under contract. And even more importantly than that, I would say Cenovus has been pressing hard across the industry for what's next, although the diff is in the right place and stable, we know that we need to take action to continue that. And I think you can probably scour the market and find a number of publicly discussed projects, and we're really quite supportive of all of them, both in philosophy but also through contracting mechanisms, and we'll continue to do that. Jonathan McKenzie: Yes. I'd say just adding to that, Neil, I would say that we probably see more proposed projects today than I've seen in the last 10 years. and more projects that are doable in a shorter time frame than we've had in a long period of time. So as Geoff mentioned, heavy oil egress is a really important part of our strategy, and we are actively evaluating and looking at all of those options that are available to us. And you shouldn't be surprised if we take action on some of those. Neil Mehta: And the follow-up is around return of capital versus growth. We're probably in a firmer commodity price environment, Jon, than you and I would have thought a couple of months ago. Certainly, geopolitics is part of that. But if we are -- if we do go into a period of time where we're above, let's say, a mid-cycle price that you outlined, does that dollar go back to deleveraging/return of capital? Or could you accelerate the growth lever? How do you think about that? Jonathan McKenzie: We really don't think about the commodity price of the day, Neil. We are kind of more value orientated in terms of how we allocate capital over the long term. And I think we've been pretty clear that in the short term, until we get down to $6 billion of net debt, 50% of the free cash flow is going to be used for deleveraging, and then we'll return 50% to the shareholders in the form of buybacks. But Kam, maybe you have some more thoughts on that. Kam Sandhar: Yes, Neil, I would just add, I think when you look at our philosophy around just capital allocation, the growth projects we've got in the portfolio, and I mentioned this in my remarks, our growth spend actually has come down year-over-year when you look at the projects we've got. We've obviously finished or close to being done things like Narrows, the Foster optimization, West White Rose. We obviously added the FEP expansion. But when you look at the portfolio as a whole, our growth spend is down year-over-year. So -- and one of the things we do try to do is we try to ensure that capital spend doesn't really change with commodity prices to Jon's point, in that we can fully fund that growth plan with our dividend and probably in a low $50 world. And so don't expect us to make any sort of knee-jerk reactions to capital spending if commodity prices flex down $5 to $10. And similarly, you're not going to see us move it in the other direction if oil prices go up. When you look at the priorities we have today in terms of our excess free cash flow, I don't think anything has changed. Neil, we -- obviously, our philosophy has been that we're going to continue to be balanced on deleveraging and share repurchases with our excess cash, and that's something we'll continue to do. I think I would say that obviously, the share price has continued to perform very well but we're nowhere near a price level that I would suggest is a level where we would move away from things like buybacks. We've made a lot of improvements to the business, both on costs, on growth and free cash flow improvements. And our business continues to get more and more resilient. And I think that affords us the opportunity to continue to buy back stock. Operator: Our next question will come from the line of Travis Wood from NBCCM. Travis Wood: I wanted to -- Menno kind of stole my question there but I wanted to dig into that a little bit more because I think it's quite interesting in terms of the rate of change. So could you talk about some of those anomalies that you saw through Q4 in order to capture that adjusted 95%? And does the marketing and trading team have that ability to capture those go forward? And I guess, in the same breath, how much does other refinery downtime have to do with that market capture? So if we see in the future, Whiting go down again, can we ramp up that market capture in those one-off quarters with other refineries going into turnaround? Eric Zimpfer: Yes. Again, great question, Travis. I appreciate the question. Yes, I think maybe just working backwards, I think certainly, with the reliability improvements we've been able to deliver in our portfolio, it positions us to be able to capture market opportunities when they present itself. And so any time there's a disruption in the market, that reliability lets you take advantage of it. And that's what we saw in the fourth quarter. And so you saw some strength in the crack really into early December before it started to fall off as you would expect it to in the winter season. And so I fully expect that is something we will continue to stay laser-focused on that when the market presents opportunities for us, we want to be able to take advantage of that. So that is absolutely core to what we want to be able to do. In terms of the market, I think every refinery and every downstream has its own unique configuration. And I think when the market fundamentals favor that configuration, you see the opportunity to have a higher market capture. So for us, where we have a high -- heavy differential -- sorry, where we have a higher heavy crude consumption where we see that heavy diff, that favors our portfolio. Where you see the gas crack come off, we have some diesel -- some distillate length, some diesel and jet length, we're able to take advantage of that by optimizing our cut points inside the refinery and really maximizing that distillate production. Superior has significant asphalt production, right? When you see the asphalt market have some strength and carry that forward, that favors that portfolio. And so that really is that seasonality I spoke to earlier that depending on what the market is favoring and how it's priced in, that can favor or that can work against you. And what we saw in the fourth quarter was really the opportunity, both from the market opportunities with some of the disruptions as well as our configuration fitting better into what the crack available was for us. Travis Wood: Okay. That's fantastic color. Switching gears for my second, just in terms of Liwan contracting on the gas sales, does that include any kind of contracted pricing as well? Is there any material change to the pricing as we look out through '26 and beyond? Jonathan McKenzie: Yes. No, that's a good question, Travis. So what we've done on 34- it's taken the last couple of years to really work on delineating those reservoirs. And what we're finding is those reservoirs are getting bigger than what we had originally booked for reserves, not smaller. And that's given us the opportunity to increase the gas sales right to the end of life of the PSCs. And that's a big deal for us. And so the gas contracts themselves are roughly the same as what they are today, although slightly higher as well. So we're very pleased with the pricing, very pleased with the volumes. And as I mentioned in my notes, it gives us about $2 billion of incremental free cash flow over the life of those fields. So it's a very significant piece of work and something that the team there has been working on for the last couple of years. So it's good to see it come to fruition at year-end. Operator: Our next question will come from the line of Chris Hebert from RBC Capital Markets. Greg Pardy: Jon, it's Greg. So I think we may have got our wires crossed on our end. Jonathan McKenzie: Apologize. You came up because Chris Hebert [ we're wondering ] really well. Greg Pardy: I did indeed. And yes, so listen, a couple of things. I want to come back to Neil's question. So you finished the 3-year plan, the 3-year growth plan and so forth. Is there another growth plan, albeit perhaps more modest than the offering right now? And then kind of related to that, I wanted to go back to what Kam was talking about in terms of not really throttling your spending too much. But like how generally should we -- I hate to ask it this way but how should we think about sort of your capital spend maybe over the next 2, 3 years? And that obviously ties into the degree of balance sheet deleveraging, other things being equal. Jonathan McKenzie: Yes. So what I would say, Greg, is one of the things we don't want to get into is big major projects again. So West White Rose is the last of the big major projects. But we have fairly low sustaining capital in and around sort of the 3.6, 3.7 level. And so we have plenty of capital available to us at growth projects that chin the bar at $45. But the growth that you're going to see from us over the next couple of years outside of the work that we've already delineated at the Mega asset is really around brownfield development, debottlenecking and those kind of things. So we mentioned the [indiscernible] SAGD project that we've got going on at Spruce Lake, which is kind of another example of something that kind of adds 5,000 to 10,000 barrels a day, but isn't -- probably doesn't chin the bar in terms of major project status. But you're going to continue to see those kind of things. So where we have opportunities to add production for $45 or sort of add production that has a return of and return on capital of $45, and we can kind of do in $10,000, $15,000, $20,000 a flowing barrel range, you're going to continue to see those things come out of us. And so I would kind of -- if I were you, I would kind of model us being close to that $5 billion that we've talked about in the past as kind of being the ceiling for our capital spending and then incorporate from that kind of 3% to 5% growth. Greg Pardy: Okay. Okay. That's helpful. And then that [ $5 billion ], let's just assume another $350 million, like I like the fact you guys are capitalizing your turnarounds, gives good transparency. So another -- I'm splitting hairs here, Jon, but that would include turnarounds or wouldn't include turnarounds? Jonathan McKenzie: That will include turnarounds. Greg Pardy: Okay. Okay. Terrific. And Travis's question was good. I mean, kind of interested in -- like I love your Asian business. I mean it doesn't get a whole lot of airtime. But what does that business look like over 2, 3, 4, 5 years? How much time are you spending there? Do you want to grow it? Do you want to harvest it? Are you going to sell it? Jonathan McKenzie: I don't think -- the way I think about that business, Greg, you're quite right. It's a really good business, and it spits out a lot of free cash flow. I think it's averaged about $1 billion a year for the last 5 years that we've owned it on a free cash flow basis. And what we really like about it is it's fixed price gas plus we get the value of the liquids on a Brent basis. Your operating costs are about $1 an M. The fiscal take is relatively modest, and there's really not much of a requirement for sustaining capital. So the way we kind of think about it is not harvesting the asset but definitely sweating the asset and staying true to the Block 29/26, where we think we have a competitive advantage. But we kind of look at it under those terms. We evaluate the opportunities within the block. We work well with the partner there that we have in CNOOC, and we're really grateful for that relationship. And it's just an asset that we just continue to take free cash flow from and invest appropriately in. Operator: Our next question comes from the line of Manav Gupta from UBS. Manav Gupta: I just wanted to quickly focus a little bit on egress. We know Enbridge has announced MLO 1 on their call, they are very close to announcing MLO 2 could happen before year-end. And then they also threw out the prospect of an MLO 3. And then there are a bunch of projects that ET and Enbridge are looking where they could even reverse the Bakken pipeline, get more Canadian crude onto DAPL. So I'm just trying to understand, as all these Egress projects are taking shape place, does this give Cenovus a little more confidence that we are not going back to the days where WTI, WCS could be $25 or so. Those days are behind the Alberta oil sands. Can you talk a little bit about that? Geoff Murray: Manav, it's Geoff Murray. It sounds like between my last comment and this one you scoured the world and found a number of the pipelines. There's -- there are more out there as well under development. And I'd point to a few other developments and other companies that are working away on things in the same sort of time frame. The projects you referenced, I think, are all intended to be in service late '27, '28, '29. There's projects that push '29, '30, '31 as well. And I think, as Jon pointed out, there's a number of these opportunities out there. Very few of them look like the big challenging mega projects we saw of a decade ago, and there was a certain level of probability around those things. These things are smaller. They're more easily permitted. There is less development to be done. And I would say we're well connected with all of them, broadly supportive of egress. The key will be industry and Cenovus being prepared to stand by and stand behind and take long-term contracts around these assets. And as Jon pointed out, don't be surprised to see us do that. That is a way of saying we have impact and influence to drive the outcome you referenced, which is to continue to bring egress to market to keep the differential in Alberta where we see it now. And it does feel fairly comforting that, that is something we can take action to drive for at least the next 5 to 10 years. Jonathan McKenzie: Yes. I think, Manav, we don't take any of this for granted. So we would never be of the view that we're never going back to where we are. But our challenge as a company is to make sure that we take advantage of these opportunities as they arise. We're kind of in a world right now where we're opportunity-rich in terms of egress. And so we're looking at everything. But we also understand that egress is something that's very important to this company on a long-term basis. But with everything that's out there today, it's very positive for this company and this industry. And as I said before, you should look for us to lead this and take advantage of it. Operator: [Operator Instructions] And there are no further questions registered at this time. I would now like to turn the meeting over to Mr. Jon McKenzie. Jonathan McKenzie: Great. Thank you, operator. So this concludes our conference call. I'd just like to thank everybody for joining us. We definitely appreciate your interest in the company. So thank you very much, and have a great day. Operator: This concludes today's program. You may all disconnect. Thank you for participating in today's conference, and have a great day.
Operator: Ladies and gentlemen, thank you for standing by. I am Gailey, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the fourth quarter and full year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed. Christine Disch: Thank you. Good day, everyone, and welcome to our 2025 full year and fourth quarter results conference call. My name is Christine Disch, and I'm the Investor Relations Director at Arcadis. With me on this call are Alan Brookes, our CEO; Simon Crowe, CFO; and our CEO nominee, Heather Polinsky. As usual, we will start with the presentation followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements, which were made in the press release. Please note the risks related to these statements are more fully described on the company's website. Now please, over to you, Alan. Alan Brookes: Thank you, Christine. Good morning and good afternoon, everyone, and welcome to our full year and fourth quarter results call. As Christine said, I'm joined by our CFO, Simon Crowe, who will outline the steps taken to address Arcadis' performance; and by Heather Polinsky, our CEO nominee, who will talk about her priorities for the future. Heather, who has been with Arcadis for 26 years and most recently run Resilience, the most profitable part of the business, assumes the role on March 1. Heather is an exceptional leader, and I am confident she will position Arcadis for success. Our end of year results are mixed and disappointing, reflecting what has been a challenging year. In light of those challenges, we have taken rightsizing and cost reduction actions to improve performance. We will continue these actions in 2026 with Simon -- sorry, with Simon commenting further shortly. Our net revenues totaled EUR 3.8 billion, supported by a strong resilience portfolio and pockets of success in mobility, offset by weaker places performance. In turn, we delivered record cash performance, generating EUR 288 million for the year, predominantly supported by a series of measures introduced in the fourth quarter to strengthen billing and collection discipline. The backlog was up 3% to EUR 3.6 billion, driven by Resilience and Places. When taking a closer look at our 2025 revenue performance, you can see that our total revenue declined by 0.5 percentage point, reflecting growth in Resilience and Mobility offset by weak Places performance. We will lay out the actions we have taken this year to address the underperformers and for the high-growth areas, the investments we have made to leverage our leading positions. Starting with the underperforming areas. First, environmental restoration, which makes up 13% of our total net revenues and is part of Resilience. This declined by 5% over the year. Excluding environmental restoration, our Resilience business grew 7%, and there are a few drivers for this underperformance. First, as a result of client restructuring impacting a substantial project, plus the successful completion of a large incident response project in North America, we saw revenues come down. In addition, shifts in the U.S. federal government policies, changing funding priorities and the longest government shutdown in history in Q4 caused delays to a portion of our pipeline for clients such as the Department of Defense. To address the underperformance, we have made senior management changes and replaced 25% of our account leads. We reduced headcount with 150 people leaving the business, while maintaining our margin performance levels year-on-year. Moreover, we are repositioning towards growth markets, including energy clients asset retirement obligations and critical minerals. Next, Property and Investment. This accounts for 8% of our total net revenues and is part of Places. Here, organic net revenue growth was down 17%. Our P&I solutions are mostly offered in Canada, China and the U.K. And in these areas, the residential real estate sector has been under considerable cyclical market pressure. During the fourth quarter, we did an extensive P&I portfolio review in Canada, which resulted in changes to revenue assumptions taken earlier in the year. Simon will provide you with the details in his section shortly. As a response to this, we have significantly rightsized the business with 400 people leaving corresponding to 4% of the places headcount, while we made leadership changes in places. We are taking further steps in the first quarter of 2026 with an additional reduction of 150 people. While we are moving away from residential real estate and increasingly now focusing on rental, student and senior housing markets where we see opportunities. The third underperforming area was mobility in the U.K. and Australia. This reflects 11% of total net revenues and declined 8% over the year. In the U.K. and Australia, the winding down of large projects such as HS2, Melbourne Metro and West Gate Tunnel, combined with large project award delays resulted in revenue pressure. To address this, we have rightsized our mobility workforce with a reduction of 350 people, corresponding to 5% of the mobility headcount. We have redeployed our excess U.K. resources to take advantage of emerging opportunities in other countries. And we have seen our order intake increase in the second half of the year, driving backlog growth as projects were awarded following the U.K. spending review last June. In Australia, with the market still constrained and lower infrastructure momentum, we are focused on pivoting towards new markets, particularly to energy and environment. Turning now to the high-growth areas. Starting with the solutions within our Resilience business, water optimization, energy transition and climate adaptation, which are part of Resilience and together delivered 12% organic net revenue growth. The performance of water optimization was driven by the strong U.S. market. Germany has seen successes in energy transition with the award of large multiyear contracts for grid expansion and maintenance. Central to this is the continued work for Amprion, performing route planning for a 500-kilometer long transmission line. Our growing project portfolio in power was underpinned by nuclear wins in the U.K. and the Netherlands. Our second growth area is technology, which accounted for 6% of net revenues and is part of Places. Our acquisition last year of KUA Group in Germany has expanded our capabilities in this area. Our data center performance was strong, whilst our semiconductor business faced pressure from the wind down of one large contract. Overall, the resulting technology growth was 3%. Arcadis reported over EUR 150 million of revenues in 2025 for its data center services, with an operating EBITDA margin of almost 20%. And we currently are involved in 280 data center projects. Finally, the third high-performing area is in mobility, specifically in North America, the Netherlands and Germany, which taken together delivered organic net revenue growth of 16%. Major awards in 2025 have underpinned that high performance. In British Columbia, our work on the design of the Fraser River Tunnel project has ramped up in 2025. Other large projects that supported our results were ProRail in the Netherlands and Deutsche Bahn in Germany, where we have further strengthened our position through the WSP Rail acquisition. We continue to see a strong pipeline of large multiyear project opportunities in North America. To summarize, we acknowledge our challenges and are actively addressing our underperforming areas through restructuring and cost measures. We are also focusing on those areas where we see opportunities to accelerate our growth. Heather will provide further details on this approach, looking ahead for this year and beyond. But first, I will now hand over to Simon, who will take you through our results and the steps taken to address performance. Simon Crowe: Thank you, Alan, and good day to you all. Let me start with our full year performance. As Alan outlined, Arcadis delivered mixed results, ending the year with EUR 3.8 billion of revenue. Excluding our Property and Investment performance, we delivered 1.3% organic growth. I'll provide more details around our P&I performance and actions taken shortly. Our operating margin was 11.1% with a significant negative impact from places, largely driven by P&I. This was offset by good margin expansion in both resilient and mobility. Excluding P&I, the margin would have been 11.6% for the year. Overall, we've taken significant rightsizing actions, which were accelerated towards the end of the year. We reduced our headcount by 1,100 people, which equates to roughly 3% of our total workforce, driving most of the EUR 77 million of nonoperating costs. Furthermore, we continue to invest in our strategic initiatives. Turning now to our fourth quarter results. These showed an organic net revenue decline, which was driven by Property and Investment. The operating margin was 13.5%, excluding P&I. Resilience performed well as we focused on high-margin areas such as our energy transition and mobility -- and mobility also performed well as we optimized our global workforce allocation, including increased utilization of the GECs. We recorded record free cash flow in the fourth quarter, and I'll come back to this later. Turning now to P&I. Part of our Places business, a number of issues went against us during last year. First, we experienced a weak market, particularly in Canadian residential real estate market with significant project delays, and we were unable to adjust quickly enough. In addition to that, the Oracle ERP system implementation in Canada caused some operational distraction. As a result, we took -- we undertook a comprehensive analysis of our project revenue positions in the fourth quarter for our P&I portfolio in Canada, which resulted in changes to revenue assumptions taken earlier in the year. This analysis resulted in a total revenue reduction of EUR 22 million taken in the fourth quarter, and that also impacted EBITDA by EUR 22 million. As well as working on the usual year-end audit with KPMG, we also conducted an independent review with another big 4 accounting firm. This portfolio assessment is now behind us. We rightsized the business in 2025 with a reduction of 400 people and have made changes to the senior management team. We're continuing to rightsize in Canada with an additional 150 people reduction in Q1 2026. We are rebalancing away from the depressed residential real estate market and focusing on the rental, student and senior housing markets as well as the hospitality and transit markets where we see faster growth. Let me spend a minute on the strategic progress we've made in the last quarter. Firstly, we stepped up our focus and discipline on cash and implemented various working capital measures, which resulted in a record cash in of EUR 344 million for the quarter. We've also reinvigorated our sales force, hiring new people to upgrade our teams, while we've introduced sales and performance-driven incentives, which are now being rolled out. We will continue to prioritize investment in our sales teams. And as part of our go-to-market strategy, we are reviewing our value-based pricing approach. We continue to invest in automation and AI for our core processes, particularly to strengthen the effectiveness of our pursuits, our workforce planning and our forecasting process. We aim to increase our win rates and free up billable time as well as foster a performance culture and more accountability within Arcadis. Finally, we continue to take rightsizing and cost reduction actions to strengthen performance, including a workforce reduction program addressing more than 600 people in the fourth quarter. Turning now to our rightsizing measures. In 2025, we acted to take cost out of the business, and this resulted in total nonoperating costs of EUR 77 million, including EUR 39 million in Q4. Total people-related costs represented EUR 53 million for over 1,100 people, comprising operating personnel of around 1,000 people and corporate overhead reduction of around 100 people with an expected 30 basis point impact on the 2026 margin from savings. Other nonoperating costs included integration and M&A costs as well as minor goodwill write-offs. For 2026, we will continue to rightsize the business and overhead staff. This will be in line with measures taken in 2025. So we could expect a similar number of people to leave the business in 2026. We are simplifying how we work and are refocusing on clients. Our cost reduction plan continues to focus on automation and removing unnecessary expenditures. Turning now to backlog performance. Good order intake in the fourth quarter ensured that we closed the year with organic backlog growth of 2.7% for the year. Throughout the year, we saw strong data center order intake. Our fourth quarter order intake was particularly strong for environmental restoration and pharmaceutical clients in the U.S. These multiyear large contract wins will be supportive to our revenue generation in the second half of 2026 as they take time to ramp up. This was offset by a weaker mobility market in the U.K. and Australia and challenges in our semiconductor business. Turning now to the GBAs and resilience. This delivered 3% organic growth following strong performance in the U.S., Germany and the Netherlands, driven by strong demand for our water, energy grid and climate solutions. Revenues were impacted by slower progression of secured AMP8 projects with start dates being pushed out. Margin was strong as we focused on our high-growth, high-value propositions, fully in line with our strategy of project selectivity. And order intake in the quarter was also strong, resulting in an 8% organic backlog growth, driven by U.S. water and environmental restoration in Brazil. Turning now to Places. Places is a tough market now, as we've outlined, including property and investment in particular, seeing low demand, which has been -- had a big impact on margin. Excluding this impact, organic growth was 1.3% for the year. As I mentioned, in response to this softness, we're continuing to reduce headcount in P&I and actively focusing on higher-growth markets, which drove strong order intake this quarter. This order intake included data centers as well as pharma in the U.S. and we're confident about our pharma awards, but it will take time before this converts into revenue. Looking now at Mobility. We continue to see stable results where strength in North America, the Netherlands and Germany are fully offsetting weaknesses in the U.K. and Australia. We showed solid margin progression driven by optimization of global workforce allocation, including the use of GECs, ultimately driving improved billability. The softer order intake in the second half was partly a result of changing dynamics in the U.S. industry, where we experienced slower procurement processes and regulatory reviews on the back of policy uncertainty. These effects resulted in project award delays and some challenge for near-term revenue delivery. Finally, Intelligence. This delivered strong growth in Q4 and despite a slower start to the year, achieved 6% organic growth overall. The business is increasingly supporting our largest projects across other global business areas, reinforcing its strategic value. As a result, we have decided to formally integrate Intelligence mostly into mobility, and it will no longer be reported as a separate segment going forward. Turning to cash. As I mentioned earlier, cash flow is at record levels. We have driven cash collection through relentless management focus, putting in place clear systems and personal billability dashboards, and this has paid off with net working capital at 8% this year. We expect to maintain healthy levels of net working capital in 2026, and we are likely to see net working capital close to 11% as a sustainable percentage over time. Growth and free cash flow remain key priorities for us going forward. Finally, turning to our balanced capital allocation framework. Last year, we continued to invest in the business and returned significant capital to shareholders. In September, we launched a EUR 175 million share buyback program with EUR 136 million spent through to the end of December, and we concluded the program in January. We returned EUR 89 million through our dividend, returning a total of around EUR 225 million to shareholders. Furthermore, we made 2 acquisitions in Germany, namely KUA and WSP Infrastructure Engineering, and we will continue to look at M&A opportunities where they make sense and fit into our strategic goals. For 2025, we're proposing a dividend of EUR 1.05 per share to our shareholders, an increase of 5% year-on-year and well within our 30% to 40% payout ratio range. Going forward, we will continue to evaluate strategic investment opportunities to grow the business and return capital to shareholders. In summary, 2025 was a tough year, and we expect the first half of this year to be challenging, especially in places. We are rightsizing the business, focusing on top line growth, especially in pharma, tech, energy, water and major infrastructure projects. We have the people, the knowledge, the drive, the determination and the client demand to make this business much more successful. I will now hand over to Heather to provide her thoughts for the future. Heather Polinsky: Thank you, Simon. Good afternoon and good morning to those joining from around the world. Before I share my perspective, I want to thank Alan for his leadership. He has guided Arcadis through both the good and challenging times with integrity and clarity, and we are grateful for his dedication to our people, our clients and the company. As Alan and Simon have said, 2025 has been a challenging year for Arcadis. We are under no illusion about the amount of work ahead of us. But as you have heard, we are taking action to return to growth. Having spent more than 26 years at Arcadis, I personally know the strength of this business, defined by deep expertise, global reach, local delivery and trusted client relationships. What gives me confidence is the platform we are building from and the scale of the opportunity ahead. Across Arcadis, we hold leadership positions in markets that matter from firsthand experience in leading both our resilience and mobility GBAs. These are sectors shaped by demand, long-term investment and increasing complexity for clients. These are not future bets. They are markets where we already lead, and we'll extend that leadership through disciplined execution. Let me spend a few minutes on some key areas. In Water, as a top 4 designer delivering double-digit organic growth and over a century of experience in water services, we lead in engineering, coastal resilience and emerging contaminants such as PFAS with flagship programs, including Sao Paulo's largest wastewater treatment plant and the $1.7 billion Lower Manhattan Coastal Resiliency program. In Energy & Resources, the U.S. requires up to $1.4 trillion in power investment by 2030, while Europe is accelerating its energy sovereignty and critical minerals development. Our strong market positions, #3 in transmission and distribution and a leading position in mining is reflected in recent wins, including 2 new nuclear plants in the Netherlands and Australia's first renewable energy zone. In Technology and Life Sciences, nearly 100 gigawatts of new data center capacity will be added by 2030, alongside major semiconductor and advanced manufacturing investment. Arcadis as #1 in life sciences and semiconductors and top 3 in data centers, we are well positioned to capitalize on these trends and grow our business in these areas. On major infrastructure projects, our clients increasingly demand certainty on cost, schedule and outcomes. Through integrity and integrated delivery, intelligent infrastructure and asset advisory, Arcadis is the partner that clients rely on. This is reflected in projects such as the redevelopment of Amsterdam's Central Station. Taken together, these positions give me real confidence. We are aligned to powerful market tailwinds. We are focused on where we have a clear right to win to drive growth. Looking ahead, leadership today is not just about where you compete. It's about how. We build on our market positions by partnering with clients and embedding human expertise with AI and digital solutions to help our clients plan smarter, move faster and deliver with confidence. Across water, energy, data centers and rail, we combine engineering with advanced analytics to optimize performance and drive faster evidence-based decisions for our clients. Our partnership with VODA.ai is supporting water clients to predict lead service lines before they become a problem, so they can prioritize capital expenditures and accelerate compliance. Climate Risk Nexus takes predictive climate analytics and combines them with asset-level insight guiding resilience planning. In just 1 year, it's grown from 2 pilots to 20 projects, including a statewide assessment across 64 campuses of SUNY, the State University of New York. In technology, our NVIDIA Omniverse partnership lets clients model and optimize data center assets before construction even begins, cutting risk, cost and delivery time. And in rail, our integrated EAM solution brings digital products, analytics and advisory together into one seamless offering, earning recognition from Verdantix as best-in-class. These digital capabilities aren't just tools, they're central to our strategy. They create higher value outcomes for our clients, strengthen our market leadership and define exactly how we compete in a changing world. The priority now is clear, converting these strengths into consistent, profitable growth. My focus is anchored in 3 priorities. First, refocus the business on high-growth markets. We are directing capital and talent to sectors where we have the right to win, water, energy and power, technology and large infrastructure projects where demand provides long-term visibility. One of our greatest growth engines sits within our existing client base. In recent months, our executive leadership team has met more than 50 key clients and the message was consistent. They value and want to do more with Arcadis. Deepening these relationships and expanding our wallet share provides a clear path to stronger organic growth. Second, simplify to accelerate performance. We are removing complexity, reducing layers in the business and enabling faster decisions closer to our clients. Alongside this, we are advancing automation and taking disciplined cost action to improve our competitiveness. The outcomes are straightforward: higher productivity, stronger margins and better backlog conversion. Third, we need to drive cultural change through a truly client-led model. We are sharpening sector focus, aligning ownership with accountability and ensuring incentives, reward, personal and team performance. We are expanding client coverage, including over 60 new account leaders appointed this week, and the scaling of GECs will enhance delivery while maintaining cost discipline. Execution is underway, but let me be candid. As you have heard, there is a lot more work to unlock the full potential of Arcadis. Turning to our outlook. We expect net revenue organic growth to be flat with a weak start to the year. This reflects the reality of repositioning the business for stronger performance. As I said, demand in water, climate and energy is robust. Environmental restoration is also showing recovery for us in the U.S. Key geographies continue to perform well, and our pipeline is healthy. However, uncertainty in places and the timing variability in large mobility programs means that demand will not fully translate into near-term revenue in these areas. We will also be very focused on the areas where we have control, namely productivity, efficiency, cost control, GEC contribution and disciplined project selection. As a result, we expect our operating EBITDA margin to reach 11.7% to 12%. Arcadis is stronger than our current trajectory suggests, but strength alone does not create value. Consistent delivery does. Let me close with this. We are resetting the foundations of our next phase of profitable growth. And we have already begun. We have reinstated cash discipline, strengthened our sales force in markets that matter most, aligned incentivization with performance and accelerated restructuring where change was required. Now in 2026, it is about execution. It is about performance and growth, a simpler and more agile business and greater accountability. We are sharpening client centricity and aligning rewards with outcomes. We will continue rightsizing underperforming areas, and we are simplifying how we will operate and deliver so we move faster, make better decisions and compete more effectively. There is work to do, and I want to be explicit about that. But the priorities are clear, the actions are defined and execution is underway. You should hold me and Simon accountable for delivering this change. That accountability is understood, and it is embraced. I am confident in the steps we are taking, confident in the markets we serve and fully committed to restoring Arcadis to sustainable and profitable growth. Looking ahead, we will host a Capital Markets Day in November 2026. There, we will set out our next 3-year strategy, including our strategic ambitions, go-to-market model, portfolio optimization, human and digital ambitions and strategy and medium-term financial and nonfinancial targets. 2026 is a reset year, but it is also a launch pad for us. We are strengthening the core, embedding agility in how we operate, raising expectations across the entire business and positioning Arcadis to deliver stronger and more profitable growth. With that, I'll hand over to the operator for the Q&A session. Operator: [Operator Instructions] The first question is from the line of David Kerstens with Jefferies. David Kerstens: I've got 2 questions, please. First of all, you talked about the underperformance and the high-growth areas in the business. I think combined around 2/3 of the total. Can you also explain what happened in the remaining 34% of the business, which I think saw an organic decline of around 5% to get to the organic revenue decline for the group of 0.5%? Then the second question -- can you explain the cut to your full year '26 guidance compared to what you indicated on October 30? I think you said then that you expected organic net revenues to gradually build up towards 5% in 2026. Now you're guiding for flat revenues. Does that also mean you expect it to build up gradually towards flat for the year? And also, I think last quarter, you still indicated you were on track to reach the 12.5% EBITDA margin target as your strategic objective. What drives that reduction to 11.7% to 12% now despite all the measures you have taken in terms of rightsizing, adding 30 basis points to margins and all the earlier investments in productivity and standardization improvements? Simon Crowe: Yes. David, it's Simon here. I'll take the first question, and then we'll take the other questions after that. So the other part of the business that we didn't talk about, I think has declined about 1.6% based on our internal calculations. And obviously, there's a mix of things going on there. So we've had some strength and some weakness. So I think it's -- we could dive into each of the pieces, but it's just part of the business that we didn't highlight in this conference call. So we've had some government clients in there, which have been affected by the U.S. slowdown. Obviously, the policies that flip flop with Trump. So we just haven't got the momentum in that part of the business that we'd like. Dave, do you want to talk about your -- the growth for 2026? Obviously, Heather and I have had a really good chance to do a lot of reviews and a lot of dives into where we are. And we feel that 2026 is a reset year. We think the first half based on some of the things we're seeing in mobility based on places will be slower than we expected, and we expect that to hopefully increase in the latter half of the year. So we're looking forward to a slow ramp-up during the year, but Heather and I felt it was right to take a really good look and reset expectations. And I hope we've been really clear with you. We've been really clear with what we're expecting for the year. We're expecting flat. That's our judgment at the moment. And we're expecting that margin at 11.7% to 12%. Obviously, we're taking more rightsizing measures. Obviously, we're looking for more growth. obviously looking to increase that margin over and above where we're guiding to you today. But we thought it was just sensible to give you some clear expectations. Operator: The next question is from the line of Sangita Jain with KeyBanc. Sangita Jain: Could you possibly elaborate on the go-to-market strategy that you're discussing on some of these end market pivots? I'm trying to understand how you think you're competitively placed versus your peers, especially since you're bringing in new businesses and sales teams at the same time? And then I have a follow-up. Heather Polinsky: So we talked specifically about our ability to grow in several key markets, water, energy and power, technology and semiconductors and life sciences as well as data centers and large infrastructure projects. And we've had success in doing this in the past. In fact, many of those businesses are already on a growth trajectory. So we know that we have the right to win. We have looked at and conducted a pricing review to look at strategic pricing so we can make sure that we are competitive, and we're bringing the innovation that I spoke about, whether it's the AI tools or it is our digital intelligence projects, combined with our human and technical expertise and asset knowledge to win in those sectors. Sangita Jain: Got it. And then I understand that the Capital Markets Day doesn't come until much later in the year. But in the meantime, can you help us understand if the strategy review could possibly include further reducing the number of geographies you're in or possibly cutting end markets to get back on a path of growth? Simon Crowe: Yes. Look, we will continue to review our strategy. We're not going to sit still. We're in a hurry. We continue to review our geographies, our sectors, our services and where we think it is appropriate, we'll make changes and where it is appropriate, we'll grow and where we have a right to win, we'll invest in heavily. So everything is up for review for us. Heather and I are looking very carefully at where we're strong, where we're not so strong, and we will obviously communicate with the market in due course. But we're very confident we have a right to win in the sectors that we outlined, and we're going to go and win there. Operator: The next question is from the line of Martijn Denreiver with ODDO ABN AMRO. Martijn den Drijver: I'll start off with a question for Simon, if I may. The 1,100 people charges of EUR 50 million, am I right in assuming roughly that you would pay 6 months salary severance, meaning that you could expect EUR 50 million saving in 2026 from that element. If you do another EUR 1,100 million in 2026, assuming that you're going to do that relatively early in the year from the same analogy, you would get another EUR 50 million in savings. All in all, back of an envelope that would add EUR 100 million in savings, which represents 2.3% on flat revenue. So I have a bit of a trouble getting to that 11.7% to 12.0% EBITA margin given these restructuring measures. Can you help me understand that? Simon Crowe: Yes. Obviously, I think your math is pretty reasonable. Obviously, it depends on the jurisdictions and the timing, as you say. But look, we've got wage inflation. We've got to give people a pay rise in certain jurisdictions throughout the year. We've got 35,000, 34,000 people. So we'll be doing that. We're obviously going to invest in the business in the top line growth in go-to-market, in pricing and all of those things that we talked about, we're going to invest in those markets. So yes, there's going to be some savings, and we're looking to protect our margin. We're looking to grow our margin, but also we've got to continue to back our people, attract talent and grow the top line. So there's going to be some investment there. Martijn den Drijver: Got it. My second question is on net working capital. The 8.3%, very strong. Even if you adjust for the factoring, it would end up at roughly 8.8%. So still well below the target that you set yourself of 11%. But did I understand you correctly that you were saying that around 11% would be a healthy level of net working capital going forward? Simon Crowe: Yes, that's right. That's sort of our typical trend over the last couple of years. Obviously, I've started to drive very hard there, as you've seen. I made the promise back in Q3. We've delivered on that promise. It was a record level of cash intake, but we'll drive hard to get that below 11%. But look, the business has some cyclicality around it, has seasonality. We will drive hard. We've started some new initiatives internally on the back of our success in the last quarter. So we'll continue to drive that down. And -- but I think 11% is a good thing for your model, yes. Operator: The next question is from the line of Chase Coughlan with Van Lanschot Kempen. Chase Coughlan: I just have 2 and maybe starting with the portfolio review. You mentioned you had the reductions in the P&I business in the fourth quarter. Are there any other areas of the portfolio in 2026 that, let's say, could be a risk of a further revenue reduction that you're looking at? Or how is that process being conducted? Simon Crowe: No. We -- as I said, we did a review of our Canadian business. We did the normal audit review with KPMG. We brought in a third party. I myself conducted daily calls over the last quarter to review that business, and we've drawn a line under that, and that's behind us. And there's no -- there's nothing to indicate anything else like that is happening in Arcadis. So no is the answer to your question. Chase Coughlan: Okay. Perfect. And then my second question, just going back again to the sort of organic sales growth guidance. I'm struggling to understand sort of why we imply a worsening in the first half. I mean a lot of the sort of commentary you provided about you're starting your sales incentivization changes in January, more salespeople in the business. The book-to-bill even in places looks decent. So could you please maybe just sort of help me understand exactly why you expect even a worsening environment at the beginning of the year at least? Heather Polinsky: Yes. And as you mentioned, we expect net revenue organic growth to be flat across the year with a weak start. This reflects the reality of us repositioning the business for stronger performance. And it also -- while you point out, we have strong backlog in Mobility and Places. Mobility has experienced some delays, and those are driven by some of the market dynamics as well as the lumpiness of the awards that we see. Places also remain strong, but those large projects take a little bit of time to ramp up from the permitting phase into the heavier design phases for us. So really looking at that phasing and the quality of our backlog, we expect to see the positive improvement through the year, but to have a weak start. Chase Coughlan: Okay. So it's really timing and then repositioning. All right. And if I may just squeeze in a third one on capital allocation. So of course, your balance sheet remains very healthy from a leverage standpoint. Could you give any indication on what your sort of capital allocation options are? I mean you're obviously repositioning the business yourself, as you said, I'm not sure if M&A is appropriate at this time, but even for sort of another buyback potential, what -- how are your thoughts about that from a management standpoint? Simon Crowe: Look, we'll look at all of that. Of course, we will continue to discuss M&A opportunities. We did a couple of small ones last year. It'd be great to think we could do some similar things this year. They were excellent additions to our business. Of course, we'll look at buybacks. Of course, we'll look at capital allocation across the piece. So it's just the normal course of what we discuss all the time in the business. So that's what we'll be doing. And I'm confident we, as you say, got a very strong balance sheet and good cash collection. So we have a lot of optionality. Operator: The next question is from the line of Natasha Brilliant with UBS. Natasha Brilliant: I've got a couple of questions. My first one is just thinking about more the midterm growth profile of Arcadis. I realize you'll do your Capital Markets Day in November. But once we get through this transition year, do you feel confident that Arcadis can get back to being a mid- to high single-digit growth business again? And then my second question is a broader question around AI, where we're seeing a lot of investor interest, but also market volatility. And you've talked about how you're using AI to drive efficiencies internally. Are you having any discussions with customers who might be pushing back on the use of AI or asking to share on some of those efficiencies with you? Just trying to understand how we should think about pricing and profitability for your business going forward given the sort of AI overlay. Heather Polinsky: Yes. First of all, let me take the first question on Capital Markets Day and our projections going forward. It is our intent to return to the same market level performance as our competitors. And we see no reason why with the strong technical capability and strong client relationships that we have when we take the other actions that we put in place that we won't get there. So we are confident we'll get to that same market performance. On the AI question, yes, AI is something that is continuing to be in the conversations with our clients. And in fact, we are already delivering projects with AI integrated in them. There's 3 parts to the AI discussion. One is our internal efficiencies, as you've talked about and Simon mentioned [Audio Gap] we do it in a way that is really reflective of the local markets and client needs as well as the transparency of where it's able to add value. And then we are engaging on discussions with our clients about new revenue lines and how we can help them in different ways and new ways. And in fact, I don't know if you have seen, but we launched an AI for water challenge, and we'll be also launching one on energy specifically going forward, where we're co-creating with our clients AI solutions to support them. Operator: The next question is from the line of Kristof Samoy with KBC Securities. Kristof Samoy: A lot of them have already been addressed. But press release mentioned that you're working on value. Operator: Samoy, I apologize for interrupting you. Can you please speak a little closer to your microphone because I'm not sure that management can hear you. Kristof Samoy: Okay. Is it better now? Operator: Yes. Please proceed. Kristof Samoy: I have one left. It's on value-based pricing. In the press release, you mentioned that you're working on that. And obviously, there's a lot to do on AI and the impact it has on the billable hours model. Can you give like a tangible example on how you want to go at implementing more value-based pricing? And secondly, can you give some insight into your breakdown of your revenues in terms of cost plus pricing time and material and lump sum and how you see this composition change over time? Heather Polinsky: Let me start with the last part of that discussion first. It's about 60% fixed price and the remaining time materials or cost plus. And as it relates to value-based pricing, we're already using value-based pricing with some of our clients and testing it out. And we've had some great success in co-creating solutions with our clients and then working through the value-based pricing approaches with them. And as Simon mentioned in the presentation, we have initiated a strategic pricing review and also working to support our teams and more effectively bidding so that we can win more with our clients. Simon Crowe: And just to say, we brought in an external pricing specialist to help us with that review. So we're not just relying on our own knowledge, but we're really excited about the initial findings, but we've got a lot more work to do there. Operator: The next question is from the line of Dirk Verbiesen with ING. Dirk Verbiesen: I have a question on the headcount reduction. The 1,100 roles that you took out, 100 of those are in overhead and your plans for 2026, you already announced 150 further reductions in the property and investments. And I am aware of the sensitivity, but can you share a bit more on what your further plans are? And is this, let's say, overhead versus billable people 1 in 10 like we've seen in '25. Is that the same magnitude as you foresee for 2026? Simon Crowe: Look, we're going to take a really good look at this and Heather and I have started to look at this. In fact, I shared a list with her the other day. It's nonbillable, nonclient-focused people that we're just trying to work out where can we find some efficiencies and where can we find automation. We are -- I think the ratio will be different this year than it was last year. As you said, it was 1 in 10. I'd expect to find more efficiencies from our nonbillable and non-client focused areas. That's not to say that these functions are not important. They are important. We've got some great people doing some great work, but I think it's just -- it's incumbent upon us to take a really really hard look at what we're doing. And obviously, we're going to leverage AI. We're really excited about the opportunities there with the efficiencies that AI can bring to us. And hopefully, we can divert a lot of these folks on to billable work. That's really the key here. We think the markets are really, really exciting and really strong for us in the areas that Heather mentioned. And if we can move people from nonbillable and nonclient-focused work into billable and client-facing work, then that's the real opportunity we have because these people understand and know how Arcadis works. So a lot to do, and we're going to do it quickly. Dirk Verbiesen: Following up on the previous questions also from Martijn on the impact of these headcount reductions. If you say, let's say, the 1,000 billable people, yes, you've lost around EUR 110 million potential revenues taking them out and maybe also a significant number in '26. I think we understand that, that flat revenues guidance comes largely from that and maybe some delays in projects. But let's say, a return also the remark from Heather to peer average organic growth, yes, I think most peers say 6%, maybe even 6% to 8%. Let's say, how long do you think you need to really recoup the momentum there towards that ambition? Simon Crowe: Look, I mean, Heather, your math may be right. It's -- and if you're modeling it out, obviously, we're taking some heads out. Some of those are billable, but we are looking at increasing the billability and looking to return to that growth. So I think, look, we're looking for second half. We're very excited. first half is slow as we've indicated. We've been very clear on our guidance. The markets are there for us. We're going to be very selective on how we take out cost, but it's all about focusing on billable and client-facing people who will drive that recovery into the second half. Heather Polinsky: And Simon, if I can add, we are going to be taking some restructuring costs associated with those reductions, but we are making investments. We are going to shift our portfolio towards those high-growth markets and make hires in those areas. So it's really about the shift and the rebalancing towards the growth markets in the areas we have the right to win. Operator: The next question comes from the line of Sabahat Khan with RBC Capital Management. Sabahat Khan: I guess just maybe just taking a lot of the questions from earlier around the cuts and the sort of commentary on outlook together. With these sort of restructuring initiatives, do you feel like you've gone deep enough to sort of position the company on the right path? And then secondly, just in terms of '26 being a transition year, is the confidence there really that it will be a matter of time to cycle through maybe some of the not so favorable projects? Or just -- what gives you the confidence that this will be sort of a transition year and that you sort of cut deep enough? Just more of a high-level perspective, not looking for sort of guidance or anything. Simon Crowe: No, I mean I'll start and Heather, I'm sure will add to that. We're not holding back. So look, we're going to do -- we're going to continue to do the reviews. We're going to continue to see what makes sense. We're going to continue to invest in the business where we see the growth and the value, but we won't hold back on those slow growth or no growth areas that potentially need looking at. Heather Polinsky: Yes. Some of the additional elements is the market is there for us. And so specifically, the market in these areas that we've identified the right to win, we believe that by making those strategic investments by changing our incentivization and improving and adding to our sales force that we'll be able to use that strategic pricing we talked about and even the automation of our pursuit process will start to come into play. So quite a few factors coming forward to help drive us towards that growth. Sabahat Khan: Great. And then just quickly a follow-up. I guess, as you put new leaders in place, put some new folks in place, restructured other things, how are you ensuring that the sales folks and the project managers during that transition are still sort of filling the backlog to ensure '27 and onwards gets to the right range that you want to get to? Simon Crowe: Look, we've -- Heather will comment as well, but we've incentivized a lot of people to really focus on driving sales now. It's about performance culture. We're really excited. We're shifting to that performance culture. Q1 and Q2 also a massive, massive focus for us, and we've been repeating that message and incentivizing people to drive the growth into Q1 and Q2. So the message is out there, and people are excited about it, and they're grabbing the opportunity. Heather Polinsky: Yes. And Arcadis' mission of improving quality of life is done through the delivery of our projects. and through the passion of our people. So our job as leadership is to mobilize and energize that passion. We also have a really high employee engagement score. So even though we've taken these cuts over the last year, our Net Promoter Score remains in the top 10% of professional services. So in addition to the expectations we've set for our people, we've got a great foundation to grow from. Operator: The next question comes from the line of Luuk Van Beek with Banque Degroof Petercam. Luuk Van Beek: First of all, a question about the -- your ability to predict the timing of when your backlog converts into revenues. It was an issue last year. Have you taken any measures to improve the process? And if so, what kind of measures? Simon Crowe: Yes. We've -- I've been looking at that amongst other things. And that's one of the key issues for us to ensure that we give the training, we show people how they can phase their backlog more easily, make sure the systems are easy to access. And that's certainly something in terms of the transformation. And I call it the sort of 10 commitments that we've got. One of those is to phase your backlog. And we're obviously monitoring it. I've got a dashboard that I can look at every day, and we are getting that message out there that phasing the backlog is really helpful for knowing who to put on a job and who we can put on another job and also forecasting as we go forward. But it's going to take time. We've got over 30,000 projects. We've got a lot of project managers out there. So the time -- it will take us some time. But yes, it's on the list. Luuk Van Beek: And you mentioned in the presentation that you target cost reduction to drive competitiveness. Does that mean that you have the impression that you sometimes lose projects against competitors because of your pricing? Simon Crowe: I'll let Heather add to this. But we think we -- obviously, we lose some bids because of pricing. But I don't think that's it. Obviously, we work with competitors. So we can see -- often can see what the pricing and we're in partnerships. We're in joint ventures, so we can see that. I think we're just so -- actually, we're so good at what we do. We bring that complete project sometimes. And often, the customer just maybe just want something slightly less. And that's part of our pricing review, part of the value pricing that we're working on. We're so good at delivering and so enthusiastic that sometimes I think we may get carried away. But Heather, maybe you want to talk to that. Heather Polinsky: Yes. Just on our cost base, I think that what's important for us to recognize is that efficiency isn't always just in the cost. It's in how quickly we're able to make decisions in the organization. So reducing layers within our, say, overhead structure or enabling function will allow us to be more responsive to our clients and allow us to win at a faster rate and allow our people more entrepreneurship and flexibility so that we can both protect Arcadis, but also deliver to our clients more effectively. Operator: The next question is from the line of Simon Van Oppen with Kepler Cheuvreux. Simon Van Oppen: I have one remaining question left, and you mentioned the independent auditor review. I was just wondering to what extent has impairment testing be done in Q4 on each of your individual divisions? And should we expect any further impairments in 2026? Simon Crowe: No. I mean we've done all the necessary reviews. No more -- no, you shouldn't expect anything like that. Operator: Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Mr. Brookes for any closing comments. Thank you. Alan Brookes: Thank you, and thank you, everybody, for your questions. As we said at the start, it has been a challenging year for Arcadis. But as I hand over to Heather as CEO, I do so with full confidence in her leadership. She has a clear mandate, as you've heard today, to strengthen performance, simplify the business and accelerate delivery. These actions are already underway, and the priorities are well defined. So thank you again for your time and engagement over the last 3 years and for indeed your continued support for Arcadis under Heather's leadership. Thank you all very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant day.
