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Operator: Ladies and gentlemen, welcome to the Straumann Group Full Year 2025 Results Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Guillaume Daniellot, CEO. Please go ahead, sir. Guillaume Daniellot: Thank you, and good morning or afternoon to all of you. Thank you for attending this conference call on the Straumann Group's Full Year 2025 results. Please take note of the disclaimer in our media release and on Slide 2. During this conference call, we are going to refer to the presentation slides that were published on our website this morning. As usual, the discussion will include some forward-looking statements. As shown on Slide 3, I will start with the 2025 performance overview. Isabelle will then cover the financial details. And afterwards, I will share strategic updates and our outlook. We will be happy to answer your questions at the end of the presentation. And let's move directly to Slide 5. Thanks to a strong full year performance, I would like to start by highlighting that we have created more than 7.3 million smiles in 2025. In other words, together with dental professionals, we've supported around 10% more people improving their oral health and confidence than in the previous year to keep delivering on our purpose, unlocking the potential of people's lives. Now let me share how we have progressed in 2025 by moving to Slide 6. 2025 has been a very dynamic year, and I'm very pleased with the results we delivered. We achieved a strong growth with revenue reaching CHF 2.6 billion, representing an organic growth of 8.9%, supported by a very strong fourth quarter despite the uncertainties around the VBP in China. On a reported basis, growth in Swiss francs was 4.1%, which represents a translation impact of around CHF 100 million of revenue. Despite these currency and tariff headwinds, we intensified our focus on efficiency, generating gains that supported our improved profitability. Our core EBIT margin, excluding currency headwinds, increased year-on-year to 26.5%, which corresponds to 25.2%, including currency effects. These results clearly demonstrate the resilience of our business model and the disciplined execution across the group. On the innovation side, 2025 was a year of record launches. Starting with the Premium Implants segment, innovation remains the primary growth driver. It is the foundation on how we outperform the market and gain share. In 2025, these strategies translated in a record year of new product launches, reflecting both the depth and speed also of our innovation pipeline, iEXCEL is an excellent example. We have already sold more than 1 million iEXCEL implants, making it the most successful implant launch in our history. This performance demonstrates not only strong market adoption, but also the relevance of our innovation for clinicians worldwide. In parallel, we have seen a strong momentum of our SIRIOS X3 intraoral scanner since its launch in October 2025, significantly expanding the clinician base being connected to our Straumann Group digital ecosystem. On the transformation side, the partial transition of the ClearCorrect manufacturing to Smartee is well on track, boosting our value proposition and supporting scalable and profitable growth in orthodontics. Overall, those very promising progress gives us confidence as we enter 2026. Looking ahead, we expect another successful year with continued market share gains and high single-digit organic revenue growth, along with further profitability expansion of 30 to 60 basis points in the core EBIT margin at constant 2025 currency rates. Now let's have a look at the regional performance on Slide 7. Thanks to our large geographical presence, we delivered strong growth across the year and in the fourth quarter, especially looking at the strong comparison basis of 2024. Let's start with EMEA, both our largest region and biggest growth contributor for the group. EMEA performed particularly strong in the fourth quarter, leading to a full year organic growth of above 11%. This was achieved across premium and challenger implantology, digital solutions and orthodontics, which supported our continued market share gains across all markets. In North America, performance improved through the year, reaching a strong organic growth of 6.8% in the fourth quarter. This sequential acceleration is particularly significant as North America remains a strategic market for the Straumann Group. This progress reflects the impact of a strengthened leadership team, sharper execution and the contribution of recent product innovations, all of which are driving more consistent performance and stronger market traction. Growth in the fourth quarter was supported by implantology, digital solutions alongside continued momentum in the DSO segment, underscoring improved operational focus and disciplined execution. Moving to Asia Pacific. The region delivered solid underlying organic growth of around 7% for the full year, driven by strong momentum outside China, where we achieved a growth of more than 10%. Countries such as India, Japan and Southeast Asia continued to perform well, supported by challenger brands, digital workflow adoption and strengthened education activities. In China, performance during the second half of the year was significantly impacted by a softer patient flow and distributor destocking behavior, particularly linked to the upcoming VBP process. Despite the seasonal VBP impact, we believe that the underlying fundamentals of China remain intact. With the ongoing ramp-up of our Shanghai manufacturing campus, we are strengthening local production capabilities and supply chain resilience, positioning us very well for the next VBP ramp. Latin America once again delivered very strong performances with a high double-digit organic revenue growth of around 18% for the year, driven by Neodent, continued market expansion of our Straumann premium brand and fast adoption of our new digital equipment SIRIOS. Growth was strong both in the full year and in the fourth quarter and the region contributing 17% of the group's total organic growth. With this, I will now hand over to Isabelle, who will take you through the financials in more detail. Isabelle Adelt: Thank you, Guillaume, and good morning also from my side. It is a great pleasure to walk you through our financial highlights of 2025. Let me start on Slide 9 with how we translated our strong growth in 2025 into solid cash generation. We delivered revenues of CHF 2.6 billion, which translated into a core gross profit margin of 70.1%. This is a strong result in a year marked by elevated investments and external headwinds and driven by our productivity improvements and the favorable product mix. The strong gross profit flowed through to profitability. As Guillaume mentioned, we achieved a core EBIT margin of 25.2%, including currency effects or 26.5% at constant 2024 exchange rates. This was driven by disciplined execution, targeted OpEx measures and operating leverage and demonstrates our ability to protect and improve margins despite FX headwinds and tariff-related pressure. At the bottom line, our core net results reached CHF 478 million, corresponding to a net margin of 18.3%, supported by the quality of earnings and effective cost management across the entire group. Importantly, the strong operating performance translated into cash. We generated a free cash flow of CHF 290 million, representing 11.1% of net revenue and influenced by tactical working capital management decisions as well as one of the highest investment years in our history. This also marks the ending of a large manufacturing investment cycle for future growth. Overall, this clearly shows that we not only delivered strong growth in 2025, but also successfully converted this growth into profitability and cash generation, fully in line with our guidance. With this overview, let us now look at the individual line items in more detail, starting with gross profit on Slide 10. Compared to the prior year, the margin was only slightly lower with 70.1%. This development was mainly driven by 2 factors: Firstly, the impact from U.S. tariffs; and secondly, the ramp-up of production at our Shanghai campus, which weighed on margins during the year. These effects were partly offset by our strong product mix and productivity improvements across the group. Overall, the gross margin development reflects the strength of our portfolio mix and our ability to further automate our production while maintaining a high and resilient margin profile. With this, let me now turn to Slide 11 and discuss EBIT in more detail. Foreign exchange effects had a visible impact on our profitability. While revenue growth differed by around 480 basis points between local currencies and Swiss francs, only around 130 basis points of FX impact flowed through to the EBIT line. This reflects the effectiveness of our local-for-local production strategy and the structural improvements we have implemented across our supply chain, which significantly reduced the sensitivity of margins to currency movements. In addition, cost saving and efficiency measures contributed around 120 basis points to the EBIT margin improvement. These measures were implemented across the organization and focused on operating discipline, prioritization and productivity while continuing to invest in our strategic priorities. Overall, EBIT development shows that we were able to translate strong growth into improved profitability, even in an environment characterized by currency volatility, tariffs and cost pressure. Looking ahead, it is important to note that the ClearCorrect Smartee partnership was only announced in October and, therefore, has not yet had a meaningful impact on EBIT margin in 2025. As part of the production transition during 2026, we expect to see positive effects on margin, especially in the second half of this year. Against this backdrop, let me now take you to the net results on Slide 12. The financial result was slightly lower compared to the prior year. This was mainly driven by the effects of currency hedging, reflecting the volatility in foreign exchange markets. Taxes were somewhat higher as a larger share of profits was generated outside of Switzerland, which is also a consequence of our local-for-local production strategy. As in previous years, we present core results in addition to IFRS results to facilitate a like-for-like comparison. In 2025, noncore items amounted to around CHF 120 million after tax. A significant part of these noncore items related to restructuring measures, which are directly linked to strategic decisions we have taken to strengthen our operational setup. We transferred implant volumes for the Chinese market from Switzerland to our new manufacturing campus in Shanghai. And furthermore, restructuring costs were incurred in connection with the transformation of the orthodontic business. In addition, noncore items include acquisition-related amortization and special items, legal costs as well as impairments related to the planned relocation of the group's headquarters to our new campus in [indiscernible]. From here, I will move on to the cash flow and investments on Slide 13. In 2025, we generated a free cash flow of CHF 290 million. This is particularly noteworthy given the very high level of investments during the year. Capital expenditure amounted to CHF 223 million, an increase of CHF 56 million compared to the previous year, making 2025 one of the strongest investment years in the group's history. These investments were focused on clearly defined strategic priorities. They include the expansion of production capacity, most notably the ramp-up of our Shanghai manufacturing campus, Medentika and the new third production site in Curitiba as well as continued investments in innovation, digital infrastructure and operational efficiency. Despite this elevated CapEx level, cash conversion remains solid. This reflects strong operating performance and working capital management across the group. Overall, this combination of high investments and strong free cash flow demonstrates our ability to invest for future growth while maintaining financial flexibility and balance sheet strength. With this, I will now move to Slide 14 and the proposed dividend. Based on our strong performance and solid cash generation, the Board of Directors proposes a dividend of CHF 1 per share, which is subject to approval at this year's Annual General Meeting. This represents an increase of 5% compared to the prior year and corresponds to a core payout ratio of around 33%. This is in line with our capital allocation priorities to maintain and increase dividends with earnings. With this, let me now briefly touch on our efforts and progress in sustainability on Slide 15. Before I turn to the details, let me briefly highlight that the annual report published today includes our sustainability report prepared in line with CSRD requirements for the first time. This reflects our commitment to transparency and regulatory alignment. In 2025, we continue to make progress across our key sustainability priorities, closely linked to our strategy and operations. As part of our long-term growth strategy, education remains a central pillar for the group. During the year, we trained more than 370,000 dental professionals worldwide with around 42% of all education activities taking place in low- and middle-income countries. This shows our continued efforts to broaden access to care and enables the adoption of modern efficient treatment approaches across regions. On climate, we continue to move towards our net zero ambition. We further reduced our Scope 1 and 2 CO2 emissions by around 17% compared to 2021 and 98.5% of our electricity consumption now comes from renewable sources. This reflects the fact that renewable electricity is increasingly embedded as an operational standard rather than an aspiration. In addition, our local-for-local manufacturing strategy contributes not only to resilience and efficiency, but also to sustainability by reducing transportation needs and strengthening regional supply chains. Overall, sustainability at Straumann Group is closely integrated into how we operate the business and supports long-term value creation for patients, customers and society. With this, I will now hand back to Guillaume for the strategy update and outlook. Guillaume Daniellot: Thank you, Isabelle. Let me now focus on our strategy update, starting with highlighting the massive market opportunity we are facing on Slide 17. First, within our total addressable market of more than CHF 20 billion, we have gained market share across key segments, increasing our total share from 12.5% to 14% within the last 12 months. While we have once again outperformed, this total addressable market still offers us a very significant opportunity to grow in the short and midterm future. Our growth playbook has 2 major dimensions. First, we want to continue to strongly perform in our core market segments, Implants and Regenerative through innovation, digitalization and education. Secondly, we are focusing on transforming our business in key market segments to capture the huge growth opportunities. Then let me start on the left-hand side with the performed dimension. In implantology, our core segments, we are continuing to strengthen our leading position. The market size is around CHF 6.1 billion, and our market share increased to above 35%. This reflects consistent outperformance of the market driven by innovation, digital workflows and strong execution in a still underpenetrated market segment. Regenerative is closely linked to implant surgery with a market size of around CHF 1.3 billion and a market share of around 13%. This is another area where we continue to expand our positions, supported by our strong clinical heritage and portfolio breadth. These segments represent our core strength. This is where we have strong brands, deep clinical relationships and a proven innovation pipeline. Now on the right-hand side, the focus is on transformation. In clear aligners, the market is sizable at around CHF 4.9 billion, but our market share remains below 5%. This clearly highlights the upside potential. With the ongoing large transformation of our orthodontics business, supported by our technology partners such as Smartee, we are very confident in the future of our business repositioning to grow and scale efficiently. Secondly, digital equipment such as SIRIOS scanner and 3D printers represent another attractive segment with a market size of around CHF 1.8 billion. In this area, we have made excellent progress in 2025, achieving strong growth and a market share of above 10% now, and we see further acceleration ahead driven by a very differentiated and competitive equipment and workflows. Finally, CAD/CAM prosthetics is a large market of around CHF 5.7 billion, where our market share is still below 5%. Here, we see an interesting opportunity to accelerate growth by disrupting workflows through chairside solutions. We are very confident that this perform and transform strategic playbook, combining our core strength together with new technologies, which are radically changing our competitiveness in key new segments, will deliver consistent short- and midterm growth opportunity. With this, let me now turn to Slide 18 and walk you through how we execute against this playbook. Our strategy is focused around 3 strategic priorities, each addressing a specific growth engine of the group. First, we aim to expand our leadership in implantology by driving further penetration in an underpenetrated market through innovation, digitalization and education supported by our strong premium and challenger brands. Secondly, we are transforming our orthodontics business, building a stronger value proposition in a more scalable, digitally enabled model that allows us to grow efficiently and profitably together with strong partners. Third, to unlock the market potential of digital equipment and the CAD/CAM prosthetic market, we are working to disrupt chairside prosthetics by simplifying and accelerating workflows, leveraging our SprintRay strategic partnership and our open cloud-based digital ecosystem. What connects these 3 priorities is a common execution logic. Across all of them, innovation definitely supports our value proposition differentiation. Digitalization delivers the expected efficiency and education enables adoption and opening up wider the market segments. Let's now move to Slide 19. Before we go into the details of each pillar, let me highlight the clear principle differentiating our solutions. We are leveraging our cloud-based ecosystem to combine the best products with the best workflows to deliver practice efficiency and superior clinician experience. In today's dental market, product performance alone is no longer sufficient. Clinicians expect not only innovation at the implant or aligner level, but also complete, efficient and integrated workflows that support them from planning to treatment and case follow-up. This combination is what enables us to differentiate and consequently gain market share across segments. With this foundation in mind, let us now go into the first pillar of more detail, starting with implantology on Slide 21. I would like to highlight once again the fact that the implantology market remains yet significantly underpenetrated, offering a vast growth potential. Spain, with its large number of surgically trained dentists and a dynamic DSO presence driving increased affordability, serves as a valuable benchmark for evaluating average implant treatment penetration. Using Spain as a reference, we see significant potential for growth in both developed markets such as Italy, France, Germany, but also especially U.S. as well as in emerging markets like India. We are very confident that market penetration will continue to rise. This development is driven by increasing patient awareness of dental implant treatments and constant growing number of surgically trained dentists who can place implants in all geographies and more affordable treatment costs. With this context, let me now go into the first growth driver, starting with innovation on Slide 22. In implantology, innovation is the key driver to expand penetration and gain market share. In 2025, we launched iEXCEL, our next-generation implant system. Since its launch at IDS in Cologne, we have already sold more than 1 million iEXCEL implants, making this the most successful product launch in our history. IEXCEL combines unique features such as our premium surface SLActive and our Roxolid material with a simplified system architecture. One connection, one prosthetic diameter and one single surgical instrument set enabled to treat a wide range of indications with easier handling. In parallel to excellent clinical outcome, this simplicity is critical. It reduces complexity for clinicians such as inventory management, improves efficiency in daily practice and supports the adoption of more advanced treatments such as immediate loading and full-up solutions. Importantly, iEXCEL is not only driving growth within our existing customer base, it is especially a strong conversion tool, driving new customer acquisition. Premium competitors implant users on the one side, but even more importantly, it is now also a strong tool to switch clinicians using value systems. With this, let me now turn to our leading global challenger brand, Neodent on Slide 23. Neodent continues to be a strong growth engine driven by innovation and geographical expansion. In 2025, we sold around 5 million Grand Morse implants, underlining the strong acceptance of this platform across markets. Grand Morse is a very powerful system. It combines a modern implant design with a broad indication range and is also available in ceramic materials. Neodent is now established as a leading global challenger brand and continues its dynamic expansion into new geographies and growing market share in the Challenger segment. A key milestone ahead will be the registration of Neodent in China, which we expect to be done by 2027, opening up a significant additional growth opportunity. Overall, Neodent plays a critical role in complementing our premium portfolio and driving global expansion in implantology. Let's now turn to Slide 24. Embedded in our innovation process, digitalization is what turns products into a comprehensive and efficient customer experience. With Straumann AXS, we have built a successful open cloud-based platform that connects implantology workflow end-to-end across planning, surgery and restoration. The adoption of Straumann AXS has scaled up very rapidly. Within 18 months, the platform has grown from 0 to more than 15,000 active users, clearly demonstrating strong acceptance and relevance in daily clinical practice. What drives this adoption is the integration of complex workflow. Solutions such as co-diagnostic surgical planning and Smile in a Box are fully embedded into AXS, enabling faster, standardized and predictable implant treatments. Importantly, Straumann AXS also strengthened customer engagement. The platform drives a recurring usage and creates a continuous interactions between clinicians well beyond a single product transaction. Let me show you a concrete example how digitalization amplifies innovation and turns it into a differentiated customer experience on Slide 25. By combining intraoral scanner, the iEXCEL implant and a specifically designed anatomic healing abutment for the digital Straumann AXS platform, we created a fully connected workflow that significantly improves efficiency and accelerates treatment, and the impact is measurable. With the Fast Molar workflow, patient treatment time can be reduced by up to 26 weeks, clinical churn time by around 50 minutes and the number of appointments can be reduced from 5 to 2, enabled by the fully integrated digital nature of the solution. Importantly, it also strengthens the economics. By accelerating treatment and standardizing workflow, we increased the pull-through of original abutments and restorative components, driving higher recurring revenue per case. For clinicians, this means higher productivity and predictable results. For patients, fewer visits and faster restoration. And for Straumann, stronger consumables growth and scalable value creation. Moving up to Slide 26. To drive access to care, education is critical to make our solutions accessible to more clinicians and patients. In 2025, we delivered more than 10,700 education programs worldwide and trained over 370,000 dental professionals covering implantology, digital workflows and advanced indications such as pull out procedures. Education plays a critical role in increasing penetration. It enables more clinicians, particularly general practitioners to adopt implant treatments and to use digital workflow in a predictable and efficient way. With this, let me now move to the second pillar of our playbook for growth, the transformation of our orthodontics business on Slide 28. Through the Smartee and DentalMonitoring strategic partnership announced last quarter, we are transforming our Clear Aligner value proposition and accelerating our growth capabilities. On the product side, it means the launch of a scalloped trimline option in May 2026, together with mandibular repositioning devices later in the year, allowing us to address a broader range of orthodontic indications and more complex treatment needs. Equally important is the transformation of our production setup. As planned, EMEA and Asia Pacific aligner production is now transitioning to Smartee manufacturing, enabling constant quality, faster turnaround time and lower cost of goods. The first customer feedback on quality and service levels has been very positive so far. Together, these innovations and production capabilities are strengthening our ability to compete and our potential to scale and win market share in the Clear Aligner segment looks very promising. Moving to Slide 29. Digitalization is also here a critical enabler to scale orthodontics and broaden access to treatment, particularly for general practitioners, which is the focused growth segment for us. Through ClearCorrect remote care powered by DentalMonitoring, we enable remote treatment monitoring. This reduces the need for in-office visits and supports a simpler and more efficient patient journey while building the confidence of general practitioners to achieve consistent quality clinical outcomes. Digital workflows also support case conversion for general practitioners, which is one of the most important aspects of market growth. Tools such as before and after simulations make treatment outcomes more tangible, helping clinicians explain cases more clearly and increasing patient acceptance. In addition, the integration of CBCT data simplify treatment planning and enables more comprehensive diagnostics, especially for more advanced cases. This further expands the range of orthodontic treatments that can be addressed digitally by general practitioners. Overall, the digital capabilities simplify workflows, improve efficiency and create a faster and more compliant patient journey, supporting clinical success and scalable growth in orthodontics. And to ensure broad adoption of these workflows, education plays also here a critical role, which I would like to comment on Slide 30. Lowering barriers for general practitioners is critical to accelerate adoption and enable scalable case growth. Digital workflows and advanced aligner technologies only create value if clinicians are confident in using them in daily practice. With the ClearCorrect orthodontics, we provide structure and modular education tailored to different experience levels and treatment needs. This allows clinicians to progress step by step and build clinical skills over time. In addition, we complement education with ongoing online and clinical treatment support, ensuring that clinicians are supported beyond the initial training and through to the treatment process. With this, let me now move to the third pillar of our playbook for growth, disrupting chairside prosthetics on Slide 32. Digital equipment is an attractive and growing market in its own right and at the same time, a strategic enabler across our entire portfolio. Across implantology, orthodontics and prosthetic, there is always the same starting point. It all begins with an intraoral scan. Intraoral scanners are the entry point into our digital Straumann AXS platform. They capture the data that connects treatment workflows and platform across all segments. And this is why the intraoral scanner is strategically important for us. With our iOS portfolio, we cover the full market spectrum. We offer premium solution through our partnership with FreeShape, mid-range solutions with our SIRIOS X3 and entry solution with SIRIOS. This breadth allow us to address all customer segments and significantly expand access to digital workflows. This strategy has delivered very strong results in 2025, and we are confident to continue this momentum in 2026. We are seeing strong market share gains in intraoral scanners, allowing us to outgrow the digital equipment market. Each scanner placed increases adoption of Straumann AXS, our open cloud-based platform. And this expands our active user base, strengthen engagement and drives recurring usage across implantology, orthodontics and prosthetic. Let me now show you how this applies to prosthetic on Slide 33. What you see on this slide is a clear example on how we translate digital integration into speed, efficiency and recurring revenue while transforming the chairside prosthetics segment. With the Straumann Signature Midas 3D printer fully integrated into Straumann AXS, we enable automated crown design and production directly at the chairside. Clinicians can produce crowns, inlays or onlays in less than 10 minutes, significantly accelerating treatment and reducing dependency on external lab processes. This workflow is supported by our innovative chairside resin portfolio developed by our partner, SprintRay, delivered in patented capsule format. This format simplifies handling, improved consistency and ensures predictable clinical outcomes. Importantly, this is not only about speed, it fundamentally changes the economics. For clinicians, this means faster turnaround time, higher productivity and more control. For patients, it means especially fewer appointments and same-day restoration. And for Straumann, it means recurring revenue streams embedded in the workflow and the Straumann AXS ecosystem. For us, the integration of scanning, design, production and material into one seamless workflow creates a recurring revenue model driven by ongoing resin and consumable usage linked to every printed case. Finally, moving to Slide 35 to unlock those many opportunities and execute flawlessly on our growth playbook, the player learner culture is a key asset. We operate in a world that is increasingly volatile, uncertain and complex. In this environment, speed, agility and learning capability are decisive. At Straumann, our high-performance player-learner culture brings this all together. It encourages entrepreneurial thinking, accountability and continuous improvement, while at the same time, fostering collaboration and learning across functions and regions. This culture enables us to innovate closer to customers, take faster decisions and execute our strategy consistently across markets. And importantly, this is not an aspiration, it is measurable. Our employee engagement score of 80 reflects the high level of commitment and energy across our organization and represents the top score amongst globally leading companies. This is a major robust competitive advantage and allows us to turn strategy into execution and execution into results. With this, let me now turn to our outlook for 2026 on Slide 37. We entered 2026 with solid momentum, supported by our strong market position in a total addressable market of more than CHF 20 billion. While market conditions are expected to remain volatile with ongoing macroeconomic and regulatory uncertainties, we're expecting positive impact from our new key strategic initiatives, especially in the second half of the year. In China, the impact from the VBP process is expected to support growth momentum as the year progresses. And in orthodontics, the ClearCorrect transition to Smartee is advancing as planned and will contribute positively over the course of the year. With this timing effect, we are very confident in our outlook. For 2026, we expect to deliver high single-digit organic revenue growth alongside a core EBIT margin improvement of 30 to 60 basis points at constant 2025 exchange rates. With this, we are happy to move to the Q&A session to answer your questions. As usual, we kindly ask you to limit the number of your questions to 2 in order to give other participants a chance to post their questions within the available time. Chorus Call, can we have the first question, please? Operator: The first question comes from Doyle, Graham from UBS. Graham Doyle: Maybe, Guillaume, just firstly, on sales phasing for the year, I know it's early in the year, it's a bit hard to fully describe it given what's going on in China. But it does look like the way EMEA and the U.S. finished that maybe those regions are a little bit more H1 weighted. So is it reasonable to think that this is a relatively balanced year in terms of group growth for organic? And then secondly, just on free cash flow, should we expect a good step-up from H1 just as some of that inventory unwinds and maybe the restructuring charges fall as well? Guillaume Daniellot: Yes, Graham, for the top line, we will have obviously some different effect also from a regional basis. But when you look at Asia Pacific, where China is obviously a major impact, for the time being, assumption is that VBP will take place in the second quarter. That's an assumption as there is not yet any official statement by the China authorities, but the latest information that are coming up seems to demonstrate that it will be rescheduled around this time frame. As we have a very strong comparative base in 2025 in the first half and the low in the second half, I would say 2026 is going to be the reverse of 2025. We are going to have obviously still a weaker first half in China and Asia Pacific for the first half and a much stronger one in the second half when we look at the start of the year. When it comes to North America, we expect progress to continue, and we expect in our guidance, let's say, we have tabled a stable macro environment where we believe that our execution is going to continue to produce positive results, then that's the way we are seeing that our growth rate for 2026 will be more weighted on the second half than the first half. Isabelle Adelt: Let me take your question on cash flow, Graham, a very easy answer to that. Yes. What are the big building blocks when we look at it? It's CapEx, it's net working capital and it's the noncore items we're looking at. So CapEx, as outlined earlier, we said we are coming out of one of the biggest CapEx cycles we've had in the history of the group. By end of this year, we will have doubled our capacity in terms of how many implants we can produce this year. So the last big project to be finished is our third factory in Curitiba during this year, but you can already expect a significantly lower CapEx level for 2026 compared to prior year. Same holds for working capital. As you might recall, we did a couple of tactical decisions to increase our inventories to mitigate for the U.S. tariffs last year, and this is likely to unwind. So we will see structurally a little bit lower working capital in 2026. And last but not least, I think last year, we have seen a lot of effort we put into putting the right structures for our future growth. so namely preparing the orthodontics transition as well as enabling the China campus and making sure volumes can be produced where they are needed. And this is why we expect to see significantly lower noncore items in 2026 as well. Operator: Next question comes from Hugo Solvet from BNP Paribas. Hugo Solvet: Just Guillaume, maybe for you on North America and the U.S. in particular. Can you help us understand the balance between volumes and price mix in Q4? And just a word on current trading. Do you continue to see that sequential improvement in the U.S. as we start 2026? And maybe on a follow-up to Graham's question on the phasing, but more on margin this time, maybe for you, Isabelle. Can you quantify how much of margin pressure should we expect in H1? I think historically, you were more 55%-45% H1, H2 EBIT weight and that was more 50-50 in 2025. So would 2025 be a better proxy? Or would it be even more skewed towards H2? Guillaume Daniellot: Hugo, when it comes to U.S. volume price, it has been mainly volume growth. We had some price impact, but really small. Then I would say 80% to 90% of our development came from volume and share gain. When it comes to what we start to see in Q1, we see the trend still being positive with our iEXCEL still being very appreciated and helping us to gain share. Actually, something which is important, I tried to allude that in the script, not only on premium users, but also on value system users based on the efficiency gains delivered by the digital workflow and the digital equipment. Our DSO development is also positive. We have seen the DSO starting to reinvest on the marketing activities in order to keep then the patient flow at the same level. While it's still not very dynamic, at least we have seen a really good stability over the past month. That's why we believe that at least the beginning of the year should also see North America being able to keep delivering this kind of performance. Isabelle Adelt: And regarding your question for the margin distribution, Hugo, so I think this follows a little bit the same pattern Guillaume already elaborated on for the sales phasing. Just to help you think about how the margin distribution could look like, for me, there are 3 big building blocks. On the one hand side, of course, it's the China business and the VBP. There's still a little bit of uncertainty regarding the timing. But what Guillaume already explained that last year, we had a super strong first half year in China and a little bit weaker second half of the year, this will look the other way around this year. The second big building block definitely, the ortho transformation. As we speak, we are in the process of transferring production volumes to Smartee for the EMEA and APAC region and winding down our own production line in Germany, which, of course, means the benefit will be bigger in the second half of the year that the first, where we have transition costs and the wind-down costs included. There's still a little bit of double cost. And last but not least, which we shouldn't forget is the phasing of the tariffs. From all we know to date, the amount we expect to see is a little bit the same we had last year. But last year, it was more biased towards the second half of the year since it was only announced in April, and we didn't see a big effect in the first half. And this year, the amount will not differ significantly for the full year, but will be a little bit more biased towards the first half year since we will have a more continuous flow of tariffs from what we know today. Operator: The next question comes from David Adlington from JPMorgan. Mr. Adlington removed his question. Let's take the next one from Susannah Ludwig from Bernstein. Susannah Ludwig: I have two, please. I guess, first, could you just give a bit more color in terms of the strength of the EMEA performance in Q4 and maybe what you're seeing in Q1 so far? How sustainable are you thinking about sort of the acceleration in performance there? And then second, on prosthetics, that's a business that historically, the dental labs have controlled and dental offices have very strong relationships with their labs. So what do you see as the catalyst for sort of the disruption of that relationship? Dentists often tend to be a creature that have a bit of inertia. What do you see as sort of driving the shift to chairside? And what role will the DSOs play here? Guillaume Daniellot: Yes, Susannah. Then on those two questions. EMEA is obviously a very, very solid trend. We had an exceptional Q4 first, because I think we have very underlying capability to continue gaining share, and we are leveraging all the innovation that we have at our fingertips. And I think the EMEA team is doing very well on all the different franchises, and this has to be highlighted. I think in premium, in challenger, also digital and orthodontics is really driving then the very solid performance. Now -- the fourth quarter has been also boosted by some January '26 price increase announcement that has been done, and we know that there have been some also high digital equipment orders that have boosted performance. And I would say we have always said that the EMEA regular high performance is going to be between high single digit to low double digit. And I think this is what we expect to see also in 2026. And it will be balanced between the different quarters, saying that potentially the first quarter will be a little bit lower based on the strong finish. But all in all, it's going to be just a balance in all the different quarters that will still see us delivering strong contribution of EMEA with regard to our total 2026. When it comes to prosthetics, you have a very good point that the lab relationship with the dental practitioner is very strong. And why do we believe that such chairside 3D printed crown can have some disruption capabilities in the future for one very good reason, we believe, is patient expectation. If you can say to a patient that you are going to solve his decay or his crown issue in one appointment, there will be a lot of benefits on the patient side and obviously, a lot also on the clinician side because it will save significant number of appointments. Will it be a fast disruption? No, because we all know that dentistry is rather conservative. But as soon as practitioner will have experienced this same-day dentistry being able to gain significant efficiency in posterior crown restoration like this, we do believe that the share of the business will not go to the lab anymore. Obviously, DSO will be able to push those workflow because of the efficiency and profitability gain that they can generate. But it will be all across the market based on the significant appointment savings that could be generated. Then to be seen step by step, but I think all the elements are here now to be able to allow the same-day dentistry that will, I personally think, going to take significant share in the future. Operator: The next question comes from David Adlington from JPMorgan. David Adlington: Yes, just -- I may have missed it, sorry if you addressed it. But just in terms of your margin guidance, just wondering if I could check what you're assuming in terms of savings from Smartee or whether you're looking to reinvest those? And then secondly, again, I think you may have touched this and I just missed it, but in terms of the tariff impact in the second half, I just wondered if you could quantify that and how you see that evolving through 2026? Isabelle Adelt: Sure to take that. So I think -- I mean, margin guidance for Smartee. So David, I think what we explained a little bit before, we have a very clear plan how we want to turn the orthodontics business profitable over the next 2 years. And I think the first big step will be this year really working on our COGS position, working on our profitability position by transferring the big production volumes we have in EMEA and in APAC to Smartee. But how will this look like? So on the one hand side, we're currently closing down our own production site in Germany to be finished by end of Q1. So you will potentially still have the COGS in Q1, but then at the same time, transfer to Smartee at a much lower cost per liner than we had before internally. And this will ramp up over Q2, so we can see the full effect in Q3 and in Q4. And then I think in addition to that, obviously, we expect to see a little bit higher growth rates for the ortho business as well, being a positive impact to the margin in the second half because we are planning, as Guillaume said, to launch the scalloped shape trimline during Q2, which will substantially complement our portfolio. And this is why we will, for sure, already see a step-up in terms of margin in the first half, but the bigger impact we would see in the second half of the year once the cost for our own production is out and Smartee is fully ramped up for those 2 regions. And then for tariffs, I think to give you an indication, we expect the total amount from all we know today, so assuming tariffs will stay where they are to be at a similar level as 2025, where we saw a total hit of around about CHF 20 million in our P&L in the COGS line. We expect that number to be pretty similar, maybe a little bit higher in 2026. But saying this, it was very biased towards the second half of the year in 2025, especially in July when we did all the shipments, but then in the second half of the year when we had the high tariffs, whereas in this year, you can rather think about it as distributed half and half, so half in the first half of the year, half in the second half of the year. Operator: Next question comes from Hassan Al-Wakeel from Barclays. Hassan Al-Wakeel: I have two, please. So [indiscernible] up on the margin guidance and why this isn't higher given your commentary on Smartee halving the loss, [indiscernible] loss in '26? And is the guidance is that of the uncertainty that you still see in China? Or is there anything else to highlight in terms of the margin building blocks? And then secondly, on China, is the second half realistic? And what do you have in your guidance from the potential continuation of destocking beyond this quarter and the [indiscernible] can also ask what the margin headwind that you're baking China VBP in 2026? Guillaume Daniellot: We are going to try to answer, but you have been breaking up on your questions. And let me try to summarize your questions and try to answer that, and you will let us know if this is in line. First question is, what are the different building blocks we are seeing on our margin. I think as Isabelle explained and what we discussed already quite a lot is, on the one side, we have that negative impact of tariffs. That will be almost the same, a little bit more than potentially 2025, but that will be then having an effect more in the first year -- in the first half than the second half because of the fact that it has been, in 2025, impacting our second half mainly. The second side that we said is about Smartee, where as our manufacturing now is for Asia Pacific and EMEA translating to Smartee, we will see the effect over the year starting from March because we are going to finally close our German plant, as just Isabelle said, there in the end of the first quarter. and something also to express on Smartee, there are 2 effects for our margin. The first one is the immediate COGS effect that will be obviously direct. And the second one will be the operational leverage that will come over the next 18 months, where we really are expecting significant growth that will help us to drive then significantly improvement in profitability as well with regard to all our SG&A costs that are going to be absorbed in a much higher way with the double-digit growth that we're expecting and that we are seeing at this point. But we are having also additional elements in our building blocks that we are counting and that are going to have positive effect on our profitability. The first one is obviously the manufacturing of the Shanghai campus, where we are allowing to have all our China volume being manufactured at a lower COGS that have been obviously planned in our guidance. We have also another one, which is in part looking at the growth of our digital equipment, where we are transitioning some significant part of our volume from third-party products to our own SIRIOS intraoral scanners, meaning that we can also benefit from a higher profitability. And last but not least, we are continuing to do operational leverage in the overall organization, thanks to the growth that we are delivering. Then that's where our improvement from a profitability standpoint is coming from many parts that are allowing us to be pretty confident about delivering then the improvement that we have been presenting. To the second side, I think if I understood well, you were talking about or you were asking about what is baked in our guidance somewhat with the current VBP being in Q2 and the destocking -- potentially further destocking of distributor. What we believe is that the destocking of the distributor is going to be less important than the second half of 2025 because they are -- it seems from our information in between 1.5 to 1.8 months of stock right now than at a pretty minimum level to operate. Then while it's going to be still slow from a patient standpoint, we don't believe that the destocking will be massive anymore. Now obviously, we are going to be still against a very strong comparison base. What you have to remember is our first half in China has been in the 20-plus percent growth. And we are going obviously to see much more than the weak market than what we have seen in the first half. Then it's much more this challenging comparison base that are going to provide, I would say, China still in the negative territories from our perspective that will strongly be reversed for the second half. Then we have baked more or less this dynamic in our guidance for our high single-digit growth for 2026. Operator: The next question comes from Daniel Jelovcan from ZKB. Daniel Jelovcan: The first one is also on Clear Aligners. Can you elaborate a bit on the geographical growth? It was probably double digit in all areas, but I'm not sure, that's why I'm asking. First question. Guillaume Daniellot: Yes. Daniel, Clear Aligner has been very dynamic, and we had double digit in 2025 again. Significantly in Latin America and EMEA, rather flattish in the North America, which we expect this to change with a better consumer sentiment. And we have been, since the partnership with Smartee, also seeing some interesting uptick in Asia Pacific and especially in the 2 markets where I think we will be able to drive interesting volume in the future, which are Japan and Australia. And that's why we are pretty confident to get on track with our Clear Aligner also operational leverage in the future, looking at the current growth trend that we're having on this business segment. Daniel Jelovcan: Okay. Great. And the second -- last question is the development in Spain. As you elaborated, you mentioned a lot in the past, DSO is pushing penetration up because of the low price and so on. I would wonder if you can add a bit more details. So what implants do the Spanish use? I mean, is it Neodent or is it premium or both? I'm talking about the DSOs. And also when you look at your penetration chart, is the DSOs, you see evidence that the DSOs are also pushing growth in other underpenetrated countries. I mean, have in mind the DSOs are not allowed in Germany, for instance, or maybe there is a change coming up. So yes, that's the question. Guillaume Daniellot: Yes. Spain has been a very good example on how DSO has grown the market through opening up a segment of patients that was not thinking that they could afford implant treatment. And with rather aggressive marketing activities, presenting, of course, implant treatment at a lower level, but especially pushing the patients to go through the door to get presented with the diagnostic, actually, it's a question of spending prioritization. Then if you do an implant, then you might not buy the latest, I don't know, computer or iPhone or whatever. And