Olaf Scholz: Good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones. We have presented, this morning, our preliminary figures for the fiscal year '25. So Krones continued profitable growth in '25, and we forecast also a further revenue and profitable growth for '26. Next to me is Christoph Klenk and Uta Anders, they will give you more details about these figures and also additional information. And we will also talk about the '26 targets. After the presentation, you will have the opportunity to ask questions. I think you also know how the Q&A session works. Please use the function raise your hand in Teams or send me a short e-mail, and then I will hand over to you. Additionally, please be reminded that this meeting will not be recorded and that is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams. So I think we can start with the presentation, and I will hand over to Christoph Klenk, CEO of Krones. Christoph Klenk: Yes, Olaf, thank you. Warm welcome, ladies and gentlemen, on behalf of Uta and myself to our preliminary figures for 2025 and of course, to how we see 2026 and looking forward then in, of course, answering your questions. I will skip, as always, I would say, the beginning of the slides because this has been actually working as a summary for you that you can see all in a condensed way. And here even over the numbers, I will skip because we go in detail anyway. I can say if we see here the numbers at the end of 2025 and seeing the results we are extremely happy. Before I continue, I want to extend a big thank you to the Krones team globally. So 21,000 people having made this success possible because we're dealing with 160 countries around the globe and quite complex lines and businesses. And once somebody is failing, some projects are failing totally. So everybody is important in our team, and that's why we are so thankful that we have achieved those numbers with the team together. Before I go ahead, we had various challenges in 2025. I just want to name them, not all of them because then we would stand here an hour, but at least 3 of them. First of all, is Middle East because we all forgot that in the beginning of the year, Middle East was pretty much under pressure with the strike of Israel and the United States in Iran, which actually affected the whole region. Then of course, we had the tariff issues during the year and should not forget that FX issues will affect and has affected our businesses as well. On the other side, we had a highlight with Drinktec. You have been all being invited to that, seeing the Ingenic line and what we are doing with that into the services we are delivering. And of course, with Prefero, the Netstal acquisition and the, let me say, combination of the Netstal Maschinen and the Krones Maschinen. So that's the highlights. And again, thanks to our team that all those things have been working out. Yes, numbers you see here, and these are the green tick marks that we have actually achieved what we have promised, and that's the most important thing for us, for Uta and myself that we once again have been robust in the statements we have made and that we have been achieving our targets. From this on, jumping into more details, order intake. I mean, we have said all the time that order intake will be around 1 with the book-to-bill ratio, and this is actually what we have achieved. Yes, we have been -- and this is very obvious, we have been short EUR 100 million with order intake in comparison with the sales we have done. But nevertheless, I would like to put that into context what we have seen in 2025. As said in the beginning, I mean, the beginning of the year, Middle East was a bit shaky because of what I have said earlier. Then, of course, we had a tariff issue, which I'm reflecting later on when we go to the split into the regions, how this affected North America, but this has been 2 challenges. And number three, and this is on the positive note, this is very important for us that we have maintained price stability. I mean, for those of you knowing us for a longer period of time, in particular those times before COVID, pricing was all the time an issue. And since I would say the -- let me say, the markets are a bit more under pressure than before. For us, it was very important that we kept a very close eye on pricing and we kept price stability. Some of those let me say, actions have been that we have been losing some of the orders just to make sure that the signal into the market is crystal clear. That's the remark I wanted to do here. If we look to 2026 because Uta and myself, we have agreed on that once we go through the presentation here, we give you all the time, let me say, the view in 2026, of course, you will see a summary at the end. But as you have seen, book-to-bill ratio in 2025, around 1, which is actually 0.98, if you put it exactly on it, the EUR 100 million short, I'm just saying, we are looking about a book-to-bill ratio slightly above 1 for 2026. So that means we will be higher than sales, and we will have in order intake a higher growth than we will have in sales. So that's the statement we are doing. And this is based, of course, always on, let me say, our interviews we have done with our customers by late 2025. And I would say what we see right now in the market looks good for Q1 to confirm what I have just said. So that's for order intake, and I assume you will have later on certainly more questions to it. Order backlog, yes, that has decreased slightly, but only slightly, and this has been on purpose because our point was our delivery times have been too long. Fortunately, we have been able to decrease that to around 40 weeks right now. And in particular, let me say, orders, we are even going further down. So we have shortened that. And we can say that as of today, we don't lose orders because of delivery times. So we have been arrived into the competitive landscape again on where we should be, and that's important for us that this is not a reason that we are going to lose orders. On the other side, it actually provides a very nice and stable fundament for the, let me say, economical development of Krones in 2026. So we are well booked into the third quarter. So very important for us because that gives us the visibility on our statements. But more to say again, by purpose, we are happy to decrease that because we need short delivery times. Now from the market perspective, how do we see things? Number one, we see customers behaving slightly different than what we have seen in the past. I would assume that might be something for Q&A later on once you want to know more details about that. But basically, if you look to the split of the regions, and this is actually sales, it's not order intake. You might see that on the left-hand side that North and Central America in terms of percentage is going significantly down. However, if you look to the absolute numbers, we maintain a quite stable level on sales in North America and roughly -- I mean it's easy to calculate, it's EUR 1.2 billion. So all 3 numbers are reflecting EUR 1.2 billion, and that has to do with the growth of the other regions. And of course, I named it earlier at the beginning based on FX reasons we have in that. So that's one thing. If you look to pure order intake in North America 2025, that was decreasing, in fact, by 10%. Of course, in the second half of the year, influenced by the tariffs. But important for you to know, we plan on, let me say, the levels we had seen the year before last in terms of order intake for 2026 because what we see from our customers since the shock of the tariffs have been going away, the business cases are still even including the tariffs intact. I think we can talk certainly more about that in the future or in the Q&A. Second, what is to remark here, even as South America looks pretty good in sales, we have missed the targets there. We had higher expectation into South America. So this was not going too well, to be honest with you. So this is one critical aspect for 2025. And if you look to Asia Pacific, that has been going down into sales and in order intake. So that as well a critical development in 2025. But now the good news comes for all of the 3 markets, North America and Central America, South America and Asia Pacific, we do assume that 2026 will perform better, and we are looking into achieving our targets for 2026. And this, again, because many projects has been postponed are still active, not lost. And that's the reason why we have hope into those markets. And we will see, from our point of view, a good development in 2026. Remarkable, Europe and Middle East, Africa, both of them in sales and in order intake have been growing significantly. And in particular, Middle East and Africa have helped to overcome the shortage in order intake in North America. And even China from the order intake numbers is an increase in 2026. Sales is declining a bit in the sense of generating revenue, but we are on a good path in terms of order intake. And last but not least, you see Central Asia and Eastern Europe is doing quite well as well. So even good on track here. So that's from, let me say, the markets, the order intake and where we are with that. And with that, I'm going to hand over to Uta. Uta Anders: Thank you, Christoph. Yes. Good afternoon to all of you also from my side. I mean, as always, I will start with revenue development. I mean you have seen it already in our press release, but let me just give you some additional comments also from my side. I mean we said 7% growth. So we are within our guidance of 7% to 9%. And we have mentioned or Christoph has mentioned it earlier already in that 7% is a EUR 99 million effect just coming from currency translation. That was mainly in Q3 and Q4. We didn't see it so much at the beginning of the fiscal year. That's why also we didn't put too much emphasis at the beginning of the fiscal year on it. But if you look now at the whole fiscal year, EUR 99 million is quite an effect. And if we took that out, we would have been -- or we would have recorded a growth rate of 8.9%. Yes, Q4, I mean, we had always said for both order intake and revenue, Q4 will be strong with EUR 1.556 billion. It was strong 9.7% growth compared to 2024. So also there within our expectations. I mean, as Christoph has mentioned, we will highlight already on those slides, on the individual slides, our expectation, our guidance for 2026. Our expectation for 2026 is a growth -- a revenue growth of 3% to 5%, and this is important adjusted for currency translation effects. I mean it's the first time that we are guiding this way. Not only I know that I mean, we also saw, as I said earlier, EUR 99 million is quite a high number for '25, and we expect a similar number for '26. So that's why we believe it's only fair to take that out in our guidance or guide this way. Moving on with EBITDA, EUR 602.3 million. I mean we are not so much into superlatives, but let's say, it's the highest number we have ever recognized. So we are proud on behalf of our team that we have achieved that. And you can see 12.2% growth. So absolute numbers growth compared to '24. And I mean speaking about margin, you can see the 10.6%, so 0.5 percentage point compared to 2024. And we are with that within our guidance of 10.2% to 10.8%. And yes, I'm sure you all have calculated Q4 which was an 11% margin. So versus a 10.3% Q4 2024. And for 2026, I mean, the headline of our press release has stated it already. We continue growth both in top line but also in margin. So that's why our expectation, our guidance is 10.7% to 11.1% for 2026. Moving on with EBT, very similar development to what I had said already for EBITDA. I mean, if we look at the absolute number, EUR 424.1 million,7.5% margin. And I already want to say it at this point, I'm sure a lot of you have calculated the difference between EBITDA and EBT, which is a little bit in terms of growth, lower. So I mean, we had higher depreciation in '25 and also the interest result was a little bit lower because we had special effects in '24. But I'm sure we'll come to that also later in the Q&A. Personnel and material expense, yes. Starting with personnel cost, I mean, you can see that we have increased it by EUR 125 million, which is, I mean, that's logical because of the additional FTE, which we will see in one of the next slides, but also the overall cost increase in payroll per person in general. Important for us, and you know that we have highlighted that also throughout the calls in the fiscal year, 30.1%, so very close to our 30%, which is an orientation for us as payroll, personnel cost as a result of total performance. Material costs, yes, very positive development, as we can see. I mean, overall, we only increased material cost by EUR 110 million. So -- and that brought us then also down to 47.8% material cost ratio, so well below all other years, which is just the result also of the good work of our purchasing team. I already spoke about employees very shortly. I mean you can calculate it yourself. We have an increase by 962 coming to 21,339 employees. So what makes up the difference of the 962? 1/4 of it is service technicians. Then we have some, but that's not 3 digit. So mid-2-digit increase because of M&A. You remember, we have bought CSW. And the rest of the increase is across the globe, as I always say, and also across the functions, also with emphasis, of course, focus on digitalization and IT. Important for us also is, I mean, looking at the ratio of the German workforce in total that is 55.0% compared to 55.5% last year. And also to mention, you can read it in the headline, 1,600 employees in the United States. Now coming to the segments, yes, I mean, for Filling and Packaging Technology, the story is always very similar to Krones in total because it is the largest segment. So I mean, with our EUR 4.774 billion revenue, we had a growth of 7.2%, also here effected or impacted by FX. We have met the guidance 7% to 9%, which is important for us. And we also here had a very strong fourth quarter, EUR 1.294 billion revenue. Looking at absolute EBITDA and margin, you can see EUR 517.8 million and a margin of 10.8%. So also here well within our guidance, which we had given of 10.5% to 11.0% and Q4 was 11.2%. Speaking about guidance, yes, for 2026, we expect revenue growth by 2% to 4% adjusted for currency translation effects and an EBITDA margin of 11% to 11.5%. Moving on to Process Technology. I mean, EUR 514 million revenue, it's a growth by 1.2%. Our guidance was 0% to 5%. So we have met our guidance here as well. Very slight currency translation effects, but as I said, not major. Speaking or coming to EBITDA, you can see at EUR 52.9 million. So another positive development here. And also if we look at the margin, 10.3%. Our guidance was 9% to 10%. So a very positive development also because you know that on the growth side, we are lacking turnkey projects, but that on the other side is beneficial also for the margin. Speaking about guidance, same guidance as we had it for '25, 0% to 5%, a 9% to 10% EBITDA margin. Intralogistics, EUR 376 million revenue, you can see EUR 44 million more than 2024, which is a growth by 13.2%. Adjusted for currency translation effects, it was 14.9%. So very, very close to our 15% to 20% guidance, which we had given. Looking at EBITDA and margin, yes, also if we look longer term, a very positive development here. Overall, 31.6% as an absolute figure, but also 8.4% as the number, which is also a result. You remember that we had said on the CMD that we are having smaller projects, but also new products, which we brought into the market also then with higher margins. And for 2026, growth of 5% to 10% and EBITDA margin of 7.5% to 8.5%. So far for our P&L. Now let's look into our balance sheet and everything which is related to that. I want to start with cash and liquidity. I mean you have seen it already on the first slide. We had a very good cash flow in the fourth quarter again and overall a very good cash flow of EUR 283 million, which brought us then to a cash of EUR 549 million, which was above our expectations. And with free credit lines and used ones, you can see the number, EUR 1.437 billion liquidity. So very solid to manage global economic volatility as also the headline states. Now coming to the right side of the picture, I mean, you see that we have increased equity by EUR 206 million to EUR 2.128 billion. And the EUR 206 million, of course, is the result of EUR 299 million net income, paying out the dividends of EUR 82 million and then a small miscellaneous change brings us to the EUR 2.128 billion, and it's an increase by 11% compared to December '24. And because the total of assets liability only increased by 6%, we increased our ratio to 42.2%. Yes. And of course, I mean, good cash flow, very good cash flow is reflected in stable working capital development, 17.3%. So very much in line with what we had last year, so '24 below our 20% or also 18%, which we have as a hallmark also for the future. And then looking where it comes from, I mean, received prepayments, you see that with 15.6%, this is 2 percentage points lower than we had at end of '24. But if we look at the overall number, it is still about EUR 900 million as we had it also '24. Now looking at inventory, also stable here as an absolute number. And that's why also the ratio decreased slightly to 12.5%, EUR 700 million approximately is the absolute number. And now accounts payable, yes, 15.5%. So on the level as we had at '24. And here, we had an increase in the absolute number, which, of course, then leads to a stable ratio. Receivables, contract assets as last number, a slight decrease, 1 percentage point. If I look at the overall number, also slight decrease -- a slight increase, close to EUR 2 billion we are here now. And if I look at the total working capital, you don't see that number on the slide, EUR 80 million increase. But we see that number on the next slide as change in working capital. But let's start, first of all, with free cash flow in general. We have mentioned that already a few times throughout this call, EUR 282.9 million. So above our expectations because we had a very strong fourth quarter again as we have it usually. And if we look where does it come from or where does the free cash flow before M&A come from, of course, first of all, earnings development, other noncash changes, which is mainly depreciation and then change in working capital, I already mentioned. Other assets and liabilities, the major or the bulk in that is tax payments, EUR 111 million, so income tax payments. And some of you may wonder why that is so much higher than it was in '24. '24, we had some consolidation effects from Netstal included. So that's why it's not 100% comparable. So cash flow from operating activities, very solid, very good with EUR 446 million. And CapEx, EUR 185 million, so 3.3% so slightly below our 4% and then other, which is smaller things, bringing us to our free cash flow without M&A. M&A activities in 2025, you remember Q3 CSW acquisition, that was the largest in here. And then financing activities, other, that is mainly the payout of the dividend of EUR 82 million and then some lease payments. And then you can read it yourself, change in cash, bringing us to our cash of EUR 550 million. Free cash flow as an overview over many years and also then slightly shown what our expectation for '26, yes, we're always a little bit more cautious. Yes, Christoph is smiling because it's always a kind of discussion on how high is the bar. I'm sure that some of you will also measure the bar and have a number there. But what is our message here? Our message is here, we also expect for '26 a solid and a good free cash flow. That's our message. And last but not least, for 2026 -- 2025, of course, ROCE 19.1%, yes, it's logical. EBT increased by 13%. Average capital employed increased only by 8%. So that's why our ROCE increased by 0.9 percentage points to 19.1%. And also to give you the absolute numbers, EBT EUR [ 470 ] million and average capital employed close to EUR 2.2 billion. Yes. So far for the actuals. And now let's just summarize one more time the outlook for 2026. I mean I have mentioned all those numbers already throughout the call, but already -- one more time here as a summary, 3% to 5% revenue growth. Important is the asterisk, adjusted for currency translation effects, EBITDA margin, 10.7% to 11.1% and ROCE, 19% to 20%. And of course, we have the usual disclaimers. And actually, we have added here also reliability of forecasting revenue is impacted because of the volatility of exchange rate. But that's why we have adjusted it in the revenue growth guidance. And for the segments, also here, the summary one more time. I have mentioned all of them already throughout my presentation. So that's why I will not read them out one more time. And that is everything from my side for the presentation. Christoph Klenk: Yes. All right. So let's have -- so let's have a look on the midterm targets. And since we have this morning several interviews with newspapers and journalists, I thought I should give a bit more of a taste on it because if you look to the planned revenue in 2026, you might ask the question, is that target still valid? And I can say it's still valid. And I just want to give some highlights on that. First of all, as we say that always here, we are not talking only with our customers about their 1-year investments. We are even talking about their 3 years investments and how markets might develop into the future. No security on that, but at least we have a pretty good understanding about possible investments in the different regions. So that's one thing. And the investment cases are pretty robust. I mean that you see when you see what, let me say, hurdles we had in the world economy, in the geopolitics in 2025 and still the order intake was good. Then we have our basic growth drivers intact. I don't want to repeat them in detail, is growth of world population, particularly in Asia and Africa and Middle East. It's definitely escaping from poverty in many areas of the world of the people. Then it's in the mature economics. It's definitely product varieties and differentiation. So that helps us a lot for new lines and it's cost pressure of our customers because new lines will simply have a better cost structure than old lines. Then there is, of course, our new factories coming up in China and in India. That has -- if we say new factories, that has to do we can actually better compete with local competition. We are still, for example, in China, the #1 in terms of revenue, but we have, let me say, growing competition, and we need to get on the price levels of our Chinese competitors where we can get really close to and have a bigger scale of, let me say, equipment being built in China. Same is true for India. So on those 2 factories, we have hope and they have to deliver contribution of it. And then the most important one is innovation. And if you look to what you have seen on Drinktec, there is this new line type, but it's not, let me say, a machine or a line because of it's a new line. It's about getting more share of the life cycle revenue of our customers. Of course, we are going to take more responsibility. But if you look to the utilization of our installed base, that is a significant proportion on the growth we have. So if you look to all of that, that's quite a big proportion, which is coming along. I have to add, we all the time had some acquisitions being built in. They are, let me say, on reasonable scale, EUR 30 million to EUR 70 million. That's the ideal sweet spot for us in the sense we do acquisitions, so that might be not overweighted into what we are going to see until 2028. But nevertheless, it's part of it. And then there is one other big thing Uta referred to that already. That's the FX because if we look to that, and if we would see the FX effects in 2025 and 2026, we are close to EUR 6 billion with the guidance in sales with the guidance we have given for 2026. So if you look to all of those factors, I think this is a reasonable number. And if we see then around EUR 7 billion being possible in terms of revenue, that will be a, let me say, a reasonable number from our point of view. Certainly, for the time being, with the FX effects more difficult to achieve. But nevertheless, I would say, for the time being, we have no reason to see that our fundamental underlying, let me say, factors out of the markets would not work. That's the statement I wanted to do here and to express that very clearly. So I would say with that, we are through our presentation. I mean, key takeaways that's a summary of the presentation. I wouldn't say that we are going to refer that once again. I would move directly on to Q&A. Thanks for listening. Olaf Scholz: So thanks to Uta. Thanks to Christoph for these information about the actual figures and the outlook. Olaf Scholz: I already got on my list Adrian Pehl from ODDO with some questions. Adrian Pehl: So actually, first of all, a question on what you mentioned in terms of the dynamics in China. I just want to make sure to get that right. So basically, the development that we saw throughout 2025, is that rather a function of the investment cycle of Chinese customers? Or would you say that you have been losing share? I mean I hear you that the situation on the order book side is improving. But how do you see your market position going forward in China? And the second question is linked to a little bit the slide, obviously, that you showed on the free cash flow development. I just want to make sure on the CapEx side of things, what should we expect for 2026? And how is the phasing of the CapEx given that you are ramping up your capacity throughout the years? I'll start with these 2 and then I jump back into the queue. Christoph Klenk: First to where we are in China and how -- if we look closer to the market, how do we have to see the market there? I mean, first of all, to give general questions of the Chinese market is very difficult because you need to see it different in the different, let me say, beverage categories. And we have to see it, of course, different in the, let me say, various products we have in the Chinese market. So it's a different route. But if I look into channel, I would say China has had over the last 5 years, a bit up and down. So we have been on a higher investment level than it has been a bit going down. It has been a bit going up. But if we look to a long run, it's pretty stable. And I would say the investment patterns of our customers is on a very comparable level. Now if you look to the future, I mean, China is right now in terms of investments dominated by aseptic bottling lines. The Chinese market has some specialties. And if I look back the last, Krones had a bit of a shortcoming because we didn't have aseptic lines localized. What we deliver out of China is PT lines for water and CSD, which was working well and everything included. So from, let me say, the end -- from the beginning to the end. And now the next step, and this is becoming true in 2026 are aseptic lines out of China because the market is significantly growing. Historically, we have been the biggest supplier of aseptic lines over the last 20 years in the Chinese market. We have around 250 systems installed in the market. Then it has been going down a bit and then it has been going up. And we have a disadvantage of what I just said, no local production, but this is coming up right now. So I would say, if I look to the future, there's a better fundamental on which we sit in terms of the local supply, we can supply out of the market. And we have strengthened our technical, let me say, ability in China in addition. So I would say there is a good potential for the future. And second, we have been working on the other side of the product portfolio that we get a bit of, let me say, more simple products out of the Chinese operation to serve -- to begin -- I mean really to say to beginning to serve the market better. Now if you look to the order, let me say, behavior of our customers, this is a quite competitive market. And then I would say this is changing because we have seen customers being good 5 years ago, they have lost really market shares and others have taken them. Fortunately, because of the long term, we are already serving the Chinese market and a good customer relationship, we don't care too much which customer is at the moment investing or not because we have access to all of them. And we have a specific program in place to get customers on board, which we didn't know yet because they are new customers. And we are having a team observing the local competition in detail just to understand what we need to do in order to get with certain customers an order, which is not all the time only the product. It has a lot to do with the services we supply around the product. I hope that gives you a taste where we are in China. Uta Anders: I take the CapEx question? Christoph Klenk: Yes. Uta Anders: Adrian, it is what we have communicated also throughout the conferences. We stick to our 4%. That's also the bottom-up plan we have. And I mean, we have mentioned all the investment cases, but projects we are currently undergoing. Christoph talked about the strategic importance of India, but also of China. We spoke about the U.S. that's where money goes into when it comes to CapEx, but also here in Germany, I mean, investing into a new warehouse here at our headquarters, but also investing more automation into our machining facility close by. So those are the big tickets, and they end up at 4% as we had planned it all the time. Olaf Scholz: So thanks to Adrian. The next question, I just see a phone number starting with 44. I don't know. Christoph Klenk: Somebody from the U.K. that's obvious. Olaf Scholz: That must be U.K. number, yes. It's a U.K. number and then next is 7407. But let me skip to the next one, which is [ Vitor Shen from Iberbell ]. Unknown Analyst: So just regarding the outlook provided, I was just wondering of the composition of it. I mean, is it possible to split it a bit? I understand that it's communicated in local currency. And thereby, can you elaborate a bit more on how much, I would say, it could come from pricing and how much from volumes? And also if M&A is [ loosely ] part of the strategy for 2026 as well, if you could get some color on that? And the next question will be on the EBITDA margin. So you're enhancing them. And is it possible to elaborate a bit more regarding the drivers implying the improvements, notably the cost optimization measures? I have seen in the presentation that personnel expenses were increasing relative to total performance, while material expenses were decreasing. So can you please shed some light on this as well? I mean is this trend going to be the same for the coming year or not? Christoph Klenk: So if you look to the, let me say, a more detailed split of the 2026 perspective we give. I mean, number one, we do not see significant changes on, let me say, the markets we are going to serve, okay? So I would say the composition will be pretty much the same. And that's the reason why we see -- once we see currency on the same levels as of today and the changes that currency impact, and that's what we're actually stating might then be very comparable. If you look to the composition of, let me say, our segments, even this composition will be pretty much the same. I mean, with the growth of what we have said, this will be pretty easy to calculate. If you look now to our main segment in terms of machines and services, which we do not separate there, even there, the composition will be the same. There might be small gainings in terms of the life cycle because that's important for us, but that's the beginning, it will be pretty small. So I would say even this composition will be pretty much the same. And if you look to pricing, there is very little in terms of pricing included. We keep prices stable. And even in those areas where we had historically, I would say, better and fast price adjustments, which is the spare part and life cycle business, even there, prices are pretty stable because customers do not accept that we are raising pricing for the time being. I mean we are fighting -- and I said it in the beginning, we pay a strong attention that pricing is not eroding. That's our target. But if you look to sales in total, there's no pricing effects being included. So I hope that gives you for, let me say, this category a point. And if you look to the strategy to 2026, I mean, if you look to the overall situation, we have been, let me say, driving the company significantly by growth in a pretty large scale over the last 4 years. Yes, that's a bit less than in the past. But if you look to 2026, we have big initiatives in the markets that we go more in specific cases of the market that we strengthen, for example, namely processing that we say we have -- we are going to attack certain markets stronger. We have for categories of processing, different sales forces being in place, which are coming just to make sure that we maintain the growth. Same is true for Intralogistics. And if we look to our core business, it's about what I said that in 2026, the factories in China and in India are going to be started up. That's an important factor to serve the markets closer. And of course, as always, we are building stronger footprint into life cycle around the globe just to make sure that we are going to harvest on the installed machine base and getting more share in the service section. I would say that's my summary. Okay. Thanks. Uta? Uta Anders: I wouldn't have said it as such. Christoph Klenk: Good. M&A is something which we certainly look into, which might be as well part of it. Did I read it right, what you said? Yes. Good. Then we go to the... Uta Anders: Then let's go -- let's look at margin expansion. I mean, 10.7% to 11.1%. Actually, it's compounded by various developments. First of all, let's look at payroll. I mean I mentioned earlier staying around 30% is important for us. I mean, despite of staying at around 30%, we expect as an absolute number, an increase in payroll just because of, for instance, collective bargaining agreements, which is around, but it's just an approximate number, 3%. Then on the other hand, and I have communicated that also throughout our conferences, we expect decrease in material cost. And why are we certain that we can achieve that? Because already last year, so 2025 in summer, we have actually closed quite some deals in terms of securing steel, for instance. And we are not only securing that for us, Krones, but we have also secured it for some of our suppliers, which then gives us a leverage also on some of the supplies we get. So that is important, and we have also hedged copper. So that's the 2 major components of our cost base. Then I mean, we will not have a Drinktec in 2026, which also has a certain effect. I mean you know it was around, but it's just an approximate number, EUR 10 million last year to EUR 25 million. So we will not have that high amount in 2026. And as a fourth lever, we will have only a moderate increase in FTE in 2026 compared to 2025, so very moderate. And then last but not least, we have always talked about the strategic measures we are executing to secure our margin, to secure our performance. And we have spoken earlier about CapEx. I mean, I have spoken about our machining plant. And there, we are increasing the level of automation, which helps us also then to increase operational efficiency, just to name 5 reasons why we -- or 5 portions why we believe that the EBITDA can increase as a margin. Does that answer your... Olaf Scholz: The next question is coming from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Two quick ones, but I guess the first one you already answered. I mean, looking at your organic growth guidance for this year, 3% to 5%, if I understood you correctly, you said pricing is stable, so that it will be fully and solely driven by volume effects, correct? Christoph Klenk: Yes, correct. Lars Vom Cleff: Perfect. And then, I mean, more and more of my companies are worried or starting to get worried about chip prices rocketing, potential supply chain bottlenecks. Would you see that as a risk for your company as well? And if chip prices stay on this extremely or far elevated levels they are currently or some of them are currently trading on, would you be able to pass on the additional costs to your customers? Christoph Klenk: First of all, I would say we, as a management, and this is maybe one of the learnings out of the last 5 years that you worry all the time about your supply chain. But nevertheless, I would say we see no hurdles at the time being that we are not capable of, let me say, getting those components on board, which we need for our production. And out of this learning from the last 5 years, we have a totally different view on supply chains because we -- our arrangements would have said it earlier that we are going to hedge material and making these on a much longer period than we have been doing that in the past. We have included our suppliers, and this is even to the chip question, even for all the suppliers because we don't buy any chip direct. So if we buy chips, they are either in the PLCs, which we get delivered from Siemens and others or in other electrical components, which we get supplied again from Siemens, from B&R and so on. But what we have is, we are sitting with them and to look deeper into their supply chain. And I would say the fact that we have been all the time concerned that the Taiwan and Chinese issue might come up that we have secured supply chains in, let me say, different quantities and different time periods than we have been doing that in the past. And this will help us over a pretty long period if things go south that we can: a, maintain pricing and; b, can maintain supply. I don't want to go more in detail into what we have done there, but it's at least beyond one business year. That's the important message we sent here. Second, this is another learning once pricing of certain components goes out of the frame, like chip pricing would go up. And we can explain that to our customers. We have gained significant experience in translating material cost increases once they are reasonable and can be not compensated by other sectors of material costs that we can translate that into pricing. This is still, let me say, a procedure. We do every 6 weeks, controlling procurement and sales. Is there anything which we need to translate because that was one of the learnings out of the, let me say, supply chain crisis. Once we look early into that and address it early, we can manage even, let me say, significant price changes in the supply chain reasonably. So I hope this gives you a taste on how we are going to manage that. And I wouldn't say that we are fully protected to all of this because we all know that the prices might come up. But at least we have prepared in a reasonable manner for such kind of incidents which might happen. Olaf Scholz: Christoph Blieffert from BNP. Christoph Blieffert: Can you give us some idea about the revenue contribution for the new Chinese and Indian factory, please in '26? Christoph Klenk: Very simple, India will be very low because these are actually most probably for the time being, what we see today, 2 lines, which are built in India and being then shipped to customers. So if you look to the overall revenue, it's small. It's more for, let me say, if we look to order intake in India and the agreements we are going to do with our customers, and this will actually pay off 2027 and 2028. For China, I mean, today, we are doing a low 3-digit number revenue in China locally. And I would say this is going to be [ extended ] by 10% to 20% in 2026. Why is that? Because the factory goes into operation by July. And I would say, until we have it in really full speed, it will be October. But nevertheless, we are doubling the capabilities in China for 2027. And this is what I said earlier that we are even going to localize our aseptic business there, which is a significant proportion, which can even add then another, let me say, 50% to what we are going to do in China. So it will be quite a significant proportion. I think there will be a chance in one of the next meetings to show you some slides how this looks like. This is a factory, which is really big. And at the end, we are talking about increasing our headcount in China until mid-2027 from today, roughly 1,000 to 1,500. Uta Anders: But small in 2026. Christoph Klenk: Small in 2026. Yes. Christoph Blieffert: You have been highlighting the negative FX impact of again, some EUR 99 million in '26. This is based on the current exchange rate levels? Uta Anders: So the EUR 99 million is '25. That's what we have highlighted. And this was just the difference between the average exchange rates '24 to '25. So translated them with the same exchange rates. And actually, most of it comes from the U.S. dollar, about half of a significant portion. And '26, yes, we expect a similar level. Does that answer your question? Christoph Blieffert: Similar level means again [indiscernible] close to EUR 100 million? Yes? Uta Anders: Like we had it in '25, yes, around EUR 100 million. Christoph Blieffert: And if the exchange rate remain on the current level, would you have to adjust your 2028 targets? Christoph Klenk: That's a good question because we can answer that when we know how the exchange rate will remain, let me say, later than 2026. But I told you earlier, I mean, we are keeping this target of around EUR 7 million in place, okay? And how much we might be short because of FX effects, I can't tell you today. We always the statement, we believe in the growth of our market. There are potentials which we can actually lift ourselves. It's not only market related. And since I have been explaining that, we would not make the statement at all that we are, for the time being, skip any of those targets. I mean there are many unpredictable things in front of us, but we have seen that world economy is for us, in our market is quite stable. And we believe we have talked that up and down. We still believe in that target, and we stay with that even with the FX effects in place for the time being. And please allow me that do not take the notions in for the time being. I have to be really careful because there any word is interpretated. So we stay with the targets of around EUR 7 billion in 2028. That's important. Olaf Scholz: Now we identified the number from U.K., Constantin Hesse from Jefferies. Constantin Hesse: Yes. Sorry, I had some issues with Teams. All right. So I have 3 questions. I would love to start with the medium-term guidance, one. So I already heard that on the call, you talked about order intake in Q1 looking good. So what I want to understand for '26 because clearly, there has to be some kind of growth cadence into that about EUR 7 billion figure in '28, meaning that order intake clearly has to be above 1x book-to-bill this year. So what I want to understand is what visibility? And are you actually seeing a pick up in order intake where you could today already give confidence that '27, we could see an accelerated growth relative to what we're seeing currently, obviously, assuming no further FX headwinds? Christoph Klenk: Well, visibility is certainly not up to 2027. I mean visibility, if I might explain that, how we -- what kind of visibility we have and how we deal with that. We have 3 measures: number one, discussion with our customers to understand those our own analytics. That's one package, why we actually look into the markets and how we think that we see investments coming. Then second, we have the more short-term view, which might go, let me say, until end Q2, beginning of Q3. And this is how many quotes we have out and how the pipeline looks like. And saying that this includes as well that we look into how much is the lost order rate we have because it's important, is there enough volume in the market and we are losing because of other reasons? Or is the market, let me say, as such not intact? But what I can say as of today, and this was true even for 2025, volume is not an issue. If my sales colleague would stay here, would say, Christoph volume is no issue at all, just pricing is a problem. But this is my second statement. We want to maintain pricing. So this is all the time a bit of a, let me say, a different balance we need to keep. And number three, short term, why I say Q1 is okay, we are mid of February. We know the orders we have already on hand. We know what is out there, and we know what we usually gain or lose. So I think this is something where we are usually pretty good in predicting that. But 2027 is staying significantly on the measures we have in our own hand. What I said earlier, the factories we are going to build, the innovations we see, the life cycle we want to extend, the processing where we see big potentials in the market that we can grow further and even Intralogistics, which has been doing great for us, where we can grow on. And we have then, let me say, Netstal, what we call advanced molding technology, where we see options and some smaller, let me say, growth areas where we are going to grow. So if we put it only on what we know from the market, this would be not enough for us to see really the case. And yes, order intake, of course, has significantly increased in 2027. That's no doubt about. And this is something we have in mind once we look into the statements we have just given. Constantin Hesse: Fair enough on '27. But then just rephrasing the question, keep it simple, Q1, Q2, Q3, which is what you have visibility on, you're confident that book-to-bill is above 1? Christoph Klenk: As confident as you can be with all the history and, let me say, the know-how we have. We have not yet the orders for Q2 and Q3 in our hand. But again, pipeline is good. We have been, I would say, any week in discussion, is that sound what we have planned to? Do we -- can we stick to it? Is there other reasons why it should not work? But from all what we know, things are looking pretty good for the time being. I promise I wouldn't give too long being in the business because we all know that Iraq, Iran -- sorry, Iran and the Middle East is, let me say, under pressure for the time being for us, an important market. I would predict that there is a reasonable reason -- or let me say, it's reasonable that there will be a strike, which would be then serious for our business. So that might be some of the downside. But if things could go normal, yes, I'm quite confident that we are going to get our order intake. Constantin Hesse: So second question, just on cash levels. We're reaching close to EUR 550 million in net cash. So I'm wondering, is there -- in terms of M&A pipeline, is there anything potential coming up that could be larger? And if not, at what level of cash would you start considering returning cash to shareholders? Christoph Klenk: First of all, I mean, we have proven over the period that we have been using the cash for possible M&As. And I would say, on the other side, we are very careful in terms of our cash positions because we all know that this is something very comfortable once you have it in particular on times get a bit more shaky. But I can say we are -- how to say, we are working on M&A projects. However, we do speak only in case they are just before becoming true. So these are things which might come up. And we have -- sorry, when I say that not yet considered to pay extra dividend to our shareholders because we believe the reinvestment in the company is going to happen. We see things which could be done in the market in terms of M&A, and let's see how this continues through 2026 and 2027. So I don't think we come into the question whether we have to use our -- or we have to give our cash to pay it out to the shareholders. Uta Anders: Yes. And also with the profitable growth, we believe our forecast shows that the payout ratio or payout per dividend is going to increase. So that is the lever where we believe that this is beneficial for our shareholders as well. Constantin Hesse: And then just curious around the free cash flow development. I mean, you said that you're being conservative for 2025 -- 2026, sorry. But just to understand the dynamics of it because from today's perspective, I mean, because you basically confirm the '28 guidance, I would assume that orders start accelerating in '26 in order to have the book to grow in '27. So looking at the free cash flow development, what is holding you back from generating a free cash flow that is similar or even above 2025? Uta Anders: I mean, yes, we're going to invest further 4% of revenue. That's also what we plan for 2026 and also the years beyond. I mean for working capital, I mentioned earlier, a level of about 18%, which is an absolute increase also for 2026. Of course, we're going to generate good levels of cash flow from operating activities. And so we expect a good level. And why is it in our expectation lower than it is for 2025? I mean, you may remember that for 2025, our expectation actually was a bit lower as well. So that means we have generated more cash flow. And I mean you can cash flow only generate once. So there's maybe also some effect -- some small effect from '26. But overall, we expect a very good cash flow development for '26 as well. Some, as my colleague may say, also conservatism in here, but we believe it's going to be a good one as well. And we don't guide it. I mean it's, of course, indirect part of our ROCE guidance, but the free cash flow, we don't guide. We just give an indication on the expected development. Constantin Hesse: Christoph, can I quickly just -- Christoph, can I just ask very quickly? You said Iran, obviously, is an important part of the business. If there is potentially a strike there, is there any -- what's -- I mean, any idea that you could give us in terms of what the potential impact could be? Christoph Klenk: First of all, when I look to Iran, I mean, I'm looking more to the countries, let me say, aside from Iran, like Saudi Arabia and Israel. So I do not talk about Iran. That's from a business perspective, not important. So I was more looking to the uncertainty which brings that to the region because if you look to our Israelian and Saudi Arabian friends and customers, I mean, if such a strike would go to happen, they are concerned whether their countries would be attacked. That's the reason behind it. And I would say our customers are in this region quite robust to whatever weaponized conflict they are going to see. Nevertheless, a bit of an uncertainty might be if, let me say, such a counter-attack of Iran might jeopardize those areas. And I would say it's limited to those being around Iran. And -- but if I really can figure out what the impact would be, I can't tell you. I would take it around. I mean, if you look too, we have digested a 10% decrease in order intake in North America because of the tariffs. And we have been able to compensate that in other areas. And I would see that other, let me say, areas of the world, and I would name Asia in particular, have a big potential for 2026. And again, I wouldn't promise it, but I would see potentials to compensate in other areas as well. And that's the reason why we still stay pretty sound on our statement, book-to-bill ratio will be slightly above 1. Olaf Scholz: And the next questions come from Sven Weier from UBS. Sven Weier: I'm sorry, I have to follow up on the revenue guidance, and I'm probably the only person on the call who hasn't understood it yet. But the 3% to 5% guidance that you give, is that already after the EUR 99 million? Or do we have to deduct it so the real guidance is 1% to 3%? Uta Anders: So first of all, the EUR 99 million is '25, but I said it's a similar number for '26 and the 3.5% is not after the EUR 100 million, the similar number, you have to deduct it. Sven Weier: Okay. Good. That's what I thought, but I just wanted to confirm that. And then the other question also on currency because you said U.S. is down 10%. I mean, is that an organic figure? Or is that including the negative currency effect? Because otherwise, I guess, you would be kind of... Christoph Klenk: Yes, yes, including. Including. Including. Sven Weier: So organically, you've been actually quite flat in the U.S. despite all the trouble? Christoph Klenk: No, it's half-half. It's half-half. It's half-half. If you look to the numbers on order intake, what I just said, I would say a bigger proportion is tariffs, but it's certainly a proportion is currency. Yes. But nevertheless, this is not -- you have to look into -- currency is an order intake, not so big issue. It's just a translation effect, which we usually have once we translate P&Ls from the U.S. into Germany. Because on the orders, we are dealing with the numbers we have in the quotes, very simple. And we don't translate them because if we quote bottling lines to the U.S., we have here a euro quote, so if we count. We have not the U.S. count. Once we quote out of the U.S., of course, it's U.S., and we do not translate that at all. It's just a number we see. So order intake has not so a big effect of FX than actually the sales because we don't have the, let me say, exact translation. Sven Weier: And final question for me is just if you could share what kind of beer exposures do you still have left? I mean we all can obviously see... Christoph Klenk: That's a good question. Sven Weier: The issues that the beer makers have and it doesn't seem to keep getting better, the generational issue, I guess. So has it become quite small already? Or what's left in beer? Christoph Klenk: First of all, I have to say, complement how you phrased the question in the sense of what beer percentage we have left and beer exposure. This is really good. 2025 was really bad on it. If you look to it, I think it would have been around 20%, maybe beyond -- below that. But interestingly, we have received this year quite good orders from the beverage -- from the beer industry. So I would -- if you look to purely Q1, this would be on old levels, maybe between 25% and 30%. But all in all, we do expect that beer is, I would say, on a 22% to 25% level in our portfolio. And it's still decreasing since Intralogistics is growing, and we have been actually in processing, not growing at all in the beer that has become a pretty small business in the processing. I would say -- and I can say the number that's pretty easy. We have around EUR 120 million in the processing business being exposed to beer, not more anymore. Where we are coming from, I would say, EUR 300 million. So that has been compensated all by other, let me say, activities outside of beer. And in the core, I would say it's pretty stable because bottling lines are more replaced than brewhouses. Sven Weier: And what is the nature of the order that you got? I'm just curious, I mean, if these guys invest, what are they still investing? Is this an emerging markets order or developed markets? Christoph Klenk: To be honest, it's all over the place. So we have orders from Europe where we have very old equipment being replaced from well-known breweries, but it's as well in Asia, where we have received orders, and there is still some orders out there in Southeast -- in South America, where we believe those orders are going to materialize in the next 3 months as well. So it's all over the place. And I have to say maybe that's interesting for you in the audience that in particular, the German brewers have been quite active in ordering equipment and getting on better cost levels. So I would say they have been -- had a lot of courage into what they are going to do. So in particular, in Germany, investments in breweries have been pretty good in 2025. And the same looks like for 2026, even if you look to the market development, which is not so good all over the globe, it's, I would say, a lot of hesitation for investments into breweries. Sven Weier: And is that around also a lot of energy efficiency and those environmental topics, let's say? Christoph Klenk: I would say it's more economical reasons that they, in many cases, bring 2 lines down to 1 with higher speeds, higher efficiency, getting better, let me say, economics because they have less people in. That's more the investment scheme we see right now. And there is still some very old equipment out there in case you look to bottle washers, which have, in their case, they are 25 years old. They have a significant amount of energy consumption where they just because of energy reasons, go to reduce that energy consumption of pasteurizers; if they are old, they are horrible in terms of what they consume in water and heating. Olaf Scholz: And a little question, I think I see from Adrian, Adrian Pehl. Adrian Pehl: Actually, a very quick one on Intralogistics. Obviously, I mean, you want to grow the business still quite substantially. So you achieved 8.4% margin in this segment last year. So I was wondering why should we assume that the margin is not going to see more momentum on this one? Is that due to mix? Or how should we see this? Christoph Klenk: Yes. I mean Intralogistics from a, let me say, profitability standpoint, let me say, and I would call it commodities, which I call hybrid warehouses has been over the years under pressure. And what we did and this we stated as well on our Capital Market is that we looking into, let me say, more advanced order picking systems and that we have moved, let me say, the portfolio significantly. Then we have, let me say, a momentum that we are exploring new markets in Asia, while we have on the other side, the mature markets in the U.S. But I would say, if we look in comparison with, let me say, comparable product portfolio structures, we are doing pretty well in terms of the profitability. And we wouldn't see Intralogistics necessarily being in the short run on the same profit levels than we see the core. That's a fact. And I wouldn't say anything wrong in case I would make the statement that's going immediately in the right direction. So I would say the profitability we see we are quite happy with. It was quite an effort to be there. And I would say we can grow certainly further because and this adds on the margin because even our service business is growing, and this is not parts in this particular point. This is more software upgrades and helping people -- customers out with crews running their installation. So there's a different business model. Again, if we grow an installed base, I think we have a better chance in grabbing the aftermarket business, which is highly profitable in that section. And in the long run, I see a good development in terms of profitability as well, but it will be not in the short term. Adrian Pehl: All right. And very last follow-up, actually on the service share in general for the group. I take it that actually the service share increase is probably more pronounced as of 2027 as well and more or less like -- I think the line of communication so far has been 2025, 2026 rather not a significant increase on the service side. Is that correct? Christoph Klenk: Yes. I mean if we talk about significant, it's a question of what is significant, but we are growing our service business. So it's still growing. It has a very solid fundament. And if we look to the first 2 months, things are in line. Is it, let me say, that you see a huge momentum in sales? No, it's a kind of a very constant development. And we would see that even over the period of 2027, 2028. In life cycle, there is no, let me say, big jump. It's more an evolution rather than really an explosion what you might see. Even with the new lines we bring up, I mean, we are going to ship 8 of those by the end of the year, beginning of next year, which we are harvesting on. But if it's really completely having scale, and we stated that all the time, it will be 2027 to 2028. Olaf Scholz: So let me check the channels or ask a [ community side ]. I don't see no hand raising, also no mails from my mail server, so Christoph [indiscernible]. Christoph Klenk: Again, thank you very much. We are beginning of the year. As always, there is, let me say, a realistic optimism. We see and you have heard from the statements we have made. We are, I would say, as we have been always quite committed to the numbers we have given. A lot can happen, of course. But nevertheless, we managed that and compensated that with the markets we have. So we are looking with realistic optimism forward and even looking to listen to our 2028 numbers. Thanks a lot for staying with us and having your questions. It was a pleasure, as always. Thank you. Uta Anders: Thank you very much. Olaf Scholz: Thank you.
Salvador Villasenor Barragan: Good morning, everyone. I'm Salvador Villasenor, Head of Investor Relations at Walmex, and I want to thank you once again for joining our live Q&A session following our fourth quarter and full year 2025 earnings release, which was published yesterday. As always, we will make an effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. [Operator Instructions] Joining me today is Cristian Barrientos Pozo, President and CEO; Paul Lewellen, our Chief Omnichannel Operating Officer; and Paulo Garcia, our Chief Financial Officer. We'll now go right straight away to the first question. Operator: [Operator Instructions] The first question is from Mr. Ben Theurer from Barclays. Benjamin Theurer: Can you guys hear me, see me? Salvador Villasenor Barragan: Yes. Benjamin Theurer: So I wanted to get a little bit your sense as you look at the market in Mexico. And in the presentation yesterday, it was very clear there's a lot of differences between regions, but also within formats. So I wanted to understand what are your targets for 2026, how to potentially address these issues, be it on the regional side and/or on a format side? What are the things that you can do that are under your control to tackle what seems to be still a somewhat challenging environment? Paulo Garcia: So first of all, Ben, on the targets and guidance for the year, we are still elaborating on that and probably you'll hear more about that in terms of the Walmarts there. I think when you think about the environment, it's still relatively soft. We still expect the environment to be still probably relatively soft in the first half of the year. The good thing, as you know, we all know the data is the GDP growth expectation for the year is better than actually what we had in 2025. That's roughly 1.5%. I think 2 things that I'll say before I pass the button, whether Cristian or Paul want to add up on that. One is -- so what we're seeing in a banner like Bodega in these moments tends to shine further. We talked about the fact that Bodega increasing the penetration in the households of the lower income, and that is helping us. But at the end of the day, you know the strength of our portfolio, it's the overall portfolio that we have. And you've seen that -- across all the last quarters, not very dissimilar performance if you think about Bodega, Sam's and Walmart. Maybe Walmart Express at times a little bit more volatile, but a very tiny part of our portfolio, as you know, roughly 2%. But maybe Paul or Cristian can elaborate a little bit more what we are doing with the banners in particular. Cristian Barrientos: Ben, from my perspective, I think we are expecting a different year 2026 compared with 2025, as Paulo mentioned. We have seen in other markets how relevant is as you mentioned, what is in our control today to be prepared when the numbers came, let me say, in growth in the market, we will be very benefit. We have seen in other markets, as I told you, that we can accelerate 3, 4x above the market if we are very well prepared. So that is why the focus will continue in EDLP availability and, of course, the acceleration of e-commerce that's going to be prepared in the future, maybe near future because it will happen this year. So that's the focus of the total company. Operator: Our next question is from Mr. Alejandro Fuchs from Itau BBA. Paulo Garcia: Let's go to the next question, and we come back to Alejandro. Operator: Our next question is from Mr. Froy Mendez from JPMorgan. Fernando Froylan Mendez Solther: I was -- I wanted to ask about private label within your EDLP strategy. What role does it play? What level of penetration should this reach in the midterm under this new enhanced EDLP strategy? And what could the impact on margins be from pushing further into the private label? Cristian Barrientos: Thank you, Froy. And maybe you saw in the report that we are focused as a company in deliver EDLP, improve availability and accelerate e-commerce. And in EDLP, EDLP is not only about a price gap. It's a business strategy that differentiates us from the rest of the market. And included in EDLP, private brands play a very important role, the same as the assortment, supply chain, modulars, all this stuff. So for us, private brands is really important, and we have seen in Q4 good evolution of the penetration inside of Walmart. And so particularly in Bodega, as you saw also in the numbers, Bodega was the highest accelerator in sales during Q4. And in Bodega, private brand plays a super important role. So we are seeing a room to improve, a room to grow. So we are leveraging in all the markets with a different brand that we have today in Mexico. But it's a clear differentiator for us today. So that's the information that we have today to share with you in terms of penetration, acceleration, all this stuff. So -- and also, as I mentioned before, EDLP, there is a lot of metrics, but at the end, we are looking for increase our price perception and private brand plays a super important role there. And we have a very good quarter in terms of how we accelerate price perception and private brand was one of the key elements there. So I don't know if you... Paulo Garcia: Just maybe on numbers because there were 2 questions directly on numbers and margin of private brands, building on what Cristian said. I think on where we need to go, we said that a couple of times probably in the past, we want to be in the mid-20s penetration minimum, and that mostly focused in the Bodega. So there's a lot of room to improve, which things Cristian was saying that we need to do, but adding more products in categories, and we have lots of white spaces, entry price points. To the second question, private brands margins, our margins today of private brands is higher than what we have in innate brands but tends to be also the portfolio. One of the things I want to let it clear because once there was adopt, we don't manage private brands for margin. We do manage private brands for the EDLP to help the customers save money and live better with the entry price points. Of course, there will be categories that we will be having better margins. So as you can imagine, in foods and consumables is roughly similar to what we have in innate branded. We do have higher margins, in particular, in the areas of seasonal entertainment in the commodities, as you can expect, because it's a commodity, we will have lower margins than a branded. So -- but of course, we will play with it, but we manage for what's relevant for the customer. Operator: Our next question is from Mr. Ulises Argote from Santander. Ulises Argote Bolio: So the question that I had was trying to get a bit more sense and a bit more detail on those 15 basis points gross margin improvement that we saw in Mexico coming from the other businesses. So just wanted to get your thoughts on how should we think about this kind of trending forward? Are this the initial levels and how much more runway is there left for this? And maybe if you can comment a little bit on which of the businesses actually are becoming more relevant and are contributing more here at the gross margin level. Paulo Garcia: On that one. So as you can see, our new business has been contributing steadily over quarter-on-quarter, roughly around 20 basis points, sometimes a little bit more than that. In this case, a little bit less as you've seen it Ulises. The big one, which is actually becoming more and more relevant is Walmart Connect, immediately followed, of course, by Byte. In this particular quarter, Ulises, as you've seen it from what we said it in the webcast, Walmart Connect was not the one that drove the most of this improvement, actually tended to be around in the space of the financial solutions as well as Byte. These were the ones that contributed. You've seen the size of Byte these days. So contributing both in terms of the revenues as well to the P&L on a stand-alone basis. We always said 2 things about the business, right, Ulises. I will refresh that. One, of course, we do look at them on a stand-alone basis because it's good practice. We need to make sure that they did deliver. But of course, the sole reason why they are here is twofold: one, to deliver a pain point of the customer and how they actually helped overall the core of the business, either more frequency or more average ticket being higher. And that's what we are seeing with some of these businesses. For instance, a customer that is in Byte, the average ticket is more than 2x what we see in a customer that's non-Byte. So that we are pushing. The other thing that we're doing at the same time, we're using these funds to continue progressing and investing in margins in more EDLP in order to fuel the growth. In this particular one, our margin was higher as you've seen it. It will always be volatile as we said it, but that's how we actually approach this area. Operator: Our next question is from Mr. Felipe Rached from Goldman Sachs. Felipe Rached: Can you hear me well? Salvador Villasenor Barragan: Yes, Felipe. Now we don't. Let's move on to the next one. Operator: Our next question is from Ms. Melissa Byun from Bank of America. Cristian Barrientos: Melissa can you hear us? Operator: Our next question is from Mr. Álvaro García from BTG Pactual. Alvaro Garcia: Can you hear me? Cristian Barrientos: Yes, sure. Alvaro Garcia: Great. Awesome. I have a few questions. The first one on reducing the number of SKUs at Bodega Aurrera Express by 30%. I was wondering if you can give some more comments on that. And the second one for Paul. Paul, nice to meet you. I was wondering as part of your sort of onboarding on to Walmex into what Mexico and Central America look like as retail markets, if you could maybe share your sort of first take or your first impressions on how different Mexico is relative to the U.S. market and what that means from a playbook standpoint for Walmex. Paul Lewellen: Sure. Thank you for the question, Alvaro. I've been with Walmart for over 35 years, and I would say that we have more in common than we do different. And I would say the biggest similarity is around culture and our people are definitely an enabler of our success. And from a global leverage standpoint, I think the way that I would describe it is that Walmart has no boundaries. So when we're looking at either technology, AI, global leverage, we're able to take best practices from around the world and apply them globally. And that's exactly what we're doing this year in Walmart, Mexico. Just a few examples of that, that I would give, is when you think about how there are no boundaries and we can enable the stores from an AI and technology standpoint, you could start at the front end with Coastal, which is a global platform, which allows our registers to run the same around the world. You can go to the sales floor where we have the same tools and same technology to speed up the way that we process freight from the back room to the sales floor, the accuracy of our on hands, the availability of our products, the availability of what we can pick and what is available inside of our catalogs for our customers to purchase regardless of where, when and how they want to shop. And then I would lastly say from an inventory standpoint, whether it's our logistics system and the exciting technology that we're implementing there in Mexico and how that's going to enable us in the stores to be more efficient. I would say we're more like than we are different. Speed is critically important to us this year in Mexico, and I think you're going to see that, and it's going to come through loud and clear. Paulo Garcia: On the SKUs... Paul Lewellen: Yes. On the SKUs in BAE, I can tell you not only in BAE, but in Mi Bodega, the 30% reduction or SKU rationalization is a process that we are undergoing right now. Space is critically important and devoting the majority of our space to those items that drive the most sales and the most traffic inside of our stores, it's nothing new about that. We're constantly reevaluating our assortment across all of our banners. But these 2 are very, very important as it comes or relates to our purpose, which is saving people money so that they can live better, and that also drives our price and our price perception. Operator: Our next question is from Mr. Antonio Hernandez from Actinver. Antonio Hernandez: Just wanted to get a sense on Byte from a P&L perspective. I mean we all know that it's part of the ecosystem and it's not per se a P&L driver. But wanted to get a sense, I mean, you've already gained so much of a very large scale in a very short period of time. So if you can provide more light on that and maybe if there's any specific target, that would be very helpful. Paulo Garcia: Yes, Antonio, thanks. So I'll say what the things that we have mentioned this about in the past. So Byte, I said to you, it's in the past, guys, it's already a profitable business. We always said that was not sole driver at the beginning as we were building it because we wanted, of course, helping people getting access to affordable phones, so to speak in affordable prices and also help the overall business. But we also see as the business is evolving, it can also get better, it can also contribute more overall even on a stand-alone basis. We have the view that this business can easily go and actually have an operating margins in line to what we have in the rest of the business in the near term. So that's actually where we actually are heading to. At the same time, as I said, and Cristian always talks about that, the role of this business is to help the core, right? That's why actually I mentioned that the frequency -- the ticket of the Byte customer is more than 2x the one that actually you see that's a non-Byte. That's actually what we're also trying to push as we fulfill our purpose. Antonio Hernandez: Okay. And do you have any idea of the scope that maybe you could achieve in terms of the amount of users? Paulo Garcia: No, I'm not going to throw that number, but you can expect us to continue growing. I'm not going to put a number in the market that holds me accountable on that. Operator: Our next question is from Mr. Alex Wright from Jefferies. Our next question is from Ms. Melissa Byun from Bank of America. Melissa Byun: Can you hear me this time? Paulo Garcia: Yes, Melissa. Melissa Byun: Sorry about that. I had some technological difficulties, so I do apologize if this question has already been asked. But can you please provide some more context around the decision to reduce the Bodega Express assortment by more than 30%? How are consumers responding to cuts given the differentiation that's historically been provided by the broad assortment? And should we think about this maybe as a broader shift in your strategy moving toward a narrower and more private label-oriented mix in the concept? Paulo Garcia: Just say, Melissa, we actually answered this question just before. I'm not sure if you listen... Melissa Byun: I did not but I can -- sorry. Paulo Garcia: Let's do one thing, Melissa, we'll try to elaborate a bit more on the question. So Paul, will add a few things to your benefit. Paul Lewellen: Yes. I would tell you, our strength comes from a very diversified format portfolio, especially with Bodega. And when I think about Bodega, I think about value and I think about how critically important price is to value. I think about the experience that our customers have inside of our store. The assortment, to your point, is critically important. In our 2 smaller formats, though, space is a premium, and we want to make sure that we are dedicating space to the items that are producing the greatest amount of sales and sales results for our customers. Also, they're tailored to our customers' needs. And these are things that our customers have actually told us that they want more space dedicated. We don't have a ton of backroom space in Bodegas as you know. Most of it is stored on the sales floor on our top steel. So space is a premium. And I think the merchants and our commercial team have done a fantastic job in making sure that we have tailored the assortment and diversified the assortment to the customers that we serve. And the last thing I would say is that it's all about trust and our customers trust us, especially in Bodega to deliver price, that value, that experience and the assortment in a lot of cases for a one-stop shop. So SKU rationalization and the way that we rationalize SKUs by category, it honestly is nothing different or anything that we don't do on an annual basis across our commercial teams. So it is the right thing to do for these 2 formats. But again, the strength comes from the diversification of all 3. Cristian Barrientos: If I may add, Melissa, in this point, maybe you know that I run this business a long time ago. And in a small format is so important availability. So the way to reach right numbers in availability came from our right assortment. So today, we're taking advantage of the program that we have here in Mexico shop. So it's an asset that we have today to run faster and have the right assortment for the customer. So we will improve availability. So immediately, sales came. So you can see numbers in the past in Bodega Aurrera Express what happened, and that's the idea to evolve every year. Operator: Our next question is from Mr. Felipe Rached from Goldman Sachs. Felipe Rached: Sorry for the tech issue before. I hope you can hear me well now? Paulo Garcia: Yes, perfect, Felipe. Felipe Rached: Great. So I was wondering if you guys could share more details on what you expect to be the main drivers for the e-commerce acceleration going forward and whether you think any further investments will be necessary in that front. And still in this context, it would be very interesting to hear more on how the maturation process of the One Hallway initiative in Mexico so far compared to the one that you guys observed in the U.S. So anything you can share on that would be very interesting. Paulo Garcia: Okay. Maybe we'll try to answer the question and to... Cristian Barrientos: So first of all, thank you, Felipe, for the question. As you saw in the report, we define -- really important element to focus on the fundamental and the acceleration of e-commerce is critical here in Mexico and all over the world, and we have a huge opportunity. We -- you saw the numbers. We are still depending in 1P in a few categories in the quarter that didn't perform so well. We are evolving on demand. And as you mentioned, we are in the learning curve in One Hallway. But for us, I think the huge opportunity that we have today is to take advantage of the footprint that we have in Mexico to accelerate and accelerate speed to the customer and also reach more customer because today, we are serving not all the households here in Mexico because of -- because we need to evolve our operational model to reach homes. And we're right now evolving that last quarter. We extend our reach and we added in our fleet, let me say, Valle de Bravo, San Miguel de Allende, some cities that we didn't get because of the restriction that we had. And today, we are adding more cities. Next quarter, we're adding more than 20 cities to reach that. So in summary, speed, reach and assortment will be critical for us, and we have the footprint, we have the team looking forward to accelerate more both business, both that Paul shared in the idea that we have today. We're in a journey to unify our platform. So we will be ready to adapt or connect, let me say, as a global platform. So that allow us to receive the assortment from the U.S., the assortment from all over the world, in the Walmart world and in both sides. But the most important part is we will receive, but we can deliver or we will deliver to the customer with the speed. And that's the idea to increase assortment, reach and also accelerate the deliveries. Paul Lewellen: Cristian, can we also talk about total availability. I think I would say the journey that we're on from a store mapping, store location, modular integrity, on-hand accuracy and being able to fulfill the items on the shelf, the moment of truth in a very timely manner with precision and accuracy like we've never done before. This availability journey that we are on allows us to have real-time data down to an item level and where it is located across all stores, increasing our availability, improving our availability and our pickability of items for on-demand. Cristian Barrientos: And helping customer, shoppers, pickers to be faster. Paul Lewellen: That's right. Operator: Our next question is from Mr. Miguel Ulloa from BBVA. Miguel Ulloa Suárez: Can you hear me? Paulo Garcia: Yes. Miguel Ulloa Suárez: Perfect. A couple on my side would be regarding the slowdown in e-commerce. Could you provide a little more color on categories or what happened in the whole market and how you are reading going forward? Paulo Garcia: And Cristian to build on that well. We are still -- when you think about the extended assortment, particularly 1P, but also marketplace, we still very [Technical Difficulty] categories like TVs, particularly during the season, when Buen Fin and Fin Irresistible didn't perform so well. So therefore, that tends to impact us. And that's when you see the e-commerce numbers, you see that our on-demand business pretty much grew almost 20%, but our extended assortment grew much less mid-single digit, and that was impacted by 1P. So that's what an impact in the short term. As you know as well, we're also going through the transition on One Hallway. And the goal of the One Hallway, of course, is to increase and broaden our assortment so that we can diversify the assortment. And today, we have roughly 20 million SKUs. In the future, we can go up to more than 1 million SKUs in the next couple of years. So that's the journey we are in. It's a gradual implementation. It's a gradual progress. We don't expect to happen from one quarter to the other. But gradually, we'll see improvements over and above the things that Cristian already talked about that we are 100% focused, which is speed and reach. So it's about speed, reach and assortment. Operator: [Operator Instructions] Our next question is from Mr. Alejandro Fuchs from Itau BBA. Alejandro Fuchs: First of all, welcome, Paul, to Mexico and to Walmex, best of luck. I want to make 2 brief questions. The first one on same-store sales in Mexico. We saw a slight decrease in traffic and most of the growth coming from ticket. I wanted to see if you can maybe explain to us a little bit more color on how much of this is mix? How much of this is price? That will be the first one. And the second one, maybe for Paulo on gross margins. The improvement on the commercial front from lower shrinkage and general merchandise, how sustainable is this improvement on commercial margin going forward? And if you could give us maybe a little bit more color on those 2 general merchandise and on the food side, that will be very helpful. Cristian Barrientos: Thank you, Alejandro. And first of all, I will begin with the traffic, as you mentioned, was negative almost flat, but we always see the trend. So we began the year with a more negative traffic in the first quarter, and we're seeing a very good, let me say, response of the customer with the program that we're putting in place. Q3, Q4 was almost 0. And as you know, and as you saw in the reports, we have seen an evolution of the focus and that we're looking today in the fundamentals on the EDLP availability and e-com that those 3 are helping us to accelerate. And the idea in the coming months is to be very well prepared because we are waiting for the country to improve growth. You know very well that we ended 2025 with 0% growth in the market in -- as a total Mexico. We are expecting 1.5%. And we have a lot of data in other markets when you are very well prepared and the economy turn, you receive all these benefits in the future. So that is why we will be continue to focus on these 3 pillars that is crucial for the business, crucial for brick and also crucial for e-com. Recently, Paul mentioned that we are working very hard to mapping all our stores, all our items in the sales floors, also in backroom, trying to connect with e-com business and create more speed, more reach and take advantage of the assortment that we have. So that's the idea to combine all together, and we will continue to focus on it, and we know we will be very well prepared when the economy turn a little bit. Okay? And the second one was? Paulo Garcia: It was around margin. Thanks, Alejandro. Yes. So let me talk about -- as you said, you've seen the improvement in the omnichannel margin was mostly from GM mix and shrink. Let me start from the second and then talk about the first. So the second one, yes, it's an area that we are attacking. It's an area because at the end of the day, it's waste. And it's ways that we better can elsewhere invested to invest in pricing for our customers. We're putting a lot of energy there across all the teams. It's an end-to-end process. It's merchants, it's operators, but everyone that is involved. And we are topping that up with AI tools and machine learning, whether that's in terms of to optimize the replenishment, but it's also improve the demand forecasting because we still have a little bit of manual process in the way we actually look at the perishables. So that is something that we are really attacking left and center. On the general merchandise, Alejandro, goes a little bit what I also said to what on the e-commerce response or the extended assortment. So the categories that actually didn't perform so well tend to be, as you know, categories that don't enjoy the best margins as well. And as a result of that, of course, we tend to have a benefit on that. I think what you can expect from us going forward is the new business continue helping our margins, and we continue to invest behind the EDLP for our customers. And you, of course, might see volatility quarter-on-quarter as we always said it every single year. Operator: That was the last question. I will now hand over to Mr. Salvador Villasenor for final comments. Salvador Villasenor Barragan: Well, thank you very much for joining, and thank you for all your questions, and we hope to see you all at Walmex Day on March 25. Thanks again. Cristian Barrientos: Thank you very much. Paul Lewellen: Thank you. Operator: Walmex would like to thank you for participating in today's video conference. You may now disconnect.