that's a little bit what we have seen for countries where most of the oral care or dental care are full copayment by the patient, which is the case in Spain. Then this has been one of the significant effect DSOs have had on those patient group that was not going to a dentist anymore, but are suddenly going to DSO because they feel that it's actually more affordable than they were thinking about. Then those DSOs are mainly using challenger brands and our Neodent system, but some are still using premium as well, especially because of the efficiency driven by the digital workflow that are not fully yet available on the challenger brands. We are expecting this to continue developing in other geographies. And one of the good reasons why we have also seen China developing so strongly after VBPs has been because DSOs have been able to invest and scale clinician education and also doing investments in equipment to be able to place more implants. Then DSOs are a very strong partner for us for continuing to open the market and expand the market in most geographies because they are also the ones that are investing in technology that are allowing efficiency and then potentially more affordable pricing, that's what we see the future. And that's one of the reasons also why we are working in co-creation with a lot of DSOs to develop specific solutions that are adapted to the strategy they would like to pursue. Daniel Jelovcan: That's great. And also congrats for this achievement in '25 in these challenging times. Operator: The next question comes from Julien Ouaddour from Bank of America. Julien Ouaddour: I have only one. But I just want to understand the level of maybe [indiscernible] conservatism that you have in the margin guide this year. Just to explain myself. So I mean, usually in a given year, you have some operating leverage that you expect to grow high single digits. You should have some -- I think you mentioned strong growth in EMEA, like North America also probably improving, which should help you on the mix side. In the call, you mentioned digital and Shanghai production to be a tailwind as well. So it seems the swing factors are the savings from ClearCorrect and like the VBP. Have you changed your expectation in terms of the VBP? I think in the past, Isabelle said China is expected to have roughly a flat margin. So is there, I mean, any different assumptions in the guidance? And in terms of savings, do you still expect the losses from ClearCorrect to have in '26, which should clearly give you a nice boost. So just trying to understand really the 30 to 60 bps of margin expansion. It's pretty -- I mean, it's pretty good already, but I wanted to check if there is any level of prudence there. Guillaume Daniellot: I can start with answering. Again, on the ClearCorrect, as we expressed, it has been a large transformation we started in August. And honestly, we are really pleased on where we are right now. We have made a very strong progress being able to connect manufacturing for 2 major regions with no hiccup, having really strong already feedback from customers from turnaround time, from quality levels and still using, again, all the ClearCorrect specific technology. That means we are using all our ClearCorrect portal. We are using all our specific ClearCorrect material. We are having still a very clear differentiated branding by leveraging the technology of Smartee. From a manufacturing standpoint, we are well on track, being able to -- we have started to transfer this manufacturing, meaning that with operational leverage, the plan that we have for end of 2027 to be breakeven of ClearCorrect should be really achieved. At least for the time being, we are pretty positive about this midterm perspective that we have. Then looking at regions like North America doing better and being able to deliver the stronger growth than the 4% we had in 2025 and backing for higher growth rate for 2026 will also deliver then higher profitability, thanks to the higher pricing that we have there versus the other regions. Solid EMEA will also contribute well that we can generate operational leverage from those geographies. Then I think we already expressed manufacturing in China, the fact that we have our digital equipment that are going to be more in-house than third party and the fact that we are also going to have the latest for us high CapEx year because we have been investing a lot into profitability -- into capacity, sorry, in the past years. I think it is making us, yes, I would say, confident about our capability to deliver higher gross margin and higher EBIT moving forward in 2026, but also having a profile keeping improving over 2027, which is really something that we are looking at from a midterm standpoint. Operator: The next question comes from Julien Dormois from Jefferies. Julien Dormois: I have two. The first one relates to the iOS business. I think you have mentioned during your presentation that you have experienced significant share gains, obviously, related to the comprehensiveness of your portfolio. So I was wondering whether you could help us size this market on a global basis and whether your current market share is maybe above or below the 10% you have highlighted for the broader digital equipment market. So just to understand where you sit on that side. And what do you think could be a realistic target for Straumann maybe by the end of the decade or in the next 5 to 10 years? That would be quite interesting. And the second one is very much a housekeeping question, and sorry if I missed that, but it's probably more for Isabelle. But at the current FX rates, I'm just curious whether it is fair to assume more than 500 basis points of adverse impact on top line and maybe a new round of headwinds to margin, probably to the tune of 150 bps if I compare to the 130 bps you had in 2025. Guillaume Daniellot: Yes, I will. I think -- thanks for the question, Julien. It's not so easy to assess the real full market total value of iOS. But if we look at what we call modern technology that our iOS and 3D printer, that's where we are assessing this market to be a bit shy of CHF 2 billion. And when we see our development, we are seeing, yes, our shares being double digit now. We have been, I would say, more on the 5% to 6%. We think that we have significantly increased this, this year, thanks to this new technology coming from our AlliedStar acquisition that we have made in September 2023. And we believe that this is going to continue to grow as together with our FreeShape partner, we are on the sweet spot to be able to deliver a really advanced technology with FreeShape for surgeons and orthodontists that really want to leverage the latest technology also in terms of diagnostic and having advanced capabilities. But as we are now entering a lot into the GP segment with orthodontics, but also implant treatments and now prosthetics, very often, they like a good technology that does not need to have all the latest one at a more affordable price. And what we have seen in this market penetration, we are now in the middle of the S curve, and we are well positioning to take a fair share of the volume of our intraoral scanner in the next 3 years. And we see that significant growth in the next 3 years. Afterwards, we expect the total market penetration to move from -- it is around 35% to, I would say, 35% globally today. It will double in the next 3 years from my perspective because we are having the sweet spot in terms of quality to price ratio on digital equipment. And this is where we believe strong growth will still be achieved on our side. This being said, I want to express once again the fact that we consider intraoral scanner as an enabler. What we want to do is really connect as many clinicians as possible into our open cloud-based AXS platform, where clinicians have then the efficiency, the access to consumables and solutions that are really creating a difference in their practice. That's where they can go to the Fast Molar workflow from Straumann, they can go to the clear aligner, then ClearCorrect solutions. They can go to the SprintRay. And every new technology that will come will be able to be connected through that AXS platform, meaning that we will be open to any innovation in-house or externally, thanks to that customer base connected with our intraoral scanner and that ecosystem. That's really the strategy that we have been pursuing and that we are very pleased into the progress of it right now. Isabelle, do you want to comment on the... Isabelle Adelt: The FX impact, yes. Julien, you didn't miss it. I think you're actually the first one to ask it, which I think is a little surprising. But I think -- I mean, FX impact, as you all know, I mean, we're operating in a very volatile environment. And I think you gave a very good range already when you said that. So from what we currently see and looking at -- basically looking at what we say we are doing at January spot rates, we are looking at a very similar impact we had last year once again. But having said this, to give a clear guidance at this point in time is very difficult. Because in January alone, we saw movement of over 50 bps up and down just by the volatility of the U.S. dollar. So I think for the time being, if you look at a very similar impact to what we had last year. So to remind you, in terms of top line, 480 bps; in terms of bottom line, 130 bps for the time being, the estimation is not too wrong. And we will keep you updated as the year evolves given of what the currencies will do throughout the course of the year. Operator: Next question comes from Richard Felton from Goldman Sachs. Richard Felton: Just two questions for me, please, both on orthodontics. So the first one, on the product side, like how important are some of the product innovations that you've referenced in your presentation? And for instance, the scalloped trim products, how important is that in filling a gap in your portfolio? And what percentage of cases are you now able to address? And then secondly, also on orthodontics, are there any changes to your commercial organization that you are making? Just trying to get a sense of what is driving the acceleration in liners that you expect over the next couple of years. Guillaume Daniellot: Yes. Thanks a lot for the question on orthodontics. And yes, I think happy to be able to explain this. When we are commercializing ClearCorrect, we had a significant differentiation, which is a specific high trimline, which is helping to place a little bit more force to the teeth in order to move them a bit faster and to do some different movements. This is something which has been appreciated by some clinicians, but a lot of others are used to scalloped trimline, which is what has been proposed by most of the players in the market. Then when we have been willing to switch some of the GPs that were using a lot of competitor products, they were asking us to have also the scalloped trimline option because they are so used to this that they don't want to change any of their protocols or their experience so far by moving to ClearCorrect. Then it has been a pretty strong obstacle to some of the switches that we were wanting to do because of asking the clinicians to change the way they were treating patients. And obviously, then a lot of the clinicians like to continue doing what they are used to and what they are confident with. And it's a very different way of manufacturing product. We have also to look at how to redefine protocols with a different trimline. And that's why for us, it's also a major addition to our portfolio because we will be able to offer those different trimline capabilities, either the high or low trimline that are existing to ClearCorrect and the additional scalloped auction that will be also a lot of wishes by a lot of general practitioners that we have been meeting over time. The second aspect on the commercialization side and what we have done is we have also to generate operational leverage decided to focus on the key growth market. And what we are doing is making sure that our customer experience, clinician support and commercial go-to-market investments are going to be done in the 14 major countries where we are seeing actually those double-digit growth. And as much as we are seeing growth, we will then continue doing specific go-to-market investments in order to support growth as we are seeing it happening. Operator: The next question comes from Sibylle Bischofberger from Vontobel. Sibylle Bischofberger: I have only two questions left. First of all, the gap between the reported EBIT and the core EBIT was quite strong in 2025. Could you give us a hint how will be the delta between your reported and core in 2026? And secondly, CapEx will clearly come down, as you said, only Curitiba 3 will be spent. And then in 2027, it will be even lower. Could you tell us how much it will be in 2026 and what to expect for '27? Isabelle Adelt: Yes. No, happy to take those two questions. I think this is what we discussed a little bit as influencing factors to our free cash flow performance already, right? So just to remind you, 2025, we had a lot of extraordinary impacts in there. So we provided quite some detail in our annual report what they were. And I think it wouldn't be too wrong to assume that everything regarding restructuring when it comes to the ortho business, when it comes to the transfer of our factory from Villeret to Shanghai is something that will not occur again this year. Although having said this, of course, costs related to M&A and so on will remain. So if you look at those categories, we provide quite a lot of detail. I think it's a fair assumption to say that 2026 will be a little bit more of the same as in previous years, but not in 2025, where we did all of those projects I just talked through. And then I think CapEx, I think it's important to understand that in the last 4 years, we invested over CHF 1 billion into our manufacturing capacity. Having said this, with the finishing Curitiba 3, we will have doubled our capacity for implants. And this means for the rest of the cycle, we will step down significantly in terms of CapEx intensity, so meaning CapEx over revenues. So you can already expect the first step down more towards the level of 2024, 2023, a mix of that in this year with the Curitiba finishing and then a further step down in 2027. Operator: The last question for today's call comes from Falko Friedrichs from Deutsche Bank. Falko Friedrichs: My first question is whether you expect China to see similar sales declines in H1 as it was in the fourth quarter? And my second question is, do you foresee a return to high single-digit growth in North America in 2026? Guillaume Daniellot: Sorry, the first one. Could you say again the first one on China, Falko, please? Falko Friedrichs: Do you expect the first half of 2026 to see similar sales declines in China compared to what you saw in the fourth quarter? Guillaume Daniellot: First half. No, not to the same extent. We don't think so because we believe that some of the destocking has already happened on the distributor side. But again, it will still be then quite lower than 2025 first half because of the fact that the growth was very significant. But we don't feel we will see the same trough that we have seen in Q4 than 2025. And when it comes to North America, we are not doing specific guidance per region, but I think we expect in between the high end of mid-single-digit growth to high single-digit growth being potentially possible, depending on what will be also the macro around there. But it's -- if we see the labor -- the latest news about the labor market that was rather positive. The inflation that has been just been presented at 2.4% and being also on the right side, that could help, of course, adding a little bit additional pressure on the Fed lowering their interest rate. We believe that we can have a rather positive development of the macro situation in North America that could support then a really good outcome for North America. It's still too early to say to see consumer confidence, but I think there are options for having a healthy growth for North America in 2026. Well, thank you for joining us today and for your continued interest in the Straumann Group. We look forward to seeing you again soon, and we wish you a nice day and a warm goodbye from Basel. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2025 Pitney Bowes Earnings Conference Call. Joining us today are Chief Executive Officer, Kurt Wolf; Chief Financial Officer, Paul Evans; and Director, Investor Relations, Alex Brown. [Operator Instructions] Please be advised that today's conference is being recorded. It is my pleasure to turn the call over to Alex Brown, Director, Investor Relations. Please go ahead. Alex Brown: Good morning, and thank you for joining us. Included in today's presentation are forward-looking statements about our future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these items can be found in our earnings press release, our Form 10-K and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any obligation to update forward-looking statements as a result of any new information or developments. Also included in today's presentation are non-GAAP measures. Specifically, EBIT, EBITDA, EPS and free cash flow are all on an adjusted basis. You can find a reconciliation for these items to the appropriate GAAP measure in the tables attached to our press release. We have also provided a slide presentation and a spreadsheet with historical segment information on our website. With that, I'd like to turn the call over to Kurt. Kurt Wolf: Good morning, and thank you for joining us. I trust that everyone has had a chance to read our earnings release and my quarterly letter. As such, I will keep my comments brief. First, I'd like to welcome our recently announced executive hires. It's exciting to see the level of talent we are now able to attract to Pitney Bowes. I'm particularly pleased to have Steve Fischer join the company. Steve is an accomplished bank leader, something that stood out during the recruiting process. I look forward to working closely with him to maximize the value of Pitney Bowes Bank. Moving to the fourth quarter. Our results demonstrate the progress we're making in transforming Pitney Bowes. While we did have some tailwinds, our financials were strong absent those benefits and reflect the growing strength of our business. In closing, we are rapidly progressing through our transformation. In 2025, we significantly strengthened the foundation of our business, taking meaningful steps in upgrading leadership, simplifying our structure, streamlining processes and eliminating costs. All of this is putting us on strong footing as we pivot to a focus on profitable growth and beginning our external review with qualified advisers during the second quarter. With that, let's open the call for questions. Operator: [Operator Instructions] And our first question will come from Aaron Kimson with Citizens. Aaron Kimson: Kurt, can you expand on the additional market uncertainty and geopolitical challenges you mentioned in your letter as reasons for the wider guidance range? Kurt Wolf: Yes. Aaron, thanks for the question, and thanks for joining the call. Yes, some of the things that we -- I guess, I would point to, one is, as we've seen in the past, there's been issues with government shutdowns. I think there's no guarantee that doesn't happen again. As we talked about during our Q3 call, that certainly affects some of our performance in the SendTech space. More broadly, obviously, there's questions about a change at the Fed, other -- there's some uncertainty about where the direction of the economy is going. We're a pretty noncyclical business. However, I would really point to our marketing mail aspect of the Presort business. which is more economically sensitive. So while we don't expect anything major, we are cognizant that there could be potential headwinds related to both of them, but not necessarily expect them. Aaron Kimson: Okay. That makes sense. And then I wanted to ask on the Presort business as well. You mentioned new business wins and no churn since June of 2025. I think you had a nice win in the state of Pennsylvania that was well publicized in 4Q. Are boomerang customers and new wins generally reflected in Presort volumes immediately? Or is there a ramp time where Debbie and her team get agreements, but the volumes come at the end of a pre-existing contract with another vendor and you have some visibility into the ramp? Kurt Wolf: Usually, they come in pretty quickly. But what I would point to is there's definitely a sales cycle that can be pretty long. So we got more aggressive starting in June of last year, and it's taken time to fill that pipeline. And I think at this point, the pipeline is pretty full start to finish. And one thing I'd point to is the customer wins that we had in Q4, we've essentially met that level of wins this half the way into Q1 of this year. So you can see as that pipeline is filled that we're getting more and more wins on a more rapid basis. And then finally, in terms of flow-through to the financials, it does take a little bit of time. We have to add multiple customers. We have a lot of major losses from the first half of last year that we're trying to eclipse. So it's just going to be a process over the next few months and quarters. Operator: And our next question is going to come from Anthony Lebiedzinski with Sidoti. Anthony Lebiedzinski: So just a quick follow-up. Kurt, you said that the government shutdown had some impact in the quarter. Any way you guys could quantify what that impact may have been? Paul Evans: Anthony, it's Paul Evans. Yes. Look, we were impacted on that. That was hardware purchases. It sort of pushed it into the subsequent quarters. So we saw most of it in Q3 last year. I'm not sure we go down to that level of granularity to give that. But I mean we are susceptible to government shutdowns. Anthony Lebiedzinski: Understood. Okay. So Kurt, in your shareholder letter, you mentioned being more aggressive with pricing on Presort. So just wondering if you could further expand on that as far as how perhaps aggressive you would be with pricing to win back clients? And what type of EBIT margins should we think about as we look at the Presort business going forward? Kurt Wolf: Yes. I'll let Paul speak to the EBIT margins. But just broadly speaking, what I'd highlight on that, I know there's been questions about what's going on in Presort. To be quite honest, I think we got caught flat footed early last year. Industry margins went up, and pretty much everybody in the space did what you would expect, which is to go out and be aggressive to try to win new customers with the higher margin levels. We unfortunately were not in the same boat. So we did face a lot of headwinds in terms of customer losses and having to give concessions to our customers, but we weren't necessarily aggressive going after customers in the space. And that's really what's happening now. So -- when I -- when we talk about being aggressive on pricing, a lot of it is trying to pull in new business. We've already made the required concessions to our existing customer base. So it's really about winning new customers. Paul Evans: And Anthony, to add to that, I think if you sort of target low to mid-20% range for EBIT margins and -- but it's also important to note that we are the low-cost provider. So we can sustain that. So when we come out and say we're going to get more aggressive on our pricing strategy, and we can certainly afford to do that. Anthony Lebiedzinski: Got you. Okay. And then my last question before I pass it on to others. So as we look at the free cash flow guidance, you guys add back restructuring payments to your definition of free cash flow. So how much restructuring payments are you guys assuming in 2026? Paul Evans: It is true, yes, we do add it back. And the reason we add it back is it's not really representative of our business going forward. I'm just trying to think if we've offered that level of detail in the past on that. Maybe I'll circle back to that payment. I'm not sure we've offered that level of detail. Operator: Our next question is going to come from George Tong with Goldman Sachs. Keen Fai Tong: Going back to the Presort business, in terms of winning back customers and being more competitive on pricing, given the comps ease pretty materially in the second half of this year, would you expect that by then you would return to positive growth in Presort? Paul Evans: I think we'll see -- it will be an easier comp year-over-year on growth, but we've got to get past Q1, Q2, which are going to be tougher comps for us. But again, as we said before, we stopped the decline mid last year. We've Kurt sort of empower Debbie Pfeiffer to be more aggressive on pricing. And as Kurt also mentioned, there is a sales cycle to this. So we're certainly getting some traction. But I think second half of the year will be a better comp for us. Keen Fai Tong: Okay. Makes sense. And then in the SendTech business, how do you envision the revenue performance over the course of the year? If there's any bifurcation of performance in the first half of the year, for example, versus the second half, would you expect the second half to be stronger within the SendTech business? Paul Evans: Let's start, first for the year, we expect a top line decline in the business. But if you -- to split apart the year, we believe second half of the year will be stronger than the front part of the year. Kurt Wolf: Yes. And George, just look at sequential year-over-year throughout 2025, you can see there's a trend that is essentially getting more positive every quarter, and that ties back to what we've spoken about in the past with the IMI migration. And again, we expect that to continue. So we can't guarantee that each year-over-year comparison is going to get better quarter by quarter, but that should -- we expect to be somewhat the trend on a go-forward basis, at least through 2026. Operator: And the next question will come from Jasper Bibb with Truist. Jasper Bibb: I was just curious how you're thinking about the underlying mix in SendTech in '26. I think the letter mentioned you didn't get the growth rate you wanted in the shipping technology piece. Could you maybe frame for us how you're thinking about the growth rates in the shipping technology business in '26 versus, I guess, maybe the core hardware business and everything that's associated with the mailing meters, et cetera. Kurt Wolf: Yes. And we can essentially cut it into 3 pieces. We have the mailing meter business. We have the shipping business -- shipping software business. And then we have the bank, which currently is reported as a part of SendTech. So with respect to the mailing meters, again, the IMI migration certainly created some serious headwinds in 2025. We expect that to slowly ease. In addition to that, we've had a bias in the past of always focusing on growing markets, which does not apply to the mailing meter business. So one of the things that Todd has really identified since joining the company is we probably aren't doing as much as we could to slow that rate of decline. So I think there's a lot of efforts going to be put into slowing the rate of decline. So that's what I'd say about the mail meter business. With respect to shipping software, Todd has done some great work there. We have a vast array of product offerings, and we're trying to get more focused on how we do that. And then also we're trying to figure out where do we have the best competitive advantage so we can better hone our go-to-market strategy. I think it's going to take some time to fully identify exactly what that looks like. But I will say that we're not cautious or slow in how we go about this. Todd is aggressively already testing some concepts in the market. So we'll have more in future quarters on that. And then with respect to the bank, as you saw with the hiring of Steve, that's really unlocking the opportunity for us to focus on growth in the bank. So too early to say just yet, but that's an area we're really excited about, but we will obviously show caution given the risks associated with the lending space. So hopefully, that gives you some good color. Jasper Bibb: No, that's very helpful. Maybe just one on capital return. So pretty aggressive pace of buybacks in the fourth quarter. It seems like that maybe slowed a little bit in the first, call it, 1.5 months of '26. Just wanted to get an update on how you're thinking about the balance of share repurchase and the dividend and other priorities in '26? Paul Evans: Yes. So Jasper, this is Paul. Look, I think the keyword on share buybacks and debt buybacks is opportunistic. I mean, we're very opportunistic in Q4. We're just -- we're very disciplined on how we look at this. I think I'll say it on here. I mean, we're committed to a net debt of EBITDA of around 3x. But we definitely see that our stock continues to be undervalued, and so we will continue to buy our stock. Again, relative to dividends, that's a quarter-by-quarter decision. This quarter, we decided the best use of our capital is to continue to look at debt buybacks and share buybacks. Operator: And our next question will come from Curtis Nagle with Bank of America. Curtis Nagle: Just wanted to follow up quickly on the free cash flow guide. It came in nicely above where the Street was. In terms of the components, yes, maybe we can return to that restructuring point later. But are you including the net investments in the loan receivables from the cash from investing line? Because I think the sort of comparable or the component of that in cash from ops is in there. So just wondering kind of how all that rounds out and is that in the guide? Paul Evans: A little bit on free cash flow. A big component of free cash flow is Presort prepayments. We don't control the timing of that per se, but we had a very strong Q4 on that despite not fully controlling it. So that's definitely a larger component for us when we look at that. And as far as the detail on the amount of restructuring in there, I'm just not sure that that's a number that we've given out in the past. Operator: And the next question comes from Dillon Bandi with Northcoast Research. Dillon Bandi: Looking at that target of 3x net debt, is that a 2026 target? Or are you guys kind of looking more into 2027 or longer term for that? Paul Evans: I think on how we define net debt, we actually came in end of the year slightly below 3x net debt to adjusted EBITDA. I think it's just a good overall target to be. There might be times we were slightly above it on the quarter or slightly below it. But I think for this business going forward, that's the right place to be. Kurt Wolf: Yes. And Dillon, just to add to that, Paul has highlighted we're going to be opportunistic in our capital allocation. And we've said on previous calls, we're cognizant of how the market views us and what levels of debt they think we can manage. So we believe we could have a higher ratio than that. But as long as the market doesn't believe it, we're going to follow the market's lead on that. So what I would say is by being opportunistic in the capital markets, we may go above, we may go below, but that's sort of our -- the mean or the point we want to keep returning to over time. So we may go above for a bit, return back or go below for a bit and then return back. Dillon Bandi: Got you. That's really helpful. And then, Kurt, in your letter, you talked about SendTech exiting its low point of the product cycle. Has there been any fundamental change in that business, whether that's renewal rates or price competition? Or do you guys just overall feel confident about that? Kurt Wolf: Yes. No, I would just say, overall, we feel confident we have -- we believe we have the best products in the market. I think the market agrees with that in terms of buying habits. We're doing increasingly well in the federal space and the government space. And again, it's just -- it really is -- there was a low point tied to the IMI migration recovering from it. We are recovering from it. And there's fundamentally nothing that's really changed as far as we can see in terms of the rate of decline that we've historically seen should change going forward. Operator: [Operator Instructions] And our next question comes from Justin Dopierala with Domo Capital Management. Justin Dopierala: So do the new hires you've announced signal that you're no longer looking to sell the business as part of the strategic review? Kurt Wolf: No, no, not at all. Again, what I'd highlight is with these additions, and I hope everybody recognizes the level of talent we brought in here. it's going to be important no matter what the future of the business is. These are great executives bring a lot to the table. No matter where this company goes, they're going to be a great asset going forward. So that is in no way a comment on the future path of the company. Justin Dopierala: Got it. I know you touched a little bit on restructuring. In Q4, it was a lot larger than I was expecting. I would assume in 2026 that these costs drop closer to 0. I don't know if you can say what was the largest restructuring cost in Q4? Paul Evans: Just headcount reductions. Justin Dopierala: Okay. So that was essentially onetime cost? Paul Evans: In '26. But most of it will -- it's already captured in the '25 number. Justin Dopierala: Perfect. Also, it appears that your dominance in the Presort space has contributed to a much lower price for Presort customers. I was just wondering how does the USPS view this with respect to workshare discounts? And wouldn't the post office also benefit considerably if they simply privatize the entire Presort function to companies like Pitney Bowes in the future? Kurt Wolf: Yes. I don't think we're going to comment on postal relations. All I'd say is we have an amazingly constructive relationship with the post office. With respect to workshare discounts, the whole rationale for those being introduced is -- and it's common throughout the government, whether you look at Medicare -- with Medicare Part C there's always an interest in figuring out private public partnerships, and that's exactly what these workshare discounts are. And then in terms of -- I think you were asking about pricing. Yes, I completely agree. In the end of the day, one of the big benefits of the workshare discounts is not only does it save money for the post office, but a lot of those discounts end up getting passed on to customers. So it creates a lower cost for the end user of postal services, which helps keep volume going through the postal system due to lower costs. So I think it's a win-win for the post office, but I can't speak on their behalf. Justin Dopierala: Absolutely. Got it. And I think you briefly touched on this. But looking ahead over that maybe the next few years, what do you think are the top growth opportunities that you're seeing? Paul Evans: I think I'd say in Presort, obviously, given that we're the low-cost provider in the market, our pricing strategy, we should see growth there, but that will take a little time. We're seeing more inbounds on acquisition opportunities. So we will definitely look at that. The renewed focus back on mail and investment where we have to, to slow the decline, that, in a sense, is a form of growth. And then shipping, I mean, the team that Kurt and Todd's assembled there, we like our chances on how to evolve. And then finally, with Steve coming on to run the bank, I think there will be definitely opportunities there for us. Justin Dopierala: Okay. And just, I guess, lastly, analyst coverage from yesterday seems to amplify that there's still a huge opportunity to educate people on the fundamentals of the Pitney Bowes business. Are you planning to have an Investor Day in 2026? Kurt Wolf: Yes. Yes, we are. And I certainly agree with you on the education level. But as Paul said, we're incredibly opportunistic in the -- in our allocation of capital. I think when we sit here and look at it, I think we're trading on a levered basis of 4x free cash flow. So -- and I think our -- we did have a decline in revenue that was larger than typical last year, which I think maybe creates some concern from shareholders. But again, a lot of that is tied to customer losses in Presort that was entirely preventable and shouldn't recur going forward. And then in SendTech, it was tied to the IMI migration. But to quote Warren Buffett, when the price -- if you buy hamburgers and the price of hamburgers goes down, you should be happy. So we're not worried about short-term price movements. We just are opportunistic about how we handle them. Our belief is in the long-term outcome for the company. Operator: And at this time, I'm showing no further questions in the queue. I would now like to turn the call back to Kurt for closing remarks. Kurt Wolf: Yes. Thank you, everybody, for joining us. I appreciate your continued investment in our company. Hopefully, everybody has seen the results of Q4 show some of the progress we're making. I know everybody is eager to understand and see when we get to growth. But what we hope people appreciate and I think the right investors will appreciate. We're doing everything we can to build a strong foundation. And as that foundation is built, it's going to be -- we're going to be much more successful in our pursuit of growth going forward. So thank you for your continued investment, your continued faith in us. And we will do our best to continue to deliver strong results for you. So thank you all. Operator: Thank you for participating. You may now disconnect.
Operator: Hello, and welcome to the Amrize Q4 2025 Earnings Conference Call. [Operator Instructions] Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Aroon Amarnani, Vice President of Investor Relations. Aroon Amarnani: Great. Thank you so much, and good morning, everyone. Welcome to Amrize's Fourth Quarter 2025 Earnings Conference Call. We released our fourth quarter and full year financial results yesterday after the market closed. You can find both our earnings release and presentation for today's call in the Investor Relations section of our website at investors.amrize.com. On the call with me today are Jan Jenisch, our Chairman and CEO; and Ian Johnston, our CFO. Jan will open today's call with highlights from the full year and the fourth quarter as well as the growth investments we're making in our business. Ian will then review our financial performance for the quarter before turning the call back to Jan to discuss our outlook for 2026. We will then take your questions. Before we begin, during the call and in our slide presentation, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to U.S. GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about the future results and performance, plans and expectations and objections -- objectives are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those presented during the call to various factors, including, but not limited to, those discussed in our Form 10 filings and in other reports filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Jan. Jan Jenisch: Thank you, Aroon, and thanks to everyone for joining us today. 2025 was a very important year for Amrize as we did our successful spin-off and launch in June of the company. I have focused my time at our operations and projects across North America to see our work in action, meet with customers and hear from our people. What I see is the market-leading footprint and a performance-driven change. Together, we are delivering for our customers as the partner of choice for their most important building projects. For the full year 2025, we increased revenues by 0.9% to $11.8 billion, with $3 billion in adjusted EBITDA. We generated a strong cash flow of $1.5 billion, and our cash conversion rate was 49%. Overall, we completed the year with a net leverage ratio of 1.1x. Our strong cash conversion and balance sheet [ for right ] flexibility and firepower to fuel our growth and return cash to our shareholders. Increased our investments to $788 million during 2025 to expand production, improve efficiencies and best serve our customers in the most attractive markets. Last month, we were excited to announce our agreement to acquire PB Materials, the aggregates leader in West Texas, significantly expanding our position in this high-growth region. Delivering shareholder return. The Board has approved a $1 billion share repurchase program and is proposing a special onetime dividend of $0.44 per share payable following the Annual General Meeting. The Board is also proposing an annual ordinary dividend of $0.44 per share to be paid in further reinstallments. These dividends will be paid out of legal capital reserves from tax capital contributions, and are not subject to Swiss withholding tax. The dividend and share program are subject to customary shareholder approvals at our AGM in April. Looking to the future, we are well positioned in our $200 billion addressable market, and we have set our 2026 guidance, reflecting accelerating customer demand and profitable growth. This includes 4% to 6% growth in revenues and 8% to 11% growth in adjusted EBITDA. Let us look at some of the highlights of the fourth quarter. We saw growth -- continued growth in Building Materials. The segment's revenues grew 3.9%, and more important, we expanded our adjusted EBITDA margins by 60 basis points. Both cement and aggregates volumes were up, and we have strong aggregates pricing growth, in addition to production efficiency gains and first savings from our ASPIRE program. Within our Building Envelope business, our results were affected by soft residential roofing volumes, and we expect residential demand to gradually return in this year. Our commercial roofing margins were up, driven by resilient [indiscernible] and refurbishment. At the total company level, revenues were slightly lower, 0.4% in the fourth quarter. Let us look at some of the market trends at Amrize. We see continued infrastructure demand and an improving commercial landscape. In the commercial market, which makes up half of our business, demand is improving led by new data centers. Data construction has been and continues to be a significant bright spot as hyperscalers rapidly build out the infrastructure that will power the AI economy. This is the largest infrastructure expansion in recent history, and the United States is at the center. In fact, over 40% of global data center infrastructure investment is expected to be spent in the United States through 2030. Speed, efficiency, innovation and reliability are key in this market, making it a space where Amrize building solutions and unparalleled footprint offers strong competitive advantages. In 2025 alone, we supported and supplied more than 30 data center projects, and we will see that work accelerating into this year. For us, you have just as much opportunity to supply the data centers as we do to support the infrastructure surrounding them. In 2026, we expect the commercial market to pick up as interest rates continue to move lower, and as customers accelerate the investments in advanced manufacturing, warehousing and logistics. In infrastructure, demand continues to be steady, with federal, state and local authorities privatizing modernization projects. We see increasingly domestic focused agendas of our customers in both the United States and Canada. Each country is prioritizing national investments to build strong futures. Within residential, new construction remains soft. We expect demand to gradually return later this year as the U.S. continues to have a significant housing shortage that will drive longer-term growth. As interest rates continue to decline, we expect pent-up demand to unwind and construction activity to accelerate across all sectors. If we turn to Slide 7, you can see our strong pipeline of key projects into 2026, which are directly aligned to these growth trends. We are supplying advanced building materials, the new data center campuses like in Louisiana, we're supplying water infrastructure projects like in Dallas, airport modernizations like Colorado and a new Amazon distribution facility in New York City. We are seeing increasing demand for our high-performance Elevate MAX PVC roofing systems and are supporting a new industrial warehouse in Ontario and a significant data center project in North Dakota. We see increasing data center demand for the MAX PVC roofing system going forward. These are just a few of our project highlights, and they reflect the megatrends underpinning long-term growth in the North American market. As we move into 2026, we have a big pipe of projects, and new ones are kicking off every month. We move to Slide 8. You can see some of our important expansion projects. Our -- we completed our Ste. Gen plant expansion to support growing demand and increase our efficiency. In December, we commissioned the production expansion of our flagship cement plant in Missouri, adding 660,000 tons of production capacity per year, increasing the plant's total capacity to 5.5 million tons annually. Our Ste. Gen plant is North America's largest market-leading plant, setting the standard for high performance. If you turn to Slide 9, you can see that we are on track with key organic growth projects for this year and beyond. We're building on the success of our Ste. Gen plant expansion, we are on track with key growth projects for 2026 and beyond. To serve the booming Texas region, we are investing in our Midlothian cement plant to expand production capacity by 100,000 tons, modernize logistics and increase operational efficiency at the same time. In Alberta, Canada, we are investing in our Exshaw cement plant to add 50,000 tons of cement production capacity, supporting the growing Calgary market. In Quebec, we are investing to expand our St. Constant cement plant by 300,000 tons, and further strengthening our position in Canada and increasing efficiency of these specialties. If we turn to Slide 10 now, we see more growth projects. In Virginia, we are progressing with our new Fly Ash facility to enable the use of recycled landfill as a high-quality supplementary material. We are progressing our Greenfield Aggregates quarry in Oklahoma, adding about 200 million tons of reserves to serve the fast-growing Dallas-Fort Worth market. On the Building Envelope side, we are progressing with our new state-of-the-art Malarkey Shingles plant to expand our market share to the attractive Midwest and Eastern markets. We expect this plan to be commissioned at the end of 2026, putting us in a strong position to deliver more volumes for when residential demand picks up. If you move to Slide 11, let me talk about our latest acquisition, PB Materials, which strengthens our aggregates footprint in West Texas. We announced the acquisition earlier this year. This will strengthen our aggregates business at over $180 million in annual revenue, adding 50 years of aggregates reserves and 26 operational sites in West Texas to serve long-term demand as infrastructure, data centers and commercial investments drive construction growth. This acquisition will be EPS and cash accretive already this year. We just received antitrust clearance from the Federal Trade Commission, and now expect this acquisition to close in the first quarter of 2026. Looking beyond PB Materials, we have a strong M&A pipeline and plan to continue making smart deals to accelerate our profitable growth. Now let's move to Slide 12, our ASPIRE program, which is on track to drive value through scale and focus. We made good progress here in the fourth quarter. We have now onboarded over 450 new logistics and service providers to optimize third-party spend, and we launched more than 400 projects to leverage our scale and drive synergies across raw materials, services, logistics and equipment. We started realizing savings in the fourth quarter last year, and we are now targeting a 70 basis points of margin expansion in 2026 and $250 million of full surgeries by 2028. Let us talk about allocating capital. On Slide 13, you see our priorities, increasing investments and returning cash to shareholders. We are committed to a capital allocation strategy that invests for growth and delivers value to our shareholders. We raised our CapEx investments last year by 23%. And this year, we plan to increase our investments further to $900 million. We are on track with our M&A strategy, and we have a strong pipeline of targets, led by aggregates and with additional opportunities in [indiscernible]. Our strong cash conversion and balance sheet allows us to also return cash to our shareholders. The Board has just approved a $1 billion share repurchase and is proposing a special onetime dividend of $0.44 per share, payable following the AGM in April. The Board also proposing an annual ordinary dividend of $0.44 per share to be paid in quarterly in stores. Both dividends will be paid out of legal capital reserves and are not subject to Swiss withholding tax. I'm very pleased to have established a strong balance sheet and platform for growth that enables us to return value to our shareholders while further increasing our growth investments through CapEx and M&A. Before discussing our guidance for this year in more detail, I turn over to Ian, and he gives us more details on our financial results. Ian Johnston: Thank you, Jan. I'll begin on Slide 15 with our results by segment, starting with Building Materials. For strong volume and revenue performance in Q3, we saw continued momentum and margin expansion in our Building Materials segment during the fourth quarter as new infrastructure and data centers and [ commercial ] projects program. Revenues were approximately $2.2 billion in the quarter, an increase of 3.9%, driven primarily by higher volumes across both our cement and aggregates businesses, compliance with continued aggregates pricing growth. Cement volumes increased 3.6% and aggregates grew 3%. We continue to see steady support on federal, state and local infrastructure spending as well as growth in select commercial markets, particularly in data centers and warehousing and logistics, which we expect to continue in 2026. Net pricing for the quarter was down 0.8%, while full year 2025 was up 30 basis points on a constant currency basis. As we mentioned last quarter, we have announced price increases in 2026 [indiscernible] in our markets, driven by the positive volume trend we have seen across our cement business over the last 2 quarters and into the new year. Pricing has been phasing in since the start of the year, with full run rate in place assumed by April 1. As a reminder, our markets are driven by local demand, varying by geographic region. That said, we continue to see favorable pricing dynamics across our network, supported by our inland positions and higher growth in proactive markets. Meanwhile, aggregates pricing on a freight adjusted constant currency basis increased 3.8% in the quarter. Including freight, pricing was up 7.3%. We continue to see how the aggregates pricing, supported by strong local market fundamentals and ongoing infrastructure demand. Building Materials adjusted EBITDA was $705 million in the fourth quarter, up 4.9% compared to the prior year, while adjusted EBITDA margin was 32.6%, 60 basis points. The increase in adjusted EBITDA was primarily due to volume growth, aggregates pricing, production efficiency and early ASPIRE sales. Moving forward, we expect cement pricing to be up low single digits and aggregates pricing to be up mid-single digits on a freight-adjusted basis in 2026. Given the positive customer demand we see across these businesses, we expect volumes for both cement and aggregates to be positive this year. Before we move to Building Envelope results, it's worth noting that the first quarter is typically a seasonally slower quarter for Building Materials as we perform annual maintenance and build inventory ahead of the peak selling season. Moving to Slide 16. Turning to the Building Envelope. Fourth quarter results were $678 million, a decrease of 11.8% compared to the prior year. The decline was largely driven by softer residential roofing demands. That said, when we look across our business, commercial regrouping activity remained strong with revenues up during the quarter, as this type of spend is often nondiscretionary on discretionary for our customers. In commercial new construction, we continue to see robust data center demand. As Jan mentioned earlier, our MAX PVC product line and Elevate is addressing the higher performance specifications that many of our data center customers require. So far, we've been pleased with the traction, and expect this product will continue driving growth for us in the future. Meanwhile, we have also started to see a recovery in warehousing, distribution and logistics end markets. As interest rates and the cost of capital move lower, we expect further improvements from commercial new construction. Building Envelope adjusted EBITDA was down year-over-year, largely due to softer residential roofing demand and an $8 million increase in warranty provisions to reflect claims activity in our residential roofing business. We continue to see pressure on residential demand from higher interest rates and affordability concerns. These headwinds were partially offset by an increase in commercial roofing margins driven by resilient repair and refurbishment demand. Moving into 2026, we are focused on what we can control. We launched ASPIRE to improve our third-party cost base, a significant progress, and expect additional savings to materialize in 2026. While residential demand remains soft, we expect strong demand in commercial R&R, to continue and lower interest rates to support a broader recovery across new commercial roofing [indiscernible]. As a result, we expect low single-digit volume growth in commercial roofing. In residential, we expect flat volumes for the year, the second half being better than the first half. So far, Q1 customer demand has improved compared to Q4. Looking out further, we continue to see a long tailwind of growth in commercial R&R activity, driven by an aging commercial roofing stock that needs to be replaced. We are also encouraged by recent policy developments that aim to address affordability, which can support new construction and help bridge the housing. And as I mentioned earlier, our focus is on operations and efficiently running the business through different economic environments. We continue to see a path towards best-in-class EBITDA margins. Moving to Slide 17. We had a strong cash flow performance during the year. We generated approximately $1.5 billion, representing a 49% cash conversion rate on adjusted EBITDA. This is in line with our historical average cap conversion of approximately 50%. 