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Kinross Gold Fourth Quarter and Year-End 2025 Results Conference Call and webcast. [Operator Instructions] I would now like to turn the call over to David Shaver, Senior Vice President. Please go ahead. David Shaver: Thank you, and good morning. With us today, we have Paul Rollinson, CEO; and from the Kinross senior leadership team; Andrea Freeborough, Claude Schimper, Will Dunford and Geoff Gold. For a complete discussion of the risks and uncertainties, which may lead to actual results differing from estimates contained in our forward-looking information, please refer to Page 3 of this presentation. Our news release dated February 18, 2026, the MD&A for the period ended December 31, 2025, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul. J. Rollinson: Thanks, David, and thank you all for joining us. This morning, I will provide an overview of our fourth quarter and full year results, highlight our operations and projects and discuss our outlook for the business going forward and review our achievements in sustainability. I will then hand the call over to the team to provide more detail. Looking back, 2025 was another strong year for our business, underpinned by consistent operational and financial performance. We produced just over 2 million ounces and achieved our cost guidance, demonstrating a rigorous focus on cost control. As a result, our margins increased by 66% compared to a 43% increase in the gold price. This margin expansion resulted in a record free cash flow generation for our business with $769 million generated in Q4 and $2.5 billion for the full year. This free cash flow strengthened our balance sheet, and allowed us to return significant capital in 2025. In addition to returning approximately $1.5 billion of capital to debt and equity holders, we also ended the year with approximately $1 billion of net cash. With respect to operations, Tasiast and Paracatu continue to anchor the portfolio in 2025. Together, they accounted for approximately 1.1 million ounces for the full year or more than half of our production at strong margins. At Paracatu, full year production of over 600,000 ounces exceeded the midpoint of guidance with production exceeding 500,000 ounces for the eighth consecutive year. At Tasiast, full year production also exceeded the midpoint of guidance and the mine was once again our highest margin operation in the portfolio. At La Coipa, we delivered on full year production guidance and saw a strong performance in the fourth quarter. In the U.S., our assets delivered another solid year of operations with full year guidance achieved. Turning now to our projects. In 2025, we continue to make excellent progress across our attractive pipeline. In mid-January, we announced that we are proceeding with the construction of 3 high-quality organic growth projects which will extend mine life and benefit the long-term cost of our U.S. portfolio. Each of these projects demonstrate compelling economics at a range of gold prices and represent a strong case to invest capital to grow the overall value of the business. We also saw notable progress across our broader resource base with resource additions at several assets enhancing our strong resource optionality and long-term production outlook. We also continue to advance our 2 world-class development projects, Great Bear and Lobo-Marte. At Great Bear, surface construction for the AEX is well advanced, and we look forward to starting construction of the exploration decline later this year. I'm very pleased to report that we were just designated under the Ontario 1P1P process, which Geoff will elaborate more on. For the main project, detailed engineering and permitting continues to advance as we work with the Ontario and federal authorities, including the Impact Assessment Agency of Canada. The third and final phase of the impact statement submission remains on schedule to be filed at the end of this quarter. At Lobo-Marte, we are progressing baseline studies and plan to submit an EIA by Q2, and we look forward to providing a project update later this year. With respect to our outlook, we are reaffirming our stable multiyear production profile. Production of 2 million ounces for '26 and '27 remains consistent with our previous guidance and we are introducing a new year of production of 2 million ounces for 2028. At which time, our new higher-grade U.S. projects are expected to come online coinciding with higher-grade mining at Tasiast. Together, we expect this will provide an organic offset to cost inflation through great enhancement within the mine plan. Looking further ahead, we expect production to remain around the 2 million-ounce level through the end of the decade, supported by the higher grade mining at Tasiast, the U.S. projects, open pit extensions at La Coipa and the start-up of Great Bear. As with everyone in the industry, costs are expected to increase compared to 2025, primarily on higher royalties and inflation. However, I want to stress that we are holding the line on what we can control through continued cost discipline. With respect to future capital allocation plans, we will continue to remain disciplined to ensure that we are investing in our operations to maintain a reliable low-risk business, growing net asset value through continued pipeline development and strengthening our balance sheet while also returning meaningful capital to shareholders. The outlook for our business remains very robust, and Andrea will speak more on our plans to return capital to shareholders later. Turning to sustainability. In 2025, we continue to advance several priorities across this important area. In Q2, we will publish our annual sustainability report which will provide a detailed review on our sustainability performance and initiatives throughout 2025. Some highlights from the past year include, under the heading of Environment, we completed an energy efficiency program, delivering an estimated 1.5% reduction in greenhouse gas emissions through the implementation of more than 30 projects across our sites. Under the heading of Social, in Mauritania, we donated medical supplies through our long-standing partnership with Project C.U.R.E. and Mauritania's Ministry of Health. To date, the program has supported more than 70 health clinics. And under the heading of Governance, we were once again named the top scoring mining company in the Global Mail's Annual Corporate Governance ranking including maintaining placement in the top 15% of companies overall. With that, I will now turn the call over to Andrea. Andrea Freeborough: Thanks, Paul. This morning, I will review our financial highlights from the quarter and full year, provide an overview of our balance sheet and our capital allocation plans and discuss our outlook and guidance. We finished the year producing just over 2 million ounces, in line with guidance, with 484,000 ounces produced in the fourth quarter. Cost of sales of $1,289 per ounce and all-in sustaining costs of $1,825 per ounce in the fourth quarter were higher compared to the prior quarter as expected due to higher gold prices and lower planned production related to mine sequencing. Full year cost of sales of $1,135 per ounce and full year all-in sustaining cost of $1,571 per ounce were in line with guidance despite the impact from higher royalties. Margins were strong at $2,847 per ounce sold in Q4 and $2,283 per ounce for the full year. Our adjusted earnings were $0.67 per share in Q4 and $1.84 per share for the full year. Adjusted operating cash flow was a record $1.1 billion in Q4 and a record $3.6 billion for the full year. Attributable CapEx was $362 million in Q4 and $1.18 billion for the full year, in line with our full year guidance. Attributable free cash flow was a record $769 million in Q4 and a record $2.5 billion for the full year. Turning to the balance sheet. We continue to strengthen our financial position with significant cash flow generation in 2025, $700 million of debt repayment and significant growth in our cash position. In Q1, we repaid the remaining $200 million on the term loan we used to fund the acquisition of Great Bear and after redeeming our $500 million 2027 senior notes in December, we ended the year with $1.7 billion in cash, approximately $3.5 billion of total liquidity and net cash of approximately $1 billion. We now have no near-term debt maturities with $500 million due in 2033 and $250 million due in 2041. In December, we received a credit rating upgrade from Moody's Investor Services, upgrading our rating to Baa2 from Baa3. Also in December, we renewed our $1.5 billion revolving credit facility restoring the 5-year term. Turning to our guidance and outlook. We're forecasting production in the range of 2 million ounces for 2026 remaining consistent with previous guidance. Production is expected to be relatively evenly split across the year at approximately 490,000 to 510,000 ounces each quarter. With respect to cost this year, we are guiding $1,360 per ounce for cost of sales and $1,730 per ounce for all-in sustaining costs at a gold price of $4,500 per ounce. The expected increase of 10% for all-in sustaining costs compared to 2025 is driven by 3 factors. First, higher royalty costs due to higher gold prices, resulting in an approximate impact of 4% or $55 per ounce. Second, overall cost inflation of approximately 5% or $75 per ounce and the remaining 1% is primarily related to mine plan sequencing across the portfolio. With the increase in costs largely related to noncontrollable factors, our cost guidance continues to demonstrate our effective cost management strategy. Our capital expenditure guidance of $1.5 billion for 2026 reflects annual inflation and planned higher capital investment as we reinvest more in our business to extend my life and increase production in the late 2020 and 2030. Approximately $1.05 billion of our total CapEx is expected to be nonsustaining with the remaining $450 million expected to be sustaining capital. Looking ahead, our production guidance of 2 million ounces remains unchanged for 2027. And we have now added another year 2028 to our stable 2 million-ounce profile. Capital expenditures for 2027 and 2028 are expected to be approximately in line with 2026 subject to ongoing inflation and potential other project opportunities for the 2030s that are currently under study. As Paul noted, we will maintain our disciplined capital allocation strategy which includes reinvesting in our business, where we have chosen to increase capital expenditures by $350 million this year, continuing to strengthen our investment-grade balance sheet, and returning meaningful capital to shareholders. This year, we are targeting to return approximately 40% of our free cash flow back to shareholders through both dividends and share repurchases. Our shares remain a strong return on invested capital, considering our attractive valuation and free cash flow yield. With respect to dividends, we are further increasing our dividend by $0.02 per share annually or 14%, following a 17% increase we announced in Q4 for a total increase of 33%. Also, as a reminder, as typical for us, we expect Q1 to be a higher cash outflow quarter due to annual tax payments in Brazil and Mauritania and semiannual interest payments on the remaining senior notes. We expect to start executing our share buyback program next week. I'll now turn the call over to Claude to discuss our operations. Claude J. Schimper: Thank you, Andrea. I'd like to start with our safety culture. In the fourth quarter, our risk management practices continue to be strengthened across all the assets, ensuring that our highest risk activities are consistently and effectively controlled in the field. Building on our safety excellence programs, we continue to enhance capability at the frontline by investing in our field supervisors, equipping them with practical tools targeted training and visible leadership expectations to improve the quality of our critical control verifications. In December, we signed a 5-year collective labor agreement at Tasiast and a 2-year CLA at La Coipa, reflecting our ongoing partnership with our employees and ensuring stability for both the local workforce and our businesses in Mauritania and Chile. Our culture of operational excellence, which is backed by dedicated site teams continues to drive strong performance from our operations. Beginning with Paracatu, the mine delivered another strong year of production, exceeding 600,000 ounces, resulting in significant cash flow. Full year production of 601,000 ounces exceeded the midpoint of guidance and cost of sales of $978 per ounce was below the midpoint of guidance. Production of 155,000 ounces in the fourth quarter increased over the prior quarter due to timing of ounces processed through the mill partially offsetting lower planned throughput. Paracatu is expected to produce 600,000 ounces at a cost of sales of $1,240 per ounce in 2026. Tasiast delivered another strong year of operations with full year production of 503,000 ounces at a cost of sales of $884 per ounce, both meeting guidance. Tasiast was once again our lowest cost operation in 2025, delivering a robust cash flow. In the fourth quarter, the site delivered 126,000 ounces at a cost of sales of $1,002 per ounce. Production was higher over the prior quarter due to higher grades and strongest throughput. Production is expected to be slightly higher in 2026 and 2027 compared to the technical report due to ongoing mine plan optimization. The site is expected to maintain production at around 500,000 ounce level until we are back into higher grades in 2028. In 2026, Tasiast is expected to deliver 505,000 ounces with a target cost of sales of $1,050 per ounce and is expected to be our lowest cost operation once again this year. La Coipa delivered a strong final quarter with production of 67,000 ounces, improving over the prior quarter on higher mill throughput. Full year production of 232,000 ounces was in line with guidance. In 2026, mining at La Coipa will continue to take place at the 2 open pits, Phase 7 and Puren and blend ore feed into the process plant. La Coipa is anticipated to produce 210,000 ounces at a cost of sales of $1,320 per ounce in 2026. Our U.S. assets collectively delivered full year production of 676,000 ounces at a cost of sales of $1,426 per ounce, in line with guidance. Production of 136,000 ounces in the final quarter was on plan. In Alaska, fourth quarter production of 65,000 ounces was lower compared to the prior quarter and cost of sales of $1,673 per ounce was higher as a result of planned mine sequencing, including lower contributions from Manh Choh. At Bald Mountain, we produced 38,000 ounces at a cost of sales of $1,492 per ounce, and production was lower over the prior quarter, while costs were higher due to planned mining of lower-grade areas at the Galaxy and Royale pits. At Round Mountain, production of 32,000 ounces was lower compared to the prior quarter as Phase S continue to transition into initial ore while processing from lower grade stockpiles, resulting in a higher cost per ounce sold. With that, I'll now pass the call over to William to discuss our resource update and projects. William Dunford: Thanks, Claude. I will start by providing an update on our year-end reserve and resource. For this year, we have updated our reserve price to $2,000 per ounce and our resource price to $2,500 per ounce. The intention was to be more reflective of the recent gold price environment while still maintaining discipline and a focus on strong margins. Starting with reserves, I'm pleased to report that we added approximately 1.2 million ounces of reserve before depletion. At Paracatu, we saw a 700,000 ounce addition, largely offsetting depletion through mine design optimization and successful near-mine exploration. At Bald Mountain, we added 200,000 ounces before depletion, primarily through conversion of resources to reserves and the 5 satellite pits that were approved as part of the Redbird 2 project. At Tasiast, we added 200,000 ounces before depletion, with additions, both at West Branch and the existing pit design and at the Fennec satellite pit. At Round Mountain, the transition to underground replaced just over 1 million ounces of lower margin, lower grade open pit reserves with approximately 1.2 million ounces of higher grade, higher-margin underground reserves, fully offsetting our depletion. We are pleased to continue to see this type of progress in our reserve base, extending mine life as we advance exploration, optimizations and project studies across the portfolio. We have also grown our resource base by 1.6 million ounces of M&I and 3.4 million ounces of inferred. These resource additions were spread across our portfolio and were reflective of both exploration success and the impact of higher gold prices as we continue to hold the line on costs, increasing the size of potential future open pit laybacks at some assets. Just as we are holding the line on costs, we are also holding the line on our cutoff grades to ensure we maintain the margin and quality of our resource and only saw a small resource addition from additional mill feed at the end of mine life at the higher gold price. We are pleased to see these strong additions to enhance our long-term resource optionality. You can see on this slide a summary of that significant resource optionality which now includes 27 million ounces of M&I and approximately 17 million ounces of inferred. These resources, which include a number of projects across our operating and development sites form the pipeline of potential opportunities that we are progressing to support our production profile through the end of the decade and into the 2030s. Our January announcement of progression to construction across 3 high-return projects in the U.S. is a great example, demonstrating the depth and quality of the significant resource base and how we are progressing these projects into our business plan. Phase X at Round Mountain is a low-cost bulk tonnage underground opportunity that it extends operations through 2038 with average annual production of approximately 140,000 ounces. Curlew is a high-grade underground opportunity that leverages existing infrastructure at the Kettle River mill and at a historic Curlew mine bring online an additional high-margin line produces up to 100,000 ounces per year. And the Redbird 2 project is a highly efficient extension of mining at Bald Mountain, providing the next anchor pits alongside 5 satellite pits that combines to deliver 640,000 ounces. We have progressed the construction across these 3 projects on the back of strong margins with an average ASIC of $1,660 per ounce, quick paybacks of less than 2 years, combined NPV of $4.3 billion and combined IRR of 59% at $4,500 gold. Together, they are expected to add over 3 million ounces of production just based on the initial resource and mine plan inventory we have drilled to date. We are excited to be moving ahead with 3 high-quality projects as we continue to execute our portfolio of grade enhancement strategy. Beyond our initial life of mines at Phase X and Curlew, which go out to 2038 both projects have significant potential for mine life extension down dip to further enhance our return on asset value. At Phase X, we have recently completed drilling 220 meters down dip, which has demonstrated that mineralization continues with similar strong width of grade, providing further confirmation of our hypothesis that this system extends significantly down dip. This mineralization provides potential for both mine life extensions and for mining rate increase through opening of more mining horizons, potentially increasing the production rates. At Curlew, Stealth and Roadrunner exploration development completed last year has provided drilling access to target wide, high-grade resource extensions in these areas to augment our production profile in the mid-30s and drilling is now underway. As you can see on the slide, we have seen strong intercepts outside of the current resource and mine plan inventory in both of these zones with good widths and grades that have potential to extend the mine life and enhance the margins of the asset. Exploration will continue to be a priority for these 2 sites, and we look forward to providing further drilling updates through 2026. With these 3 projects now progressing to construction expected to come online in 2028. Our focus is now shifting to adding value-accretive production in the 2030s. This slide shows a summary of some of the longer-term projects in that extensive resource base that are our next focus to progress. I'll come back to an update on Great Bear, which is next in line shortly. Moving across to Chile. At Lobo-Marte project team continues to advance technical work as well as baseline studies to support our upcoming EIA submission and we look forward to providing a project update later this year. At Tasiast, we continue to see positive results down dip at West Branch and are setting both open pit and underground optionality there for mine life extensions in the '30s. At the same time, we are continuing to progress exploration on satellite opportunities similar to Fennec, which we added to the production profile last year and where we saw further reserve growth this year. At Maricunga, this year, we will be progressing technical and baseline studies and refreshing the mine plan to refine our view given the incentive resource base. Beyond these projects, we are continuing to progress exploration and studies for open pit layback opportunities that you can see in our resource base across our portfolio with a strong focus on Paracatu, Fort Knox and La Coipa extension. Now moving to Great Bear. Both the AEX program and Main Project are progressing well, with the Main Project on schedule for first production later in 2029, subject to permitting. Starting with updates on AEX, we made strong progress on site construction. Surface construction for AEX is 80% complete. As Paul noted, we look forward to construction of the exploration decline later this year pending receipt of provincial permits, which Geoff will comment on shortly. With respect to the Main Project, which remains on track detailed engineering and technical work continues to advance well, with detailed engineering now approximately 35% in fleet. Initial major equipment procurement for process plant and surface infrastructure is already underway with contract awards in progress. Manufacturing and selected long lead items is anticipated to commence later this year. With respect to exploration at Great Bear, in 2025, our efforts shifted to focus on regional exploration on the 120 square kilometer land package. Step-out drilling completed up to 1.8 kilometers along strike of the main LP zone returned encouraging results, indicating high-grade mineralization beyond the current resource base. Drilling on the broader land package outside of the main LP trend, also returned encouraging results. We will progress additional drilling to follow up on these results along trend and on the broader land package this year. I'll now hand it over to Geoff to discuss the permitting progress at Great Bear. Geoffrey P. Gold: Thanks, Will. Permitting of the AEX program and the Main Project continue to advance as we work hand-in-hand with the Ontario and federal authorities. Focusing on AEX, we continue to work with the Ontario Ministry of Environment Conservation and parks to finalize the 2 remaining AEX permits. We anticipate receiving these permits and to commence construction of the decline by Q2 of this year. Turning to the Main Project, which remains on schedule work has commenced on both federal and provincial permits. Federally, we continue to work with the Impact Assessment Agency of Canada, IAC, to advance the project impact statement. The first 2 of 3 phase submissions for the project's impact statement were filed on time in September and December, respectively. The third and final phase is scheduled to be submitted at the end of Q1 of this year as previously noted. As a reminder, finalizing the impact statement and receiving the final impact assessment report from IAC is the critical first step to obtaining the other federal and provincial permits we require to construct and operate to Great Bear mine. Work has also commenced another main project federal permits with technical documents submitted to Fisheries and Oceans Canada and Environment and Climate Change Canada during the quarter. Provincially, we were pleased that the main project was recently designated for the 1 project, 1 process permitting framework by the Ontario Minister of Energy and Mines Stephen Lecce. This helpful initiative aims to better coordinate, integrate and streamline Ontario mining project authorizations, permitting and indigenous community consultation, which we support. We expect this more coordinated framework will facilitate the Ontario component of Great Bear permitting and targeted first gold production later in 2029. Respecting indigenous communities, we continue to advance the negotiation of benefits agreements in a constructive and positive manner. I will now turn it back to Will to discuss our exploration portfolio. William Dunford: Thanks, Geoff. Beyond the significant portfolio of projects under study, permitting and construction that already sit in our resource base, we are also actively progressing brownfield and greenfield exploration across the portfolio with a total $185 million budget in 2026. We had a strong year of brownfields exploration, driving both the significant reserve additions we spoke about earlier and identification of additional resource potential across a number of projects, a few of which I will now highlight. First, at Tasiast, we have continued to see positive results at West Branch with 2025 deep drilling demonstrating that mineralization continues at least 1.8 kilometers down plunge of our existing underground resource. Next, in Alaska, the team spent 2025 building on our knowledge of the Gil satellite deposit at Fort Knox. alongside opportunity drilling near the Fort Knox pit to enhance the optionality of our next playback. Results at Gil were encouraging with a few highlight intercepts shown on the slide, strong grades and widths, including a 15.2 gram per tonne intercept over more than 4 meters. Gil is a satellite opportunity with potential to augment production for future phases of the Fort Knox main pit. And as the last highlight, at Bald Mountain, efforts have continued to explore our large land package at the site, and we're successful in bringing in the 200,000-ounce reserve add I mentioned earlier, primarily through satellite pit extensions. We have also seen strong results outside of those satellite pits that were added to reserves as part of the Redbird 2 project. One highlight was the drilling of the Rat satellite pit, saw intercepts with significant grades and widths including 10 grams per tonne over 16 meters. Rat is 1 of more than 40 historic mining areas on the property and will be a focus to explore and study for potential to complement our next anticipated anchor pit at Bald Mountain, the top pit. You can find more details on the strong results from our 2025 brownfields program and our plans for 2026 in our press release. Moving to our greenfields program. We completed approximately 40 kilometers of drilling across targets in Canada, in the U.S. and Finland. In Canada, exploration was primarily focused in Manitoba, New Brunswick and Ontario. At Snow Lake in Manitoba, we saw exciting new results both from our first drill program on a McCafferty property, including an intercept of 4 meters at 34 grams per tonne and from grab sampling on the SLG property which returned to a number of results of strong gold grades. These properties further complement the high-grade vein system we have outlined at Laguna North, providing critical mass for further exploration work in the area. In New Brunswick work consisted of mapping and drilling in the Williams Brook JV property, where Gold rich course veins were identified at the Lynx Zone. At Red Lake North in Ontario, field work also identified several high-grade quartz veins and rock grab samples returned numerous strong grades with the highest assay returning to 65 grams per ton. In Nevada, we completed 2 drill holes at PWC JV project to test for lower placed Carlin-type host drops. Program returned 149-meter mineralized intercept, confirming the presence of Carlin-type disseminated gold, work this year will focus on following up on this exciting result. We continue to be encouraged by our success identifying earlier-stage brownfields and greenfields opportunities to progress into our resource base and project pipeline and plan to build on this success in 2026. I will now turn it back to Paul for closing remarks. J. Rollinson: Thanks, Will. After delivering on our commitments in 2025, we are well positioned for a strong 2026. Our business is in great shape, both operationally and financially, with a number of upcoming catalysts for the year ahead, including ongoing return of capital through our dividend and share repurchases, continued strengthening of our balance sheet, supported by strong operational performance and cash flow generation, advancing our project pipeline, including the U.S. projects discussed in January, as well as Great Bear and Lobo-Marte, which we intend to provide a project update later on this year and continued exploration intended to bring in new projects and mine life extensions. Looking forward, we are excited about our future. We have a strong production profile. We are generating significant free cash flow. We have an excellent balance sheet. We have an attractive return of capital. We have an exciting pipeline of both exploration and development opportunities, and we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. With that, operator, I'd like to open up the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Fahad Tariq with Jefferies. Fahad Tariq: On Great Bear, the 1 project, 1 process designation. I believe Kinross is the first major mining company to receive that. Can you maybe talk about the relationship with the provincial government and whether this could help get Great Bear into the major projects office designation at the federal level? Geoffrey P. Gold: Yes, sure. It's Geoff. I'll take that question. Look, let me start by saying that we were pleased by the Interior Minister of Energy's and Mines decision to designate the Great Bear project for inclusion in the 1P1P process. And we believe this designation represents an important milestone. I was -- I'm going to talk about both processes. But at the 1P1P level, the main benefit of the designation is a more streamlined and integrated approach for the provincial component of main project permitting. And it gives us a single point of contact at the Ontario Ministry of Energy and Mines to coordinate all required provincial authorizations permitting and First Nations consultation. And so as a result, we expect that will help facilitate the provincial piece of main project permitting and targeted first gold production in late 2029. And we've worked hand-in-hand through this process with the Ministry of Mines and other provincial permitting agencies, and we're pleased with the relationship. It's a strong relationship as we continue to work together to develop the project. On your federal piece of the question, I can tell you that we've been in touch with the federal Major Projects office. And they, along with other federal agencies are aware of the Great Bear project and its potential significant economic and sustainable benefits for not only Ontario, but Canada and indigenous communities. And it's absolutely possible to obtain designations under both the 1P1P permitting framework that I talked about previously and the federal national project of interest framework. But we've elected at this juncture to not apply for that federal designation. We believe that with the benefit of the 1P1P designation that we currently have, along with the fact as Paul noted, that we're far enough along with the federal impact assessment process overseen by IAC. As we've told the markets, we'll be filing the third and final phase of our impact statements at the end of Q1. So we believe we are well positioned for our targeted first gold production in late 2029. Fahad Tariq: Great. I appreciate the detailed response. That's very clear. And then maybe just switching gears to 2026 cost guidance. Can you just break out the impact of the royalties, the higher royalties because of the higher gold price and underlying cost inflation? Andrea Freeborough: Sure, I can take that. It's Andrea. I'll start with talking about all-in sustaining costs. So our total all-in sustaining cost guidance is up about 10% over 2025. And most of that is related to those 2 items. So inflation and higher royalties on gold price. So of the 10% increase, 5% is inflation and 4% is royalties from using the $4,500 gold price versus where we were for 2025. And then there's about a 1% increase that's left, and that's just really puts and takes across the portfolio on mine plan sequencing. When we look at cash costs, there's a bigger increase, so the increase looks like 20% year-over-year. So half of that 20% is the inflation in royalties and the other half is sequencing as well. There's a bit of a different impact there. It's kind of accounting characterization of our stripping costs. We started to see this -- starting kind of second half of last year where stripping costs move from being characterized as sustaining capital at some of our assets into operating costs. So we see the increase in cash costs, but the offset of that is in sustaining capital. So that's why there's no impact or very small impact on the all-in sustaining cost guidance. I'd say overall, we're moving the same time. it's just a characterization of cost shows up differently. Operator: Your next question comes from the line of Daniel Major with UBS. Daniel Major: First question, just on the capital allocation and cash returns going forward. I mean I think it's great that you're anchoring a capital return to free cash flow going forward. But I suppose 2 parts to the question. Is there a preference? Or can you comment on the split between ongoing buybacks and potential special dividends to get to the 40% of free cash capital return? And then 40% of free cash flow with $1 billion net cash position implies you're going to continue to build net cash? What are you going to use that for? And is there a maximum limit above which you'd pay it all out to shareholders? J. Rollinson: Why don't I start on -- and Andrea can jump in. To the first part of the question, we have a baseline dividend, which is meant to be there forever. And the bulk of the return of capital really comes in the form of buyback. We like the buyback. We think a lot of our investors prefer the buyback. And one of the things we like about buyback is it does come with that benefit of reducing our share count and therefore improving our per share metric. We reduced our share count last year, and our intention is to do that again this year. So in terms of the preference between dividend and buyback, we'll do both. But the greater volume or total of cash will be returned through the form of the buyback. Looking forward, I think our focus is to get the appropriate return of capital. And that's why, as you acknowledge, we focused on the percentage of free cash flow, that is the focal point. We do realize that in the context of current prices that will be more cash flow and therefore, more returns than we had last year. So we are increasing. But at the same time, we're reinvesting in our business. We do expect in the context of spot that our balance sheet will continue to strengthen. But I guess the point there is we also have to look at the other side of it with these higher gold prices, as we've already seen, we expect higher royalties, higher taxes. We just demonstrated with the announcement on the U.S. projects, we've got lots of optionality in our pipeline. And we'll take a sort of a steady as she goes with the balance sheet while reinvesting in our business with the appropriate return of capital expecting that we may have higher taxes, royalties and opportunities to reinvest in our business. Daniel Major: Okay. And then well, I guess, maybe a follow-on to that in terms of the inorganic options. Are you kind of optically looking at many opportunities at this point? J. Rollinson: I would say we get the question reasonably frequently. We do have -- we have a very strong internal technical team. We do look at opportunities, particularly if there's a process but I would say we're hard markers. We're not under any pressure. When you look at our reserve resource really more of our resource optionality. We've got a lot of depth in our organic portfolio. We've given good visibility on our guidance for 3 years and beyond. So we don't feel under any pressure and what that means is if we saw the right thing and we felt it created value, we'd have a look at it. But we certainly don't feel under any pressure and we're quite happy with the organic profile as it looks today. As I said, we'll our objective really with the free cash flow is to continue to grow our per share metrics. Daniel Major: Great. And then last one for me. First, I guess you slowly changed the way of the accounting for the tax payables. But just on that, in terms of the Q1, now we're past the year-end, what we should be expecting in terms of the cash outflow. I know you've obviously given the guidance of cash tax for the full year. And then with respect to the run rate of capital returns, free cash flow will be lower in Q1 because of the tax payments, would you -- should we read that you'll slow the buyback? Or will you just look to distribute that at a similar rate through the year? Andrea Freeborough: Yes. We're -- as I noted in my remarks, we haven't started the buyback yet just because of more significant cash outflows in Q1, largely related to tax, and I'll come back to that. But we are planning to get on the buyback next week. So on the whole Q1 may be lower than the rest of the year. But given we're targeting the 40% of free cash flow for total return on capital, it will be a bit of a -- we'll have to calibrate it as we go throughout the year, and then we'll report back each quarter. Like last year, we do expect to be in the market systematically sort of daily throughout the year, repurchasing our shares. In terms of the tax payments, in Q1, we expect to be paying over $400 million, and that's largely related to 2025. And then we gave the guidance for the full year, but I think $500 million of that is related to 2025. Sorry, probably closer to $600 million. Daniel Major: Okay. So $400 million in the first... Andrea Freeborough: In the first quarter. Daniel Major: $400 million in the first quarter and then the remainder of the $1.25 billion -- so $1.25 billion over the year. Andrea Freeborough: Q4 typically had sort of the lowest payments, Q1 the highest then Q2. So more weighted to the first half and Q1 being the highest. Operator: Your next question comes from the line of Carey MacRury with Canaccord Genuity. Carey MacRury: Congrats on the strong year. Just going back to the 40% target. That's just to clarify, that's for 2026, and that's a number that you'll revisit, I guess, in 2027. Andrea Freeborough: That's right. Carey MacRury: Okay. And then just in terms of the 2 million ounces, is there a quarterly progression we should be expecting or pretty flat quarter-to-quarter like last year? Andrea Freeborough: Pretty flat quarter-to-quarter. J. Rollinson: MacRury, as Andrea noted, and she gave her comment. We'd like to range sort of consistency, but obviously, at 2 million divided by 4 million, that's 500, but you have ups and downs. So we think anything 485 to 515 or 490 to 510 , that's kind of the average. Operator: Your next question comes from the line of Tanya Jakusconek with Scotiabank. Tanya Jakusconek: Yes. Okay. Perfect. Great. Some have been asked, but I just wanted to follow back on just the contract renewals. Are there any other ones that are coming up for renewal this year for your labor contracts that we should be aware of? Claude J. Schimper: Yes, Tanya, there is. We're busy -- we're currently busy working through the Brazil Paracatu contract negotiations. Those are pretty standard. We do them almost annually or 18 months. It's slightly different to the other side. Geoffrey P. Gold: A bit more legislative. Claude J. Schimper: Yes, a bit more legislative as well. So it's just a bit more of a process and that's why it's taken on into this year. But for the rest of the sites, as our U.S. sites, we don't have them, and then it's just Tasiast, Mauritania. Chile, we completed. So we're... Tanya Jakusconek: Okay. And I should be thinking about labor, the inflation and wage inflation in that 4% to 5%, would that be fair? Claude J. Schimper: Yes, it's really relative to the country. Our inflation in Mauritania is like 10%. Brazil, it's about 8%. So relative to each country. And then overall, for us as a portfolio, it's in the 4% to 5% range. Tanya Jakusconek: Okay. So it's not out of one. Okay. My second question is on Great Bear and thank you for the information on the permitting side. Hopefully, we get that permit in Q2. That would be good to see. But I read that you're going to give us an update later in the year on Great Bear. What exactly are we getting in terms of an update? Is it a new technical study? Maybe just some clarity on what's coming. J. Rollinson: Yes, just for kind of -- that may have come out a little bit on the script. The update we're going to provide is on Lobo-Marte. And we were talking about Great Bear and Lobo at the same time. I don't know that there's a specific update that we're planning. It's just continued milestones in the case of Great Bear getting those 2 remaining permits, starting to decline filing the third and final impact assessment filing. So there's not a specific deliverable that I think we're thinking about with Great Bear, in the case of Lobo, we will be filing the EIA, and we plan to give a project update on economics. Tanya Jakusconek: Okay. Now that makes more sense because I was just like what's coming on Great Bear that needs an update. But okay. And then my final question is there is a slide that we talked about -- you talked about on some mine life extensions and Paracatu was there. And I'm just wondering, many years ago, there was a potential to do a layback that would add quite a bit of ounces on Paracatu. Is that what you're still thinking about? Is that something -- that make sense? J. Rollinson: Yes, you can see that I mean, there's a variety of layback optionality, both in reserve and resource at Paracatu. You can see that we put about 700,000 ounces into the reserve this year as it converts that's material that is now in our strategic business plan, and that's a further redesign of layback. So that full reserve is now approved in part of our business case. So it's an easy way to think about the direct business case is the laybacks that sit in the reserve. And then there's also a significant multimillion ounce resource that we're looking at for the next stage of optionality there. Operator: I will turn the call back over to Paul Rollinson for closing remarks. J. Rollinson: Thank you, operator, and thanks, everyone, for joining us this morning. We look forward to catching up with you all in person in the coming weeks. Thanks for dialing in. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the TechnipFMC Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Matt Seinsheimer, Senior Vice President of Investor Relations and Corporate Development. Please go ahead. Matt Seinsheimer: Thank you, Regina. Good afternoon, and good morning, and welcome to TechnipFMC's Fourth Quarter 2025 Earnings Conference Call. Our news release and financial statements issued earlier today can be found on our website. I'd like to caution you with respect to any forward-looking statements made during the call. Although these forward-looking statements are based on our current expectations, beliefs and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q and other periodic filings with the U.S. Securities and Exchange Commission. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. I would now like to turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer. Douglas Pferdehirt: Thank you, Matt. Good afternoon and good morning to all. Thank you for participating in our fourth quarter earnings call. I am very proud to report our strong quarterly and full year results as we closed 2025 with solid operational momentum. Total company inbound for the year was $11.2 billion. Backlog ended the year at $16.6 billion. Total company revenue for the year grew 9% to $9.9 billion with adjusted EBITDA improving to $1.8 billion, an increase of 33% when compared to the prior year. Full year free cash flow increased to $1.4 billion and shareholder distributions grew to $1 billion, both more than double the levels achieved in the prior year. Turning to Subsea. Orders in the quarter were $2.3 billion, resulting in $10.1 billion of inbound for the full year with iEPCI projects being the largest contributor of inbound in 2025. There was also continued momentum for new opportunities within existing basins with bp Tiber being our most recent iEPCI contract in the Paleogene. Notably, TechnipFMC has been awarded 5 of the 6 20K projects sanctioned thus far. The widespread adoption of our differentiated offering has clearly been a catalyst for our commercial success. Over the last 3 years, we delivered on our goal to inbound more than $30 billion of subsea orders. This has driven Subsea backlog to $15.9 billion with legacy projects now representing less than 10% of backlog. Given our expectation for $10 billion of Subsea inbound in the current year, we anticipate further growth in backlog. Direct awards, iEPCI and Subsea Services represent an increasing share of our inbound. In fact, this combination accounted for more than 80% of our total Subsea inbound in 2025. We continue to be selective in the work that we pursue. We prioritize projects that utilize our iEPCI and Subsea 2.0 configure-to-order offerings. And our services business has been a clear source of differentiation, leveraging the industry's largest installed base. Most importantly, this high-quality inbound derisks project execution, enabling accelerated project timelines and increased schedule certainty. The inbound secured in 2025 also speaks to a change in customer behavior with more clients adopting a portfolio approach to offshore development. Instead of focusing on the next project exclusively, operators are taking a broader portfolio view of their opportunities, executing a vision for their entire asset base. An example of this mindset is simultaneous development of greenfield assets where operators execute multiple projects in parallel, industrializing the entire field. bp's approach to the Paleogene is an excellent example, where TechnipFMC is executing the Tiber and Kaskida projects at the same time, utilizing a consistent project methodology focused on our 20K equipment and integrated delivery. To be clear, this is not business as usual. Historically, operators would wait for the completion of the first project to incorporate learnings into subsequent phases. Today, those benefits are seen as incremental to the more substantive improvements gained from a portfolio approach. By executing as a single unit, operators benefit from integration and standardization that enable them to reach target production more quickly and economically than would be possible as stand-alone projects. This shift in customer focus from a single project to a more comprehensive portfolio view clearly benefits from our differentiation with TechnipFMC's iEPCI model and Subsea 2.0 solutions serving as key enablers of this change in behavior. The increased collaboration that comes with a portfolio approach also provides us with greater visibility into the project pipeline. Importantly, this early engagement provides us the greatest opportunity to help our customers more efficiently design and develop their entire program. Today, our clients are much more confident that they can build cost and schedule certainty into their expectations, and that is creating additional opportunities for our company. This change in customer behavior also has a positive impact on the outlook for Subsea. We expect a greater share of capital spending to move offshore, where reservoirs are prolific, high-quality and accessible to many operators with attractive project economics that continue to improve. And we are seeing the impact of this change on our Subsea Opportunities list, with the latest update reflecting the sixth consecutive quarterly increase in value. The list now highlights approximately $29 billion of opportunities for future development when using the midpoint of project values. This is the highest level ever recorded, and it was achieved even with a significant level of projects awarded in the period. And keep in mind, this only reflects a 24-month view and is not indicative of the full opportunity set for our company. There are multiple new frontiers under consideration for greenfield development, more than at any time I can remember. Greenfields are unique in that they provide a blank slate. They have no preexisting field infrastructure where legacy architecture and technologies can limit flexibility in future enhancements. This makes a portfolio approach very effective for accelerating development in new frontiers, reinforcing our confidence and continued strength in offshore activity through the end of the decade and beyond. I now want to close on a few key messages. First, 2025 was another year of exceptional performance for TechnipFMC. And I want to acknowledge the efforts of the 22,000 women and men across the globe. They take great pride in the company and are passionate about what they do. This is evident in our full year results, where continued strength in order inbound drove growth in high-quality backlog and continued strength in execution elevated the expansion in both EBITDA and free cash flow. This team has a strong desire to win and is unwavering in its commitment to deliver. The second point I want to convey is that 2025 was another major milestone for TechnipFMC, but we are far from achieving optimal performance. We had great commercial, operational and financial success in the year, but the groundwork for these results was set in motion many years ago with our introduction of new commercial models and configure-to-order product architecture and our internal focus on the principles of simplification, standardization and industrialization. While the impact of these changes is real and sustainable, we are confident that considerable upside remains. And much like our current success, it won't be dependent upon any one driver. We are confident that we will deliver further advancements in integrated execution. We will benefit from an expansion in configure-to-order offerings as we adopt them across more product platforms, and we will deliver greater operating leverage than what has historically been achieved in our industry. Finally, I want to reiterate our commitment to the relentless pursuit of the reduction of cycle time. The actions we have taken, which are ultimately focused on driving project returns higher, clearly demonstrate our ability to create sustainable value for our customers and real differentiation for our company. We know that our work is not complete. We know that more value can be created. And with a culture focused on continuous improvement in everything we do, we also know that we have the right strategic mindset in place to make offshore investment an even bigger and more sustainable opportunity. I will now turn the call over to Alf to discuss our financial results. Alf Melin: Thanks, Doug. Revenue in the quarter was $2.5 billion. Adjusted EBITDA was $440 million when excluding $52 million of restructuring, impairment and other charges and a foreign exchange gain of $1 million. Turning to segment results. In Subsea, revenue of $2.2 billion decreased 5% versus the third quarter. The sequential decline was primarily due to lower activity in the North Sea and Latin America, offset in part by higher activity in Asia Pacific. Adjusted EBITDA was $416 million, down 18% sequentially, primarily driven by seasonally lower vessel-based activity and reduced fleet availability due to higher scheduled maintenance in the period. Adjusted EBITDA margin was 18.9%. For the full year, Subsea revenue grew 11% versus the prior period with Subsea adjusted EBITDA margin up 340 basis points to 20.1%. In Surface Technologies, revenue was $323 million, a decrease of 2% from the third quarter. The sequential decrease was driven by lower activity in North America and timing of project-related activity in the Middle East, partially offset by higher activity in Asia Pacific. Adjusted EBITDA was $58 million, an increase of 8% sequentially, due to higher services activity in the Middle East and operational efficiencies related to business transformation initiatives. Adjusted EBITDA margin was 18%, up 160 basis points from the third quarter. For the full year, adjusted EBITDA margin improved 170 basis points to 16.7% even with revenue essentially flat when compared to the prior period. Turning to Corporate and Other items. Corporate expense was $35 million. Net interest expense was $5 million and tax expense was $33 million. Cash flow from operating activities was $454 million with capital expenditures totaling $94 million in the quarter. This resulted in free cash flow of $359 million. Free cash flow for the full year was $1.45 billion. We repurchased $168 million of stock in the fourth quarter. When including $20 million of dividends, total shareholder distributions were $188 million. For the full year, total shareholder distributions more than doubled versus the prior year to $1 billion. Cash and cash equivalents ended the year at $1 billion. Our net cash position increased to $602 million. Moving to our financial outlook. We have provided detailed guidance for the year in our earnings release. I will now provide additional color on the guidance and our first quarter outlook. Starting with Subsea. During the fourth quarter, we incurred restructuring charges related to simplification and industrialization actions being taken to further improve operating efficiency. As Doug indicated, our financial results and operating momentum remains strong, but we know we can achieve even more. These actions will deliver sustainable improvements in 2026 with additional benefits to be realized beyond the current year. With that in mind, we are updating our previous Subsea guidance provided in October. We now expect revenue of $9.4 billion with adjusted EBITDA margin of 21.5% at the midpoint of the full year range. This implies growth in Subsea adjusted EBITDA of 16% when compared to 2025. For the first quarter, we anticipate subsea revenue to increase low single digits sequentially, while adjusted EBITDA margin is expected to improve approximately 50 basis points from the 18.9% reported in the fourth quarter. Moving to Surface Technologies. We are guiding to full year revenue of just over $1.2 billion with adjusted EBITDA margin improving to 17.25% at the midpoint of the guidance range. For the first quarter, we anticipate Surface Technologies revenue to decline approximately 10% when compared to fourth quarter results with an adjusted EBITDA margin of approximately 16.5%. And turning to Corporate. We are guiding to full year expense of $120 million with an expectation that we will incur approximately $40 million in the first quarter. Lastly, I want to comment on our free cash flow guidance. We remain committed to a very disciplined asset-light approach to capital management. We anticipate capital expenditures to approximate $340 million for the full year, representing just over 3% of revenue. Additionally, we expect full year free cash flow to be in a range of $1.3 billion to $1.45 billion. This would imply free cash flow conversion of approximately 65% at the midpoint of guidance. And as previously indicated, we expect to return at least 70% of free cash flow to shareholders in 2026 through dividends and share repurchases. In closing, I am very proud that we delivered on our financial targets in 2025. When excluding foreign exchange, we increased total company adjusted EBITDA to $1.8 billion, an increase of 33% versus 9% growth in revenue. We drove strong improvement in adjusted EBITDA margin for Subsea and Surface Technologies with increases of 340 and 170 basis points, respectively. And we delivered growth in total company backlog to $16.6 billion, up 15% from the prior year. I'm also proud to share our full year guidance for 2026, which reflects continued operational momentum with total company adjusted EBITDA expected to exceed $2.1 billion at the midpoint of our guidance items. This represents growth in adjusted EBITDA of 15% versus 2025 when excluding foreign exchange with margin expansion in both segments. Lastly, we expect strong cash conversion from our growing EBITDA. And given the flexibility provided by our strong balance sheet, you should expect us to return the majority of this free cash flow to our shareholders. Operator, you may now open the line for questions. Operator: [Operator Instructions] Our first question will come from the line of Arun Jayaram with JPMorgan Securities. Arun Jayaram: Doug, I wanted to see if you could elaborate on your thoughts on margin expansion potential from industrializing the SURF process. And you talked about this morning in your prepared remarks about delivering further advancements in your integrated project execution. So just wondering if you could maybe shed some light on your thoughts on industrializing the SURF process to drive margins higher. Douglas Pferdehirt: Thank you, Arun. Look, I'd be happy to. As I noted in, I think, a prior quarter, when we started down the path of industrialization and the configure-to-order product architecture, which we call Subsea 2.0, that was prior to the merger. So we're obviously focused on the assets that reside on the seabed because that what was within the scope of FMC Technologies at the time. As a fully integrated company, we now have access to not only the seabed but the water column in addition. So that is where our focus is now, is to expanding that configure-to-order applications and all the efficiency gains and all the improvements in terms of reduction of cycle time for our clients and improved project certainty in terms of the delivery of the projects, which our clients benefit from, to the remainder of the subsea environment you're referring to the SURF or, if you will, the water column. I will say this. I think that the opportunities there are as substantial as the opportunities we are experiencing now from the Subsea 2.0 architecture on the seabed. Arun Jayaram: Great, great. And just my follow-up, Doug, is you mentioned how 10% of your backlog is legacy, call it, maybe lower margin kind of backlog from a few years ago. But as you look at the margins that you're booking in backlog today relative to your Subsea 2026 guide of 21.5% for EBITDA, can you talk about how much visibility do you have on further margin expansion Subsea? How many years of margin expansion do you see when you think about that backlog versus what you've guided to this morning? Douglas Pferdehirt: Sure. So let me start by confirming that we are inbounding at a level that is accretive to our backlog margin. And that's important. And that will obviously flow through revenue and then ultimately through EBITDA, EBITDA margin. So you will see that. And as you know, we have a substantial backlog already, which is very high quality, and we're adding additional quality to that. Look, I've said this publicly, I want our clients to win. And if our clients win, they like us to win as well. So this isn't about pricing or this isn't about margin. This is about the relentless pursuit of reduction of cycle time and certainty. If I can sit down with a client and show them that we have the unique capability and the only ones who can deliver them a project on a significantly shorter time frame, accelerating their time to first hydrocarbon and giving them certainty in that outcome, then I share a greater economic value that I create. So we feel that we have a long way to go in terms of the reduction of cycle time. Remember, this industry, we just started this with the creation of TechnipFMC. We have a long way to go. We talked about it in response to the first part of your question. There's even more scope within our own remit, let alone further innovation that we are working on today as well. So that is our focus. That's what we think about every single day. That's why we make our customers win. And that's why we win as well. Operator: Our next question will come from the line of Scott Gruber with Citigroup. Scott Gruber: Doug, you mentioned the renewed interest in greenfield developments. Just wanted to see if you could unpack that a bit more for us. Obviously, hearing exploration mentioned on some customer calls, but just how widespread is the renewed interest in exploration across your customer base and across geographies? Douglas Pferdehirt: Yes, Scott. I'm going to parse the question just a little bit, right? Because there's greenfield developments and then there's exploration. And you're right to point out, exploration leads to future greenfield developments. But I want to make sure everybody recognizes or appreciates that there are substantial greenfield developments where the exploration has already been done. These projects didn't move forward for a variety of reasons, including take everything I said to Arun's question in the inverse. The industry wasn't good about reducing cycle time. The industry was not good about certainty in terms of delivery. And because of that, the economics didn't necessarily support those projects to move forward. So we're seeing quite a few greenfield developments that the exploration has been done, that, if you will, have been in the queue. In addition to that, you're hearing about increases in exploration budgets. You're hearing about new emerging basins being identified, be it the equatorial margin in Brazil. We're hearing about Colombia now. I mean, almost every day, we wake up hearing new news of new opportunities in the offshore environment. We would humbly like to think that's because we've given our customers the confidence and the ability to go back and really scrub that portion of their portfolio or their reserve base and look for those opportunities. So really, Scott, they're quite global in nature. And I'm only parsing the fact that this isn't about waiting on seismic and waiting on exploration drilling. That's happening and that's good because that will continue to feed the hopper, if you will, and I kind of referred to that when I talked about through the end of the decade and beyond. But as importantly, there are opportunities out there that are being accelerated right now, and we have the tools and the kit and the ability necessary to accelerate those developments for our customers. Scott Gruber: I appreciate that. And then a quick follow-up on Arun's question around the SURF standardization. It sounds like there's a big opportunity here, and I remember having a detailed discussion with you maybe a year ago or so about it. And I know this takes a while to execute on. But where do you stand in that process? And kind of how much more is there to go? Douglas Pferdehirt: Yes. I thought I was going to get away without committing to it, Scott, so thanks for circling back. Scott Gruber: Well, I wasn't going to let you. Douglas Pferdehirt: That's fair. Look, we've been working on it for a bit. We're impatient. Our customers are impatient, and that's a good thing. But we want to make sure we do it right. But look, there will be more to come and we'll be excited to share that news with the industry. Operator: Our next question will come from the line of Mark Wilson with Jefferies. Mark Wilson: I'd like to ask, Doug, about the point you make about you see considerable upside still. And just to check how clearly returns have been coming through. Margin has been improving. Three years now of $10 billion inbound in Subsea and another $1 billion to come and more opportunities in greenfield than you've ever seen. So could I ask regarding the volume you see able to continue to do going forward, considering that CapEx also remaining just 3% of revenue? You spoke in the past about no expansion to roofline was a key element of previous years. In terms of the capacity that's within this business, should there be more of a response beyond, I don't know, the $10 billion level? How much volume capacity do you think there is within your existing setup? And I think I particularly speak to the Subsea 2.0, if that's done at 2 of your 3 facilities. Douglas Pferdehirt: Thank you, Mark. I definitely knew I wasn't going to get away with this one. So it's a fair question, and let me give you a direct response. So as you pointed out, we've had a healthy rate of inbound. We've had $30 billion over 3 years. We just now reaffirmed the $10 billion for 2026 but we're also showing a Subsea Opportunity list that is really expanding at a rate that we have not seen before. If you look at the number of projects that were awarded in this quarter, i.e., they came out of the Subsea Opportunity list, we're talking about the net increase. But if you look at the gross increase, it was quite substantial and there's others to come. So as we look forward, and you're right, you're hearing this from our clients, which is more important. We're just basically gathering that information and sharing that with you. Their focus is on offshore. Their focus is on developing offshore reserves. Their focus is on adding reserves by focusing on offshore opportunities. And again, we're seeing that happen around the world across our client set. And as we've talked about before, our client set has expanded quite dramatically 3 to 4x what it was historically. There's many new companies that are operating and performing offshore subsea developments enabled by the simplicity and the ability to work with one company, TechnipFMC, in an iEPCI 2.0 direct award manner. But if I really kind of encapsulate your whole question and, to me, what it really comes down to is, is this $10 billion a magic number? Or where do we go from here? And I want to be very, very clear that the Subsea Opportunity list is both growing and accelerating, and we fully expect that this will be reflected in inbound order growth in 2027 and beyond Operator: Our next question will come from the line of Derek Podhaizer with Piper Sandler. Derek Podhaizer: Doug, I wanted to go back to your comments around your portfolio approach, specifically bp's Tiber and Kaskida. Maybe could you help provide us with tangible examples of how Tiber is leveraging the engineering and equipment progress with Kaskida to help drive down cost and increase your efficiencies? Ultimately, just trying to understand more what this means for your earnings power and margins moving forward, if you have more of this portfolio approach from your customers. Douglas Pferdehirt: Sure, Derek. And look, all the credit goes to bp. We're humbled in order to be their partner in the Paleogene. I want to start with that. Working together in many, many discussions, we came to the conclusion that there was a different way of working than the historical way of working together. And when we looked at it, we knew we wanted to go towards standardization. We knew we wanted to have repeatability, the old saying, design one, build many. But when you have large gaps of time and distance in between projects, when you introduce new project directors on both sides, our side, their side, when you introduce new engineering teams, both sides, our side, their side, et cetera, et cetera. And then you get into the supply chain and you're dealing with the supply chain that you turn on, you turn off, you turn on, you turn off, you're never going to get those efficiencies. So bp decided to take a very different approach. We are extremely humbled and honored to be part of it. I don't want to get into, if you will, the dollar savings because I think that would be not appropriate for me to do. That's more bp's business. But they clearly are benefiting. We clearly are benefiting as a result of the ability to be able to have continuity, visibility and continuity into our own manufacturing, also being able to have 1 single project team instead of sending up 2 teams and in the supply chain because our suppliers benefit from that visibility and that continuity as well. So again, I don't like to talk about margin. I'd like to talk about improving Subsea project returns, which benefits our customer and also benefits us. Derek Podhaizer: Got it. No, that's very helpful. I appreciate that. And then maybe on Subsea Services, clearly a differentiator for the company. I think you previously guided that it should grow in line with your top line growth, which we have the guidance on. But maybe could you touch upon what your expectations are for the Subsea Services side of things? Is this an expectation around $1.92 billion for the year? Just maybe some more color and help on how we should think about services as we look into 2026. Douglas Pferdehirt: So again, in line with revenue, so let's call it $2 billion. Operator: Our next question will come from the line of Victoria McCulloch with RBC. Victoria McCulloch: Just one for me on Surface Technologies, I guess, to slightly discussion, but a similar theme. You've seen a material increase in the margin over the past 12 months in Surface Technologies. You attribute it in the presentation to operational efficiencies. This is what you spoke to us about a year ago. But can you give us an idea of how this compares to your expectation and how this was delivered? And again, on that, on Surface Technologies, how much more is there to achieve there? Douglas Pferdehirt: Look, very proud of the segment. As we talked about in a prior call, we took a decision to really look at that business, make some tough decisions, really focus on the right customers in the right geographies utilizing the right technologies, so if you will, high-grading our portfolio. That isn't a business, when you focus on market share, that ends up very well. So we took a different approach and we said, look, we're going to focus on quality, not quantity, and we're going to high grade our portfolio. We've done that. It's performing very well, as you can see as a result of that. There were some incremental benefits in Q4. But as we move forward, we expect this segment to continue to operate at a very high level. It's now 65% of our business in Surface Technologies is in our international portfolio. We continue to benefit from the investments that we've made both in Saudi Arabia as well as in Abu Dhabi in terms of local content, local manufacturing. And so yes, that's how I would summarize. The outlook remains difficult because of the North America market. But we obviously benefit from the strength of having the majority of our portfolio outside of the North American market. Victoria McCulloch: And maybe just a follow-up to look at Subsea. Can you talk to us a bit about how your discussions with customers have been in a very choppy macro environment, but then reflecting how there is greater CapEx moving offshore? And we are seeing pressure certainly, and discussion points around resources and reserves alike. Those are conflicting, I guess, points but more is being added to the Subsea. Do you think that potentially the market is more caught up in the stock pricing than your customers are when they have discussions with you? And how much does that benefit TechnipFMC from a, I guess, pricing perspective? Douglas Pferdehirt: Sure. I would describe it this way. One of the benefits of being in the offshore market is our customers -- some of that near-term choppiness, if you will, is smoothed out. They understand, these are prolific reserves. These are prolific reserves. So when they're going after these, they have a denominator that's much different than any other investment opportunity they have in their portfolio. So all that they're looking for is obviously a forward view of the commodity price and a confidence in the ability to execute the project both from their team as well as from the industry. And this has been the biggest change that has occurred in the last several years, is they have regained their confidence because of what we have created with TechnipFMC with the Subsea 2.0 configure-to-order product line and with our commitment to them and to the investment community of our relentless pursuit of the reduction of cycle time. So we don't talk about price. We talk about improving project returns, which benefit our clients. As I said earlier, if it benefits our clients, it benefits us. And once you get that mindset and you get out of a fixed asset mindset of day rate utilization and pricing, you can really change your conversation with the clients. We have a seat at the table far earlier than anyone else, and they give us visibility, now as they look and take a project approach, that is unprecedented because they like what we're doing and they want to make sure that they have the access to our iEPCI 2.0 solution, which leads to this level of direct awards that is now over 80% of our business is direct awarded to our customer and never goes out to a competitive tender. Operator: Our next question will come from the line of Dave Anderson with Barclays. Unknown Analyst: This is [ Eddie ] who came on for Dave who had a prior commitment this morning. Doug, you mentioned operators are increasingly taking a portfolio approach to their opportunities. Of course, this provides you with greater visibility on Subsea orders. But does this also maybe result in more content with this approach, where developing 2 projects simultaneously results in more content for you than if developed one after the other? And do you expect more companies to start to adopt this portfolio approach going forward? Or is this really limited to a few select majors? Douglas Pferdehirt: Sure, Eddie. Thank you. In regards to the approach, you're on to something. Very astute. Remember, we're the architects. So when we're talking about either a portfolio approach or an integrated FEED study leading to an integrated EPCI study, we are the architects. Now we will always design the field to ensure the best suitability for the reservoir, the best in terms of the relentless pursuit of reduction of cycle time. But clearly, we are going to make sure that if we have any technologies that are applicable that are going to help meet those objectives, that we're going to incorporate those into the architecture. So the benefit of being the architect and the builder, if you will, it's pretty clear that there are benefits of being able to do both. And we're uniquely positioned as the only company that has the capability to do both. So that's the position we're in. So yes, to your point, it does create opportunities. Now in terms of the portfolio approach, look, you have to have the asset base, right? So not all clients have a reservoir that has a clear line of sight to doing multiple greenfield developments. Sometimes it's a one-off development. And that's absolutely fine. That's absolutely normal. But where clients have the ability to do multiple greenfield developments within a area, if you will, it's certainly applicable to any client. And bp is not the only one. I thought it was appropriate to pass the message about bp and what they're doing to Paleogene because it was a recent award, and I do think it's appropriate to do so. But others are looking at the same approach. Unknown Analyst: Got it. So a number of signs pointing to a 2027 inflection in offshore activity that seems to be reflected in your growing Subsea Opportunity list. But could you talk to customer behavior and what you're seeing from them? You've consistently mentioned sort of this growing shift of capital into offshore. I guess what innings do you think we're in, in terms of operators shifting capital to offshore? Just wanted to get your sense of if most operators are already there at this point or if we're still in the early stages of this capital shift into offshore. Douglas Pferdehirt: Good question. And I don't want to answer on behalf of my clients. That would be inappropriate. I'm a service guy, I always have been. I know where I am in the food chain. I would just look at their behavior. And I think what you're seeing in their behavior is they are in the very early stages and they see a long runway ahead. Operator: Our next question comes from the line of Caitlin Donohue with Goldman Sachs. Caitlin Donohue: Doug, you mentioned the iEPCI and Subsea 2.0, representing a good portion of total Subsea in orders in 2025. Can you speak to your long-term expectations for this continued adoption? How do you see this flowing through to further margin expansion over the next few years? Douglas Pferdehirt: Great question, Caitlin. We've identified -- we said that the iEPCI was the majority of our inbound orders this past year, which is really quite substantial. A new product architecture like Subsea 2.0 figure-to-order, introducing that into the market is one challenge. An even greater challenge is when you change the commercial model. So look, there was a point in time -- it was a few years ago admittedly. But there was a point in time where I said if we could achieve 1/3 of our orders from iEPCI or the integrated approach, that would be substantial. We're obviously well beyond that. And when you look at the different applications around the world, neither iEPCI or Subsea 2.0 have any sort of a technical limit or commercial limit that they both couldn't go to 100%. What I did allude to in my prepared remarks, though, is in legacy fields, is Subsea 2.0 backwards compatible? Yes. Is iEPCI applicable in brownfield, greenfield, emerging markets, mature markets? Yes. But sometimes you will find customers who just want to either repeat the past because it's a small tieback and maybe the last activity in that field or that region for them. So I think there's always going to be a percentage. But Caitlin, it's a fair challenge. And I think that we certainly approach every opportunity as iEPCI 2.0 until proven otherwise. And you will see and continue to see both iEPCI and 2.0. As a result of that, you'll see iEPCI 2.0 continue to grow in our inbound. Caitlin Donohue: That's helpful. And then just one more question on the Subsea 1Q revenue guide. I know it's the increase sequentially of low single digits. Is that just more of a comment on a little bit less of that muted seasonality we're seeing in 1Q as a result of some of these macro factors? Or there are certain regions that you can call out that you're really looking out for some of this increased activity through 2026? Douglas Pferdehirt: Sure. I'm going to give that to Alf and he'll get into that detail. But if you don't mind, I'd like them just to first kind of summarize the revision to the 2026 guidance because I don't want that to get lost on the call. It was an important element. Alf Melin: Thanks for the question. So first of all, just to summarize, we did raise Subsea guidance, as you probably all noted. It's an important piece of reaching company EBITDA for the year. The adjusted EBITDA, we expect to be -- adjusted EBITDA, about $2.1 billion. So that is built on a lot of the things that Doug talked about already. We clearly achieved our inbound objective in 2025. We have a growing opportunity list. We are committed to $10 billion and have a solid path to that. The high-quality backlog, all of those things come together and gives us confidence. And then the Subsea Services revenue and growth on top is giving us a $2 billion business. So we thought it was important, as we were overall initiating guidance for the company, to update this. If you look at the margin profile of Subsea, and again, I want to point out that we are introducing through the restructuring charges we've taken this quarter, we're initiating actions, and we are further taking actions in 2026 to further boost our margin expansion, not only in '26 but also beyond. And I think with what Doug said, we are very focused on driving revenue and margin expansion into the years beyond 2026. Regarding the Q1, it is definitely what you were talking about. There is nothing big happening or anything structural that you should think about more than the seasonality. We continue to have 2 quarters a year, where several of our vessels in our fleet is either drydocked. They might be in for maintenance or some sort of upgrade and taking advantage of the slower period, in particular in the North Sea area. And that's what you see pronounced, and you will continue to see some of that in the first quarter. But there is nothing really otherwise. The underlying run rate of our Subsea business is very strong. And then coupled with all the things that we already said about our outlook and our ability to expand margins, we're confident in the overall guidance that we have given for Subsea. Operator: Our next question will come from the line of Mark Bianchi with TD Cowen. Marc Bianchi: Doug, I'm going to ask you if you could to quantify two things to the extent you're able to. So first, on this portfolio approach that you're talking about and working with the customers, can you maybe help us understand how much of the sales funnel of opportunities that you're looking at? And I realize we've got the Subsea opportunity slide and then there's like all these other discussions that you're having that might not be on the slide. So if you sort of take that together, is there a percentage of the stuff that you're discussing with customers that would be part of a portfolio approach? And then as we think about $10 billion of orders this year, more than $10 billion in '27 and beyond, what proportion of those orders would be coming from the portfolio approach? Douglas Pferdehirt: Yes. Mark, hard to put a hard number on it only because, as I said earlier, it depends on the client and it depends upon their portfolio in that particular geography, if you will, because when you do the portfolio approach, it's more focused around a particular reservoir or a particular geography. So I would say today, it's a smaller portion, but it's something that our customers are responding well to and, I think, looking at their own future developments,and seeing where and how it could be applied within their own opportunity list. So I guess that's the big difference, Mark, is we're sitting down looking at their opportunity list instead of, as we were in the past, sitting around waiting to receive a request for tender. So very different seat at the table than we used to have. Marc Bianchi: Yes. Okay. That's helpful. And then the other thing to quantify, and this is really just to maybe level set and understand. You talked about 80% of the orders being direct awarded, right, so with services and iEPCI and so forth. How much of revenue is coming from direct awarded projects maybe in '25, '26 and '27? Just so we can get a sense of the progression on the revenue side and maybe versus what the order percentage is. Douglas Pferdehirt: Sure, Mark. So I think if you go back just a couple of years, we used to talk about 50%. I think 2 years ago, maybe 1 year ago, we started talking about 70%, this year, 80%. Projects take 2 to 3 years to flow through. So I think that gave a pretty good road map, and that's obviously going to benefit us going forward. Operator: Our next question will come from the line of Saurabh Pant with Bank of America. Saurabh Pant: Doug, maybe I'll just dig into the whole Subsea Opportunity list discussion. The one thing that I'm noticing, Doug, is that there are more and more projects that are gas-directed versus just oil-directed, right? We remember a decade back, anybody struck a big gas reservoir, it used to be a disappointing moment, right? But we are more and more developing these bigger reservoirs that are part of the opportunity list. But for you as the subsea architect, how much difference does it make if a project is oil versus gas? Is there any revenue intensity impact? Anything we should read into the complexity and, by extension, margin impact potentially down the road from just the whole oil versus gas dynamic in subsea? Douglas Pferdehirt: No, it's a great observation. It actually is something we internally had anticipated would happen a bit sooner than it has happened. But we are seeing a shift towards gas, and that's partly driven by there was quite an expansion in terms of LNG capacity around the world. That's slowing down but you got to feed that. And I guess, the dots that people don't necessarily connect is other than in the U.S. and Russia, almost all LNG is fed by offshore reservoirs, not onshore reservoirs. That's a generalization but it's directionally correct. So okay, two things happen. One, you have to develop the offshore assets therefore to feed gas. But then over time, you now have a massive investment in an LNG facility. You have to continue to feed that with gas. So you almost commit yourself to continuing doing subsea developments offshore once you build that LNG facility. So we see that happening around the world and we're obviously a beneficiary of that. In terms of gas versus oil, we love everybody equally. That being said, a gas tree tends to be as a higher unit cost than oil tree, and it typically has to do with a more corrosive environment and the velocities that we need to be able to control and operate safely in a subsea environment. So net-net, a gas equipment tends to be more complex. It's better for us because it's more differentiated, and that's who we are. It fits better. It just creates even greater differentiation versus the rest of the industry. But either way, we'll take either one. We're just here to help our customers reach their objective. Saurabh Pant: Got it. Right. Okay, okay. That's fantastic color, Doug. And then Alf, maybe one for you on the whole free cash flow discussion. Like you said, '26 guidance implies 65% conversion out of EBITDA at the midpoint. But we were talking about orders. Working capital is a big part of it, right? So if orders start to inflect again from that $10 billion annualized run rate in '27 and beyond, working capital should be a tailwind, again, just how you get paid from a timing perspective, right? So are we looking at a prolonged period, 2 to 3 years, where so free cash flow conversion out of EBITDA is going to be higher than that 55% working capital neutral number we were talking about on the last call? Alf Melin: Thanks for the question. So first of all, your observation is correct. We've had, first of all, a really strong and exceptionally strong free cash flow generation this past year, I think our cash conversion is actually mathematic close to 80%. And it is, in terms of the foundation for this, is always going to be both commercial and operational execution towards your goals. And that is the foundation of improving our working capital. Now we are setting ourselves up for another strong year. We are clearly improving working capital once again from the same variables that I talked about, the commercials and operational side. And as well, we couldn't forget that our CapEx is being kept at a 3.2% level. However, having said that, looking out several years, there's always a mix of orders, et cetera, so you can never fully predict. But in general, if we are able to continue to have good commercial success in terms of how work is falling into where we have commercial strengths to realize and, as well, we need to execute on this because it's not just commercial we'll be setting up, we need to execute on this. There is opportunity to continue this. But I would caution against just assuming that you can in perpetuity keep putting up better and better working capital numbers. Because every year, you start at a better position, and you need to improve from there. And there are still, from some of the cash that you're collecting, you still need to execute, and that creates timing of where outflows could be higher. So I won't speculate out more, more than say that '26 is going to be a really, really good year where we improve working capital again. But I still think we need to focus on the neutral when we look in the very long term. Saurabh Pant: Yes. No, that makes sense, Alf, right? I mean, the whole point is that yours a very low capital intensity business, right? So on a through-cycle basis, your free cash flow power would be really strong. That's what I wanted to just get into. Alf Melin: Yes. Thank you. Clearly confirmed. Operator: Our final question will come from the line of Paul Redman with BNP Paribas. Paul Redman: You mentioned earlier that you are the only company that is an architect and a developer. But I also wanted to ask, what are the risks about replication on iEPCI or Subsea 2.0 with your competitors? Because a company generating such fantastic margins growth, growth in backlog, you'd assume that companies would like to pick up and think about how, we could possibly challenge this. Are you seeing any actions by customers to copy what you're doing? Is it copyable? Douglas Pferdehirt: Sure, Paul. The short answer is it's difficult. Many years ago, back in 2017, I said it took us 4 years, so kind of an idea of how much detailed engineering program it requires. Look, can others do it? Yes. We have never said we're the only ones that can do it. We were the only ones who chose to do it. We chose the path of integration while either our others have chosen a path of consolidation. Just a difference in strategy. We're going to stick with our strategy. Operator: And I will now turn the call back over to Matt Seinsheimer for any closing comments. Matt Seinsheimer: Thank you. This concludes today's conference call. A replay of the call will be available on our website beginning at approximately 3 p.m. New York time today. If you have any further questions, please feel free to reach out to the Investor Relations team. Thank you for joining us. Regina, you may now end the call. Operator: This does conclude our call today. Thank you again for joining. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprott Inc.'s 2025 Fourth Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, February 19, 2026. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking information and forward-looking statements within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations or material factors or assumptions applied in making forward-looking statements, please consult the MD&A for the quarter and Sprott's other filings with the Canadian and U.S. securities regulators. I will now turn the conference over to Mr. Whitney George. Please go ahead, Mr. George. W. George: Thank you, operator. Good morning, everyone, and thanks for joining us today. On the call with me today is our CFO, Kevin Hibbert; and John Ciampaglia, CEO of Sprott Asset Management. Our 2025 fourth quarter results were released this morning and are available on our website, where you can also find the financial statements and MD&A. I'll start on Slide 4. In short, it was a banner year for Sprott in 2025. Our core positioning in precious metals and critical materials investments allowed us to navigate volatile market conditions and deliver outstanding results for our clients and our shareholders. Our AUM increased by $10.5 billion during the fourth quarter and closed the year at $59.6 billion, up $28.1 billion from December 31, 2024. Subsequent to year-end, our AUM has continued to grow by another $10.5 billion to reach $70.1 billion as of February 13, 2026. Investor interest in multiple different metals contributed to strong net sales in 2025, primarily in our exchange-listed products. Our ETF business has been on a growth trajectory since 2021 and accounted for more than $4.6 billion of our total AUM as of year-end. This business is off to a strong start in 2026 with [indiscernible] AUM now approaching $7 billion. Our Managed Equity and Private Strategies segments also delivered excellent results in 2025, generating more than $54 million in gross performance and carried interest fees. With that, I'll pass it over to Kevin for a look at our financial results. Kevin? Kevin Hibbert: Thank you, Whitney, and good morning, everyone. I'll start on Slide 5, which provides a summary of our historical AUM. To Whitney's point, AUM finished the year at $59.6 billion, up 21% from $49.1 billion as at September 30, 2025, and was up 89% from $31.5 billion as at December 31, 2024. On a 3- and 12-month ended basis, we benefited from market value appreciation across the majority of our fund products and positive net inflows to our exchange-listed products. Subsequent to year-end, as at February 13, our AUM stood at $70.1 billion, up 18% from our December 31 AUM. Our performance subsequent to year-end was the result of $7.7 billion of market value appreciation and the $2.8 billion of net inflows primarily in our exchange-listed products. Slide 6 provides a brief look at our 3- and 12-month earnings. Net income this quarter was $28.7 million, up $17 million from $11.7 million over the same 3-month period last year. On a full year basis, our net income was $67.3 million, up $18.1 million from $49.3 million last year. Our net income performance was primarily due to market value appreciation and inflows to our precious metals physical trusts and carried interest and performance fee crystallizations in our Managed Equities and Private Strategies segment. These increases were partially offset by a change in accounting requirements brought on by our new cash-settled stock plan that took effect this year. As we mentioned in previous quarters, cash-settled stock plans like the one we implemented this year require the use of mark-to-market and graded vest accounting under IFRS 2, which creates the dual impact of accelerating the amount of vesting that occurs each period, and adding market volatility to each vesting amount. In our case, this nearly doubled the amount of RSUs, subject to the accounting expense methodology versus what will actually vest in the year. And at a time when our stock has appreciated 18% in the quarter and 132% on a full year basis. In contrast, in 2024, we had an equity-settled stock program that required each vest to be valued at the original grant date fair value on a constant basis over the amortization period. Moving forward, in 2026, there will be less amortization hitting our IFRS P&L relating to the 2025 3-year grants and less shares being added for our 2026 3-year grants. However, we do expect continued increases to our stock-based compensation expense on a comparative basis for at least the first half of 2026 since our stock did not begin the majority of its ascent until the summer of 2025. This means to the extent our stock price remains at current levels, the second half of 2026 should begin to produce lower period-over-period volatility as the trading range of SII in the second half of 2025 is a little closer to where we currently trade. Adjusted EBITDA, which excludes quarterly volatility from items like stock-based compensation and intermittent carried interest and performance fee crystallization, was $42 million for the quarter, up 88% from $22.4 million over the same 3-month period last year. And was $121 million on a full year basis, up 43% from $85.2 million earned last year. Adjusted EBITDA in the quarter and on a full year basis benefited from higher average AUM, on-market value appreciation I described previously and inflows to our precious metals physical trust and ETF. Finally, Slide 7 provides a few treasury and balance sheet management highlights. And as you can see, due to our improved earnings, our cash and liquidity profile strengthened this year and we raised our dividend by 33% in November. For more information on our revenues, expenses, net income, adjusted EBITDA and balance sheet metrics, you can refer to the supplemental information section of this presentation as well as our annual MD&A and financial statements filed earlier this morning. With that said, I'll pass things over to John. John Ciampaglia: Thanks, Kevin, and good morning, everybody. Now just turning to Slide 8. Sprott has held a bullish thesis on most metals and miners for the past few years. Over the past 5, we've invested heavily in our team, made timely acquisitions, developed a broad suite of differentiated offerings that incorporate our knowledge and expertise and develop new partnerships to broaden our distribution reach. We think it's fair to say that the world is catching up with our view that we are in a new metals-driven commodity super cycle and capital is finally on the move. Investors are looking for new investment ideas where long-term fundamentals appear durable and compelling. In 2025, our physical trust fund suite generated significant growth with a 97% gain in AUM to $47 billion. Momentum continues with another $7 billion added year-to-date. As we've mentioned in the past, growing AUM and liquidity begets AUM and liquidity as ever larger institutions allocate to the sector. And price signals are bullish of the 6 metals we offer in physical form. Gold, silver, platinum and copper have all recently reached all-time highs, while uranium touched a 2-year high. Moving to the next slide, which is net flows into our physical trusts. We saw a record sales year in 2025. Flows in Q4 were very strong, and they've continued into January. Our gold, silver and uranium trusts accounted for the bulk of the flows, but I'd like to highlight an emerging contributor, which is our Physical Copper Trust. While sales in 2025 were modest at only $4 million that Copper Trust has already generated $54 million year-to-date as copper, as I mentioned, recently hit a new high. We recently received approval by the SEC to cross-list the trust on the NYSE Arca Exchange and subject to unitholder approval, we expect the Copper Trust to begin trading there in early Q2. Once listed, this will be the first physical copper fund to trade in the United States. Investor interest in copper is growing as copper's strategic role in electrification is becoming better understood, along with our copper mining ETFs, assets in our copper suite of funds now stands at approximately $800 million and 2 years ago to yesterday, our assets in the category were only $6 million. Moving to the next slide, which is our ETF suite. 2025 was a breakout year with a 94% gain in AUM. Assets have gained another astonishing 45% year-to-date as growing scale creates a flywheel effect. A few items to highlight over the past year to February 18, Sprott has 6 ETFs in the top 25 in performance out of over 4,000 U.S. listed non-levered ETFs. The Sprott Physical Silver miners and Physical Silver ETFs, NYSE Arca ticker SLVR has been a huge win for our investors and shareholders. SLVR surpassed $1 billion in assets in its first year of trading. This has been our fastest-growing ETF launch to date and illustrates the value of our brand, expertise and relationships. Flows into our copper mining ETFs are accelerating, driven by superior performance to our competitors. And finally, our relationship with HANetf, which is our European distribution partner, continues to grow and assets now stand at $650 million. Moving to Slide 11. Sales were solid in 2025 despite some outflows from our uranium mining ETFs in the second half of the year. Since the year-end, we've seen a sharp pickup in sales momentum with flows matching cumulative sales in all of 2022, '23 and '24. A number of our ETFs just achieved 3-year track records and highlight to investors that not all indexes are created equal. Our index construction focuses on pure-play companies, and utilizes a dynamic universe approach to provide a differentiated offering that is translating into superior investment results. For example, our critical materials ETF ticker SETM and our copper mining ETFs have outperformed their closest competitors since their inception dates. I'll now pass it over to Whitney to talk about Managed Equities. W. George: Thank you, John. We'll move now to Slide 12 for a look at our Managed Equities segment. As I mentioned in my opening remarks, our managed equity strategies delivered strong performance in 2025 with AUM increasing by 97% during the year to $5.7 billion. Our flagship gold equity fund gained 18% in the fourth quarter and was up 148% on a full year basis, and some of our private partnerships did even better. Despite their strong performance, these strategies reported modest outflows in 2025. In the fourth quarter of '25, the sub-advisory agreement of our Silver Equities Fund was opportunistically terminated by our client despite being up 175% as of December 1. We continue to leverage our strengths in our investment team through our recently launched actively managed ETFs. The Sprott Active Gold and Silver Miners ETF and the Sprott Active Metals and Miners ETF continue to scale, with AUM reaching $202 million and $105 million, respectively. I'll turn now to our Private Strategies on Slide 13. There's not much we're allowed to say about Private Strategies. But what we can tell you is we continue to monitor and harvest investments in our second fund, lending fund. We're actively assessing new investment opportunities as we invest up our third lending fund, and we have a process of ongoing monitoring of portfolio investments in our streaming product. We're hopeful to be in a position sometime this year to be talking about our next one. Slide 14. I'll move to Slide 14 with some closing remarks. In summary, with our core strengths in precious metals and critical materials investments, well positioned for the current market conditions. For 2026, we expect more volatility in the markets, certainly, as we've seen recently. For example, in January, we experienced a very, very violent sell-off in precious metals following an exceptional run-up for gold and silver prices. In our view, this was a healthy and overdue technical correction triggered by speculative investors and algorithmic triggers while the fundamental drivers of the rally remain intact, I think it's an excellent opportunity for those who feel they've missed those rallies to have a better, more sensible reentry point. Demand for critical materials investments is growing. Governments are becoming increasingly involved in these markets to secure supply and reduce reliance on foreign sources, and we expect this trend to accelerate in 2026 which should drive even greater investor interest in our critical materials strategies. We're very pleased with what we've accomplished in 2025 and remain focused on executing on our growth opportunity -- the growth opportunities ahead of us. We will continue to drive scale in our physical trust while also explore new ETF launches. At this point, we hope to announce at least 1 new ETF in the first half and a continuing expansion of our product offerings through our partners on HANetf in Europe. We expect the rotation out of AI stocks to continue and investor allocations to natural resource investments to increase. It's early, but we are already seeing a definite pickup in interest in our Managed Equities funds and Private Strategies. We're optimistic this interest will translate into meaningful sales in 2026. That concludes our remarks for today's call. And I'll now turn it over to the operator for some Q&A. Operator? Operator: [Operator Instructions] Your first question comes from the line of Etienne Ricard at BMO Capital Markets. Etienne Ricard: So the improvement in margins this quarter was a highlight for me. Given your ETF platform still represents a relatively small but growing percentage of your assets, how should we think about incremental margins on your ETFs relative to the trust? John Ciampaglia: Yes, Etienne. It's John. Yes, the beauty of the ETF platform is obviously scale is really helpful in terms of putting funds on platforms and obviously raising larger amounts of capital. The way those funds work is they have unitary fees. Unitary fees are basically fixed fees that don't change for investors. So that's one of the benefits you have total predictability. The benefit for us is that as the assets scale we're able to capture additional margin because many of our service providers and partners have pricing arrangements with us that fall with assets. And it really helps the overall block of assets. But the other thing it really helps with is incremental new funds, which are very costly to launch. They are heavily subsidized, so to speak, with kind of our collective assets. So bringing new funds to market will become less and less expensive, and we're starting to see the benefit of that. Finally, I think we have almost every single fund in the lineup now above its breakeven AUM level, which is very important. It's very common to have to subsidize a fund in its early years. until it hits those breakeven levels. And I think we've got all but one still below breakeven. So that was a really important milestone. So the fund lineup is growing very quickly, and we expect that to fall to the bottom line. And every basis point kind of counts in ETFs. So it's all working nicely together. Kevin Hibbert: And I'll just probably add to that. That was a good summary, John. I'd also add to that, that generally speaking, Etienne, I think you made -- you're trying to make the connection between the ETFs and the physicals. The ETFs tend to have higher margin opportunities than the physicals, just given that the fixed cost structure there is a little bit lower than their physical counterparts in that segment. So everything John mentioned is correct and would actually add a little bit more torque to the bottom line to the extent it becomes an increasingly larger portion of the total AUM in that segment, if that helps. Etienne Ricard: Interesting. And where would be the breakeven level for the ETF? John Ciampaglia: So every ETF has a different breakeven level, but the primary driver is obviously, it's management fee. And then secondarily, you have to think a little bit about what market it's listed in, whether it's in the U.S. or Europe. Generally, our breakevens can range anywhere from about $25 million, upwards of $75 million. So that's kind of a wide range. But once you get through those breakeven AUMs, you start to actually generate net positive revenue. And that's why it's very important to get the ETFs up to breakeven to start and then scale from there. Etienne Ricard: Very helpful. And switching gears a little bit. Given precious metals had been out of favor for quite some time, are you now seeing greater competition from other asset managers coming to market with new products that are focused on your end markets? John Ciampaglia: Yes. Well, I think it's fair to say that the ETF market is mature in the precious metal space. There are a lot of offerings I think I would highlight that the later entrants that came into the market, say, 5, 6 years ago had to come in with a very low price point to compete and gain market share. And I'm talking about price points for, let's say, gold ETFs that are 15, 17, 18 basis points in comparison, we're at 35. So these late entrants had to heavily discount. We have never had to discount our pricing because we believe our product is a premium product given the attributes of it. We don't really see too many new competitors come in the ETF space in the precious metal segments. They're already pretty crowded. We do see new competitors coming in on the mining space, which has been less crowded. And I would say it's been a similar playbook where people tend to come in at lower price points. We also noticed that many of these entrants don't know anything about metals and mining and produce, I'd say, fairly unsophisticated offerings, which is starting to, I think, we noticed by investors because they're underperforming. So we're finding that we're in a good position to compete. And as I mentioned, even though we run a lot of passive rules-based index strategies, there are clear differences between the two. Our critical materials fund has handily outperformed all of the competitors that we track against our copper mining ETFs have outperformed between 10% and 14% the last 2 years per year. And so you say, well, if sooner or later, investors are going to notice that something is going on with the Sprott funds. Why are they performing differently. And that's just because we've taken a different approach to our index construction. And we think that's one of the reasons why we've been able to build market share in some of these categories very quickly. W. George: I'll throw one last thing on our active ETFs, both METL and GBUG, they are the first offerings of their kind to -- as an investor, I think the mining industry really offers an opportunity to manage risk actively and there is no other organization that I know of on the planet that has as deep a bench of analysts, portfolio managers, geologists, technicians that are covering this space. So I'm very excited about those launches and the progress we're making there. Operator: Your next question comes from the line of Matt Lee with CGS. Matthew Lee: Maybe I want to start on -- sorry, carried interest and performance fees, nice contributor this quarter, something we didn't model in. Can you maybe talk about what drives that? And if we do expect the funds to perform well in 2026, is it assumed that we should receive a similar benefit next year? Or is it more nuanced than that? Kevin Hibbert: Matt, can you just repeat that last part of your question? Matthew Lee: Yes. I mean, should we be thinking about a similar kind of performance fee and carried interest revenue line in 2026? Or is it... Kevin Hibbert: Yes. Okay. Got you. Well, it certainly is episodic and it's coming from really two areas. One is the carry, the other side is the performance. On a full year basis, I would say the large chunk of the carrying performance fee that you saw was coming from Managed Equities and specifically on the performance fee side, but there was another good chunk that was coming -- it came in at the second half of -- at the beginning of the second half of the year. from a legacy exploration LP that we had. So it's kind of difficult to look at this and try to get a sense of where things will be this year because a big chunk of it was legacy and we just harvested it. So that's not going to recur that much of that Q2 number. And then the rest of it is just largely based on how the markets are doing in the case of our active equities or when we get to a point where we're ready to harvest on our Private Strategies side. So I don't know what to tell you other than to gives you that type of background into just how episodic it can be, but I can't really give you a lot of insight from there, unfortunately. Matthew Lee: Okay. That's fair. And then maybe one on the Private Strategies side. I know the portfolio has a lot of fixed income like investments in it. But I'm surprised to see market value there, although only increased by about $5 million, just given how good the macro has been. So can you maybe dig into that a bit and help us understand if anything can drive value up other than net inflows in private? W. George: Okay. Those are private credit funds. And what you're seeing is a function of a strong market where the credits get paid back because the mining companies can raise capital is much cheaper than what they're paying. And so it's always a balance between deploying capital into new investments versus what you get back. As I mentioned, Lending Fund II is coming to the end of its life. So that's going to reduce AUM. But again, this is a -- it's a long cycle. They're 10-year lockup products. And so this is a transition year, I'd say, for the Private Strategies. Kevin Hibbert: And Matt, are you also asking about the -- were you asking about the gains on investments in that segment? Matthew Lee: Yes. I'm kind of thinking about that from the perspective of net inflows and market value chains, right? So I think you guys answered that in the net inflows question well. I just -- I'm wondering if there's any changes in the market value of those funds as well. Kevin Hibbert: Yes. So it's exactly as Whitney said, these are loans and so we have to use amortized cost accounting. So we wouldn't be marking them. So it's really just -- any increase you see there is probably from equity kicker enhancements, for example, offset by whatever gains we would get when we pay off the loan debt -- sorry, when the funds have the loans repaid, apologies to that. Operator: Your next question comes from the line of Mike Kozak from Cantor Fitzgerald. Michael Kozak: Congrats on the record quarter. Two questions from me. First, just at a high level, and I think Whitney, you kind of alluded to it a little bit. But I mean gold and silver prices, they set multiple new all-time highs in the quarter. They're consolidating now, which I agree is healthy. But obviously seem likely to reset here at like a much higher base. And my question is -- my first one is against that backdrop, like how do you guys think about special dividends or maybe even some sort of like dividend linked to a basket of metal prices? W. George: Okay. We have mixed investor opinions about special dividends. I've committed that we're not going to run a money market fund here. To the extent that we have nonrecurring sources of income, that's something we will consider. But I'd like to continue to grow the regular dividend along with our underlying growth. So dividends, buybacks, opportunistic buybacks. Obviously, our stock is very strong. And then ultimately, the special dividend if the first two don't get us where we want to be. Michael Kozak: Okay. And then second, maybe just given the extreme volatility in silver prices, both on the upside and the downside in January and February, I'd love if you could give me some color on what the physical market was like? Like where was it tight? Where were the metal flows jurisdictionally and how are these dynamics like now post correction versus, call it, a month ago during that parabolic move to the upside? John Ciampaglia: That's a fine question, Mike. It's John. Yes. I mean we've obviously seen a pretty extreme volatility in solar. We've never seen those kinds of moves. I think it's fair to say that the physical market was really the catalyst for the move, meaning we saw huge amounts of silver being purchased by investors in India in the fourth quarter. They continue to buy lots of silver. We've seen lots of silver buying a physical form in China in the last few months. And up until very recently, the flows into Western silver-based ETFs was quite strong. So physical buying kind of was driving the move. Obviously, in the last, I'd say, 3 weeks, that's flipped around. And the paper markets, i.e., options on ETFs and the futures markets have been pushing the price back the other way. So it has been a real tug of war between physical buyers who are thinking more long term. and have been waiting for this re-rating of silver for many, many years. And then other powers that are trying to smash the price down, we see some very abnormal selling behavior where people are dumping huge amounts of silver through paper products and derivatives and 2 minutes of trading or periods of time when markets are closed or on holiday or whatever. So there is some kind of funny business going on. But in terms of the physical our procurement, we bought a lot of silver. And we're finding there's enough silver to buy in North America. Silver is definitely more scarce in London, in India and China. China has also recently implemented export restrictions on silver, which I think is going to make the market more tight. So the physical market is definitely a little bit mismatched in terms of demand versus interest. And more recently, the large competitor, ETF -- Silver ETF that's listed in the United States has gone in, in the outflows in the last few weeks. So it's been very volatile. Silver is trying to find a footing here. But it's been very paper-driven versus physical-driven for sure, the last few weeks, but it's definitely moderating. Some regulators have stepped in to kind of rein in some of the speculative activity, namely in China, the CME has raised margin requirements on silver futures contracts multiple times, and that all seems to have some effect here. W. George: Yes. Ultimately, we think it will settle down. Ultimately, the inflation-adjusted all-time high for silver would be somewhere between $180 and $200 an ounce. It's a small market. It's been in supply deficit for 5 years, and it's critical. So I think what we're seeing now is a great opportunity somewhere in this neighborhood for new investors to get involved. Operator: Your next question comes from the line of Graham Ryding with TD Securities. Graham Ryding: Maybe you can just touch on those new ETF product launches. Will those be actively managed ETFs or passive strategies around your sort of proprietary indexes or a combination of both? How should we think about those? John Ciampaglia: Yes. The ones that are in the hopper are both proprietary passive-based indexes. One is a clone of an existing fund that we'd like to bring to Europe. The other one is a brand-new fund that I don't think we're allowed to talk about because we're in a quiet period, but it's on EDGAR. So it is in the public domain. And yes, so we're being very selective. Obviously, we've been pretty aggressive the last few years building out the suite and filling in gaps. And right now, our #1 objective is to scale what we have because that represents the best opportunity to attract assets. Graham Ryding: Understood. And is there any commodity that you would call out right now that you sort of feel is positioned to break out? Or are you sort of equally constructive across your main commodities? John Ciampaglia: Yes. I think our response to that has changed a lot because as I mentioned, multiple metals have all hit all-time highs all at once, which is very abnormal. We're pretty constructive on all of them. They're all taking a bit of a breather right now and consolidating the recent gains, but we think we're still in the early innings. And I think what's really highlighting the value of these metals is the fact that governments are now intervening and talking about strategic stockpiles and price floors and these kinds of mechanisms to basically reshore supply chain away from China. So it's hard to know how government policies and whatnot are going to affect commodity prices. But I think it's fair to say that most investors have little to no exposure to commodities and the commodities that we're most bullish about are in the mining -- are in the metal space as opposed to traditional energy and agriculture type commodities, which have obviously underperformed big time. Graham Ryding: Okay. Great. Maybe just jumping to your sort of the cash on your balance sheet. It's obviously built up quarter-over-quarter, year-over-year in a fairly healthy way. You also have some compensation payable sitting on the liability side. What's the timing around that piece? Should we expect your sort of cash balance to be coming down in Q1 as you pay out some of that or most of that comp payable? Kevin Hibbert: Well, basically, it wouldn't be the following month for the most part. Graham Ryding: Okay. And then capital allocation, any obvious uses for net cash build? Or are you sort of happy to keep your cash -- your powder dry and your balance sheet is strong? W. George: We're going to keep a strong balance sheet. That's one of our principles. What we're trying to do is deliver operating leverage without financial leverage to the parts of the world that we operate in. As I mentioned, we'd like to continue to grow the dividends, I'm the second largest shareholder, so I really appreciate that. And again, we will buy back stock depending and be opportunistic and depending on the value that we can get will depend on how much we can deploy there. And then we'll revisit where we are later this year. Graham Ryding: Okay. Great. And one more, if I could be greedy, just on the Private Strategies side. You talked about looking at doing some fundraising. Would that be to replace that LF2 fund? Or are you looking to add incremental AUM to that overall part of your business? W. George: Yes. We want to continue to cycle through our lending products, but we also have some very interesting Private Strategies that are starting to scale. One is in physical commodities that do not trade on any exchanges, run by Ryan McIntyre. We have introduced an evergreen version of our lending product, which I think is a concept that's gaining traction in the private credit world. And we continue to have people's attention now with our mining -- special metals and minings fund, given its performance, not just last year, but over 5 years. So there are lots of opportunities on the private part of our business, and we are increasingly heavily engaged with family offices and large high net worth investors. I didn't mentioned that our wealth management business more than doubled in assets last year, a lot on the back of performance. But again, we were getting calls and things like that, that we haven't seen in years and years from high net worth investors. So that part of our business, which has been sort of a rounding error, is starting to grow nicely as well. Graham Ryding: And then my last one, just on that Lending Fund II. You talked about sort of it's in a harvesting phase. Does that sort of imply that 2026 could generate some carried interest around that fund? W. George: We are not allowed to say anything. Operator: Your next question comes from the line of Bart Dziarski from RBC Capital Markets. Bart Dziarski: I wanted to ask around the net comp ratio. So it was about 45% last year, it's 40% this year, and it was lower than that in Q4. So just trying to get a sense what run rate should we assume for that ratio going forward? Kevin Hibbert: Bart, Kevin here. we don't provide forward-looking information, obviously, the kind of standard statement. But what I can say is the key drivers for us are, one, obviously, revenue growth, obviously, as the denominator, but also just keeping in mind that there's not an awful lot of torque to the cash comp side as it relates to our net revenue growth. And you can just see that when you look at the MD&A explanations that we give around compensation pre-stock based relative to the net revenue growth. So whatever you're seeing now, if you wanted to keep that and maybe kind of flat or a bit throughout the year and then maybe only toggle it down commensurate with any future net revenues we may or may not report then you're welcome to do that. And I can't imagine you'd be massively off, if you took that approach. But I can't actually specifically give you anything to rely on. Bart Dziarski: Okay. No, that's helpful, Kevin. And then John, in your prepared remarks, you talked about AUM and liquidity begets AUM and liquidity. And it's an interesting point that we probably underappreciate. So can you maybe elaborate a little bit on that? And then tying into that, you're saying on the back of it, you're seeing more and more institutions allocate. So just more color on what institutions, where, and the momentum you're seeing there? John Ciampaglia: Yes, sure. Bart. So yes, I guess I would view it from two perspectives. One is from a product shelf placement perspective. So for example, some distributors won't turn your ETF tickers on until you hit a threshold of AUM, sometimes it's $25 million, sometimes it can be even as high as $100 million. So that's thing one. You need to hit those milestones for distributors to turn them on. And then secondarily, institutional investors obviously have some limitations in terms of their comfort level in terms of owning a percentage of a fund. So as these funds get bigger, they trade more and institutions feel more comfortable putting on positions of size. So it does create a bit of a flywheel effect. You also tend to see bid-ask spreads tighten, which helps the trading. And you just have to be patient because you could have a fund that's sitting there at $10 million for months and months and then all of a sudden, somebody is interested in it, and it will jump up to $100 million in no time. And we've recently seen that with our nickel miners ETF and our lithium miners ETFs as well. And I think where we see the real big flywheel effect is obviously in the multibillion dollar funds, and that's where institutions that we talk to, pension funds, family offices, hedge funds, et cetera. That's where they can get materially positioned with large positions. So those are the kind of the workhorse funds for us. The uranium trust is a good example that has the highest percentage of institutional ownership amongst the physical products. And as that fund gets bigger, you get to talk to bigger and bigger institutions that can allocate to it. Operator: At this time, I will turn the call back to management for closing remarks. W. George: Thank you, everyone, for participating in this call. We appreciate your interest in Sprott and look forward to speaking to you again after our first quarter results. Until then, we will remain contrarian, innovative and aligned. Have a good day. Operator: Thank you. This does conclude today's conference call. We thank you for attending, and you may now disconnect your lines.
Operator: Good morning, and welcome to Deere & Company First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Josh Beal, Director of Investor Relations. Thank you. You may begin. Josh Beal: Hello. Welcome, and thank you for joining us on today's call. Joining me on the call today are Josh Jepsen, Chief Financial Officer; Ryan Campbell, President, Worldwide Construction and Forestry and Power Systems; and Chris Seibert, Manager, Investor Communications. Today, we'll take a closer look at Deere's first quarter earnings, then spend some time talking about our markets and our current outlook for fiscal 2026. After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at johndeere.com/earnings. First, a reminder, this call is broadcast live on the Internet and recorded for future transmission and use by Deere & Company. Any other use, recording or transmission of any portion of this copyrighted broadcast without the expressed written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward-looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances and other factors that are difficult to predict. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form 8-K, risk factors in the annual Form 10-K as updated by reports filed with the Securities and Exchange Commission. This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America, GAAP. Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at johndeere.com/earnings under Quarterly Earnings and Events. I will now turn the call over to Chris Seibert. Christopher Seibert: Good morning, and thank you for joining us today. John Deere completed the first quarter with a 5.9% operating margin for the equipment operations. Our results reflect the strength and resilience of a diversified portfolio spanning multiple end markets and geographies. All business segments delivered higher net sales year-over-year with both small ag and turf and Construction & Forestry top line growing by over 20%. Our results for the quarter exceeded our forecast, driven by shipping volumes that were ahead of our initial plan. Importantly, over the course of the quarter, we saw continued strengthening of our order books across several product lines, most notably in small ag and turf as well as construction. In earthmoving, double-digit year-over-year growth in retail settlements and the growing order bank have prompted us to increase our industry outlooks for both construction and compact construction equipment in North America. In small ag, order activity for midsized tractors supporting the dairy and livestock production system has remained solid. while order velocity for North American turf equipment and compact utility tractors has increased. Global large ag fundamentals, while still challenged, were largely stable over the quarter. This stability has enabled a modest improvement in our net sales forecast for North American large ag this year as our combined early order program finished better than expected and large tractor order activity has increased. These improvements have helped us to offset softer projections for the South American ag equipment market in 2026. The developments over the course of the past 3 months have strengthened our belief that 2026 marks the bottom of the current cycle as we project mid-single-digit net sales growth for the equipment operations this fiscal year. Slide 3 starts with the results for the first quarter. Net sales and revenues were up 13% to $9.611 billion, while net sales for the equipment operations were up 18% to $8.001 billion. Net income attributable to Deere & Company was $656 million or $2.42 per diluted share. Turning to our individual segments. We begin with the Production & Precision Ag business on Slide 4. Net sales of $3.163 billion were up 3% compared to the first quarter last year, primarily due to positive effects of foreign currency translation. Price realization was roughly flat. Price realization in North America was positive, though was offset by additional incentives for the South American market. Currency translation was positive by nearly 4 points. Operating profit was $139 million, resulting in a 4.4% operating margin for the segment. The year-over-year decrease was primarily due to higher tariffs, unfavorable sales mix and higher warranty expenses. Moving on to Small Ag & Turf on Slide 5. Net sales were up 24%, totaling $2.168 billion in the first quarter because of higher shipment volumes and positive effects of foreign currency translation. Price realization was positive by 2 points. Currency translation was also positive by just under 2.5 points. Operating profit increased year-over-year to $196 million, resulting in a 9% operating margin. The increase was primarily due to higher shipment volumes, favorable sales mix and price realization, partially offset by higher tariffs. Slide 6 gives our industry outlook for ag and turf markets globally. We continue to expect the large ag equipment industry in the U.S. and Canada to decline 15% to 20% this year. However, we are seeing encouraging developments that should provide stability to this segment in the near term while also improving the setup for return to growth. While global row crop production remains strong -- global production remains strong, robust demand for commodities and a normalization of trade flows are providing support for prices at current levels, which are above the lows that growers experienced last summer. Additionally, government programs are supporting farmer liquidity in the short term. Ongoing improvement in the used inventory market is providing a better environment for machine replacement, while the age of the fleet continues to grow. Additionally, proposed government policy actions, including additional support for biofuels, provide potential tailwinds for growth. For small ag and turf in the U.S. and Canada, industry demand estimates remain flat to up 5%. The dairy and livestock sector remains profitable due to strong beef prices, while the turf market is seeing a modest return to growth as that sector normalizes after several years of declines. Moving to Europe. The industry is still projected to be flat to up 5%. The underlying fundamentals of the ag sector are largely unchanged with no near-term material impact expected from newly negotiated EU trade agreements or recent declines in milk prices. Interest rates are steady, long-term financing costs are manageable and the region continues to show resilience across key arable markets. In South America, industry sales of tractors and combines are now expected to be down approximately 5%, driven by the Brazilian market where subdued commodity prices, high interest rates and the stronger real are putting pressure on producer margins. Industry sales in Asia are now projected to be flat to down 5%. The Indian market is now expected to only be down slightly from the strong levels seen in 2025. Next, our segment forecast begin on Slide 7. For Production & Precision Ag, net sales are still forecasted to be down between 5% and 10% for the full year. The forecast assumes roughly 1.5 points of positive price realization and about 3 points of positive currency translation. For the segment's operating margin, our full year forecast remains between 11% and 13%. Slide 8 shows our forecast for the Small Ag & Turf segment. We now expect net sales to be up about 15%. This includes 2 points of positive price realization as well as 2 points of positive currency translation. The segment's operating margin guide is now between 13.5% and 15%. Shifting now to Construction & Forestry on Slide 9. Net sales for the quarter increased roughly 34% year-over-year to $2.67 billion due to higher shipment volumes and positive effects of foreign currency translation. Price realization was negative by just under 0.5 point. Currency translation was positive by 3.5 points. Operating profit of $137 million more than doubled year-over-year, resulting in a 5.1% operating margin due primarily to favorable shipment volumes as well as production efficiencies, partially offset by higher tariffs. Slide 10 describes our Construction & Forestry industry outlook. Industry sales for both construction equipment and compact construction equipment in the U.S. and Canada are now expected to be up around 5% year-over-year. Construction markets remain solid, supported by U.S. government infrastructure spending, declining interest rates, strong rental demand and data center construction starts. Our year-to-date retail settlement activity is running ahead of our expectations, and our order books continue to grow. Global forestry markets are still expected to remain flat. Global road building markets are now expected to be up around 5%, driven by market increases in both North America and Europe. Moving to the C&F segment outlook on Slide 11. 2026 net sales are now forecasted to be up around 15%. Our net sales guidance for the year includes about 2.5 points of positive price realization and just over 2 points of positive currency translation. Our projection for the segment's operating margin also increased and is now estimated to be between 9% and 11%. Now transitioning to our Financial Services operations on Slide 12. Worldwide Financial Services net income attributable to Deere & Company in the first quarter was $244 million. The year-over-year increase was mainly due to favorable financing spreads and a lower provision for credit losses, partially offset by favorable special items recorded in the first quarter last year. For fiscal year 2026, our outlook increased to $840 million, primarily driven by lower provision for credit losses. Finally, Slide 13 outlines our guidance for net income, effective tax rate and operating cash flow. For fiscal year '26, our updated outlook for net income is now between $4.5 billion and $5 billion. Next, our guidance continues to incorporate an effective tax rate between 25% and 27%. And lastly, projections for cash flow from the equipment operations increased by $500 million at both ends of our range and is now expected to be between $4.5 billion and $5.5 billion. This concludes our formal comments. We'll now shift to a few topics specific to the quarter. To start, let's review Deere's results this quarter. Net sales increased by about 18% year-over-year and margins were just under 6%. Although the first quarter of fiscal year '25 had an easier top line compare given last year's underproduction in Small Ag & Turf and Construction & Forestry, it still performed ahead of our plan. Josh Beal, could you explain what happened this quarter and how it affected our full year outlook? Josh Beal: Yes, absolutely, Chris. Let's start with our expectations for the quarter. Overall, we were projecting double-digit net sales growth in the equipment operations, driven by estimates for over 20% growth in both small ag and Construction & Forestry, while large ag sales were expected to be flat year-over-year. Despite the projected net sales increase, we were expecting lower equipment operations operating margin year-over-year due to incremental tariff expenses and an unfavorable product and regional mix in large ag. Across all 3 business units, we executed ahead of our plan for the quarter. And as a result, our performance reflects better top line and margins than originally forecasted. Better-than-expected shipment volume was the primary driver of both the top line and margin beat. In PPA, shipments of North America large tractors were ahead of plan, while C&F benefited from higher road building sales in Europe and North America as well as ahead of planned shipments of both construction and compact construction equipment in North America. On the pricing front, C&F pricing was slightly negative this quarter, although competitive price pressures have started to show signs of easing. The results from the quarter in C&F had a slight impact on the timing of our expected price realization in the segment. And as a result, we've revised our full year forecast down by 0.5 point. PPA pricing was neutral during the quarter, primarily due to discounts implemented in South America, responding to FX movements as well as targeted field inventory reductions. Our PPA price guidance for the full year remains unchanged, and we still expect positive full year price realization in South America. Foreign exchange was also impactful in the quarter. The U.S. dollar was weaker year-over-year against several relevant currencies for Deere, particularly the euro and Brazilian real. The translation impact drove year-over-year net sales gains for all 3 business units. Transitioning to cost management. Excluding tariffs, production costs were lower year-over-year for all business segments in the first quarter. This was largely attributable to operational efficiencies from higher production and disciplined overhead spending. Tariffs for the year are still projected at around $1.2 billion as mitigation on Section 232 steel tariffs and some relief in India have been offset by volume growth. As you mentioned in your opening comments, our full year industry demand outlook for most markets improved over the course of the quarter. We maintained our net sales guidance for PPA, even though South America softened due to some incremental improvement in North America, and we increased the net sales ranges for SAT and C&F by 5 points. That resulted in higher projected margin ranges for small ag and C&F, resulting in an increased net income forecast of $4.5 billion to $5 billion. Christopher Seibert: Perfect. Thanks for that breakdown, Josh. It is encouraging to see that our teams continue to execute and focus on what we can control while also seeing some pickup in end market demand. Now let's take a moment to talk about the broad ag industry. Since late last year, we've seen several supportive developments in the U.S. market, including the recently announced $12 billion Farmer Bridge Assistance program, and renewed purchase commitments for U.S. commodities. Can you add some additional color to what this could mean for U.S. growers? Josh Beal: Sure, Chris. I'll start by reiterating a couple of comments on the global ag economy that you mentioned in your opening. Global crop production remains strong, but so does global demand. At current commodity price levels, producer margins remain pressured in many geographies. Specifically for the U.S., the USDA just updated their 2026 forecast for net cash farm income. While 2026 U.S. net cash farm income is forecasted to be up around 3% from 2025, much of this increase is being driven by more government payments. Crop cash receipts are expected to be up slightly this year, but expenses are projected to increase as well. Given this setup, we continue to anticipate a challenging environment for many row crop farmers. However, as you mentioned, we're starting to see some stability for producers as China has resumed purchasing U.S. soybeans and the recently approved government support program looks to provide some near-term liquidity. Additionally, strong farmland values are keeping debt ratios low despite the lower margin backdrop. Notably, the U.S. fleet age is high and continues to get older as customers put more hours on their equipment. With the stabilization that we're seeing in U.S. ag fundamentals, along with an improving used market, our expectation is that we'll start to see some replacement demand return. Joshua Jepsen: This is Jepsen. Maybe one key point to reinforce. The government payment should continue to mitigate downside risks for farmers' balance sheets, acting as a bridge in an environment where crop cash receipts are under pressure. We believe that future policies around renewable fuels and additional export opportunities should drive demand and provide continued stability. Christopher Seibert: Great. Thank you, both. With the developments over the quarter in North America, it appears that we've moved past peak uncertainty and that the market is stabilizing. Building off that, could you also share an update regarding global ag inventories and order books? Josh Beal: Yes, definitely. Let's start with large ag in North America. On the new inventory side, we continue to be in a great position and hold on to our plan to produce in line with retail demand in fiscal 2026. We also continue to make progress in North American used inventories. We saw a typical seasonal increase in used Deere combines during our first quarter. However, current inventory levels for Deere combines remain about 15% below their peak in March 2024 with model year distribution at a normal mix. Deere high horsepower tractor units were down mid-single digits in our first quarter and have declined by over 10% from their March 2025 peak. Late model mix is improving, too. It's notable that while total Deere high-horsepower tractors are down over 10% from March, model year '22 and model year '23 ADAR tractors are down more than 40% in that same time period. Just this past quarter alone, model year '22 and model year '23 ADARs were down over 20% sequentially with model year '24 ADARs also declining by over 10%. While continued reduction in used tractors remains a focus, we're encouraged by the progress that we're seeing. At the same time, large tractor order velocity for the North American market has picked up, and our rolling order books now provide visibility into the fourth quarter. We also just recently took our last calls for North American combine orders for the year-end, while we still expect that overall North American large ag industry to be down 15% to 20% this year, combines will be down less than that range. Similar to North America, we feel good about our new inventory positions in both Europe and South America. The one exception is combines in Brazil, where we're a bit higher than we want to be. We'll underproduce retail for Brazilian combines in our second and third quarters to bring those inventory levels down. Despite being higher than our target, our current inventory to sales ratio for combines is still significantly lower than what we see with competitors. As far as order visibility, European tractor order books are currently 4 to 5 months out, while South American orders are full through our second quarter. Turning to Small Ag & Turf in North America. Last year's underproduction resulted in healthy beginning inventory levels for this segment that remain in place today. For reference, current new field inventory for both tractor horsepower categories in this segment, that's the less than 100-horsepower category and the 100 to 220-horsepower category are each about 40% lower year-over-year. Our ability to maintain those lower inventory levels reinforces our plan to build in line with retail demand in small ag this year. A commitment to that plan has been further supported by strength in order activity in the first quarter. Joshua Jepsen: This is Jepsen. Maybe share an additional perspective following Beal's comments. Our channel has consistently worked to reduce used inventory levels and our deliberate approach to managing production and inventory set us up favorably both this year and into the next. With growing demand across various other markets and segments, we feel good about how we're positioned to execute for the remainder of '26. Christopher Seibert: Thank you, both. Now let's move on to Construction & Forestry. Josh Beal, we've already touched on C&F's performance in Q1, but can you please give us an update on the current business environment and outlook for 2026? Josh Beal: Yes, happy to, Chris. Let me start with the current market environment, and Ryan, please jump in with any additional color you might have. As you noted earlier, construction markets are a bright spot and continue to demonstrate resilience, bolstered by U.S. government infrastructure investments, decreasing interest rates and improved rental demand. Recall that we underproduced retail in the first half of fiscal 2025, which set us up to produce in line with retail demand this year. We saw strength in our first quarter in retail sales that exceeded our estimates as settlements of construction and compact construction equipment were both up mid-teens year-over-year in our first quarter. What's perhaps most encouraging is that our order bank has risen by over 50% in the past quarter, reaching its highest point since May of 2024. This provides us with clear visibility into the second half of the fiscal year, allowing the Construction & Forestry team to optimize their production plans accordingly. Overall, we're very encouraged by the momentum that we've seen to start the year. Ryan, is there anything you'd like to add? Ryan Campbell: Absolutely. I share your enthusiasm, and I'm excited about what's on the horizon for this business. As I mentioned at our recent investor event in New York, there are numerous reasons for my optimism. At a macro level, the world is facing growing urgency to upgrade or replace key infrastructure. Investment in single-family housing, especially across the United States, needs to increase, and there's a huge demand to support the required infrastructure for AI investments. To get all this work done, the industry must boost productivity significantly with machines doing more work with precision and utilizing less resources overall. Meeting these goals require smart machines and data-driven insights to execute tasks and manage job sites efficiently. And we believe we can help customers meet these challenges and we'll continue to invest on our side to ensure success. Christopher Seibert: Thanks for the recap, Ryan. Could you remind us of the investments that we're making to meet those challenges? Ryan Campbell: Sure, Chris. Let's start with excavators. As we've talked about, we are excited to announce our new Deere designed 20-ton class excavators at the upcoming CONEXPO show in Las Vegas. We've included additional information in the appendix of the earnings presentation for those interested in more detail. Excavators represent about 40% of the North American construction equipment industry, and these models are the first introduction of fully Deere designed and Kernersville, North Carolina built machines to the market. We packed the new units with easy-to-use, productivity-enhancing technology while remaining absolutely focused on and making further improvements in quality and durability. This is the first step of what will be a multiyear launch plan for a complete line of excavators. We couldn't be more excited about sharing these first models with our customers. The CONEXPO event will feature 24 product launches, including world premieres of equipment from John Deere and 6 market debuts from the Wirtgen Group. The last several years, our efforts have been heavily focused on excavators. However, we continue to innovate across the product portfolio. From new equipment designs, the latest in precision and job site technology, we have never felt better about our complete product portfolio. Christopher Seibert: Thank you. On the digital side, yesterday, we completed the acquisition of Tenna. Could you please provide your insights on this acquisition and discuss how it aligns with the broader C&F business and strategy? Ryan Campbell: Yes. We're incredibly excited about bringing the Tenna team and their capabilities into the John Deere portfolio of businesses. It might help to take a step back and talk through our strategy at a high level in the C&F division. We think about the construction industry and how we want to compete in 3 different layers: machines, tasks and job sites. On the machine side, completing our product portfolio of best-in-class earthmoving equipment, both in high-precision machines and those that are more basic is our focus at that level. Second, we're enhancing the tasks that the machines do individually on the job site through precision technologies like SmartGrade, SmartDetect and SmartWay. The agreements with the 3 survey providers to provide a fully integrated grade control experience through our equipment is an example of what we are working on in this area. Third is having the capabilities to help contractors and customers optimize their fleets, operations and job sites. Tenna provides a leading technology platform that automates contractor workflows, gives near real-time insights into equipment operations and maintenance and enhances visibility. planning and coordination to boost productivity and cut costs. Tenna's leading fleet-based products and services, combined with the productivity solutions from Virtual Superintendent, who we acquired a little over a year ago, along with the foundational capabilities we've built through the John Deere Operations Center gives us a unique value proposition to offer customers as they work to optimize their fleets, operations and job sites. Importantly, Tenna and Virtual Superintendent are and will continue to be brand agnostic, focused on mixed fleet solutions in step with the reality of the fleets and job sites in the industry. Christopher Seibert: Thank you, Ryan. It sounds like there's a lot to be excited about in the Construction & Forestry segment going forward. Joshua Jepsen: This is Jepsen. Maybe one thing in addition to the C&F product releases, I'd like to share a quick comment about innovation in our other businesses. At the end of this month, we'll be at Commodity Classic in San Antonio, Texas with several major product launches and updates to our advanced technology solutions. And just last week, at the World Ag Expo in California, we showcased several innovations that are helping drive value for our high-value crop producers as well. Christopher Seibert: Thank you both for your comments. Josh, do you have any final thoughts before we open the line for questions? Joshua Jepsen: Yes. Thanks, Chris. The first quarter demonstrated great execution from our teams. All business segments operated efficiently and delivered results ahead of plan. At the same time, we saw stabilization and improvement in a variety of our end markets. Our channel maintained focus on inventory management, particularly in North American used equipment. Our financial strength has allowed us to maintain high levels of investment throughout the cycle, which positions us well for future growth, particularly as the cycle inflects. The recent and upcoming product and technology introductions are tangible examples of that outcome and bolster our confidence in our growth aspirations through the end of the decade and beyond. Over the quarter, we returned nearly $750 million in cash to shareholders through dividends and share repurchases, demonstrating that strong through-cycle financial performance supports both reinvestment in the business and shareholder return. Finally, I'd like to express my sincere appreciation to all members of the Deere team. The commitment and dedication demonstrated by our employees, dealers and suppliers across every area of the business have been instrumental in maintaining this high level of discipline. The Deere team is committed to executing our strategy and focused on solving our customers' biggest challenges. Christopher Seibert: Thanks, Josh. Now let's open it up to questions from our investors. Josh Beal: We're now ready to begin the Q&A portion of the call. The operator will instruct you on the polling procedure. In consideration of others and to allow more of you to participate in the call, please limit yourself to 1 question. If you have additional questions, we ask that you rejoin the queue. Operator: [Operator Instructions] Our first question comes from Kristen Owen from Oppenheimer. Kristen Owen: And just briefly, Josh Jepsen, thank you so much for all the help over the years. If I could start maybe with the pricing question. You gave some helpful commentary on PPA pricing. But I'm just wondering how we should think about the bridge from here at neutral in Q1 to the full year guide of 1.5%. And similarly, if you could help us, you trimmed your expectation on C&S. Can you just maybe walk us through what you're seeing on the pricing side there? Josh Beal: Yes. Thanks, Kristen. Happy to. Yes, starting with large ag, the first quarter, as we mentioned, we did put some incremental incentives in place -- we put some incremental incentives in place in South America. As we mentioned, we've seen a little bit of a slowdown in that market. And as a result, we're going to pull down inventory a little bit in that market, just in combines. And maybe just for perspective, too, on the combined inventory, while we've come up a little bit in Q1, we're still about half of the levels on combines that we saw that we peaked at in 2023. So still in really good shape, but want to be proactive there. And as we've seen a little bit of a slowdown, we've taken some action. We don't expect that to continue through the year. As we mentioned, our expectation is for Brazilian price realization to be positive for the full year. And we've seen positive price in North America. Recall that we did some accrual in the third quarter of last year in large ag for pool funds that should provide some easier comps as you move through the course of the year as well. So our expectation is to still maintain that 1.5 points for large ag price. Joshua Jepsen: Yes, Kristen, this is Jepsen. I think on the PPA side, that 1.5 points for the full year, and I think we would expect that really as we run through the remaining quarters. So not too lumpy or different as we go 2 through 4Q. Ryan Campbell: Yes. Maybe just a bit on C&F. We took the guide down slightly. That wasn't a function of our lack of confidence in us being able to execute price increases, really a function of how fast the year started. We announced some price increases in January. And quite frankly, we were surprised at how quickly we had built our backlog in the first couple of months of the year. So the price actions are going to be delayed a little bit. It's important to keep in mind that it's Wirtgen, it's parts and also earthmoving. And so it's a combination. Each one will do a little bit differently. And then over the rest of the year, we'll start to lap some of the more aggressive pricing actions that we had to take last year. So overall, we still feel very confident in the price realization for the year. Operator: Our next question comes from Angel Castillo from Morgan Stanley. Angel Castillo Malpica: Just want to maybe follow up on that. If you could just talk a little bit more in detail about what's going on in terms of the order strength, in particular, I guess, on the C&S side, to the comments on the pricing and the strength that you've been surprised by, I recognize it might be difficult to unpack, but just curious if you're seeing -- if you're able to split that up between what might be one big beautiful Bill kind of bonus depreciation related, any kind of versus end market driven versus kind of Deere performance driven by all the portfolio of product innovation you're talking about or just merchandising incentives. Just curious the puts and takes across the various kind of tailwinds that might be driving some of the strength and if you're able to kind of unpack that. Josh Beal: Yes. I'll start, Angel, and Ryan, Josh jump in. I mean, first and foremost, I would just point to contractor confidence. More and more as we have conversations with contractors, they feel good about their backlog. And candidly, they feel good about that backlog growing even as they look into 2027 as well. So I think it's strength in their end markets and particularly around larger projects, I mean infrastructure mega projects certainly supporting data centers as well is where we're seeing more of that strength. Housing, still subdued to start the year. There's some expectation that, that will pick up a little bit as we get some easing as we move through the course of the year, but that's still a segment for smaller contractors where there's still challenged on the housing side. But again, particularly for those larger folks, they're seeing strength in their order book, and I think that's starting to translate into order activity. Joshua Jepsen: Yes. Just to add to that, Angel, we've seen rental refleeting, which has been positive. Our retails were up mid-teens in the quarter. So we see strength there. So not only order activity, but retail more than matching, which has helped as well. So I think that's given us more confidence as we've seen that build. Ryan Campbell: Yes. Just maybe to summarize, kind of all of the above of the things that you identified. I've been out quite a bit with customers, geographic mix and a broad swath of the different types of construction, and it's really broad-based. They feel confident. I think the construction activity has been strong in the last couple of years. They were probably a little more cautious with respect to fleet for various reasons last year and the year before that. But now the confidence in their backlog is growing and they need to start making more investments in the fleet. Josh Beal: And maybe just one last comment on Wirtgen side, too, we're seeing strength there. We mentioned it's not just concentrated in North America, certainly strong infrastructure investment there. But Europe as well, we're seeing some pickup. Infrastructure in Germany, as an example, has been positive. So strength in both of those markets as well on the roadbuilding side. Operator: Our next question comes from Stephen Volkmann from Jefferies. Stephen Volkmann: Maybe I'll just stay with this topic. I guess given what you guys are all saying, which sounds very reasonable, the kind of up 5%-ish kind of forecast feels pretty conservative. So I'm curious if you think there's some headwinds that we should be keeping in mind maybe as the year progresses or something. And then sort of on that same note, your net sales forecast in C&F is quite a bit higher than your end market forecast. So maybe you could tease that part out as well. Josh Beal: Yes. I think you're right, Steve, that there's certainly optimism. You heard us say that in our prior answer. It is mixed in some segments. Housing has still been subdued. So I think that's part of it. But yes, I mean, overall optimistic, and we're seeing strength there. On the sales guide, up 15%. Recall that we did some pretty strong underproduction last year, which has really set us up well for this upturn. I mean it was close to 10%, just high single digits for the segment last year. And so we're building in line with retail this year. So that is helping. On top of that, you're getting 2.5 points of price, so getting positive price and currency has been a tailwind as well. So for all those reasons, we're much closer to 15% now versus those markets we're seeing are up 5%. Operator: Our next question comes from David Raso from Evercore ISI. David Raso: We'll miss you, Josh. When it comes to the large ag commentary, I was intrigued by the order book color. But obviously, you're not willing to change the guide on large ag. I was just curious, that order book, is it coming in just in a sense earlier than you would have thought in the sense of you have the same view and the order book just came in at a level where now you feel you have just better visibility? Or are we at the stage where Waterloo or East Moline is starting to kind of increase line rates? And I'm not just talking seasonality, I'm speaking about versus your original budget. I'm just curious how you're sort of digesting the at least more stable, better order book on large ag when, as you pointed out, I mean, grain prices, even this morning, some of the USDA corn acre number came in, I thought kind of constructive, but corn is still not reacting positively. And I'm just trying to put together how you're thinking about that order book versus corn prices just aren't really supporting the improvement. Josh Beal: Yes. Thanks for the question, David. I mean on the North American side, our guide is still for the industry down 15% to 20% and maybe breaking that down by product lines. Our spring seasonal products, things like sprayers and planters, those EOPs happened over the course of last summer, wrapped up in August, September, still a lot of uncertainty in the market and prices from commodities were much lower at the time. Those product lines are probably the upper end of that range, closer to 15%. What we've seen over the course of the quarter from -- I'm sorry, closer to 20%, at the upper end of that range for those product lines. What we saw over the course of the quarter on the tractor side was some pickup in order velocity, particularly in the last month or so. So we're probably closer to down 15 or so on tractors, the lower end of that range. And then combines, as we mentioned in our commentary, as we close out that EOP, that will finish better than the range, more like probably down 10% to 15% for combines in that segment. So yes, what are we seeing? What's driving that? I mean, as you're right, I think from an ag fundamental standpoint, still challenged and haven't seen a whole lot of change there over the course of the quarter. However, we do feel like things are more stable certainly than where we were end of last summer, into the fall. We've seen China come back to the market. We've seen some stability in grain prices, not a lot of upside at this point in time, to your point, even on some of the recent news, but we've seen some stability there. And then I think the other thing to keep in mind is that the age of the fleet is getting older. We haven't seen much replacement over the last couple of years. and you do have some folks that do need to look to replace even sort of despite of what we're seeing with ag fundamentals. And when you see an improving used inventory market, and we mentioned some significant improvement even over the course of the quarter. And I think most notably, like model year '22, '23 AR is down 20% sequentially in the quarter, just gives you a sense of how those are starting to move. That's starting to free up the trade ladder, free up movement there. And so we are seeing a little bit of pickup from a replacement demand. Not a massive inflection, again, given where the fundamentals are, but replacement does come back over time just given that situation. Joshua Jepsen: Yes, it's Jepsen, the only thing I'd add to that, David, to your question is, yes, we are seeing some increased build rates in tractors, and that's kind of back half related to this order activity that we saw come through. As Josh mentioned, we're already out nearly through 3Q. So the back half of the year, we see some of that step up. But that's based on actual orders that we're seeing. And I think really underlying some of the replacement that Josh just mentioned. And as we see used get healthier, I think that's aiding that trade ladder, aiding the ability to move those used. We've seen stability in used prices. And then as you take inventory down, it's facilitating more activity there. Ryan Campbell: Our next question comes from Tim Thein from Raymond James. Timothy Thein: Josh Jepsen, all the best, and thank you for your help over all these many years. Just a question, circling back on kind of the outline as we came into the year with respect to price versus production costs, given the maybe slower start to the year in some of these segments are we -- but you've also mentioned some maybe fluctuations on the cost and tariff side. Has anything changed in terms of the expectation for the full year and how you expect to play out in terms of price versus cost? Josh Beal: Yes. Thanks, Tim. I mean you're right, some changes over the course of the quarter. We're probably closer now to price/cost neutral for the full year, just given particularly a little bit of a reduction on the pricing side in C&F. Tariff costs -- and by the way, that price cost neutral is inclusive of the $600 million of incremental tariffs that we're seeing this year. So we're covering that tariff piece coming into the business in 2026. But we've -- tariffs have been roughly flattish quarter-over-quarter. There were some puts and takes there, but that $1.2 billion for the full year guide on tariffs is still unchanged. We've seen a little bit of change, maybe a little bit more inflationary pressure on materials, but offset by some improvements on the overhead side as we've added volume, we're seeing more overhead efficiency. And so we'll be slightly unfavorable from a production cost standpoint ex tariffs. But overall, again, price/cost neutral with the price actions that we're taking. Joshua Jepsen: Yes. And maybe just one thing. First quarter ex tariffs, we were production cost favorable. So I think it speaks to just the things we can control and how we're operating in an environment with a fair bit of uncertainty. Operator: Our next question comes from Steven Fisher from UBS. Steven Fisher: I echo my sentiments. Josh appreciate the help. In terms of some of the regional dynamics, I think there were expected to be some pretty big differences between North America and Europe in the first quarter. It sounds like maybe North America ended up being a little bit better on the tractor side, perhaps. Anything in particular from a regional production perspective we should be expecting or just general for Q2, how to model that and any of the differences for the rest of the year because I think those can certainly affect the margin progression in large ag. Josh Beal: Yes. Thanks for the question, Steven. Regional mix was certainly an impact on large ag in the first quarter. I mean if you look at overall volume in the large ag business in Q1, we were effectively flattish year-over-year in terms of total volume, but that mix was Europe up, Asia, it was a smaller part of our large ag business, but Asia up and then both North America and South America down year-over-year in Q1. So given the different profitability profile, excuse me, for those different geographies, that was unfavorable mix for us in the first quarter. That starts to change as you move through the course of the year. I mean, as we'll see a pickup, particularly in North America production here in the second quarter. And as Josh Jepsen mentioned, our order books are for tractors as an example, now into the fourth quarter. So we've got good confidence that we'll see that pick up and we'll revert to a more normal mix going forward, and that will aid margins. I mean you can expect us in large ag to do double-digit margins each quarter for the rest of the year. So it really is a mix that's improving as you move through 2026. Joshua Jepsen: Yes, Steven, I think you see that, too, like in gross margins, that really rings through. And when you look at the first quarter versus the rest of the year, where we bounce back and look a lot more like what do we do for gross margins in PPA in 2025 in the remainder of the year, that's where we operate. And a big part of that is a little bit more normal mix geographically. Operator: Our next question comes from Chad Dillard from Bernstein. Charles Albert Dillard: I got a quick question for you on tariffs. So if we get the tariff relief, will that get rolled back to farmers? And how soon could that happen? Is that something you need to wait to see until the '27 model year pricing? Josh Beal: Yes. Yes. And so maybe just to break down a little bit, Chad, on the exposure. So like I mentioned, total tariff costs this year in 2026 is $1.2 billion pretax. And if you break that down kind of by exposure, the IEPA tariffs is a little less than half of that, a little bit higher in 232, but a little less than half is IEPA. So we'll see what happens on the Supreme Court side. It's been a very dynamic environment. So it's hard to say if those go away or something else doesn't come back. So we'll watch how that plays out. We won't react too quickly. Similar to when we saw tariffs going up last year, we didn't take immediate price action, and you can expect a similar approach for us this year in 2026 as well. Joshua Jepsen: Yes. I'd just reiterate, Chad, I mean, we were relatively muted. I mean we're well below normal or historical averages for price. I mean last year in PPA, we did just below 1 point. We're talking about 1.5 points here this year. So we haven't taken outsized price as it's related to tariffs. We're focused on how do we mitigate, how do we work our way through those. We've seen good progress on mitigation on 232, and the teams continue to do a lot of really good work. So I think we're kind of heads down focused on that, and we'll see what -- how the environment changes, but we're going to keep working on that and focus on the things that we can manage. Operator: Our next question comes from Jerry Revich from Wells Fargo. Unknown Analyst: This is Kevin on for Jerry Revich. Just had a quick question about large ag used inventories. Based on our data, we're seeing North America large ag used inventory destock accelerated over the quarter by 4%. Just trying to understand, were there any higher pool funds or other incentives? And is this pace of destock sustainable based on what you're seeing? Josh Beal: Yes, Kevin, thanks for the question. As we mentioned, we saw a really good progress in the first quarter and maybe worth repeating again, I mean, particularly late model tractors, we saw a really significant reduction over the quarter. I mean '22s and '23 AR is down 20% sequentially in the quarter, even model year '24s down 10%. So really good movement there. We did this in 2025. We increased the pool fund contribution rate to keep those levels healthy for our channel. And we'll continue to support the market with pool funds. We did a little bit in Q1, but still positive price for North America. So like I said, we're seeing good momentum there. We're seeing good movement. Our first quarter tends to be the strongest quarter of the year for used reduction. You do see a lot of year-end calendar buying. So you'll see probably more movement in Q1 than you will be as you get to some of these other quarters. But we've seen continued progression quarter-over-quarter really for the last better part of the year or so, and we'd expect that to continue going forward. Operator: Our next question comes from Jamie Cook from Truist Securities. Jamie Cook: Josh Jepsen, thanks for your help throughout the years and best of luck to you. I guess just my question in terms of how we're managing large ag. It seems like things are getting better. You talked about the combines coming in better, order velocity improving. To what degree -- I know you have orders through the third quarter. To what degree do you want to limit production, I guess, in 2026 to set yourself up for a better 2027 in terms of how you're managing things? And then I guess my second question, just with large ag getting better, production sort of moving up, surprised your margins and the mix getting better with more North America just surprised margins wouldn't be more towards the upper end of the range for the year and production and precision Ag. Josh Beal: Yes. Thanks, Jamie. I mean certainly, as you mentioned, we've seen improvement over the course of the quarter. For combines, as you know, we base our production for the year on that early order program. So that largely defines what we're going to build this year. And so I wouldn't say there, there's any really much change. It will be pretty level through the rest of the year on combines. I mean tractors, as we've mentioned, our order book is now into the fourth quarter. We've seen some increased momentum there. And as Josh Jepsen said, we'll pick up some production towards the back half of the year. Probably not a whole lot of change now at this point, I mean we're getting pretty close to where the full year will have the year filled up. We'll see how things play out over the next quarter or so as we build out the book for the rest of the year. But we'll be pretty steady, pretty level now based on what our plans for the rest of the year. Yes. I mean margin, certainly, as we see North America come back, that's good mix. We've seen a little bit of softening in South America. That's a very profitable region for us as well. And so there's some puts and takes there that don't drive the margin too different from what we've originally forecasted. Joshua Jepsen: Yes, Jamie, it's Jepsen. I think the one thing I'd point out is we're still below trough levels for production and precision Ag overall and North America below that. So when you just the overall magnitude of North America being down 15% to 20% and the pull or negative impact on margins is real there. So I think we're glad to see some of that order activity move, but it's not -- to Josh's earlier point, it's not a bounce. It's not inflecting hard. It's just we're seeing some positive progress and momentum. So that, I think, does demonstrate we should see momentum as we go forward. Inventories are in good shape. Factories are running really lean. So as we see demand come back, I think we will see strong incrementals, particularly ex tariffs, but we're still kind of coming off of very low levels right now. Operator: Our next question comes from Tami Zakaria from JPMorgan. Tami Zakaria: My question is on the new excavator, which is quite exciting. Curious whether you can comment on any marketing plans around the launch of this? Are you expecting to put in some promotions to gain share, any financing promotions, incentive for dealers or anything along those lines to start off on a strong note? Ryan Campbell: Yes. I think the big splash that we have is out at CONEXPO, and so that will be the big launch event. We spent a lot of time with a lot of different operators from customers across the country, testing and understanding the capabilities of the equipment. We had a big launch party and launch event with them. And so I think the capability and the quality of the equipment and what we're going to deliver to the marketplace is pretty well known. We've done more testing than we have in the past. With respect to incentives, the excavator market has been pretty challenging from a price perspective over the last couple of years. This new model gives us differentiation that we haven't had over the last couple of years. We're not going to significantly take price with that, but the value that we're offering to our customers through this and through all the work that we've done, we feel like they really understand it and continue to do that. And again, at CONEXPO, we'll continue to emphasize the message of the value that we're delivering through technology, through improved durability and just the productivity and capability of the new excavator. We think we're in a great spot to launch. And the teams are super excited. The dealers are super excited. There are good products in the market today. We've had a long-standing relationship with Hitachi with good products. This is a truly differentiated product that we're super excited to bring to the marketplace. Operator: Our next question comes from Sabahat Khan from RBC Capital Markets. Sabahat Khan: Maybe just a 2-parter there. I think the initial comments around some of the shipments during the quarter being a little bit better. I guess based on the order book, are you finding that this is more of a structural shift in the outlook that the farmers on the ground have maybe because of some of the trade issues easing and/or other factors? And then secondly, just as the trade issues do ease for the U.S. and China starts to order, how are you thinking about the offset in South America where maybe some of the orders for soybeans and other things might moderate? So how are you thinking about that on a net basis? Josh Beal: I mean specific to the quarter, I would say largely, we ran really well in our factories. We talked about overhead efficiencies that we saw in the quarter as we ran so well. Tractors in North America, we shipped a little bit more than we anticipated just given how the factory ran. And so I wouldn't say in the quarter that production was so much demand related versus just how we ran in our operations. But yes, I mean, as you think about overall for large ag, we talked about the pickup in North America. We've had that point already just on some of the improved optimism we've seen there. Again, it's a minor inflection, but we've seen some positive momentum there. South America, the way I would describe that is just a little more caution in the market. I mean there's a few factors at play there. Certainly, the high interest rates that we've seen in the region have been pressuring customers. We saw the real appreciate quite a bit over the course of really the past month, 1.5 months. Given the structure of our customers' operations, they sell a lot of their commodities in U.S. dollars. That puts some pressure on their margins. So we've seen a little more caution there as well. And certainly, they're keeping an eye on the election -- presidential election in the country that's coming up at the end of the year as well. So for all those reasons, a little more caution in the market, and we've seen just a bit of a cautious ordering as a result. Joshua Jepsen: Sabahat, it's Jepsen. I think the one thing to your point on trade flows and how does this balance North America, South America. I think there's a couple of positive things here, and that's domestic consumption in both geographies, North and South America. North America, we're seeing more crush of soybeans domestically, more use domestically. And conversely, exports of corn and ethanol are higher. And in part, you're seeing Brazil actually consume more corn and more ethanol domestically. So I think you're seeing some puts and takes and just shifts in terms of how domestic markets are evolving vis-a-vis what's happening in exports. So I think positive is we're seeing strong demand both in country when you go U.S. and South America, Brazil in particular. And then obviously, some shifting as trade impacts that. But I think as things settle there, I think the important part is the strong demand we're seeing that's consuming those grains domestically. Operator: Our next question comes from Mike Shlisky from D.A. Davidson. Michael Shlisky: I want to add my sentiments Josh, thanks for everything. All the best to you. I kind of want to just maybe dive into your a little more optimistic tone on large ag and some of the order trends that you're seeing, especially in combines. Do you -- are you seeing or do you think you'll be seeing any market share gains this year? And I was curious whether you could tell us about tech attachments on some of your combines or other products? Are more farmers taking on the ultimate package or other prescriptions this year that might start to benefit you in 2027? Josh Beal: Yes. Thanks, Mike. Yes, I mean, I think overall, in large ag in North America, over the last 12 to 18 months, we've ceded a little bit of share. I think as we've been leaner on the new inventory side, more focused on driving used down, we've talked about the progress that we've seen there. As a result, we're set up really well coming into 2026 and our expectation is we've got some opportunity to gain some share as we move through the course of the year. On the tech side, on combine, super excited. Last year was our first year of harvest settings automation, predictive ground speed automation. We saw really good success in the field. I mean, on harvest settings automation, over 60% utilization of operators in the cab had that tech on while they were harvesting last fall and saw really good productivity gains, really good throughput gains. And as a result, we're seeing a pickup in take rates on that option as well. So 99% of the combines that were ordered this year through the EOP at some level of harvest automation and nearly 80% of that, we're taking the highest level of the ultimate package. That's up 4 or 5 points, Mike, better year-over-year. And so we've seen really good gains there and would expect that to translate into good utilization in the fall as well. Joshua Jepsen: Yes. Maybe stepping back to, as we think about just overall tech adoption and our conversations around are recovering acres with more dear technology, our engaged acres stepped up again this quarter or 500 million engaged acres. That's over 10% increase from a year ago and about a 25% increase on highly engaged. So nearly 1/3 of those engaged acres are highly engaged. So we're continuing to see progression there. which speaks to what we're doing on connectivity and making sure we're reaching deeper into the fleet, but we're seeing that progress. And we're seeing it progress really across the world, which is positive as well. Operator: Our next question comes from Jairam Nathan from Daiwa. Jairam Nathan: So Justin, you mentioned in your comments about biofuels. If you could just expand on that on what your expectations are medium term. And on construction, I think one of your competitors yesterday talked about bringing back some of the incentives. If you could address that as well. Josh Beal: Thanks, starting on the biofuels question. I mean, certainly, as Josh said, around the world, we've seen the power of increased consumption of biofuels. I mean, Brazil is a great example where more and more of their corn production is going into ethanol, and that's having a positive impact. Looking forward, we're looking at a number of different areas. Certainly in the near term, some of the opportunity around the RVO and what that might mean for 2026 and 2027, keep an eye on that. I mean E15, as that legislation continues to move through Congress as well, we see opportunity there to increase consumption longer term for corn through E15. So a number of different fronts. We see opportunity there. On the -- switching to the competitive side on construction and forestry, I mean certainly, that's been a competitive market. We've seen that over the last 12, 18 months. We've seen competition as of late last quarter or 2, take some price increase, signal some price increase. The timing of that, we're keeping an eye on. Many of our competitors still have a lot of inventory in the field. So as those price increases for 2026 start to manifest themselves in transaction price, there's a bit of a lag there that creates some pressure. But overall, as we said, we feel good about the price increases that we've taken and the opportunity to continue to drive increased realization as we move through the course of the year. Operator: Our last question comes from Evan McCall from BMO Capital Markets. Unknown Analyst: It's Evan on for Joel. Just want to talk about your cadence of earnings for the year. If you could just give some color on that? And if you see growth in Q3 as possible? Or would Q4 be the first possible quarter of growth? Josh Beal: Yes. I mean as we look through the balance of the year for equipment operations as a total, our expectation is to see a bit of growth as we move through the entire of the year. I mean it's less Evan, than we saw in Q1. As we mentioned, in Q1, we lapped some significant underproduction, particularly in construction and forestry last year. So it's an easier comp in Q1, but you'd expect to see kind of mid-single-digit growth for most quarters for the balance of the year. Joshua Jepsen: Yes. I think PPA, if you look at that one specifically, Evan and think about that, you're probably -- the toughest comp is 2Q and then get easier when you get to the back half of the year from a top line perspective. And then you've got kind of the, call it, a pretty equal tariff burden as you move through the year. Josh Beal: It looks like that's the last call we have for the day. Thanks all for taking the time -- taking time with us today. We appreciate your time, and thanks for joining. Have a great day. Operator: That concludes today's conference. Thank you for participating. You may disconnect at this time.
Operator: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the GATX 2025 Fourth Quarter Earnings Call. [Operator Instructions] I would now like to turn the call over to Shari Hellerman, Head of Investor Relations at GATX. Please go ahead. Shari Hellerman: Thanks, Jordan. Good morning, everyone, and thank you for joining GATX's fourth quarter and full year 2025 earnings conference call. Joining me today are Bob Lyons, President and Chief Executive Officer; Tom Ellman, Executive Vice President and Chief Financial Officer; and Paul Titterton, Executive Vice President and President of Rail North America. As a reminder, some of the information you'll hear through our discussion today includes forward-looking statements. Actual results or trends may differ materially from those statements or forecasts. For more information, please refer to the risk factors in our earnings release GATX's 2024 Form 10-K and our other filings with the SEC. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. I'll start with a brief overview of our fourth quarter and full year 2025 results, then I'll turn the call over to Bob for additional commentary on 2025 and our outlook for 2026. After that, we'll open the call up for questions. Earlier today, GATX reported fourth quarter 2025 net income of $97 million or $2.66 per diluted share, this compares with fourth quarter 2024 net income of $76.5 million or $2.10 per diluted share. Results for both periods include net positive impact from tax adjustments and other items of $0.22 per diluted share in 2025 and $0.17 per diluted share in 2024. For the full year 2025, GATX reported net income of $333.3 million or $9.12 per diluted share, this compares with net income of $284.2 million or $7.78 per diluted share in 2024. Full year results for both 2025 and 2024 include impact from tax adjustments and other items. A net positive impact of $0.37 per diluted share in 2025 and a net negative impact of $0.11 per diluted share in 2024. Additional details can be found in our earnings release. And with that quick overview, I will now turn the call over to Bob. Robert Lyons: Thank you, Shari, and thank you all for joining the call today. I'll open with some brief comments on 2025 performance versus the outlook we had coming into the year, and then talk a little bit about 2026 and what we see on the horizon. For those of you that participate in our calls regularly, we're usually very brief at the opening. But today, I'm going to take a little bit more time as I did last year at this time to talk through our outlook for the year ahead and recap a little bit about the past year. First of all, I want to thank all the employees of GATX around the world for their outstanding efforts and contributions this past year, especially those who were central to the Wells Fargo Rail acquisition and the integration efforts, which are ongoing. We asked a lot from people, and they delivered across the board. And they did so because everyone sees the long-term benefit of this transaction. Regarding 2025 results, we came into the year expecting EPS growth in the 8% range over 2024. And as reported this morning, our EPS actually increased 11% over 2024. Importantly, we achieved this strong EPS growth while posting another year of ROE above 12%. And I think this is important to point out because we continue to maintain a very conservatively structured balance sheet with leverage steady at [ 3.301 ]. On top of the positive EPS and ROE metrics, we continue to find investment opportunities. We put $1.3 billion of capital to work in what we believe will be attractive earnings growth and return opportunities for our shareholders. Given the magnitude of the Wells Fargo Rail acquisition, it'd be easy just to jump past 2025 and focus on this opportunity, which we'll do. But I don't want to lose sight of how our business is delivered in 2025. So allow me a few minutes to recap some of the highlights. At Rail North America, we maintained utilization at 99%, we closed on over $640 million of new investments. We continue to invest in our own maintenance network, and we stayed focused on safety and customer service. Additionally, the secondary market was very robust and demand for GATX leased assets was strong. We capitalized on that by optimizing our portfolio and generating substantial remarketing income. Within Rail International, coming into the year, we were hopeful that the economic environment would improve as the year progressed, but it did not. Despite these challenges, the team at GATX Rail Europe did an outstanding job by raising lease rates on many car types and holding utilization at solid levels. And on top of that, we closed a very large and important transaction, acquiring nearly 6,000 railcars from DD cargo. In India, the economic environment was very strong, and our results showed it as the GATX India team grew the portfolio to over 12,000 wagons. Demand for spare aircraft engines was very robust in 2025, and we grew our asset base on earnings at both the joint venture and wholly owned levels. In fact, the earnings growth within engine leasing was the strongest among the various GATX businesses in 2025. We saw solid lease rate increases and substantial engine sale opportunities. Overall, I was very pleased with the operating performance across our businesses last year. And we've set the stage for a very solid year in 2026, one that will have a number of new and unique elements as we integrate the Wells Fargo rail portfolio and management activities into our daily operations. So let's talk about 2026, and I'll start right there with the acquisition. There are 3 elements of the transaction that I'd like to recap. And for some, this will be a repeat but I think it's important because it helps set the stage for additional discussion. First, GATX and Brookfield formed a new joint venture that acquired 101,000 railcars from Wells Fargo Rail constituting all of their railcar operating leased assets. GATX owns 30% of the JV, Brookfield owns 70%, and we have the option to buy down Brookfield's interest over time. Second, Brookfield acquired approximately 22,000 railcars directly from Wells Fargo, those being under finance leases. And third, GATX will manage all the railcars involved in both transactions. So I'll walk through each segment and our outlook for 2026, starting with Rail North America and some housekeeping matters to keep in mind. As we've previously discussed, GATX will consolidate 100% of the newly formed JV into our financial statements and show Rail North America as a single segment with consolidated operating metrics. U.S. GAAP requires consolidated financial reporting because we're the controlling partner from day 1. Among other things, that means that each line item of the income statement and balance sheet will include 100% of the combined balance of the legacy GATX business and the JV with any intercompany activity eliminated. Brookfield's share of the JV earnings will be recognized in a single line item on the income statement, net income attributable to noncontrolling interest. That will be deducted from net income to arrive at the net income attributable to GATX. Now I know that's a mouthful and probably a little difficult to follow, but it will be much easier in Q1 and beyond when we have actual results to go along with the nomenclature. Reporting requirements aside, we have an obligation to our partner to treat all of the JV railcars exactly as we treat our legacy portfolio. In other words, we cannot and will not discriminate in any way. The GATX portfolio of 107,000 railcars and the acquired portfolio of 101,000 is now one fleet, 208,000 railcars fully under the control of GATX. And that's how we're going to manage the business. For example, if a customer has 500 cars renewing, some are with GATX, legacy fleet and some at the JV, honestly, they're indifferent as to who the owner is. All they want is 1 point of commercial contact, 1 renewal discussion, 1 maintenance plan, 1 fleet plan, et cetera, and that's what we're going to deliver. On a macro level, we expect a similar operating environment in North America as we experienced in 2025. Looking at a few of the key commercial metrics for our consolidated Rail North American fleet, this is the full 208,000 cars. For the LPI, we expect to be in the high teens to low 20% positive following the 21.9% posted in Q4. This reflects the continuation of a very solid existing car market. The Wells Fargo fleet was running at approximately 97% utilization at closing. And factoring that starting point in, we expect utilization for the consolidated fleet to be 98% to 99% by year-end. And we expect our renewal success rate to be in the high 70s to low 80% range. Again, a really, really strong outcome. With those metrics in mind, I'll walk through our expectations for some key line items at Rail North America and noting that the vast majority of the variances versus '25 for those revenue and expense items that I'm going to talk about are due to the addition of the Wells Fargo rail fleet. Looking first at revenue. In 2026, we expect Rail North America lease revenue to be in the range of $1.6 billion or approximately $550 million over 2025. As indicated by the LPI, we continue to benefit from opportunities to reprice leases into a strong existing car market. We also have other revenue, which is largely related to repair revenue. We expect that to be in the range of $160 million, up $25 million versus last year. As for asset sales and scrapping, which drive our net gain on asset dispositions, a very robust secondary market we experienced in 2025 shows all signs of continuing. In fact, given our increased scale, we're having a number of positive conversations with a range of secondary market participants about what GATX will put into the marketplace in the year ahead. So in 2026, we expect approximately $200 million of net gains on asset dispositions versus $130 million last year. That's a material increase. But keep in mind that we now have a pool of cars to select from in terms of sale candidates, that's twice the size of our historical fleet. And we're going to continue utilizing the strong demand to optimize and rebalance the entire portfolio. Of course, along with all the benefits of an increased fleet size, we have ownership costs and maintenance costs associated with the new additions. Interest expense is expected to be in the range of $440 million in 2026, that's a $180 million increase over '25. Depreciation should be in the range of $520 million, a $230 million increase. And regarding maintenance expense, we expect to be in the range of $500 million in 2026, a $150 million increase over '25. And all of those increases are largely driven by the new fleet. The last item to note is other operating expense, the bulk of which relates to items like car taxes, mileage charges, freight charges, et cetera, as we move cars around North America. And thankfully, we have a lot more cars to move around today. So we expect these expenses to be in the range of $85 million in the year ahead, about $25 million over last year. Bringing all this together, we expect segment profit at North America rail to be in the range of $415 million in 2026, that's a $55 million to $65 million increase over last year. At Rail International, in Europe, the economic environment, we expect will remain challenging. However, the GATX Rail Europe team has done an excellent job investing in building the business, and we're going to see profit growth there. The same in India, although there we have the benefit of a very strong economic tailwind. Taken together, we expect Rail International segment profit to increase by $5 million to $10 million in 2026. At GATX engine leasing, the market environment remains quite favorable. Not only is global air travel strong, but the long-term trends in this market are positive. In addition to base demand for new engines, you have the fact that the lead time to acquire a newly built engine or complete repairs on existing engines is extended. That's a continuation of a global supply chain constraints, but also a reflection of the fact that there's limited capacity to build or repair these very complex assets. That means the installed base of these assets is more valuable. We see that same trait in rail. In 2025, our RRPF 50% owned joint venture, invested over $1.4 billion, bringing its total asset base to over $5.7 billion. GATX has grown its directly owned engine portfolio to over $1 billion. Given our outlook for the engine investments, we expect Engine Leasing segment profit to increase by $15 million to $20 million in 2026 and this is after increasing almost $50 million between '24 and '25. On SG&A, we continue to work hard to hold the line on costs. And for 2026, we came in at '24 -- for 2025, we came in at $246 million. We expect this to be in the range of $275 million in 2026. The majority of the increase is related to staff we've added for the acquisition. To put this in perspective and to highlight the scalability of our business, we added over 100,000 owned railcars and 22,000 managed railcars to our franchise, more than doubling the size of our owned and managed fleet while seeing an increase in SG&A of just over 10%. And that includes the standard cost and wage inflation we'd see in a normal year. Putting all these factors together, we expect EPS to be in the range of $9.50 to $10.10 per diluted share in 2026, which would mark another year of record EPS. Importantly, this is roughly a 10% increase in EPS in a year in which we'll complete and integrate the largest acquisition in our history. For those who enjoy the vagaries of lease accounting, you know that acquiring one railcar is often dilutive in the early years of ownership from a GAAP income standpoint. Adding over 100,000 cars is 100,000x more challenging on that front. Yet, given the scalability of our platform, the management services we're providing and the fact that we acquired the assets at an attractive valuation, we still expect to generate strong EPS growth in the year ahead. So I'd like to provide a quick update on the acquisition integration process because we're getting -- we have received a number of very good investor questions on this point. I'm pleased to report that the closing and the integration to date are progressing very well. As noted, we closed on January 1. And on that day, we did an IT cutover that entailed hundreds of thousands of data points, car files, contract records, mechanical records, customer data and myriad other supporting documents. The cutover went very well and I'd like to take a second just to thank the Wells Fargo Rail team for all of their work in assisting with that effort. From a commercial perspective, our sales team hit the ground running. While we added some new customers through the acquisition, by and large, the biggest accounts are existing customers of GATX that we know very well. So all the customer interaction right now is under one umbrella. And with an expanded fleet, we will have more customer interaction than we've ever had before, and we believe we can bring additional value to our customers. On maintenance, historical maintenance spend on the acquired fleet was in the range of $135 million annually. As a bank, Wells Fargo was not allowed to own its own shops, and therefore, it utilized third-party shops for 100% of this spend. As we've indicated before, given that the GATX shops are currently at full capacity, we'll continue to utilize those third-party shops for maintenance of the acquired fleet. Over time, based on investments we're making in our shops and efficiency improvements, we will have an opportunity to move some of this work in-house. That does not mean that we can't add value immediately in the maintenance process. For example, previously, there were close to 80 shops providing service on the Wells Fargo fleet. In just 7 weeks of ownership, we've already paired this down materially and we'll keep doing so as we transfer work to our preferred third-party providers. In the process, we will find cost efficiencies. Just one example of how our team is integrating the fleet, applying their experience and expertise and bringing additional value for our customers and our shareholders. So I'll close with comments on the dividend and the share repurchase, authorization that was announced today. Our Board has approved an increase in the quarterly dividend of 8.2%, and this follows several years of increases in the 5% range. The stepped-up percentage increase versus prior years reflects the Board's confidence and the strength and quality of our cash flow, the increased scale and strength of our global businesses and the positive outlook for GATX. So I appreciate the Board's confidence. And as always, we appreciate the support of our shareholders who have been with us for years and in several cases decades. The Board also approved a new $300 million share repurchase authorization as we exhausted the prior one, which was granted in 2019 in the fourth quarter. We view stock repurchase as a tool to use periodically to return capital to shareholders. Our capital allocation has been consistent and clear. We believe our first mission is to acquire hard assets at attractive valuations to grow our business. Second, we'll do that while always managing our balance sheet and leverage prudently. And third, we'll return excess capital to shareholders, either through the dividend or share repurchase. Again, I want to thank the Board for their support in providing the authorization. So thank you for your patience. This was a much longer preamble than normal, but I hope you found it helpful as we are trying to provide some background and foundation as we look at the year ahead. This is a very exciting time at GATX. A year of transition as we fully integrate the acquired fleet and bring all the assets fully under our commercial and operational control. And we have the foundation in place to execute on this while also pursuing and maximizing growth and return opportunities in all of our global businesses. With that, let's go to Q&A. Operator: [Operator Instructions] Your first question comes from Andrzej Tomczyk from Goldman Sachs. Andrzej Tomczyk: Wanted to start off on the guidance for EPS. First, are you just able to frame up the magnitude of gains on sales factored into the low versus the high end? And then maybe just a question on if supply-demand tightens further for railcars through 2026, given below replacement delivery. Is that a scenario where you could see upside to your gains target through the year? Thomas Ellman: Yes. So maybe I'll start on the first part and then let Paul chime in on the second. So as Bob stated, we're targeting something in the range of $200 million for gains on sales. As you know, those tend to be pretty lumpy quarter-to-quarter. But if you look over the past few years on how the year has actually played out compared to what our original expectations were, that gives you a pretty good guidance to what magnitude the range might be. So something on the order of $10 million, $15 million either way is something that we've seen historically. But that's no guarantee for the future. It's really hard to say exactly how that will play out. Paul Titterton: And then I'll just add to that. This is Paul speaking. We've talked about some of the benefits of the fact that new car production is down to levels that we have not seen in quite some time. And what I'll say is there remains a tremendous amount of capital that would like to be deployed in the railcar market, and we believe that capital and we're seeing evidence that, that capital is going to flow into the secondary market as it looks for investments. So if you're in a situation like we are where you're the largest owner of railcars in North America, that should be a very supportive environment to generate the secondary market gains. Andrzej Tomczyk: Understood. And maybe just one follow-up there. Apart from the gains, what areas of the business could you see sort of more variability around the results in 2026 relative to the guidance you laid out between North America, international and engine leasing and then just maybe what's driving the variability across those segments? Thomas Ellman: Yes, Andrzej. So you definitely pointed out the biggest one in the way you teed up the original question, purely in terms of financial results, variance and projected remarketing gains, both at Rail North America and in our engine leasing business are the biggest source of upside or downside. And as I noted, that's particularly true because it can be difficult to precisely predict the timing of these asset sales. But our guidance also assumes that we're able to manage the Rail North America maintenance spend, whether owned or third-party shops very tightly. As Bob mentioned in his opening comments, gross maintenance spend is projected to be approximately $500 million. So even a small percentage change in this line item could be impactful. We also assume no material disruption in the global economy in general or to the global aviation market in particular. Again, we highlighted the strength that we've seen in engine leasing, but it is a market that is subject to periodic disruption. Andrzej Tomczyk: Makes sense. And just maybe following on the synergies from earlier. I was curious if you could give some more detail on synergies in total and maybe how we think about capturing the synergies through year 1. And then when you said previously year 2 would be more than modestly accretive. Are you able to put a frame around that if it's mid-single or high single-digit type accretion or even double digits depending on sort of what avenues you take with the business. Any framing there would be helpful. Appreciate it. Robert Lyons: Yes, Andrzej, it's Bob. I'll start out, and Tom may jump in, but we gave the guidance in the press release of the $0.20 to $0.30 from the impact of the transactions that's early-stage synergies and benefits. It also is reflective of the fact that, as I mentioned in my opening comments, operating lease accounting is not a new acquirers friend, whether it's 1 car or 100 cars or 100,000 cars operating lease accounting can be dilutive in the early days. So we're overcoming that through some of the synergies we're realizing through the management fees that we're receiving and through some of the other benefits of the transaction. Beyond 2026, I think I'd like to hold off on speculating what that may be. But as the year progresses, we'll be very clear with you as to how the integration and the benefits are coming along and what those will mean longer term. Thomas Ellman: So just putting a couple of numbers to some of the synergies and the discussion of SG&A that we talked about. So we earn 2 different types of management fees. As Bob noted, we're managing the long-term lease portfolio that Brookfield wholly owns, and for that, we expect management fees of approximately $11 million a year. We also manage the JV that we are a 30% owner of, and for that, we expect management fees on the order of $44 million per year. So combined, it's a little over $50 million. Now keep in mind, the JV portion of those is 30% owned by GATX. So you need to think of that as the 70% that we don't own. But if you compare that to the $30 million of incremental SG&A that Bob talked about, most but not all of which is related to the increased asset size, give you some idea. As far as long term, as Bob mentioned, we've historically always given 1 year of guidance. We're going to continue to adhere to that. Bob mentioned in his comments, a couple of different things related to maintenance that where we could see some things. The only other qualitative point I would make is as we introduced our cyclically-aware management philosophy to the Wells Fargo portfolio, you should continue -- you should see some benefits there as well. Robert Lyons: Yes. I'd just add to that, Andrzej. From the standpoint of the guidance we gave today, outside of the numbers Tom just hit on and the guidance we put in the press release. We're not factoring in any significant incremental synergies beyond that. Now we believe they're there long term, but we haven't really factored that into the 2026 guidance because it will take some time to realize those in 2027, we'll address that as we get into that year. Andrzej Tomczyk: Understood. Appreciate all the color there. Maybe just shifting gears a little bit to engine leasing. It sounds that's been a strong segment for you guys through the year. It sounds like Airbus just announced lower delivery expectations for the year with bottlenecks being seen around aircraft engine availability. So I was just wondering if you could talk to how this is playing out on your aircraft spare engine leasing business. And maybe if you could share sort of what you expect through 2026 from affiliates. Appreciate it. Thomas Ellman: Yes. So what I'll tell you is, in general, the global aviation market and aircraft engine leasing, in particular, remains very strong. Certainly contributing to that is the supply constraints, both on the engine production side and on the maintenance backlog. So all of that is quite helpful. As far as the total magnitude that we'll see in engine leasing, it's exactly what Bob hit in his opening comments in terms of the total dollar amount that we'll see. Robert Lyons: So total segment profit kind of forecast whether from JV or 100% owned assets is in the $180 million range, segment profit wise, up over $165 million or so in 2025. So a very significant meaningful contributor. And again, you hit on it. There is supply chain issues, whether it's on new engines or whether it's on engines that are in MRO facilities, waiting on repairs. These are complex assets, not everybody can do the work. Nobody -- you can't really scale up quickly to do that kind of work. So the lead times are long. That raises the value of the existing portfolio, and it gives you more lease rate leverage as well. Operator: Your next question comes from the line of Ben Mohr from Citi. Benjamin Mohr Mok: I wanted to start off by asking about whether you're seeing any potential railcar shortages in any particular car types, if you're seeing any of that in any places in interacting with investors, there's thought that it could be starting to happen here and there due to the scrapping and age of fleet would be curious to hear your thoughts on what you're seeing? Paul Titterton: Yes. Thanks, Ben. This is Paul. I'll take that. So we continue to stand by the thesis we've been advancing for a few years now, which is that we are in a market that is what we're calling supply led, which is to say that there are fewer new cars being produced, and thanks to supportive scrap rates, we are seeing cars leave the fleet. And as a result, we're seeing net fleet shrinkage in the North American fleet. And again, that's a positive when you're the largest owner of railcars in North America because those conditions should be supportive of stable utilization and stable pricing environment. So certainly, those are favorable dynamics for our business. In terms of outright shortages, I would say no, we're not seeing outright shortages, but we certainly continue to see a stable and supportive market in most of the car types in which we invest. Benjamin Mohr Mok: My next question then is on the sort of -- at least from what we view as greater than expected step down in your LPI to the 21.9%, that's kind of towards the lower end of the low to mid-20s expectation and a step down from your 3Q is 22.8%. I wanted to hear your thoughts. Could that be indicative of lower renewal rate gains catching up from the shell bus in COVID to be expected over the next 2 years? Or could it maybe just be a blip this quarter and step back up? And then kind of mudding that with your Brookfield JV would just love to hear kind of how you account for all of these. Robert Lyons: Yes, Ben, it's Bob. I'll start. Paul may jump in. But from an LPI standpoint, I would say actually in 2026, something in the high teens, 20% range is very positive, especially given kind of the renewal -- the trend in the number of cars renewed and the expiring rate over time. I would take 20% LPI every year to Infinity, if I could. That's a really, really positive outcome for us. And it is on the combined fleet, so that's a good thing and a good metric to provide. There are some economically sensitive car types, as we referenced in the press release, where we're seeing a little bit more challenge in terms of the lease rate environment. And I'll let Paul comment on that. Paul Titterton: Yes, sure. So as Bob said, there are certain segments of the fleet. Unfortunately, for us, these are the distinct minority of our overall fleet, but certain segments of the fleet box cars would be a great example where those are more sensitive to some of the macroeconomic uncertainty we're seeing. And so there, there is a little bit of downward pressure, and I think we're watching that in those and certain other car types. But having said that, the core franchise for GATX, which is what I call the heavy haul bulk franchise and specifically tank cars and specialty covered hoppers that we continue to see very supportive, stable pricing utilization. Those dynamics remain, I would say, favorable, and we expect them to continue to be favorable. Benjamin Mohr Mok: Great. And maybe kind of related to that, the step-up in your renewal success rate into the low 90s from the mid- to high 80s, that's been kind of for some time now, that seems to be of note. Could that help offset a gradual decline in LPI. And just wanted to get your thoughts on that. Robert Lyons: Yes. I would view the low 90s as a bit of an anomaly based on certain renewals that we concluded in the fourth quarter that's -- I can't recall being north of 90% on a quarterly basis before. So being anywhere in the high 70s, 80% range is commercially what we expect and consistent with history. I'd say the key on that renewal success rate number is, if you're in that high 70%, 80% range, et cetera, those are cars that are staying with existing customers, those are cars that are not then going to customer B and winning through the shop. So there is a benefit there in terms of us not having to handle those cars upon return. So anything up in that high 70s, 80% range is really good. Benjamin Mohr Mok: Great. And I know that you've been continuing to do your railcar qualification tests. And so we've been expecting maybe a higher maintenance expense. And it seems like it stepped down quite nicely this past quarter. Is this step down more temporary kind of a blip and we can see it step back up or how would you guide on kind of cadence that you did give kind of the full year, but the cadence throughout '26? Paul Titterton: From quarter-to-quarter, a lot of it is, frankly, noise. So I think you really -- when you think about the compliance calendar, it's really an annual calendar. 2026 will be another fairly busy compliance year for us, and we're anticipating though, after that, that our compliance calendar will moderate somewhat. Benjamin Mohr Mok: Great. And then maybe just if I can squeeze in one last one. Your due diligence on the Wells portfolio is that completely done? Or what actually not that you've already acquired it? That's a new point. So let me just scratch that. Robert Lyons: No, that's fine, Ben. And just to add on to that question, I would say that based on the amount of due diligence we were able to do pre-close, there were very few, if any, surprises at closing. By and large, the fleet we expected to acquire we acquired with the underlying car types, customer base, et cetera. So no issues there. Operator: Your next question comes from the line of Harrison Bauer from Susquehanna. Harrison Bauer: I wonder if just a quick follow-up on your $0.20 to $0.30 accretion from the Wells deal. Is the variability in that largely due to gains? Is there anything else that might take you from the low end to high end? Thomas Ellman: So I would say that -- I'll start and I'll let Bob add on. But Overall, what I would say is the same factors that drive the overall business is what drives the incremental piece from Wells Fargo. It's the same business, the same core business that we're in. So the #1 thing, of course, is variability around gains on asset sales. And then I would make the same comment I made about the magnitude of the maintenance spend and a small variability being potentially impactful. Robert Lyons: Yes, that's -- I have nothing to add on that, Harrison. Harrison Bauer: Okay. And then aside from maybe your games assumption within the Wells fleet this year, and you mentioned as well the some of the purchase accounting impacts. Can you give us a sense of any additional onetime cost or the purchase accounting that might roll off over time? Just so we can understand what the incremental earnings contribution might look like from that business as you scale your ownership over time? Robert Lyons: Yes. Well, there's no significant onetime costs in there. We had some of those in 2025, which we called out and normalized for in our EPS numbers. So there's no significant onetime items in there. And the way operating lease accounting works because you flat -- you straight-line depreciation, it's really the interest expense that burns down over time as cash flow continues to generate on the fleet. So that's really the biggest variable. And then what we're able to do from a commercial and maintenance perspective, adding our skill set expertise and knowledge of those assets, we feel we can get incremental benefit there as well. Harrison Bauer: Great. And along the lines of the capital that you're willing to deploy on that deal over time? You structured the Wells transaction to preserve some flexibility between new car investment and then the incremental equity over time. Given the muted new build environment and then your re-up share authorization, how are you thinking about your capital allocation priorities as you go through the integration of this fleet this year? Thomas Ellman: Yes. So the philosophy is unchanged from what Bob talked about. So first and foremost, we want to invest in economically accretive assets. We want to make sure that we're maintaining the proper balance sheet and doing things that preserve our cost of capital, and then we'll return excess capital to shareholders. As you noted, part of the reason for structuring the deal the way we are, the way we did is because we have really attractive investment opportunities throughout all of our businesses. So in 2025, we did $1.3 billion of investment, the 2 years prior to that, we did something on the order of $1.6 billion. So if you look at the investment level that we expect outside of the Wells Fargo Rail transaction in 2026, it'd be a little over $1 billion. Regarding the Wells Fargo Rail transaction, we recently made our initial equity investment of a little under $400 million to acquire the 30% ownership in the JV. Currently, we anticipate exercising our first option to acquire another 3.5% of the JV on June 30 for approximately $66 million. So if you add those numbers, the investment absent Wells Fargo, the initial equity investment and the anticipated option exercise you come to about $1.5 billion, so very much in line with what we've seen recently. Operator: And the next question comes from the line of Brendan McCarthy from Sidoti. Brendan Michael McCarthy: Just wanted to circle back to that CapEx question. Can you provide a further breakdown there as you look into 2026 just among railcar assets in the engine leasing business? Thomas Ellman: Yes. So thank you for that follow-up. So the $1 billion, I would say, about 3/4 of that is expected to be at Rail North America and about 1/4 of it expected to be in Rail International. But in addition to that, we anticipate doing significant investment via the JV. So GATX does not typically have to make nor do we anticipate making any capital contribution, but in 2025, the JV invested about $1.4 billion. So our percentage share of that investment would have been another $700 million. And in 2026, we anticipate the JV will do another $1 billion of investment or more. So that would translate our share to being another $500 million. But again, the engine leasing, the JV is self-funded, so GATX does not typically make a capital contribution. Brendan Michael McCarthy: Great. I appreciate that. That's helpful. And just on the engine leasing segment, just really strong results there in 2025. I have it driving pretty much all of the year-over-year gain in segment profit. Can you provide a breakdown there of that year-over-year gain between what you saw from remarketing income and then what you saw from operating income? Thomas Ellman: Yes. So again, as a reminder for that, the quarter-to-quarter variability can be pretty lumpy just because of the way the gains come in. But for the full year, about 2/3 of that was operating income and about 1/3 of it remarketing gains. Brendan Michael McCarthy: Got it. And as you look into 2026, I think you mentioned $15 million to $20 million uplift in segment profit for engine leasing should that break down maybe stay right around the same for 2026? Thomas Ellman: You answered your own question. That's a very good assumption to make going in. But again, with the caveat that there's a certain degree of lumpiness on the remarketing side. But assuming that it would be similar to this year is a reasonable assumption. Brendan Michael McCarthy: Got it. Got it. And last question for me, just on the outlook for $200 million in railcar remarketing income for 2026. How do you kind of expect the Wells Fargo fleet to play into that? Maybe you can talk about the average age of the Wells Fargo fleet. Any certain railcar types that you feel you're maybe oversupplied in at the moment? Do you think that the -- I guess, overall, do you think the quarterly cadence might be somewhat to the past? Or do you think there might be some front-end impact there just as you kind of gauge the Wells Fargo fleet? Robert Lyons: Yes. It will take a little bit of time to fully assess the Wells portfolio in terms of what we want to go to market with. But let's just start with the $200 million to begin with. The GATX legacy fleet 2025, we generated about $130 million. We would expect about the same roughly in 2026. So the incremental amount, that $70 million incremental amount is really from the Wells side of the ledger. But again, we're managing the whole portfolio as one from a standpoint of what we're going to be in the market with. The very good news is, as I mentioned in my opening comment, we have 2x the portfolio now to work with. And there is a lot of demand in the secondary market. So it's really going to be a decision we make from a fleet management perspective on whether it's credits or car types that we may want to sell into the secondary market, and I'll let Paul add some color on that. Paul Titterton: Yes. I'll just say one of the nice things about the Wells Fargo business, we said when we announced the deal that it's been a well-managed business. We're not buying a distressed problematic asset. We're buying an asset that actually has been a portfolio that has been managed effectively. And so what that means is there are actually quite a few quality saleable deals within that portfolio that we think the secondary markets will want. And so as Bob said, we're still determining what parts of that portfolio we want to dispose of. We think about things like concentrations in credit or commodity or car type or tenor of exposure. And we're really trying to do a portfolio balancing exercise as we sell down. But ultimately, the good news is really however we decide we want to rebalance the portfolio, there are quite a few saleable transactions in both the legacy GATX and the Wells Fargo portfolio. Robert Lyons: Yes. And I would just to add to that, that the most liquid car type in the secondary market is freight cars versus tank. Tank, it's not that you can't sell cars in the secondary market, but there's a limited buyer universe and it's a more specialized asset. So the most active market by far is for freight cars, and the Wells Fargo fleet was 95% freight cars. So we have a lot to work with. Brendan Michael McCarthy: That makes sense. And just as a follow-up, just curious as to the Wells Fargo fleet, doubled the fleet size and you just mentioned a much more higher proportion of freight cars. But then you kind of mentioned in 2026, the breakdown might be like $130 million in remarketing income from the GATX legacy fleet plus the $70 million from the Wells Fargo fleet. I guess why would the breakdown look like that, just considering the Wells Fargo fleet was a higher proportion of freight? Robert Lyons: Well, there's really no reason in particular, we continue to see very good demand on the legacy side of the business, while it's half of what we do on the legacy portfolio, freight cars, that's still over 50,000 cars you're talking about. So it is a very big universe of cars. And we'll continue to balance what makes sense to be in the market with, whether it's car type or credit. And again, we'll be working with our partner on what's the most logical thing to be putting in the marketplace from the JV side. We think that's a good mix going in. It could shift, could very well shift as the year progresses. But in total, that's a very reasonable number, that $200 million to work with. Paul Titterton: I'll just add too, over the last several years of supportive railcar markets, we have put on a lot of very good leasing business in the legacy fleet. So in terms of deals that we have on our balance sheet, legacy balance sheet that are attractive to sell. We've done a good job restocking the shelves there. Operator: Next question comes from the line of Justin Bergner from Gabelli Funds. Justin Bergner: Congratulations on closing the deal for Wells Fargo. First question would be any contours around the specifics of the repurchase? Or is it just pretty open-ended time-wise and pace-wise? Robert Lyons: It's very open ended. As I mentioned, the authorization that we just exhausted in the fourth quarter was granted in 2019. And so we look first, invest; second, manage the balance sheet; and third, as we said, kind of what is the increment or the extra left over for dividends and share repurchase. So we don't have a targeted amount in any given year. It's just what makes sense in the overall capital allocation framework. Justin Bergner: Okay. Did you actually repurchase a modest amount of shares in the fourth quarter, you said it was exhausted or just exhausted time-wise? Thomas Ellman: Yes. So again, as Bob mentioned, the initial authorization was in 2019. In the fourth quarter, we purchased approximately $46.5 million of stock at an average price of $160 a share. Justin Bergner: Okay. Any comments on sequential lease rates? It's usually asked earlier in the call, but since it hasn't come up figured out? Paul Titterton: Yes. Justin, this is Paul speaking. And broadly speaking, across most car types, we're seeing sequential lease rates roughly flattish. Bob mentioned a handful of what we call economically sensitive car types where there are a few headwinds. But across the broad bulk of the fleet flattish. Justin Bergner: Okay. I think when you spoke about the Wells Fargo transaction, you announced it and had the call, you spoke about modest accretion in '26. I forget, were you including gains from sale on the Wells Fargo side at that point in time? Or has the mix become a little bit more gains? Robert Lyons: No, that was all in, Justin. Justin Bergner: And then just lastly, the Wells Fargo fleet is going to continue to operate and run off mode, right? There's going to be minimal investments that $70 million in gains would just shrink it by however many cars are sold as part of that roughly $70 million of gains? Robert Lyons: Yes, the joint venture itself is structured to run down over time. It's not set up to reinvest. All of that activity will be taking place on the GATX side of the ledger. So to the extent there's replacement opportunities and reinvestment opportunities that come out of the fact that, that portfolio will burn down over time, they'll be on GATX's side. But again, we're looking at a few thousand -- 3,000 or 4,000 car sale package roughly spread out over 2026 to generate those gains. So you would have a very long tail of selling cars at that rate before you put serious reduction into that portfolio. Justin Bergner: Got it. That's helpful. So 3,000 or 4,000 cars sold that would be the Wells Fargo side of the ledger? Robert Lyons: Yes, we'll be in that ballpark, yes. Operator: Final question comes from the line of Ben Mohr from Citi. Benjamin Mohr Mok: Just one clarification question on your very strong guide of the $200 million in remarketing for 2026. If we take your midpoint of your EPS guide range and we left out that $200 million and try to compare apples-to-apples versus 2025, it looks like the net income less the remarketing appears to be kind of down 20% or so for 2026 year-over-year. Are we missing anything? Is that because you only have a 30% impact of that? Or how should we think about the net income less remarketing for 2026? Thomas Ellman: Yes, Ben, I think you found your way to it near the end of that question. It's all tied up in the fact that the asset sales that we do from the JV are subject to the NCI, the noncontrolling interest piece of it. So GATX will economically enjoy 30% of those gains as opposed to the wholly owned portfolio. Operator: There are no further questions. I would now like to turn the call back over to the CEO of GATX for closing remarks. Robert Lyons: I don't have any closing remarks, but Shari probably does. Shari Hellerman: Well, I'd like to thank everyone for their participation on the call this morning. Please contact me with any follow-up questions. Have a great day. Thank you. Operator: That concludes today's meeting. 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: Ladies and gentlemen, thank you for standing by. I am Gailey, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the fourth quarter and full year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed. Christine Disch: Thank you. Good day, everyone, and welcome to our 2025 full year and fourth quarter results conference call. My name is Christine Disch, and I'm the Investor Relations Director at Arcadis. With me on this call are Alan Brookes, our CEO; Simon Crowe, CFO; and our CEO nominee, Heather Polinsky. As usual, we will start with the presentation followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements, which were made in the press release. Please note the risks related to these statements are more fully described on the company's website. Now please, over to you, Alan. Alan Brookes: Thank you, Christine. Good morning and good afternoon, everyone, and welcome to our full year and fourth quarter results call. As Christine said, I'm joined by our CFO, Simon Crowe, who will outline the steps taken to address Arcadis' performance; and by Heather Polinsky, our CEO nominee, who will talk about her priorities for the future. Heather, who has been with Arcadis for 26 years and most recently run Resilience, the most profitable part of the business, assumes the role on March 1. Heather is an exceptional leader, and I am confident she will position Arcadis for success. Our end of year results are mixed and disappointing, reflecting what has been a challenging year. In light of those challenges, we have taken rightsizing and cost reduction actions to improve performance. We will continue these actions in 2026 with Simon -- sorry, with Simon commenting further shortly. Our net revenues totaled EUR 3.8 billion, supported by a strong resilience portfolio and pockets of success in mobility, offset by weaker places performance. In turn, we delivered record cash performance, generating EUR 288 million for the year, predominantly supported by a series of measures introduced in the fourth quarter to strengthen billing and collection discipline. The backlog was up 3% to EUR 3.6 billion, driven by Resilience and Places. When taking a closer look at our 2025 revenue performance, you can see that our total revenue declined by 0.5 percentage point, reflecting growth in Resilience and Mobility offset by weak Places performance. We will lay out the actions we have taken this year to address the underperformers and for the high-growth areas, the investments we have made to leverage our leading positions. Starting with the underperforming areas. First, environmental restoration, which makes up 13% of our total net revenues and is part of Resilience. This declined by 5% over the year. Excluding environmental restoration, our Resilience business grew 7%, and there are a few drivers for this underperformance. First, as a result of client restructuring impacting a substantial project, plus the successful completion of a large incident response project in North America, we saw revenues come down. In addition, shifts in the U.S. federal government policies, changing funding priorities and the longest government shutdown in history in Q4 caused delays to a portion of our pipeline for clients such as the Department of Defense. To address the underperformance, we have made senior management changes and replaced 25% of our account leads. We reduced headcount with 150 people leaving the business, while maintaining our margin performance levels year-on-year. Moreover, we are repositioning towards growth markets, including energy clients asset retirement obligations and critical minerals. Next, Property and Investment. This accounts for 8% of our total net revenues and is part of Places. Here, organic net revenue growth was down 17%. Our P&I solutions are mostly offered in Canada, China and the U.K. And in these areas, the residential real estate sector has been under considerable cyclical market pressure. During the fourth quarter, we did an extensive P&I portfolio review in Canada, which resulted in changes to revenue assumptions taken earlier in the year. Simon will provide you with the details in his section shortly. As a response to this, we have significantly rightsized the business with 400 people leaving corresponding to 4% of the places headcount, while we made leadership changes in places. We are taking further steps in the first quarter of 2026 with an additional reduction of 150 people. While we are moving away from residential real estate and increasingly now focusing on rental, student and senior housing markets where we see opportunities. The third underperforming area was mobility in the U.K. and Australia. This reflects 11% of total net revenues and declined 8% over the year. In the U.K. and Australia, the winding down of large projects such as HS2, Melbourne Metro and West Gate Tunnel, combined with large project award delays resulted in revenue pressure. To address this, we have rightsized our mobility workforce with a reduction of 350 people, corresponding to 5% of the mobility headcount. We have redeployed our excess U.K. resources to take advantage of emerging opportunities in other countries. And we have seen our order intake increase in the second half of the year, driving backlog growth as projects were awarded following the U.K. spending review last June. In Australia, with the market still constrained and lower infrastructure momentum, we are focused on pivoting towards new markets, particularly to energy and environment. Turning now to the high-growth areas. Starting with the solutions within our Resilience business, water optimization, energy transition and climate adaptation, which are part of Resilience and together delivered 12% organic net revenue growth. The performance of water optimization was driven by the strong U.S. market. Germany has seen successes in energy transition with the award of large multiyear contracts for grid expansion and maintenance. Central to this is the continued work for Amprion, performing route planning for a 500-kilometer long transmission line. Our growing project portfolio in power was underpinned by nuclear wins in the U.K. and the Netherlands. Our second growth area is technology, which accounted for 6% of net revenues and is part of Places. Our acquisition last year of KUA Group in Germany has expanded our capabilities in this area. Our data center performance was strong, whilst our semiconductor business faced pressure from the wind down of one large contract. Overall, the resulting technology growth was 3%. Arcadis reported over EUR 150 million of revenues in 2025 for its data center services, with an operating EBITDA margin of almost 20%. And we currently are involved in 280 data center projects. Finally, the third high-performing area is in mobility, specifically in North America, the Netherlands and Germany, which taken together delivered organic net revenue growth of 16%. Major awards in 2025 have underpinned that high performance. In British Columbia, our work on the design of the Fraser River Tunnel project has ramped up in 2025. Other large projects that supported our results were ProRail in the Netherlands and Deutsche Bahn in Germany, where we have further strengthened our position through the WSP Rail acquisition. We continue to see a strong pipeline of large multiyear project opportunities in North America. To summarize, we acknowledge our challenges and are actively addressing our underperforming areas through restructuring and cost measures. We are also focusing on those areas where we see opportunities to accelerate our growth. Heather will provide further details on this approach, looking ahead for this year and beyond. But first, I will now hand over to Simon, who will take you through our results and the steps taken to address performance. Simon Crowe: Thank you, Alan, and good day to you all. Let me start with our full year performance. As Alan outlined, Arcadis delivered mixed results, ending the year with EUR 3.8 billion of revenue. Excluding our Property and Investment performance, we delivered 1.3% organic growth. I'll provide more details around our P&I performance and actions taken shortly. Our operating margin was 11.1% with a significant negative impact from places, largely driven by P&I. This was offset by good margin expansion in both resilient and mobility. Excluding P&I, the margin would have been 11.6% for the year. Overall, we've taken significant rightsizing actions, which were accelerated towards the end of the year. We reduced our headcount by 1,100 people, which equates to roughly 3% of our total workforce, driving most of the EUR 77 million of nonoperating costs. Furthermore, we continue to invest in our strategic initiatives. Turning now to our fourth quarter results. These showed an organic net revenue decline, which was driven by Property and Investment. The operating margin was 13.5%, excluding P&I. Resilience performed well as we focused on high-margin areas such as our energy transition and mobility -- and mobility also performed well as we optimized our global workforce allocation, including increased utilization of the GECs. We recorded record free cash flow in the fourth quarter, and I'll come back to this later. Turning now to P&I. Part of our Places business, a number of issues went against us during last year. First, we experienced a weak market, particularly in Canadian residential real estate market with significant project delays, and we were unable to adjust quickly enough. In addition to that, the Oracle ERP system implementation in Canada caused some operational distraction. As a result, we took -- we undertook a comprehensive analysis of our project revenue positions in the fourth quarter for our P&I portfolio in Canada, which resulted in changes to revenue assumptions taken earlier in the year. This analysis resulted in a total revenue reduction of EUR 22 million taken in the fourth quarter, and that also impacted EBITDA by EUR 22 million. As well as working on the usual year-end audit with KPMG, we also conducted an independent review with another big 4 accounting firm. This portfolio assessment is now behind us. We rightsized the business in 2025 with a reduction of 400 people and have made changes to the senior management team. We're continuing to rightsize in Canada with an additional 150 people reduction in Q1 2026. We are rebalancing away from the depressed residential real estate market and focusing on the rental, student and senior housing markets as well as the hospitality and transit markets where we see faster growth. Let me spend a minute on the strategic progress we've made in the last quarter. Firstly, we stepped up our focus and discipline on cash and implemented various working capital measures, which resulted in a record cash in of EUR 344 million for the quarter. We've also reinvigorated our sales force, hiring new people to upgrade our teams, while we've introduced sales and performance-driven incentives, which are now being rolled out. We will continue to prioritize investment in our sales teams. And as part of our go-to-market strategy, we are reviewing our value-based pricing approach. We continue to invest in automation and AI for our core processes, particularly to strengthen the effectiveness of our pursuits, our workforce planning and our forecasting process. We aim to increase our win rates and free up billable time as well as foster a performance culture and more accountability within Arcadis. Finally, we continue to take rightsizing and cost reduction actions to strengthen performance, including a workforce reduction program addressing more than 600 people in the fourth quarter. Turning now to our rightsizing measures. In 2025, we acted to take cost out of the business, and this resulted in total nonoperating costs of EUR 77 million, including EUR 39 million in Q4. Total people-related costs represented EUR 53 million for over 1,100 people, comprising operating personnel of around 1,000 people and corporate overhead reduction of around 100 people with an expected 30 basis point impact on the 2026 margin from savings. Other nonoperating costs included integration and M&A costs as well as minor goodwill write-offs. For 2026, we will continue to rightsize the business and overhead staff. This will be in line with measures taken in 2025. So we could expect a similar number of people to leave the business in 2026. We are simplifying how we work and are refocusing on clients. Our cost reduction plan continues to focus on automation and removing unnecessary expenditures. Turning now to backlog performance. Good order intake in the fourth quarter ensured that we closed the year with organic backlog growth of 2.7% for the year. Throughout the year, we saw strong data center order intake. Our fourth quarter order intake was particularly strong for environmental restoration and pharmaceutical clients in the U.S. These multiyear large contract wins will be supportive to our revenue generation in the second half of 2026 as they take time to ramp up. This was offset by a weaker mobility market in the U.K. and Australia and challenges in our semiconductor business. Turning now to the GBAs and resilience. This delivered 3% organic growth following strong performance in the U.S., Germany and the Netherlands, driven by strong demand for our water, energy grid and climate solutions. Revenues were impacted by slower progression of secured AMP8 projects with start dates being pushed out. Margin was strong as we focused on our high-growth, high-value propositions, fully in line with our strategy of project selectivity. And order intake in the quarter was also strong, resulting in an 8% organic backlog growth, driven by U.S. water and environmental restoration in Brazil. Turning now to Places. Places is a tough market now, as we've outlined, including property and investment in particular, seeing low demand, which has been -- had a big impact on margin. Excluding this impact, organic growth was 1.3% for the year. As I mentioned, in response to this softness, we're continuing to reduce headcount in P&I and actively focusing on higher-growth markets, which drove strong order intake this quarter. This order intake included data centers as well as pharma in the U.S. and we're confident about our pharma awards, but it will take time before this converts into revenue. Looking now at Mobility. We continue to see stable results where strength in North America, the Netherlands and Germany are fully offsetting weaknesses in the U.K. and Australia. We showed solid margin progression driven by optimization of global workforce allocation, including the use of GECs, ultimately driving improved billability. The softer order intake in the second half was partly a result of changing dynamics in the U.S. industry, where we experienced slower procurement processes and regulatory reviews on the back of policy uncertainty. These effects resulted in project award delays and some challenge for near-term revenue delivery. Finally, Intelligence. This delivered strong growth in Q4 and despite a slower start to the year, achieved 6% organic growth overall. The business is increasingly supporting our largest projects across other global business areas, reinforcing its strategic value. As a result, we have decided to formally integrate Intelligence mostly into mobility, and it will no longer be reported as a separate segment going forward. Turning to cash. As I mentioned earlier, cash flow is at record levels. We have driven cash collection through relentless management focus, putting in place clear systems and personal billability dashboards, and this has paid off with net working capital at 8% this year. We