2025 free cash flow was lower due to net income and increased organic CapEx growth. Cash flow is a key performance indicator for all of the P&L leaders across our business. Our free cash flow performance in 2025 demonstrates the strength of our working capital management and resilient underlying cash generation of our business. Turning to Slide 18. We are very pleased with the progress we made post-spin to further strengthen our financial position during our first year as Amrize. At the end of the year, our net leverage ratio was 1.1x, delivering on our commitment of less than 1.5x on a year. Net debt at the end of the year was approximately $3.3 billion, down over $1.5 billion from the end of the third quarter as we generated strong cash flow at the end of the year. Turning to Slide 19. In 2025, we established a solid foundation to deliver growth and return capital to shareholders in 2026. As of December 31, we had $5.3 billion in senior notes, nearly $6 billion of available liquidity and a low leverage ratio, providing us with ample firepower to accelerate growth this year. We are also effectively managing our interest expense and expect run rate to come down in 2026 compared to 2025 as we continue to optimize our capital structure. We expect our effective tax rate to stabilize in the range of 21% to 23% in 2026. Corporate costs are expected to be approximately $200 million this year, a modest step down from 2025. This sufficient capital structure and operating model allows us to continue generating significant cash in 2026 and drive profitability. This model also lays the foundation for our capital allocation strategy, putting us in an excellent position to announce our shareholder return plan while continuing to invest in organic growth projects and value and pursue value-accretive M&A. This speaks to our financial power, firepower and our business and flexibility of our balance sheet. With that said, I will pass it back to Jan to cover our 2026 outlook. Jan Jenisch: Thank you, Ian. When we look at the guidance of 2026, I'm confident that this will be the year of accelerating demand from our customers. The commercial market will continue its improving trends as lower interest rates support new products, adding to already strong demand for data centers, but also for other projects in logistics and manufacturing facilities where we have a lot of sideline projects. We have a good demand here, which will unfold throughout this year. In infrastructure, the demand will continue to be strong as governments prioritize modernization. Only in the residential market we will remain soft, with improvements rather towards the end of the year. We expect pricing and volumes in Building Materials to be key growth contributors in 2026. Cement pricing is expected to increase low single-digit percentage range, while aggregates pricing is expected to increase mid-single-digit percentage range. The market trends and increasing customer demand will drive volume growth both cement and aggregates. Building Envelope, we expect low single-digit growth in commercial roofing volumes, while we see flat volumes in residential roofing, with demand improving in the second half of the year. Very important for us, the ASPIRE program is a key priority and will deliver significant results in 2026. We are now targeting a margin expansion of 70 basis points and are on track with our goal of $250 million in synergies through 2028. Based on this momentum from our customers to all the programs under our control, we have set our 2026 guidelines or guidance with 4% to 6% revenue growth and 8% to 11% EBITDA growth. Both numbers include the contribution from our recent PB Materials acquisition. With that, I'll now pass back to Aroon and to open up our question-and-answer session. Aroon Amarnani: Thank you, Jan. Operator, we're now ready to begin the question-and-answer session. Operator: [Operator Instructions] Our first question is from Adrian Huerta from JPMorgan. Adrian Huerta: Can you hear me? Unknown Executive: We can hear you. Adrian Huerta: Ian, Jan and Aroon, congrats on the results. My question has to do with the cement prices. I want to understand a little bit better why this confidence on getting a low single-digit price increase for the year? I mean just from comments from other companies, it seems like a traction on price increases at the beginning of the year is not going as expected. What are you seeing on your own markets and where you see better pricing traction? And where do you think it might be a bit more difficult to get the increases that you're looking for? Jan Jenisch: Look, we are confident and we're going to see a price increase for our Amrize products this year. I think we made good progress in this. And we have -- I have nothing negative really to report here. Adrian Huerta: And if I may ask just a follow-up question. On the ASPIRE program, good to see a larger target on savings this year than the run rate of 50 basis points, now with a target of 70 basis points. Any more color on where are these savings, which should be somewhere around $100 million between SG&A or by segment within Envelope or Materials? Where most of the savings coming? Jan Jenisch: No. Great. Good question. Look, I mean, I'm very excited. As you know, we have over $7 billion of cost to third party, and we haven't done really the synergies. So we have doubled the company just in the past few years from $6 billion to $12 billion, and we have not really run that synergy program. So very exciting now to have savings. Of course, we have it in logistics. We have it in raw materials. And we have a lot of services, which are provided to us for maintenance, for equipment and other things. So we made great progress. You can see already in the fourth quarter results in Building Materials that we had quite a significant impact from the ASPIRE program. And this is just the start. So we are very confident to see a significant contribution this year from ASPIRE, and that's why I also guide this to be fully margin accretive. Operator: Our next question is from Anthony Pettinari from Citigroup. Unknown Analyst: This is [ Asher Stone ] on for Anthony. And just in terms of compare and contrasting the way you're looking at 2026 versus maybe how you're thinking 3 months ago, what are you seeing in terms of project backlog, cancellations, et cetera? And then on top of that, your positive volume growth outlook for '26, how does that break out between your different end markets between commercial, infrastructure and residential? Jan Jenisch: Look, I'm very happy how things are accelerating with all our customers. You have to see that the strongest market segment in last year was infrastructure, where we have this program is running and we are very happy to supply a lot of those projects. However, at Amrize, we do 50% of sales. We do have our commercial customers, and that's really key, and that market has really picked up from mid last year. And then you can see it from some indexes like [indiscernible], where we have increasing -- the number of standing projects, and we can literally see it with our customers. They have a backlog of projects, not only for data centers but for logistics, for infrastructure, around logistics centers for manufacturing facilities, and this will unfold. We have no canceled projects, a lot sideline and -- slowed down. And now we see that coming. The 2 cuts in interest rates has helped a lot. Many people -- most people always speak about the mortgage rates and the interest cuts. But actually, for us, the interest rate is more important for our commercial customers. And this is why I'm very excited for this year, and I -- we will see an accelerating demand and number of projects from our commercial customers. Operator: Our next question is from Trey Grooms from Stephens. [Operator Instructions] Trey Grooms: Got it. Can you hear me now? Operator: Please go ahead. Trey Grooms: Okay. Sorry for that. Just on the acquisition, maybe if we could touch on that. PB Materials, aggregates-led business with some ready mix. It's included -- I believe it's included in the full year guide. It's doing $180 million in annual revenue. Any other details maybe you could give us there around PB? The -- I understand it's in West Texas and geographically where it stands. But anything around the -- maybe the production or tonnage or how much it's adding to the overall volume being positive this year in aggregate? Any other details that maybe you could give us? Jan Jenisch: No, no, thank you. Great question. And look, we have a great slide on Slide 11. And I think what's key here for me is, first of all, the size of the acquisition, over $180 million. We're going to close that very soon now in Q1. So very excited now when the season really starts that we have this business with us. It's already a very well margin product business which has now significant synergies. I like that -- we bought a little map there where you can see how well that fits with our footprint in Texas, especially also our cement terminals and our [indiscernible] service all those sites. We have about 26 sites -- operating sites and 13 are quarries and another 13 are ready-mix sites. So it's a well-balanced business, and the other market leader around 30% of market share. So I'm very happy we can onboard now then with our very successful business in Texas. Operator: Our next question is from Bryan Blair from Oppenheimer. Bryan Blair: Ian, you had offered pretty good color on the visibility in commercial and infrastructure project outlook. I was hoping we could drill down a little bit on the residential side. And we know that there's weakness anticipated and [ understandably ]. So over the near term, looking to the back half, there's some degree of recovery against relatively weak comps. If we look at the low versus high end of your guidance, are you willing to quantify what is baked in specific to residential market activity through the back [indiscernible]? Jan Jenisch: No, I wish I could share with you, but I think what's exciting about residential, while it's only around 20% of our business, 50% of that is repair and refurbishment. And this gives us this resilient demand from the residential customers. And that was slowed down last year. We had much less storm impacts like we had in years before, but this has really slowed us down, especially in Q4, but we believe this will normalize this year again. So to the question, I'm quite confident that within refurbishment, we will see significant growth for us in 2026. New residential, that needs to be seen if that sees a recovery towards the end of the year or let's say, a start of recovery. But in our numbers, we are not planning for any growth in new construction residential. But very confident about repair and refurbishment. Operator: Our next question comes from Pujarini Ghosh from Bernstein. Pujarini Ghosh: One follow-up on the guidance. Please, can you confirm that you have not baked in any future potential acquisitions in the revenue and EBITDA growth guidance for 2026? And could you give some color around the CapEx spend that you are going to do in 2026? And how much new capacity addition in terms of the overall portfolio does these new projects bring in? Jan Jenisch: Thank you for the question. So the guidance of 4% to 6% revenue growth and 8% to 11% EBITDA growth is organic, including the PB Materials acquisition. We are very confident about these numbers. You have to see we have now this accelerating demand from our customers and our order books, which are on a good level. And then we have a lot of self-help. So -- and we see the pricing this year. We have the ASPIRE program, and we have the first impact from our new growth CapEx programs. So very excited to start to run our flagship cement plant in St. Louis at higher volumes and then the other CapEx will come. I think at this point, we don't give a break, which is maintenance CapEx and growth CapEx. But you can see, as we come somewhere from below $600 million to $900 million this year, you see already that we are more than doubling our growth CapEx. And this is a good thing. We have a lot of low-hanging fruits to debottleneck, to expand in new markets. This is a new plan of Malarkey to enter the Eastern markets or is it new terminals to distribute our cement and aggregates. And of course, we are excited to debottleneck some of our best-performing cement plants to increase the volumes, but also to further improve the efficiencies. Operator: Our next question is from Yassine Touahri from On Field Research. Yassine Touahri: Just one question regarding your Building Envelope business. We see that QXO has acquired Beacon and is aiming to substantially increase its margin and also double its EBITDA. And I think one of the lever is to work on changing the relationship with roofing product suppliers, including MIs. Could you give us some color on what has happened over the past year in terms of your relationship? And what has been the impact of these developments so far on your commercial strategy and potentially even your overall strategy as a group? Jan Jenisch: Look, we are partnering with the distributors in roofing, and they are very good companies. A company you mentioned, there are another 2 big nationwide, the roofing distributors. And then there are many local business in roofing distribution. I think what is important for us is that we are not focusing on a distributor itself. We are focusing on the end customer. So we have the ambition to build the best roofs. So all what we do is we focus on innovation, providing the best systems brand, everything. We are offering the training for the roofing contractor, we're offering the warranty, we're offering the roofing inspection. So when you look at our business, the distributor has an important function to make sure our product is on time on the construction side. But beyond that, we just focus on the best roof, the best service, the best warranty for the end customer. And we do -- I think we do about 30% of the roofing business is direct, about 70% goes through distribution. So I have nothing to report here. I know -- there are some distributors they like to talk a lot about their future. But I can just tell you, we partner with all of them. And we make decisions who is our partner in certain geographic markets. So I think we're in a very good spot here to further increase our market share and expand our systems for roofing. Operator: Our next question is from Arnaud Lehmann from Bank of America. Arnaud Lehmann: My question is regarding your Q4 free cash flow generation, very impressive, around $1.7 billion, I believe. Is it the normal inflow, in your view, considering seasonality? Or was there any specific effect related to the merger or to accounting that we need to consider? Jan Jenisch: No, I think it's nothing special, Arnaud. I think we have -- I mean our cash flow conversion from EBITDA is around 50%. This is what we're also targeting for the future. So I'm very happy. In this first year of Amrize, we just started the company in June last year. So we're very happy to -- that we were able to deliver, also considering our significant increase in CapEx spend, very happy to, nevertheless, deliver such strong cash flow so you, I think, should expect from us that this will continue in the years to come. Operator: Our next question is from Julian Radlinger from UBS. Julian Radlinger: Jan, Ian, Aroon, any color you can give investors on building Envelope earnings in 2026? I know you're guiding to overall positive volumes, commercial up a little bit; resi, more flat. But what about margins? If resi roofing volumes are as you expect in commercial as well, should we expect Building Envelope EBITDA to be up as well in 2026? Jan Jenisch: Yes. I mean, look, when you look at our guidance that we want to grow the EBITDA, 8% to 11% this year, you can imagine that this is true for both segments, for Building Materials and for Building Envelope. And we have strong programs in place, also with ASPIRE to increase our efficiencies in Building Envelope as well. We have pricing in place. And our target is to increase price over cost in Building Envelope in 2026. Operator: Our next question is from Tom Zhang from Barclays. Tom Zhang: Yes. Could you maybe just elaborate a little bit on the volume and materials? I think you said volume will be a growth contributor for the Materials business, both cement and aggregates. Is that a sort of low single-digit, mid-single-digit number? And is that predominantly driven by the self-help and organic growth that you have as you ramp Ste. Gen? Or do you think that's more a sort of market growth number? And I guess maybe just you link to that, can you talk a little bit about how you plan to approach the Ste. Gen ramp up? Obviously, it sounds like commercial and infra demand is okay, resi a little bit weaker, but it's still a decent amount of capacity to try and bring to the market. If you can just talk about the strategy of how you'll introduce those volumes? Jan Jenisch: I think it's important if you run Amrize and you guide the year and you give the targets to your sales force, to all the people responsible. I very much like to focus on ourselves. I don't make a big market prediction. So like the Ste. Gen expansion is based on our customers demanding the product. And this is how we work. And this is why we come up that we believe our volumes will increase in '26. And this is all I can say at this point. We make this all for the customers and we have good order books and again, nothing negative to report here. Operator: [Operator Instructions] Our next question is from Carlos Caburrasi from Kepler Cheuvreux. Carlos Caburrasi: Just wondering on CapEx, if you could give us some color regarding the expected investments during the rest of decade? I'm just wondering if we should expect a further acceleration from the $900 million in 2026? Or is it going to be kind of flat or a front-loaded performance that will normalize as we get closer to 2030? Jan Jenisch: I'm very happy to invest in the business. So I was happy that we have the opportunity. There are a lot of low-hanging fruits on the CapEx side, and we are doing all the good projects. So that adds up to around $900 million CapEx spend this year. I think this is already a significant increase, especially when you focus on the growth CapEx, this means we more than double the growth CapEx this year. And I think this is in a good spot. And then we will take it from here. Those projects we also introduced here, I think we have 2 slides on like 6 of the most important projects for us. And that also keeps us busy because you not only have to execute this and commission the plan or whatever the CapEx is about, you also have to commercialize the volumes into the market. So I think we are on a great track to fully support our growth ambition for 2026, and then we will see later this year what the CapEx is for the years to come. But I think $900 million is a good number for us. Operator: Our next question is from Keith Hughes from Truist. Keith Hughes: Can you hear me now? Operator: We've got you. Keith Hughes: There we go. A question on pricing on the roofing markets. Can you talk about in the fourth quarter, what pricing was like in residential and commercial and what you're expecting in your guidance for calendar '26 on pricing? Jan Jenisch: And for us in roofing is a bid to an aggregate cement, we like to talk straightforward about price. In roofing, it's a bit different. We like to talk about price of cost and as we shared a bit in the presentation, we were very satisfied with the commercial roofing margins. They increased. So we had a positive price over cost in commercial roofing. And we had quite a disruption in the residential market, which I think will be fully stabilized already in the first month of this year. But nevertheless, there was quite a big disruption you saw in the fourth quarter and also maybe a bit softer pricing. I think that pricing even will come back now fast already this year. So for the full year, I mentioned this before, we are targeting a positive price over cost growth in the Building Envelope side. Operator: We have no further questions at this time. I will now turn the call back over to Aroon Amarnani for closing remarks. Aroon Amarnani: Thank you, operator. Thank you all for joining us for our fourth quarter and full year '25 earnings call. We look forward to speaking with you after we report our first quarter '26 results in the coming months. Thanks, everybody. Operator: This concludes the Amrize Q4 2025 earnings conference call. You may now disconnect.
Abel Arbat: Good morning, everyone, and thank you for joining our full year 2025 results presentation. This is Abel Arbat speaking from the Capital Markets team at Naturgy. Next to me sits our Executive Chairman, Mr. Francisco Reynes; the General Counsel to the Board, Manuel Garcia Cobaleda; the Global Head of Financial Markets and Corporate Development, Mr. Steven Fernandez; and the Global Head of Control and Energy Planning, Ms. Rita Ruiz de Alda. Today's presentation is a bit longer than usual as we aim to cover the results, but also to address some of the key themes and opportunities for 2026. As usual, we will start the presentation and then move to the Q&A session at the end of the call. Please, as usual, submit your questions through the webcast platform. And with that, let me hand it over to Steven Fernandez to kick off the presentation. Steven Fernández: Thank you, Abel, and good morning to everyone. Thank you for joining our webcast to discuss the full year numbers for 2025 and the outlook for 2026. So before moving into the detailed review, I would like to highlight some of the key messages for the year. As you have seen in the results presentation, 2025 was a strong year for Naturgy, where we met our guidance, once again, reinforcing our track record of consistent delivery. The successful execution of our 2018 to 2025 transformation has underpinned the value creation of the company, and, we hope, our credibility. Now looking ahead, our 2026 guidance is well supported by business fundamentals, a very proactive risk management, as you will see throughout the presentation. We remain fully committed to the energy transition with gas increasingly recognized as essential. Also, our strengthened balance sheet provides strategic flexibility. And on the capital markets front, the tender offer on our own shares and subsequent placements have also led to a significant increase in the free float and stock liquidity, resulting in the return to major indices like the MSCI. Finally, the governance of the company has been adapted to align with the long-term objectives and ambitions of Naturgy. Now we move over to the consolidated results. Starting with the evolution of the energy markets, as you can see on Page 6 of the presentation, gas benchmark softened during the second half of the year with TTF declining by 23%, the Henry Hub by 6% and JKM by 14% compared to the first half of the previous year -- of 2025, sorry. Brent prices were also lower, both in the second half of the year and year-on-year, averaging $66 per barrel in the second half of 2025 versus $77 in the same period of 2024. Iberian pool prices for its part increased from EUR 62 per megawatt hour in the first half of the year to EUR 69 in the second half of the same year, owing mainly to the usual seasonal patterns with lower renewal generation in the second half of the year. If we move over to Slide 7, in terms of FX, we saw a broad-based depreciation across most of our operating currencies versus the euro. The U.S. dollar weakened meaningfully, particularly in the second half of the year, and it's continued to do so in 2026 so far, with LatAm currencies, including the Brazilian real, Mexican peso and Chilean peso also depreciating. Now we turn over to the full year 2025 results. We have a quick snapshot of some of the key metrics of these figures. EBITDA reached EUR 5.3 billion. This is a record level for the company. Net income reached EUR 2 billion. CapEx in the year amounted to EUR 2.1 billion, in line with the estimates that we had for our strategic plan. And net debt ended the year at EUR 12.3 billion. In this period, we've almost paid around EUR 1.3 billion in taxes and levies. So overall, the company has met its guidance despite a year of challenging environment, and these robust results reinforce our track record of consistent delivery. The year's performance was also supported by continued improvements in operational efficiency and very strong risk management, which have translated into higher profitability and visibility. At the same time, the strong cash flow generation and our capital discipline have allowed us to reduce our net debt levels below our 2025 guidance. So as a result, we end the year 2025 with a strengthened balance sheet that provides the company with strategic flexibility. If we move on to the income statement, EBITDA remained in line with last year, again, as a reminder, at record levels, with net income slightly above, in part due to higher minorities in 2024 for the reversal of TGN provisions in Chile. These earnings, we believe, show strong resilience and are supported by a balanced mix of activities, risks and currencies, as you can see on the right-hand side of the page. If we move over to Slide 10, which is the capital allocation, the cash flow from operations amounted to EUR 4.5 billion, which have allowed us to, one, fund EUR 2.1 billion investments, as I mentioned before, distribute close to EUR 1.7 billion in dividends and execute the tender offer of our own shares, which, for the most part, has already been placed in the market. The investments remain focused on networks and renewables with EUR 1 billion allocated to networks and around EUR 800 million to renewal generation, allowing us to reach 8.1 gigawatts of installed capacity at year-end 2025. So we take all this together, these figures, we think, clearly demonstrate the strength of our cash flow generation and, of course, of our disciplined approach to capital allocation. In fact, if we move over to Slide 11 in terms of cash flow and net debt evolution, you can see that free cash flow after minorities stood at around EUR 2.2 billion, EUR 800 million above 2024. That's 58% above. Net debt for the year closed at EUR 12.3 billion, which is broadly stable versus the figures from last year, 2024, correct, with net debt to EBITDA at around 2.3x. And of course, this includes approximately EUR 1.7 billion in dividends, as previously stated, and the EUR 941 million of shares repurchased net of the subsequent placements that we executed. The average cost of debt stands at 3.9%, in line with 2024 levels with around 66% of the debt locked at fixed rates. And the FFO-to-net debt stands at around 27%, which is comfortably above the threshold required for a BBB rating. During the year, it's worthwhile highlighting that we completed around EUR 11 billion of financing operations, reinforcing our liquidity and extending maturities. So all in all, our balance sheet remains solid and again, provides the company with strategic flexibility. If we think about shareholder remuneration on Slide 12, for fiscal year '25, we are proposing a total dividend of EUR 1.77 per share, representing an almost 11% year-on-year growth and above the DPS floor of EUR 1.7 per share committed for the year. This includes two interim dividends of EUR 0.60 per share each and a final dividend, which we are announcing today of EUR 0.57 per share, which will be payable the next 31st of March, subject to the AGM approval. The final dividend per share has been increased to account for treasury shares as these shares do not receive dividends and its corresponding amount is redistributed among the outstanding shares. So all in all, when we think about 2025, we've delivered on our company's guidance across basically all metrics. EBITDA reached EUR 5.3 billion, slightly above our guidance. Net income was above EUR 2 billion, also above the EUR 2 billion guidance. The net debt closed at EUR 12.3 billion, which is below our guidance of around EUR 13 billion, and the DPS amounted to EUR 1.77 per share, which is above our minimum commitment of EUR 1.7 per share. So all in all, this consistent track record of delivery once again reflects the company's commitment and delivery. So now I'll hand over to Rita, who will take you through the operational business performance in each of our businesses in greater detail. Rita de Alda Iparraguirre: Thanks, Steven, and good morning, everyone. Starting with Networks on Page 15. Networks reported a total EBITDA of EUR 2,735 million in 2025, representing a 5% decline when compared to 2024. This decrease was primarily driven by a one-off positive impact in Chile last year and the depreciation of several Latin American currencies, most notably the Argentine peso, but also Brazilian and Mexican currencies. In Spain, gas networks experienced remuneration adjustments foreseen in the current regulatory framework as well as increased demand in the residential segment due to temperature effects. In electricity, EBITDA increased driven by a higher regulated asset base and increased contribution rates. On December 23, the new regulatory framework for the 2026-2031 was finally approved, introducing an OpEx remuneration model with a regulatory rate of 6.58% compared to the 5.58% in the previous period. In Mexico, results mainly impacted by negative foreign exchange effects compensated by tariff updates in July. And in Brazil, results were also affected by currency depreciation. In Argentina, a substantial tariff increase was implemented in 2024 and 2025 to offset inflation. In fact, the new regulatory review approved for 2025-2030 period provides visibility and also includes mostly inflation adjustment that allowed to compensate for FX devaluation during the year. In Chile, performance declined when compared to last year due to an extraordinary effect in 2024 related to TGN conflict, which is now officially closed. In Panama, results were negatively affected by lower demand due to temperature effects and increased operating expenses from higher maintenance activity to improve quality standards. In summary, comparison is affected by an extraordinary impact in 2024, currency depreciation in LatAm, and I will also highlight the publication of the distribution model for electricity distribution in Spain. Now turning to Energy Management on Page 16. EBITDA reached EUR 815 million, which shows an increase versus 2024 of an 8%, mainly due to higher margins on hedge sales. The group benefited from effective hedging in a context of high volatility and uncertainty. It is important to highlight that we have reached a price agreement with our gas suppliers, Sonatrach, for the period 2025, 2027, which strengthens the good relationship between both parties and provide us with visibility in the context of energy price volatility. Finally, last October, Naturgy signed a purchase agreement of 1 million tonnes of LNG with a U.S. gas supplier starting in 2030. This agreement strengthens the group's positioning and its commitment to a diversified LNG portfolio as a key enabler of the energy transition. Overall, the period benefited from effective hedging and diversified procurement portfolio. And furthermore, the group is building new capabilities that reduce risk and enhance optionality. Continuing with Thermal Generation, EBITDA reached EUR 837 million in 2025, 39% over 2024 levels due to higher activity in Spain, partially offset by lower revenues in Latin America. In Spain, the increase in results was supported by higher demand for ancillary services from our combined cycle fleet. Naturgy holds the largest CCGT fleet in Spain with 7.4 gigawatt acting as a backbone to energy security of supply. Furthermore, the group obtained a favorable court ruling confirming the reimbursement of the hydrocarbons tax related to the 2014-2018 period. In Mexico, production and margins remained stable. However, revenues from availability markets and prices declined, mainly due to an exceptionally high revenue base in 2024. Overall, CCGTs remain essential for ensuring system stability with an extraordinary contribution in 2025 following the positive ruling. Let's turn now to Renewable Generation on Page 18. Renewable generation reached an EBITDA of EUR 586 million during the period, slightly above 2024 levels. In Spain, renewable production was 7% lower when compared to 2024, mainly due to lower wind and hydro generation given the exceptionally high levels of hydro production in 2024. This negative impact was partially offset by the commissioning of new installed capacity. In the United States, results are higher when compared to 2024, mainly due to higher production and higher energy prices as the completion of the construction of its second solar plant in Texas. In LatAm, activity continues with impacts due to currency devaluation in both Mexico and Brazil. And finally, in Australia, performance was supported by increased production, more than 100%, driven by the additional installed capacity implemented during the final months of 2024. Investment includes 1.2 gigawatt of power under construction that will come into operation in 2026. All in all, higher results in Renewable Generation due to commissioning of new capacity that reinforces vertical integration and selective growth. Last, moving to Supply. EBITDA has been EUR 535 million, 17% lower when compared to 2024. It is important to remember that in 2024, we had an extraordinary impact due to the positive ruling in favor of Naturgy regarding tariff subsidies. Gas margins have shown resiliency, but negatively affected by regulated tariffs with legal process for recovery underway. In terms of electricity, the group has expanded its client portfolio in a higher competitive environment. However, it was impacted negatively by increasing costs. Finally, our AI-enabled digital commercial platform drives efficiency and improves client service through a significant simplification of product and processes. Overall, stable volumes and margins pressure partially offset by integrated position and operational efficiency. I will now hand it over to our Executive Chairman. Thank you. Francisco Reynés Massanet: Hello. Good morning to everyone. Thank you for joining. And thank you, Steven and Rita, for this wrap-up on 2025 results. I wanted just to spend a few minutes talking about the overview of the transformation we have conducted since 2018, which demonstrates that the company has been focused, as you will see later, in delivering or even exceeding our commitments that were placed in two strategic plans that were already ended. The six key messages I wanted to share with you are about our decision in 2018 to get strongly involved in the energy transition. Our important target to move Naturgy into a more reliable, efficient and derisked company. All this transformation being done under the umbrella or clear financial discipline. As a conclusion of these targets, achieving a much stronger balance sheet, which demonstrates that our commitments are firmly achieved by the hard work of all the team. Finally, as you will see, the conclusions of all this work is that we have improved in the main metrics as return on capital employed, return on equity and total shareholders return. In Page 22, you have it in your hands, and I will not go in big details, but the most important thing is that back to 2018, we have decided to change the face of our portfolio generation, betting on more renewable generation, maintaining the flexibility that our gas turbines are providing to the system and moving ahead in a transformation that has brought us to a very important share of the non-emission technologies. On Page 23, one of our key mantras during the last 7 years has been around making the company more efficient. We really believe that a company will survive as more efficient it is. And the efficiency is shown in this page as an important change from a 36% OpEx over margin to a level of 25% of it. It's important that this work has been done streamlining by all the different business units and in particular, as a demonstration of three pillars that has been driven this efficiency to an end is a portfolio simplification that started back in 2019, OneGrid as a philosophy to extend the best practices across all the business units in the company and leveraging on genAI, in particular, on the commercial field to improve not only our cost, but also our client service. On the other side, and with the aim to make the company more reliable and less volatile, we have been focused every year to secure the level of pricing by hedging our LNG portfolio, we did change it from 30% -- around 30% of volume hedged at the beginning of the period to 100% volume hedged in the last year we closed. In parallel, as a business decision, we have decided that a way to self-hedge our fixed price sales contracts of electricity with clients could only be supported by our inframarginal base of electricity generation. In this period, we have been generating around EUR 40 billion of cash flow -- EUR 41 billion of cash flow. And the solid use of these sources has been divided between three major destinies. One is investment. The second one is shareholders' remuneration and the third one is back to society through taxes and levies. As you can see, this equilibrium has been maintained, in particular, to create a much more solid company for the future with a high degree of investments. The conclusion of this work is that we have been able to reduce our leverage, we're reinforcing the balance sheet and as a result, it provides us a strategic flexibility for the future. The level of rating has been able to be maintained as a BBB from Standard & Poor's. And today's liquidity is already around EUR 10 billion. If you look backwards to 2018 and 2021, there have been two strategic plans in place that were shared with the market in June 2018 and at the end of 2021. Each of it had four important indicators as a target. As you can see in the slide, in all these different targets, the company and the team has been able to meet or exceed the expectations provided to the market with a consistent delivery through the years. In conclusion, the company has created value for its shareholders. If we look at from the ratio point of view, we have clearly increased our efficiency in ratios like return on investment capital and return on equity. As you can see, we were at the time, clearly below our peers. And today, in comparable terms, our metrics are clearly above peers' average. If we will go back to the market and despite of all the different turmoils that may have around the equity markets, the total shareholders return for our shareholders could be clearly above 10%. This is what we have done in this period of work, 2018 and 2025. The company has not stopped. This has been the case since 183 years of existence. And now I think that we want to tackle the most important issues that we have for the year 2026, which hopefully, Steven will clarify to all of you. Steven? Steven Fernández: So thank you, Paco, and I'm super happy to be able to discuss this part of the presentation with you because when we look at some of the questions that are coming in as we discuss this presentation, we think we address a lot of those in this particular area. So we focused on some of the key themes for 2026 that we know the market is looking at. And I would like to start off perhaps with the first one, in no particular order, but on Page 29, a word about the rising value of flexible generation. So we are seeing a structural shift in the Spanish system where CCGTs are playing an increasingly important role. It's worth highlighting that just a few years back, having CCGTs in your fleet was seen as something potentially negative. We kept on defending their relevance, and we are seeing that play out today. So we do see an increase in the value of flexible generation. In Spain, it's worthwhile highlighting that our thermal installed capacity of 7.4 gigas of combined cycles and 600 megas of nuclear, and the CCGTs located in key areas provide grid support and operational flexibility, making the company a best-in-class operator. Potential capacity payments are only assumed from 2027, so not included in the 2026 guidance. In LatAm, as you know, we also have a relevant fleet, specifically in Mexico, where we are engaging in discussions for the extensions of the PPAs. However, we do expect lower margins and lower availability in the excess capacity market for those combined cycles. So all in all, when it comes to the rising value of flexible generation, we see that the fleet's reliability, our flexibility and the fleet's efficiency are one of the key elements of the company's competitive advantages in this business. Another area that I would like to touch on has to do with supply. So we are getting a lot of questions on supply, and we'd be happy to answer most of them. But before we go on to them, hopefully, this slide clears some of the elements. So we continue to focus on competitiveness and operational excellence. So some of the key drivers for 2026 include a stable market share and volumes to preserve margins. So we're not engaging in a battle here to gain market share at all. We rather preserve margins. And this is in the context of a highly competitive environment. We have a well-balanced and vertically integrated position, which is also something worth highlighting. And we are experiencing and focusing clearly on excellence in client service and efficiency, which is supported by the new digital commercial platform the company launched, what we commonly know as NewCo. Some key elements about this. So when we think about NewCo and the impact of this new digital commercial platform, we've seen a simplification and reduction of the number of energy plans offered to our clients from 634 previously to about half of that, 342 in 2025. So there's simplification easier to understand by our clients. We also have improved significantly the first call resolution from 80% in 2024 to 94% in 2025. And this has resulted in an increase in the customer satisfaction levels from 9.4% in '24 to around 9.6% in 2025. We also have more margin visibility into 2026 based on the high percentage of already contracted sales. So for example, if you look at electricity, around 65% and 75% of -- is contracted for industrial and retail segments, respectively. And if you look at it in terms of gas, the numbers are 75% and 80% contracted for industrial and retail segments, respectively. We also have a limited exposure to lower margin regulated tariffs in the sales mix. As you can see, overall, we can say that margin pressure during the year should be contained by our integrated position and high percentage of contracted sales for 2026 and together with what we think are the right ingredients for client retention and attraction. If we move over to another interesting part of the business, which is energy management, we will continue to reduce our gas risk profile. I think the group has been very vocal about this, and we've been able to show very clear successful results. All this while maintaining the security of supply and optionality. So some of the key drivers for this area include an agreement with Sonatrach on the price until 2027, which increases our commercial visibility. And obviously, this is subject to the customary commercial -- the customary authorizations. Moreover, our total gas exposure for 2026 is negligible, thanks primarily to our hedging efforts with risk significantly reduced through 2028. This is made both with U.S. volume hedging and residual positions offset by short sales. In addition, the hedge volumes are closed above current market levels, preserving the company's potential. Our long-term procurement strategy is also focused in prioritizing security of supply and disciplined risk management. So we have made progress on the following areas. We have executed a long-term U.S.-sourced LNG gas procurement agreement with Venture Global starting in 2030, which is public. And we have up to two 2 new bcms under long-term SPAs with additional procurement opportunities under evaluation. So we are actively engaging the market. We also have a proactive management of the upcoming EU ban on the Russian gas imports effective 2027. So all in all, the company keeps reducing the gas risk profile, increasing the visibility while obviously maintaining the focus on security of supply and our optionality. In terms of networks, in Spain, in electricity distribution, the new regulatory framework increases the financial remuneration, as you know, to 6.58%, although with a strong adjustment to OpEx remuneration. Our investment plan in this strategic plan, which I remind you is around between EUR 300 million and EUR 350 million a year, is subject to the approval of the government network planning, which we're still awaiting. So we expect in 2026 to have a one-off recognition of remuneration also from previous years. In gas distribution, we should have the new regulatory framework from October 2026, and that covers a time span of '27 to '32. We expect the current parametric formula to be maintained with some adjustments to remuneration parameters. And we should also see an acceleration in biomethane production and distribution. So Nedgia in that sense, distributed last year 170 gigawatt hours of biomethane, which represents a 53% increase versus 2024. Finally, in gas distribution, we also expect a gradual rollout of smart meters. So in essence, when you look at both areas, both electricity and gas in networks in Spain, we believe that visibility has improved, and we expect stability in gas. If we move over then to renewables, it's worth highlighting that our development remains disciplined and return-focused with 1.2 gigas under construction that will come into operation throughout the year 2026. In Spain, in particular, we'll continue benefiting from our low-risk and flexible portfolio, which is focusing on repowering and battery hybridization. Execution will focus on high-return projects, as you can imagine, and the opportunity to capture value from unique assets, suitable specifically for data centers and pumped-storage solutions. On top of that, 640 megawatts of additional capacity and 115 megawatts of repowering will be fully operational by Q4 '26. In Australia, we will have some additional capacity, around 360 megas, with supply contracts supported via long-term PPAs. And lastly, in the United States, we will see additional capacity to the tune of around 125 megas coming operational in 2026, with supply contracts supported via long-term PPAs of between 10 to 15 years. In addition, in the U.S., we will see asset rotation, and we will seek asset rotation opportunities to projects under development. So overall, I think renewable growth remains focused on profitable and selective investments. This goes to our mantra of value over size. And this will continue to contribute, of course, to our vertically integrated position in Spain. Moving on to biomethane. Biomethane, we believe, in Spain presents significant long-term potential of around 160 terawatt hours because it's an efficient solution to decarbonize the transport, the residential, the industrial sectors as gas networks are already ready to distribute the gas, the biomethane with no modifications. In this sense, Spain's biomethane plants have doubled from 12 to 24 in 2025. Nedgia or the gas distribution business, biomethane distribution has also seen a material increase, as I just previously mentioned. And the forthcoming Spanish policy package should provide regulatory tailwinds from 2026, accelerating biomethane production and the use for decarbonization. So we continue progressing in the development of our portfolio with more than 75 projects, that's equivalent to more than 5.5 terawatt hours despite the investment plan being delayed due to slow administrative processes. So it's worth highlighting that we're admittedly not going as fast as we'd like. And this is shown by the 20 environmental authorizations in Spain versus 140 under review, of which 40 belong to Naturgy. So we continue to become the leading energy player in biomethane in Spain. We continue to push for the right regulation, and we are ready to accelerate our CapEx plan once visibility on this front improves. I'd also like to take this opportunity to discuss data centers a little bit, right? And when we talk about data centers, we work and we deliver results as opposed to deliver expectations with no results. So let's talk about the data center opportunity here. Spain is one of the fastest-growing data center markets. It is supported by competitive costs and a strategic geographic position, which make the country an attractive hub for international data traffic. We believe the company is very well positioned to benefit from this. So we combine 8 gigawatts of thermal capacity with 5.7 gigas of renewables, which, together with our multi-energy focus provide us with the flexibility, and this is very important, to adapt to the clients' energy needs. So in addition, we also offer integrated solutions, combining grid access, energy and network resilience and redundancy. So in this context, Naturgy's business model is evaluating opportunities to monetize suitable power land and provide long-term PPAs and energy services, while the investor retains control of the data center assets. That is our model. We hold close to 3 gigas of locations with suitable access or potential for obtaining access to power consumption, of which around 500 megas in renewables, 400 megawatts in combined cycles and a conservative 2 gigawatt pipeline. So in conclusion, we see this as an opportunity to unlock value with very limited capital deployment. We are working in this area, and we are optimistic in our ability to deliver. We recognize that the process won't happen overnight, that capturing value from DC expansion may take a few years, but we also recognize the unique position the company is in to capture some of this growth. Finally, if I move over to LatAm. This year, we'll see relevant tariff reviews across businesses and the preparation for concession extensions. In Panama, the main drivers will be the 2026 to 2030 tariff review, which should include both inflation and higher losses recognition. And we are also seeing higher demand and the continuation of the ongoing quality upgrade plan. In Mexico, the '26-'30 tariff review will also reflect inflation recognition. And additionally, we expect industrial demand to recover from '25 levels. In Chile, the '26-'29 tariff review will come with full asset value recognition. And in supply, we're seeing a slight margin contraction due to the expected energy scenario. In Brazil, the focus is on the preparation for the concession retender in 2027. So we have a lot of questions about this. The reality is that the government has the ability to retender the concession. We'll look at the tender conditions when and if they are published, and we'll make the decision on whether or not to go ahead. But suffice it to say, the company is uniquely positioned to continue operating these assets. In Argentina, the gas review for '25-'29 was approved in April. And while the electricity tariff review for '26-'30 was approved in February 2026. So both reviews, very importantly, incorporated the inflation recognition. So in summary, we do expect ordinary tariff reviews across businesses in LatAm with demand continued to grow and with the company ramping up and getting ready for the retender of the concession in Rio. And with that, I hand over to our Chairman for the last remarks. Francisco Reynés Massanet: Thank you, Steven. And again, thank you for listening to me. Two important messages for 2026. If you remember, one of the key topics of the strategic plan 2025, '27 was to be a truly listed company again. And that was translated in one word, increasing liquidity. Increasing liquidity has been the aim of what it was behind all our plans during this year, and we have been able to achieve our targets even 2 years earlier than the finish of the strategic plan '27. In terms of liquidity and after the BTO that we launched in June 2025 and after the placement of the shareholder GIP of 7% of its stake by December '25, this is the new configuration of our shareholding base. It's important to remark that now the free float is above 23%. And one demonstration that the company is becoming more liquid is that if you compare the ADTV of shares in January '25 with January '26, the volume of shares traded has been multiplied by 5x. On the governance side, I want to highlight first a very important message. Naturgy's Board is a solid and peaceful room. All the plans that we have submitted to the market for your consideration has been approved by unanimity and all the changes that were going to happen have been also approved by unanimity of its members. Therefore, for many things that has been written, we have the privilege to have a very committed and devoted Board that works for the benefit of all shareholders, large and/or small. What we have done is to adapt the new equilibrium of shareholders to the new circumstances of the bylaws of the company, including a respect of the proportional representation for the stakes of every shareholder. In this regard and after the placement of GIP, the Board unanimously have decided to change one board seat from GIP to IFM. These numbers, which are not only pure mathematics, would also like to reflect the long-term commitment of the shareholders in the company. If we go back -- if we go ahead on 2026 forecast, we want to share with you how we see this year, which has started very bumpy. And as we see a scenario in both energy prices and exchange rates, very challenging. We see a market that is again deteriorating a little versus the last half of 2025. And in particular, in what it reflects to the price of electricity, we are seeing more depressed electricity prices in the first half of '26 compared to last year. When we go to the exchange rates, there are also some visions based on the forwards of last 11th of February that we are seeing a certain stable evolution in Chile, Brazil, probably a little decline in the U.S. dollar and a continuous, now less, decline on the Argentinian peso. With all into account, what we can provide to you today is a vision of our figures in 2026 which, as you will see, may think less affected than this challenging scenario, in particular, because of the proactive hedging policy of our volatile business and our proactive regulatory management of our infra business. We can tell today that we see EBITDA for this year at a level of 2025. Net income slightly below than 2025, but clearly above EUR 1,800 million with an investment around the same level than last year. That will provide us room enough to continue delivering the messages of our commitments and in particular, a dividend that was established as a floor for this year '26 on EUR 1.8 per share. As you know, we regularly pay our dividends in three steps: one after the first half results, the second after the third quarter results and the third at the time of the AGM. If you allow me to close this first introduction after going to your Q&A session, just to remember which are our key fundamental messages for the investment community. One is about 2025 results, strong as committed. Second, about the transformation 2018-'25, a clear transformation from different points of view, operationally, financially and shareholder base. Third, on the guidance 2026, supported by our aim to maintain risk management in our core. Firm commitment to energy transition by investing with financial discipline. A balance sheet that give us this strategic flexibility. Increased free float as part of our key fundamentals. And governance adapted and aligned with long-term objectives and ambitions. Thank you very much for your time. I give the floor to Abel, who will manage the part of the Q&A session. Abel Arbat: Thank you. Thank you, Mr. Chairman, and thank you, everyone, for submitting your questions. In the meantime, we have the pleasure of having some of our business heads joining the discussion and helping us to address the more spicy questions with Pedro Larrea from Networks, Carlos Vecino from the Supply business, Jorge Barredo from Renewables Activity and Jon Ganuza from Energy Management. But before we get into the specific business questions, let's address the more -- the questions more related to the group and business strategy. So starting with guidance 2026. There's a question around underlying assumptions for guidance 2026 and how it compares to the former strategic plan and whether we are comfortable -- still comfortable with the 2027 targets and what offsets the more challenging scenario? Rita de Alda Iparraguirre: Thank you, Abel. So I think we've mentioned during the presentation that we expect increased investment in Networks and also tariff reviews in LatAm, that will bring higher results in the following months. Also, we've mentioned that we have a 1.2 gigawatt under construction of new renewable capacity that will also enter into operation during 2026 and 2027. Third, we still see the thermal generation will remain strong in the following months. And also, I think it is also mentioned during the presentation that there is one positive retroactive impact in electricity distribution in Spain expected in 2026. So I think that all these impacts will compensate for the margin decline expected under energy scenario. Abel Arbat: Thank you, Rita. Now questions on net debt. Some analysts recognize that net debt came better than expected in 2025. And wonder if we can elaborate on the drivers of the increase in net debt to 2026 of EUR 13.5 billion. Rita de Alda Iparraguirre: Okay. So we are expecting to pay some liabilities in 2026 regarding supply contract agreements and also some payments to the CNMC, for example, the one regarding electricity price caps from 2023 that we provisioned, but we have to pay. So therefore, we expect some debt increase in 2026, in line with the guidance. However, operational cash flow will remain solid in 2026. Abel Arbat: Thank you, Rita. In line with the lower-than-expected net debt delivery in 2025, there are some questions around balance sheet capacity. And recognizing that balance sheet capacity, where do we see organic growth opportunities? And also, are we contemplating any inorganic opportunities? And what would be the criteria of these potential inorganic opportunities? Steven Fernández: So thank you, Abel. We recognize that we have balance sheet headroom and flexibility. I think to answer the question, the first thing that we need to remember is that we have a very clear commitment to a BBB rating. So that is fundamental as a starting point of any discussion. To keep that rating right now, we have to meet a number of metrics to focus on one in particular, FFO to net debt has to be above 18%. We're running right now at a level of around 27%. So you can do the math on how much additional leverage capacity the group has. It doesn't mean that we're going to be using it. So we don't want to stress the balance sheet, but it means that we have the ability to deploy or to put our balance sheet to work. When we think about investments, you also have to think about our mantra, which is very clear as well, which is value over size. And we've been following that since 2018. We will continue following that. So by no means are we going to be jumping into the market doing crazy things. We're very rational and very disciplined as a company. So when we divide between inorganic and organic, organic, I think the company has provided you with guidance for year 2026 of around EUR 2.1 billion. In terms of inorganic growth, as you can imagine, we're constantly monitoring the market for attractive opportunities that make sense for the company, that create value for our shareholders, that do not stress us. We're looking for opportunities that are not dilutive, that are accretive from the beginning. We're looking at opportunities where we can actually export our know-how. I think you've seen in the presentation, the track record the company has from '18 to '25. We've been able to develop best-in-class expertise in certain areas. And these are areas that we would look to be able to leverage on when thinking about acquisitions. Do we have anything on the table today? The answer is no. But we do have a very good team that spends a lot of their time looking at opportunities. And when and if one of those fits what we're looking for, then we'll bring it to the Board and decide whether or not we want to go ahead with them. Francisco Reynés Massanet: If you allow me, Steven, just to remark on a very important fact that reinforces Steven's words. Since 2018 until now, that has been more than 7 years, there have been a lot of rumors about different potential projects that the company may get involved. And as you have seen, we haven't lost the financial discipline and our commitment to firmly stay on the words that Steven has said, and I would like to remark, value over size. This is going to continue. And this is the main reason why we are not obsessed about inorganic growth. We are obsessed about value creation. Abel Arbat: Thank you, Steven. And Mr. Chairman. There is a question on the upper end of a net debt-to-EBITDA range, but I think that Steven already answered that by stating our commitment -- our firm commitment to a BBB rating. And as a result, there's not an upper end of net debt to EBITDA, but rather a commitment to a BBB rating. We're more guided around the FFO-to-net debt criteria. There's another question around cash flow and in particular, on working capital. What are the key moving parts of the change in working capital during 2025? Rita de Alda Iparraguirre: Okay. So the evolution of working capital is significantly influenced by seasonal demand patterns, fluctuations in energy prices and also with the negotiation of gas contracts with our suppliers. And this has been the case in 2025. Abel Arbat: Thank you, Rita. There is also a lot of interest around the data center theme. I think that Steven covered very well the topic and our positioning on the matter. But I guess it's worth clarifying a few of the questions. So let's go with them. Are we contemplating any kind of partnerships, and how imminent a deal could be? Also, a deal on power land could be expected already this year. And also, what exactly is the self-consumption capacity for data centers? Steven Fernández: So partnerships, we don't envisage -- our model for development in data centers or to capture the opportunity presented by data centers does not envision any partnership per se. In other words, we're not going to be getting involved in the construction of the data center. We're not going to be getting involved in the running of the data center. We're going to be getting involved in the procurement of energy. We're going to be getting involved in the procurement of permits, and we're going to be getting involved in the selling of electricity and selling of the power land. So that's our business model, right? We do think we have a unique position to capture part of this growth because of the locations where we operate, which are, by the way, generating quite a bit of interest from a number of parties. As to whether or not we should expect any deal this year, all we can say is that the company is working to make this potential a reality. And when we have any news to share, we'll obviously be happy to do so with the market, but we're not going to anticipate things ahead of time. And I think the other question had to do with self-consumption. There's two different alternatives that you can do as a data center, connect directly to the network or do self-consumption, which has its own advantages. The majority of developers are looking for self-consumption. So that's one of the -- that's the area that we're focusing on. Abel Arbat: Thank you, Steven. So we can now move on to the specific questions around the various business units. So let's start with electricity distribution in Spain. And the first question relates to how the new regulatory framework for electricity distribution in Spain affects us in terms of our investment plans or strategic ambition? Rita de Alda Iparraguirre: Okay. Thank you. So as you all know, the CNMC has already published a definitive resolution for the new regulatory framework covering the 2026-2031 period. The published proposal introduces a shift to an OpEx-based remuneration model with an increase in the contribution rate to 6.58%. This new model finally defines investment cap in 0.13% of gross domestic products. The group considers that this new regulatory model creates value and provides the distributor with a solid growth path for the coming years that is consistent with our strategic plan estimates. Abel Arbat: Thank you, Rita. Another question also related to the new framework, and it relates to our views around the new OpEx standard and the new incentive mechanism, if we could share our views on the new regulatory changes. Rita de Alda Iparraguirre: So we think that the new model fails a little bit in order to incentive -- to be more efficient in the future. That's our perspective. Abel Arbat: Okay. Also, during the presentation, we mentioned the retroactive one-off recognition from previous years. Can we clarify the concept behind this recognition, this one-off recognition? Rita de Alda Iparraguirre: So this is mainly contribution related to maintenance activity from previous periods in the past that depends on court rulings that are currently being published. Abel Arbat: Okay. Thank you very much, Rita. Let's now move on to questions around our gas distribution activities in Spain. And there are a number of questions around our expectation for the new regulatory framework in gas distribution for the period 2027 to 2032. Rita de Alda Iparraguirre: Okay. So regarding timing, we are expecting a first draft of the remuneration methodology should be ready probably the next month in 2026 as the final distribution model should be expected by the end of the year. From our point of view, continuing with the parametric model will be a desirable option to provide both stability and predictability to the sector. I want to highlight that the current model has proven to be efficient. It has provided system stability and the remuneration has fallen significantly in the recent years as a result of the drop in demand. However, parameters should be -- should reflect exceptional inflation of the current period. Furthermore, we foresee this new regulation as the opportunity to incentive renewable gases, smart metering and the decarbonization of the gas networks. Pedro Larrea: Maybe just highlight that we have been arguing and I think everybody is now acknowledging that gas networks are a strategic asset for energy in the country. Gas networks actually distribute 1.5x the amount of energy that electricity networks do, and they are around 6x more efficient than electricity networks. So -- and by the way, gas demand has been increasing consistently for the past 20 years. So everybody, I think, today is acknowledging the long-term strategic value of gas networks in Spain. Abel Arbat: Thank you very much, Pedro. So moving now on to networks in Latin America. The first question is around the retender process for the Rio de Janeiro concession, and if we can share any updates or views on the matter. Unknown Executive: Well, a public process for extending concessions is the base case. In this case, there was an opportunity, at least the [ regulator threw it ] like this, that it could have been more efficient to make a renewal with the current concession holder, but just the politics timing in the Rio de Janeiro state haven't made this possible. So we are now back to the base case of renewing within an ordinary process. Pedro Larrea: And maybe two comments on my side. One is we have been in the past 2 years, having a very candid and open relation both with government and regulator, and we have been successful in unlocking a number of discussions we have been having like tariff reviews, asset values, et cetera. And we plan to continue to do so. So we will continue to be openly having open conversations with both regulator and government. Second is that there is no questioning of our management of the concession of our management of the assets. So there's no negative valuation of our performance as a concession holder so far. And we will continue again to have this open relationship with the government and see what comes out of the retendering. And there is a number of regulatory discussions that are open and that we are having just as normal course of business. Abel Arbat: Thank you very much, Pedro. One last question on regulatory networks in LatAm, and it mainly relates to the key drivers coming into 2026 and 2027. Rita de Alda Iparraguirre: Okay. So regulatory management continues to be a key priority in Latin America as we aim to obtain tariff reviews in most of our distributors in LatAm and updates which compensate for ongoing inflation and FX depreciation as well as tariff updates that reflect investment plans in those geographies. I think it's important to highlight that in the case of Argentina gas, the new tariff review published this year includes monthly adjustments for inflation, which is a very important milestone regarding high inflation rates in this country. Abel Arbat: Thank you, Rita. And a final question on not networks, but on Latin America. And it's related to the reclassification of our Chilean renewable assets that are now reclassified as held for sale. So why is that a decision? Is there any read-across for other renewable assets in Latin America? Steven Fernández: So thank you, Abel. No, there is absolutely no read-across for any assets in LatAm or anywhere else. The reason why those assets are held for sale quite simply is because they did not meet or are not meeting our return requirements. Abel Arbat: So let's now move on to the energy management questions. So starting with the more generic questions. So what is the -- our views on the gas outlook and the expected performance of the energy management division in 2026 and 2027 compared to the strategic plan? Rita de Alda Iparraguirre: Okay. So regarding energy scenario forecast for the next months indicate a moderate gas price level environment in Europe, mainly driven by increasing exports from the U.S. However, we are nearly fully hedged this year, and we have margin visibility throughout the next months. Regarding contracted volumes, we anticipated already in the strategic plan that we will have lower contracted volumes in 2026 due to contract expirations. And these effects will be mitigated through our diversified gas portfolio and our ability to access to market volumes. Overall, while we foresee a more challenging environment in the next few years, due to rising global LNG exports that we actually anticipated this in our strategic plan, we rely on LNG as a key enabler of the energy transition in the future. That's why we signed a new contract with U.S. gas suppliers starting in 2030. Abel Arbat: Thank you, Rita. Tons of questions around the levels of hedging and exposure and sensitivity to moves in the TTF, Brent and Henry Hub. I think that throughout the presentation, we clarified and guided towards the very limited sensitivity and the high levels of hedging. But if there are any comments that we can add, please? Jon Ganuza de Arroyabe: No, I mean, basically -- thank you, Abel. If we are hedged for 2026, that means that we are -- we have no impact or negligible impact associated to any variation on the TTF or Henry Hub or even power prices. So I think that for 2026, we are fully hedged. And for 2027, we are mostly hedged and the same could also be said for 2028. Abel Arbat: Thank you very much, Jon. Also, a question on the Sonatrach price review. And if we can comment on the main elements of that review and why it's helpful to the group. Jon Ganuza de Arroyabe: Of course, we cannot disclose any of the commercial details, but I think that the most important thing is that it allows us to have a 3-year outlook of how the prices are going to evolve. That helps on our supply business, it also helps in our overall cash position. But especially, I think that it strengthens the relationship, the long-term relationship partnership that we have with Sonatrach, and it reflects that we can work even in a challenging condition or environment like the one that we've seen in the past few months and the past few years. Abel Arbat: Thank you very much, Jon. A few questions as well on the European ban to importing gas from Russia. What is the current status? And what are the sort of alternatives that we are considering in line of the current situation? Jon Ganuza de Arroyabe: So I think that we always talk about the ban, but actually, there are two overlapping measures that have different scope and different time line. On the one hand, we have a sanction that is a full ban on Russian LNG. So it not only covers that we could not import LNG to Europe, but we could not do anything with the LNG. But the time line of that sanction is until July 31 of this year. And if it doesn't review, it will die off. And then there is the second measure that is the ruling that was approved by the European Parliament in February. And the scope there is more limited. The scope of that ruling, it limits itself to the import of Russian LNG to Europe, but it would allow eventually diversions to other markets or other countries. So I think that the first thing that we have to look out is whether the sanction will be renewed on July 31 or not, and that would mean a different scenario for a company like ours. Abel Arbat: And finally, on this business unit also a few questions related to acknowledging that we signed a new contract with Venture, are we looking for other alternatives to replace or to top up our current gas procurement volumes? Jon Ganuza de Arroyabe: So I think the security of supply in energy is a bit like the saying that you have in English that you fix the roof only when it rains, and we don't like to work that way. We think that we have to work in advance. And that's why we are always looking to different procurement solutions that would increase the security of supply and would increase our diversification. We are having talks with the different parties. And if we find something that makes sense and is sensible for both parties and it strengthens our supply procurement portfolio, of course, we will move ahead with that. Abel Arbat: Thank you, Jon. So now moving on to the thermal generation, particularly a number of questions in Spain. So what's our view on the outlook for 2026 and beyond on the role of CCGTs and its contribution by ancillary services? How sustainable do we think this is? Rita de Alda Iparraguirre: Okay. So as we mentioned during the presentation, we don't expect capacity payments in 2026. We expect them to be published for 2027. And what we see is that CCGTs will continue to play a key role in this -- in the current environment, and we don't expect this to change in the near and the medium term. This translates into higher demand and production in ancillary services market that guarantee the system stability and the security of supply. We are nevertheless taking a more conservative assumption in CCGT's production for 2026. And also, it's important to understand that probably the launch of new voltage control markets, the entry of new batteries or the development of new infrastructure will obviously influence some restriction in the future, but we insist that CCGTs will remain essential as a backup technology. Abel Arbat: Thank you, Rita. Moving on to a few questions on the renewable businesses. And the first one relates to renewables in Spain. We continue to invest in renewables in Spain. There is around EUR 430 million of growth CapEx in 2025. Do we still find returns are reasonable? What kind of -- what's our focus in Spain and our competitive advantage? Rita de Alda Iparraguirre: Okay. So regarding renewables in Spain, we are conscious that they face significant challenge, for example, delays in permitting and also limited profitability due to negative prices. However, for this reason, we are focusing our investment during the next months in repos of existing wind plants and also in batteries and finishing the projects that we have under construction. As we always defend, we seek a multi-technology and balanced position that allows us to meet the demand of our customers. And we are, therefore, committed to renewals, but always under selective growth that guarantees profitability. Abel Arbat: Thank you, Rita. There is also a related question around our views about curtailments and how we see the curtailments evolving this year and in the current dynamics, I guess. Rita de Alda Iparraguirre: Okay. So curtailments of renewable energy have increased significantly in the recent months. We expect them to decrease with the entry of new storage capacity in the next months and years. Abel Arbat: Thank you, Rita. There is a question about the amount of hydro, nuclear and renewable terawatts in Spain that we have hedged already. I think I guess it's worth highlighting our positioning between how we manage our power generation and supply. Rita de Alda Iparraguirre: So I think we have several times mentioned that we have an integrated position. So we sell at a fixed price, the energy that we produce. So in this sense, we have a hedged position between production and sales. Abel Arbat: Thank you, Rita. So we can now move on. There's a question around biomethane. And so what's our latest views on the current state of administrative authorizations and the potential of this activity? Rita de Alda Iparraguirre: Okay. So we are expecting a policy package to be published in 2026 that will accelerate biomethane production and its use for decarbonization. In this sense, the group has, during the last years, made a strong progress in the development of biomethane portfolio with more than 75 projects in pipeline and 40 of these projects are already waiting for permitting. However, our investment plan has been delayed by a slow administrative process. We expect administrations to collaborate in order to achieve these objectives. But however, this means that 2027 investment plan will be partially delayed. Abel Arbat: Thank you, Rita. So moving now to the last part in the Supply business. So our Supply EBITDA performance has dropped versus last year. How could we describe the competitive landscape in Spain between electricity and gas? Rita de Alda Iparraguirre: Okay. So generally, the sector is experiencing high levels of competition and churn ratios, especially in electricity, and we expect them to remain both in retail gas and electricity. Even in this context, the group has expanded its client electricity portfolio. On the other hand, a substantial portion of the customer portfolio for 2026, more or less 70% or 80% of our sales have already been contracted. This provides us a strong visibility into next year margins, which remain solid. Finally, the group is focusing on excellence in client service and efficiency, supported by our new digital platform that we call NewCo. Abel Arbat: Thank you, Rita. Okay. So -- and also a question on Supply around the evolution of our Supply margins and whether or not we are maintaining market shares in both gas and electricity segments. Rita de Alda Iparraguirre: Yes, we expect volumes to remain solid, as I've already mentioned, we've already -- we have most of our customer portfolio already contracted, and we see continuity in this sense. Abel Arbat: All right. Many thanks, Rita, and this finishes the questions that we've received through the webcast. So thank you, everyone, for joining the presentation. The Capital Markets team remains available for any further questions you may have. And the management team is going to be on the road for the coming weeks in London, Continental Europe and the U.S. So we hope to see as many of you as possible. And many thanks again. Thanks, everyone, for joining.
Operator: Good day, and thank you for standing by. Welcome to the BAE Systems 2025 Preliminary Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paul Checketts. Please go ahead. Paul Checketts: Welcome to BAE Systems 2025 Full Year Results. I'm Paul Checketts, Director of Investor Relations. And with me, I have Charles Woodburn, our Group Chief Executive; Tom Arseneault, Chief Executive Officer of BAE Systems, Inc.; and Brad Greve, our Chief Financial Officer. Charles, over to you. Charles Woodburn: Hello, everyone, and thank you for joining us this morning. Before we begin, I want to thank our employees, trade unions and supply chain partners for the tireless work they do to ensure we deliver on our commitments to our customers. Delivering reliably on our mission to protect those who protect us is vitally important given the increased threats to security around the world. There are 3 key messages I'd like to leave you with today. First, 2025 was another year of strong performance. We delivered solid growth in revenue, profit, earnings per share and order intake and once again, cash flow was high. Second, the breadth of our business across air, land, sea, cyber and space and across multiple geographies puts us in an exceptionally strong position for both current and future opportunities in defense. And third, we are confident in the future growth we can deliver and the duration of that growth. We delivered strong outcomes in 2025. Sales and EBIT both grew at double-digit rates. Cash generation was high, and we secured GBP 37 billion of new order intake, demonstrating strong demand for our products. Our order backlog increased to a new record of GBP 84 billion, around 3x our annual sales. At the same time as focusing on delivery today, we're preparing for our future. Part of this is investing in research and development and CapEx. Our collective spending on these in 2025 was our highest ever. These results extend the track record we've built over multiple years of strong financial and operational performance and demonstrate our value compounding model in action. If we step back and look at our performance over the last 5 years, the story is compelling. At constant currency, our sales are up more than 50%. That's around 8% compound growth each year. We've also steadily expanded our margins, adding around 100 basis points or roughly 20 basis points a year. And because of that, our EBIT has grown even faster than sales, up by more than 60%. Earnings per share have been even stronger, increasing by over 70%, which equates to a 12% compound growth rate. Importantly, we continue to convert earnings into cash at a very high level. Across these 5 years, we've generated more than GBP 11 billion of free cash flow. And that cash gives us real strategic flexibility. It's allowed us to reinvest in the business to support further organic growth and to make targeted value-enhancing acquisitions. It's also supported increasing shareholder returns with dividends per share growth at around 9% a year. So overall, we're delivering strongly and consistently across the key financial metrics, and we see a very clear path for further progress. Our business has an outstanding geographic footprint. We have established positions in some of the largest defense markets in the world. This gives us an excellent breadth of opportunity and reduces the risk and volatility that comes with being more concentrated. Across all our key regions, defense spending is increasing because of the growing threats to national security. In each of our markets, the work we've done to invest in and position our business means our existing proven portfolio of capabilities aligns well to customer priorities. We'll look at Europe and the U.S. in more depth shortly. Here in the U.K., the government has committed to the largest sustained increase in defense spending since the end of the cold war. The U.K. Strategic Defense Review set out its vision for defense to move to greater warfighting readiness and to act as an engine of U.K. economic growth. It committed to invest in both our long-term programs and new disruptive technologies. We formed a new joint venture with industrial partners in Japan and Italy to design and develop the next-generation combat aircraft under the Global Combat Air Program, or GCAP. More broadly, Japan is on a path to double its defense spending by 2027, and we're exploring how we can support the country in other areas of defense capability. Australia is also increasing its defense spending. We're already the largest defense contractor in Australia and through the Hunter class frigate program and SSN-AUKUS, where we'll deliver state-of-the-art nuclear-powered submarines, we expect strong long-term growth. The geopolitical situation in the Middle East is likely to drive higher defense spending in the region. The largest defense market there is the Kingdom of Saudi Arabia, where we have a 60-year track record of partnership. Their 2026 military budget is expected to increase by 5% and areas of long-term focus include combat aircraft, missile defense systems, naval vessels and further increasing the localization of defense spend. Across the globe, our growth opportunities are significant, and we're focused on consistently executing our long-term strategy to deliver strong top line growth, margin expansion and cash generation. Over the past 12 months, there have been 3 consistent themes that have come up in our discussions with investors. First is our exposure to Europe, considering the rising threat posed by Russia, which is now driving increased defense expenditures in the region. The second is our shareholding in MBDA, given the growing significance of this business as Europe's preeminent manufacturer of missile systems. The third is the evolution of modern warfare and why we feel so confident in the continued and indeed increasing relevance of our portfolio, particularly in the light of new opportunities such as Golden Dome. As a result, we wanted to spend a few minutes focusing on each of these areas in turn, bringing Tom in to cover our U.S. business. The last year has seen a profound change in Europe security situation with the continent facing an acute and growing threat. In response, most countries are now significantly increasing the amount they spend on defense, underpinned by their commitment to meet NATO's target by 2035 of 3.5% of GDP being spent annually on core defense requirements and 5% in total. We're one of the leading defense companies in Europe, and our business is going from strength to strength. When you look across the continent, our equipment and services are integral to the defense of more than 25 countries. We have great capabilities across multiple areas, including combat air, land vehicles and missile systems. Growth for us in Europe is higher than the overall group. And at the same time, our order backlog has increased materially, now representing 32% of our total compared with 11% of our current annual sales in this region. To support our customers as they look to rebuild defense readiness, we're investing to support increased capacity, efficiencies and enhanced capabilities. An excellent example of our critical role in the defense of Europe, both today and in the future, is MBDA. As a reminder, MBDA provides sovereign capabilities to Europe and is a shining example of European defense collaboration. It's a joint venture between BAE Systems, Airbus and Leonardo with our shareholding totaling 37.5%. MBDA is a world leader in missile systems and the #1 player in Europe. Their portfolio has excellent breadth with products in service with more than 90 armed forces around the world. When you look at the critical areas where Europe and its allies are looking to rapidly improve defense readiness, MBDA has proven products. Areas of strength include air dominance since MBDA provides weapons for more than 10 different combat aircraft, including Typhoon, Rafale, Gripen and KF21. In air defense, they have capabilities across land and sea, including counterdrone, short-range air defense and medium range, including antiballistic missile threats. For longer ranges, they have a complete array of deep strike precision products, all of which makes MBDA extremely well positioned to benefit from increased defense spending as European and other nations focus on growing their weapons capabilities and inventories. You can see the high demand for MBDA's products and their momentum since 2021. Since Russia invaded Ukraine, order intake has stepped up from a cadence of around EUR 4 billion per year to EUR 13 billion. The order backlog has increased by 150% to EUR 44 billion or 7.5x annual revenue. And over that 4-year period, revenue has increased by 37%, a compound average growth of 8% to EUR 5.8 billion with improving momentum in recent years. MBDA is investing to fulfill orders and support customers' urgent needs. Significant funds are already committed over the medium term. They're renewing sites, accelerating digitalization, significantly increasing production capacity, investing in their supply chain and developing new products and technology. The combination of investing in the business, the high order backlog and the alignment of the portfolio with customer needs mean MBDA is positioned for continued strong revenue growth in the coming years. I'll now hand over to Tom, who will explain why we are confident about the outlook for our business in the U.S. Tom Arseneault: Thank you, Charles. Across the U.S. business, our strong performance in 2025 reflects our continuing efforts to align our portfolio strategy with evolving U.S. government defense and intelligence priorities. This enables us to support a broad range of programs and deliver for our customers with speed and at scale. We remain well positioned in areas the U.S. administration is clearly focused on. National security space and missile defense capabilities will play critical roles in the Golden Dome architecture, and we support a number of the key mission solutions, which underpin it. For example, as a result of emerging demand for the Terminal High Altitude Area Defense or THAAD interceptor, we expect a fourfold increase in production of our THAAD Seeker over the life of the 7-year contract. Our critical electronics and sophisticated apertures will also factor into the production ramps of other key munitions such as the long-range anti-ship missile or LRASM. Production of these additional key munitions will at least double in the coming years. Our teams are also rapidly developing and delivering cost-effective counter-UAS capabilities. Last year, we were awarded a new 5-year IDIQ contract worth up to $1.7 billion from the U.S. Navy to produce additional APKWS kits. This precision munition is combat proven for both surface-to-air and air-to-air engagements against hostile drones. And our platforms and services team has expanded its maritime business, allowing us to apply our highly skilled workforce and industrial capacity to contribute to the U.S. submarine and surface ship industrial base in addition to ongoing ship repair and modernization support for the U.S. Navy and commercial customers. While we have been investing in capacity and innovation for many years, the current market environment and long-term demand signals present additional opportunity. Since 2020, the businesses across our U.S. portfolio have invested more than $4 billion to expand production capacity and advance our research and development to deliver growth. To further support that growth, our workforce has increased by nearly 14%, and we've expanded our footprint by more than 2 million square feet. While there has been considerable focus on supporting the record production rates associated with key munitions demand, we have also been leveraging investments in a number of other important areas. In our Electronic Systems business, we have been investing to modernize and expand our microelectronics center to triple our production capacity for critical electronic components, supporting electronic warfare and other applications. Our Space and Mission Systems team has invested to develop Elevation, a new series of cost-effective modular spacecraft that will deliver world-class reliability and performance. An Elevation spacecraft has already been selected for the $1.2 billion resilient missile warning and tracking program we won last year. Supported by previous investments in combat vehicle manufacturing and robotic welding, we anticipate more than doubling our vehicle production compared to 2024 levels. In the maritime domain, our new state-of-the-art Shiplift in Jacksonville, Florida is now operational and will increase the capacity of that shipyard threefold. These are but a few examples of our investments in capacity and key technologies to support growth and ensure we deliver to our customers at speed and at scale. With that, Charles, I'll hand it back over to you. Charles Woodburn: Thanks, Tom. Technology and innovation sit right at the heart of our strategy and have done for many years. In 2025, we took that commitment further, increasing our self-funded research and development to a new record level. Let's look at how we develop the next generation of defense capabilities and our competitive advantages in technology. Areas of the defense market are developing at a rapid pace. Technology is being embraced and a number of companies are competing, including new entrants who often don't come from a purely defense background. This includes in drones, counter-drone systems and autonomy more generally. While it's a competitive market, solving the complex problems involved in producing equipment that works in a warfighting domain is extremely difficult. We bring together an understanding of our customers' operational needs with an understanding of the operating environment, agile software capability, differentiated hardware and an ability to successfully integrate the various elements rapidly and crucially the capability to scale up production quickly. I'll give you some examples to bring this to life. First, our platforms and products are deployed on the battlefield today, which gives us firsthand understanding of our customers' operating environments in real time. For example, our Callen-Lenz drones have proven themselves to be resilient and capable in extremely contested electronic warfare environments, and we take all these learnings into other products across our portfolio. A second highlight is our agile software capability. We are actively using generative AI to allow drones to understand the commander's intent and then configure their own software to best deliver that mission need. And we wrap these capabilities within well-understood assurance methodologies, which means the drones are only able to operate within the parameters set by their human operators. This enables rapid introduction of new behavior models and allows the drone to perform missions that were not originally envisaged. Next, consider our differentiated hardware. While software can define the optimal tactics for deploying artillery, being able to implement these tactics still requires a platform. Our mobile artillery system, ARCHER, can deploy fire 4 rounds and leave the location before the first round has reached its target. Now to integration. Bringing together the APKWS precision guiding munition from our U.S. business, heavy lift quadcopter technology from our Malloy acquisition and expertise in weapons integration from FalconWorks, a major step was achieved when we successfully used the drone to shoot down another drone. In just 4 months, we moved from concept to successful live firing trials. Finally, our APKWS technology more generally is a great example of how we can scale up quickly. It has brought down the cost of counter drone technology by so much that it's similar to the cost of the drones it targets. We've now produced over 100,000 units in total. And by the end of this year, we anticipate more than doubling our production rate compared to 2024. Our combination of established multi-domain expertise, decades of delivery and agile software capability gives us an advantage that many of our competitors simply can't match. It provides our customers trusted, differentiated solutions that have proven to work on the battlefield, and these provide us with a competitive advantage. And now over to Brad for the financials. Bradley Greve: Thanks, Charles. It's been a really strong year for the business. We delivered a record year in sales for the group with a 10% increase while building our backlog to an all-time high of GBP 84 billion. Our focus on efficient delivery contributed to a 12% increase in underlying EBIT, and we posted a double-digit increase as well in earnings per share. Free cash flow at GBP 2.2 billion was above our guidance with the benefit of strong delivery and material customer advances. This free cash was after double-digit increases in R&D and continued high levels of capital expenditure. And after all of these increased internal investments, we returned GBP 1.5 billion to shareholders, in line with our disciplined capital allocation policy. All of these numbers highlight the health and effectiveness of our value compounding model. I'll now break these results down in more detail. And as usual, when comparing results to prior periods, I will use a constant currency basis. With orders of GBP 37 billion, the book-to-bill was 1.2 and reflected the continued relevance of our broad technical and geographical reach. Key orders in the year featured close to GBP 9 billion in electronic systems orders. This included GBP 2 billion from our space business, featuring the missile warning and tracking satellite systems for the U.S. Space Force. GBP 6 billion in our P&S business, including significant orders in Europe for Hägglunds and Bofors and over GBP 2 billion for U.S. combat vehicles. The air sector recorded GBP 15 billion, including the Typhoon win in Turkey and GBP 4.2 billion in MBDA. Our Maritime business recorded GBP 5 billion of orders, including increased funding for submarines. And finally, the Cyber and Intelligence sector recorded a further GBP 2.7 billion. Our record backlog, together with the pipeline of incumbencies sets us up well for continued growth over the medium term. We grew sales by 10% to reach GBP 30.7 billion with growth across all sectors. Organic growth was 9%. Platforms & Services led the group with a 17% increase, hitting GBP 5 billion for the year. European growth in Hägglunds and Bofors was over 30%, while our U.S. combat vehicle business grew by 15%. Maritime continued to grow in double digits, up 11% to GBP 6.8 billion, with strong growth in design work for the SSN-AUKUS submarine and double-digit growth in Australia. The air sector rose by 9% to reach GBP 9.3 billion with 17% growth in MBDA, GCAP ramp and continued growth in drone sales and FalconWorks. Electronic Systems sales rose by 8%, paced by double-digit gains in EW sales, strong contributions from our precision strike and sensing activities and the full year contribution from the space business. Finally, Cyber and Intelligence was up 2%, predominantly on gains in counter-drone sales. Group EBIT of GBP 3.3 billion was up 12%, and our margin of 10.8% represented 20 basis points of expansion. This means over the last 5 years, we have delivered 100 basis points of expansion. The largest gain in EBIT came from P&S with 30% growth to reach GBP 576 million. Margin climbed to 110 basis points to 11.4%, with accretion on higher full rate production volumes from AMPV and growth in our European businesses. Electronic Systems EBIT rose by 12%, with margins growing by 50 basis points to 15.4%, including a strong contribution from SMS. The air sector EBIT grew by 10% with margins of 11.9% at the high end of our guidance range. Maritime margins reflected the early-stage maturity of the portfolio with several first-in-class programs trading at relatively low margins. We expect margins to improve in 2026 and beyond as these programs mature and as key milestones are achieved, allowing for risk release. Cyber and Intelligence EBIT was up 15% with a full year of Kirintec included. Organic growth for the sector was 10%. The group delivered operating cash flow of GBP 2.8 billion, significantly higher than our expectations as large customer advances were received very late in the year. With close to GBP 1 billion of CapEx, we once again invested at levels substantially higher than depreciation with capacity expansion and efficiency investments across the portfolio. There was a reduction in net advanced inflows in 2025 compared with 2024 in P&S and Air, which is the primary driver for the reduction in operating cash flow. Our free cash flow after netting tax and finance costs was GBP 2.2 billion. The strong performance contributed