expect to maintain healthy levels of net working capital in 2026, and we are likely to see net working capital close to 11% as a sustainable percentage over time. Growth and free cash flow remain key priorities for us going forward. Finally, turning to our balanced capital allocation framework. Last year, we continued to invest in the business and returned significant capital to shareholders. In September, we launched a EUR 175 million share buyback program with EUR 136 million spent through to the end of December, and we concluded the program in January. We returned EUR 89 million through our dividend, returning a total of around EUR 225 million to shareholders. Furthermore, we made 2 acquisitions in Germany, namely KUA and WSP Infrastructure Engineering, and we will continue to look at M&A opportunities where they make sense and fit into our strategic goals. For 2025, we're proposing a dividend of EUR 1.05 per share to our shareholders, an increase of 5% year-on-year and well within our 30% to 40% payout ratio range. Going forward, we will continue to evaluate strategic investment opportunities to grow the business and return capital to shareholders. In summary, 2025 was a tough year, and we expect the first half of this year to be challenging, especially in places. We are rightsizing the business, focusing on top line growth, especially in pharma, tech, energy, water and major infrastructure projects. We have the people, the knowledge, the drive, the determination and the client demand to make this business much more successful. I will now hand over to Heather to provide her thoughts for the future. Heather Polinsky: Thank you, Simon. Good afternoon and good morning to those joining from around the world. Before I share my perspective, I want to thank Alan for his leadership. He has guided Arcadis through both the good and challenging times with integrity and clarity, and we are grateful for his dedication to our people, our clients and the company. As Alan and Simon have said, 2025 has been a challenging year for Arcadis. We are under no illusion about the amount of work ahead of us. But as you have heard, we are taking action to return to growth. Having spent more than 26 years at Arcadis, I personally know the strength of this business, defined by deep expertise, global reach, local delivery and trusted client relationships. What gives me confidence is the platform we are building from and the scale of the opportunity ahead. Across Arcadis, we hold leadership positions in markets that matter from firsthand experience in leading both our resilience and mobility GBAs. These are sectors shaped by demand, long-term investment and increasing complexity for clients. These are not future bets. They are markets where we already lead, and we'll extend that leadership through disciplined execution. Let me spend a few minutes on some key areas. In Water, as a top 4 designer delivering double-digit organic growth and over a century of experience in water services, we lead in engineering, coastal resilience and emerging contaminants such as PFAS with flagship programs, including Sao Paulo's largest wastewater treatment plant and the $1.7 billion Lower Manhattan Coastal Resiliency program. In Energy & Resources, the U.S. requires up to $1.4 trillion in power investment by 2030, while Europe is accelerating its energy sovereignty and critical minerals development. Our strong market positions, #3 in transmission and distribution and a leading position in mining is reflected in recent wins, including 2 new nuclear plants in the Netherlands and Australia's first renewable energy zone. In Technology and Life Sciences, nearly 100 gigawatts of new data center capacity will be added by 2030, alongside major semiconductor and advanced manufacturing investment. Arcadis as #1 in life sciences and semiconductors and top 3 in data centers, we are well positioned to capitalize on these trends and grow our business in these areas. On major infrastructure projects, our clients increasingly demand certainty on cost, schedule and outcomes. Through integrity and integrated delivery, intelligent infrastructure and asset advisory, Arcadis is the partner that clients rely on. This is reflected in projects such as the redevelopment of Amsterdam's Central Station. Taken together, these positions give me real confidence. We are aligned to powerful market tailwinds. We are focused on where we have a clear right to win to drive growth. Looking ahead, leadership today is not just about where you compete. It's about how. We build on our market positions by partnering with clients and embedding human expertise with AI and digital solutions to help our clients plan smarter, move faster and deliver with confidence. Across water, energy, data centers and rail, we combine engineering with advanced analytics to optimize performance and drive faster evidence-based decisions for our clients. Our partnership with VODA.ai is supporting water clients to predict lead service lines before they become a problem, so they can prioritize capital expenditures and accelerate compliance. Climate Risk Nexus takes predictive climate analytics and combines them with asset-level insight guiding resilience planning. In just 1 year, it's grown from 2 pilots to 20 projects, including a statewide assessment across 64 campuses of SUNY, the State University of New York. In technology, our NVIDIA Omniverse partnership lets clients model and optimize data center assets before construction even begins, cutting risk, cost and delivery time. And in rail, our integrated EAM solution brings digital products, analytics and advisory together into one seamless offering, earning recognition from Verdantix as best-in-class. These digital capabilities aren't just tools, they're central to our strategy. They create higher value outcomes for our clients, strengthen our market leadership and define exactly how we compete in a changing world. The priority now is clear, converting these strengths into consistent, profitable growth. My focus is anchored in 3 priorities. First, refocus the business on high-growth markets. We are directing capital and talent to sectors where we have the right to win, water, energy and power, technology and large infrastructure projects where demand provides long-term visibility. One of our greatest growth engines sits within our existing client base. In recent months, our executive leadership team has met more than 50 key clients and the message was consistent. They value and want to do more with Arcadis. Deepening these relationships and expanding our wallet share provides a clear path to stronger organic growth. Second, simplify to accelerate performance. We are removing complexity, reducing layers in the business and enabling faster decisions closer to our clients. Alongside this, we are advancing automation and taking disciplined cost action to improve our competitiveness. The outcomes are straightforward: higher productivity, stronger margins and better backlog conversion. Third, we need to drive cultural change through a truly client-led model. We are sharpening sector focus, aligning ownership with accountability and ensuring incentives, reward, personal and team performance. We are expanding client coverage, including over 60 new account leaders appointed this week, and the scaling of GECs will enhance delivery while maintaining cost discipline. Execution is underway, but let me be candid. As you have heard, there is a lot more work to unlock the full potential of Arcadis. Turning to our outlook. We expect net revenue organic growth to be flat with a weak start to the year. This reflects the reality of repositioning the business for stronger performance. As I said, demand in water, climate and energy is robust. Environmental restoration is also showing recovery for us in the U.S. Key geographies continue to perform well, and our pipeline is healthy. However, uncertainty in places and the timing variability in large mobility programs means that demand will not fully translate into near-term revenue in these areas. We will also be very focused on the areas where we have control, namely productivity, efficiency, cost control, GEC contribution and disciplined project selection. As a result, we expect our operating EBITDA margin to reach 11.7% to 12%. Arcadis is stronger than our current trajectory suggests, but strength alone does not create value. Consistent delivery does. Let me close with this. We are resetting the foundations of our next phase of profitable growth. And we have already begun. We have reinstated cash discipline, strengthened our sales force in markets that matter most, aligned incentivization with performance and accelerated restructuring where change was required. Now in 2026, it is about execution. It is about performance and growth, a simpler and more agile business and greater accountability. We are sharpening client centricity and aligning rewards with outcomes. We will continue rightsizing underperforming areas, and we are simplifying how we will operate and deliver so we move faster, make better decisions and compete more effectively. There is work to do, and I want to be explicit about that. But the priorities are clear, the actions are defined and execution is underway. You should hold me and Simon accountable for delivering this change. That accountability is understood, and it is embraced. I am confident in the steps we are taking, confident in the markets we serve and fully committed to restoring Arcadis to sustainable and profitable growth. Looking ahead, we will host a Capital Markets Day in November 2026. There, we will set out our next 3-year strategy, including our strategic ambitions, go-to-market model, portfolio optimization, human and digital ambitions and strategy and medium-term financial and nonfinancial targets. 2026 is a reset year, but it is also a launch pad for us. We are strengthening the core, embedding agility in how we operate, raising expectations across the entire business and positioning Arcadis to deliver stronger and more profitable growth. With that, I'll hand over to the operator for the Q&A session. Operator: [Operator Instructions] The first question is from the line of David Kerstens with Jefferies. David Kerstens: I've got 2 questions, please. First of all, you talked about the underperformance and the high-growth areas in the business. I think combined around 2/3 of the total. Can you also explain what happened in the remaining 34% of the business, which I think saw an organic decline of around 5% to get to the organic revenue decline for the group of 0.5%? Then the second question -- can you explain the cut to your full year '26 guidance compared to what you indicated on October 30? I think you said then that you expected organic net revenues to gradually build up towards 5% in 2026. Now you're guiding for flat revenues. Does that also mean you expect it to build up gradually towards flat for the year? And also, I think last quarter, you still indicated you were on track to reach the 12.5% EBITDA margin target as your strategic objective. What drives that reduction to 11.7% to 12% now despite all the measures you have taken in terms of rightsizing, adding 30 basis points to margins and all the earlier investments in productivity and standardization improvements? Simon Crowe: Yes. David, it's Simon here. I'll take the first question, and then we'll take the other questions after that. So the other part of the business that we didn't talk about, I think has declined about 1.6% based on our internal calculations. And obviously, there's a mix of things going on there. So we've had some strength and some weakness. So I think it's -- we could dive into each of the pieces, but it's just part of the business that we didn't highlight in this conference call. So we've had some government clients in there, which have been affected by the U.S. slowdown. Obviously, the policies that flip flop with Trump. So we just haven't got the momentum in that part of the business that we'd like. Dave, do you want to talk about your -- the growth for 2026? Obviously, Heather and I have had a really good chance to do a lot of reviews and a lot of dives into where we are. And we feel that 2026 is a reset year. We think the first half based on some of the things we're seeing in mobility based on places will be slower than we expected, and we expect that to hopefully increase in the latter half of the year. So we're looking forward to a slow ramp-up during the year, but Heather and I felt it was right to take a really good look and reset expectations. And I hope we've been really clear with you. We've been really clear with what we're expecting for the year. We're expecting flat. That's our judgment at the moment. And we're expecting that margin at 11.7% to 12%. Obviously, we're taking more rightsizing measures. Obviously, we're looking for more growth. obviously looking to increase that margin over and above where we're guiding to you today. But we thought it was just sensible to give you some clear expectations. Operator: The next question is from the line of Sangita Jain with KeyBanc. Sangita Jain: Could you possibly elaborate on the go-to-market strategy that you're discussing on some of these end market pivots? I'm trying to understand how you think you're competitively placed versus your peers, especially since you're bringing in new businesses and sales teams at the same time? And then I have a follow-up. Heather Polinsky: So we talked specifically about our ability to grow in several key markets, water, energy and power, technology and semiconductors and life sciences as well as data centers and large infrastructure projects. And we've had success in doing this in the past. In fact, many of those businesses are already on a growth trajectory. So we know that we have the right to win. We have looked at and conducted a pricing review to look at strategic pricing so we can make sure that we are competitive, and we're bringing the innovation that I spoke about, whether it's the AI tools or it is our digital intelligence projects, combined with our human and technical expertise and asset knowledge to win in those sectors. Sangita Jain: Got it. And then I understand that the Capital Markets Day doesn't come until much later in the year. But in the meantime, can you help us understand if the strategy review could possibly include further reducing the number of geographies you're in or possibly cutting end markets to get back on a path of growth? Simon Crowe: Yes. Look, we will continue to review our strategy. We're not going to sit still. We're in a hurry. We continue to review our geographies, our sectors, our services and where we think it is appropriate, we'll make changes and where it is appropriate, we'll grow and where we have a right to win, we'll invest in heavily. So everything is up for review for us. Heather and I are looking very carefully at where we're strong, where we're not so strong, and we will obviously communicate with the market in due course. But we're very confident we have a right to win in the sectors that we outlined, and we're going to go and win there. Operator: The next question is from the line of Martijn Denreiver with ODDO ABN AMRO. Martijn den Drijver: I'll start off with a question for Simon, if I may. The 1,100 people charges of EUR 50 million, am I right in assuming roughly that you would pay 6 months salary severance, meaning that you could expect EUR 50 million saving in 2026 from that element. If you do another EUR 1,100 million in 2026, assuming that you're going to do that relatively early in the year from the same analogy, you would get another EUR 50 million in savings. All in all, back of an envelope that would add EUR 100 million in savings, which represents 2.3% on flat revenue. So I have a bit of a trouble getting to that 11.7% to 12.0% EBITA margin given these restructuring measures. Can you help me understand that? Simon Crowe: Yes. Obviously, I think your math is pretty reasonable. Obviously, it depends on the jurisdictions and the timing, as you say. But look, we've got wage inflation. We've got to give people a pay rise in certain jurisdictions throughout the year. We've got 35,000, 34,000 people. So we'll be doing that. We're obviously going to invest in the business in the top line growth in go-to-market, in pricing and all of those things that we talked about, we're going to invest in those markets. So yes, there's going to be some savings, and we're looking to protect our margin. We're looking to grow our margin, but also we've got to continue to back our people, attract talent and grow the top line. So there's going to be some investment there. Martijn den Drijver: Got it. My second question is on net working capital. The 8.3%, very strong. Even if you adjust for the factoring, it would end up at roughly 8.8%. So still well below the target that you set yourself of 11%. But did I understand you correctly that you were saying that around 11% would be a healthy level of net working capital going forward? Simon Crowe: Yes, that's right. That's sort of our typical trend over the last couple of years. Obviously, I've started to drive very hard there, as you've seen. I made the promise back in Q3. We've delivered on that promise. It was a record level of cash intake, but we'll drive hard to get that below 11%. But look, the business has some cyclicality around it, has seasonality. We will drive hard. We've started some new initiatives internally on the back of our success in the last quarter. So we'll continue to drive that down. And -- but I think 11% is a good thing for your model, yes. Operator: The next question is from the line of Chase Coughlan with Van Lanschot Kempen. Chase Coughlan: I just have 2 and maybe starting with the portfolio review. You mentioned you had the reductions in the P&I business in the fourth quarter. Are there any other areas of the portfolio in 2026 that, let's say, could be a risk of a further revenue reduction that you're looking at? Or how is that process being conducted? Simon Crowe: No. We -- as I said, we did a review of our Canadian business. We did the normal audit review with KPMG. We brought in a third party. I myself conducted daily calls over the last quarter to review that business, and we've drawn a line under that, and that's behind us. And there's no -- there's nothing to indicate anything else like that is happening in Arcadis. So no is the answer to your question. Chase Coughlan: Okay. Perfect. And then my second question, just going back again to the sort of organic sales growth guidance. I'm struggling to understand sort of why we imply a worsening in the first half. I mean a lot of the sort of commentary you provided about you're starting your sales incentivization changes in January, more salespeople in the business. The book-to-bill even in places looks decent. So could you please maybe just sort of help me understand exactly why you expect even a worsening environment at the beginning of the year at least? Heather Polinsky: Yes. And as you mentioned, we expect net revenue organic growth to be flat across the year with a weak start. This reflects the reality of us repositioning the business for stronger performance. And it also -- while you point out, we have strong backlog in Mobility and Places. Mobility has experienced some delays, and those are driven by some of the market dynamics as well as the lumpiness of the awards that we see. Places also remain strong, but those large projects take a little bit of time to ramp up from the permitting phase into the heavier design phases for us. So really looking at that phasing and the quality of our backlog, we expect to see the positive improvement through the year, but to have a weak start. Chase Coughlan: Okay. So it's really timing and then repositioning. All right. And if I may just squeeze in a third one on capital allocation. So of course, your balance sheet remains very healthy from a leverage standpoint. Could you give any indication on what your sort of capital allocation options are? I mean you're obviously repositioning the business yourself, as you said, I'm not sure if M&A is appropriate at this time, but even for sort of another buyback potential, what -- how are your thoughts about that from a management standpoint? Simon Crowe: Look, we'll look at all of that. Of course, we will continue to discuss M&A opportunities. We did a couple of small ones last year. It'd be great to think we could do some similar things this year. They were excellent additions to our business. Of course, we'll look at buybacks. Of course, we'll look at capital allocation across the piece. So it's just the normal course of what we discuss all the time in the business. So that's what we'll be doing. And I'm confident we, as you say, got a very strong balance sheet and good cash collection. So we have a lot of optionality. Operator: The next question is from the line of Natasha Brilliant with UBS. Natasha Brilliant: I've got a couple of questions. My first one is just thinking about more the midterm growth profile of Arcadis. I realize you'll do your Capital Markets Day in November. But once we get through this transition year, do you feel confident that Arcadis can get back to being a mid- to high single-digit growth business again? And then my second question is a broader question around AI, where we're seeing a lot of investor interest, but also market volatility. And you've talked about how you're using AI to drive efficiencies internally. Are you having any discussions with customers who might be pushing back on the use of AI or asking to share on some of those efficiencies with you? Just trying to understand how we should think about pricing and profitability for your business going forward given the sort of AI overlay. Heather Polinsky: Yes. First of all, let me take the first question on Capital Markets Day and our projections going forward. It is our intent to return to the same market level performance as our competitors. And we see no reason why with the strong technical capability and strong client relationships that we have when we take the other actions that we put in place that we won't get there. So we are confident we'll get to that same market performance. On the AI question, yes, AI is something that is continuing to be in the conversations with our clients. And in fact, we are already delivering projects with AI integrated in them. There's 3 parts to the AI discussion. One is our internal efficiencies, as you've talked about and Simon mentioned [Audio Gap] we do it in a way that is really reflective of the local markets and client needs as well as the transparency of where it's able to add value. And then we are engaging on discussions with our clients about new revenue lines and how we can help them in different ways and new ways. And in fact, I don't know if you have seen, but we launched an AI for water challenge, and we'll be also launching one on energy specifically going forward, where we're co-creating with our clients AI solutions to support them. Operator: The next question is from the line of Kristof Samoy with KBC Securities. Kristof Samoy: A lot of them have already been addressed. But press release mentioned that you're working on value. Operator: Samoy, I apologize for interrupting you. Can you please speak a little closer to your microphone because I'm not sure that management can hear you. Kristof Samoy: Okay. Is it better now? Operator: Yes. Please proceed. Kristof Samoy: I have one left. It's on value-based pricing. In the press release, you mentioned that you're working on that. And obviously, there's a lot to do on AI and the impact it has on the billable hours model. Can you give like a tangible example on how you want to go at implementing more value-based pricing? And secondly, can you give some insight into your breakdown of your revenues in terms of cost plus pricing time and material and lump sum and how you see this composition change over time? Heather Polinsky: Let me start with the last part of that discussion first. It's about 60% fixed price and the remaining time materials or cost plus. And as it relates to value-based pricing, we're already using value-based pricing with some of our clients and testing it out. And we've had some great success in co-creating solutions with our clients and then working through the value-based pricing approaches with them. And as Simon mentioned in the presentation, we have initiated a strategic pricing review and also working to support our teams and more effectively bidding so that we can win more with our clients. Simon Crowe: And just to say, we brought in an external pricing specialist to help us with that review. So we're not just relying on our own knowledge, but we're really excited about the initial findings, but we've got a lot more work to do there. Operator: The next question is from the line of Dirk Verbiesen with ING. Dirk Verbiesen: I have a question on the headcount reduction. The 1,100 roles that you took out, 100 of those are in overhead and your plans for 2026, you already announced 150 further reductions in the property and investments. And I am aware of the sensitivity, but can you share a bit more on what your further plans are? And is this, let's say, overhead versus billable people 1 in 10 like we've seen in '25. Is that the same magnitude as you foresee for 2026? Simon Crowe: Look, we're going to take a really good look at this and Heather and I have started to look at this. In fact, I shared a list with her the other day. It's nonbillable, nonclient-focused people that we're just trying to work out where can we find some efficiencies and where can we find automation. We are -- I think the ratio will be different this year than it was last year. As you said, it was 1 in 10. I'd expect to find more efficiencies from our nonbillable and non-client focused areas. That's not to say that these functions are not important. They are important. We've got some great people doing some great work, but I think it's just -- it's incumbent upon us to take a really really hard look at what we're doing. And obviously, we're going to leverage AI. We're really excited about the opportunities there with the efficiencies that AI can bring to us. And hopefully, we can divert a lot of these folks on to billable work. That's really the key here. We think the markets are really, really exciting and really strong for us in the areas that Heather mentioned. And if we can move people from nonbillable and nonclient-focused work into billable and client-facing work, then that's the real opportunity we have because these people understand and know how Arcadis works. So a lot to do, and we're going to do it quickly. Dirk Verbiesen: Following up on the previous questions also from Martijn on the impact of these headcount reductions. If you say, let's say, the 1,000 billable people, yes, you've lost around EUR 110 million potential revenues taking them out and maybe also a significant number in '26. I think we understand that, that flat revenues guidance comes largely from that and maybe some delays in projects. But let's say, a return also the remark from Heather to peer average organic growth, yes, I think most peers say 6%, maybe even 6% to 8%. Let's say, how long do you think you need to really recoup the momentum there towards that ambition? Simon Crowe: Look, I mean, Heather, your math may be right. It's -- and if you're modeling it out, obviously, we're taking some heads out. Some of those are billable, but we are looking at increasing the billability and looking to return to that growth. So I think, look, we're looking for second half. We're very excited. first half is slow as we've indicated. We've been very clear on our guidance. The markets are there for us. We're going to be very selective on how we take out cost, but it's all about focusing on billable and client-facing people who will drive that recovery into the second half. Heather Polinsky: And Simon, if I can add, we are going to be taking some restructuring costs associated with those reductions, but we are making investments. We are going to shift our portfolio towards those high-growth markets and make hires in those areas. So it's really about the shift and the rebalancing towards the growth markets in the areas we have the right to win. Operator: The next question comes from the line of Sabahat Khan with RBC Capital Management. Sabahat Khan: I guess just maybe just taking a lot of the questions from earlier around the cuts and the sort of commentary on outlook together. With these sort of restructuring initiatives, do you feel like you've gone deep enough to sort of position the company on the right path? And then secondly, just in terms of '26 being a transition year, is the confidence there really that it will be a matter of time to cycle through maybe some of the not so favorable projects? Or just -- what gives you the confidence that this will be sort of a transition year and that you sort of cut deep enough? Just more of a high-level perspective, not looking for sort of guidance or anything. Simon Crowe: No, I mean I'll start and Heather, I'm sure will add to that. We're not holding back. So look, we're going to do -- we're going to continue to do the reviews. We're going to continue to see what makes sense. We're going to continue to invest in the business where we see the growth and the value, but we won't hold back on those slow growth or no growth areas that potentially need looking at. Heather Polinsky: Yes. Some of the additional elements is the market is there for us. And so specifically, the market in these areas that we've identified the right to win, we believe that by making those strategic investments by changing our incentivization and improving and adding to our sales force that we'll be able to use that strategic pricing we talked about and even the automation of our pursuit process will start to come into play. So quite a few factors coming forward to help drive us towards that growth. Sabahat Khan: Great. And then just quickly a follow-up. I guess, as you put new leaders in place, put some new folks in place, restructured other things, how are you ensuring that the sales folks and the project managers during that transition are still sort of filling the backlog to ensure '27 and onwards gets to the right range that you want to get to? Simon Crowe: Look, we've -- Heather will comment as well, but we've incentivized a lot of people to really focus on driving sales now. It's about performance culture. We're really excited. We're shifting to that performance culture. Q1 and Q2 also a massive, massive focus for us, and we've been repeating that message and incentivizing people to drive the growth into Q1 and Q2. So the message is out there, and people are excited about it, and they're grabbing the opportunity. Heather Polinsky: Yes. And Arcadis' mission of improving quality of life is done through the delivery of our projects. and through the passion of our people. So our job as leadership is to mobilize and energize that passion. We also have a really high employee engagement score. So even though we've taken these cuts over the last year, our Net Promoter Score remains in the top 10% of professional services. So in addition to the expectations we've set for our people, we've got a great foundation to grow from. Operator: The next question comes from the line of Luuk Van Beek with Banque Degroof Petercam. Luuk Van Beek: First of all, a question about the -- your ability to predict the timing of when your backlog converts into revenues. It was an issue last year. Have you taken any measures to improve the process? And if so, what kind of measures? Simon Crowe: Yes. We've -- I've been looking at that amongst other things. And that's one of the key issues for us to ensure that we give the training, we show people how they can phase their backlog more easily, make sure the systems are easy to access. And that's certainly something in terms of the transformation. And I call it the sort of 10 commitments that we've got. One of those is to phase your backlog. And we're obviously monitoring it. I've got a dashboard that I can look at every day, and we are getting that message out there that phasing the backlog is really helpful for knowing who to put on a job and who we can put on another job and also forecasting as we go forward. But it's going to take time. We've got over 30,000 projects. We've got a lot of project managers out there. So the time -- it will take us some time. But yes, it's on the list. Luuk Van Beek: And you mentioned in the presentation that you target cost reduction to drive competitiveness. Does that mean that you have the impression that you sometimes lose projects against competitors because of your pricing? Simon Crowe: I'll let Heather add to this. But we think we -- obviously, we lose some bids because of pricing. But I don't think that's it. Obviously, we work with competitors. So we can see -- often can see what the pricing and we're in partnerships. We're in joint ventures, so we can see that. I think we're just so -- actually, we're so good at what we do. We bring that complete project sometimes. And often, the customer just maybe just want something slightly less. And that's part of our pricing review, part of the value pricing that we're working on. We're so good at delivering and so enthusiastic that sometimes I think we may get carried away. But Heather, maybe you want to talk to that. Heather Polinsky: Yes. Just on our cost base, I think that what's important for us to recognize is that efficiency isn't always just in the cost. It's in how quickly we're able to make decisions in the organization. So reducing layers within our, say, overhead structure or enabling function will allow us to be more responsive to our clients and allow us to win at a faster rate and allow our people more entrepreneurship and flexibility so that we can both protect Arcadis, but also deliver to our clients more effectively. Operator: The next question is from the line of Simon Van Oppen with Kepler Cheuvreux. Simon Van Oppen: I have one remaining question left, and you mentioned the independent auditor review. I was just wondering to what extent has impairment testing be done in Q4 on each of your individual divisions? And should we expect any further impairments in 2026? Simon Crowe: No. I mean we've done all the necessary reviews. No more -- no, you shouldn't expect anything like that. Operator: Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Mr. Brookes for any closing comments. Thank you. Alan Brookes: Thank you, and thank you, everybody, for your questions. As we said at the start, it has been a challenging year for Arcadis. But as I hand over to Heather as CEO, I do so with full confidence in her leadership. She has a clear mandate, as you've heard today, to strengthen performance, simplify the business and accelerate delivery. These actions are already underway, and the priorities are well defined. So thank you again for your time and engagement over the last 3 years and for indeed your continued support for Arcadis under Heather's leadership. Thank you all very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant day.
Salvador Villasenor Barragan: Good morning, everyone. I'm Salvador Villasenor, Head of Investor Relations at Walmex, and I want to thank you once again for joining our live Q&A session following our fourth quarter and full year 2025 earnings release, which was published yesterday. As always, we will make an effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. [Operator Instructions] Joining me today is Cristian Barrientos Pozo, President and CEO; Paul Lewellen, our Chief Omnichannel Operating Officer; and Paulo Garcia, our Chief Financial Officer. We'll now go right straight away to the first question. Operator: [Operator Instructions] The first question is from Mr. Ben Theurer from Barclays. Benjamin Theurer: Can you guys hear me, see me? Salvador Villasenor Barragan: Yes. Benjamin Theurer: So I wanted to get a little bit your sense as you look at the market in Mexico. And in the presentation yesterday, it was very clear there's a lot of differences between regions, but also within formats. So I wanted to understand what are your targets for 2026, how to potentially address these issues, be it on the regional side and/or on a format side? What are the things that you can do that are under your control to tackle what seems to be still a somewhat challenging environment? Paulo Garcia: So first of all, Ben, on the targets and guidance for the year, we are still elaborating on that and probably you'll hear more about that in terms of the Walmarts there. I think when you think about the environment, it's still relatively soft. We still expect the environment to be still probably relatively soft in the first half of the year. The good thing, as you know, we all know the data is the GDP growth expectation for the year is better than actually what we had in 2025. That's roughly 1.5%. I think 2 things that I'll say before I pass the button, whether Cristian or Paul want to add up on that. One is -- so what we're seeing in a banner like Bodega in these moments tends to shine further. We talked about the fact that Bodega increasing the penetration in the households of the lower income, and that is helping us. But at the end of the day, you know the strength of our portfolio, it's the overall portfolio that we have. And you've seen that -- across all the last quarters, not very dissimilar performance if you think about Bodega, Sam's and Walmart. Maybe Walmart Express at times a little bit more volatile, but a very tiny part of our portfolio, as you know, roughly 2%. But maybe Paul or Cristian can elaborate a little bit more what we are doing with the banners in particular. Cristian Barrientos: Ben, from my perspective, I think we are expecting a different year 2026 compared with 2025, as Paulo mentioned. We have seen in other markets how relevant is as you mentioned, what is in our control today to be prepared when the numbers came, let me say, in growth in the market, we will be very benefit. We have seen in other markets, as I told you, that we can accelerate 3, 4x above the market if we are very well prepared. So that is why the focus will continue in EDLP availability and, of course, the acceleration of e-commerce that's going to be prepared in the future, maybe near future because it will happen this year. So that's the focus of the total company. Operator: Our next question is from Mr. Alejandro Fuchs from Itau BBA. Paulo Garcia: Let's go to the next question, and we come back to Alejandro. Operator: Our next question is from Mr. Froy Mendez from JPMorgan. Fernando Froylan Mendez Solther: I was -- I wanted to ask about private label within your EDLP strategy. What role does it play? What level of penetration should this reach in the midterm under this new enhanced EDLP strategy? And what could the impact on margins be from pushing further into the private label? Cristian Barrientos: Thank you, Froy. And maybe you saw in the report that we are focused as a company in deliver EDLP, improve availability and accelerate e-commerce. And in EDLP, EDLP is not only about a price gap. It's a business strategy that differentiates us from the rest of the market. And included in EDLP, private brands play a very important role, the same as the assortment, supply chain, modulars, all this stuff. So for us, private brands is really important, and we have seen in Q4 good evolution of the penetration inside of Walmart. And so particularly in Bodega, as you saw also in the numbers, Bodega was the highest accelerator in sales during Q4. And in Bodega, private brand plays a super important role. So we are seeing a room to improve, a room to grow. So we are leveraging in all the markets with a different brand that we have today in Mexico. But it's a clear differentiator for us today. So that's the information that we have today to share with you in terms of penetration, acceleration, all this stuff. So -- and also, as I mentioned before, EDLP, there is a lot of metrics, but at the end, we are looking for increase our price perception and private brand plays a super important role there. And we have a very good quarter in terms of how we accelerate price perception and private brand was one of the key elements there. So I don't know if you... Paulo Garcia: Just maybe on numbers because there were 2 questions directly on numbers and margin of private brands, building on what Cristian said. I think on where we need to go, we said that a couple of times probably in the past, we want to be in the mid-20s penetration minimum, and that mostly focused in the Bodega. So there's a lot of room to improve, which things Cristian was saying that we need to do, but adding more products in categories, and we have lots of white spaces, entry price points. To the second question, private brands margins, our margins today of private brands is higher than what we have in innate brands but tends to be also the portfolio. One of the things I want to let it clear because once there was adopt, we don't manage private brands for margin. We do manage private brands for the EDLP to help the customers save money and live better with the entry price points. Of course, there will be categories that we will be having better margins. So as you can imagine, in foods and consumables is roughly similar to what we have in innate branded. We do have higher margins, in particular, in the areas of seasonal entertainment in the commodities, as you can expect, because it's a commodity, we will have lower margins than a branded. So -- but of course, we will play with it, but we manage for what's relevant for the customer. Operator: Our next question is from Mr. Ulises Argote from Santander. Ulises Argote Bolio: So the question that I had was trying to get a bit more sense and a bit more detail on those 15 basis points gross margin improvement that we saw in Mexico coming from the other businesses. So just wanted to get your thoughts on how should we think about this kind of trending forward? Are this the initial levels and how much more runway is there left for this? And maybe if you can comment a little bit on which of the businesses actually are becoming more relevant and are contributing more here at the gross margin level. Paulo Garcia: On that one. So as you can see, our new business has been contributing steadily over quarter-on-quarter, roughly around 20 basis points, sometimes a little bit more than that. In this case, a little bit less as you've seen it Ulises. The big one, which is actually becoming more and more relevant is Walmart Connect, immediately followed, of course, by Byte. In this particular quarter, Ulises, as you've seen it from what we said it in the webcast, Walmart Connect was not the one that drove the most of this improvement, actually tended to be around in the space of the financial solutions as well as Byte. These were the ones that contributed. You've seen the size of Byte these days. So contributing both in terms of the revenues as well to the P&L on a stand-alone basis. We always said 2 things about the business, right, Ulises. I will refresh that. One, of course, we do look at them on a stand-alone basis because it's good practice. We need to make sure that they did deliver. But of course, the sole reason why they are here is twofold: one, to deliver a pain point of the customer and how they actually helped overall the core of the business, either more frequency or more average ticket being higher. And that's what we are seeing with some of these businesses. For instance, a customer that is in Byte, the average ticket is more than 2x what we see in a customer that's non-Byte. So that we are pushing. The other thing that we're doing at the same time, we're using these funds to continue progressing and investing in margins in more EDLP in order to fuel the growth. In this particular one, our margin was higher as you've seen it. It will always be volatile as we said it, but that's how we actually approach this area. Operator: Our next question is from Mr. Felipe Rached from Goldman Sachs. Felipe Rached: Can you hear me well? Salvador Villasenor Barragan: Yes, Felipe. Now we don't. Let's move on to the next one. Operator: Our next question is from Ms. Melissa Byun from Bank of America. Cristian Barrientos: Melissa can you hear us? Operator: Our next question is from Mr. Álvaro García from BTG Pactual. Alvaro Garcia: Can you hear me? Cristian Barrientos: Yes, sure. Alvaro Garcia: Great. Awesome. I have a few questions. The first one on reducing the number of SKUs at Bodega Aurrera Express by 30%. I was wondering if you can give some more comments on that. And the second one for Paul. Paul, nice to meet you. I was wondering as part of your sort of onboarding on to Walmex into what Mexico and Central America look like as retail markets, if you could maybe share your sort of first take or your first impressions on how different Mexico is relative to the U.S. market and what that means from a playbook standpoint for Walmex. Paul Lewellen: Sure. Thank you for the question, Alvaro. I've been with Walmart for over 35 years, and I would say that we have more in common than we do different. And I would say the biggest similarity is around culture and our people are definitely an enabler of our success. And from a global leverage standpoint, I think the way that I would describe it is that Walmart has no boundaries. So when we're looking at either technology, AI, global leverage, we're able to take best practices from around the world and apply them globally. And that's exactly what we're doing this year in Walmart, Mexico. Just a few examples of that, that I would give, is when you think about how there are no boundaries and we can enable the stores from an AI and technology standpoint, you could start at the front end with Coastal, which is a global platform, which allows our registers to run the same around the world. You can go to the sales floor where we have the same tools and same technology to speed up the way that we process freight from the back room to the sales floor, the accuracy of our on hands, the availability of our products, the availability of what we can pick and what is available inside of our catalogs for our customers to purchase regardless of where, when and how they want to shop. And then I would lastly say from an inventory standpoint, whether it's our logistics system and the exciting technology that we're implementing there in Mexico and how that's going to enable us in the stores to be more efficient. I would say we're more like than we are different. Speed is critically important to us this year in Mexico, and I think you're going to see that, and it's going to come through loud and clear. Paulo Garcia: On the SKUs... Paul Lewellen: Yes. On the SKUs in BAE, I can tell you not only in BAE, but in Mi Bodega, the 30% reduction or SKU rationalization is a process that we are undergoing right now. Space is critically important and devoting the majority of our space to those items that drive the most sales and the most traffic inside of our stores, it's nothing new about that. We're constantly reevaluating our assortment across all of our banners. But these 2 are very, very important as it comes or relates to our purpose, which is saving people money so that they can live better, and that also drives our price and our price perception. Operator: Our next question is from Mr. Antonio Hernandez from Actinver. Antonio Hernandez: Just wanted to get a sense on Byte from a P&L perspective. I mean we all know that it's part of the ecosystem and it's not per se a P&L driver. But wanted to get a sense, I mean, you've already gained so much of a very large scale in a very short period of time. So if you can provide more light on that and maybe if there's any specific target, that would be very helpful. Paulo Garcia: Yes, Antonio, thanks. So I'll say what the things that we have mentioned this about in the past. So Byte, I said to you, it's in the past, guys, it's already a profitable business. We always said that was not sole driver at the beginning as we were building it because we wanted, of course, helping people getting access to affordable phones, so to speak in affordable prices and also help the overall business. But we also see as the business is evolving, it can also get better, it can also contribute more overall even on a stand-alone basis. We have the view that this business can easily go and actually have an operating margins in line to what we have in the rest of the business in the near term. So that's actually where we actually are heading to. At the same time, as I said, and Cristian always talks about that, the role of this business is to help the core, right? That's why actually I mentioned that the frequency -- the ticket of the Byte customer is more than 2x the one that actually you see that's a non-Byte. That's actually what we're also trying to push as we fulfill our purpose. Antonio Hernandez: Okay. And do you have any idea of the scope that maybe you could achieve in terms of the amount of users? Paulo Garcia: No, I'm not going to throw that number, but you can expect us to continue growing. I'm not going to put a number in the market that holds me accountable on that. Operator: Our next question is from Mr. Alex Wright from Jefferies. Our next question is from Ms. Melissa Byun from Bank of America. Melissa Byun: Can you hear me this time? Paulo Garcia: Yes, Melissa. Melissa Byun: Sorry about that. I had some technological difficulties, so I do apologize if this question has already been asked. But can you please provide some more context around the decision to reduce the Bodega Express assortment by more than 30%? How are consumers responding to cuts given the differentiation that's historically been provided by the broad assortment? And should we think about this maybe as a broader shift in your strategy moving toward a narrower and more private label-oriented mix in the concept? Paulo Garcia: Just say, Melissa, we actually answered this question just before. I'm not sure if you listen... Melissa Byun: I did not but I can -- sorry. Paulo Garcia: Let's do one thing, Melissa, we'll try to elaborate a bit more on the question. So Paul, will add a few things to your benefit. Paul Lewellen: Yes. I would tell you, our strength comes from a very diversified format portfolio, especially with Bodega. And when I think about Bodega, I think about value and I think about how critically important price is to value. I think about the experience that our customers have inside of our store. The assortment, to your point, is critically important. In our 2 smaller formats, though, space is a premium, and we want to make sure that we are dedicating space to the items that are producing the greatest amount of sales and sales results for our customers. Also, they're tailored to our customers' needs. And these are things that our customers have actually told us that they want more space dedicated. We don't have a ton of backroom space in Bodegas as you know. Most of it is stored on the sales floor on our top steel. So space is a premium. And I think the merchants and our commercial team have done a fantastic job in making sure that we have tailored the assortment and diversified the assortment to the customers that we serve. And the last thing I would say is that it's all about trust and our customers trust us, especially in Bodega to deliver price, that value, that experience and the assortment in a lot of cases for a one-stop shop. So SKU rationalization and the way that we rationalize SKUs by category, it honestly is nothing different or anything that we don't do on an annual basis across our commercial teams. So it is the right thing to do for these 2 formats. But again, the strength comes from the diversification of all 3. Cristian Barrientos: If I may add, Melissa, in this point, maybe you know that I run this business a long time ago. And in a small format is so important availability. So the way to reach right numbers in availability came from our right assortment. So today, we're taking advantage of the program that we have here in Mexico shop. So it's an asset that we have today to run faster and have the right assortment for the customer. So we will improve availability. So immediately, sales came. So you can see numbers in the past in Bodega Aurrera Express what happened, and that's the idea to evolve every year. Operator: Our next question is from Mr. Felipe Rached from Goldman Sachs. Felipe Rached: Sorry for the tech issue before. I hope you can hear me well now? Paulo Garcia: Yes, perfect, Felipe. Felipe Rached: Great. So I was wondering if you guys could share more details on what you expect to be the main drivers for the e-commerce acceleration going forward and whether you think any further investments will be necessary in that front. And still in this context, it would be very interesting to hear more on how the maturation process of the One Hallway initiative in Mexico so far compared to the one that you guys observed in the U.S. So anything you can share on that would be very interesting. Paulo Garcia: Okay. Maybe we'll try to answer the question and to... Cristian Barrientos: So first of all, thank you, Felipe, for the question. As you saw in the report, we define -- really important element to focus on the fundamental and the acceleration of e-commerce is critical here in Mexico and all over the world, and we have a huge opportunity. We -- you saw the numbers. We are still depending in 1P in a few categories in the quarter that didn't perform so well. We are evolving on demand. And as you mentioned, we are in the learning curve in One Hallway. But for us, I think the huge opportunity that we have today is to take advantage of the footprint that we have in Mexico to accelerate and accelerate speed to the customer and also reach more customer because today, we are serving not all the households here in Mexico because of -- because we need to evolve our operational model to reach homes. And we're right now evolving that last quarter. We extend our reach and we added in our fleet, let me say, Valle de Bravo, San Miguel de Allende, some cities that we didn't get because of the restriction that we had. And today, we are adding more cities. Next quarter, we're adding more than 20 cities to reach that. So in summary, speed, reach and assortment will be critical for us, and we have the footprint, we have the team looking forward to accelerate more both business, both that Paul shared in the idea that we have today. We're in a journey to unify our platform. So we will be ready to adapt or connect, let me say, as a global platform. So that allow us to receive the assortment from the U.S., the assortment from all over the world, in the Walmart world and in both sides. But the most important part is we will receive, but we can deliver or we will deliver to the customer with the speed. And that's the idea to increase assortment, reach and also accelerate the deliveries. Paul Lewellen: Cristian, can we also talk about total availability. I think I would say the journey that we're on from a store mapping, store location, modular integrity, on-hand accuracy and being able to fulfill the items on the shelf, the moment of truth in a very timely manner with precision and accuracy like we've never done before. This availability journey that we are on allows us to have real-time data down to an item level and where it is located across all stores, increasing our availability, improving our availability and our pickability of items for on-demand. Cristian Barrientos: And helping customer, shoppers, pickers to be faster. Paul Lewellen: That's right. Operator: Our next question is from Mr. Miguel Ulloa from BBVA. Miguel Ulloa Suárez: Can you hear me? Paulo Garcia: Yes. Miguel Ulloa Suárez: Perfect. A couple on my side would be regarding the slowdown in e-commerce. Could you provide a little more color on categories or what happened in the whole market and how you are reading going forward? Paulo Garcia: And Cristian to build on that well. We are still -- when you think about the extended assortment, particularly 1P, but also marketplace, we still very [Technical Difficulty] categories like TVs, particularly during the season, when Buen Fin and Fin Irresistible didn't perform so well. So therefore, that tends to impact us. And that's when you see the e-commerce numbers, you see that our on-demand business pretty much grew almost 20%, but our extended assortment grew much less mid-single digit, and that was impacted by 1P. So that's what an impact in the short term. As you know as well, we're also going through the transition on One Hallway. And the goal of the One Hallway, of course, is to increase and broaden our assortment so that we can diversify the assortment. And today, we have roughly 20 million SKUs. In the future, we can go up to more than 1 million SKUs in the next couple of years. So that's the journey we are in. It's a gradual implementation. It's a gradual progress. We don't expect to happen from one quarter to the other. But gradually, we'll see improvements over and above the things that Cristian already talked about that we are 100% focused, which is speed and reach. So it's about speed, reach and assortment. Operator: [Operator Instructions] Our next question is from Mr. Alejandro Fuchs from Itau BBA. Alejandro Fuchs: First of all, welcome, Paul, to Mexico and to Walmex, best of luck. I want to make 2 brief questions. The first one on same-store sales in Mexico. We saw a slight decrease in traffic and most of the growth coming from ticket. I wanted to see if you can maybe explain to us a little bit more color on how much of this is mix? How much of this is price? That will be the first one. And the second one, maybe for Paulo on gross margins. The improvement on the commercial front from lower shrinkage and general merchandise, how sustainable is this improvement on commercial margin going forward? And if you could give us maybe a little bit more color on those 2 general merchandise and on the food side, that will be very helpful. Cristian Barrientos: Thank you, Alejandro. And first of all, I will begin with the traffic, as you mentioned, was negative almost flat, but we always see the trend. So we began the year with a more negative traffic in the first quarter, and we're seeing a very good, let me say, response of the customer with the program that we're putting in place. Q3, Q4 was almost 0. And as you know, and as you saw in the reports, we have seen an evolution of the focus and that we're looking today in the fundamentals on the EDLP availability and e-com that those 3 are helping us to accelerate. And the idea in the coming months is to be very well prepared because we are waiting for the country to improve growth. You know very well that we ended 2025 with 0% growth in the market in -- as a total Mexico. We are expecting 1.5%. And we have a lot of data in other markets when you are very well prepared and the economy turn, you receive all these benefits in the future. So that is why we will be continue to focus on these 3 pillars that is crucial for the business, crucial for brick and also crucial for e-com. Recently, Paul mentioned that we are working very hard to mapping all our stores, all our items in the sales floors, also in backroom, trying to connect with e-com business and create more speed, more reach and take advantage of the assortment that we have. So that's the idea to combine all together, and we will continue to focus on it, and we know we will be very well prepared when the economy turn a little bit. Okay? And the second one was? Paulo Garcia: It was around margin. Thanks, Alejandro. Yes. So let me talk about -- as you said, you've seen the improvement in the omnichannel margin was mostly from GM mix and shrink. Let me start from the second and then talk about the first. So the second one, yes, it's an area that we are attacking. It's an area because at the end of the day, it's waste. And it's ways that we better can elsewhere invested to invest in pricing for our customers. We're putting a lot of energy there across all the teams. It's an end-to-end process. It's merchants, it's operators, but everyone that is involved. And we are topping that up with AI tools and machine learning, whether that's in terms of to optimize the replenishment, but it's also improve the demand forecasting because we still have a little bit of manual process in the way we actually look at the perishables. So that is something that we are really attacking left and center. On the general merchandise, Alejandro, goes a little bit what I also said to what on the e-commerce response or the extended assortment. So the categories that actually didn't perform so well tend to be, as you know, categories that don't enjoy the best margins as well. And as a result of that, of course, we tend to have a benefit on that. I think what you can expect from us going forward is the new business continue helping our margins, and we continue to invest behind the EDLP for our customers. And you, of course, might see volatility quarter-on-quarter as we always said it every single year. Operator: That was the last question. I will now hand over to Mr. Salvador Villasenor for final comments. Salvador Villasenor Barragan: Well, thank you very much for joining, and thank you for all your questions, and we hope to see you all at Walmex Day on March 25. Thanks again. Cristian Barrientos: Thank you very much. Paul Lewellen: Thank you. Operator: Walmex would like to thank you for participating in today's video conference. You may now disconnect.
Operator: Thank you for standing by. My name is Olivia, and I'll be your conference operator for today. Welcome to the Canadian Tire Corporation Earnings Call. [Operator Instructions] Now, I will pass along to Karen Keyes, Head of Investor Relations for Canadian Tire Corporation. Karen? Karen Keyes: Thank you, Olivia. Good morning, everyone. Welcome to Canadian Tire Corporation's Fourth Quarter and Full Year 2025 Results Conference Call. With me today are our President and CEO, Greg Hicks, and Executive Vice President and CFO, Darren Myers. Before we begin, I'd like to remind you that today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws, including management's current expectations regarding future events and the company's True North strategy. Although the company believes that the forward-looking information in today's discussion is based on information, estimates and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on these material risks, uncertainties, factors and assumptions, please see the company's MD&A available on our website and filed on SEDAR +. The company does not undertake to update any forward-looking information whether written or oral, except as is required by applicable laws. I would also highlight that our discussion today will focus mainly on the normalized results of the business on a continuing operations basis. Within our financial results, Helly Hansen has been presented as discontinued operations since the sale of the business completed on May 31, 2025. To help you bridge the results to reported numbers, please consult Slides 5 and 6 of our quarterly earnings deck, which can be found on our website. By way of a reminder, we would also highlight that the fourth quarter and full year 2025 results include one additional week of retail operations compared to the fourth quarter and full year 2024 results. With the exception of comparable sales growth, comparisons include the additional week in 2025. After our remarks today, the team will be happy to take your questions. We will try and get in as many questions as possible this morning, but we ask that you limit your time to one question plus a follow-up before cycling back into the queue, and we welcome you to contact Investor Relations if we don't get through all the questions today. And with that, I'll hand the call over to Greg. Greg? Greg Hicks: Thank you, Karen, and good morning, everyone. For about a year since the March launch of True North, I've spoken frequently about CTC's twin tasks, performing our business while transforming our company. As we look back on 2025, I am immensely proud of the accomplishments of our team. We got the business moving sharply in the right direction and performed at levels that put us among the best of our North American peers, achieving some of our strongest retail sales and profitability in recent memory. Fiscal year retail sales and revenue were up 5%, profitability grew 14% and EPS increased 19% to $13.77. And while those numbers benefited from an extra week, annual comp retail sales were up 4%, exceeding 4% in 3 of 4 quarters, in a year that saw both tailwinds and headwinds. All banners contributed with SportChek up 6% and Mark's and CTR, each up close to 4% for the year. Triangle Rewards tied everything together, driving traffic to banner stores at sites, with membership up and active registered members growing 6% to 9.8 million. We saw increased uptake on personalized offers, which drove about $300 million in incremental sales. Throughout the year, we resonated with customers who remained resilient but discerning. And at a time when we'd all agree it meant more to be Canadian, it meant more to be Canadian Tire. Through the wintery weather, the rise of patriotic purchasing, the rush for stripes blankets, the tariff threats, the consumer pivot to value, Canadians consistently named us their most trusted retailer, and we gained meaningful market share. As we performed, we also transformed. Our first year of transformation included significant organizational change, a new operating model and major strategic advances. Now in 2026, we are building momentum for long-term value creation. Before I come back to that and highlight some of the key initiatives and metrics to watch for this year, I'll turn it over to Darren to walk through our fourth quarter results and our perspective on 2026. As I do, I'll simply say, while we are clear-eyed about our operating environment to the inevitable ups and downs of retail, we got nice momentum and detailed plans to deliver True North. Over to Darren. Darren Myers: Thank you, Greg, and good morning, everyone. Q4 was an exceptionally strong finish to the year across all banners. We executed well while continuing to build momentum in our True North transformation. Strong retail performance, lower finance costs and stable financial services results led to 33% growth in normalized IBT. Normalized earnings per share increased 38% year-over-year to $4.47, supported by improved retail profitability and ongoing share repurchases. Let me take you through the quarter, starting with retail. As Karen noted, our results reflect the 53-week year for retail compared to a 52-week period in 2024. The 53rd week, which benefited from favorable weather-related demand, contributed positively to results. We estimate the extra week generated $287 million of retail sales, excluding Petroleum, and approximately $40 million of IBT in 2025. All in, retail revenue and sales grew close to 9% and more than 10% excluding Petroleum. Underlying 13-week quarter performance was exceptional, with comp sales up 4.2%, with all banners and regions growing. Key contributors included strong in-stock positions to meet weather-driven demand, successful Black Friday promotions across our banners and a meaningful contribution from loyalty sales, with increased loyalty engagement and more active members. Looking at sales on a banner-by-banner basis. At CTR, comparable sales grew 2.7%. Seasonal & Gardening led the way with double-digit growth, supported by an early start to winter, which pulled forward sales in categories like snowblowers, shovels and ice melt. We also saw good sell-through of Christmas trees and decor, along with healthy toy sales. Winter footwear in categories like ice fishing also contributed good growth in playing. Automotive posted its 22nd quarter of consecutive growth, driven by strength in sales of batteries, wipers and tires. SportChek had an incredible quarter with comp sales up 9.5%. Fan gear demand surged with the Blue Jays post season run and the early lead up to World Cup. Outerwear performed strongly, helped by favorable weather. Finally, we continue to gain traction on winning with athletes in categories such as hockey. Mark's had a strong quarter, with comparable sales up 7.2% year-on-year. Workwear and industrial footwear sales were growth standouts this quarter, while traffic continues to be up at Bigger, Better, Bolder stores. Our first BBB store in Quebec contributed to strong sales in the province, while leveraging Triangle promotional tools helped drive record Black Friday and e-commerce sales. We're pleased with our progress in managing our gross margin throughout 2025. In Q4, normalized retail gross margin rate, excluding Petroleum, was up 118 basis points to 35.4%. CTR and SportChek margins benefited from overall mix dynamics, which included lower promotional intensity in the prior year. Ongoing benefits from our DaiVID implementation and improved margin sharing with our dealers also contributed to CTR margin performance. Our SG&A rate as a percentage of revenue, excluding Petroleum, improved 40 basis points as increased operating discipline and higher revenue contributed to modest leverage. We realized $30 million in restructuring savings in the quarter, in line with expectations. Restructuring savings and higher vacancies partially offset higher volume-related costs as well as increase in True North's IT investments, real estate expenses and variable compensation. Bringing it all together, we delivered strong operational results in our retail business. Normalized retail EBITDA increased 19% to $557 million and normalized retail IBT grew 49% to $242 million. Corporate inventory ended the quarter up 8%, primarily driven by CTR and SportChek, with improved aging and increased newness in the assortment as we support high growth -- higher growth levels. At CTR, dealer inventory was up 5%. Moving to Financial Services. 2025 was a year of investment to set the bank up for long-term growth and resilience. Credit card sales in Q4 increased 3.9% as we continue to deepen engagement with cardholders. GAAR grew 2.5%, driven by higher average account balances, while active accounts increased modestly on the back of increased cardholder acquisition. We continue to leverage loyalty issuance as a tool to engage cardholders and drive retail sales. eCTM issuance to cardholders increased more than 12% to $329 million over the course of 2025, reflecting deeper integration with retail. Gross margin dollars at CTFS increased 11% as a result of higher revenue and lower net impairment losses. Normalized IBT was up 3%, driven by the increase in gross margin, which more than offset higher SG&A as we continue to invest in the business. Overall risk metrics remained stable. PD2+ improved slightly, finishing the year at 3.5%, down 11 basis points. The net write-off rate was 7.2%, up 13 basis points year-over-year but stable versus last quarter. Portfolio stability saw the allowance remain relatively unchanged. With an increase in the ending receivable balance to $7.7 billion, the allowance rate ended the quarter at 12%. While economic recovery remains uneven across the country, we have continued to see stable trends. As always, we keep a close eye on the environment, and are prepared to act should we see any meaningful change. Let me provide some color on what we're seeing so far in Q1 and how we are thinking about 2026. Despite ongoing geopolitical uncertainty, inflation and continued mortgage renewals, Canadian consumers have remained resilient. Q1 is off to a good start, with winter weather driving sales in late January and into February in what is normally our smallest and least discretionary quarter. Keep in mind, though, that we're comping very favorable weather last February as well as a strong end to March, which is always the biggest month of the quarter. Turning to the year as a whole. At CTR, we continue to buy for growth in 2026. However, it's worth noting that we will be cycling tough weather comps, along with the strong patriotic purchasing in the first half of 2025. At SportChek, we expect events like the Olympics and World Cup to help us sustain momentum in the first half, while the rollout of BBB stores in Quebec and Ontario will continue to be key to sales growth at Mark's. Our North Star retail gross margin rate of 35% plus remains a good long-term anchor. Our 2025 results demonstrate that through disciplined execution, we can balance value to customers while delivering results above that level. The rollout of DaiVID to SportChek and Mark's in late 2026, along with the continued optimization of CTR, will help underpin our gross margin rate, notwithstanding we will always have some quarter-to-quarter variation. Our retail, although we continue to see inflation in our advancing targeted investments, including in AI, we remain focused on managing the rate of OpEx growth. At the bank, we don't expect the same profitability headwind we saw in 2025, but ongoing investments will create some pressure on SG&A rate and profitability in the first half. Finally, we remain committed to a balanced approach to capital allocation, investing in the business for long-term value, while also giving back to our shareholders. For 2025, our return on invested capital improved to 11%. 2025 operating CapEx came in below our range at $502 million due to tighter project discipline and timing. We expect CapEx in the range of $500 million to $550 million in 2026. Finally, we continue to repurchase shares under our 2026 share repurchase intention. In 2025, we supported EPS with over $440 million of share repurchases, reducing share count by about 5%. In summary, 2025 was a strong year built on a new operating model, tighter execution and a clear strategic direction. We intend to carry that discipline and momentum into 2026. We look forward to updating you further at our Q1 results call in May. With that, I'll hand things back to Greg. Greg Hicks: Thanks, Darren. Following a strong year, our job is not only to celebrate, but to demonstrate that our progress is durable. And while we continue to detail the specifics of our initiatives, I want to start at a slightly higher altitude. I want to describe what we're building because it's fundamental to the success of True North. In a new era of retail and a world of global mega competitors, we are setting a path that is uniquely our own. By rapidly building a new go-to-market approach predicated on a retail system of unique assets that nobody can match, we are digging a moat. Our retail system starts with the highest consumer trust in Canada. It connects our banners, brands and partnerships together through the engagement and privileged data of Triangle Rewards. It elevates our insights and actions to new technologies and tools like AI. And it moves us from individual banner selling products to a retail enterprise ready to serve the big and small occasions of Canadian life. That's what we mean when we call it a retail system. By extension, I'd encourage you to think about the initiatives in our 4 strategic cornerstones, not in isolation, but as part of a larger plan. You can expect us to put those puzzle pieces together more tightly through our actions and commentary in 2026. Our retail forward cornerstone is fundamentally about growing core retail sales. You've seen the results in 2025, but we're also reshaping the customer experience. We continue to drive new store concepts and store refreshes with 52 last year and approximately 70 planned for 2026. We're strengthening our investments at Mark's, with bigger store concepts that are attracting new and younger customers, expanding assortments and elevating brand experiences. SportChek's refreshes and new format stores are lifting already outstanding NPS and reinforcing its position as a top destination for leading brands. Likewise, we are growing our e-commerce performance at twice the rate of bricks and mortar. On the hypothesis, the future of retail is by lowering friction for customers, however they shop, in person, from home, or in combination. We have rolled out faster fulfillment options, easier transactions and contextual AI search. And as we have ramped up same-day delivery, related NPS scores have been remarkable and among the best that we track. Retail forward also includes retail fundamentals. Darren spoke about DaiVID and our surgical work to balance sales and margin. But I want to highlight how that has shown up for customers. Last year, we adjusted tens of thousands of prices based on deeper and deeper insights. Some moved up, others, down. By Q4, year-over-year improvements in our consumer price-value perception were industry leading, with perceptions of our regular pricing up a staggering 15 points. As you think about retail forward, think of it as a portfolio of strategies meant to change the way Canadian consumers experience CTC. Our stores, digital convenience, price, value, brands and all the factors that help us balance sales margin over the long run. Moving on to the progress of our Triangle-powered everyday cornerstone is clear in our 2025 loyalty results. But in 2026, Triangle is not just about member count, it's about velocity. Engagement is up, members are more responsive to promotions, and we are delivering more AI-informed offers that generate sales. Growing loyalty attachment also allows us to inspire members to move between banners. CTR customers are shopping Mark's or Mark's customers are shopping CTR, and the flywheel turns driving quantifiable sales. Then, of course, we have our growing roster of big brand loyalty partners to give members more ways to earn Canadian Tire money for everyday activities like filling their tank, banking, travel and the morning ritual of grabbing a Tim's. As you know, eCTM has a multiplier effect, driving sales in our stores. By extension, our most engaged members drive the most sales as we lead into partnerships, engagement clients. Many members are already making incredible use of our Petro-Canada partnership. RBC has come out of the gates quickly, and WestJet and Tim's are on the horizon. As these partnerships come fully online, let me give you a sense of what it can mean in terms of volume and velocity. And there are 2 stats that stand out. First, in terms of volume, today, we have a growing population of about 2 million members engaged in our partnerships through mechanisms like offers, our credit card or the simple act of linking programs. Over time, we see a path to doubling that count. Then in terms of velocity, we have a large pool of members who are highly engaged in our partnership program, including the more than 600,000 who have linked Triangle and Petro points. Analysis shows that these customers are spending about 10% more with us, that's similar but less engaged members. Whatever the measure, growing partnerships is an important lever for growing sales, and we are making good progress in the early innings. True North is ultimately about a more modern company organized around stronger customer connections. Our last 2 cornerstones, customer insights and action, and one team, agile and scaled, are key. Automotive service is a great example of what is possible. In a category that is built on customer centricity and relationships, we have established a clearer understanding of who does or does not come to us and why, applying our existing local knowledge, the growing power of Triangle and new customer insights. As we accelerate automotive service, consider a few numbers. Over the last 5 years, we have grown to $1 billion of sales, compounding at a rate of 7% per year. This is an impressive new baseline and a trend line that suggests further growth. For instance, if we compare our average 15% share in general merch categories to our 10% share in automotive service, we could be looking at a growth opportunity of more than $0.5 billion. In a large, highly fragmented market, we have the assets to compete harder, to keep it capital light and deliver considerable upside for both our customers and shareholders. But our future is a bit more than just identifying categories right for growth. It's more fundamental. It's about a different go-to-market strategy with customers a bit more. We will deliver primarily through faster, more insightful, coordinated strategies across our enterprise and assets. We offered something of a sneak peek yesterday with the announcement of our work with Microsoft on an AI intelligence engine called MOSaiC. Together, we are scaling a program that matches our retail system, stores, sites, marketing, loyalty, partners, products and services to the moments of Canadian life. Last year, we conducted a pilot, prompted an LLM to compute huge sums of internal data and external contacts to be asked to identify the moments of life where CTC is best positioned to serve Canadians, and it surfaced more than 1,000 occasions, from basement floods to weekend workouts, to anything you'd imagine in your own day to day, where we can combine all of our existing assets and new insights to pivot from simply selling products to serving the occasions of Canadian life. If that sounds conceptual, it's not. We will begin to commercialize this approach in the back half of 2026, and I look forward to telling you more in the quarters ahead. I'll conclude by reminding you of our True North vision, 3 simple phrases that represent all we set out to achieve by 2028: stronger customer connections, higher retail performance, accelerated shareholder value. On the back of a strong 2025 results, I hope you agree we've already come a great distance and that we are moving at pace, ready to go distance more. Our strategy underpins our conviction that the business should, over the long term, deliver annual retail sales growth of 3% to 5%, with earnings growing faster than sales. While this is not near-term guidance and any year can be affected by factors such as geopolitics, economics, even weather, True North should position us to deliver these kinds of results more consistently in the long run. I want to thank our team from our offices, to stores, to distribution facilities and beyond. 2025 was a year of considerable change. People performed with determination and transformed with grace. They have my very personal thanks. And while we're on the topic of high performance, I want to add my voice to those cheering on our Olympic athletes, including many with deep ties to the Jumpstart charity. And our very own Trennt Michaud, a figure skater and SportChek team member who not only inspired his teammates here at CTC, but the entire nation. With that, go, Canada, go! We can open the call for questions. Operator: [Operator Instructions] And our first question coming from the line of Irene Nattel with RBC Capital Markets. Irene Nattel: Certainly, you gave us a lot to unpack there. So taking a step back, 2025, certainly unfolded in a more bullish way, shall we say, than what we might have thought a year ago. Can you please walk through what the biggest upside surprises were? And then sort of, I guess, the follow-up question is how some of the initiatives that you put in place in '25 and that are accelerating in '26 can sustain that momentum as we move through this year? Greg Hicks: Yes. Thanks, Irene. So biggest surprises, I think the resiliency of the Canadian consumer just comes top of mind. I think when we started 2025, we suggested to you that we didn't have a lot of certainty in the economic environment looking forward, but we were buying for growth, and that we hoped to see a more resilient consumer coming off a tough period through '23 and '24. So I think when we look to our data in retail, we continue to see spend increases for all income level households. The largest increases this quarter actually came from the highest debt household, debt-burdened households. But for the quarter of the year, we see similar spend increases percentage-wise across income levels and debt burden. So that would be one big surprise. The other big pleasant surprise is just the separation that we're seeing between our loyalty sales and our non-loyalty sales. So I think it speaks to the fact that members are both seeking and we are providing value. So large separation in Q4 and for the year. And that, we believe, is indicative of us managing the system that I spoke to, to engage customers or with that privileged data. So to continue to see that separation, more separation, I would say was a nice and pleasant surprise. And then third that comes to mind is just the power of partnerships. The -- I personally wouldn't have expected to see such phenomenal incremental retail sales performance at the customer member level associated with engaged Petro points, Triangle Rewards linked members, so that 600,000 strong cohort who have linked their programs. I think we're really starting to see the value creation that could come back into our banners in the form of incremental spend or engagement at the member level, and we're excited by continued momentum of our ability to grow, link members with Petro-Canada and now as we as we carry on with other partnerships. I mentioned RBC being strong out the gate. We're already 150,000 members linked. And I think there's a strong value proposition there. So I think our ability to extend our system to get some brand scale around moments in Canadians lives that -- where we don't have a particularly strong owned assets that can help engage members, I think all very positive. I forgot the second part of your question. Those are the 3 big surprises. Irene Nattel: The second part of the question was how you build on that momentum into 2026? Because if we think about what you -- the last comment you made in your prepared remarks about 3% to 5% revenue growth and more earnings growth than that, clearly, you delivered that very well in '25. How do you keep that going? . Greg Hicks: Yes. It's a lot more of the same, Irene. We're going to continue to focus with our dealers and across our corporate-owned banners around the fundamentals of being in stock. That was a big driver in 2025 of winning seasons. The partnerships, as I just talked about, we've got 3 brand new ones rolling into 2026, which will provide wraparound benefit into 2027. And I think one of the things that is exciting, especially as AI is advancing is -- we've talked a lot about our ability to improve our personalization capability. That's been a big focus of us as an organization. But for the most part, that personalization capability has been delivered at a, call it, kind of a look alike or a cohort audience level. And we're really starting to see evidence now and the technology is helping to get that true personalization at the member level. And that's a whole new exciting frontier. It's completely brand new and nascent to us in terms of the opportunity. So I'm very excited about how AI will help shape our personalization journey to truly be more one-on-one. And -- so I lean to those critical areas, Irene, and we're really excited about MOSaiC. We think this is a strategic pivot -- just pivot from selling products to selling occasions. We think it feels natural for us. We're going to stand up. It's grounded in not only customer insight in terms of our brands' ability to travel in those spaces, but also market size and opportunity. So we're going to stand up a couple of what we're calling lighthouses in key occasions in 2026. I'll stop short of telling you what those are for competitive reasons, but we'll certainly talk to you this year about how they perform. So we're excited about this new pivot and our ability to be even more customer-centric going forward. Darren Myers: Irene, maybe let me just add. I think it's clear to everyone that when Greg said the 3% to 5%, it wasn't -- it's not a guide for this year. I mean, clearly, as you think of 2026, we still see the economy bouncing back. We have some tough weather comps, patriotic purchasing. So just consider that as you do your modeling for the year. Operator: Our next question in queue coming from the line of Brian Morrison with TD Cowen. Brian Morrison: Greg, can we just circle back to the same-store sales growth at CTR for the quarter and it was strong, obviously, in the auto and seasonal categories. But at 2.7%, it's not -- it's lower than your 3% to 5% target. I realized for the year, you're within that target. But your 2.7% off of 1.1% last year and the negative the prior year, what is underperforming? Or what categories have room to improve maybe is probably the better way to ask? Darren Myers: Maybe I'll just start, Brian, on that. Just really for the year, I think you highlighted it, it's -- and you got to be careful never to look at a quarter because there's so much variability year-over-year on its own. But recall, when we started the quarter, we were flat in October. So we had a very slow start, and we had a very strong December last year. So when the math comes together, we did well, obviously, in a number of categories that I outlined. I would say the growth was across many, many parts of the business. But more importantly was we hit 3.7% for the whole year. So we're pleased with the full year growth. We're pleased with the Q4 growth as well. But there's always year-over-year impacts and quarter-to-quarter variability. Greg Hicks: I would just add, Brian, I mean the growth was widespread in CTR, almost 90% of categories grew in the quarter, uneven, as you pointed out. So I would point to 2 things. One or two areas. One, we still have quite a bit of separation between -- in this quarter between discretionary and essential. So discretionary was up 4.7% -- or sorry, essential was up 4.7%, discretionary up 1.6%. So that speaks to that kind of discerning purchasing again. We did have some good growth in snow blowers. So I take it discretionary. But beyond that, that kind of healthy discretionary business is something we would look to come around in 2026. And then second is our living division in CTR is underperforming relative to the other divisions. Again, still growing, but an area of focus for the team. We're not feeling the same level of newness and the innovation from our suppliers that we have in many of the categories in that business. And it's something that TJ and Micheline Davies, the team and all of our merchants are working on pretty aggressively and trying to turn that newness in living on its head and really drives excitement for 2026. Brian Morrison: Okay. And my follow-up is, maybe Darren, you gave us good color on the gross margin expectations for this year. I'm more focused on the OpEx in 2026. Maybe just directionally, should we expect leverage this year? And maybe the key drivers that we should be looking at to take into consideration? . Darren Myers: Yes. Brian, as I mentioned in my prepared remarks, the way to think about OpEx is, I mean, certainly with True North and changes we're making and operating in a more disciplined way and better alignment on the organization, we are very focused on managing the rate of growth. Of course, the actual rate is going to depend greatly on where the revenue number falls. So I want to be careful, if not trying to position -- overly position that. But we do see inflation. We continue to have targeted investments, including in AI. And then we will have productivity. As you know, we have $30 million of savings this quarter. It was the first quarter of full savings. Those restructuring savings started in Q3. We also had higher vacancy rates in 2025 that you need to consider as we were going through True North and taking the actions we took. We obviously weren't hiring. So we'll have a little bit of a headwind from vacancies. Probably the best way to think about the restructuring savings is we're on track to the $100 million relative to 2024. So if you kind of want to model that, and maybe I'll leave it at that. Operator: Our next question coming from the line of Mark Petrie with CIBC. Mark Petrie: I wanted to ask just a very high-level question actually, just about the revised org structure and executive alignment and how you think that has affected the business? What's gone as expected, and what's sort of been a surprise coming out of that? . Greg Hicks: Mark, it's Greg. Yes. I mean I think True North fundamentally is about transforming our operating model to better compete in this new era of retail defined by scale players. So fundamentally, it was about aggregating the scale that we created for ourselves. That was the primary rationale for the extensive changes we made to the workforce. As we talked before, very difficult but important decisions to make. We think the rationale was well understood by our teams. So organization is now complete. It probably completed more towards the end of, kind of, call it, September, October. So it's still relatively fresh. But our focus now is turning that -- all of our attention to value creation. So we're working through process changes, working through technology duplication, tech and data infrastructure so that we can better deploy AI for value going forward. And then working through the new and vacant roles created through the organization. I think whenever you do a big organization like this, you don't get everything right. So we probably got some tweaking to do in 2026 in some areas. But I really like what I'm seeing so far, especially in the areas of resource and capital prioritization, performance management. Darren's committed to put a real strong focus on in-season performance management. And as we look to where we're spending our cash and how we're kind of allocating resources, I feel like we're in a much better rhythm and management system for making trade-offs. And just managing the decision-making associated with ensuring that those investments create value because we're prioritizing it at an enterprise level, not banner by banner. So lots more work to do to kind of deliver on that value creation. Big, big change. But now the work really gets started on process reengineering, technology duplication, all the stuff kind of behind the curtain, so to speak, that will make us a more efficient, agile retailer. Darren Myers: Mark, maybe I'll just add, since I joined, and Greg, obviously, before I joined was talking to the HoldCo and OpCo. And it's been a big change. I mean, the kind of the -- as Greg said, the rhythm and the performance management alignment of the team, I mean in the fourth quarter, we're able to make decisions much sooner, and it is showing up in our results, and it will continue to get better. We still have work to do. It's hard to turn a big ship, but we're making good progress, and I do think it will lead to longer-term consistency and improved results. Mark Petrie: Yes. Okay. I appreciate that. I wanted to also just follow up on your comment, Greg, with regards to the assortment and sort of, I think, newness is the word you used. I think this is another year where own brands penetration was relatively stable, down a little bit. Does that figure into that comment at all? And how are you feeling about that as a lever in the business today? Greg Hicks: I feel really good about own brands performance, the overall role they play. We feel really good about the portfolio. I would say the most proud in terms of an accomplishment in 2025 is what we're seeing from a product quality standpoint. The whole portfolio reached the lowest defect rates that it has since starting own brands. The business on the top line is performing better than national brands, both in the quarter and for the year, continues to appreciate our margins, while differentiating the offering in the retail system. The penetration, we're not as fast as that -- on that, Mark, as we once were. And mostly, it relates to Mark's and Chek, especially Mark's, the BBB concept is our concept for the future. We think it's the best representation of our assortment standing really tall in front of our membership. And the mix of national brands to own brands is significantly different in those stores, the non-BBB stores. And we think that's good. We're managing the blended margin associated with that concept. We can see evidence, and you've heard us talk to the fact that we've got brands now in the mix -- the national brands in the mix that are attracting a much younger demographic. I think I've talked about the fact that my teenagers think that Mark's is pretty cool these days based on some of the brands that they carry. So yes, all that to say, not as fast about penetration increases going forward at the system level, and continue to feel really, really good about its ability to -- the portfolio's ability to differentiate us with product quality, great value and running harder on the sales line than national brands for us. Operator: Our next question coming from the line of John Zamparo with Scotiabank. John Zamparo: I wanted to ask about patriotic purchasing. And I wonder if you've seen a resurgence or a continuation of that. And this is obviously hard to measure. It sounds like HPC has contributed to that, the timing of the Winter Olympics add some noise there. So surely, those are both contributing, but I wonder if you get a sense that this wasn't just a onetime item in '25 and that lapping that in the first half of this year might not be as meaningful a headwind as perhaps we thought it would be a few months ago. Greg Hicks: John, it's Greg. Really tough, as you pointed out, your question to tease out, I think we suggested that back coming out of Q2's call. We kind of -- we felt -- it felt more subjective and objective when we were in it in Q2, and I think we had suggested in Q3 that we kind of felt kind of waning sentiment around patriotic purchasing. So I don't really know, to be honest, how to think about it. I don't think we haven't planned it as a major kind of negative building block for the year. I think we're going to continue to play our game and do all the things that we have outlined in terms of our go-to-market strategy in 2026. I think where it is most objective, John, is probably in the SportChek business. It's not really patriotic purchasing, although maybe some of it's caught up, but that is when you think about Blue Jays and Olympics. Blue Jays probably represented about 1.5 points a comp, incremental comp for the SportChek business. But this year, we have the World Cup and the Olympics to work to offset that. So I do believe there was some Canadian pride associated with the nation getting behind the Blue Jays. So objectively, that's probably the finest point that we can put on some degree of patriotism with the fact base. John Zamparo: Right. Okay. That's helpful. And then just a modeling question. I want to better understand the impact of the extra week. So first, can you confirm, I think you said $287 million in additional retail sales and $40 million in IBT. If that's the case, that's about 9% of last year's retail sales number in Q4, but it's about 20% of last year's IBT. That's more than I think we would have expected on the income line. So can you help us understand how SG&A is accounted for in that calculation? Darren Myers: On SG&A, so your numbers, the absolute numbers were correct. I have a little trouble following your math on the percentages. But the SG&A, I'll leave it to you, we're not giving gross margin and SG&A. But if you apply just the regular gross margin rate or the rate we had, you'd see a slightly lighter SG&A, which is typical on the extra weeks because you don't have all the same costs within there. But John, I'm not sure I caught your percent growth. That was year-over-year for the quarter, I assume? John Zamparo: Correct. Yes. Darren Myers: Yes. So if you took it for the quarter, it'd be about half the growth on the revenue, maybe you did say that. And just under -- we would be just probably under half the growth on the EPS. So 20% EPS without it type of number without the extra week. Operator: Our next question coming from the line of Vishal Shreedhar with National Bank Financial. Vishal Shreedhar: With respect to the underlying business, and it seems like management feels some enthusiasm with regard to the initiatives that you've implemented. But when we're looking at it, we see the start of the quarter with respect to sales, indicated last conference call starting out flattish. Then obviously it ended out strong. There's a few more transient events in there, including weather and some other events in there as well. So how should we think about how to assess the underlying momentum? Q1 is going to get a weather benefit as well. So what would you point to, to help us better understand what the true comp is moving at? Greg Hicks: Yes. I don't know if we can help you discern to a finite point impact of whether I think Darren suggested that we did have tough comps in October. We had strong comps in December. That wasn't -- the October comps we were dealing with, which came in post and then some other things in the performance of the business. We can tell you, we feel -- we believe that we were on pace for a strong quarter before weather hit in December. But make no mistake, it was a positive contributor in the quarter for all banners that we spoke to, some of the categories that performed really well across the banners, and those are rather dependent. I'd remind you though, your commentary around Q1 of this year, we basically just traded off weather in January of 2026 for February of 2025. So we had -- if you recall, last year, we -- Central Canada, Ontario right through to Quebec had very, very strong snowfalls, ice issues, et cetera. So we're comping that as we speak. But listen, we've worked really hard to be Canada's destination for winter weather, like we make no excuses for that. And so I think the teams executed really, really well. The dealers are replenished. Our supply chain stood up resiliently and got as much inventory back in stock. So we think our in-season management was really strong. But it does layer over top of a healthy underlying business. I'm not sure what else I could say on that. Vishal Shreedhar: Okay. And just moving on to the gross margin performance, very solid again. And I think, Darren, you can correct me if I misinterpreted this, but you expressed the North Star being 35% plus, and I don't recall it being expressed in that way as well. Does that -- is that increasing of the expectation of what the North Star is? Or should we think about it's in line with what you've said in the past? . Darren Myers: Yes, it's a good observation. We weren't saying plus, we were around 35%. We've added the plus. We feel very good about the capabilities that we've built, the muscles that we've built in terms of our processes. And we're making, as Greg mentioned, good progress with the value orientation while doing this. So the actual math, if you did the real math based on removing Helly, the True North would be 35.2%. We called it 35%. We came in at 35.5%. We like the plus, and we certainly are looking to maintain our momentum, but we're not going to start giving guidance on the gross margin line. Good observation. Vishal Shreedhar: Okay. Congrats on the quarter. Operator: Our next question in queue coming from the line of Jonathan Matuszewski with Jefferies. Andres Padilla: This is Andres on for Jonathan. My first one will be on Triangle Rewards. So with the RBC partnership ramping quickly, how is that informing how you're thinking about WestJet and Tim's later in the year? And as you look to expand that network further, what verticals do you see the biggest opportunities for future partnerships? Greg Hicks: Yes. Thanks for the question. You're right, we're feeling good about the ramp thus far in the RBC partnership. It's early days. I think I may have mentioned, we're up to 150,000 linked members. 50,000 came in January. So we would love that to be kind of a run rate. More Canadian Tire money is being issued. We're seeing new Triangle sign-ups. I think the 3x accelerated is a strong value prop for the RBC partnership and functionality to be able to convert Avion points to eCTM will be in place by spring. So I think, generally speaking, we are developing the playbook here with respect to how to set expectations and objectives for each partnership and then work with the partner in a joint business planning-type relationship, whereby we both have the same targeted outcomes. We have an integrated scorecard. And we've stood up a small but mighty partnership team to help manage the relationship advantage to the outcomes that we're looking for. So I think that -- those kind of organizational muscles, I'm happiest in terms of what I'm seeing because it is net new. I just love the fact that it's grounded in the outcomes that we're trying to achieve. And I think we're deploying the same type of playbook all the way from kind of my relationship with the top of the house in each of our most critical partners, all the way down to this integrated scorecard. So we're on track, feeling good about launching WestJet and RBC this year. Each partnership has different expectations for those outcomes that I spoke to and membership engagement, and we're just actively managing it. We're -- I think we've said before, we're not looking to build a vast coalition to the last component of your question. We're focusing on strategic industry verticals that align with everyday customer needs. I think we're leveraging this kind of asset-light approach to grow in financial services, travel. It's a limited number of other verticals that we would consider. I'll probably stop short of naming them, but just think about where Canadians have a good amount of spend in a vertical that we don't participate in, and you can probably figure out where we're active. But we've got our -- we have our hands full with partnerships we have here. And because, as I said earlier, we see so much value, turning our attention to making sure that we get value in each partnership before we add a bunch more is really important to us. Andres Padilla: Great. And then just a quick follow-up. So you guys have made meaningful progress in reshaping the customer experience through the store refreshes with now the 70 planned refreshes for '26, up from 52 in '25. How are you thinking about the cadence of the store refresh plans from here? Greg Hicks: Yes. So this year leans much more into Mark's. We've got, I think it's about 13 BBBs in market. Right now, we've got 10 on the docket this year. I think we've got just over 30 total projects of the 70 would be Mark's, so 10 BB and then some refreshes, et cetera. That's because of what I talked about earlier, we're loving how the concept is showing up in front of the customer. It's providing a strong customer engagement, top line performance at returns that are above our hurdle rate. So we'll all day long kind of invest in those types of dynamics. We're 150 in on Concept Connect across CTR. So more work to do. I think when we originally identified Better Connected, we thought that we could get to 225. So more work to do there. That's how to think about the runway. And then SportChek kind of feels to us similar to Mark's in just kind of, call it, a year or 2 behind. The destination sport concept is off the charts performance right now. We couldn't be happier with what we're seeing. We've got 4 in market. We're opening 3 this year. Performance is well above our hurdle rate. And certainly, our expectation from '27 onward is that we will build more per year than we're doing this year. So I think this is our opportunity to refresh the brand, the experience, either for the athlete, tell stories with and for our brand partners. I think when we really zero in on that business, we look to Dick's Sporting Goods in the U.S. and see us a few years behind their journey. I think we should be able to invest in this concept for growth, drive strong returns and deliver both great customer and employee experiences. The athletes that work in our stores, a lot of these destination sport concept. So hopefully, that kind of gives you a picture in terms of how we're thinking about the life cycle and stage of each of the big concepts. Operator: Now last question will come from the line of Chris Li with Desjardins. Christopher Li: I know there's obviously a lot of moving parts. But when you exclude the extra week, it seems like CTR revenue growth this quarter was more in line with POS. Do you expect this to be the case for 2026? I think last quarter, you mentioned that inventory levels for spring and summer were slightly elevated, but I think that was because of air conditioners in Alberta. But just overall, I wanted to see how we should think about revenue growth? Should we be more in line with comp sales for this year? Greg Hicks: Yes. Thanks for the question, Chris. So we expected last year, the U.S. revenue ratio to be fairly in line, but revenue ended up outpacing sales as dealers build for inventory through the year. As you point out, the dealers did end Q3 a little heavy in spring/summer inventory and the end of the year with a build and winter inventory. So overall, up about 5%, but their winter inventory has been clearing given the weather experience to date. So we'll update you as we normally do regular course after Q1 ends and give you a sense of their ending inventory position and its expected impact on revenue in the fourth quarter. Generally speaking, though, because of the build, now we got this planning assumption wrong last year, but we do expect -- we expect some drawdown in inventory relative to POS. In 2026, we think that it's healthy given the starting position and the elevation in spring/summer. So that's our expectation and planning assumption for the year. And we'll keep you posted, obviously, as we move through it. Christopher Li: That's helpful, Greg. And maybe my follow-up, you mentioned that you recently negotiated some amendments to the contract with the dealers. I was wondering, to the extent that you can, can you share with us how some of those amendments help you further align your objectives with your True North strategic priorities? Greg Hicks: Yes. So you're right. We did amend the contract with the dealers. And I would say, at the highest level, the requirement for engaging in contract discussions was really about making sure that we had broad and joint alignment on the True North strategic priorities. And so we really feel -- I think the relationship is so strong. We came together on the fundamental principles and financial frameworks that have historically made our CTC dealer partnerships so strong and effective. And we added new specificity to make sure we were aligned on True North to share commitments like expanding omnichannel retail. Certainly, the growth of Triangle Rewards, how we think about investing in the issuance of Canadian Tire money. And then because brand trust is just underpinning of this entire True North strategy and our retail system going forward, as I explained in my prepared remarks, just making sure that we had high standards of performance across our network stores. And so those 3 or 4 critical areas, all in service of True North, and dealers completely aligned to the intent and feel really good that the dealers are with us on True North. They're super, super excited about MOSaiC and AI, I can tell you, in terms of what that could do for their businesses. And so I really feel, strategically, we're in a really good spot and the dealer just -- or the contract just reinforces the strength of the relationship and the alignment. Operator: I will now turn the call back over to Mr. Greg Hicks for any closing remarks. Greg Hicks: Well, thank you for your questions and for joining us today. We look forward to speaking with you when we announce our Q1 results at the AGM on May 14. Bye for now. Operator: This will conclude today's call. You may now disconnect.
Operator: Hello, everyone, and thank you for joining us on today's call Royal Gold 2025 Full Year and Fourth Quarter Conference Call. During today's call, we will have a Q&A session. [Operator Instructions]. With that, it's my pleasure to hand over to Alistair Baker to begin. Please go ahead when you are ready. Alistair Baker: Thank you, operator. Good morning, and welcome to our discussion of Royal Gold's fourth quarter and year-end 2025 results. This event is being webcast live, and a replay of this call will be available on our website. Speaking on the call today are Bill Heissenbuttel, President and CEO; Paul Libner, Senior Vice President and CFO; and Martin Raffield, Senior Vice President of Operations. Other members of the management team are also available for questions. During today's call, we will make forward-looking statements, including statements and other projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA and cash G&A. Reconciliations of these measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website. Bill will start with an overview of 2025 performance. Martin will provide portfolio commentary and Paul will give a financial update on the quarter. After the formal remarks, we'll open the lines for a Q&A session. I'll now turn the call over to Bill. William Heissenbuttel: Good morning, and thank you for joining the call. I'll begin on Slide 4. 2025 was a transformational year for Royal Gold. We set records for revenue, operating cash flow and earnings and completed some material acquisitions that set us up very well for the current strong gold price environment and over the longer term. We also had developments within our portfolio that adds significant value to some of our largest assets. For the full year, revenue was $1 billion. Operating cash flow was $705 million, and earnings were $466 million. These were increases of 43%, 33% and 40%, respectively, over 2024. After adjusting for unusual items throughout the year, net income was a record $510 million a 47% increase over 2024. We are a gold-focused company, and gold contributed 78% of total revenue for the year. The strong gold price, combined with our low and stable cash G&A allowed us to maintain an adjusted EBITDA margin of 82% for the year. During the year, we paid over $118 million to shareholders and dividends and raised our annual dividend to $1.90 per share for 2026. This is the 25th consecutive annual dividend increase, which is an unmatched record in the precious metals industry. Since our first dividend in 2000, we have returned approximately $1.2 billion to shareholders. We were very active during the year and made several meaningful acquisitions. We acquired Sandstorm Gold and Horizon Copper, which allowed us to meaningfully grow and diversify our portfolio. We now have the largest and most diversified portfolio of mining assets in our sector. We acquired a gold stream on the producing Kansanshi mine from First Quantum, which adds another large, long life and cash flowing assets to the portfolio. And we acquired a gold stream and royalty on the Warintza development project increased our exposure to the Xavantina mine and added a further royalty interest on the Lawyers-Ranch project. Our portfolio performed well during the year, and we achieved full repayment of the advanced stream deposits on a Rainy River, Pueblo Viejo and Andacollo mine. We acquired these interests in 2015 and each remains an important contributor to the portfolio. We also saw some very positive news from within the portfolio with the life of mine extension at Mount Milligan, the recently approved expansion at Khoemacau, and significant exploration success of Fourmile. And finally, we got off to a quick start on rationalizing and simplifying the Sandstorm and Horizon portfolios. The integration of these portfolios is largely complete, and we're looking forward to further daylighting the value in those portfolios. Paul will discuss the fourth quarter in more detail, but I'd like to comment that there were several unusual financial items last year and in particular, this last quarter that were onetime in nature and related to this acquisition activity. We started 2026 with these items behind us, and we are hosting an Investor Day on March 31 to put our 2025 activity into context, provide 2026 guidance and give directions on how we see growth over the longer term. Turning to Slide 5. We performed well in 2025 compared to guidance. Our annual guidance was issued in March 2025 based on the interest in our portfolio at that time. We didn't update guidance during the year to include the impacts of the Sandstorm, Horizon or Kansanshi acquisitions and we likewise didn't include the impacts of these acquisitions in the comparison of actual results to our guidance ranges. Compared to the guidance ranges for the year before the new acquisitions, all categories were within the guidance range except for revenue from other metals, which exceeded the high end of that range. I'll now turn the call over to Martin to discuss portfolio performance in the fourth quarter. Martin Raffield: Thanks, Bill. Turning to Slide 6. Portfolio performance was solid for the quarter. Volume was 90,800 GEOs with record revenue of $375 million, which included new revenue of $32 million from Kansanshi and $49 million from Sandstorm, Horizon. We closed the Sandstorm, Horizon transaction on October 20, so the revenue from these interest does not reflect the full quarter. Royalty revenue was up by 42% from the prior-year quarter to $111 million. We saw very strong revenue from the quarter's CC Zone in Penasquito, partially offset by weaker revenue from the Cortez legacy zone. Revenue from our stream segment was $265 million, up over 110% from the same period last year. We saw higher contributions from all our stream interest with materially higher sales from Pueblo Viejo, Andacollo, Rainy River and Mount Milligan. I'll now turn to Slide 7 and give some high-level commentary on notable developments within the portfolio in the last quarter. The portfolio has grown to include interest on about 80 producing and 30 development assets. And we've changed our disclosure this quarter to group our interest on a regional basis and break out the revenue for the largest interests. This should help you track our most material revenue drivers. At Mount Milligan, Centerra reported it continues to progress engineering and studies to support permitting for the life of mine extension to 2045. At Pueblo Viejo, Barrick reported continued progress on the life of mine extension with a focus on housing and resettlement and the engineering and permitting for the new tailings facility. Barrick also reported guidance for its share of gold production of 350,000 to 400,000 ounces in 2026. At Cortez, Barrick reported continued exploration success at Fourmile with the extension of the Dorothy zone and identification of new mineralization below the Mill Canyon stock and down to the Charlie area. Barrick also reported 2026 production guidance for the quarters complex of approximately 700,000 to 780,000 ounces on a 100% basis. Our royalties overlap the quarters, and we expect an average blended royalty rate of 3.5% to 4% over this production in 2026 versus 2.6% in 2025. At Xavantina, Ero filed an updated technical report showing a 4-year extension to the life of mine to 2032. Ero expects 2026 gold production to range between 40,000 and 50,000 ounces. Ero further disclosed that it sold approximately 15,000 ounces of gold and gold concentrate in the fourth quarter, and it expects concentrate sales to continue through mid-2027. The sale of gold and gold concentrate is not included in their guidance. At Fruta del Norte, Lundin Gold reported continued exploration success and recent drilling continues to advance the understanding of the emerging porphyry belt adjacent to the mine. Lundin has identified a large intrusive complex hosting several shallow copper-gold porphyry systems within a short distance of each other, and the newest discovery extends the porphyry corridor to at least 10 kilometers in length. At MARA, Glencore reported that feasibility study work is ongoing with a final investment decision targeted for the second half of 2027. And first production expected from the Agua Rica deposit in 2031. At Kansanshi, we received our first stream delivery in early October, and we are now receiving regular monthly deliveries. First Quantum declared commercial production at the S3 expansion in December and 3-year copper production guidance that increases with the ramp-up of the S3 expansion feed. Based on First Quantum's copper production guidance and production to delivery to sales timing, we expect 2026 gold sales attributable to our stream interest of 26,000 to 31,000 ounces, which rises to 38,000 to 43,000 ounces in 2028. At Khoemacau, MMG reported that the feasibility study for the expansion was approved by the Board and production of concentrate is expected in the first half of 2028. MMG is targeting annual silver production of 4 million to 4.5 million ounces, and we expect our share to be about 60% at this level. We expect silver production to our account of 1.45 million to 1.55 million ounces in 2026. Recall that our stream has a 90% payable factor applicable to this production. At Platreef, by Ivanhoe mines reported that development continues on schedule. The first sale of concentrate from Phase 1 was completed late in the fourth quarter and the Phase II expansion is targeted for completion in the fourth quarter of 2027. We expect to see first revenue from Platreef in the first half of 2026. And finally, at Hod Maden, SSR announced the results of a feasibility study for a 10-year life of mine with annual average production of 159,000 ounces of gold and 21 million pounds of copper and a development capital cost of $910 million. I'll now turn the call over to Paul. Paul Libner: Thanks, Martin. I'll turn to Slide 8 and give an overview of the financial results for the quarter. For the discussion on Slides 8 and 9, I'll be comparing the quarter ended December 31, 2025, to the prior year quarter. Revenue for the quarter was up strongly by 85% to $375 million. As Martin noted, during the quarter, we saw a combined new revenue of about $82 million from the Kansanshi Gold stream and the Sandstorm Horizon interest. Metal prices were also a major driver of the revenue increase with gold up 55%, silver up 74% and copper up 21% over the prior year. Gold remains our dominant revenue driver, making up 78% of total revenue for the quarter, followed by silver at 11% and copper at 8%. Royal Gold has the highest gold revenue percentage when compared to our large cap peers in the royalty and trimming sector, and we expect our revenue mix will remain consistent after the recent acquisitions. To help you with your Q1 estimates, we expect first quarter 2026 GEO sales to be in line with the fourth quarter. We will provide details on 2026 revenue guidance at our Investor Day. But at this point, we expect the first quarter sales to be the lowest of the year and not reflective of the full year. Turning to Slide 9. I'll provide more detail on certain financial items for the quarter. G&A expense was $17.6 million, which is approximately $9 million higher than the prior year. The higher G&A expense this period was mostly due to higher corporate costs related to integration activities associated with the Sandstorm and Horizon Copper acquisition. These integration costs were nearly $4.5 million, and many of these costs are largely onetime in nature and are not expected to be recurring. Employee-related costs, which also includes noncash stock compensation, were $3 million higher during the quarter. Like the integration-related costs, much of these additional employee costs this quarter are not expected in future periods. Moving forward, we are estimating our 2026 total G&A expense to range between $50 million and $60 million. This estimate reflects some of the cost synergy savings we expected when we announced the Sandstorm and Horizon Copper acquisition. Our DD&A expense increased to $80 million from $34 million in the prior year. On a unit basis, this expense was $881 per GEO for the quarter compared to $444 per GEO last year. The higher overall expense was primarily due to $33 million in additional depletion attributable to the producing interest acquired from Sandstorm and $13 million in additional depletion from the new Kansanshi gold stream. Depletion expense and depletion rates for the producing Sandstorm interest are higher than historical amounts reported by Sandstorm. This is primarily due to an increase in the carrying values of these interests, which were stepped up as part of purchase accounting rules under U.S. GAAP. Excluding the additional depletion as part of the Sandstorm interest and the new Kansanshi stream, our 2025 DD&A expense was within guidance range we provided earlier in 2025. We will provide more detail on 2026 DD&A expectations when we provide 2026 guidance at our upcoming Investor Day. Costs related to the Sandstorm Horizon Copper acquisition were $14 million for the quarter. We highlighted these costs on our last conference call, and these costs are attributable to financial advisory, legal, accounting, tax and consulting services specific to the acquisition. Again, these costs are onetime in nature, and we do not expect much, if any, of these costs beyond this quarter. As we announced in November, we sold all the Versamet Royalties common shares that we acquired with Sandstorm. The sale resulted in a onetime loss of approximately $48 million during the quarter. The loss is due to the difference between the sale price of CAD 8.75 per share and the fair market value of the shares on the date we acquired Sandstorm, which was CAD 11.60 per share. We view the value of this shared position at CAD 5.20 per share on the date of the Sandstorm transaction announcement in July. So while we recognize an accounting loss, we sold the position at a price that was 68% higher than our original valuation. Interest and other expense increased to $17.7 million from $1.4 million in the prior period, due primarily to higher average amounts outstanding under the revolving credit facility in the current quarter. Tax expense for the quarter was $53 million, resulting in an effective tax rate of 36% compared to tax expense of $26 million in the prior year. The higher income tax expense is primarily attributable to higher pretax income and onetime acquisition-related tax items. Absent the unusual and nonrecurring items, our effective tax rate for the quarter was approximately 22.5%. Our annual effective tax rate for 2025 was 17.8% and within the guidance range we provided earlier. We will provide more detail on the expectations of our effective tax rate, when we give our 2026 guidance. Net income for the quarter was $94 million or $1.16 per share, which compares to $107 million or $1.63 per share in the prior year. The decrease in net income was largely due to the onetime loss on the sale of the Versamet shares and the onetime costs related to the Sandstorm Horizon Copper acquisition I just outlined. After adjusting for these items, adjusted net income was $155 million or $1.92 per share. Finally, our operating cash flow this quarter was a record $242 million, up significantly from $141 million in the prior period. The increase was primarily due to higher stream and royalty revenue and proceeds from the first delivery of deferred gold for the Mount Milligan cost support agreement. These increases were partially offset by the higher acquisition-related costs I mentioned earlier. In summary, it was a solid operating quarter, but with some unusual items related to the Sandstorm and Horizon Copper acquisition that impacted our financial results. As much of the Sandstorm and Horizon copper acquisition-related noise is behind us, I am anticipating that we will return to a steadier state beginning with our first quarter results. I'll turn to Slide 10 for a summary of recent changes to our outstanding debt. As discussed in our last conference call, we drew an additional $450 million on the credit facility on October 10 for the closing of the Sandstorm and Horizon Copper transaction, which resulted in a debt balance of $1.225 billion. Since October, we have made significant process paying down our debt. We ended the year with outstanding debt of $900 million. And with further repayments in early 2026, we have reduced our outstanding balance to $725 million and now have $675 million available under revolver. New growth within the portfolio, strong metal prices and the proceeds received from the Versamet share's sale have helped us reduce our debt faster than we originally expected. Based on current metal prices and absent further significant acquisitions, we now expect to fully repay the balance in early 2027, earlier than our previous forecast of mid-2027. I will end on Slide 11 and summarize our financial position. At the end of December, we had total available liquidity of $757 million between the available amount on the revolver and $257 million of working capital. With respect to further financial commitments, $200 million of funding outstanding for the warrants acquisition. We expect to fund the remaining commitment in 2 tranches of $50 million this year, with the first tranche expected in the first quarter and the second in May. Although we will work to convert the Hod Maden joint venture entrance into another investment structure, we plan to continue to fund our share of project costs during the year in order to maintain our 30% ownership interest. That concludes my comments on our financial performance for the quarter, and I'll now turn the call back to Bill proposing comments. William Heissenbuttel: Thanks, Paul. 2025 was a very active year for us, and this quarter had a lot of unusual items related to that activity and introduced significant noise into the results. These onetime items are now behind us. Our underlying portfolio is performing well and after a record year in 2025, we're starting 2026 from a position of strength. Royal Gold has the most diversified and gold-focused portfolio amongst our large-cap peers, and we believe we're positioned as a premier company in our sector. We are looking forward to sharing our vision of the future at our upcoming Investor Day. Operator, that concludes our prepared remarks. I'll now open the line for questions. Operator: [Operator Instructions] Our first question comes from Fahad Tariq from Jefferies. Fahad Tariq: And can you provide maybe some color on what the deal pipeline looks like right now. We're hearing from one of your competitors that because of this maybe potentially larger copper builds that are coming, there could be significant byproduct streams available as part of the financing strategy. So just curious what you think in terms of the deal pipeline and thoughts around bigger copper projects. William Heissenbuttel: Yes. Thanks very much for the question. I might see, if I can get Dan Breeze on the line who runs our business development, just to give you -- he can give you a sense for what he's seeing. Daniel Breeze: Yes. Thanks, happy to give you a bit of color on what we're seeing. And obviously, 2025 was a great year for us, a great year for the industry. And I think what we're seeing is more of the same in terms of our pipeline, it looks pretty strong at the moment. I think one of the things that we've noticed is the market has been pretty volatile looking at the commodity prices, but it just doesn't seem to be slowing down the activity. I mean, we've seen a number of deals announced this year already -- so I'd say I think the -- sort of the framework of what we're seeing in terms of actual deals is very much like what we've seen announced year-to-date. So third-party royalties, great market to sell those into -- and then to your specific comment around the base level producers and looking to surface value by selling noncore precious exposure. I think that's fair to say. Obviously, the BHP, Wheaton deal this week. But if you look back at our transactions last year at Kansanshi and Warintza, they fit that category as well. And that's really where our product works extremely well. It works for both the seller and the buyer. So I think that's a fair comment. I think it's a good market to consider that from a base metal producer perspective. And then we're also seeing development opportunities over projects on primary gold assets as well. So overall, it's a good -- it looks like it's going to be a good market for us going forward into 2026. Does that help you? Fahad Tariq: Yes, that's great. Yes, that's great. Operator: Our next question comes from Cosmos Chiu from CIBC. Cosmos Chiu: Bill and team. Maybe my first question is on Hod Maden as you mentioned, SSR Mining have recently put out a new technical report on the asset as the operator. Were you happy with those numbers? And then secondly, are you happy with the time line that they kind of put out there, knowing that a construction decision has yet to be made. And when I ask SSR Mining, it sounds like they're trying to involve all parties involved to make a final decision. So on that front, is Royal Gold actively involved in terms of any discussions in terms of a go-ahead decision? And then lastly, as a royalty company, what's your long-term strategy here at Hod Maden. Right now, you're a joint venture partner, you need to contribute CapEx into it. Ultimately, are you looking to convert that into some kind of royalty, some kind of stream -- so sorry, multipart, but I'm sure you can answer all my questions. William Heissenbuttel: There are a lot of pieces to the question. Let me see, if I can cover all. Cosmos Chiu: Answer the questions, that you want to answer Bill. William Heissenbuttel: Were we happy with the technical study? Yes, we were. We knew when we were doing the due diligence on Sandstorm and Horizon, we knew the capital costs were higher. That was part of the due diligence. So it wasn't a surprise you look at the IRRs, it's outstanding gold project. I mean, if we were in the business of being an operating partner, it would certainly be 1 I think we'd want to hang on to. So yes, happy with the technical report. A construction decision, I think our approach might be a little bit different than an operating company. If the construction decision gets put off a little bit that gives us a little more time before there's heavy spending to work on what we might ultimately try to convert this into. So a delay here is not all that bad. And I think Rod was talking about 2 to 3 years until production. That's fine. We're not saying to investors, we're going to deliver Hod Maden ounces in a certain period of time. So -- that's not an issue. But we are a joint venture partner. So yes, we are involved in discussions with SSR on the technical report, on development strategy, on spending -- right now, we're proceeding as though we are a joint venture partner, and we're taking that responsibility. And then I think the last part of your question was the strategy, I think we've been pretty clear, we would like to turn it into something that looks a little more familiar, where we don't have the overrun risk, the operating cost risk. But that's going to take some time. And as you can well imagine, SSR has been busy with the technical report. We've been busy with the press release, working on the partners trying to move forward to a construction decision. So I think that, to the extent we're able to do it, I think it plays out over the course of the rest of this year. Cosmos Chiu: That's great. Maybe moving on to another stream or option that you acquired from Sandstone MARA, it's in Argentina, certainly, Argentina is looking much better now in terms of supporting mining. This is an option to convert into a 20% gold stream eventually. So could you maybe talk about the mechanics behind that potential conversion? What needs to happen and potential timing here? And the payment that you need to make? William Heissenbuttel: Yes. So I think we've got like -- we've got a very small royalty as it is and what we're able to do is -- it is basically forgo that royalty and convert it into the stream. We have to spend, I believe it's $225 million. It could be off there a little bit over the course of whatever the construction period is to earn that gold stream. The economics of how that investment was calculated was formulaic with a cap -- and I think, if you didn't have the cap, the formula would result in a much larger investment. So economically, we have every incentive to invest that money to turn the small royalty into a meaningful gold stream. Cosmos Chiu: Great. And then maybe 1 last question. Looking back, as you mentioned 2025, you hit all your different guidances for commodity, but you also exceeded in other metals. Could you maybe talk about some of the details behind how you exceed it, I think, you came in at $25 million. Guidance was $18 million to $21 million in terms of revenue. What drove that outperformance? And is that sustainable? Should we expect that to be factored into how you guide other metals in for 2026? William Heissenbuttel: I may turn this over to Paul. Paul, I believe the excess was primarily due to metal price. But correct me, if I'm wrong there. Paul Libner: That is largely the case, Bill. And if you want more specifics, I mean, on the -- Martin, if you also have further information or details you can provide there, but largely was metal price. Operator: [Operator Instructions] Our next question comes from Derick Ma from TD Cowen. Derick Ma: I wanted to ask about Pueblo Viejo, the silver stream there. Barrick seems to be making progress from the tailing situation perspective. And I recognize there isn't much detail on the silver side. But conceptually, because of the size of the silver stream and the deferred ounces, is there a lack of incentive for the operator to prioritize silver here? And what can Royal Gold do to kind of pull that forward? William Heissenbuttel: A lack of incentive. I don't think so. If you just break down the math. So it's a 75% Silver Stream, but we pay a 30% cash price. So if you take 70% of 75%, you're basically splitting the economics almost in half, and it only covers 60% of the projects. So -- when you do that math, Newmont actually has a 40% interest in the silver, and we and Barrick sort of have around a 30% interest. So I don't think there's a lack of incentive to do that. And I would also think that the entity that has 100% interest in economically in the silver is probably the DR government that gets royalties and taxes on it. So I don't think we don't get the sense. We go to site every year. I don't get the sense that Barrick is just sitting on solutions because they don't see the economic benefit as a whole. Derick Ma: Okay. So that's clear. And then in terms of the royalty revenue, it's a bit lower than my expectations at least for Q4. Why doesn't Royal Gold provide preliminary royalty -- sorry, royalty revenue expectations on that side of the business? Is it a matter of information right to get on some of these assets because some of your peers do you put out preliminary revenue in GEOs inclusive of the royalty assets? William Heissenbuttel: Yes. And I'm actually surprised we're able to do it, to be honest with you, just given -- maybe it is just information rights. But Paul, maybe you can just walk through when we tend to get the information from the end of a quarter or a year to when we put out financials, what happens is we start to find operators reporting over a period of time, and we don't necessarily have an expectation of what it's going to be. But I don't know, Paul, can you give him a little more detail there? Paul Libner: Sure. Yes. So Derick, on the information rights, yes, largely a lot of the royalties that we have, we're not entitled to a lot of the information until 15 to 30 to sometimes 45 days after the respective month end or quarter end. So as you -- because of that, it's difficult for us to put together that with a good estimate there. Now I would point to you to that we have historically provided our stream sales guidance on a quarterly basis. And if you look back at just history of the 2 segments between streams and royalties, roughly 70% is streams and 30% is royalty revenue on average. So that could be another measuring stick for you, if that's helpful. But just, yes, I think going back to just a lot of the information rights that we have, we do look at the revenue over the course of the year and kind of with expectations. But just not having that firm kind of paper in hand to help with that, you probably wouldn't help with estimation. So I probably would point you back to that stream release that we put out and then just thinking to the 70%, 30% split. Derick Ma: Yes, it's -- it might be a bit of Cortez and it was a bit tricky to model that one, that kind of throws a rent in our estimates, but understood. Maybe 1 last question. Your comment on Q1, Paul, you mentioned flat sales quarter-over-quarter. That's metal sales, right, not revenue? William Heissenbuttel: Correct. Operator: Our next question comes from Tanya Jakusconek from Scotiabank. Tanya Jakusconek: Great. Okay. Sorry, I just want to make sure I understood. So the Q1 guidance on the GEO sales, you said that only the metals portion? William Heissenbuttel: Sorry, Tanya, could you just repeat that? Are you asking if it's only on the stream side? Or we're talking about sort of total GEOs. Tanya Jakusconek: Okay. So you're talking total GEOs for Q1 is going to be similar to Q4 of '25, and it's going to be the lowest of your 2026 number? William Heissenbuttel: That's our estimate. Yes. Tanya Jakusconek: Okay. Got it. Sorry, I just wanted to clarify that, that it wasn't just the streaming portion of it. And then I heard metals and I'm like I wasn't sure what it was. Okay, I got it. Maybe I could just go back to Pueblo Viejo again. Barrick indicated on their conference call that like they're not going to get to the gold recovery that they were anticipating. Never mentioned anything on silver. So I'm just kind of wondering and the new technical report will be out shortly. I guess we can wait for that as well. But how much work is being done on this silver? I mean, obviously, the focus has been on this gold and I understand that. Is there any concern that we may not get to what the silver recovery could be as well? William Heissenbuttel: Yes, Tanya, what I might do is just ask Martin to hop on here and just give you a little background or a sense of where -- what they've been working on recently. Yes, just give you as much background as we have. Martin Raffield: Yes. Thanks, Bill. Tanya. So over the past year, what we've seen is that Barrick have really focused at Pueblo Viejo along improving the throughput and they've made great strides towards that. And towards the end of the year, we saw it coming up to the levels that they were expecting, and we expect that to continue going forward. So we think that they -- from a throughput point of view, they're going to be fairly consistent going forward. We don't, in the short term, expect any material change to silver recovery. And you pointed out that gold recovery expectations are lower long term and that they are working on those. So really, those recovery issues are related to the type of feed that they're putting in at the moment. They're putting a lot of the old stockpile material in that stockpile is highly weathered and it's highly variable, probably more variable than they expected, when they put the expansion plan in place -- and that weathering is affecting their flotation and autoclave plants. I'm not really able at the moment to comment specifically on silver recovery going forward. And I think as you pointed out, we'll wait for that technical report to come out in March. What I will say is that they are highly focused on both gold and silver recovery. We spend quite a bit of time during the year outside visits, talking to the operating team on site, talking to the corporate team. And we're very happy with the amount of effort they're putting into it, in order to improve both gold and silver recovery. But the tech report comes out, and that will give us more information on the future of the operation. Tanya Jakusconek: No, I appreciate the stockpiles, but the stockpiles are going to be part of the ore feed for the next 5 years. So just -- they're there. So we got to deal with that. Okay. We'll wait for the technical study. Hopefully, we'll have more guidance there. Maybe I'll move on to the -- yes, the transaction environment. Appreciate you going through what's available out there. Just a couple of things I wanted to get an understanding of, #1, are you still in -- you've got about $700 million of available liquidity to use for transactions. Are you still focused in that $100 million to $500 million range? Or what are you focused? Or what are you seeing -- or could you see yourself doing those multibillion-dollar transactions given your focus on debt reduction as well? William Heissenbuttel: Well, just in terms of capital allocation, I would still always say that if we can find good investments, that's the best use of the capital. And if we stopped repaying debt or even borrowed more to fund the right transaction, that would be a priority. So we are not prioritizing debt repayment over new investments. As far as the transaction size, I think it has reverted to what we've seen historically. I think $100 million to $500 million is a good estimate. As you can imagine, with metal prices where they are, every GEO we buy is going to be more expensive. So when we refer to $100 million to $300 million might be $200 million to $500 million at this point for the same number of GEOs, but yes, so that's really in terms of the size of investment. That's the range that we are seeing and we are still actively working. Tanya Jakusconek: Okay. And then my other second part of that same question is, I've seen some of your peers double down or go shopping in their own closets. -- i.e., for assets that they already own and increase exposure there. Is there opportunities for you to do the same? William Heissenbuttel: We're always looking. We have a great relationship with them. I think Xavantina was a great example. We were able to put another $50 million to work at an asset that has really developed the way we thought it would, but an asset that we quite like. So again, that should be fertile ground given the relationships we have and the knowledge we have of the assets. Tanya Jakusconek: Now just thinking of some of these larger-sized ones? And how much... William Heissenbuttel: Yes, I mean, if you look at the larger ones, if Centerra needed money, if -- I can't imagine Barrick coming to us on Pueblo Viejo. We're certainly open to that. And I think the nice thing about transactions like Antamina is, if you can get a BHP to do streaming, that just opens the market to almost every mining company, including companies that were probably resistant. So I actually see that transaction is opening the door to some other opportunities with bigger companies. Operator: Our next question comes from Josh Wolfson from RBC. Joshua Wolfson: Just looking back at that first quarter production guidance that was discussed, I guess, thinking about the fourth quarter having been a partial contribution from the Sandstorm assets, first quarter will be a full contribution and then also there's some annual payments for some of the assets that are paid in the first quarter and then the inventories that are at normal levels. I'm wondering what is causing production really not to increase quarter-on-quarter? William Heissenbuttel: Yes. Thanks, Josh. I might -- I know Martin, can I ask you from a production profile perspective? Because obviously, what's happening, yes, we have things that are going up. But there's always variability quarter-to-quarter. And so Martin, I don't know, if there's any color you can add there? Martin Raffield: Yes. I think it would -- Josh, it would be around delivery timing. Some of our bigger assets on it from a delivery point of view fluctuate quite significantly on a quarter-to-quarter basis. And I think I would put that lower estimate for Q1 down to delivery timing in general. Joshua Wolfson: Okay. So there's no material mine plan changes or seasonality we're thinking about here? Martin Raffield: No, not at all. It's all around deliveries. Joshua Wolfson: Got it. Okay. And maybe just along those lines, given the portfolio is larger now, should we expect to see inventories build up from current levels? Or even with the new assets that are streaming related entities should the inventory level be stable? William Heissenbuttel: Yes, John, I wouldn't -- so go ahead, Martin. Martin Raffield: I was hoping to leave that one to you, Bill, but I'll say no. I think our inventory levels are going to be fairly stable. William Heissenbuttel: Yes. The only color I was going to add to it, Josh, is our inventory is the product of our sales policy. And what we try to do is sell metal over the period of time between delivery. So if we expect the next delivery in 21 days, we'll sell the metal we just got over 21 days. There's not an inventory strategy. The inventory at the end of the quarter is just a result of what deliveries occurred and where are we in that sales cycle? Operator: Our next question comes from Brian MacArthur from Raymond James. Brian MacArthur: To the comment made that you're going to fund Hod Maden this year to maintain your interest, which makes sense to me. Is it -- it's not significant funding this year. If I look at the way the feasibility works, the big capital tends to be a few years out. Is that right the way you look at it right now? Because, again, I think, one of the things you would probably trying to restructure this before you had to put significant capital into it because it's a different business model then. William Heissenbuttel: Yes. I mean, if we can restructure this before our significant capital goes in, that -- I agree with you. That is the best outcome for us. As far as the spending this year, again, I think SSR is talking about a 2- to 3-year construction period. What we spend this year is going to be very much dependent on when the investment decision gets made, because I think what [ Rod ] talked about yesterday was spending about -- it was [ $50 million ] a month, but that would increase. So if an investment decision is made in 2 weeks, that's different than an investment decision is made in a couple of months. And I think once we have more clarity on that, we can come back to you and say, okay, if we don't restructure this, this is what the spend will be for this year. I just don't know what that number is right now. Operator: With that, we have no further questions in the queue at this time. So that does conclude the Q&A portion of today's call. I'll now hand back over to Bill Heissenbuttel for closing comments. William Heissenbuttel: Well, thank you for taking the time to join us today. We certainly appreciate your interest, and we look forward to updating you during our upcoming Investor Day. Take care. Operator: Thank you all for joining. That concludes today's call. You may now disconnect your lines.