to a 22% reduction in net debt, which landed at GBP 3.8 billion. Excluding lease liabilities, the net debt to EBITDA was 0.9x. Our strong balance sheet provides excellent optionality to support our growth ambitions, and it was good to see this month's rating upgrade from Moody's, taking us up to A3. Turning now to guidance. We anticipate another strong year of sales with a 7% to 9% growth range, supported by the record backlog. Strong sales in air and continued growth in Europe for P&S should drive both sectors up in the 9% to 11% range, while growth in space and EW should drive growth in ES in the 6% to 8% range. Growth in maritime and cyber are expected to be in mid-single digits. EBIT should grow above sales with more margin expansion expected. Our guidance is for a 9% to 11% growth in profitability across the group. Earnings per share should grow in line with EBIT at 9% to 11% despite a higher tax rate anticipated in 2026. Regarding free cash, we do not include material advance receipts in our guidance. As you have seen in 2025, this can result in large positive variances. But given the difficulty in predicting these, we exclude them from guidance. We do include the anticipated unwind of existing advances. For 2026, we expect free cash flow to exceed GBP 1.3 billion, reflecting advanced unwinds and continued high levels of CapEx investment planned. So with the strong 2025 delivered, our guidance for 2026 demonstrates our confidence in the continued high performance of our business across all key measures. I'd like to discuss the 3-year cash delivery in a little bit more detail. Our consistency in hitting our 3-year guides continued in 2025, where we recorded GBP 7.3 billion over these last 3 years. For the next 3-year period covering '26 to '28, the target we are setting today is to exceed GBP 6 billion, including an assumed unwind of advances and high levels of investment to support growth. I'll end my section of the presentation with a quick reminder of our consistent value-creating capital allocation model. The first rung on our ladder is investing in the business, specifically in our people, facilities and technology. From the skills academies we opened to our commitment to early careers programs and a constant focus on building strong teams and leaders, investment in our people is essential to delivering our strategy. We have invested over GBP 1 billion since 2020 on education and skills. Our investments in CapEx to increase the efficiency in how we deliver to our customers as well as expanding the capacity of what we deliver continues to be maintained at very high levels, helping us to drive growth. Our investments in CapEx are over GBP 4 billion since 2020 and are now averaging close to GBP 1 billion a year. And our higher investments in self-funded R&D help to increase differentiation and open new revenue streams. These investments have increased by 70% since 2020 and programs like the APKWS illustrate how these convert to value. The second rung of the ladder is our dividend, which is covered approximately 2x by underlying earnings. Our dividends have increased for 22 consecutive years. And today, we have announced a 10% increase for our full year 2025 dividend. While maintaining our strong balance sheet with a focus on preserving investment grading, we have strong optionality to use M&A to grow the portfolio as we have done successfully over the last several years with over GBP 6 billion invested since 2020. And finally, when there is surplus cash after all of these allocations, buying back our shares has proven to be another important way we return cash to our shareholders, and we have retired 9% of our ordinary share count since the program started in the summer of 2021. So handing over to Charles with a final comment that our value compounding model has led to a high compound annual growth rate in both sales and underlying EBIT over the last several years, significantly enabled by this consistent approach in the allocation of capital. Over this time, we have also converted cash at very high levels. With our record backlog and pipeline, we are very well positioned for continued strong delivery across the medium term. Over to you, Charles. Charles Woodburn: Thanks, Brad. Looking ahead, we're well positioned to keep building on our momentum. A key strength of BAE Systems is not just our near-term growth, but the visibility we have over the long term. Our order backlog and incumbent program positions total around GBP 260 billion, nearly 9x our annual sales. This includes both shorter-cycle products such as drones, counter-drones and munitions, where we're currently experiencing high growth but also critical multi-decade programs such as frigates and submarines with long-term embedded value. Some of our biggest programs like the Global Combat Air program and SSN-AUKUS submarines don't come into full production until the mid-2030s and beyond. The combination of our order backlog, incumbent positions and a strong new business opportunity pipeline due to rising defense spending gives us the visibility and confidence that we can deliver strong growth for an extended period. Bringing this all together, what should it mean for investors? The combination of our exceptional breadth of world-class defense products and capabilities, strong positions in some of the largest defense markets in the world, a continued focus on execution while increasing our investments in technology and innovation and a large backlog of long-term work with significant new business opportunities means we're confident we can deliver strong revenue growth that is both visible and sustainable over multiple years with higher margins and strong cash generation, all of which will be amplified by our disciplined capital allocation, giving us enhanced visibility on our value compounding model. Many thanks. And with that, we're ready for your questions. Operator: [Operator Instructions] And now we'll go and take our first question and it comes from the line of Ross Law from Morgan Stanley. Ross Law: The first is just on the U.S. budget and the potential upside there for fiscal '27. Are you actually planning for a GBP 1.5 trillion (sic) GBP 1.5 billion scenario? And when would this increase flow through to your P&L? Second question, just on Europe. You highlighted that it's 11% of sales, but 32% of the backlog. And what do you expect the mix of European sales contribution to trend to midterm, please? And then lastly, just on MBDA, how should I think for the growth outlook there in terms of CAGR? Charles Woodburn: The first one, U.S. budget upside. Tom, do you want to take that one? Tom Arseneault: Yes, sure. I think we're very encouraged by the trajectory of the budget. I mean how that -- how the 2027 top line ends up remains to be seen, but it certainly is heading in the right direction. It is not part of our current guidance. And so we do see upside in there. And to the extent we've worked to align ourselves well with the National Defense strategy and various priorities that fall out of that, I think we are well positioned. The Golden Dome, for example, we talk about the recent wins in the base layer and our involvement in the interceptors, FAD and others. And so I think you'll see some of the budget applied there as well as shipbuilding. We've recently pivoted some of our maritime solutions to be the better part, as I mentioned earlier, of the shipbuilding, the submarine and surface ship industrial base. And so I think we are well positioned to the extent that budget heads in that direction, we're all encouraged by that. Charles Woodburn: So on the European composition, I mean, clearly, it's going to grow quite significantly with that 11% European ex U.K. in our current sales and 32% in the order backlog. Quite what the final number ends up being, I think it's a bit hard to tell a lot depends back on things like U.S. budgets as to the rate at which they grow, the relative rate of other areas. So I think it's a bit hard to judge, but we are looking at significant growth over the next 5 years as we build out that backlog. On MBDA, Brad I mean we've had already a pretty rapid growth. I think it was 17% year-on-year growth last year to the year before. But do you want to comment a little bit on the outlook for that business? Bradley Greve: Yes, I'll just echo too, on Europe. We -- GBP 3.6 billion of sales in Europe in 2025. That is against GBP 2.8 billion in 2024. So you can already see how our European revenue growth is really accelerating. And actually, our European business is bigger than our KSA business now. So I think that's worth reflecting on and positioned for continued growth. I think MBDA has been a really strong 2025 with over 17% growth. And Charles laid out some of that backlog that they've got. So sometimes revenue there can be a bit choppy because it's point on delivery revenue recognition. So some of that revenue growth may not be even. But with that backlog they've got, we expect really continued high levels of growth for a long time to come here. And also, Charles mentioned the production capacity investments that they're making, that will allow us to accelerate growth over the medium term once those get online. So I think all of this points to a really strong outlook for MBDA on the back of what's already on a pretty strong run for that business. Operator: And the question comes from the line of Robert Stallard from Vertical Research. Robert Stallard: I've got a couple for you this morning. First of all, this might be for Tom and Charles. Given the broader industry trends, are you expecting much higher CapEx in your U.S. business going forward? And in relation to that, are there any limits you potentially see on your flexibility on returning cash to shareholders? And then secondly, you highlighted the growth potential in MBDA and the rapid growth you've seen already. We've seen one of your peers in the U.S. announcing plans to spin a minority stake in its missile business. Is there any chance of a similar move for MBDA? Charles Woodburn: I think on the MBDA, I think we're very happy with the business. We don't see any particular need to change the structure or the holding system at the moment. We're just pleased to see the performance and keep supporting it. On CapEx, I'll maybe leave that to both of you, Brad and Tom to say a couple of words on it. But I would come back to the fact that we have because of the good performance of the business, ample capacity to invest as we have been at record levels. If we needed to increase, we can still do it and still maintain our very disciplined capital allocation strategy. But if you want to just say a couple of words on U.S. in particular CapEx growth, maybe... Tom Arseneault: Rob. So in the U.S., I mean, clearly, we're focused on -- and as we've all been encouraged by the executive order to make sure we are positioning and applying our capital resources in a way to help grow capacity and focus in areas of technology investments, some of which I mentioned earlier. We are on the verge. We're part of the FAD program. We do the -- we make the interceptor. We anticipate signing our own head of agreement with the Department of War here in the coming weeks in order to secure that quadrupling of demand over the 7-year multiyear program. As part of that, we would look to invest appropriately and it's quite a bit easier to close the business case on a multiyear demand like that, but to ensure that we can produce at that level. So that's just one very near-term example. But we continue to focus and make sure we're applying our resources to the benefit of the Department of War and their priorities. CapEx will generally impact to you. Bradley Greve: Yes. At a higher level, Rob, we -- as we've laid out in the scripts in the prepared remarks today, you've seen us talk about a lot more investment. And over the last 3 years, we've been averaging sort of GBP 1 billion a year. I would expect in the next 3, it's likely to go up as we see this increasing growth environment that we're in. And a lot of that, as Tom has laid out, is in the U.S. But overall, this is embedded in our 3-year cash guide where we said we're going to have 6 -- over GBP 6 billion in the next 3 years of free cash. That is reflective of higher CapEx investments. Operator: And now we're going to take our next question from the line of David Perry from JPMorgan. David Perry: Two questions. First one, just an update on AUKUS, please. I think the last few days, there's been quite a lot of press reporting out of Australia that the government there is about to commit AUD 30 billion to a new production facility. So just any info you have on that? And then secondly for Tom, I think one of the surprises for me in the results was U.S. land vehicles, where both sales and margin were better than expected, because that's a business that you've been less bullish on recently. Have you changed your view on that? And any thoughts on the outlook? I mean, could there be more margin upside from where you are at the moment? Charles Woodburn: Thanks, David. So on AUKUS, I think as you already alluded to, there was some announcements over the weekend about infrastructure investments in the Osborne precinct around for the long-term build of SSN AUKUS, which I think is excellent progress and just underlines the strength of the program longer term. From a U.K. perspective as well has been continued investments in the design work that's going on the SSN AUKUS submarine. So I think whilst we've always said this is a long-cycle program, much of it doesn't really bear fruit until well into the 2030s. These are early days, laying the -- literally the foundations for the success of the program. And I think we're making good progress on that. On U.S. land vehicles, I think Tom, as you said, is best place to answer that one. Tom Arseneault: Yes. Thank you, Charles. And David, yes, no, thank you for pointing that out. I mean I think the team and Platforms & Services has done an excellent job playing out the backlog that we've been reporting in recent years. And programs like the amphibious combat vehicle, for example, which is a Marine Corps program, factors well into the Pacific deterrent dimension of the National Defense Strategy an important vehicle for Marine Corps as well as the armored multipurpose vehicle, AMPV, which is the highest volume vehicle running through the factories there. Some of the -- and the margin improvement, excellent performance, coupled with some of the investments we've made in recent years, robotic welding, et cetera, that helped drive a little bit of automation, allowing for better throughput in some of those higher markets. And so we continue to focus on delivering for our customer and ensuring that we can return to the shareholders at the same time. I won't point out, I mean, we do -- our combat vehicle portfolio also includes the business in Hägglunds in Sweden, and that business is growing quite strongly. We are -- it was in the press late last year, working on a 6 nation agreement for CV90s. That will likely result in orders for additional vehicles in the hundreds. The 6 nations, Finland, Sweden, Norway, the Netherlands, Lithuania and Estonia, and the team is working with all 6 nations now in order to hammer out an agreement for a common vehicle platform across those nations. I hope that's helpful. Charles Woodburn: Which I might say is a great example of European partnership. Operator: Now we're going to take our next question and it comes in of Christophe Menard from Deutsche Bank. Christophe Menard: I had 3. The first one is still on the U.S. Can you comment on the drive for affordability in the U.S.? How -- and does it impact you? Is it in technology programs or in -- for instance, I don't know, the Radford rebid that's coming up? Second question is on capital allocation, share buyback. The GBP 1.5 trillion (sic) [GBP 1.5 billion] is coming to an end, I think, around June. What are the clients plans beyond? And the last one is on order intake. I'm still -- I'm always surprised -- I mean, always very positively surprised by your order intake. Any guidance for 2026 of book-to-bill or any key orders we should be watching in terms of influencing the order intake in '26? Charles Woodburn: Well, Christophe. So drive for affordability, I will let Tom say a few words on that, but we are fully supportive of the intent of the executive order to improve production rates and make sure that we deliver on the programs. Capital allocation, I may correct you there, is GBP 1.5 billion, not GBP 1.5 trillion. And -- but I'll hand over to Brad to do that one. And then order intake guidance, as you know, we don't guide on order intake. They tend to be quite lumpy. But if Brad, as you're answering capital allocation, do you want to expand on that by all means do. So maybe, Tom, over to you on the drive for affordability. Tom Arseneault: Yes. No, that's a great question. Thank you, Christophe. We -- the focus on affordability is highly enabled by volume production, right? And so some of these investments in capacity, I mentioned robotic welding a little bit earlier, brings automation to bear, drives for the economies of scale and economies of labor and automation that allow us to create a more affordable situation. Investments in technology around how we're driving, for example, as I mentioned earlier, the microelectronics position, right? As the microelectronics get denser and denser, we're able to get more capability into smaller space, drive down the material -- the builds of material on some of these items and again, helps with affordability. So we're looking at it in every dimension from the way we work all the way through to the technology we apply. I hope that's helpful. Charles Woodburn: Brad, do you want to talk about capital allocation? Bradley Greve: Yes. I think it's healthy just going to look back to our capital allocation hierarchy again. And the first rung in that ladder, as we said, was investment in the business. And so this takes the shape and investment in our people, the GBP 1 billion that we spent over the last several years on skills academies and early careers programs, self-funded R&D. We've been making meaningful increases in those investments and CapEx. We've talked a lot in this presentation about how much we're increasing our investments there in CapEx. And all of this, I think, is very much aligned to a growing business and a growing backdrop. And our customers all want capability faster and our investments are designed to do that. So that is our very first priority, and that's completely aligned with our customers' view on this. And after that, of course, we have a dividend policy that's very established and clear covered 2x by underlying earnings. And we've then looked at M&A as sort of another wrong and using a strong balance sheet to increase and enhance our portfolio. And finally, if there's cash left over after all of this, that's when the buyback program kicks in. And we're in a situation with the business that across all these increases of internal investments and dividends and the M&A we've been doing, we still have had cash left over. And so I think that's been a useful tool to deploy that surplus cash. Charles Woodburn: Then on order intake guidance, as I said, we don't give guidance, but Tom alluded to, for example, more CV90 potential orders translating. The Type 26 selection by the Norwegians is not yet in order backlog. We've got a number of additional opportunities for Eurofighter, both support and new aircraft sales. Electronic systems, there's opportunities with Compass Call. I mean there's a wide hopper of opportunities. But as you always know, the -- some of these big programs, quite what year they fall from an order intake perspective can be a little hard to predict, which is why we are cautious around giving specific guidance on that. Christophe Menard: And yes, indeed it was GBP 1.5 billion. Charles Woodburn: I was joking to be honest, Christophe, I knew you have -- anyway, thank you, Christophe. Operator: The question comes from the line of Ian Douglas-Pennant from UBS. Ian Douglas-Pennant: I have 3, at least one of which is quite quick. Firstly, on the free cash flow. So your free cash flow guidance 2025, '27 implies GBP 2 billion of free cash flow in 2027, which is a decline on what we've seen recently. Like can you talk about why that's the case beyond -- and obviously, I hear what you're saying on the advanced payments, but anything else beyond that, we should be considering? Secondly, could you talk about the outlook for tax rates? I think your communication there has changed? And thirdly, on the Eurofighter, can you talk about the long-term production rate plans there given some of the recent demand we've seen coming in? And related to that, could you talk about progress on FCAS and when you now think that will be ready for use for our customers? Charles Woodburn: So maybe the first couple for you there, Brad, free cash flow and... Bradley Greve: Free cash flow, really the story on the variability is not a new story. It's just really down to how advances move and how we guide on the basis of a conservative outlook on advances where we always model the burn of advances. And in 2026, we expect to have a circa GBP 600 million burn down of advances. We haven't guided to any material advanced receipts. So to the extent those come in, that would be upside to what we've guided. And that also is true of the forward guidance ranges in those 3-year increments that we've outlined. So none of those include material receipts for new advances, but all of those new ranges looking ahead include burn down. So that -- I think that's really the simple explanation of your question on that one. And on tax rates, we did see an increase, we're expecting to increase rather in 2026, and that's mainly coming from '25. We did have some prior year releases from some retired tax issues. Those obviously don't recur in '26. And the France tax regime has carried forward what was meant to be a 1-year surplus and tax rates. They've now taken those into a second year. So the France tax rate is 36% compared to what we expect it to be sort of in the mid-20s. So I think I really explains the tax movements and a 22% guidance for ETR for '26, that's probably a range that's likely to endure for a little bit longer. Charles Woodburn: Thanks, Brad. On Eurofighter, I mean, we've talked before about sort of the pathway to doubling production rates, and I think we're well on that. Having secured Turkey and there are other opportunities. I mean, obviously, some European buys that you're well aware of. We'll look to adjust that. But I think that we said at the time at the Capital Markets Day last year that it was sort of a couple of year trajectory to get to the new production rates, and we're well on that journey. And we will adjust, if needed, upwards if we are successful in securing further orders. And of course, the good news is that we now have production requirements all the way through to when we start doing final assembly of a GCAP capability, which is important. And I think to your final question, GCAP is making really good progress. We have a really strong team, moving well and are delighted with the partnership that we have and moving at pace. Operator: And now we're going to take our next question. And the question comes from the line of Olivier Brochet from Rothschild & Co. Olivier Brochet: I would have a couple of things to ask. The first one is on the operating cash flow in H2, it doubled in electronic system. Do you have any areas that you would like to point to explain the move? On the same vein, did you have any cash payment catch-up on the F-35 after the release from inventory aircraft last year? And the second question would be on the space exposure. Can you maybe size how big it is across the group, maybe in terms of backlog and sales as you very hopefully did for the European business? Charles Woodburn: On cash OCF, do you want to do that, Brad, and then maybe over to you for space, Tom? Bradley Greve: I'll simply say, Olivier, we tend to have a very back weighted cash flow profile. So '25 is no exception to that. We did see some advances come through in our space business from SMS into the ES cash flow. So that was a contributing factor in that. But we always have a very H2-weighted cash profile, and that continued into 2025. Tom? Tom Arseneault: Yes. I think I mean backlogs in the former Ball Aerospace, now our Space & Mission Systems business are at record levels. I mean, after some delay in the early part of the year as the administration was settling in and working through its priorities, there were some pivots on their part early in the year. Although as we moved to the half and beyond, we spoke at the half, and I mentioned earlier, the big win on missile warning and tracking. We won a ground systems award called FORGE C2 that will -- is a ground systems for this missile warning and tracking kind of mission in our national and military space businesses grew and won a number of other programs. And so record levels. I think Brad, just check me if I'm wrong, GBP 8-ish billion for SMS. And so a really good performance there, and 1 that will play out through sales growth here. We're projecting double-digit sales growth in 2026. Operator: We're going to take our next question and it comes from the line of Alessandro Pozzi from Mediobanca. Alessandro Pozzi: The first one is referring to your opening remarks about the outlook, very strong pipeline as well. I was wondering, can we have any color on the medium-term growth? A lot of your peers have given 2030 targets. We don't guide to 2030. But I was wondering, is it the right time maybe to factor in an acceleration in top line and maybe growth of double digit rather than high single digit, also in line of defense spending in the U.S. going up? And the second question on the GCAP. There's a lot of speculation that Germany and France may not go ahead with the FCAS any longer. Would you be able to accommodate Airbus as a new partner in the GCAP and what the implication could have for the program? And maybe a last one. Any update on the Eurofighter potential opportunity in Saudi Arabia? And any thoughts on that? Charles Woodburn: So outlook, thanks for the question, Alessandro. We don't, as you know, give medium-term outlook, but we've been on a strong temper of growth, and we do see that continuing. As you probably are aware, everyone on this call much debate around the U.K., for example, and the defense investment plan and will there be more funding around that. And I don't know any more to add to that other than has been in the press already. But none of that is in a sense, assumptions around that further upside would be in our guidance and indeed -- but it would affect our medium-term outlook, but we just have to wait and see how that plays through. So there is further upside, we think, to the medium-term outlook, depending on how things play through. And indeed, as Tom alluded to already, with the U.S. budgets as we see how that plays through, but that's not a '26 impact. That would be a '27, '28 and beyond impact. On GCAP, I mean, really the decisions around expanding the partnership are entirely down to the 3 governments of Italy, Japan and the U.K. that are partners already. So there's not really not much more I can comment on that apart from the fact that we have a really strong partnership that is making great progress and moving at pace. And on Eurofighter, again, there's a little I can really add apart from we have a large portfolio of additional opportunities for the Eurofighter platform. It's a superb fighter aircraft. And with the latest missile systems from MBDA has extremely good capabilities. So we do see a range of additional opportunities, both from existing customers and new customers as we see with like Turkey coming into the Eurofighter family. That's really all I can say at this point. Operator: And the question comes from the line of Sam Burgess from Goldman Sachs. Samuel Burgess: Three, if I may. Firstly, just back on Europe. If there is movement in the rules on U.K. company participation in future European defense funds, just in big picture terms, how material could this be for BAE Systems? Secondly, can you give us just any directional indication of the expected magnitude of advanced payments expected in 2026 relative to '25? I mean given quite a lot fell in Q4 '25, might we assume it's a slightly slower year in terms of prepayments? And then thirdly, maybe one for Tom. Just following on from Ross' question about potential U.S. budget increases. I know there's been a lot of kind of CapEx going in for Jacksonville and Louisville, but that was obviously in advance of some of the latest messaging from the U.S. President on budget. So what's your sense on the areas that incremental budget spend may be directed? And might you need to accelerate CapEx to capture some of that demand if it's not in your base case? Charles Woodburn: Thanks. Good set of questions. On Europe, I would just come back to -- we already have -- we're well positioned within Europe. So our position with MBDA, Eurofighter, our Swedish businesses mean that we are very well positioned, and we can happily partner with companies like PGZ in Poland, who are recipients. So for example, say funding we can work with them. So we see, as you've already seen in our order outlook, we're expecting significant growth in Europe, and it's a combination of selling in from our U.K. business, but very importantly, strongly enhanced by our footprint already within the Europe and specifically EU. So -- and then in terms of advanced payments, I mean, we don't guide around that. It's very hard to predict, which is why we specifically exclude them from our cash guidance. And I think that's probably the prudent place to be. And I think we're very clear around our position there. Tom areas for CapEx -- in the U.S., do you want to say a little bit about that? Tom Arseneault: Yes. I'm happy to it. Thank you for the question, Sam. I mean if I had to point to one area and again, as I mentioned earlier, we're very encouraged by the administration's move toward multiyear contracts, particularly in and around munitions. So if you look at the 2026 National Defense Authorization Act, the budget has outlined, particularly Section 804, that really outlined these multiyear procurements where they create effectively 7 years of demand for some of these munitions. Our 8-ish munitions sort of called out there as key munitions. We play a role on 6 of those. FAD I mentioned earlier has one. And so as we look to the sorts of volume increases associated with those anywhere from doubling in production to quadrupling there will definitely be some CapEx expected in those areas across the portfolio. By the way, that's both ES and SMS, those 2 businesses will contribute. So I'd call that out as probably the dominant area, although there would be others. Operator: We're going to take our next question comes the line of Chloe Lemarie from Jefferies. Chloe Lemarie: I have a first question, please, on the 2026 to '28 cash outlook. You helpfully said the GBP 600 million advances burn in '26. Could you maybe share how much over the total period you're factoring in for this? The second question is on P&S. Obviously, quite a strong performance in '25. We touched on the U.S. platform performance. But I think a 30% growth in both for Hägglunds was mentioned. So could you maybe touch on capacity utilization now in those businesses and the expansion phasing going forward? Charles Woodburn: Over to you, Brad, for cash guidance and then, Tom, for the excellent performance in P&S. Bradley Greve: Yes. I think the GBP 600 million burn down is probably a fair average to use across the medium term. So the '26 to '28 cash guide. Again, we don't assume any advances coming in, so any prepayments coming in. We do have a slightly higher CapEx across the next 3 years and then there's the normal working capital movements, but we will have higher profits, which will fall to cash. So all that weighted in is kind of what colors in that GBP 6 billion -- greater than GBP 6 billion cash guide over the next 3 years. I mean it's going to be timing on programs that will dictate the cash burn on advances. It may not be evenly distributed GBP 600 million each year. But I wouldn't be surprised if it's a number like that over the next 3. Tom Arseneault: Yes. And then on Adrien (sic) [Chloe], on vehicle performance and production. I mean P&S, again, thank you for highlighting that a really excellent performance on the part of that business. Remember, P&S includes both the U.S. portfolio as well as Hägglunds and Bofors in Sweden. We expect that we would focus -- again, we don't see additional capacity necessary in the U.S., for example, we are -- we have built that up over the course of the last 5 or 6 years. And so now we're sort of running at rate, focusing on good performance there and that you can see in the bottom line in that business. So over in Hägglunds, I mentioned earlier, the 6-nation opportunity that would likely require some additional CapEx in Sweden, but we do, as we've reported in the past, spread that capacity work out into the countries to which those vehicles would be delivered and in industrial cooperation. And so a modest investment there, we expect. But here's a business that was maybe 50 vehicles a year, only a handful of years ago, now looking at maybe somewhere between 200, 300 vehicles a year. So really good opportunity there, and business has done well to scale. I hope that is helpful. Operator: We'll go and take our next question and it comes from the line of Adrien Rabier from Bernstein. Adrien Rabier: I also have 2, please. Sorry to ask again about the U.S. budget, but if you don't ask -- if you don't mind me asking in a more basic manner, if we have anywhere near 50% growth in U.S. budget in 2027, what would that mean for you? How much you expect to participate? And how long will it take to flow into your P&L? And the second question on your 2026 guidance, please. Your sales growth target implies some sequential slowdown from 2025. But as you said, budgets are growing in your key regions and backlog is great and you've been expanding capacity. So should we see this as a reasonable caution? Or is there a reason to actually expect a slowdown this year? Charles Woodburn: Well, on the second one, the answer is no. But do you want to explain that a little bit guidance? You're saying it's slowing down compared to this year. But Bradley Greve: On top line? Charles Woodburn: Yes, on top line. Bradley Greve: Yes. The growth that we printed for 2025, the 10% included a full year of SMS, our space business, former Ball Aerospace. So that compares to a partial year in 2024. If you look at our organic growth rate in 2025, it was 9%. So again, if you put that in the context of our go-forward guidance, where we're saying 7% to 9% for 2026, we're continuing to grow at these very high levels on a higher 2025 base. So hopefully, that helps you understand a little bit that we're continuing to grow in pretty high levels here. Charles Woodburn: Yes, we still see strong momentum in the business. And maybe over to you, Tom, on U.S. budgets. Tom Arseneault: So there is so much that has to play out here before we understand where the top line for 2027 will settle. I mean it's -- again, we're very encouraged by the directionality of the discussions around the budget. You'd have to imagine that the way that would translate into portfolios would be sort of relative to how well aligned we are around the demand signals. And we feel very well aligned, as I mentioned earlier. And so we would hope we would get a reasonably proportionate share. The focus on the national defense strategy, deterrence in the Pacific, our electronic warfare, our space portfolio, the work we're doing to help with the submarine and shipbuilding industrial base. When it comes to defend the Homeland, we spoke about Golden Dome, Clearly, the space and the munitions side of that, Counter-UAS, with our APKWS solution. So we've worked to align as best as we can with the national defense strategy. I think that's paying dividends for us, and we would hope to earn our fair share of that budget when it settles out. Charles Woodburn: But this would really play out in '28, '29. Tom Arseneault: Right. It will be some time before we know exactly where that is, but the directionality is clearly encouraging. Operator: And the next question comes from the line of George Mcwhirter from Berenberg. George Mcwhirter: Maybe on R&D, going back to the comments that Charles you made about self-funded R&D reaching a record high this year. Do you expect self-funded R&D to continue to account for the minority of R&D? Or could you see that the self-funded share grows a bit faster than customer funded as government shift to a greater company, that innovation to reduce the time it takes for products to come to market? That's the first question. Charles Woodburn: Okay. Is that the only question? Or do you want to ask... George Mcwhirter: Sure, I can ask the second one. Maybe on margins. You talked about 20 basis points of margin expansion a year for the past 5 years. Do you think this is a reasonable level that you can achieve in the next 5 years? Charles Woodburn: So on margins, I'll let you answer that one, Brad. On R&D, I mean, as you said, we have been increasing self-funded R&D. The most intensive area of self-funded R&D is the electronic systems portfolio in the U.S., and that's been really good investments, things like APKWS is -- was a self-funded R&D program that is now doing extremely well and a huge commercial success for us. So we are encouraged to keep investing in R&D. The balance between that and customer-funded R&D, I mean, it largely depends as well as to the amount that we get through customer funding on R&D programs. So I'm not sure it's going to change dramatically, but we will keep investing in self-funded R&D. We've had some great success there. The other area that we've invested and continue to invest heavily in self-funded R&D is in the U.K. air sector, specifically around drones, counter drones some of those capabilities is making sure that we really build out that what is already a market-leading portfolio and develop that further. On margins and the margin progression, do you want to say a bit about that, Brad? Bradley Greve: Yes. Last several years, our mantra here has been top line growth, margin expansion and cash conversion. And we were pleased to generate those 100 basis points of expansion over the last 5 years. And when we look forward, we'll continue to focus on these things. And where we have opportunity for more improvement is really everywhere. Operational efficiency is a key lever of expansion. The extent that we deliver our programs and retire risk to the bottom line rather than consume it. That's a really important part of how we're going to grow margins from here. We'll have some operating leverage with top line growth, where we can keep indirect costs flat. That's another key lever. And our supply chain function continues to make size our scale advantage so we can get procurement volumes to drop down into bottom line margin expansion. I mean across the entire business, we look at these margin levers to really drive improved delivery, and we've seen that over the last several years. Now looking at where we're going to go from here and where you're going to expect more margins. Obviously, the maritime sector is one that is below the range that we expect from that sector. And so I would look at that sector as being the one that will drive the biggest gains over the next 3 years. But we're already pretty top range and a lot of our delivery across the sector. We look at ES at 15.4% and P&S at 11.4%. There's still room to go on those. So I wouldn't just extrapolate a 20 basis point a year over the next 5 years to come, but we certainly are focused on it. And we continue to think that we can drive margins up from already these high levels in 2025. Operator: And the next question comes from the line of Nick Cunningham from Agency Partners. Nick Cunningham: Yes, so the -- a few details on the U.S... Charles Woodburn: Yes, we can hear you, Nick. Nick Cunningham: Can you hear me? Charles Woodburn: We hear you loud and clear. We are hearing you. Nick Cunningham: So the administration is Good. So the U.S. administration is not very happy about NOAA and NASA budget. And it's obviously engaged in a big fight with Congress. But in the meantime, it's been holding out signing checks. And is that an issue for BAE? Or are you assuming that those delayed payments will get caught up later in the year? And also, of course, will it be more than offset by the growth in military space anyway? Secondly, on the P&S shipbuilding move, is this into something new like building modules? Or is it more of the surface ships fit out that you did in earlier years? And how big could it get? And then a final high-level question for Brad. Debt reduction wasn't mentioned as an option in capital allocation. Some of your U.S. peers are looking at retiring debt instead of buybacks. And in that context, what is the right level of debt? Charles Woodburn: Okay. So Tom, I mean, you already alluded to the pivot early in the year from civil space to military and where you think that's going. So I think you maybe say a bit on that and also the shipbuilding and maybe the pivot to submarines. Tom Arseneault: All right, Nick. What was the first one again? Charles Woodburn: The question was about civil space -- [ NASA ]. Tom Arseneault: Yes. No, you're right. And that has played out a bit in the press of late. -- our current trajectory is depending only on the contracts that we have in hand. There is potential upside in this debate around NASA NOAA priorities. But you are exactly right, and that is our -- the growth we've seen has really been driven by military and national space. And that backlog I mentioned earlier, was built around that. And so to the extent the NASA NOAA debate settles in the direction we would like and that is to reinstitute some of the capability in like the GeoXO that program, for example, that would be beneficial to us. But our focus has been on ensuring we're well positioned to deliver on that military and national space. And then second question around shipbuilding. And here, let me be very clear. We are not intending to build full ships, and we had gotten ourselves in trouble in the middle of the last decade or so off on a commercial shipbuilding venture. That is not our intent here. We are contributing components and working to earn our way in to be a reliable supplier. We do the Virginia payload module, for example, for the Virginia class submarines today. We're looking to expand on some of that work. But we are just trying to be a good, healthy and reliable supplier in this submarine and shipbuilding industrial base but in the supply chain. I hope that's clear. Charles Woodburn: Would you, Brad, on the sort of debt reduction and debt levels? Bradley Greve: Yes. We're not looking at doing any accelerated reductions in our debt. We're already at 0.9x net debt to EBITDA. So pretty healthy balance sheet. And I do believe that constructive debt can help grow the business. And that's what we've done with the acquisitions of Ball Aerospace. And I'm really comfortable with where we are with the balance sheet, and that gives us really strong optionality, which really is what you want as a business. So we don't have any plans to accelerate any early maturities of debt. Charles Woodburn: Thanks very much, Nick. So I think over to you, Ben, for the last question. Operator: And now we're going to take our last question for today. And it comes from the line of Benjamin Heelan from Bank of America. Benjamin Heelan: Thank you for holding it for me. So the first question I had was on M&A, Charles, can you talk about the M&A pipeline? It feels as though buyback has been somewhat kind of deemphasized the potential to kind of grow that medium term, a lot of focus on CapEx, a lot of focus on self-funded R&D. But how are you seeing M&A within that? And if you could talk about the pipeline, how are you thinking about where you want to deploy capital geographically technology-wise, over the next couple of years? That would be great. And then the second question, I guess one for Tom. If I look at Electronic Solutions, I would have -- I would have assumed it would have grown a little bit better organically in '25 than the 5%. And when I look at the guide, the '26, the 6% to 8%, I kind of feel it would be more towards the top end and high single digit given the program mix that you have there. So first question on that, is there anything in there that is slower that we need to that we need to be thinking about? And then you've had a lot of questions on the budget in the U.S. I mean, obviously, we don't know what is going to happen. But I guess one way to ask it is, if you do see the budget moving to the kind of GBP 1.2 trillion to GBP 1.3 trillion range over the next couple of years, do you think the U.S. exposure that the BAE has will be able to outgrow that budget over the medium term? Is that what we should be thinking about? Charles Woodburn: M&A I'll take first. I mean really, it's much of similar focus areas as before, bolt-on opportunities adding to our Electronic Systems portfolio has been a good hunting ground for us in the past, and we'd continue if we found the right opportunities to look at that. Europe is presenting more opportunities given the growth rates there, although being careful and prudent with our valuations and making sure that we're not paying for opportunities -- we just announced our intention to move forward with an acquisition of a relatively small business in Sweden, which supplies barrels and castings to our Swedish businesses. I think will be a great addition to the portfolio. I've identified before Nordics as being an area that we'd be looking at. And then you'll have seen, and again, very much in the bolt-on category over the last couple of years, we've done some very interesting acquisitions in the drone and counterdrone space, things like Malloy, Callen-Lenz, Kirintec capabilities. And again, we'd look for those kind of opportunities to add to the portfolio. So very much in the bolt-on space and in the kind of areas that we've looked at in the past. ES growth, do you want to say a little bit more on that Tom? Tom Arseneault: Yes. Sure. So ES, as you know, it includes SMS, the Space & Mission Systems business. And as we were discussing a little bit earlier, we saw a slowing of growth in the Space & Missions Systems over what we had originally expected in 2025 driven by some of this uncertainty, some of the delays in the -- again, as the administration settled in and they work through their various priorities, we saw some decisions and awards being delayed through the year. And so that resulted in a little bit of lower ES growth overall at the reporting segment level. As mentioned earlier though, the wins that eventually came here in the latter part of 2025, position us for double-digit growth here in 2026 that backlog translates. And so really good growth that will recover in the coming year. And then the other question around budget growth. And again, here we are with our crystal ball trying to get a sense of whether what that trajectory, what the slope of that budget growth will be. Our strategy all along as we -- as we've said, is we are working to pivot and align our portfolio as accurately as we can with the demand signals of the Department of are where is that budget likely to be spent? It's in the areas we've mentioned munitions the Secretary that maybe came out the other day saying that with the higher budget, they could potentially double the shipbuilding budget for the Navy. Marine Corps and ACV, so an additional award there. So we've done quite a bit to get that alignment right. And so again, we would hope to earn our way into a proportional benefit from that growth when it comes. Thank you for the question, Ben. Charles Woodburn: I think that actually brings us to an end now on the questions. But thank you all for joining. I think I'll see many of you out on the road over the next couple of weeks and beyond. But thanks for joining and -- thanks for joining. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Abel Arbat: Good morning, everyone, and thank you for joining our full year 2025 results presentation. This is Abel Arbat speaking from the Capital Markets team at Naturgy. Next to me sits our Executive Chairman, Mr. Francisco Reynes; the General Counsel to the Board, Manuel Garcia Cobaleda; the Global Head of Financial Markets and Corporate Development, Mr. Steven Fernandez; and the Global Head of Control and Energy Planning, Ms. Rita Ruiz de Alda. Today's presentation is a bit longer than usual as we aim to cover the results, but also to address some of the key themes and opportunities for 2026. As usual, we will start the presentation and then move to the Q&A session at the end of the call. Please, as usual, submit your questions through the webcast platform. And with that, let me hand it over to Steven Fernandez to kick off the presentation. Steven Fernández: Thank you, Abel, and good morning to everyone. Thank you for joining our webcast to discuss the full year numbers for 2025 and the outlook for 2026. So before moving into the detailed review, I would like to highlight some of the key messages for the year. As you have seen in the results presentation, 2025 was a strong year for Naturgy, where we met our guidance, once again, reinforcing our track record of consistent delivery. The successful execution of our 2018 to 2025 transformation has underpinned the value creation of the company, and, we hope, our credibility. Now looking ahead, our 2026 guidance is well supported by business fundamentals, a very proactive risk management, as you will see throughout the presentation. We remain fully committed to the energy transition with gas increasingly recognized as essential. Also, our strengthened balance sheet provides strategic flexibility. And on the capital markets front, the tender offer on our own shares and subsequent placements have also led to a significant increase in the free float and stock liquidity, resulting in the return to major indices like the MSCI. Finally, the governance of the company has been adapted to align with the long-term objectives and ambitions of Naturgy. Now we move over to the consolidated results. Starting with the evolution of the energy markets, as you can see on Page 6 of the presentation, gas benchmark softened during the second half of the year with TTF declining by 23%, the Henry Hub by 6% and JKM by 14% compared to the first half of the previous year -- of 2025, sorry. Brent prices were also lower, both in the second half of the year and year-on-year, averaging $66 per barrel in the second half of 2025 versus $77 in the same period of 2024. Iberian pool prices for its part increased from EUR 62 per megawatt hour in the first half of the year to EUR 69 in the second half of the same year, owing mainly to the usual seasonal patterns with lower renewal generation in the second half of the year. If we move over to Slide 7, in terms of FX, we saw a broad-based depreciation across most of our operating currencies versus the euro. The U.S. dollar weakened meaningfully, particularly in the second half of the year, and it's continued to do so in 2026 so far, with LatAm currencies, including the Brazilian real, Mexican peso and Chilean peso also depreciating. Now we turn over to the full year 2025 results. We have a quick snapshot of some of the key metrics of these figures. EBITDA reached EUR 5.3 billion. This is a record level for the company. Net income reached EUR 2 billion. CapEx in the year amounted to EUR 2.1 billion, in line with the estimates that we had for our strategic plan. And net debt ended the year at EUR 12.3 billion. In this period, we've almost paid around EUR 1.3 billion in taxes and levies. So overall, the company has met its guidance despite a year of challenging environment, and these robust results reinforce our track record of consistent delivery. The year's performance was also supported by continued improvements in operational efficiency and very strong risk management, which have translated into higher profitability and visibility. At the same time, the strong cash flow generation and our capital discipline have allowed us to reduce our net debt levels below our 2025 guidance. So as a result, we end the year 2025 with a strengthened balance sheet that provides the company with strategic flexibility. If we move on to the income statement, EBITDA remained in line with last year, again, as a reminder, at record levels, with net income slightly above, in part due to higher minorities in 2024 for the reversal of TGN provisions in Chile. These earnings, we believe, show strong resilience and are supported by a balanced mix of activities, risks and currencies, as you can see on the right-hand side of the page. If we move over to Slide 10, which is the capital allocation, the cash flow from operations amounted to EUR 4.5 billion, which have allowed us to, one, fund EUR 2.1 billion investments, as I mentioned before, distribute close to EUR 1.7 billion in dividends and execute the tender offer of our own shares, which, for the most part, has already been placed in the market. The investments remain focused on networks and renewables with EUR 1 billion allocated to networks and around EUR 800 million to renewal generation, allowing us to reach 8.1 gigawatts of installed capacity at year-end 2025. So we take all this together, these figures, we think, clearly demonstrate the strength of our cash flow generation and, of course, of our disciplined approach to capital allocation. In fact, if we move over to Slide 11 in terms of cash flow and net debt evolution, you can see that free cash flow after minorities stood at around EUR 2.2 billion, EUR 800 million above 2024. That's 58% above. Net debt for the year closed at EUR 12.3 billion, which is broadly stable versus the figures from last year, 2024, correct, with net debt to EBITDA at around 2.3x. And of course, this includes approximately EUR 1.7 billion in dividends, as previously stated, and the EUR 941 million of shares repurchased net of the subsequent placements that we executed. The average cost of debt stands at 3.9%, in line with 2024 levels with around 66% of the debt locked at fixed rates. And the FFO-to-net debt stands at around 27%, which is comfortably above the threshold required for a BBB rating. During the year, it's worthwhile highlighting that we completed around EUR 11 billion of financing operations, reinforcing our liquidity and extending maturities. So all in all, our balance sheet remains solid and again, provides the company with strategic flexibility. If we think about shareholder remuneration on Slide 12, for fiscal year '25, we are proposing a total dividend of EUR 1.77 per share, representing an almost 11% year-on-year growth and above the DPS floor of EUR 1.7 per share committed for the year. This includes two interim dividends of EUR 0.60 per share each and a final dividend, which we are announcing today of EUR 0.57 per share, which will be payable the next 31st of March, subject to the AGM approval. The final dividend per share has been increased to account for treasury shares as these shares do not receive dividends and its corresponding amount is redistributed among the outstanding shares. So all in all, when we think about 2025, we've delivered on our company's guidance across basically all metrics. EBITDA reached EUR 5.3 billion, slightly above our guidance. Net income was above EUR 2 billion, also above the EUR 2 billion guidance. The net debt closed at EUR 12.3 billion, which is below our guidance of around EUR 13 billion, and the DPS amounted to EUR 1.77 per share, which is above our minimum commitment of EUR 1.7 per share. So all in all, this consistent track record of delivery once again reflects the company's commitment and delivery. So now I'll hand over to Rita, who will take you through the operational business performance in each of our businesses in greater detail. Rita de Alda Iparraguirre: Thanks, Steven, and good morning, everyone. Starting with Networks on Page 15. Networks reported a total EBITDA of EUR 2,735 million in 2025, representing a 5% decline when compared to 2024. This decrease was primarily driven by a one-off positive impact in Chile last year and the depreciation of several Latin American currencies, most notably the Argentine peso, but also Brazilian and Mexican currencies. In Spain, gas networks experienced remuneration adjustments foreseen in the current regulatory framework as well as increased demand in the residential segment due to temperature effects. In electricity, EBITDA increased driven by a higher regulated asset base and increased contribution rates. On December 23, the new regulatory framework for the 2026-2031 was finally approved, introducing an OpEx remuneration model with a regulatory rate of 6.58% compared to the 5.58% in the previous period. In Mexico, results mainly impacted by negative foreign exchange effects compensated by tariff updates in July. And in Brazil, results were also affected by currency depreciation. In Argentina, a substantial tariff increase was implemented in 2024 and 2025 to offset inflation. In fact, the new regulatory review approved for 2025-2030 period provides visibility and also includes mostly inflation adjustment that allowed to compensate for FX devaluation during the year. In Chile, performance declined when compared to last year due to an extraordinary effect in 2024 related to TGN conflict, which is now officially closed. In Panama, results were negatively affected by lower demand due to temperature effects and increased operating expenses from higher maintenance activity to improve quality standards. In summary, comparison is affected by an extraordinary impact in 2024, currency depreciation in LatAm, and I will also highlight the publication of the distribution model for electricity distribution in Spain. Now turning to Energy Management on Page 16. EBITDA reached EUR 815 million, which shows an increase versus 2024 of an 8%, mainly due to higher margins on hedge sales. The group benefited from effective hedging in a context of high volatility and uncertainty. It is important to highlight that we have reached a price agreement with our gas suppliers, Sonatrach, for the period 2025, 2027, which strengthens the good relationship between both parties and provide us with visibility in the context of energy price volatility. Finally, last October, Naturgy signed a purchase agreement of 1 million tonnes of LNG with a U.S. gas supplier starting in 2030. This agreement strengthens the group's positioning and its commitment to a diversified LNG portfolio as a key enabler of the energy transition. Overall, the period benefited from effective hedging and diversified procurement portfolio. And furthermore, the group is building new capabilities that reduce risk and enhance optionality. Continuing with Thermal Generation, EBITDA reached EUR 837 million in 2025, 39% over 2024 levels due to higher activity in Spain, partially offset by lower revenues in Latin America. In Spain, the increase in results was supported by higher demand for ancillary services from our combined cycle fleet. Naturgy holds the largest CCGT fleet in Spain with 7.4 gigawatt acting as a backbone to energy security of supply. Furthermore, the group obtained a favorable court ruling confirming the reimbursement of the hydrocarbons tax related to the 2014-2018 period. In Mexico, production and margins remained stable. However, revenues from availability markets and prices declined, mainly due to an exceptionally high revenue base in 2024. Overall, CCGTs remain essential for ensuring system stability with an extraordinary contribution in 2025 following the positive ruling. Let's turn now to Renewable Generation on Page 18. Renewable generation reached an EBITDA of EUR 586 million during the period, slightly above 2024 levels. In Spain, renewable production was 7% lower when compared to 2024, mainly due to lower wind and hydro generation given the exceptionally high levels of hydro production in 2024. This negative impact was partially offset by the commissioning of new installed capacity. In the United States, results are higher when compared to 2024, mainly due to higher production and higher energy prices as the completion of the construction of its second solar plant in Texas. In LatAm, activity continues with impacts due to currency devaluation in both Mexico and Brazil. And finally, in Australia, performance was supported by increased production, more than 100%, driven by the additional installed capacity implemented during the final months of 2024. Investment includes 1.2 gigawatt of power under construction that will come into operation in 2026. All in all, higher results in Renewable Generation due to commissioning of new capacity that reinforces vertical integration and selective growth. Last, moving to Supply. EBITDA has been EUR 535 million, 17% lower when compared to 2024. It is important to remember that in 2024, we had an extraordinary impact due to the positive ruling in favor of Naturgy regarding tariff subsidies. Gas margins have shown resiliency, but negatively affected by regulated tariffs with legal process for recovery underway. In terms of electricity, the group has expanded its client portfolio in a higher competitive environment. However, it was impacted negatively by increasing costs. Finally, our AI-enabled digital commercial platform drives efficiency and improves client service through a significant simplification of product and processes. Overall, stable volumes and margins pressure partially offset by integrated position and operational efficiency. I will now hand it over to our Executive Chairman. Thank you. Francisco Reynés Massanet: Hello. Good morning to everyone. Thank you for joining. And thank you, Steven and Rita, for this wrap-up on 2025 results. I wanted just to spend a few minutes talking about the overview of the transformation we have conducted since 2018, which demonstrates that the company has been focused, as you will see later, in delivering or even exceeding our commitments that were placed in two strategic plans that were already ended. The six key messages I wanted to share with you are about our decision in 2018 to get strongly involved in the energy transition. Our important target to move Naturgy into a more reliable, efficient and derisked company. All this transformation being done under the umbrella or clear financial discipline. As a conclusion of these targets, achieving a much stronger balance sheet, which demonstrates that our commitments are firmly achieved by the hard work of all the team. Finally, as you will see, the conclusions of all this work is that we have improved in the main metrics as return on capital employed, return on equity and total shareholders return. In Page 22, you have it in your hands, and I will not go in big details, but the most important thing is that back to 2018, we have decided to change the face of our portfolio generation, betting on more renewable generation, maintaining the flexibility that our gas turbines are providing to the system and moving ahead in a transformation that has brought us to a very important share of the non-emission technologies. On Page 23, one of our key mantras during the last 7 years has been around making the company more efficient. We really believe that a company will survive as more efficient it is. And the efficiency is shown in this page as an important change from a 36% OpEx over margin to a level of 25% of it. It's important that this work has been done streamlining by all the different business units and in particular, as a demonstration of three pillars that has been driven this efficiency to an end is a portfolio simplification that started back in 2019, OneGrid as a philosophy to extend the best practices across all the business units in the company and leveraging on genAI, in particular, on the commercial field to improve not only our cost, but also our client service. On the other side, and with the aim to make the company more reliable and less volatile, we have been focused every year to secure the level of pricing by hedging our LNG portfolio, we did change it from 30% -- around 30% of volume hedged at the beginning of the period to 100% volume hedged in the last year we closed. In parallel, as a business decision, we have decided that a way to self-hedge our fixed price sales contracts of electricity with clients could only be supported by our inframarginal base of electricity generation. In this period, we have been generating around EUR 40 billion of cash flow -- EUR 41 billion of cash flow. And the solid use of these sources has been divided between three major destinies. One is investment. The second one is shareholders' remuneration and the third one is back to society through taxes and levies. As you can see, this equilibrium has been maintained, in particular, to create a much more solid company for the future with a high degree of investments. The conclusion of this work is that we have been able to reduce our leverage, we're reinforcing the balance sheet and as a result, it provides us a strategic flexibility for the future. The level of rating has been able to be maintained as a BBB from Standard & Poor's. And today's liquidity is already around EUR 10 billion. If you look backwards to 2018 and 2021, there have been two strategic plans in place that were shared with the market in June 2018 and at the end of 2021. Each of it had four important indicators as a target. As you can see in the slide, in all these different targets, the company and the team has been able to meet or exceed the expectations provided to the market with a consistent delivery through the years. In conclusion, the company has created value for its shareholders. If we look at from the ratio point of view, we have clearly increased our efficiency in ratios like return on investment capital and return on equity. As you can see, we were at the time, clearly below our peers. And today, in comparable terms, our metrics are clearly above peers' average. If we will go back to the market and despite of all the different turmoils that may have around the equity markets, the total shareholders return for our shareholders could be clearly above 10%. This is what we have done in this period of work, 2018 and 2025. The company has not stopped. This has been the case since 183 years of existence. And now I think that we want to tackle the most important issues that we have for the year 2026, which hopefully, Steven will clarify to all of you. Steven? Steven Fernández: So thank you, Paco, and I'm super happy to be able to discuss this part of the presentation with you because when we look at some of the questions that are coming in as we discuss this presentation, we think we address a lot of those in this particular area. So we focused on some of the key themes for 2026 that we know the market is looking at. And I would like to start off perhaps with the first one, in no particular order, but on Page 29, a word about the rising value of flexible generation. So we are seeing a structural shift in the Spanish system where CCGTs are playing an increasingly important role. It's worth highlighting that just a few years back, having CCGTs in your fleet was seen as something potentially negative. We kept on defending their relevance, and we are seeing that play out today. So we do see an increase in the value of flexible generation. In Spain, it's worthwhile highlighting that our thermal installed capacity of 7.4 gigas of combined cycles and 600 megas of nuclear, and the CCGTs located in key areas provide grid support and operational flexibility, making the company a best-in-class operator. Potential capacity payments are only assumed from 2027, so not included in the 2026 guidance. In LatAm, as you know, we also have a relevant fleet, specifically in Mexico, where we are engaging in discussions for the extensions of the PPAs. However, we do expect lower margins and lower availability in the excess capacity market for those combined cycles. So all in all, when it comes to the rising value of flexible generation, we see that the fleet's reliability, our flexibility and the fleet's efficiency are one of the key elements of the company's competitive advantages in this business. Another area that I would like to touch on has to do with supply. So we are getting a lot of questions on supply, and we'd be happy to answer most of them. But before we go on to them, hopefully, this slide clears some of the elements. So we continue to focus on competitiveness and operational excellence. So some of the key drivers for 2026 include a stable market share and volumes to preserve margins. So we're not engaging in a battle here to gain market share at all. We rather preserve margins. And this is in the context of a highly competitive environment. We have a well-balanced and vertically integrated position, which is also something worth highlighting. And we are experiencing and focusing clearly on excellence in client service and efficiency, which is supported by the new digital commercial platform the company launched, what we commonly know as NewCo. Some key elements about this. So when we think about NewCo and the impact of this new digital commercial platform, we've seen a simplification and reduction of the number of energy plans offered to our clients from 634 previously to about half of that, 342 in 2025. So there's simplification easier to understand by our clients. We also have improved significantly the first call resolution from 80% in 2024 to 94% in 2025. And this has resulted in an increase in the customer satisfaction levels from 9.4% in '24 to around 9.6% in 2025. We also have more margin visibility into 2026 based on the high percentage of already contracted sales. So for example, if you look at electricity, around 65% and 75% of -- is contracted for industrial and retail segments, respectively. And if you look at it in terms of gas, the numbers are 75% and 80% contracted for industrial and retail segments, respectively. We also have a limited exposure to lower margin regulated tariffs in the sales mix. As you can see, overall, we can say that margin pressure during the year should be contained by our integrated position and high percentage of contracted sales for 2026 and together with what we think are the right ingredients for client retention and attraction. If we move over to another interesting part of the business, which is energy management, we will continue to reduce our gas risk profile. I think the group has been very vocal about this, and we've been able to show very clear successful results. All this while maintaining the security of supply and optionality. So some of the key drivers for this area include an agreement with Sonatrach on the price until 2027, which increases our commercial visibility. And obviously, this is subject to the customary commercial -- the customary authorizations. Moreover, our total gas exposure for 2026 is negligible, thanks primarily to our hedging efforts with risk significantly reduced through 2028. This is made both with U.S. volume hedging and residual positions offset by short sales. In addition, the hedge volumes are closed above current market levels, preserving the company's potential. Our long-term procurement strategy is also focused in prioritizing security of supply and disciplined risk management. So we have made progress on the following areas. We have executed a long-term U.S.-sourced LNG gas procurement agreement with Venture Global starting in 2030, which is public. And we have up to two 2 new bcms under long-term SPAs with additional procurement opportunities under evaluation. So we are actively engaging the market. We also have a proactive management of the upcoming EU ban on the Russian gas imports effective 2027. So all in all, the company keeps reducing the gas risk profile, increasing the visibility while obviously maintaining the focus on security of supply and our optionality. In terms of networks, in Spain, in electricity distribution, the new regulatory framework increases the financial remuneration, as you know, to 6.58%, although with a strong adjustment to OpEx remuneration. Our investment plan in this strategic plan, which I remind you is around between EUR 300 million and EUR 350 million a year, is subject to the approval of the government network planning, which we're still awaiting. So we expect in 2026 to have a one-off recognition of remuneration also from previous years. In gas distribution, we should have the new regulatory framework from October 2026, and that covers a time span of '27 to '32. We expect the current parametric formula to be maintained with some adjustments to remuneration parameters. And we should also see an acceleration in biomethane production and distribution. So Nedgia in that sense, distributed last year 170 gigawatt hours of biomethane, which represents a 53% increase versus 2024. Finally, in gas distribution, we also expect a gradual rollout of smart meters. So in essence, when you look at both areas, both electricity and gas in networks in Spain, we believe that visibility has improved, and we expect stability in gas. If we move over then to renewables, it's worth highlighting that our development remains disciplined and return-focused with 1.2 gigas under construction that will come into operation throughout the year 2026. In Spain, in particular, we'll continue benefiting from our low-risk and flexible portfolio, which is focusing on repowering and battery hybridization. Execution will focus on high-return projects, as you can imagine, and the opportunity to capture value from unique assets, suitable specifically for data centers and pumped-storage solutions. On top of that, 640 megawatts of additional capacity and 115 megawatts of repowering will be fully operational by Q4 '26. In Australia, we will have some additional capacity, around 360 megas, with supply contracts supported via long-term PPAs. And lastly, in the United States, we will see additional capacity to the tune of around 125 megas coming operational in 2026, with supply contracts supported via long-term PPAs of between 10 to 15 years. In addition, in the U.S., we will see asset rotation, and we will seek asset rotation opportunities to projects under development. So overall, I think renewable growth remains focused on profitable and selective investments. This goes to our mantra of value over size. And this will continue to contribute, of course, to our vertically integrated position in Spain. Moving on to biomethane. Biomethane, we believe, in Spain presents significant long-term potential of around 160 terawatt hours because it's an efficient solution to decarbonize the transport, the residential, the industrial sectors as gas networks are already ready to distribute the gas, the biomethane with no modifications. In this sense, Spain's biomethane plants have doubled from 12 to 24 in 2025. Nedgia or the gas distribution business, biomethane distribution has also seen a material increase, as I just previously mentioned. And the forthcoming Spanish policy package should provide regulatory tailwinds from 2026, accelerating biomethane production and the use for decarbonization. So we continue progressing in the development of our portfolio with more than 75 projects, that's equivalent to more than 5.5 terawatt hours despite the investment plan being delayed due to slow administrative processes. So it's worth highlighting that we're admittedly not going as fast as we'd like. And this is shown by the 20 environmental authorizations in Spain versus 140 under review, of which 40 belong to Naturgy. So we continue to become the leading energy player in biomethane in Spain. We continue to push for the right regulation, and we are ready to accelerate our CapEx plan once visibility on this front improves. I'd also like to take this opportunity to discuss data centers a little bit, right? And when we talk about data centers, we work and we deliver results as opposed to deliver expectations with no results. So let's talk about the data center opportunity here. Spain is one of the fastest-growing data center markets. It is supported by competitive costs and a strategic geographic position, which make the country an attractive hub for international data traffic. We believe the company is very well positioned to benefit from this. So we combine 8 gigawatts of thermal capacity with 5.7 gigas of renewables, which, together with our multi-energy focus provide us with the flexibility, and this is very important, to adapt to the clients' energy needs. So in addition, we also offer integrated solutions, combining grid access, energy and network resilience and redundancy. So in this context, Naturgy's business model is evaluating opportunities to monetize suitable power land and provide long-term PPAs and energy services, while the investor retains control of the data center assets. That is our model. We hold close to 3 gigas of locations with suitable access or potential for obtaining access to power consumption, of which around 500 megas in renewables, 400 megawatts in combined cycles and a conservative 2 gigawatt pipeline. So in conclusion, we see this as an opportunity to unlock value with very limited capital deployment. We are working in this area, and we are optimistic in our ability to deliver. We recognize that the process won't happen overnight, that capturing value from DC expansion may take a few years, but we also recognize the unique position the company is in to capture some of this growth. Finally, if I move over to LatAm. This year, we'll see relevant tariff reviews across businesses and the preparation for concession extensions. In Panama, the main drivers will be the 2026 to 2030 tariff review, which should include both inflation and higher losses recognition. And we are also seeing higher demand and the continuation of the ongoing quality upgrade plan. In Mexico, the '26-'30 tariff review will also reflect inflation recognition. And additionally, we expect industrial demand to recover from '25 levels. In Chile, the '26-'29 tariff review will come with full asset value recognition. And in supply, we're seeing a slight margin contraction due to the expected energy scenario. In Brazil, the focus is on the preparation for the concession retender in 2027. So we have a lot of questions about this. The reality is that the government has the ability to retender the concession. We'll look at the tender conditions when and if they are published, and we'll make the decision on whether or not to go ahead. But suffice it to say, the company is uniquely positioned to continue operating these assets. In Argentina, the gas review for '25-'29 was approved in April. And while the electricity tariff review for '26-'30 was approved in February 2026. So both reviews, very importantly, incorporated the inflation recognition. So in summary, we do expect ordinary tariff reviews across businesses in LatAm with demand continued to grow and with the company ramping up and getting ready for the retender of the concession in Rio. And with that, I hand over to our Chairman for the last remarks. Francisco Reynés Massanet: Thank you, Steven. And again, thank you for listening to me. Two important messages for 2026. If you remember, one of the key topics of the strategic plan 2025, '27 was to be a truly listed company again. And that was translated in one word, increasing liquidity. Increasing liquidity has been the aim of what it was behind all our plans during this year, and we have been able to achieve our targets even 2 years earlier than the finish of the strategic plan '27. In terms of liquidity and after the BTO that we launched in June 2025 and after the placement of the shareholder GIP of 7% of its stake by December '25, this is the new configuration of our shareholding base. It's important to remark that now the free float is above 23%. And one demonstration that the company is becoming more liquid is that if you compare the ADTV of shares in January '25 with January '26, the volume of shares traded has been multiplied by 5x. On the governance side, I want to highlight first a very important message. Naturgy's Board is a solid and peaceful room. All the plans that we have submitted to the market for your consideration has been approved by unanimity and all the changes that were going to happen have been also approved by unanimity of its members. Therefore, for many things that has been written, we have the privilege to have a very committed and devoted Board that works for the benefit of all shareholders, large and/or small. What we have done is to adapt the new equilibrium of shareholders to the new circumstances of the bylaws of the company, including a respect of the proportional representation for the stakes of every shareholder. In this regard and after the placement of GIP, the Board unanimously have decided to change one board seat from GIP to IFM. These numbers, which are not only pure mathematics, would also like to reflect the long-term commitment of the shareholders in the company. If we go back -- if we go ahead on 2026 forecast, we want to share with you how we see this year, which has started very bumpy. And as we see a scenario in both energy prices and exchange rates, very challenging. We see a market that is again deteriorating a little versus the last half of 2025. And in particular, in what it reflects to the price of electricity, we are seeing more depressed electricity prices in the first half of '26 compared to last year. When we go to the exchange rates, there are also some visions based on the forwards of last 11th of February that we are seeing a certain stable evolution in Chile, Brazil, probably a little decline in the U.S. dollar and a continuous, now less, decline on the Argentinian peso. With all into account, what we can provide to you today is a vision of our figures in 2026 which, as you will see, may think less affected than this challenging scenario, in particular, because of the proactive hedging policy of our volatile business and our proactive regulatory management of our infra business. We can tell today that we see EBITDA for this year at a level of 2025. Net income slightly below than 2025, but clearly above EUR 1,800 million with an investment around the same level than last year. That will provide us room enough to continue delivering the messages of our commitments and in particular, a dividend that was established as a floor for this year '26 on EUR 1.8 per share. As you know, we regularly pay our dividends in three steps: one after the first half results, the second after the third quarter results and the third at the time of the AGM. If you allow me to close this first introduction after going to your Q&A session, just to remember which are our key fundamental messages for the investment community. One is about 2025 results, strong as committed. Second, about the transformation 2018-'25, a clear transformation from different points of view, operationally, financially and shareholder base. Third, on the guidance 2026, supported by our aim to maintain risk management in our core. Firm commitment to energy transition by investing with financial discipline. A balance sheet that give us this strategic flexibility. Increased free float as part of our key fundamentals. And governance adapted and aligned with long-term objectives and ambitions. Thank you very much for your time. I give the floor to Abel, who will manage the part of the Q&A session. Abel Arbat: Thank you. Thank you, Mr. Chairman, and thank you, everyone, for submitting your questions. In the meantime, we have the pleasure of having some of our business heads joining the discussion and helping us to address the more spicy questions with Pedro Larrea from Networks, Carlos Vecino from the Supply business, Jorge Barredo from Renewables Activity and Jon Ganuza from Energy Management. But before we get into the specific business questions, let's address the more -- the questions more related to the group and business strategy. So starting with guidance 2026. There's a question around underlying assumptions for guidance 2026 and how it compares to the former strategic plan and whether we are comfortable -- still comfortable with the 2027 targets and what offsets the more challenging scenario? Rita de Alda Iparraguirre: Thank you, Abel. So I think we've mentioned during the presentation that we expect increased investment in Networks and also tariff reviews in LatAm, that will bring higher results in the following months. Also, we've mentioned that we have a 1.2 gigawatt under construction of new renewable capacity that will also enter into operation during 2026 and 2027. Third, we still see the thermal generation will remain strong in the following months. And also, I think it is also mentioned during the presentation that there is one positive retroactive impact in electricity distribution in Spain expected in 2026. So I think that all these impacts will compensate for the margin decline expected under energy scenario. Abel Arbat: Thank you, Rita. Now questions on net debt. Some analysts recognize that net debt came better than expected in 2025. And wonder if we can elaborate on the drivers of the increase in net debt to 2026 of EUR 13.5 billion. Rita de Alda Iparraguirre: Okay. So we are expecting to pay some liabilities in 2026 regarding supply contract agreements and also some payments to the CNMC, for example, the one regarding electricity price caps from 2023 that we provisioned, but we have to pay. So therefore, we expect some debt increase in 2026, in line with the guidance. However, operational cash flow will remain solid in 2026. Abel Arbat: Thank you, Rita. In line with the lower-than-expected net debt delivery in 2025, there are some questions around balance sheet capacity. And recognizing that balance sheet capacity, where do we see organic growth opportunities? And also, are we contemplating any inorganic opportunities? And what would be the criteria of these potential inorganic opportunities? Steven Fernández: So thank you, Abel. We recognize that we have balance sheet headroom and flexibility. I think to answer the question, the first thing that we need to remember is that we have a very clear commitment to a BBB rating. So that is fundamental as a starting point of any discussion. To keep that rating right now, we have to meet a number of metrics to focus on one in particular, FFO to net debt has to be above 18%. We're running right now at a level of around 27%. So you can do the math on how much additional leverage capacity the group has. It doesn't mean that we're going to be using it. So we don't want to stress the balance sheet, but it means that we have the ability to deploy or to put our balance sheet to work. When we think about investments, you also have to think about our mantra, which is very clear as well, which is value over size. And we've been following that since 2018. We will continue following that. So by no means are we going to be jumping into the market doing crazy things. We're very rational and very disciplined as a company. So when we divide between inorganic and organic, organic, I think the company has provided you with guidance for year 2026 of around EUR 2.1 billion. In terms of inorganic growth, as you can imagine, we're constantly monitoring the market for attractive opportunities that make sense for the company, that create value for our shareholders, that do not stress us. We're looking for opportunities that are not dilutive, that are accretive from the beginning. We're looking at opportunities where we can actually export our know-how. I think you've seen in the presentation, the track record the company has from '18 to '25. We've been able to develop best-in-class expertise in certain areas. And these are areas that we would look to be able to leverage on when thinking about acquisitions. Do we have anything on the table today? The answer is no. But we do have a very good team that spends a lot of their time looking at opportunities. And when and if one of those fits what we're looking for, then we'll bring it to the Board and decide whether or not we want to go ahead with them. Francisco Reynés Massanet: If you allow me, Steven, just to remark on a very important fact that reinforces Steven's words. Since 2018 until now, that has been more than 7 years, there have been a lot of rumors about different potential projects that the company may get involved. And as you have seen, we haven't lost the financial discipline and our commitment to firmly stay on the words that Steven has said, and I would like to remark, value over size. This is going to continue. And this is the main reason why we are not obsessed about inorganic growth. We are obsessed about value creation. Abel Arbat: Thank you, Steven. And Mr. Chairman. There is a question on the upper end of a net debt-to-EBITDA range, but I think that Steven already answered that by stating our commitment -- our firm commitment to a BBB rating. And as a result, there's not an upper end of net debt to EBITDA, but rather a commitment to a BBB rating. We're more guided around the FFO-to-net debt criteria. There's another question around cash flow and in particular, on working capital. What are the key moving parts of the change in working capital during 2025? Rita de Alda Iparraguirre: Okay. So the evolution of working capital is significantly influenced by seasonal demand patterns, fluctuations in energy prices and also with the negotiation of gas contracts with our suppliers. And this has been the case in 2025. Abel Arbat: Thank you, Rita. There is also a lot of interest around the data center theme. I think that Steven covered very well the topic and our positioning on the matter. But I guess it's worth clarifying a few of the questions. So let's go with them. Are we contemplating any kind of partnerships, and how imminent a deal could be? Also, a deal on power land could be expected already this year. And also, what exactly is the self-consumption capacity for data centers? Steven Fernández: So partnerships, we don't envisage -- our model for development in data centers or to capture the opportunity presented by data centers does not envision any partnership per se. In other words, we're not going to be getting involved in the construction of the data center. We're not going to be getting involved in the running of the data center. We're going to be getting involved in the procurement of energy. We're going to be getting involved in the procurement of permits, and we're going to be getting involved in the selling of electricity and selling of the power land. So that's our business model, right? We do think we have a unique position to capture part of this growth because of the locations where we operate, which are, by the way, generating quite a bit of interest from a number of parties. As to whether or not we should expect any deal this year, all we can say is that the company is working to make this potential a reality. And when we have any news to share, we'll obviously be happy to do so with the market, but we're not going to anticipate things ahead of time. And I think the other question had to do with self-consumption. There's two different alternatives that you can do as a data center, connect directly to the network or do self-consumption, which has its own advantages. The majority of developers are looking for self-consumption. So that's one of the -- that's the area that we're focusing on. Abel Arbat: Thank you, Steven. So we can now move on to the specific questions around the various business units. So let's start with electricity distribution in Spain. And the first question relates to how the new regulatory framework for electricity distribution in Spain affects us in terms of our investment plans or strategic ambition? Rita de Alda Iparraguirre: Okay. Thank you. So as you all know, the CNMC has already published a definitive resolution for the new regulatory framework covering the 2026-2031 period. The published proposal introduces a shift to an OpEx-based remuneration model with an increase in the contribution rate to 6.58%. This new model finally defines investment cap in 0.13% of gross domestic products. The group considers that this new regulatory model creates value and provides the distributor with a solid growth path for the coming years that is consistent with our strategic plan estimates. Abel Arbat: Thank you, Rita. Another question also related to the new framework, and it relates to our views around the new OpEx standard and the new incentive mechanism, if we could share our views on the new regulatory changes. Rita de Alda Iparraguirre: So we think that the new model fails a little bit in order to incentive -- to be more efficient in the future. That's our perspective. Abel Arbat: Okay. Also, during the presentation, we mentioned the retroactive one-off recognition from previous years. Can we clarify the concept behind this recognition, this one-off recognition? Rita de Alda Iparraguirre: So this is mainly contribution related to maintenance activity from previous periods in the past that depends on court rulings that are currently being published. Abel Arbat: Okay. Thank you very much, Rita. Let's now move on to questions around our gas distribution activities in Spain. And there are a number of questions around our expectation for the new regulatory framework in gas distribution for the period 2027 to 2032. Rita de Alda Iparraguirre: Okay. So regarding timing, we are expecting a first draft of the remuneration methodology should be ready probably the next month in 2026 as the final distribution model should be expected by the end of the year. From our point of view, continuing with the parametric model will be a desirable option to provide both stability and predictability to the sector. I want to highlight that the current model has proven to be efficient. It has provided system stability and the remuneration has fallen significantly in the recent years as a result of the drop in demand. However, parameters should be -- should reflect exceptional inflation of the current period. Furthermore, we foresee this new regulation as the opportunity to incentive renewable gases, smart metering and the decarbonization of the gas networks. Pedro Larrea: Maybe just highlight that we have been arguing and I think everybody is now acknowledging that gas networks are a strategic asset for energy in the country. Gas networks actually distribute 1.5x the amount of energy that electricity networks do, and they are around 6x more efficient than electricity networks. So -- and by the way, gas demand has been increasing consistently for the past 20 years. So everybody, I think, today is acknowledging the long-term strategic value of gas networks in Spain. Abel Arbat: Thank you very much, Pedro. So moving now on to networks in Latin America. The first question is around the retender process for the Rio de Janeiro concession, and if we can share any updates or views on the matter. Unknown Executive: Well, a public process for extending concessions is the base case. In this case, there was an opportunity, at least the [ regulator threw it ] like this, that it could have been more efficient to make a renewal with the current concession holder, but just the politics timing in the Rio de Janeiro state haven't made this possible. So we are now back to the base case of renewing within an ordinary process. Pedro Larrea: And maybe two comments on my side. One is we have been in the past 2 years, having a very candid and open relation both with government and regulator, and we have been successful in unlocking a number of discussions we have been having like tariff reviews, asset values, et cetera. And we plan to continue to do so. So we will continue to be openly having open conversations with both regulator and government. Second is that there is no questioning of our management of the concession of our management of the assets. So there's no negative valuation of our performance as a concession holder so far. And we will continue again to have this open relationship with the government and see what comes out of the retendering. And there is a number of regulatory discussions that are open and that we are having just as normal course of business. Abel Arbat: Thank you very much, Pedro. One last question on regulatory networks in LatAm, and it mainly relates to the key drivers coming into 2026 and 2027. Rita de Alda Iparraguirre: Okay. So regulatory management continues to be a key priority in Latin America as we aim to obtain tariff reviews in most of our distributors in LatAm and updates which compensate for ongoing inflation and FX depreciation as well as tariff updates that reflect investment plans in those geographies. I think it's important to highlight that in the case of Argentina gas, the new tariff review published this year includes monthly adjustments for inflation, which is a very important milestone regarding high inflation rates in this country. Abel Arbat: Thank you, Rita. And a final question on not networks, but on Latin America. And it's related to the reclassification of our Chilean renewable assets that are now reclassified as held for sale. So why is that a decision? Is there any read-across for other renewable assets in Latin America? Steven Fernández: So thank you, Abel. No, there is absolutely no read-across for any assets in LatAm or anywhere else. The reason why those assets are held for sale quite simply is because they did not meet or are not meeting our return requirements. Abel Arbat: So let's now move on to the energy management questions. So starting with the more generic questions. So what is the -- our views on the gas outlook and the expected performance of the energy management division in 2026 and 2027 compared to the strategic plan? Rita de Alda Iparraguirre: Okay. So regarding energy scenario forecast for the next months indicate a moderate gas price level environment in Europe, mainly driven by increasing exports from the U.S. However, we are nearly fully hedged this year, and we have margin visibility throughout the next months. Regarding contracted volumes, we anticipated already in the strategic plan that we will have lower contracted volumes in 2026 due to contract expirations. And these effects will be mitigated through our diversified gas portfolio and our ability to access to market volumes. Overall, while we foresee a more challenging environment in the next few years, due to rising global LNG exports that we actually anticipated this in our strategic plan, we rely on LNG as a key enabler of the energy transition in the future. That's why we signed a new contract with U.S. gas suppliers starting in 2030. Abel Arbat: Thank you, Rita. Tons of questions around the levels of hedging and exposure and sensitivity to moves in the TTF, Brent and Henry Hub. I think that throughout the presentation, we clarified and guided towards the very limited sensitivity and the high levels of hedging. But if there are any comments that we can add, please? Jon Ganuza de Arroyabe: No, I mean, basically -- thank you, Abel. If we are hedged for 2026, that means that we are -- we have no impact or negligible impact associated to any variation on the TTF or Henry Hub or even power prices. So I think that for 2026, we are fully hedged. And for 2027, we are mostly hedged and the same could also be said for 2028. Abel Arbat: Thank you very much, Jon. Also, a question on the Sonatrach price review. And if we can comment on the main elements of that review and why it's helpful to the group. Jon Ganuza de Arroyabe: Of course, we cannot disclose any of the commercial details, but I think that the most important thing is that it allows us to have a 3-year outlook of how the prices are going to evolve. That helps on our supply business, it also helps in our overall cash position. But especially, I think that it strengthens the relationship, the long-term relationship partnership that we have with Sonatrach, and it reflects that we can work even in a challenging condition or environment like the one that we've seen in the past few months and the past few years. Abel Arbat: Thank you very much, Jon. A few questions as well on the European ban to importing gas from Russia. What is the current status? And what are the sort of alternatives that we are considering in line of the current situation? Jon Ganuza de Arroyabe: So I think that we always talk about the ban, but actually, there are two overlapping measures that have different scope and different time line. On the one hand, we have a sanction that is a full ban on Russian LNG. So it not only covers that we could not import LNG to Europe, but we could not do anything with the LNG. But the time line of that sanction is until July 31 of this year. And if it doesn't review, it will die off. And then there is the second measure that is the ruling that was approved by the European Parliament in February. And the scope there is more limited. The scope of that ruling, it limits itself to the import of Russian LNG to Europe, but it would allow eventually diversions to other markets or other countries. So I think that the first thing that we have to look out is whether the sanction will be renewed on July 31 or not, and that would mean a different scenario for a company like ours. Abel Arbat: And finally, on this business unit also a few questions related to acknowledging that we signed a new contract with Venture, are we looking for other alternatives to replace or to top up our current gas procurement volumes? Jon Ganuza de Arroyabe: So I think the security of supply in energy is a bit like the saying that you have in English that you fix the roof only when it rains, and we don't like to work that way. We think that we have to work in advance. And that's why we are always looking to different procurement solutions that would increase the security of supply and would increase our diversification. We are having talks with the different parties. And if we find something that makes sense and is sensible for both parties and it strengthens our supply procurement portfolio, of course, we will move ahead with that. Abel Arbat: Thank you, Jon. So now moving on to the thermal generation, particularly a number of questions in Spain. So what's our view on the outlook for 2026 and beyond on the role of CCGTs and its contribution by ancillary services? How sustainable do we think this is? Rita de Alda Iparraguirre: Okay. So as we mentioned during the presentation, we don't expect capacity payments in 2026. We expect them to be published for 2027. And what we see is that CCGTs will continue to play a key role in this -- in the current environment, and we don't expect this to change in the near and the medium term. This translates into higher demand and production in ancillary services market that guarantee the system stability and the security of supply. We are nevertheless taking a more conservative assumption in CCGT's production for 2026. And also, it's important to understand that probably the launch of new voltage control markets, the entry of new batteries or the development of new infrastructure will obviously influence some restriction in the future, but we insist that CCGTs will remain essential as a backup technology. Abel Arbat: Thank you, Rita. Moving on to a few questions on the renewable businesses. And the first one relates to renewables in Spain. We continue to invest in renewables in Spain. There is around EUR 430 million of growth CapEx in 2025. Do we still find returns are reasonable? What kind of -- what's our focus in Spain and our competitive advantage? Rita de Alda Iparraguirre: Okay. So regarding renewables in Spain, we are conscious that they face significant challenge, for example, delays in permitting and also limited profitability due to negative prices. However, for this reason, we are focusing our investment during the next months in repos of existing wind plants and also in batteries and finishing the projects that we have under construction. As we always defend, we seek a multi-technology and balanced position that allows us to meet the demand of our customers. And we are, therefore, committed to renewals, but always under selective growth that guarantees profitability. Abel Arbat: Thank you, Rita. There is also a related question around our views about curtailments and how we see the curtailments evolving this year and in the current dynamics, I guess. Rita de Alda Iparraguirre: Okay. So curtailments of renewable energy have increased significantly in the recent months. We expect them to decrease with the entry of new storage capacity in the next months and years. Abel Arbat: Thank you, Rita. There is a question about the amount of hydro, nuclear and renewable terawatts in Spain that we have hedged already. I think I guess it's worth highlighting our positioning between how we manage our power generation and supply. Rita de Alda Iparraguirre: So I think we have several times mentioned that we have an integrated position. So we sell at a fixed price, the energy that we produce. So in this sense, we have a hedged position between production and sales. Abel Arbat: Thank you, Rita. So we can now move on. There's a question around biomethane. And so what's our latest views on the current state of administrative authorizations and the potential of this activity? Rita de Alda Iparraguirre: Okay. So we are expecting a policy package to be published in 2026 that will accelerate biomethane production and its use for decarbonization. In this sense, the group has, during the last years, made a strong progress in the development of biomethane portfolio with more than 75 projects in pipeline and 40 of these projects are already waiting for permitting. However, our investment plan has been delayed by a slow administrative process. We expect administrations to collaborate in order to achieve these objectives. But however, this means that 2027 investment plan will be partially delayed. Abel Arbat: Thank you, Rita. So moving now to the last part in the Supply business. So our Supply EBITDA performance has dropped versus last year. How could we describe the competitive landscape in Spain between electricity and gas? Rita de Alda Iparraguirre: Okay. So generally, the sector is experiencing high levels of competition and churn ratios, especially in electricity, and we expect them to remain both in retail gas and electricity. Even in this context, the group has expanded its client electricity portfolio. On the other hand, a substantial portion of the customer portfolio for 2026, more or less 70% or 80% of our sales have already been contracted. This provides us a strong visibility into next year margins, which remain solid. Finally, the group is focusing on excellence in client service and efficiency, supported by our new digital platform that we call NewCo. Abel Arbat: Thank you, Rita. Okay. So -- and also a question on Supply around the evolution of our Supply margins and whether or not we are maintaining market shares in both gas and electricity segments. Rita de Alda Iparraguirre: Yes, we expect volumes to remain solid, as I've already mentioned, we've already -- we have most of our customer portfolio already contracted, and we see continuity in this sense. Abel Arbat: All right. Many thanks, Rita, and this finishes the questions that we've received through the webcast. So thank you, everyone, for joining the presentation. The Capital Markets team remains available for any further questions you may have. And the management team is going to be on the road for the coming weeks in London, Continental Europe and the U.S. So we hope to see as many of you as possible. And many thanks again. Thanks, everyone, for joining.