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Adamas Trust Fourth Quarter 2025 Results Conference Call. [Operator Instructions] This conference is being recorded on Thursday, February 19, 2026. I would now like to turn the conference over to Kristi Mussallem, Investor Relations. Ma'am, please go ahead. Kristi Mussallem: Good morning, and welcome to the Fourth Quarter 2025 Earnings Call for Adamas Trust. A press release and supplemental financial presentation with Adamas Trust's fourth quarter 2025 results was released yesterday. Both the press release and supplemental financial presentation are available on the company's website at www.adamasreit.com. Additionally, we are hosting a live webcast of today's call, which you can access in the Events and Presentations section of the company's website. At this time, management would like me to inform you that certain statements made during the conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Adamas Trust believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission. Now at this time, I would like to introduce Jason Serrano, Chief Executive Officer. Jason, please go ahead. Jason Serrano: Hello. Thank you for joining us today to discuss our 2025 fourth quarter results. With me this morning is Nick Mah, President; and Kristine Nario, our CFO. We are excited about entering a new year as 2025 represented a strategic inflection point for the company, characterized by significant balance sheet growth, accelerating profitability and a strategic expansion into Constructive, a leading business purpose loan originator. We exited 2025 stronger and larger than at any point in our history. The transformation of Adamas over the past year has been deliberate and decisive. We expanded scale, materially enhanced recurring earnings power, strengthened the balance sheet and positioned the company for durable long-term growth. Our Q4 results are another validation to our strategy, which reinforce our confidence in the trajectory ahead. Salient 2025 company performance highlights include: $3.1 billion investment portfolio expansion, a 44% increase to earnings available for distribution year-over-year, where we generated over $100 million of net income, leading to a 15% increase to our common dividend. All these factors contributed to generating a 36% cumulative total stockholder return, a transformational year where we also grew company book value. We stay firm with the disciplined capital allocation, active portfolio management and a clear strategic vision by meaningfully increasing our allocation to Agency RMBS. We improved liquidity, reduced credit volatility, enhanced financing flexibility and strengthened the trajectory of earnings. The balance sheet today is materially more resilient than it was a year ago and positioned well for 2026. The addition of a powerful new earnings engine in the full acquisition of Constructive strategically positioned Adamas to benefit from both stable spread income and scalable origination economics, a combination that we believe differentiates our platform. As an update to fourth quarter, GAAP book value and adjusted book value increased by 4.3% and 2.4%, respectively, continuing the positive momentum we generated throughout the year. Quarterly EAD of $0.23 per share fully covered our dividend but declined by $0.01 sequentially. This slight reduction from last quarter was anticipated and directly tied to the J-curve effect discussed in our third quarter communication related to the integration of Constructive. Importantly, this temporary negative impact reflects upfront integration and scaling costs, not structural earnings pressure. As we transition from integration to production, we expect Constructive to be a positive contributor to EAD in the first quarter. Throughout 2025, we found scaling Agency RMBS to be both an attractive investment on an absolute and relative basis, providing mid- to high-teens equity returns. We increased the company's Agency RMBS portfolio by $3.4 billion or 56% of company capital from 23% a year earlier at an attractive average spread to treasury interpolated between 5- to 10-year maturities of 139 basis points. The strategic reallocation of capital throughout the year enhanced liquidity and balance sheet flexibility, also lowered our credit exposure and tail risk as well as increased visibility into book value performance. Now against that base, Constructive's DSCR origination platform introduce a significant upside potential. As volume scales and efficiencies are realized, we believe the earnings contribution from the DSCR production from both a gain on sale as well as interest income from loans held can expand materially. We are excited to demonstrate the operating leverage embedded within our business model in the new year. Despite the transformation of the company, Adamas shares continue to trade at a substantial discount to intrinsic value. At year-end, the shares traded at a 31% discount to book value. Even more compelling, the market capitalization represents approximately a 14% discount to just the Agency capital held on our balance sheet alone. In practical terms, the market in 2025 and continuing in early 2026 is assigning limited to no value to our non-Agency and multifamily holdings, our scaled origination platform with an exciting embedded earnings growth track and our ability to grow book value. We believe the discount creates compelling upside potential as we continue to execute and expand earnings and demonstrate sustained book value accretion. We have entered 2026 with strong momentum. In the first quarter, we are off to an exceptional start as adjusted book value is up between 3% to 4%. At the same time, Constructive DSCR originations are beginning to contribute to earnings as expected. As acquisition efficiencies are realized, we see a clear path to expanding EAD in 2026. We are highly encouraged by the early results and increasingly confident in the earnings power of the platform. We approach 2026 with conviction and optimism in the macro backdrop. The progression of the Fed easing cycle, coupled with declining volatility has created a favorable environment of lower rates and tighter spreads. The current administration's policy focus of improving housing affordability and reducing mortgage rates further reinforces our positive outlook on the residential assets. Our goal is to maintain flexibility to capitalize emerging opportunities and to direct capital to the most attractive risk-adjusted returns in the residential mortgage market. Dividend sustainability remains a core priority. In the year, we are focused on balancing competitive yields to expand reoccurring earnings with robust coverage and long-term capital preservation. We are energized by the opportunity in front of us and confident in our ability to deliver long-term value for our stockholders. At this time, I'll pass the call over to Nick for a market and strategy update. Nicholas Mah: Thank you, Jason. As we close out 2025, we are excited to have delivered significant EAD expansion alongside book value growth. Looking forward, we are confident that our two-pronged approach of investing in Agency RMBS and high-quality residential credit remains the optimal strategy for the current market environment. In the quarter, we deployed $810 million into residential assets, reflecting another period of solid investment activity. Agency RMBS purchases totaled $347 million in the fourth quarter as tightening spreads moderated the pace of acquisitions. In residential credit, we invested in $276 million of BPL-Rental loans and $181 million of BPL-Bridge loans. This marks the first quarter where rental loan purchases exceeded bridge loan purchases, reflecting our deeper utilization of Constructive's origination capabilities in rental loans. We anticipate that this trend will continue. Our Agency portfolio ended the year at $6.6 billion, doubling in size over the course of 2025, constituting 63% of our investment portfolio and 56% of our equity capital, Agency RMBS now represents our single largest asset exposure. In the fourth quarter, our Agency purchases were concentrated entirely in 5% coupon spec pools. We have continued to target low pay-up spec pools at or slightly under the current coupon, where we see the best balance of positive net interest margin duration upside and a more favorable convexity profile. Agency leverage also declined slightly in the quarter, falling to 7.7x from 7.8x. The pace of Agency acquisitions was tempered by meaningful spread compression during the period. Current coupon agency spreads tightened by 16 basis points, narrowing from 126 basis points to 110 basis points. Interest rate volatility fell meaningfully in the fourth quarter and has steadily declined since the tariff announcement in April, providing the impetus for tightening spreads in agencies. Despite spreads normalizing toward longer-term averages, we continue to see value in Agency RMBS. Our capital allocation to Agency is expected to grow through 2026 to between 60% and 70% of equity capital. We will adjust the pace and magnitude of future acquisitions opportunistically in response to spread movements and broader market conditions over the course of the year. Our BPL-Rental portfolio has almost doubled over the course of 2025, growing from $770 million to $1.4 billion. This core strategy has benefited from the integration of Constructor's origination platform alongside our disciplined underwriting standards. Borrower metrics remain strong across the BPL-Rental portfolio with a 748 average FICO, 71% average LTV and 1.36x DSCR. Credit performance has been robust with delinquencies remaining low at 1.4%, a direct result of our focus on credit quality. In 2025, we completed 4 securitizations across our home loan portfolio. We continue to aggregate loans to execute securitizations, and we are on pace for executing one BPL-Rental deal a quarter, targeting a mid- to high teens levered return. In the fourth quarter, non-QM AAA spreads remain range bound at around 130 basis points. Into the new year, however, we have seen meaningful spread compression as non-Agency AAA spreads have converged towards Agency levels, creating a favorable environment for us to grow our BPL-Rental loan securitization program. We continue to take a selective approach in BPL-Bridge, where the portfolio stands at $820 million of UPB, a decline from $1.2 billion at the beginning of the year. The proliferation of revolving securitizations across a myriad of issuers has intensified buyer competition, driving yields tighter. At this juncture, we see more compelling opportunities in agencies and BPL-Rental, and we expect the size of the BPL-Bridge portfolio to decline throughout 2026. Constructive continues to scale successfully, delivering its highest volume quarter of the year in Q4 with $474 million of originations. Constructive originated $1.8 billion worth of loans in 2025, with 93% of those originations in BPL-Rental, reflecting a strong alignment with our core credit strategy. Origination quality remains robust with a weighted average FICO of 751 and an average LTV of 74%. After our full acquisition of the platform, Constructive's loan production now matches closely with Adamas' investment criteria. We target strong borrower profiles in the stable segments of the credit spectrum. Beyond disciplined credit underwriting, we have deliberately minimized originations at the margins of securitization eligibility and shifting institutional buyer mandates, concentrating production where institutional sponsorship and secondary market liquidity are the strongest. Over the past 12 months, new construction loans have represented less than 2% and multifamily loans have represented less than 5% of Constructive's total origination. We expect Constructive to become a strategic earnings driver and sourcing engine for the firm. In the quarter, Adamas purchased 44% of Constructive's originations, deliberately striking a balance of investment portfolio growth and the cultivation of Constructive's third-party distribution network. Through Constructive, we benefit from a capital-light model that produces both gain on sale revenue and a proprietary investment pipeline. We have the flexibility to direct BPL-Rental originations to our portfolio or to the secondary markets as conditions warrant, and we expect a broadly balanced allocation between the two in 2026. In multifamily, we had another positive quarter of resolutions at an accelerated 39% annualized payoff rate. Performance has been strong throughout 2025 with only one delinquent and one restructured asset, both unchanged over the course of the year. As the portfolio seasons, we anticipate that the pace of payoffs to be higher than the historical average of 26%, and we will continue to redeploy the proceeds into our higher-yielding core strategies. Our diversified agency and credit portfolio paired with constructive origination capabilities provide us multiple avenues to grow earnings in this market environment. We are well positioned to extend this momentum in portfolio growth and earnings through 2026. I will now pass the call to Kristine to walk through our financial highlights. Kristine Nario: Thank you, Nick, and good morning, everyone. For the fourth quarter, we reported GAAP net income attributable to common stockholders of $41.6 million or $0.46 per share and earnings available for distribution of $0.23 per share, which fully covered our quarterly dividend. After accounting for a $0.23 dividend, we generated a 6.85% economic return on GAAP book value and a 4.62% economic return on adjusted book value. For full year 2025, economic return on GAAP and adjusted book value was 12.72% and 11.01%, respectively. Our quarterly performance benefited from strong investment mark-to-market gains. We saw spread tightening across Agency RMBS and certain portions of our residential loan portfolio, which increased asset valuations and contributed meaningfully to earnings. In addition, gains on our interest rate swaps contributed to our results as swap spreads widened during the quarter. Adjusted net interest income increased to $46.3 million in the fourth quarter from $42.8 million in the third quarter, and net interest spread remained stable at 152 basis points. These results reflect our continued portfolio repositioning toward Agency RMBS and BPL-Rental loans while also benefiting from improved financing costs. Partially offsetting the positive valuation impact that I mentioned earlier, we recorded $14.9 million of realized losses, primarily related to discounted payoffs and resolution activity on certain nonperforming residential loans and valuation adjustments on foreclosed properties primarily related to our BPL-Bridge portfolio. These actions reflect ongoing active portfolio management and credit resolution efforts. And in most cases, the realized losses have been substantially reflected in prior period marks. Turning to Constructive. The platform continued to demonstrate solid origination momentum during the quarter. Constructive generated $12.5 million in mortgage banking income, driven by higher origination volumes and related origination fees, partially offset by lower valuation on interest rate lock commitments and the prudent increase in loan repurchase reserves. Constructive incurred $4.3 million in direct loan origination costs and $10.2 million in direct G&A expenses, resulting in a $2 million loss for the quarter on a stand-alone basis. Direct G&A for Constructive increased in line with higher production volumes, the full quarter impact of consolidation and also continues to include expenses associated with integration. We view these items as part of normal progression of integrating and scaling the platform. Origination activity and pipeline trends remain healthy and as integration efforts moderate and production continue to grow, we expect a more consistent earnings contribution from Constructive. At acquisition, we estimated Constructive to generate approximately 15% annual equity return, and our current expectations remain aligned with that target. Total consolidated Adamas G&A expenses were $25.1 million for the quarter, up from $23.3 million last quarter, reflecting the full quarter consolidation of Constructive. From a capital markets perspective, we continue to strengthen our balance sheet. During the year, we issued $198 million senior unsecured notes to extend and diversify our funding profile. Subsequent to quarter end, we issued $90 million of 9.25% senior unsecured notes due 2031 and redeem our $100 million 5.75% senior unsecured notes due 2026 at par, retiring that obligation ahead of its April maturity. As a result, we now have no corporate debt maturities for the next 3 years. This provides meaningful flexibility and positions us to focus our capital on growing the investment portfolio rather than addressing near-term refinancing needs. At year-end, we maintained $206 million of available cash and approximately $420 million of total liquidity capacity, including financing available on unencumbered and underlevered assets. Our company recourse leverage ratio was 5x and portfolio recourse leverage ratio was 4.7x, with leverage primarily concentrated in Agency financing. Overall, our strategic repositioning has strengthened the durability of our earnings profile and positioned the company for continued growth in recurring income. We remain focused on disciplined execution and delivering sustainable returns for our stockholders. That concludes our prepared remarks. Operator, please open it up for questions. Operator: [Operator Instructions] Our first question will come from the line of Doug Harter with UBS. Marissa Lobo: It's Marissa Lobo on for Doug today. On the pace of deployment between Agency MBS and residential loans in 2026, how are you viewing the relative attractiveness of Agency MBS given the significant spread tightening year-to-date? Nicholas Mah: Yes. So from a levered return perspective, we do see a higher return on the non-Agency credit that we invest in, in particular, BPL-Rental. So for that particular asset class, we see somewhere in the mid- to high -- mid- to high teens type levered return compared to agencies today, somewhere in the mid-teens type return on a levered hedge basis. So we are still constructive on both. We still like both asset classes. We like the balance and the diversity that having both on our portfolio gives us. As I mentioned in my earlier remarks, we do expect the Agency portfolio to grow. So right now, it's at 56% of equity capital. We do expect it to grow into the 60s, assuming market conditions hold. We do think that the Agency -- the non-Agency part of our portfolio will stay about the same, but that's not because we are not increasing our BPL-Rental exposure. We're going to continue to increase that. But because BPL-Bridge does pay down relatively quickly and we find less opportunity there that effectively the mix within non-agencies will change, but we expect that the percentages in the non-Agency side to remain relatively static. So where does the additional equity capital come from? It comes from the continued resolutions in the multifamily portfolio and other noncore strategies. Marissa Lobo: That's very helpful. And looking at the expenses related to the Constructive acquisition, how should we think about the remaining integration costs and the 2026 run rate for operating expenses related to Constructive? Kristine Nario: We still see in first quarter partially some integration costs with Constructive. We've only been there for about 6 months. But in terms of G&A ratio, when you think about it, it's going to be approximately 77.5% of stockholders' equity and really approximately 44% of that would be attributable to Constructive with the rest really Adamas. And if you think about Constructive, roughly 40% of their G&A is variable and directly tied to origination activity. And this really provides us meaningful expense flexibility as volumes fluctuate. So as I said, it's about 7% or -- and 7.5% of stockholders' equity would be a run rate. Marissa Lobo: Got it. And finally, just on that comment about the gain on sale change this quarter, reflecting lower commitment valuations and the increase in loan repurchase reserves. Could you expand on that? Are there -- what are the implications to the valuation of loans on balance sheet? Kristine Nario: We don't -- yes, we think it is transitional. And let's talk about the interest rate lock valuation. It was really primarily driven by a smaller pipeline compared to last quarter and modestly lower pull-through rate, reflecting pricing conditions -- during the period, these changes are consistent with kind of normal quarter-to-quarter market fluctuations, and we continue to actively monitor and manage the pipeline and align it with current market conditions. In terms of purchase reserves, we think it was prudent to increase the repurchase reserves, and it is really tied into our purchase of the 50% interest into Constructive, and Nick can go into a little bit more detail. Nicholas Mah: Yes. We effectively coordinated the magnitude and timing of some of these repurchases and the corresponding reserves with -- in collaboration with our former equity partner in the Constructive business. And primarily, these actions were executed in the fourth quarter to take advantage of provisions and indemnities that were provided as part of the Constructive purchase transaction. We don't see the repurchase loan loss reserves as an extrapolation of higher loss trends or credit concerns for 2026. We feel very comfortable with the credit underwriting that we currently have in Constructive. Operator: Our next question will come from the line of Bose George with KBW. Francesco Labetti: This is actually Frank Labetti on for Bose. I want to start with discussing about the balancing between capital deployment between scaling Constructive originations versus increasing Agency deployment or share repurchases? And then is there like a preferred return threshold guiding that allocation going forward? Jason Serrano: Yes. Thanks for the question. So ultimately, we're focusing on mid- to high teens returns on a risk-adjusted basis throughout the different avenues which we deploy capital into. The interchange of that does change per quarter based on what's available in the market and different underwriting trends that we're seeing. Going back to Constructive, we see it as more of a capital-light model given their wholesale origination business. Nick mentioned earlier that we're focused on both gain on sale through selling to third parties as well as holding on balance sheet for our origination activity, securitization activity, which we expect one securitization a month in the space. But we don't expect to have a significant increase of capital allocation towards that strategy even with origination volumes that would prefer to grow. That was one of the primary focuses that we looked at Constructive many years ago and why we were excited about their business model. It provides for flexibility on the cost side, keeping it flat with origination trends going up or down. So we think it will be consistent kind of capital allocation there. And then the trends of looking at different asset classes, again, it's really -- we're -- Nick mentioned a target of 60% on agencies, and that's just looking at where we see value in today's market, the interchange between BPL-Bridge and rental, the fact that BPL-Bridge, we think will start -- will be reduced on our balance sheet just due to payoffs that are happening there and a lack of opportunity that we're seeing. And on the Bridge -- on the rental side, continuing to support efforts there for Constructive and seeing value in that space. So ultimately, it really depends on what the market is giving us, and we're going to make the prudent capital allocations accordingly. Nicholas Mah: One follow-on comment on Constructive. So we're still in the process of transition, and there are still things that we can do to more -- to increase volume and increase efficiencies and reduce cost that does not require capital, like, for example, getting them better financing lines with better terms, whether it's providing our captive capital to reduce the time, the warehouse time that they have their loans under. So there's things that we can do that doesn't necessarily require additional capital, and we're actually focused on those things first before planning to put additional capital in. Francesco Labetti: Great. That's very helpful. And then sticking on Constructive, can you just talk about the competition in the business purpose lending channel. Demand for the product is clearly very strong. Are you seeing any new entrants in the space and any pressure on margins there? Nicholas Mah: Yes. On the competition in DSCR loans, in particular, yes, we -- this is a space that Constructive has been in for a while. So we have seen the ebbs and flows in terms of competition. Obviously, at this juncture, it is a relatively competitive business. There's also very strong demand for loans from institutional buyers across both non-QM as well as BPL-Rental/DSCR. So there's fortunately a strong demand there in terms of -- and therefore, originators have tried to grow in that particular space. I think from our perspective, Constructive has always been a top-tier player. They have very long-term relationships. They're navigating the competition very well. And I think one of the things that we are seeing is some of the larger non-QM originators having a higher percentage allocation of originations into BPL-Rental. That is a trend that we think will continue. In some cases, we have also or Constructive has partnered with some of these larger entities to grow volume as well. So the market continues to evolve and change. Fortunately, there's strong demand, but the competition is something that we have been mindful of and navigating very well. Francesco Labetti: Great. And just one more, if I can. Just if you guys -- did you guys provide an update on book value quarter-to-date? Nicholas Mah: Yes. So in Jason's remarks, he mentioned that book value -- adjusted book value is up somewhere between 3% to 4% thus far quarter-to-date. Operator: [Operator Instructions] Our next question comes from the line of Matthew Erdner with JonesTrading. Matthew Erdner: There's been a lot of talk about institutionals or I guess, institutions being banned kind of from that rental space. Could you talk about just the profile of borrower that you guys have? And if that were to occur, what impact it would have? Nicholas Mah: Sure. We think that if this policy ultimately goes through, that it will be positive for Constructive's business. So Constructive originates loans really to individual investors, not to institutional investors. Every single one of Constructive's borrowers of loans originated in 2025 owns less than 80 single-family properties and the average is significantly lower than that. So -- and institutional investors own SFR properties by the thousands. So we don't have a lot of details yet, but in the White House executive order, the policy is really looking to limit purchases and I quote from Wall Street investors and large institutional investors. So the definitions of which are forthcoming, but these are not necessarily descriptors of Constructive's client base. So overall, I think if there was a ban institutions owning SFR, positive for Constructive, it should increase the supply of homes and transactions and reduce the demand for homes that our borrowers target. Matthew Erdner: Got it. Got it. That's helpful. And then apologies if I missed this on the last question, but could you kind of talk about share repurchases? If you did any during the quarter, I don't think you did and how you're viewing that going forward? Jason Serrano: Yes. So the way we look at share repurchases is just as a different capital allocation relative to the opportunities we see in the market as a whole. We did not repurchase shares in the quarter, in the fourth quarter. We do look at where our price to book is and the accretive value of actually utilizing capital for that. and share repurchases, it's a permanent capital reduction in retiring those shares. We don't get the ability to hold in treasury and try to issue later. So what we have to do is just -- we focus on whether or not the capital that we have allocated to and budgeted for our investment programs is accretive relative to using that capital and permanent dilution of that capital related to those share repurchases. So it's something that we consistently look at and we monitor. We throw in our models as it relates to core capital allocations, and we will continue doing that. We have, in previous quarters, repurchased shares as the market provided some opportunities there, and we'll continue to look at that going forward. Matthew Erdner: Got it. That's helpful. And then last one for me. How are you guys looking at Agency leverage given that we've kind of moved into a tighter spread range. Obviously, there's the GSE backstop, I guess, with their loan purchases. Just how are you guys thinking about leverage? Nicholas Mah: Yes. So in the quarter, leverage declined slightly. Right now, it's about 7.7x. Historically, we have run leverage up into 8, 8.5x leverage. For now, we are probably going to be trending on the lower end, so closer to the 7.7x. But depending on how market conditions, we could go higher. Operator: Our next question will be from the line of Timothy D'Agostino with Equity Research. Timothy D'Agostino: With the comments on 60% to 70% of equity capital being Agency and potentially seeing a decline in BPL-Bridge in 2026. I was just wondering, the total investment portfolio size currently is at $1.5 billion. Do you have like a target size you or goal you're trying to reach? Or do you have any near-term like percentage increases? Just thinking about what you're striving for in terms of the total portfolio size maybe at the end of '26 or at the end of 2027. Jason Serrano: Yes. So the goal is to maximize our total return within our portfolio. And that's the core -- that's where we start with looking at capital allocation. So in doing so, when the market has different moves and whether it's on credit or any Agency, we will look to change our capital allocation relative to those 2 different asset classes. So there is not a target that we are focused on reaching as a sense of just reaching the target versus maximizing our recurring earnings that we have in our portfolio. The comments that Nick made earlier on the targets around 60% is based on what we see the market giving us today and the different roll-offs of noncore strategies we have in our balance sheet. So yes, we don't have a capital allocation model that focuses on either investment portfolio size or a certain percent that we need to be in either strategy. It's really where we see the best risk-adjusted returns in the market and how do we maximize our earnings potential. Timothy D'Agostino: Okay. Great. And then just as a second question, regarding available cash, you probably averaged maybe around like $170 million over the trailing 5 quarters. And obviously, at year-end, you have $206 million available cash. I guess, could you just provide maybe an overview of how you plan to allocate that cash, whether you want to continue to hold stockpile, if you're going -- if you're just seeing kind of rotation of capital? I guess just any sort of color on the available cash at year-end would be great and how you plan to use it. Jason Serrano: Yes. We -- as the Agency strategy and spreads tighten into year-end, we -- it did take away some of our expectations of what we could grow our portfolio in the beginning of that quarter. So we ended up the quarter with a little bit more cash than we would have expected, which was partially the reason why we ended up maturing our 5.75% notes due April 2026. We just saw an opportunity there given the cash allocation that we had and the fact that there was a near-term maturity coming up and utilize the capital in that way. But I think overall, the opportunity for us is continued deployment in 2 areas. We talked about a capital-light model on the Constructive side and then looking for opportunities within Agency. So to the extent that the market winds down on the Agency side, we expect to have further deployment there and looking for more opportunistic trades in the market as a whole versus kind of a scheduled deployment. Operator: I am showing no further questions at this time. And I would now like to hand the conference back over to Jason Serrano for closing remarks. Jason Serrano: Yes. We appreciate your continued support and look forward to discussing our first quarter results in April. Have a great day. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Today's call is being recorded. I'll now turn the call over to Zoe Lawrenson, Senior Director of Strategy and Corporate Development, Liberty Latin America. Zoe Lawrenson: Good morning, and welcome to Liberty Latin America's Full Year 2025 Investor Call. [Operator Instructions] Today's formal presentation materials can be found on the Investor Relations section of Liberty Latin America's website, www.lla.com. Following today's formal presentation, instruction will be given for a question-and-answer session. As a reminder, this call is being recorded. Today's remarks may include forward-looking statements, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. Actual results may differ materially from those expressed or implied by these statements. For more information, please refer to the risk factors discussed in Liberty Latin America's most recently filed annual report on Form 10-K, along with the associated press release. Liberty Latin America disclaims any obligation to update any forward-looking statements or information to reflect any change in its expectations or in the conditions on which any such statement or information is based. In addition, on this call, we may refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Balan Nair. Balan Nair: Thank you , Zoe, and welcome, everybody, to Liberty Latin America's Fourth Quarter and Full Year 2025 Results Presentation. I will be running through our group highlights and an overview of our operating results by Credit Silo before Chris Noyes, our CFO, reviews the company financial performance. We'll then get straight to your questions. As always, I'm joined by my executive team from across our operations, and I will invite them to contribute as needed during the Q&A following our prepared remarks. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. All right. Starting on Slide 4 and our highlights. Our business performed very well in 2025. We added over 225,000 mobile postpaid subscribers across the group, notably driven by Costa Rica and supported by fixed mobile convergence efforts and continuing prepaid to postpaid migrations. The postpaid adds this quarter included a positive net add contribution from Puerto Rico for the first time since the migration. We also recorded $1.7 billion of adjusted OIBDA in full year 2025, which represented 9% growth on a rebased basis. This performance was driven by good execution of cost initiatives as well as effective customer management and came despite headwinds in the fourth quarter from Hurricane Melissa. We worked hard to drive a steep recovery in profitability in Puerto Rico as well as double-digit adjusted OIBDA growth in Cable & Wireless Panama. B2B came in very strong in the fourth quarter, which is seasonally our best B2B quarter. LLA registered P&E additions for the group at 14% as a percentage of revenue for full year 2025, in line with previously communicated intentions and representing a 2 percentage point decline versus the prior year. With adjusted OIBDA expanding, the P&E additions falling, the adjusted OIBDA less P&E additions increased by 27% for the full year 2024. Our adjusted OIBDA after P&E additions margin came in at 24% for full year 2025. When comparing on a like-for-like basis, including adjusting for different lease accounting under the IFRS reporting, this compares very favorably to peers across the region and in the U.S., and there is still room to grow here. Finally, in Jamaica, I would like to thank all those involved in our recovery efforts following the effects of Hurricane Melissa. Against the backdrop of a Category 5 hurricane, our mobile network held up well, recovering service very quickly. While our fixed infrastructure was more impacted by the storm, we continue to reconnect homes and B2B customers. As we rebuild in fixed and continue our network transformation in mobile, we aim to invest in an innovative and returns-focused manner. I'll cover more on this later. Turning to Slide 6. I'll provide an update on Liberty Caribbean, which inevitably felt the impact of the hurricane in Jamaica in both Q4 and full year numbers. On the top left of the slide, we present our mobile KPIs. Postpaid mobile additions of 55,000 registered a strong cadence through 2025 and notably continued through Q4 despite the impact of hurricane. Momentum here continues to bring from rising FMC penetration and prepaid to postpaid migration, which are tailwinds we anticipate continuing over the coming periods. On the bottom left of the slide, we show our fixed KPIs. We have managed to keep the broadband base broadly steady throughout the first 9 months of the year, with Q4 largely reflecting the impact of lost customers in Jamaica. Elsewhere, we saw some modest pressure on volumes in Trinidad and Tobacco and the Bahamas. Moving to the center of the slide. Despite headwinds from Hurricane Melissa, we held Liberty Caribbean segment revenue flat in full year 2025 at $1.5 billion. Within this, we registered rebased residential mobile revenue growth of 4%, given structural support from postpaid additions as well as selective price increases on both prepaid and postpaid throughout the year. This offset pressures on the fixed residential business and on B2B, which mainly was due to the impact of the hurricane in the fourth quarter. Looking forward to 2026, we continue to be fully focused on rebuilding in Jamaica, which I will turn to in more detail on the next slide. In addition and looking region-wide, we aim to continue driving FMC where penetration is now within 40%, in the B2B segment, which reflects over 1/3 of segment revenue, we also see a significant opportunity to expand this revenue pool. Turning to Slide 7. I'll provide an update on Jamaica post Melissa and outline our investment focus for 2026, during which we will be deploying proceeds from the payout under our weather derivatives program, which totaled $81 million on a net basis. First, the mobile. Our mobile network recovered quickly. And through quarter end, we were running at a higher level of mobile subscribers and carrying more data traffic over the network than prior to the hurricane. As of the latest data available through early February, this trend has been continuing. Our mobile business in Jamaica is largely prepaid, and these improving KPIs translated into higher prepaid and higher overall residential mobile revenue in Q4. Our postpaid mobile business has also proven to be resilient. We feel good about the outlook for our mobile business in Jamaica, seeing not only the opportunity to maintain this recovery, but to further build upon it. We have been transforming our network over the course of 2025. And as a result, we have been recognized by Ookla as the fastest mobile network in the island for the second half of 2025. We will continue our transformation journey into 2026, leveraging an improved spectrum position and greater site density. With over 85% of our mobile customer base on the prepaid tariff, we see continued opportunities to migrate customers to postpaid, and we will continue to focus on attracting higher-value prepaid customers within this segment. On the fixed side, as we have mentioned, the fixed network was materially more damaged than our mobile network, impacting both our residential fixed customers and our B2B customers who weigh more towards fixed services. As a result, we have taken out 133,000 home passed from the count, where we don't foresee a restoring of fixed service in the near term. To provide more clarity on our outlook for the fixed network, it's instructive to break down the country into 3 geographic zones. Across the country, we have over 75% of our fixed broadband customers back online today, but see significant regional differences. The capital city, Kingston is in what we term as Zone 1, an area which represents the largest driver of GDP, over half of pre-Melissa homes passed and is where the bulk of our B2B customers are based. In Zone 1, economic activity and daily life is fully restored and the vast majority of homes are back online. In Zone 2, representing 30% of pre-Melissa homes is still recovering. Our plans are to rebuild in the Parish of St. James, where Jamaica's second city, Montego Bay is located. Once complete, this should move the needle in terms of further bringing customers back online. Meanwhile, in the West, Zone 3 felt the largest impact of the storm and just over 50% of broadband customers still remain offline. Our rebuild here is following and subject to the cadence of reconstruction of homes and businesses in the region. Through the course of the year, we will continue to restore homes and B2B customers with a focus on return on investment and innovation. We look forward to building back stronger in Jamaica and on a run rate basis, we target being back close to pre-hurricane levels of profitability by the end of 2026. Moving to Slide 8 and our C&W Panama segment. Starting on the top left of the slide. We delivered accelerating momentum in postpaid adds throughout 2025 as customers continue to migrate from prepaid, which creates more predictable revenues. We increased prices in postpaid and improved pricing plans in our prepaid business. On the bottom left of the slide, we show our fixed KPIs. We delivered another robust quarter of Internet subscriber adds, while competitive conditions caused some offset on price over the course of the year. Looking at revenue and as we show in the center of the slide, we registered rebased revenue growth of 3% for C&W Panama for full year 2025, which in turn was driven by rebased residential mobile revenue growth of 7% in 2025. Encouragingly, we also saw an improving performance in our B2B segment in 2025, with the contribution weighing more towards the end of the year. We have registered a number of new wins, including the Ministry of Education of Panama, MEDUCA, which signed a contract with us to provide high-speed Internet to all public schools nationwide. B2B rebased revenue growth for full year 2025 was 1%, mainly driven by the fourth quarter that registered 24% growth on a year-over-year basis. Looking to 2026, we aim to build on our success in B2B and B2G and continue to drive postpaid momentum in residential segment while staying vigilant on costs and disciplined on capital investments. Next to Slide 9 and our final segment within the C&W Credit Silo, Liberty Networks. On the left side of the slide, we present our full year 2025 revenue evolution. Wholesale revenue grew 6% on a rebased basis. Stripping out headwinds from noncash IRUs, underlying wholesale revenue growth would have been 12% year-over-year, mainly driven by revenue from a new key project win and new lease capacity sales. In December last year, we announced that we were chosen to design, construct, activate and operate El Salvador's first submarine cable. This is a 1,800-kilometer cable to connect the country to major international hubs, boosting high-speed Internet capacity and resiliency. This investment goes beyond building critical infrastructure. It lays the foundation for economic growth, innovation and opportunity for all Salvadorians. Enterprise revenue was a smaller part of the growth engine, but still showing momentum in IT-as-a-Service and connectivity solutions. These services are helping us bring a strong base of monthly recurring revenue, which supports long-term stability and positions us well for the future. As we look forward, we remain focused on continuing to deliver growth in underlying subsea capacity as well as executing on our El Salvador project and on MANTA as well, our 5,600-kilometer joint build with Sparkle and Gold Data. On track to be operational in late 2027 or early 2028, MANTA is expected to establish a solid foundation of monthly recurring revenue, enhancing long-term profitability and positioning Liberty Networks as the region's primary data hub. Given expenditure is front-end loaded for this project, we look forward to turning current FCF headwinds into future tailwinds. Turning to Slide 11 and Liberty Costa Rica. Starting on the top left of the slide. The postpaid business segment in Costa Rica continues to be the highlight for the LLA Group. In 2025, we added over 160,000 postpaid subscribers, representing a 16% expansion on the 2024 base. In particular, we have seen strong take-up in the lower-end postpaid segment, which is nevertheless accretive relative to our prepaid ARPU levels. Moving to the bottom left of the slide. On the fixed side, we continue to do a good job growing our subscriber base under competitive market conditions with an improved performance in the fourth quarter. Moving to the center of the slide, we show Costa Rica registering rebased revenue growth of 1% in 2025. The driver of this was our residential mobile business, which grew revenue by 6% on a rebased basis. Despite the growing broadband base, price competition led to fixed revenue declining by 4% on a rebased basis, while we also faced a tough comparison on B2B. Looking forward, we see no immediate reason for a slowdown in the drivers of our prepaid to postpaid mobile strategy. We expect 5G to become even more important, and Liberty was the first operator to launch 5G in Costa Rica in 2024, and we have over 300,000 customers today. Following the acquisition of 5G spectrum in 2025, we expect a continued lift as we deploy 5G stand-alone in partnership with Ericsson. Knowledging the tougher fixed market conditions, we will leverage our FMC advantage and stay innovative. In Q3 of last year, for example, we launched an offer for new and existing customers to have access to the most popular over-the-top platforms, including in their phone plan. A unique move in the Costa Rican market. Finally, and following Sutel's rejection of the proposed merger with Tigo in Costa Rica, we have now turned our attention to costs. We believe we have a strong track record on cost reduction across the LLA Group, and we are focused on delivering similar margin benefits in Costa Rica over time. Moving to Slide 13 and our third credit silo, Liberty Puerto Rico. Starting on the top left of the slide. In Q4, we registered the first quarter of positive postpaid mobile adds since the migration. This follows significant commercial efforts in the second half of the year, focused on the launch of Liberty Mix. This new multiline plan has captured customers' imagination, offering flexibility designing to mix and match plans within multi-bundle packages. It also has transparency with no hidden fees and value add through hotspots and roam like home, which are particularly important to our customer base. Additionally, in mobile, we are pleased to have completed the migration of our Boost MVNO customers onto our network. These are high ARPU prepaid customers and retaining these customers while removing wholesale costs is an important milestone for the business. Our postpaid base also saw a pickup in the quarter from a small number of migrators Boost customers who opted to switch into our Liberty postpaid offering. Moving to the bottom left of the slide. On the fixed side, we continue to see competitive pressures impacting our subscriber base, though we registered lower broadband losses in the fourth quarter. In part, this follows greater commercial efforts on the fixed side, including campaigns focusing on network quality and reliability. Moving to the center of the slide, we registered a 6% revenue decline for the year. This largely reflects a 6% decline in residential mobile revenue, in turn a function of the negative impact from the migration of customers to our mobile network and network challenges in 2024, which caused a decline in the average number of postpaid mobile subscribers. B2B revenue declined by 16% year-over-year, in part due to similar migration factors. Residential fixed declined by 1% year-over-year with support coming from price increases early in 2025. Looking to 2026, Puerto Rico remains a competitive market, and we aim to keep laser focus on our commercial proposition. We have seen a nice lift in NPS to start the year on both fixed and postpaid side. We will continue to work hard to improve our customer propositions as we try to stabilize the fixed business and scale up in postpaid mobile. Finally, on Slide 14, we summarize our strategic vision for Liberty Latin America as we look to 2026. Firstly, on the commercial front. You have heard me mention FMC or fixed mobile convergence a number of times on the call. We have complementary high-speed fixed and mobile infrastructure across almost all of our entire footprint, and we aim to continue to leverage this in our commercial proposition. We sometimes talk a little less about B2B, though this represents almost 1/3 of group revenue. This contribution could be higher, and we are particularly excited about our recently announced partnership with AWS to bring AWS compute and AI models to our local markets for our customers. We have a number of innovative products to be launched that will reduce our video costs to bring more resilience to our Internet service to bring 100% coverage to our mobile service and to bring more AI agents to our Care service. Operationally, we remain focused on investing in our business in a returns-focused manner. Of key importance is our rebuild in Jamaica, both in terms of reconnecting homes, but also further transformation of our mobile network. We are excited to be pursuing 2 key projects within Liberty Networks, building connectivity on behalf of El Salvador and our ongoing MANTA project. We will be very focused on successful execution on Build through 2026, of 5G, which is now available in Puerto Rico, Panama, Costa Rica, the Cayman Islands and Barbados. This helps us maintain and enhance our commercial position in the mobile market as well as supporting FMC. We remain attuned to future opportunities to deploy 5G across our footprint. Finally, we are committed to rewarding our shareholders and have financial aspirations to deliver. I won't steal Chris' thunder, but suffice to say, cost efforts, capital investment discipline and a focus on free cash flow delivery lay at the heart of our outlook. And with that, I'll pass you over to Chris Noyes, our Chief Financial Officer, who will take you through our financial performance before we move on to your questions. Chris? Christopher Noyes: Thanks, Paul. Over the next slides, I will provide key highlights of our Q4 and full year results for 2025 with a focus on the fourth quarter. For Q4, we delivered revenue of $1.2 billion, reflecting 1% year-over-year rebased growth. This was fueled by double-digit top line growth at Liberty Networks and CWP, offset in large part by declines in LC, principally due to the hurricane and LPR as a result of the year-over-year decline in customers. On a full year basis, LLA revenue was slightly down on a rebased basis to $4.4 billion. Moving to the right. We reported adjusted OIBDA of $451 million in Q4, bringing our 2025 full year adjusted OIBDA to $1.7 billion. These results reflect year-over-year rebased growth of 8% for Q4 and 9% for 2025, with both periods adversely impacted by $27 million stemming from Hurricane Melissa. For LLA, our operating focus on cost control and efficiency contributed to our roughly 300 basis point improvement in adjusted OIBDA margins in 2025. We expect our 2025 actions will continue to benefit our 2026 results. Slide 17 recaps our Q4 results for the C&W credit silo. Starting on the left, in Q4, LC reported $356 million in revenue and $153 million in adjusted OIBDA. Both metrics declined year-over-year on a rebased basis, which was entirely due to Hurricane Melissa as the Jamaican business experienced declines of $20 million in revenue and $27 million in adjusted OIBDA in the last 2 months of Q4. Overall, it is important to not let the hurricane detract from what was a very strong year from the LC team, especially in light of their margin improvement and 7% adjusted OIBDA rebased growth for full year 2025. With that being said, we do expect that the next quarters will be financially challenging in Jamaica and obviously, the year-over-year comps will be difficult until we lap the hurricane in Q4. Next, moving to CWP. Aided by revenue from government-related projects. In Q4, CWP posted double-digit rebased year-over-year growth for both revenue and adjusted OIBDA, reporting $230 million of revenue and $94 million of adjusted OIBDA. CWP's focus on improved gross margin contribution and content activities was reflected in expanded adjusted OIBDA margins in Q4 and full year 2025. Turning to Liberty Networks. LN generated $129 million in revenue and $75 million in adjusted OIBDA, which accounts for year-over-year rebased increases of 14% and 21%, respectively. Results in Q4, as Balan highlighted, were fueled in part by the El Salvador build and continued ramping of its wholesale infrastructure business. Aggregating all 3 operating segments within the C&W credit silo. For Q4, we reported $693 million in revenue, reflecting a year-over-year rebased increase of 4% and $322 million in adjusted OIBDA, resulting in 5% year-over-year rebased growth. As noted earlier in LC, the results for the silo were hampered by the hurricane impact. Rounding out our other 2 credit silos, Liberty Costa Rica and Liberty Puerto Rico. On the left, we highlight LCR. We delivered Q4 revenue of $168 million and adjusted OIBDA of $66 million, representing rebased declines of 2% for revenue and 3% for adjusted OIBDA. Residential mobile continued to deliver year-over-year growth, but was not able to offset a particularly soft quarter in B2B. With respect to full year 2025, adjusted OIBDA of $236 million was flat on a rebased basis. Importantly, the operating team has launched a comprehensive effort to improve its cost structure during 2026 and would expect momentum to build throughout the year, like we have seen in other markets. Concluding with Puerto Rico on the right, LPR posted Q4 revenue of $301 million, a slight increase from Q3 levels and which reflects a 4% rebased year-over-year decline. The rebased decline over last year is primarily a result of the full year impact of customer losses experienced from the 2024 migration. Importantly, the business has shown stabilizing trends over the last few quarters. Turning to adjusted OIBDA. We reported $89 million in Q4, reflecting double-digit rebased growth year-over-year. LPR has significantly improved their cost structure during 2025 to align more with their current customer base and also returned to more normalized customer service levels, which have positively impacted their collection efforts and bad debt expense. These steps have been necessary to help compensate for the lower revenue base and the net impact is reflected in LPR's improving adjusted OIBDA margins. Turning to Slide 19. Two important metrics that we are focused upon at LLA as we think about driving long-term value, adjusted OIBDA less P&E additions and adjusted FCF before partner distributions. Starting on the left, we have already briefly discussed adjusted OIBDA, but the other key input to the calculation is P&E additions. Even in light of the various commitments we had and events that occurred during the year, including new project wins and hurricane impacts, we remain disciplined during 2025. In aggregate, we invested $640 million in 2025, including $220 million in Q4 as compared to $725 million in 2024, including $240 million in Q4 of 2023. LLA's P&E additions as a percentage of revenue were 14% in 2025 versus 16% in 2024, a measurable year-over-year reduction. Combined with our improved LLA adjusted OIBDA performance and margins, we delivered adjusted OIBDA less P&E additions of $1.1 billion in 2025, including $231 million in Q4, representing year-over-year growth for fiscal 2025 of 27% and for Q4 of 30%. Our 2025 result represents 24% of revenue, a significant improvement over 2024 levels and one we look forward to continuing to drive higher over time. Turning to adjusted free cash flow before partner distributions. We had a particularly robust Q4, delivering $278 million in the quarter, which brought our full year figure to $150 million, a 29% year-over-year increase. A key driver of this improvement was the significant expansion in adjusted OIBDA less P&E additions of $226 million over this period, which was offset somewhat by working capital and related movements. Additionally, in Q4, we collected $81 million in net proceeds from our Parametric program, which helps to mitigate to a large extent, the physical damage and business interruption from Hurricane Melissa. As discussed earlier, we suffered financial impact in Q4 from Melissa, but a substantial amount of the adverse impact, including a large portion of the recovery investment is expected to occur in 2026. Although it will continue to evolve throughout the year, we generally expect that the 2026 adjusted FCF impact from the storm will be in the neighborhood of $100 million. Our operating goal is to be run rating near pre-hurricane levels by year-end, which should set us up for a full recovery in 2027. Next is Slide 20 and a review of our capital structure. At the consolidated level, we have total debt of $8.4 billion and liquidity consisting of $800 million in cash and $900 million in availability under our credit lines. At year-end 2025, we had consolidated net leverage of 4.3x, an improvement from 2024 levels. If we exclude LPR leverage, which is undergoing a liability management exercise as previously discussed, LLA leverage would decline into the mid-3s. Turning to the middle of the slide, which summarizes our 2 credit silos of C&W and LCR. We have total debt at C&W of $4.9 billion and covenant leverage of 3.5x and total debt at LCR of $515 million and covenant leverage of 1.8x. As seen by the combined maturity schedule, approximately 75% of borrowings are due in 2031 and later. Moving to the right, Liberty Puerto Rico has $2.9 billion of total debt with reported borrowing group net leverage of nearly 8x, while covenant leverage of the restricted subsidiaries was 14x as of Q4 2025. As seen today, LPR performance has stabilized over the last few quarters, but has a long road back to gain market share and expand the top line. And LPR continues to look for ways to improve its leverage profile. Of note, LPR may also need to raise additional liquidity in the near future to cover ongoing operating costs, although no definitive decisions have yet been taken in this regard. As discussed in our Q2 2025 earnings, LPR embarked on a liability management exercise with its creditors in 2025. And as part of that, a transaction proposal was provided to the creditors' advisers in early November, and those advisers were provided with access to significant levels of information and diligence since that time. To date, while no response to such proposal has been received, the team hopes for engagement from the creditors in the near future. As previously highlighted, LPR has substantial flexibility in its credit documents that will enable the business to continue to utilize its assets to meet any near-term liquidity needs as they arise, as demonstrated by the $250 million secured financing raised through an unrestricted subsidiary of LPR that was announced in September 2025. Additionally, and consistent with our previously stated intention of separating LPR and LLA, we are actively working on this and we'll update when appropriate. Moving to Slide 21 and our closing remarks. As compared to 2024, we delivered robust financial performance in 2025 with nearly double-digit rebased adjusted OIBDA expansion, 27% adjusted OIBDA less P&E additions growth and adjusted FCF before partner distributions improvement of 29%. In Jamaica, we have generally recovered our mobile business and will be disciplined in our capital approach to reconnecting homes and businesses as conditions on the ground improve. No doubt the full recovery will take time and impact our reported results in the coming quarters, but we anticipate that we will be running at a much fuller tempo by 2027. Looking forward, Balan highlighted his 2026 strategic vision on his concluding slide covering commercial, operational and financial priorities. Without repeating, I believe they can be further summarized into our continued focus on driving organic growth within our operating businesses and cash flow improvement. We clearly have near-term headwinds, especially with the timing of the Jamaican recovery and given our planned cadence for 2026. We would expect our financial performance at LLA and across our markets to be heavily weighted to the second half of the year. Activities related to cost out, our investments in projects like MANTA and product innovation, including our new arrangement with AWS, all speak to setting the stage for future growth. Finally, for our equity investors, certainly, 2025 did have its share of ups and downs, but trending positively at the end of the year. Management remains committed to working to unlock value, including returning capital to shareholders and we will be focused on executing Balan's 2026 priorities, which we believe will be beneficial to value creation in 2026 and beyond. With that, operator, we will open it up for questions. Operator: [Operator Instructions] Our first question today will be from the line of [ Matthew Harrigan ] with [ StoneX ]. Unknown Analyst: I wonder if AI will ever enable the Q&A to not be conducted electronically. Actually, 2 questions. Firstly, you have some really abusive expectations on private equity infrastructure investment at one point. That didn't materialize, but certainly, the results are really inflecting upward. Even apart from MANTA and El Salvador, just by virtue of economic growth and increased volume even at lower per bit pricing. Do you think you've got a really nice tailwind just organically from economic activity? Or is it really just going to be largely a step function of MANTA and El Salvador and whatever other discrete projects materialize? And then I have a follow-up. Balan Nair: On the MANTA and El Salvador project, they're actually quite different projects. The MANTA project is both building more resiliency as well as adding a huge amount of capacity on routes we think are going to be highly profitable. So -- and it's being built right now, and we'll start selling into it very soon, starting later this year, early next year. And we've got quite a bit of interest in that. The El Salvador project on the flip side, it's really a build operate transfer kind of a model with the government of El Salvador. But it has some really good upsides for us as well, including the fact that we will be running, maintaining that network. And in the future, perhaps we could put a branching unit and add some capacity to some of the other drops. So both projects are hugely accretive and have very good margins on it. But they are very complex projects. Ray Collins, who leads our business unit there. He and his team have been really on top of it. The build and the engineering is ongoing right now. And we have a lot to deliver on here, but the team is really up for it. Unknown Analyst: And then as a follow-up, Mike Fries yesterday, this wasn't his expectation, but I think he said one of the hyperscaler executives said that it was possible that they could reduce Liberty Telecoms OpEx from $15 billion to $7 billion or $8 billion. Mike certainly didn't endorse that, but he implied that there was going to be a long run of AI and cost improvements given, obviously, telecom, you've got a lot of repetitive processes and big data lakes and network management, customer management. Do you think you're going to have that type of improvement? Obviously, not of that scale, but do you think we're going to be seeing very, very significant prolonged margin benefits? And then I was also curious, this month, you just the other day with AWS and then Liberty Global with Google and Gemini somewhat before that, both entered into relationships. And I'm curious how the expectations are vary between Google and Amazon. And was there any clear explanation as to why they went with Google and you went with AWS? Balan Nair: Sure. Let me answer your last question first, and I'll get back. I really can't comment on Liberty Global's decision with Google, like Google Cloud and the work the Google team is doing. It's extremely impressive. Chris, myself or a whole bunch of my executives visited with the Google Cloud folks just 2 weeks ago in California, 3 weeks now. Our relationship with AWS is slightly different, and it's really focused on our business. Most of our models and most of our services and compute and storage is done over AWS. Most of our customers prefer AWS. The relationship with AWS is strong for our internal usage. And certainly, it's a great product for us to partner with our customers. We have quite a number of customers today, cloud customers on our premises that are migrating, and we think the migration to AWS makes a lot of sense for them and for us. And the folks that AWS has been really great to work with as well in this partnership. So that's really kind of why we went down that path. We think it's great for ourselves internally, and it's great for our customers as well. In addition, by the way, AWS is making investments in our region with us building out what they call outposts and their wavelength product in our data centers in Panama, in Colombia. So this is not just a reseller agreement. This is a really deep partnership between us and them. To your second question -- or your first question on AI benefits, I think we are really in the first innings here on this. This requires -- the opportunity is large. Let's be clear. I don't want to put a number on this. But clearly, as you pointed out, we have a lot of repetitive processes in our company, and we have a lot of things that perhaps we're not really good at. And AI can actually make us a lot better. It will take cost out. It will help us be more productive. And in addition to that, it will have a better front end for us to our customers as well. And on all those fronts, we have either trials, we have implemented, we have launched, and we're just seeing the beginnings of it. I think the challenge in our company that we are challenging ourselves is how do we translate all of this into some real tangible free cash flow improvement. And that's really, as Chris pointed out, our primary goal. Everything that we work on here has to, at some point, translate to a free cash flow expansion. And we are working on it. I think if you ask the same question 2 quarters from now, I will probably have a slightly different answer with much more tangible initiatives that we are working on. I can tell you now, if you go to Costa Rica, you call our call centers right now, there's a high likelihood an AI agent will be answering the call. Operator: The next question today will be from the line of Michael Rollins with Citi. Michael Rollins: Curious if you could help us -- help all of us understand the fixed to mobile convergence opportunity. In your major markets or regions, can you frame what the current level of converged take rates are, where you see that potentially going on a volume basis? And to get there, do you have to do substantial discounting? Or can it be nearly as accretive as if you were getting these customers on the stand-alone services and just coincidentally package together? Balan Nair: The fixed mobile convergence have been a real benefit for us. Yes, there's a few ways to look at it. One, if you know, most of our markets, with the exception of Puerto Rico, it's primarily prepaid, primarily prepaid markets. So when you go to fixed mobile convergence, there's 2 things -- 2 steps here. One, you go from pre to post and then you link the post to our fixed product. And it's primarily postpaid mobile with our fixed broadband. That's really the golden product, the bullseye product we call. And this has worked quite well across our markets. And in Puerto Rico specifically, we've been looking at -- we have more than 50-some percent market share in our fixed broadband in Puerto Rico. And we have right about slightly under 20% in our mobile postpaid. And clearly, the opportunity to link both of them is pretty high. So for every fixed broadband customer that do not have our postpaid, it's really an opportunity for us. And for any of our postpaid customers that don't have fixed broadband, also an opportunity for us. And the trick is really our systems, and we've been going through, as you know, in Puerto Rico, quite a significant upgrade in our systems and stabilizing them. We are now at a point where we can start doing a lot of this postpaid and fixed mobile -- sorry, and fixed broadband convergence. And it's really kind of -- it provides 2 things. One, a higher ARPU in the home or that specific customer, so the customer ARPU goes up. And secondly, churn goes down. And these are proven facts across all telcos over many years. And I think we've been quite successful. We have quite a number of my general managers who are really steeped into this, focused on it, and this is really one of our growth opportunities in '26 and beyond. Michael Rollins: Maybe just a follow-up on the revenue side. Can you give us an update when you take into account the -- what you just described in terms of the FMC opportunities, the opportunity to continue to grow in your markets, what's a fair range of annual rebased revenue growth that Liberty Latin America should operate within on a multiyear basis? Balan Nair: That's a great question. I've got to be careful I don't give guidance here. But here's how you look at it. Our mobile product is growing because as we move from pre to post, ARPU gets better, we attach it to our fixed and we start growing. So the mobile product, you'll see growth. It won't be in the double digits, but it will be very respectable single-digit growth annually. And that -- we have a long runway in that. On the fixed side, broadband continues to grow, however, offset by headwinds on video and voice. So as you look at the fixed product, you'll see flattish to slight growth, but it's mostly because we have some legacy products that you got to adjust for. Eventually, will wash out and we'll get to a steady cadence. B2B has good growth as well. And the B2B growth, we are really excited now getting into more and more cloud services that we're selling. We still continue to sell connectivity. But in addition to connectivity, we're selling a lot more cloud services. But even in B2B, there is a headwind. And the headwind is mostly a lot of customers are canceling their voice products. So there's voice services that will continue to decline a bit, but it's offset by these new cloud services. And the second thing that kind of offsets our revenue going forward is roaming. -- clearly, as people travel, this is a great market for us because a lot of the cruise ships, a lot of people roam. But clearly, with new technologies and most people getting on WiFi via WhatsApp, the roaming revenue is going to be continuously, it's going to slightly decline, and that kind of adds to a headwind to our product. So our product portfolio has a lot of really nice good products and a few headwinds that it's just the nature of where the technology is at. I think the way we look at it is we are going to invest further and deeper into all the products that are growing. And then we're just going to manage the rest of the products that we are challenged with, voice, video, roaming, those kinds of products, we're going to just try to manage that. And I think the team has done a pretty good job. You can see it in our numbers. And that's why you can see while revenue is kind of flattish at the top, there's a significant EBITDA expansion. The EBITDA expansion comes from cost cutting, this base management and really us moving to higher-margin products. So that's kind of one way to look at it. Operator: [Operator Instructions] The next question today will be from the line of Chris Hoare with New Street Research. Chris Hoare: I had a question on the top line trajectory in Puerto Rico. Obviously, great news on the inflection in postpaid net adds. I wonder if you can give sort of any color on the shape of how that sort of played out in the quarter. And obviously, what I'm trying to think of is what we should expect going forward, whether you'd expect to see further improvements in terms of postpaid net adds? And then also on the top line in Puerto Rico, obviously, that was sort of slightly offset by a bit of weakness on B2B. And I think you said that, that's a function of sort of hangover from the transition, but I'd just be interested in sort of if you can give any more color on what happened there as well and therefore, also trajectory on B2B revenues in Puerto Rico. Balan Nair: In '25, we had a whole bunch of headwinds there. We started the year with an outlook that's very, very different than what we ended the year with, meaning extremely positive in the way we ended the year compared to how we saw it at the beginning of the year because there were some headwinds and challenges that we did not anticipate as we came into 2025, the first quarter of '25. Here's a few things that can show the improvements. One, of course, you see financially, we're turning this business around. And -- but it's really based on a whole bunch of things that we fixed in the business, whether it's the leadership talent, whether it's the processes in it, the stabilization of the systems and really coming out with value propositions and products that make sense to our customers. There's a huge amount of improvements in business when somebody walks into our store today than they did last year. So a number of things that I think will give us some nice tailwind into '26. The net adds you saw in the fourth quarter of '25 were driven by all these improvements, including a real big turnaround in our NPS scores. And -- but it was also assisted by the fact that we were migrating a ton of these subscribers -- we bought from DISH. They were prepaid subscribers that came to us. But because of our really strong postpaid value proposition, a number of those prepaid subscribers actually ended up buying our postpaid product instead of moving as to prepaid. And so that drove as well some of the growth of net adds in fourth quarter '25. Now if I look into '26, January, we had a very good month in January. So without any of the Boost subscribers moving up to postpaid. So we continue to see the progress in that. But I think this is a journey that's going to take a lot more than 1 or 2 quarters. And my sense is by the end of '26, we'll be an even better state to set up for a really nice opening balance into 2027. And then back to the revenue miss, you correctly pointed out, B2B was a challenge for us in 2025. We opened the year with a very weak opening balance coming into 2025 and struggled throughout the year. We made a number of changes in the team in the B2B team. We brought in a new leader for the group. She is extremely focused. And if I look at my budget for 2026, has a very good and a very, I think, a budget that when we hit it, I think people are going to be quite happy. So the turnaround is happening, but we have to be patient. This is going to take many quarters. Chris Hoare: Okay. And maybe one follow-up would just be on the slide on equity value unlock where you talk about shareholder returns focus. Is there any more color you can give there in terms of either what you're thinking of or timing around when anything might be announced there? Balan Nair: I think things are looking on the up and up here. We feel really confident about the business. We really feel really confident about the future. As Chris pointed out, the cash flow generation in the fourth quarter looks really good. And you can see that our intention, as Chris pointed out, is we're going to expand that into '26. Now as you know, most of our free cash flow comes in, in the second half of the year. So there's a number of things that we've been thinking about. I suspect that sometime during the course of this year, we are going to come out with something that together with our Board, make some decisions that I think will reward a lot of the shareholders that's been with this. Operator: That will conclude today's question-and-answer session. I'd like to hand back to Balan Nair for any additional or closing remarks. Balan Nair: Well, firstly, I'd like to say thank you for everybody that's been patient with this. Certainly, the story has got lots of moving parts, and we've had a fair share of challenges. And some of it is self-inflicted, some of it, clearly, mother nature is -- we weren't expecting that hit in Jamaica and the hurricane. But we're going to power through all of it. And one thing that's really good about this team is it's we are quite resilient. And when we see things going off, we try to fix it and we do, I think, a pretty dang good job bringing things back to where it should be. And we'll do the same thing within Jamaica as well, as Chris pointed out, I think by the end of this year, you're going to see that Jamaica is back to where it should be, which sets us up for a great 2027 as well. But we've had our setbacks, and we say in our company, all these setbacks, great for a great comeback. And I think we are on our path to a great comeback. So thank you very much for all your support, and we look forward to talking to you again next quarter. Operator: Ladies and gentlemen, this concludes Liberty Latin America's Full Year 2025 Investor Call. As a reminder, a replay of the call will be available inn the Investor Relations section of Liberty Latin America's website at www.lla.com. And you can also find a copy of today's presentation materials.