Operator: Good day, and thank you for standing by. Welcome to the BAE Systems 2025 Preliminary Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paul Checketts. Please go ahead. Paul Checketts: Welcome to BAE Systems 2025 Full Year Results. I'm Paul Checketts, Director of Investor Relations. And with me, I have Charles Woodburn, our Group Chief Executive; Tom Arseneault, Chief Executive Officer of BAE Systems, Inc.; and Brad Greve, our Chief Financial Officer. Charles, over to you. Charles Woodburn: Hello, everyone, and thank you for joining us this morning. Before we begin, I want to thank our employees, trade unions and supply chain partners for the tireless work they do to ensure we deliver on our commitments to our customers. Delivering reliably on our mission to protect those who protect us is vitally important given the increased threats to security around the world. There are 3 key messages I'd like to leave you with today. First, 2025 was another year of strong performance. We delivered solid growth in revenue, profit, earnings per share and order intake and once again, cash flow was high. Second, the breadth of our business across air, land, sea, cyber and space and across multiple geographies puts us in an exceptionally strong position for both current and future opportunities in defense. And third, we are confident in the future growth we can deliver and the duration of that growth. We delivered strong outcomes in 2025. Sales and EBIT both grew at double-digit rates. Cash generation was high, and we secured GBP 37 billion of new order intake, demonstrating strong demand for our products. Our order backlog increased to a new record of GBP 84 billion, around 3x our annual sales. At the same time as focusing on delivery today, we're preparing for our future. Part of this is investing in research and development and CapEx. Our collective spending on these in 2025 was our highest ever. These results extend the track record we've built over multiple years of strong financial and operational performance and demonstrate our value compounding model in action. If we step back and look at our performance over the last 5 years, the story is compelling. At constant currency, our sales are up more than 50%. That's around 8% compound growth each year. We've also steadily expanded our margins, adding around 100 basis points or roughly 20 basis points a year. And because of that, our EBIT has grown even faster than sales, up by more than 60%. Earnings per share have been even stronger, increasing by over 70%, which equates to a 12% compound growth rate. Importantly, we continue to convert earnings into cash at a very high level. Across these 5 years, we've generated more than GBP 11 billion of free cash flow. And that cash gives us real strategic flexibility. It's allowed us to reinvest in the business to support further organic growth and to make targeted value-enhancing acquisitions. It's also supported increasing shareholder returns with dividends per share growth at around 9% a year. So overall, we're delivering strongly and consistently across the key financial metrics, and we see a very clear path for further progress. Our business has an outstanding geographic footprint. We have established positions in some of the largest defense markets in the world. This gives us an excellent breadth of opportunity and reduces the risk and volatility that comes with being more concentrated. Across all our key regions, defense spending is increasing because of the growing threats to national security. In each of our markets, the work we've done to invest in and position our business means our existing proven portfolio of capabilities aligns well to customer priorities. We'll look at Europe and the U.S. in more depth shortly. Here in the U.K., the government has committed to the largest sustained increase in defense spending since the end of the cold war. The U.K. Strategic Defense Review set out its vision for defense to move to greater warfighting readiness and to act as an engine of U.K. economic growth. It committed to invest in both our long-term programs and new disruptive technologies. We formed a new joint venture with industrial partners in Japan and Italy to design and develop the next-generation combat aircraft under the Global Combat Air Program, or GCAP. More broadly, Japan is on a path to double its defense spending by 2027, and we're exploring how we can support the country in other areas of defense capability. Australia is also increasing its defense spending. We're already the largest defense contractor in Australia and through the Hunter class frigate program and SSN-AUKUS, where we'll deliver state-of-the-art nuclear-powered submarines, we expect strong long-term growth. The geopolitical situation in the Middle East is likely to drive higher defense spending in the region. The largest defense market there is the Kingdom of Saudi Arabia, where we have a 60-year track record of partnership. Their 2026 military budget is expected to increase by 5% and areas of long-term focus include combat aircraft, missile defense systems, naval vessels and further increasing the localization of defense spend. Across the globe, our growth opportunities are significant, and we're focused on consistently executing our long-term strategy to deliver strong top line growth, margin expansion and cash generation. Over the past 12 months, there have been 3 consistent themes that have come up in our discussions with investors. First is our exposure to Europe, considering the rising threat posed by Russia, which is now driving increased defense expenditures in the region. The second is our shareholding in MBDA, given the growing significance of this business as Europe's preeminent manufacturer of missile systems. The third is the evolution of modern warfare and why we feel so confident in the continued and indeed increasing relevance of our portfolio, particularly in the light of new opportunities such as Golden Dome. As a result, we wanted to spend a few minutes focusing on each of these areas in turn, bringing Tom in to cover our U.S. business. The last year has seen a profound change in Europe security situation with the continent facing an acute and growing threat. In response, most countries are now significantly increasing the amount they spend on defense, underpinned by their commitment to meet NATO's target by 2035 of 3.5% of GDP being spent annually on core defense requirements and 5% in total. We're one of the leading defense companies in Europe, and our business is going from strength to strength. When you look across the continent, our equipment and services are integral to the defense of more than 25 countries. We have great capabilities across multiple areas, including combat air, land vehicles and missile systems. Growth for us in Europe is higher than the overall group. And at the same time, our order backlog has increased materially, now representing 32% of our total compared with 11% of our current annual sales in this region. To support our customers as they look to rebuild defense readiness, we're investing to support increased capacity, efficiencies and enhanced capabilities. An excellent example of our critical role in the defense of Europe, both today and in the future, is MBDA. As a reminder, MBDA provides sovereign capabilities to Europe and is a shining example of European defense collaboration. It's a joint venture between BAE Systems, Airbus and Leonardo with our shareholding totaling 37.5%. MBDA is a world leader in missile systems and the #1 player in Europe. Their portfolio has excellent breadth with products in service with more than 90 armed forces around the world. When you look at the critical areas where Europe and its allies are looking to rapidly improve defense readiness, MBDA has proven products. Areas of strength include air dominance since MBDA provides weapons for more than 10 different combat aircraft, including Typhoon, Rafale, Gripen and KF21. In air defense, they have capabilities across land and sea, including counterdrone, short-range air defense and medium range, including antiballistic missile threats. For longer ranges, they have a complete array of deep strike precision products, all of which makes MBDA extremely well positioned to benefit from increased defense spending as European and other nations focus on growing their weapons capabilities and inventories. You can see the high demand for MBDA's products and their momentum since 2021. Since Russia invaded Ukraine, order intake has stepped up from a cadence of around EUR 4 billion per year to EUR 13 billion. The order backlog has increased by 150% to EUR 44 billion or 7.5x annual revenue. And over that 4-year period, revenue has increased by 37%, a compound average growth of 8% to EUR 5.8 billion with improving momentum in recent years. MBDA is investing to fulfill orders and support customers' urgent needs. Significant funds are already committed over the medium term. They're renewing sites, accelerating digitalization, significantly increasing production capacity, investing in their supply chain and developing new products and technology. The combination of investing in the business, the high order backlog and the alignment of the portfolio with customer needs mean MBDA is positioned for continued strong revenue growth in the coming years. I'll now hand over to Tom, who will explain why we are confident about the outlook for our business in the U.S. Tom Arseneault: Thank you, Charles. Across the U.S. business, our strong performance in 2025 reflects our continuing efforts to align our portfolio strategy with evolving U.S. government defense and intelligence priorities. This enables us to support a broad range of programs and deliver for our customers with speed and at scale. We remain well positioned in areas the U.S. administration is clearly focused on. National security space and missile defense capabilities will play critical roles in the Golden Dome architecture, and we support a number of the key mission solutions, which underpin it. For example, as a result of emerging demand for the Terminal High Altitude Area Defense or THAAD interceptor, we expect a fourfold increase in production of our THAAD Seeker over the life of the 7-year contract. Our critical electronics and sophisticated apertures will also factor into the production ramps of other key munitions such as the long-range anti-ship missile or LRASM. Production of these additional key munitions will at least double in the coming years. Our teams are also rapidly developing and delivering cost-effective counter-UAS capabilities. Last year, we were awarded a new 5-year IDIQ contract worth up to $1.7 billion from the U.S. Navy to produce additional APKWS kits. This precision munition is combat proven for both surface-to-air and air-to-air engagements against hostile drones. And our platforms and services team has expanded its maritime business, allowing us to apply our highly skilled workforce and industrial capacity to contribute to the U.S. submarine and surface ship industrial base in addition to ongoing ship repair and modernization support for the U.S. Navy and commercial customers. While we have been investing in capacity and innovation for many years, the current market environment and long-term demand signals present additional opportunity. Since 2020, the businesses across our U.S. portfolio have invested more than $4 billion to expand production capacity and advance our research and development to deliver growth. To further support that growth, our workforce has increased by nearly 14%, and we've expanded our footprint by more than 2 million square feet. While there has been considerable focus on supporting the record production rates associated with key munitions demand, we have also been leveraging investments in a number of other important areas. In our Electronic Systems business, we have been investing to modernize and expand our microelectronics center to triple our production capacity for critical electronic components, supporting electronic warfare and other applications. Our Space and Mission Systems team has invested to develop Elevation, a new series of cost-effective modular spacecraft that will deliver world-class reliability and performance. An Elevation spacecraft has already been selected for the $1.2 billion resilient missile warning and tracking program we won last year. Supported by previous investments in combat vehicle manufacturing and robotic welding, we anticipate more than doubling our vehicle production compared to 2024 levels. In the maritime domain, our new state-of-the-art Shiplift in Jacksonville, Florida is now operational and will increase the capacity of that shipyard threefold. These are but a few examples of our investments in capacity and key technologies to support growth and ensure we deliver to our customers at speed and at scale. With that, Charles, I'll hand it back over to you. Charles Woodburn: Thanks, Tom. Technology and innovation sit right at the heart of our strategy and have done for many years. In 2025, we took that commitment further, increasing our self-funded research and development to a new record level. Let's look at how we develop the next generation of defense capabilities and our competitive advantages in technology. Areas of the defense market are developing at a rapid pace. Technology is being embraced and a number of companies are competing, including new entrants who often don't come from a purely defense background. This includes in drones, counter-drone systems and autonomy more generally. While it's a competitive market, solving the complex problems involved in producing equipment that works in a warfighting domain is extremely difficult. We bring together an understanding of our customers' operational needs with an understanding of the operating environment, agile software capability, differentiated hardware and an ability to successfully integrate the various elements rapidly and crucially the capability to scale up production quickly. I'll give you some examples to bring this to life. First, our platforms and products are deployed on the battlefield today, which gives us firsthand understanding of our customers' operating environments in real time. For example, our Callen-Lenz drones have proven themselves to be resilient and capable in extremely contested electronic warfare environments, and we take all these learnings into other products across our portfolio. A second highlight is our agile software capability. We are actively using generative AI to allow drones to understand the commander's intent and then configure their own software to best deliver that mission need. And we wrap these capabilities within well-understood assurance methodologies, which means the drones are only able to operate within the parameters set by their human operators. This enables rapid introduction of new behavior models and allows the drone to perform missions that were not originally envisaged. Next, consider our differentiated hardware. While software can define the optimal tactics for deploying artillery, being able to implement these tactics still requires a platform. Our mobile artillery system, ARCHER, can deploy fire 4 rounds and leave the location before the first round has reached its target. Now to integration. Bringing together the APKWS precision guiding munition from our U.S. business, heavy lift quadcopter technology from our Malloy acquisition and expertise in weapons integration from FalconWorks, a major step was achieved when we successfully used the drone to shoot down another drone. In just 4 months, we moved from concept to successful live firing trials. Finally, our APKWS technology more generally is a great example of how we can scale up quickly. It has brought down the cost of counter drone technology by so much that it's similar to the cost of the drones it targets. We've now produced over 100,000 units in total. And by the end of this year, we anticipate more than doubling our production rate compared to 2024. Our combination of established multi-domain expertise, decades of delivery and agile software capability gives us an advantage that many of our competitors simply can't match. It provides our customers trusted, differentiated solutions that have proven to work on the battlefield, and these provide us with a competitive advantage. And now over to Brad for the financials. Bradley Greve: Thanks, Charles. It's been a really strong year for the business. We delivered a record year in sales for the group with a 10% increase while building our backlog to an all-time high of GBP 84 billion. Our focus on efficient delivery contributed to a 12% increase in underlying EBIT, and we posted a double-digit increase as well in earnings per share. Free cash flow at GBP 2.2 billion was above our guidance with the benefit of strong delivery and material customer advances. This free cash was after double-digit increases in R&D and continued high levels of capital expenditure. And after all of these increased internal investments, we returned GBP 1.5 billion to shareholders, in line with our disciplined capital allocation policy. All of these numbers highlight the health and effectiveness of our value compounding model. I'll now break these results down in more detail. And as usual, when comparing results to prior periods, I will use a constant currency basis. With orders of GBP 37 billion, the book-to-bill was 1.2 and reflected the continued relevance of our broad technical and geographical reach. Key orders in the year featured close to GBP 9 billion in electronic systems orders. This included GBP 2 billion from our space business, featuring the missile warning and tracking satellite systems for the U.S. Space Force. GBP 6 billion in our P&S business, including significant orders in Europe for Hägglunds and Bofors and over GBP 2 billion for U.S. combat vehicles. The air sector recorded GBP 15 billion, including the Typhoon win in Turkey and GBP 4.2 billion in MBDA. Our Maritime business recorded GBP 5 billion of orders, including increased funding for submarines. And finally, the Cyber and Intelligence sector recorded a further GBP 2.7 billion. Our record backlog, together with the pipeline of incumbencies sets us up well for continued growth over the medium term. We grew sales by 10% to reach GBP 30.7 billion with growth across all sectors. Organic growth was 9%. Platforms & Services led the group with a 17% increase, hitting GBP 5 billion for the year. European growth in Hägglunds and Bofors was over 30%, while our U.S. combat vehicle business grew by 15%. Maritime continued to grow in double digits, up 11% to GBP 6.8 billion, with strong growth in design work for the SSN-AUKUS submarine and double-digit growth in Australia. The air sector rose by 9% to reach GBP 9.3 billion with 17% growth in MBDA, GCAP ramp and continued growth in drone sales and FalconWorks. Electronic Systems sales rose by 8%, paced by double-digit gains in EW sales, strong contributions from our precision strike and sensing activities and the full year contribution from the space business. Finally, Cyber and Intelligence was up 2%, predominantly on gains in counter-drone sales. Group EBIT of GBP 3.3 billion was up 12%, and our margin of 10.8% represented 20 basis points of expansion. This means over the last 5 years, we have delivered 100 basis points of expansion. The largest gain in EBIT came from P&S with 30% growth to reach GBP 576 million. Margin climbed to 110 basis points to 11.4%, with accretion on higher full rate production volumes from AMPV and growth in our European businesses. Electronic Systems EBIT rose by 12%, with margins growing by 50 basis points to 15.4%, including a strong contribution from SMS. The air sector EBIT grew by 10% with margins of 11.9% at the high end of our guidance range. Maritime margins reflected the early-stage maturity of the portfolio with several first-in-class programs trading at relatively low margins. We expect margins to improve in 2026 and beyond as these programs mature and as key milestones are achieved, allowing for risk release. Cyber and Intelligence EBIT was up 15% with a full year of Kirintec included. Organic growth for the sector was 10%. The group delivered operating cash flow of GBP 2.8 billion, significantly higher than our expectations as large customer advances were received very late in the year. With close to GBP 1 billion of CapEx, we once again invested at levels substantially higher than depreciation with capacity expansion and efficiency investments across the portfolio. There was a reduction in net advanced inflows in 2025 compared with 2024 in P&S and Air, which is the primary driver for the reduction in operating cash flow. Our free cash flow after netting tax and finance costs was GBP 2.2 billion. The strong performance contributed to a 22% reduction in net debt, which landed at GBP 3.8 billion. Excluding lease liabilities, the net debt to EBITDA was 0.9x. Our strong balance sheet provides excellent optionality to support our growth ambitions, and it was good to see this month's rating upgrade from Moody's, taking us up to A3. Turning now to guidance. We anticipate another strong year of sales with a 7% to 9% growth range, supported by the record backlog. Strong sales in air and continued growth in Europe for P&S should drive both sectors up in the 9% to 11% range, while growth in space and EW should drive growth in ES in the 6% to 8% range. Growth in maritime and cyber are expected to be in mid-single digits. EBIT should grow above sales with more margin expansion expected. Our guidance is for a 9% to 11% growth in profitability across the group. Earnings per share should grow in line with EBIT at 9% to 11% despite a higher tax rate anticipated in 2026. Regarding free cash, we do not include material advance receipts in our guidance. As you have seen in 2025, this can result in large positive variances. But given the difficulty in predicting these, we exclude them from guidance. We do include the anticipated unwind of existing advances. For 2026, we expect free cash flow to exceed GBP 1.3 billion, reflecting advanced unwinds and continued high levels of CapEx investment planned. So with the strong 2025 delivered, our guidance for 2026 demonstrates our confidence in the continued high performance of our business across all key measures. I'd like to discuss the 3-year cash delivery in a little bit more detail. Our consistency in hitting our 3-year guides continued in 2025, where we recorded GBP 7.3 billion over these last 3 years. For the next 3-year period covering '26 to '28, the target we are setting today is to exceed GBP 6 billion, including an assumed unwind of advances and high levels of investment to support growth. I'll end my section of the presentation with a quick reminder of our consistent value-creating capital allocation model. The first rung on our ladder is investing in the business, specifically in our people, facilities and technology. From the skills academies we opened to our commitment to early careers programs and a constant focus on building strong teams and leaders, investment in our people is essential to delivering our strategy. We have invested over GBP 1 billion since 2020 on education and skills. Our investments in CapEx to increase the efficiency in how we deliver to our customers as well as expanding the capacity of what we deliver continues to be maintained at very high levels, helping us to drive growth. Our investments in CapEx are over GBP 4 billion since 2020 and are now averaging close to GBP 1 billion a year. And our higher investments in self-funded R&D help to increase differentiation and open new revenue streams. These investments have increased by 70% since 2020 and programs like the APKWS illustrate how these convert to value. The second rung of the ladder is our dividend, which is covered approximately 2x by underlying earnings. Our dividends have increased for 22 consecutive years. And today, we have announced a 10% increase for our full year 2025 dividend. While maintaining our strong balance sheet with a focus on preserving investment grading, we have strong optionality to use M&A to grow the portfolio as we have done successfully over the last several years with over GBP 6 billion invested since 2020. And finally, when there is surplus cash after all of these allocations, buying back our shares has proven to be another important way we return cash to our shareholders, and we have retired 9% of our ordinary share count since the program started in the summer of 2021. So handing over to Charles with a final comment that our value compounding model has led to a high compound annual growth rate in both sales and underlying EBIT over the last several years, significantly enabled by this consistent approach in the allocation of capital. Over this time, we have also converted cash at very high levels. With our record backlog and pipeline, we are very well positioned for continued strong delivery across the medium term. Over to you, Charles. Charles Woodburn: Thanks, Brad. Looking ahead, we're well positioned to keep building on our momentum. A key strength of BAE Systems is not just our near-term growth, but the visibility we have over the long term. Our order backlog and incumbent program positions total around GBP 260 billion, nearly 9x our annual sales. This includes both shorter-cycle products such as drones, counter-drones and munitions, where we're currently experiencing high growth but also critical multi-decade programs such as frigates and submarines with long-term embedded value. Some of our biggest programs like the Global Combat Air program and SSN-AUKUS submarines don't come into full production until the mid-2030s and beyond. The combination of our order backlog, incumbent positions and a strong new business opportunity pipeline due to rising defense spending gives us the visibility and confidence that we can deliver strong growth for an extended period. Bringing this all together, what should it mean for investors? The combination of our exceptional breadth of world-class defense products and capabilities, strong positions in some of the largest defense markets in the world, a continued focus on execution while increasing our investments in technology and innovation and a large backlog of long-term work with significant new business opportunities means we're confident we can deliver strong revenue growth that is both visible and sustainable over multiple years with higher margins and strong cash generation, all of which will be amplified by our disciplined capital allocation, giving us enhanced visibility on our value compounding model. Many thanks. And with that, we're ready for your questions. Operator: [Operator Instructions] And now we'll go and take our first question and it comes from the line of Ross Law from Morgan Stanley. Ross Law: The first is just on the U.S. budget and the potential upside there for fiscal '27. Are you actually planning for a GBP 1.5 trillion (sic) GBP 1.5 billion scenario? And when would this increase flow through to your P&L? Second question, just on Europe. You highlighted that it's 11% of sales, but 32% of the backlog. And what do you expect the mix of European sales contribution to trend to midterm, please? And then lastly, just on MBDA, how should I think for the growth outlook there in terms of CAGR? Charles Woodburn: The first one, U.S. budget upside. Tom, do you want to take that one? Tom Arseneault: Yes, sure. I think we're very encouraged by the trajectory of the budget. I mean how that -- how the 2027 top line ends up remains to be seen, but it certainly is heading in the right direction. It is not part of our current guidance. And so we do see upside in there. And to the extent we've worked to align ourselves well with the National Defense strategy and various priorities that fall out of that, I think we are well positioned. The Golden Dome, for example, we talk about the recent wins in the base layer and our involvement in the interceptors, FAD and others. And so I think you'll see some of the budget applied there as well as shipbuilding. We've recently pivoted some of our maritime solutions to be the better part, as I mentioned earlier, of the shipbuilding, the submarine and surface ship industrial base. And so I think we are well positioned to the extent that budget heads in that direction, we're all encouraged by that. Charles Woodburn: So on the European composition, I mean, clearly, it's going to grow quite significantly with that 11% European ex U.K. in our current sales and 32% in the order backlog. Quite what the final number ends up being, I think it's a bit hard to tell a lot depends back on things like U.S. budgets as to the rate at which they grow, the relative rate of other areas. So I think it's a bit hard to judge, but we are looking at significant growth over the next 5 years as we build out that backlog. On MBDA, Brad I mean we've had already a pretty rapid growth. I think it was 17% year-on-year growth last year to the year before. But do you want to comment a little bit on the outlook for that business? Bradley Greve: Yes, I'll just echo too, on Europe. We -- GBP 3.6 billion of sales in Europe in 2025. That is against GBP 2.8 billion in 2024. So you can already see how our European revenue growth is really accelerating. And actually, our European business is bigger than our KSA business now. So I think that's worth reflecting on and positioned for continued growth. I think MBDA has been a really strong 2025 with over 17% growth. And Charles laid out some of that backlog that they've got. So sometimes revenue there can be a bit choppy because it's point on delivery revenue recognition. So some of that revenue growth may not be even. But with that backlog they've got, we expect really continued high levels of growth for a long time to come here. And also, Charles mentioned the production capacity investments that they're making, that will allow us to accelerate growth over the medium term once those get online. So I think all of this points to a really strong outlook for MBDA on the back of what's already on a pretty strong run for that business. Operator: And the question comes from the line of Robert Stallard from Vertical Research. Robert Stallard: I've got a couple for you this morning. First of all, this might be for Tom and Charles. Given the broader industry trends, are you expecting much higher CapEx in your U.S. business going forward? And in relation to that, are there any limits you potentially see on your flexibility on returning cash to shareholders? And then secondly, you highlighted the growth potential in MBDA and the rapid growth you've seen already. We've seen one of your peers in the U.S. announcing plans to spin a minority stake in its missile business. Is there any chance of a similar move for MBDA? Charles Woodburn: I think on the MBDA, I think we're very happy with the business. We don't see any particular need to change the structure or the holding system at the moment. We're just pleased to see the performance and keep supporting it. On CapEx, I'll maybe leave that to both of you, Brad and Tom to say a couple of words on it. But I would come back to the fact that we have because of the good performance of the business, ample capacity to invest as we have been at record levels. If we needed to increase, we can still do it and still maintain our very disciplined capital allocation strategy. But if you want to just say a couple of words on U.S. in particular CapEx growth, maybe... Tom Arseneault: Rob. So in the U.S., I mean, clearly, we're focused on -- and as we've all been encouraged by the executive order to make sure we are positioning and applying our capital resources in a way to help grow capacity and focus in areas of technology investments, some of which I mentioned earlier. We are on the verge. We're part of the FAD program. We do the -- we make the interceptor. We anticipate signing our own head of agreement with the Department of War here in the coming weeks in order to secure that quadrupling of demand over the 7-year multiyear program. As part of that, we would look to invest appropriately and it's quite a bit easier to close the business case on a multiyear demand like that, but to ensure that we can produce at that level. So that's just one very near-term example. But we continue to focus and make sure we're applying our resources to the benefit of the Department of War and their priorities. CapEx will generally impact to you. Bradley Greve: Yes. At a higher level, Rob, we -- as we've laid out in the scripts in the prepared remarks today, you've seen us talk about a lot more investment. And over the last 3 years, we've been averaging sort of GBP 1 billion a year. I would expect in the next 3, it's likely to go up as we see this increasing growth environment that we're in. And a lot of that, as Tom has laid out, is in the U.S. But overall, this is embedded in our 3-year cash guide where we said we're going to have 6 -- over GBP 6 billion in the next 3 years of free cash. That is reflective of higher CapEx investments. Operator: And now we're going to take our next question from the line of David Perry from JPMorgan. David Perry: Two questions. First one, just an update on AUKUS, please. I think the last few days, there's been quite a lot of press reporting out of Australia that the government there is about to commit AUD 30 billion to a new production facility. So just any info you have on that? And then secondly for Tom, I think one of the surprises for me in the results was U.S. land vehicles, where both sales and margin were better than expected, because that's a business that you've been less bullish on recently. Have you changed your view on that? And any thoughts on the outlook? I mean, could there be more margin upside from where you are at the moment? Charles Woodburn: Thanks, David. So on AUKUS, I think as you already alluded to, there was some announcements over the weekend about infrastructure investments in the Osborne precinct around for the long-term build of SSN AUKUS, which I think is excellent progress and just underlines the strength of the program longer term. From a U.K. perspective as well has been continued investments in the design work that's going on the SSN AUKUS submarine. So I think whilst we've always said this is a long-cycle program, much of it doesn't really bear fruit until well into the 2030s. These are early days, laying the -- literally the foundations for the success of the program. And I think we're making good progress on that. On U.S. land vehicles, I think Tom, as you said, is best place to answer that one. Tom Arseneault: Yes. Thank you, Charles. And David, yes, no, thank you for pointing that out. I mean I think the team and Platforms & Services has done an excellent job playing out the backlog that we've been reporting in recent years. And programs like the amphibious combat vehicle, for example, which is a Marine Corps program, factors well into the Pacific deterrent dimension of the National Defense Strategy an important vehicle for Marine Corps as well as the armored multipurpose vehicle, AMPV, which is the highest volume vehicle running through the factories there. Some of the -- and the margin improvement, excellent performance, coupled with some of the investments we've made in recent years, robotic welding, et cetera, that helped drive a little bit of automation, allowing for better throughput in some of those higher markets. And so we continue to focus on delivering for our customer and ensuring that we can return to the shareholders at the same time. I won't point out, I mean, we do -- our combat vehicle portfolio also includes the business in Hägglunds in Sweden, and that business is growing quite strongly. We are -- it was in the press late last year, working on a 6 nation agreement for CV90s. That will likely result in orders for additional vehicles in the hundreds. The 6 nations, Finland, Sweden, Norway, the Netherlands, Lithuania and Estonia, and the team is working with all 6 nations now in order to hammer out an agreement for a common vehicle platform across those nations. I hope that's helpful. Charles Woodburn: Which I might say is a great example of European partnership. Operator: Now we're going to take our next question and it comes in of Christophe Menard from Deutsche Bank. Christophe Menard: I had 3. The first one is still on the U.S. Can you comment on the drive for affordability in the U.S.? How -- and does it impact you? Is it in technology programs or in -- for instance, I don't know, the Radford rebid that's coming up? Second question is on capital allocation, share buyback. The GBP 1.5 trillion (sic) [GBP 1.5 billion] is coming to an end, I think, around June. What are the clients plans beyond? And the last one is on order intake. I'm still -- I'm always surprised -- I mean, always very positively surprised by your order intake. Any guidance for 2026 of book-to-bill or any key orders we should be watching in terms of influencing the order intake in '26? Charles Woodburn: Well, Christophe. So drive for affordability, I will let Tom say a few words on that, but we are fully supportive of the intent of the executive order to improve production rates and make sure that we deliver on the programs. Capital allocation, I may correct you there, is GBP 1.5 billion, not GBP 1.5 trillion. And -- but I'll hand over to Brad to do that one. And then order intake guidance, as you know, we don't guide on order intake. They tend to be quite lumpy. But if Brad, as you're answering capital allocation, do you want to expand on that by all means do. So maybe, Tom, over to you on the drive for affordability. Tom Arseneault: Yes. No, that's a great question. Thank you, Christophe. We -- the focus on affordability is highly enabled by volume production, right? And so some of these investments in capacity, I mentioned robotic welding a little bit earlier, brings automation to bear, drives for the economies of scale and economies of labor and automation that allow us to create a more affordable situation. Investments in technology around how we're driving, for example, as I mentioned earlier, the microelectronics position, right? As the microelectronics get denser and denser, we're able to get more capability into smaller space, drive down the material -- the builds of material on some of these items and again, helps with affordability. So we're looking at it in every dimension from the way we work all the way through to the technology we apply. I hope that's helpful. Charles Woodburn: Brad, do you want to talk about capital allocation? Bradley Greve: Yes. I think it's healthy just going to look back to our capital allocation hierarchy again. And the first rung in that ladder, as we said, was investment in the business. And so this takes the shape and investment in our people, the GBP 1 billion that we spent over the last several years on skills academies and early careers programs, self-funded R&D. We've been making meaningful increases in those investments and CapEx. We've talked a lot in this presentation about how much we're increasing our investments there in CapEx. And all of this, I think, is very much aligned to a growing business and a growing backdrop. And our customers all want capability faster and our investments are designed to do that. So that is our very first priority, and that's completely aligned with our customers' view on this. And after that, of course, we have a dividend policy that's very established and clear covered 2x by underlying earnings. And we've then looked at M&A as sort of another wrong and using a strong balance sheet to increase and enhance our portfolio. And finally, if there's cash left over after all of this, that's when the buyback program kicks in. And we're in a situation with the business that across all these increases of internal investments and dividends and the M&A we've been doing, we still have had cash left over. And so I think that's been a useful tool to deploy that surplus cash. Charles Woodburn: Then on order intake guidance, as I said, we don't give guidance, but Tom alluded to, for example, more CV90 potential orders translating. The Type 26 selection by the Norwegians is not yet in order backlog. We've got a number of additional opportunities for Eurofighter, both support and new aircraft sales. Electronic systems, there's opportunities with Compass Call. I mean there's a wide hopper of opportunities. But as you always know, the -- some of these big programs, quite what year they fall from an order intake perspective can be a little hard to predict, which is why we are cautious around giving specific guidance on that. Christophe Menard: And yes, indeed it was GBP 1.5 billion. Charles Woodburn: I was joking to be honest, Christophe, I knew you have -- anyway, thank you, Christophe. Operator: The question comes from the line of Ian Douglas-Pennant from UBS. Ian Douglas-Pennant: I have 3, at least one of which is quite quick. Firstly, on the free cash flow. So your free cash flow guidance 2025, '27 implies GBP 2 billion of free cash flow in 2027, which is a decline on what we've seen recently. Like can you talk about why that's the case beyond -- and obviously, I hear what you're saying on the advanced payments, but anything else beyond that, we should be considering? Secondly, could you talk about the outlook for tax rates? I think your communication there has changed? And thirdly, on the Eurofighter, can you talk about the long-term production rate plans there given some of the recent demand we've seen coming in? And related to that, could you talk about progress on FCAS and when you now think that will be ready for use for our customers? Charles Woodburn: So maybe the first couple for you there, Brad, free cash flow and... Bradley Greve: Free cash flow, really the story on the variability is not a new story. It's just really down to how advances move and how we guide on the basis of a conservative outlook on advances where we always model the burn of advances. And in 2026, we expect to have a circa GBP 600 million burn down of advances. We haven't guided to any material advanced receipts. So to the extent those come in, that would be upside to what we've guided. And that also is true of the forward guidance ranges in those 3-year increments that we've outlined. So none of those include material receipts for new advances, but all of those new ranges looking ahead include burn down. So that -- I think that's really the simple explanation of your question on that one. And on tax rates, we did see an increase, we're expecting to increase rather in 2026, and that's mainly coming from '25. We did have some prior year releases from some retired tax issues. Those obviously don't recur in '26. And the France tax regime has carried forward what was meant to be a 1-year surplus and tax rates. They've now taken those into a second year. So the France tax rate is 36% compared to what we expect it to be sort of in the mid-20s. So I think I really explains the tax movements and a 22% guidance for ETR for '26, that's probably a range that's likely to endure for a little bit longer. Charles Woodburn: Thanks, Brad. On Eurofighter, I mean, we've talked before about sort of the pathway to doubling production rates, and I think we're well on that. Having secured Turkey and there are other opportunities. I mean, obviously, some European buys that you're well aware of. We'll look to adjust that. But I think that we said at the time at the Capital Markets Day last year that it was sort of a couple of year trajectory to get to the new production rates, and we're well on that journey. And we will adjust, if needed, upwards if we are successful in securing further orders. And of course, the good news is that we now have production requirements all the way through to when we start doing final assembly of a GCAP capability, which is important. And I think to your final question, GCAP is making really good progress. We have a really strong team, moving well and are delighted with the partnership that we have and moving at pace. Operator: And now we're going to take our next question. And the question comes from the line of Olivier Brochet from Rothschild & Co. Olivier Brochet: I would have a couple of things to ask. The first one is on the operating cash flow in H2, it doubled in electronic system. Do you have any areas that you would like to point to explain the move? On the same vein, did you have any cash payment catch-up on the F-35 after the release from inventory aircraft last year? And the second question would be on the space exposure. Can you maybe size how big it is across the group, maybe in terms of backlog and sales as you very hopefully did for the European business? Charles Woodburn: On cash OCF, do you want to do that, Brad, and then maybe over to you for space, Tom? Bradley Greve: I'll simply say, Olivier, we tend to have a very back weighted cash flow profile. So '25 is no exception to that. We did see some advances come through in our space business from SMS into the ES cash flow. So that was a contributing factor in that. But we always have a very H2-weighted cash profile, and that continued into 2025. Tom? Tom Arseneault: Yes. I think I mean backlogs in the former Ball Aerospace, now our Space & Mission Systems business are at record levels. I mean, after some delay in the early part of the year as the administration was settling in and working through its priorities, there were some pivots on their part early in the year. Although as we moved to the half and beyond, we spoke at the half, and I mentioned earlier, the big win on missile warning and tracking. We won a ground systems award called FORGE C2 that will -- is a ground systems for this missile warning and tracking kind of mission in our national and military space businesses grew and won a number of other programs. And so record levels. I think Brad, just check me if I'm wrong, GBP 8-ish billion for SMS. And so a really good performance there, and 1 that will play out through sales growth here. We're projecting double-digit sales growth in 2026. Operator: We're going to take our next question and it comes from the line of Alessandro Pozzi from Mediobanca. Alessandro Pozzi: The first one is referring to your opening remarks about the outlook, very strong pipeline as well. I was wondering, can we have any color on the medium-term growth? A lot of your peers have given 2030 targets. We don't guide to 2030. But I was wondering, is it the right time maybe to factor in an acceleration in top line and maybe growth of double digit rather than high single digit, also in line of defense spending in the U.S. going up? And the second question on the GCAP. There's a lot of speculation that Germany and France may not go ahead with the FCAS any longer. Would you be able to accommodate Airbus as a new partner in the GCAP and what the implication could have for the program? And maybe a last one. Any update on the Eurofighter potential opportunity in Saudi Arabia? And any thoughts on that? Charles Woodburn: So outlook, thanks for the question, Alessandro. We don't, as you know, give medium-term outlook, but we've been on a strong temper of growth, and we do see that continuing. As you probably are aware, everyone on this call much debate around the U.K., for example, and the defense investment plan and will there be more funding around that. And I don't know any more to add to that other than has been in the press already. But none of that is in a sense, assumptions around that further upside would be in our guidance and indeed -- but it would affect our medium-term outlook, but we just have to wait and see how that plays through. So there is further upside, we think, to the medium-term outlook, depending on how things play through. And indeed, as Tom alluded to already, with the U.S. budgets as we see how that plays through, but that's not a '26 impact. That would be a '27, '28 and beyond impact. On GCAP, I mean, really the decisions around expanding the partnership are entirely down to the 3 governments of Italy, Japan and the U.K. that are partners already. So there's not really not much more I can comment on that apart from the fact that we have a really strong partnership that is making great progress and moving at pace. And on Eurofighter, again, there's a little I can really add apart from we have a large portfolio of additional opportunities for the Eurofighter platform. It's a superb fighter aircraft. And with the latest missile systems from MBDA has extremely good capabilities. So we do see a range of additional opportunities, both from existing customers and new customers as we see with like Turkey coming into the Eurofighter family. That's really all I can say at this point. Operator: And the question comes from the line of Sam Burgess from Goldman Sachs. Samuel Burgess: Three, if I may. Firstly, just back on Europe. If there is movement in the rules on U.K. company participation in future European defense funds, just in big picture terms, how material could this be for BAE Systems? Secondly, can you give us just any directional indication of the expected magnitude of advanced payments expected in 2026 relative to '25? I mean given quite a lot fell in Q4 '25, might we assume it's a slightly slower year in terms of prepayments? And then thirdly, maybe one for Tom. Just following on from Ross' question about potential U.S. budget increases. I know there's been a lot of kind of CapEx going in for Jacksonville and Louisville, but that was obviously in advance of some of the latest messaging from the U.S. President on budget. So what's your sense on the areas that incremental budget spend may be directed? And might you need to accelerate CapEx to capture some of that demand if it's not in your base case? Charles Woodburn: Thanks. Good set of questions. On Europe, I would just come back to -- we already have -- we're well positioned within Europe. So our position with MBDA, Eurofighter, our Swedish businesses mean that we are very well positioned, and we can happily partner with companies like PGZ in Poland, who are recipients. So for example, say funding we can work with them. So we see, as you've already seen in our order outlook, we're expecting significant growth in Europe, and it's a combination of selling in from our U.K. business, but very importantly, strongly enhanced by our footprint already within the Europe and specifically EU. So -- and then in terms of advanced payments, I mean, we don't guide around that. It's very hard to predict, which is why we specifically exclude them from our cash guidance. And I think that's probably the prudent place to be. And I think we're very clear around our position there. Tom areas for CapEx -- in the U.S., do you want to say a little bit about that? Tom Arseneault: Yes. I'm happy to it. Thank you for the question, Sam. I mean if I had to point to one area and again, as I mentioned earlier, we're very encouraged by the administration's move toward multiyear contracts, particularly in and around munitions. So if you look at the 2026 National Defense Authorization Act, the budget has outlined, particularly Section 804, that really outlined these multiyear procurements where they create effectively 7 years of demand for some of these munitions. Our 8-ish munitions sort of called out there as key munitions. We play a role on 6 of those. FAD I mentioned earlier has one. And so as we look to the sorts of volume increases associated with those anywhere from doubling in production to quadrupling there will definitely be some CapEx expected in those areas across the portfolio. By the way, that's both ES and SMS, those 2 businesses will contribute. So I'd call that out as probably the dominant area, although there would be others. Operator: We're going to take our next question comes the line of Chloe Lemarie from Jefferies. Chloe Lemarie: I have a first question, please, on the 2026 to '28 cash outlook. You helpfully said the GBP 600 million advances burn in '26. Could you maybe share how much over the total period you're factoring in for this? The second question is on P&S. Obviously, quite a strong performance in '25. We touched on the U.S. platform performance. But I think a 30% growth in both for Hägglunds was mentioned. So could you maybe touch on capacity utilization now in those businesses and the expansion phasing going forward? Charles Woodburn: Over to you, Brad, for cash guidance and then, Tom, for the excellent performance in P&S. Bradley Greve: Yes. I think the GBP 600 million burn down is probably a fair average to use across the medium term. So the '26 to '28 cash guide. Again, we don't assume any advances coming in, so any prepayments coming in. We do have a slightly higher CapEx across the next 3 years and then there's the normal working capital movements, but we will have higher profits, which will fall to cash. So all that weighted in is kind of what colors in that GBP 6 billion -- greater than GBP 6 billion cash guide over the next 3 years. I mean it's going to be timing on programs that will dictate the cash burn on advances. It may not be evenly distributed GBP 600 million each year. But I wouldn't be surprised if it's a number like that over the next 3. Tom Arseneault: Yes. And then on Adrien (sic) [Chloe], on vehicle performance and production. I mean P&S, again, thank you for highlighting that a really excellent performance on the part of that business. Remember, P&S includes both the U.S. portfolio as well as Hägglunds and Bofors in Sweden. We expect that we would focus -- again, we don't see additional capacity necessary in the U.S., for example, we are -- we have built that up over the course of the last 5 or 6 years. And so now we're sort of running at rate, focusing on good performance there and that you can see in the bottom line in that business. So over in Hägglunds, I mentioned earlier, the 6-nation opportunity that would likely require some additional CapEx in Sweden, but we do, as we've reported in the past, spread that capacity work out into the countries to which those vehicles would be delivered and in industrial cooperation. And so a modest investment there, we expect. But here's a business that was maybe 50 vehicles a year, only a handful of years ago, now looking at maybe somewhere between 200, 300 vehicles a year. So really good opportunity there, and business has done well to scale. I hope that is helpful. Operator: We'll go and take our next question and it comes from the line of Adrien Rabier from Bernstein. Adrien Rabier: I also have 2, please. Sorry to ask again about the U.S. budget, but if you don't ask -- if you don't mind me asking in a more basic manner, if we have anywhere near 50% growth in U.S. budget in 2027, what would that mean for you? How much you expect to participate? And how long will it take to flow into your P&L? And the second question on your 2026 guidance, please. Your sales growth target implies some sequential slowdown from 2025. But as you said, budgets are growing in your key regions and backlog is great and you've been expanding capacity. So should we see this as a reasonable caution? Or is there a reason to actually expect a slowdown this year? Charles Woodburn: Well, on the second one, the answer is no. But do you want to explain that a little bit guidance? You're saying it's slowing down compared to this year. But Bradley Greve: On top line? Charles Woodburn: Yes, on top line. Bradley Greve: Yes. The growth that we printed for 2025, the 10% included a full year of SMS, our space business, former Ball Aerospace. So that compares to a partial year in 2024. If you look at our organic growth rate in 2025, it was 9%. So again, if you put that in the context of our go-forward guidance, where we're saying 7% to 9% for 2026, we're continuing to grow at these very high levels on a higher 2025 base. So hopefully, that helps you understand a little bit that we're continuing to grow in pretty high levels here. Charles Woodburn: Yes, we still see strong momentum in the business. And maybe over to you, Tom, on U.S. budgets. Tom Arseneault: So there is so much that has to play out here before we understand where the top line for 2027 will settle. I mean it's -- again, we're very encouraged by the directionality of the discussions around the budget. You'd have to imagine that the way that would translate into portfolios would be sort of relative to how well aligned we are around the demand signals. And we feel very well aligned, as I mentioned earlier. And so we would hope we would get a reasonably proportionate share. The focus on the national defense strategy, deterrence in the Pacific, our electronic warfare, our space portfolio, the work we're doing to help with the submarine and shipbuilding industrial base. When it comes to defend the Homeland, we spoke about Golden Dome, Clearly, the space and the munitions side of that, Counter-UAS, with our APKWS solution. So we've worked to align as best as we can with the national defense strategy. I think that's paying dividends for us, and we would hope to earn our fair share of that budget when it settles out. Charles Woodburn: But this would really play out in '28, '29. Tom Arseneault: Right. It will be some time before we know exactly where that is, but the directionality is clearly encouraging. Operator: And the next question comes from the line of George Mcwhirter from Berenberg. George Mcwhirter: Maybe on R&D, going back to the comments that Charles you made about self-funded R&D reaching a record high this year. Do you expect self-funded R&D to continue to account for the minority of R&D? Or could you see that the self-funded share grows a bit faster than customer funded as government shift to a greater company, that innovation to reduce the time it takes for products to come to market? That's the first question. Charles Woodburn: Okay. Is that the only question? Or do you want to ask... George Mcwhirter: Sure, I can ask the second one. Maybe on margins. You talked about 20 basis points of margin expansion a year for the past 5 years. Do you think this is a reasonable level that you can achieve in the next 5 years? Charles Woodburn: So on margins, I'll let you answer that one, Brad. On R&D, I mean, as you said, we have been increasing self-funded R&D. The most intensive area of self-funded R&D is the electronic systems portfolio in the U.S., and that's been really good investments, things like APKWS is -- was a self-funded R&D program that is now doing extremely well and a huge commercial success for us. So we are encouraged to keep investing in R&D. The balance between that and customer-funded R&D, I mean, it largely depends as well as to the amount that we get through customer funding on R&D programs. So I'm not sure it's going to change dramatically, but we will keep investing in self-funded R&D. We've had some great success there. The other area that we've invested and continue to invest heavily in self-funded R&D is in the U.K. air sector, specifically around drones, counter drones some of those capabilities is making sure that we really build out that what is already a market-leading portfolio and develop that further. On margins and the margin progression, do you want to say a bit about that, Brad? Bradley Greve: Yes. Last several years, our mantra here has been top line growth, margin expansion and cash conversion. And we were pleased to generate those 100 basis points of expansion over the last 5 years. And when we look forward, we'll continue to focus on these things. And where we have opportunity for more improvement is really everywhere. Operational efficiency is a key lever of expansion. The extent that we deliver our programs and retire risk to the bottom line rather than consume it. That's a really important part of how we're going to grow margins from here. We'll have some operating leverage with top line growth, where we can keep indirect costs flat. That's another key lever. And our supply chain function continues to make size our scale advantage so we can get procurement volumes to drop down into bottom line margin expansion. I mean across the entire business, we look at these margin levers to really drive improved delivery, and we've seen that over the last several years. Now looking at where we're going to go from here and where you're going to expect more margins. Obviously, the maritime sector is one that is below the range that we expect from that sector. And so I would look at that sector as being the one that will drive the biggest gains over the next 3 years. But we're already pretty top range and a lot of our delivery across the sector. We look at ES at 15.4% and P&S at 11.4%. There's still room to go on those. So I wouldn't just extrapolate a 20 basis point a year over the next 5 years to come, but we certainly are focused on it. And we continue to think that we can drive margins up from already these high levels in 2025. Operator: And the next question comes from the line of Nick Cunningham from Agency Partners. Nick Cunningham: Yes, so the -- a few details on the U.S... Charles Woodburn: Yes, we can hear you, Nick. Nick Cunningham: Can you hear me? Charles Woodburn: We hear you loud and clear. We are hearing you. Nick Cunningham: So the administration is Good. So the U.S. administration is not very happy about NOAA and NASA budget. And it's obviously engaged in a big fight with Congress. But in the meantime, it's been holding out signing checks. And is that an issue for BAE? Or are you assuming that those delayed payments will get caught up later in the year? And also, of course, will it be more than offset by the growth in military space anyway? Secondly, on the P&S shipbuilding move, is this into something new like building modules? Or is it more of the surface ships fit out that you did in earlier years? And how big could it get? And then a final high-level question for Brad. Debt reduction wasn't mentioned as an option in capital allocation. Some of your U.S. peers are looking at retiring debt instead of buybacks. And in that context, what is the right level of debt? Charles Woodburn: Okay. So Tom, I mean, you already alluded to the pivot early in the year from civil space to military and where you think that's going. So I think you maybe say a bit on that and also the shipbuilding and maybe the pivot to submarines. Tom Arseneault: All right, Nick. What was the first one again? Charles Woodburn: The question was about civil space -- [ NASA ]. Tom Arseneault: Yes. No, you're right. And that has played out a bit in the press of late. -- our current trajectory is depending only on the contracts that we have in hand. There is potential upside in this debate around NASA NOAA priorities. But you are exactly right, and that is our -- the growth we've seen has really been driven by military and national space. And that backlog I mentioned earlier, was built around that. And so to the extent the NASA NOAA debate settles in the direction we would like and that is to reinstitute some of the capability in like the GeoXO that program, for example, that would be beneficial to us. But our focus has been on ensuring we're well positioned to deliver on that military and national space. And then second question around shipbuilding. And here, let me be very clear. We are not intending to build full ships, and we had gotten ourselves in trouble in the middle of the last decade or so off on a commercial shipbuilding venture. That is not our intent here. We are contributing components and working to earn our way in to be a reliable supplier. We do the Virginia payload module, for example, for the Virginia class submarines today. We're looking to expand on some of that work. But we are just trying to be a good, healthy and reliable supplier in this submarine and shipbuilding industrial base but in the supply chain. I hope that's clear. Charles Woodburn: Would you, Brad, on the sort of debt reduction and debt levels? Bradley Greve: Yes. We're not looking at doing any accelerated reductions in our debt. We're already at 0.9x net debt to EBITDA. So pretty healthy balance sheet. And I do believe that constructive debt can help grow the business. And that's what we've done with the acquisitions of Ball Aerospace. And I'm really comfortable with where we are with the balance sheet, and that gives us really strong optionality, which really is what you want as a business. So we don't have any plans to accelerate any early maturities of debt. Charles Woodburn: Thanks very much, Nick. So I think over to you, Ben, for the last question. Operator: And now we're going to take our last question for today. And it comes from the line of Benjamin Heelan from Bank of America. Benjamin Heelan: Thank you for holding it for me. So the first question I had was on M&A, Charles, can you talk about the M&A pipeline? It feels as though buyback has been somewhat kind of deemphasized the potential to kind of grow that medium term, a lot of focus on CapEx, a lot of focus on self-funded R&D. But how are you seeing M&A within that? And if you could talk about the pipeline, how are you thinking about where you want to deploy capital geographically technology-wise, over the next couple of years? That would be great. And then the second question, I guess one for Tom. If I look at Electronic Solutions, I would have -- I would have assumed it would have grown a little bit better organically in '25 than the 5%. And when I look at the guide, the '26, the 6% to 8%, I kind of feel it would be more towards the top end and high single digit given the program mix that you have there. So first question on that, is there anything in there that is slower that we need to that we need to be thinking about? And then you've had a lot of questions on the budget in the U.S. I mean, obviously, we don't know what is going to happen. But I guess one way to ask it is, if you do see the budget moving to the kind of GBP 1.2 trillion to GBP 1.3 trillion range over the next couple of years, do you think the U.S. exposure that the BAE has will be able to outgrow that budget over the medium term? Is that what we should be thinking about? Charles Woodburn: M&A I'll take first. I mean really, it's much of similar focus areas as before, bolt-on opportunities adding to our Electronic Systems portfolio has been a good hunting ground for us in the past, and we'd continue if we found the right opportunities to look at that. Europe is presenting more opportunities given the growth rates there, although being careful and prudent with our valuations and making sure that we're not paying for opportunities -- we just announced our intention to move forward with an acquisition of a relatively small business in Sweden, which supplies barrels and castings to our Swedish businesses. I think will be a great addition to the portfolio. I've identified before Nordics as being an area that we'd be looking at. And then you'll have seen, and again, very much in the bolt-on category over the last couple of years, we've done some very interesting acquisitions in the drone and counterdrone space, things like Malloy, Callen-Lenz, Kirintec capabilities. And again, we'd look for those kind of opportunities to add to the portfolio. So very much in the bolt-on space and in the kind of areas that we've looked at in the past. ES growth, do you want to say a little bit more on that Tom? Tom Arseneault: Yes. Sure. So ES, as you know, it includes SMS, the Space & Mission Systems business. And as we were discussing a little bit earlier, we saw a slowing of growth in the Space & Missions Systems over what we had originally expected in 2025 driven by some of this uncertainty, some of the delays in the -- again, as the administration settled in and they work through their various priorities, we saw some decisions and awards being delayed through the year. And so that resulted in a little bit of lower ES growth overall at the reporting segment level. As mentioned earlier though, the wins that eventually came here in the latter part of 2025, position us for double-digit growth here in 2026 that backlog translates. And so really good growth that will recover in the coming year. And then the other question around budget growth. And again, here we are with our crystal ball trying to get a sense of whether what that trajectory, what the slope of that budget growth will be. Our strategy all along as we -- as we've said, is we are working to pivot and align our portfolio as accurately as we can with the demand signals of the Department of are where is that budget likely to be spent? It's in the areas we've mentioned munitions the Secretary that maybe came out the other day saying that with the higher budget, they could potentially double the shipbuilding budget for the Navy. Marine Corps and ACV, so an additional award there. So we've done quite a bit to get that alignment right. And so again, we would hope to earn our way into a proportional benefit from that growth when it comes. Thank you for the question, Ben. Charles Woodburn: I think that actually brings us to an end now on the questions. But thank you all for joining. I think I'll see many of you out on the road over the next couple of weeks and beyond. But thanks for joining and -- thanks for joining. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that this conference call may contain statements that are forward-looking in nature and is subject to a number of risks and uncertainties that could cause actual results to differ materially. I would also like to remind everyone that this conference call is being recorded on February 18, 2026. Joining us on the call today are Alain Bedard, Chairman, President and Chief Executive Officer; and David Saperstein, Chief Financial Officer. I would now like to turn the call over to Mr. Alain Bedard. Thank you. Please go ahead, sir. Alain Bedard: Well, thank you, operator, for the kind introduction, and thanks, everyone, for joining us on today's call. Last evening, we reported our quarterly results showing robust free cash flow driven by international initiatives and the hard work of our team. With overall freight dynamics showing modest signs of stabilization, the men and women of TFI are busy preparing for a potential industry rebound and controlling the controllables. . And another focus of ours, which you've heard me in emphasis many times is producing strong free cash flow regardless of the cycle. I'm pleased to say that we generated more than $10 per share of free cash flow in 2025 or $832 million for the year and notably, our fourth quarter free cash flow was 25% higher than the year ago figure. At TFI, we view this free cash flow as very important given our strong track record of strategic capital allocation. We intelligently invest for the long term, even during down markets, and whenever possible, return our excess capital to shareholders. As you may recall, during the fourth quarter, our Board again raised our dividend. And over the course of 2025, we continue our track record of opportunistic repurchase buying back over $225 million of common shares. Now let's turn to the other aspect of our fourth quarter results, total revenue before fuel surcharge of $1.7 billion compares to $1.8 billion a year earlier, and we generated $127 million of operating income, reflecting a margin of 7.6. Our net cash from operating activities improved meaningfully to $282 million, which was up 8% over the prior year quarter. And our free cash flow from the quarter was $259 million, reflecting a 25% year-over-year increase, as I mentioned. Taking a more granular look at our business segment. Let's begin with LTL, which represent 39% of our segmented revenue before fuel surcharge. At $661 million, this was down 10% compared to a year earlier. However, we're able to improve our adjusted OR slightly more than expected to 89.9% relative to 90.3% in the year ago period. Our total LTL operating income was $62 million compared to $70 million a year earlier. We also generated for LTL a return on invested capital of 12.2%. Next up is Truckload, which was 40% of a segmented revenue before fuel surcharge at $674 million for the fourth quarter as compared to $693 million in the prior year. While tariff and the general economic uncertainty still affect freight volumes and excess capacity has been an industry-wide concern. We continue to seek growth opportunity that our network and our infrastructure are particularly well suited for. This includes both data center and the broader economic grid -- electric grid to market in which we've demonstrated recent successes. Our Truckload operating income of $48 million compares to $60 million a year earlier and our OR of 93.2% compared to 91.5%. So wrapping up on Truckload, our return on invested capital came in at 5.8%. Lastly, in our segment discussion, Logistics was 21% of segmented revenue at $358 million relative to $410 million in the fourth quarter of 2025. Operating income was $31 million versus $43 million last year, and this represents a margin of 8.7% versus the 10.5%. I'll note that despite slightly lower logistics revenue sequentially we were able to expand our operating margin by 30 basis points over the third quarter. And finally, our Logistic return on invested capital was 11.8. Shifting gears, our balance sheet is a pillar of our strength supported by the $830 million of free cash flow we produced during 2025, including more than $250 million during the fourth quarter alone. Both figures up year-over-year. We ended the year with a 2.5x debt-to-EBITDA ratio. And given this financial foundation, we continue to be an attractive dividend and repurchase more than $225 million worth of common shares during 2025, as I mentioned previously. We also continue to seek accretive bolt-on acquisition opportunities. And I'll conclude with our outlook as we entered the new year. For the first quarter, we look for adjusted diluted EPS to be in the range of $0.50 to $0.60. And for the full year 2026, we initially expect net CapEx, excluding real estate, to be in the range of $225 million to $250 million. As I mentioned in the past, our outlook assumes no significant change, either positive or negative in the operating environment. So before we open up the Q&A, you may also have seen our press release yesterday about the latest change to our Board of Directors. So I want, again -- I want to again express my gratitude to my friend Andre Berard for his more than 2 decades of service as a Director of TFI International, most recently as our Lead Director. His impact on our Board since 2003 has been enormously beneficial to the firm, and we all wish him all the very best to his upcoming retirement. I would also like to congratulate Diane Giard on their nomination as our new Lead Director. And now operator, if you could please open the lines for both David and myself, we'll be happy to take questions. Operator: [Operator Instructions] And your first question comes from the line of Ravi Shanker from Morgan Stanley. Unknown Analyst: This is Nancy on for Ravi. I was wondering if you could help give some guidelines around the fiscal year guide and potential scenarios to get there and how you're thinking about 2026 as a whole would be great. Alain Bedard: Yes. Well, that's a very good question. So this is why we came out with our Q1, okay, with $0.50 to $0.60. I mean this is down year-over-year versus 2025 because we're still in a transition environment. The freight recession that we've seen since 2023, 2024 and 2025 is still persistent as we look at Q1. We're starting to see some very early signs in our Truckload sector that maybe things will start to get better, okay, during '26. This is very early. The change in the U.S. with the CDL and not renewing some permits as drivers, et cetera, et cetera okay? That may help the Truckload industry in general. On the Canadian side, the fact that now every owner operator or not an employee, but let's say, a Driver Inc. now has to -- will be issued a T4A, which is a kind of like a W-2 in the U.S. as an employee. So now he's got to report his income and pay taxes. So we're starting to see some people disappearing okay, in '26. But this is the very early days in the Truckload sector. On the LTL side, I mean, we're still in a very difficult environment, and we anticipate that it's still going to be the case for probably 2026 as a whole. On the Logistics side, though, I mean we feel really good that, okay, yes, our Q4 2025 was not as good as the previous year. But in terms of one of our divisions that moves trucks for the most important manufacturer in the U.S. Packard and Freightliner. We think that this is going to start improving by probably Q3 and Q4 going back to normal. So on the logistics side, we have a more clear path of the major improvement that we could see during the course of '26. Truckload early signs that things will probably get better, although nothing is sure, it's very early in 2026. We're just in February. On the LTL side, U.S., still very soft market. On the Canadian side, very soft market, too, but we do way better in Canada than we do in the U.S. because if you look at our revenue per shipment, number of shipments are down, okay, in Canada, the same as the U.S. But we're able to maintain an operating ratio very close to what we were doing, let's say, a year ago. So we have a better control on our costs still in Canada. If you look at our claim ratio, for example, which is like unbelievable. Were close to 0 in Q4 on the Canadian LTL side. And we're still at 0.9% of revenue on the U.S. side, which is an area that we definitely have to improve during the course of '26. I mean we had some better quarters on that in that regard on the claims side, and we need to focus more on that, and this is a big area of focus in terms of improving our service on the U.S. LTL side with our customers. So you don't want to break the customers' freight or lose it, right? Unknown Analyst: Got it. That's very helpful. I guess touching on that a bit more. Do you guys feel ready for the up cycle that comes within U.S. LTL with the idiosyncratic changes you have made? Or is there a lot more work within 2026. Alain Bedard: No, we're ready -- I mean, we are really ready. I mean in terms of the management tools that we have today versus, let's say, just 2, 3 years ago, I mean we are very well equipped. We have financial information by terminal now. We've implemented Optym on our line all. We have Optym also implemented, which is a software on our delivery side, okay, now we're going to Phase 2, which is going to be also implemented for the pickup side. So I mean, we're ready. We have the tools. We are improving our team on the commercial side. I mean, we have way more stability in our sales force than ever, okay. So our friend, Mr. Traikos has done a fantastic job of creating some stable environment in the sales team, understanding the focus of what these guys need to do. And I think that probably for the first time, it's still early in the game, but in Q1, we're probably for the first time in a long time, show that our shipment count is about equal to the one of the previous year. Very early still, okay? But if you look at Q4, we were down 10%. We're down 6%, 7% in Canada, but down close to 10% in the U.S. So it would be quite an accomplishment as a first step, okay, to be able to at least maintain the volume that we had in Q1 '25. Operator: And your next question comes from the line of Jordan Alliger from Goldman Sachs. Jordan Alliger: Yes, I hear your thoughts around the demand environment. I'm just sort of curious as we roll into the -- or through the first quarter. Is there a way you could give some additional color as to perhaps the segment margin-related drivers behind the $0.50 to $0.60 EPS guide, again, realizing that you're not assuming much change in the operating environment, but maybe give some sense for shape of those margins as we move forward seasonally . Alain Bedard: Well, that's a very good question, Jordan. And so this is why I'll pass it on to David, which is our CFO. David Saperstein: Jordan. So we're looking at probably around 250 basis points of sequential margin deterioration in the U.S. LTL. And I just want to qualify that by saying that Q1 is unique in the year and that it's very back-end weighted to March. And so it's very difficult to get a sense for the trends based on January and the first half of February. And this year, particularly so, because we lost at least 100 basis points related to weather, which caused us to have a lot of overtime expense, et cetera. So we anticipate around 250 basis point sequential deterioration, but it's heavily weighted towards March, which, of course, hasn't occurred yet, and we don't have perfect visibility into. In terms of Canadian LTL about the same in terms of the sequential move, P&C is 1,000 basis point down and 15% revenue down sequentially, which is normal seasonality for us, Q4 being a peak season in the P&C. Specialty Truckload, like Mr. Bedard was saying, we are seeing some early signs of positive things in the Truckload. And so we expect to be flat sequentially from Q4 to Q1 in the Specialty Truckload. Canadian Truckload, a little bit of erosion, maybe 100 basis points margin deterioration sequentially and then Logistics are around 150 basis points. Jordan Alliger: All right. Great. And just out of curiosity, I know the weather has had an impact. Are you able to share a little bit more color around, I know March is so important, how's January, February volumes? And is it possible? I know you alluded to it a little bit, can you still make that up in March on the tonnage side for LTL? David Saperstein: Well, listen, the January was very, very difficult, both from a volume perspective and from a cost perspective, because of the costs associated with the weather and the disruptions and the inefficiencies that, that caused. February, we saw volumes tick up, and that's why Mr. Bedard is making a reference to potentially being flat year-over-year in volumes. We'll see how the pricing follows as it relates to that. But we can see that the volumes are -- did tick up in Feb. Operator: And your next question comes from the line of Walter Spracklin from RBC Capital Markets. Walter Spracklin: Good morning, everyone. So you mentioned some of the improvement that you're seeing, and David just mentioned it as well in the fundamentals of trucking attributed to some of the CDL and [indiscernible] previously testing. Are you seeing that now build into your pricing, your contract pricing. We see pricing move on the spot side. But are you seeing at all any improvement in pricing on a contracted basis, particularly in U.S. LTL or if it is differentiated by segment or region, if you could touch on that. Alain Bedard: Yes. That's a very good question also, Walter, because spot moves first. And when the shippers start to see a movement upward in the spot, they try to get into a long-term agreement with you with those low rates, right? So to answer your question, yes, spot are up. On the van side, I mean we're starting to -- it's also inflation for us on the line haul for our LTL, because some of our LTL is moved by third parties, okay? And we saw price moving up in Q1 so far. But on the contract rate, it takes more time. It takes more time Walter, so that shippers are going after you, commit to long-term pricing at these low rates. And as a trucker, what you normally say is let's wait, let's wait and see. So for now, no, on the long-term rates, it's still not as good as the spot rate, but we believe that the fact that the it's always an offer and demand balance. So the offer is starting to reduce, okay? The demand is still not great, okay? This is the issue we have for the last few years is that the offer has always been growing because of the '21, '22 COVID area where we added so much capacity, okay, that now we're stuck with overcapacity. And now the offer is starting to reduce a little bit and the demand is still not very strong, but we anticipate that if the demand starts to go upward and the offer is also being reduced. So this is why as 3PL they're starting to see some pressure, because the trucker are asking for more money and they can't get that kind of money from the shipper yet. So a little bit of pressure on rates for our, let's say, our 3PL organization. But long term, medium term, for sure, the contract rates will start to go up. If this trend of reducing the offer and a little bit of increase in the demand continues in '26. Walter Spracklin: Okay. That's fantastic. I'd like to go back to your guide now and just reflecting some of the inbounds I'm getting in the sense that you delivered much better than your guide had -- your guide for Q4 had been set at 80 to 90, you came in it with [indiscernible]. Can you talk a bit about the different. What we could see what we had been forecasting relative to what you came in with, but really internally, where was the area of outperformance? And is that area of outperformance now built into your guide for Q1 as well? Alain Bedard: Well, you know what, Walter, like David was saying, the problem that we face is that we are giving guidance on Q1 based on horrible month of January, right? And a very early, okay, signs of improvement in February. So this is why we're cautious. I mean, -- this is what we believe it could be delivered by our operation, okay? Hopefully, we do better than that like we did in Q4. But then again, the other problem we have Walter until we have a deal between U.S., Canada and Mexico, which is supposed to come, let's say, in the summer of '26 even if the market -- there is a reduction in the offer, the demand is still not very strong. So this is why we have to be very careful until such time that we have a new agreement between the 3 countries where our customers knows what's going to happen in the future, then we're going to feel way better, okay, in terms of being able to forecast what can the company deliver in terms of our profitability. Operator: And your next question comes from the line of Brian Ossenbeck from JPMorgan. Brian Ossenbeck: I just wanted to hear a little bit more about the Specialty Truckload business, obviously, heavy industrial there. So assuming not seeing too much of an uptick yet, but we've seen a little bit of life in the PMI, but I also want to hear a little bit more about the data centers, the electrical grid, the things that probably have maybe a little bit more longer tail to them, but I'm not sure how big they are and how fast they're growing at this point. So maybe some more details on the industrial side with those 2 in focus. Alain Bedard: Yes. Yes. You know what? This is something new for us, right? And this is coming right now, okay. It's our Lone Star operation out of Texas that is really the one being involved in wind, although wind is going to be quite active in '26 and moving some equipment for the data center. One of our latest acquisition is also bidding on some job up north in Michigan in those northern states in the U.S. So that could be a positive for us if these guys were able to win these adventures. So I mean, we are an industrial carriers in our Truckload. We're not a retail guy, okay? We are industrial. And for sure, let's say, on building we start moving in the right direction in that regard. Okay, that's going to help. Whereas in the meantime, this is why we created this job of Chief Commercial Officer for all of our U.S. Truckload with [ Mr. Huppi ] that is now in charge of working, okay, all of our network participants in that sector. So we are deeply focused on what is moving now. And what is moving now is where the major investments are in the energy sector and wind, solar and the data center. So that's our area of focus right now. But hopefully, the other sector, okay, of the industrial, which is construction material and all that starts to move in '26. Now like I said, with this latest acquisition that we've done late in '25, these guys are very good. Hopefully, they're successful in those bids, and we'll see, because this could be a very interesting win for us. So we'll see if these guys are able to get the ball moving on that. So all in all, we started, okay, like we said, we're just seeing a little bit of the early sign of some industrial activity, which is our world. I mean we're not a van carrier that moves retail freight, right, for, let's say, a Walmart or Amazon. I mean us, we move steel, we move aluminum, we move building material, et cetera, et cetera. So that's our core, okay. Same in Canada, too, right? So hopefully, this starts to move. And like you said, there's some movement on PMI. Hopefully, those major investments starts to increase. Under the new administration, we're hopeful that this is -- this will happen. Brian Ossenbeck: All right. Maybe just a follow-up on the TFF, TForce side of things, for shipment looks like it's stabilizing a bit here. Talking about getting back to maybe flat tonnage growth here in the quarter and maybe improving from there. Is that service and network dependent? Or is that more of a -- all of the economy, I would assume it's more of the former, but just wanted to see how far along you are with that -- with those improvements to the point where you could maybe grow a little bit faster than what the market is giving you. Alain Bedard: Yes. See, our focus to us is if you look at what we do in Canada in terms of our weight per shipment is way higher than what we do in the U.S. Why is that? Because you have to understand that TForce rate used to be UPS freight. And their focus was retail, like UPS per se. And as we're saying, forget about retail as much as you can move away from retail and let's move freight, that is based on the industrial base. So this is why our weight per shipment since we bought the company, it went from about 10.75 to 12 something now, 12.25, 12.50. Right? And the push is to continue to move into that sector of industrial LTL versus retail LTL. We understand that a lot of the retail stuff more and more, okay, will be controlled by the gig economy, by the Amazon and all that. So this is why we're saying to our guys in the U.S., let's focus on the industrial sector of the economy versus the retail sector of the economy. Now the problem, like I just said earlier, is that the industrial economy is slow, it's very soft, right? But this is why it may be a little bit more difficult to do this transition. But that's the focus of ours is to move away as much as fast as we can, okay, from the retail economy, because we're seeing what's happening, okay, with the gig economy with the Amazon and all the others one. So guys, that's changed, okay, the focus. We've been quite successful so far, okay, doing that, but we need to improve more. We have to be closer to 1,400, 1,500 pound shipments, because don't forget, you're paid -- normally, you're paid by the weight. And the cost is not based on the weight. The cost is based on the movement, right? So you move a pallet that's a 1,000 pounds or move a pallet that's 1,500 pound. The cost is about the same. May be different on the line haul. But line haul the issue is always [ queued ] before weight. David Saperstein: Yes. And the service point continues to be very important for us, Brian, and that's how we're looking to grow and move. I mean it's true that we took a step back on the claims ratio. But the other service metrics are moving in the right direction. I can tell you that in Q4, the miss pickups were 1.5%, down from 3.3% a year ago, reschedules at 8%, down from 12% a year ago. On time is flat, around 91%. And then we've continued to increase our small, medium-sized shippers as a percent of total, it's around 28% of total revenue, that's up from 25% a year ago. Operator: And your next question comes from the line of Jason Seidl from TD Cowen. Jason Seidl: I wanted to touch base a little bit on the data center comments and I think you called it out in the previous release, and you guys typically don't do that. Maybe you could dig a little bit deeper and let us know sort of how big you think this can get for TFI. Alain Bedard: Well, you know what, Jason, like I said, I mean, right now, before this acquisition that we did late '25, I mean we were only servicing the data center world, okay, through our Texas operation at Lone Star. Okay? And this is something new for those guys. It's like it's something new for the industry in general. So -- because these guys used to be big with wind and energy in Texas. So now we're saying, okay, this is great, but how about data center. So let's -- so we are kind of very close to what's this builder Bechtel, okay? So we're trying to work very closely with those guys. But now with this new acquisition that we just made late in the year, those guys that are operating more like in the Michigan area. Those guys are also very close to a builder there that's been awarded to data center. One for Meta, one for Google. And hopefully, we could continue to work for this builder okay, to support them in those two data centers. So this is -- could be a win for us. If ever, our team is successful out there. So this is what we're trying to do is build some kind of a recipe partnering with the builder of those centers, like the Lone Star guys are with Bechtel and our guys up north are with a different builder. So this is what we're trying to do. And then once this is -- this data center has been completely built, they will need servicing, right? So that's also something that we're trying to get into and to grow that business. We have lots of experience in Texas with Lone Star and moving very expensive -- like we did a move for one of the energy company, ConocoPhillips that was valued at about just doing the move, if I remember correctly, it was like close to $1 million just to move this kind of equipment, right? So these guys are really good at what they're doing. And it's just like, okay, guys, so good for wind, good for energy, for the oil sector and all that. But data center is the new thing. So let's get up and running on that. David Saperstein: And the approach is to approach -- the approach is to approach this as a consolidated group, right? And we have one of the larger flatbed fleets in the U.S. over $1 billion of U.S. Flatbed revenue. And we are going to market for the large customers as one so that they're in the area able to get that nationwide service. And so it's around the energy, it's around the construction. It's also around the high-value A lot of the materials or high value need to be on time. And so we have that skill set with the DoD top secret work that we do high-value freight as well. Jason Seidl: That makes sense, David. And my follow-up, Alain, you touched on continuing to do acquisitions. There's been a lot of articles out that 2026 could be a big M&A year for the logistics group in general. Maybe talk a little bit more about that? I mean, are you still targeting a larger acquisition this year? Or is that going to be something that's more of a '27, '28 event? Alain Bedard: Jason, in order to do a deal of large-size you got to be patient. And like I've always said, you make your money in the buying, never in the selling. So the price has to make sense and all that. So for sure, I mean, we could do something of size, the end of '26 into '27. But there, again, I'm looking at what's going on with everything that's going on in the market right now with -- on the parcel side and even on the LTL side. So you'll probably see us do some in '26, do some kind of smaller deals, okay, like the one we just did late in Q4. We just did one small deals in Minnesota to add to our Transport America division, okay, that makes a lot of sense. We may be doing some smaller deals in the LTL world in the U.S. So large deals takes time, right? And we have to be very careful. And like I said earlier, until we have a deal between the 3 countries, okay, in NAFTA kind of deal, right? Until we have that, it's very difficult to do a deal of size because you don't know what the rule is going to be. So this is why I'm saying it's impossible to do something now may be possible by the end of '26 but probably more like '27. And in the meantime, because of our free cash flow generation, we'll keep continuing to do smaller deals, okay, where the risk is different, okay? Now because of too much unknown on the deal between the 3 major partners in the world, which is U.S., Canada and Mexico. Jason Seidl: Yes. Makes sense. Alain, you mentioned smaller deals on the LTL side. Will this be like buying cartage agents. Alain Bedard: No, I would say it's probably -- I'll give you an example. You buy a small Texas regional guy as an example, okay? -- or you buy a regional guy in the Northeast, which is close to Ontario, Quebec, right? So that's what I'm saying by smaller deals. So it's not a national carrier. It could be a strong regional guy that covers one state like Texas or cover two or three states in the Northeast. This is more okay, what we are trying to do right now because a large deal in the U.S. LTL for us, it's not possible right now. Operator: And your next question comes from the line of Tom Wadewitz from UBS. Thomas Wadewitz: I wanted to try to drill down a little bit on the non-domiciled CDL impact and how to look at that in your business, right? So Truckloads is an extremely large market. where we expect the supply side benefit, but the benefit might be different in dry van versus specialty in flatbed. So do you have a sense of kind of how much non-domiciled CDL has impacted specialty flatbed, you were mentioning some of the skill sets are a little more unique in specialty. And I'm just trying to get a sense of like, well, is this really going to cause capacity to come out in dry van and then there's maybe less pricing impact to you. I know they're somewhat fungible, but just trying to get a little more sense of kind of how you would see the driver impact and whether you think there is a lot of activity in supply and specialty that's actually non-domiciled? Alain Bedard: That's -- you know what -- this is a really good question, because so far, okay, we see way more, okay, on the van side than on the specialty truckload side, because what you just said I mean in the specialty, let's say, on a flatbed or on a tanker operation, there's more than just driving the truck. Right? Whereas the van, you just pick up a trailer and you drive it, right? So it's much easier than to tarp a load on a flatbed, right? So I don't know that, Tom, so far. It's very hard to put a finger on what the effect of that is going to be. But one thing is for sure is that we'll probably not see as much benefit as the van because it's probably less of an issue for our world, but it's a little bit like a domino effect, right? So once the spot moves okay, on the van, it starts to move on the reefer, we see also some movement on the price on the flatbed side year-over-year. It's starting to move. So I don't know if exactly -- is it because the supply is constrained or is it the demand that's more? My feeling would be more like not the demand because the demand in my mind, is still very soft and weak excluding the data center thing there or the energy sector. But I think it's an issue of the supply that's starting to constrain because our revenue per mile, although we still have some of our divisions that are not doing well on a revenue per mile basis because of market condition. But overall, okay, our revenue per mile is improving. I mean in Q1, okay, I think we're going to start to see those improvements, because we did not improve in Q4. That's for sure. I mean we -- I've never seen a Specialty Truckload OR at 93%, which is worse than my van 91 OR in Canada. This is not acceptable, absolutely not. But there's market condition to that. So that should -- we should see some improvement there. And is it because of the demand? Or is it because of the supply, I think it's a little bit the supply demand will probably improve over the course of '26 and '27 and CDL, is that helping us as much in the specialty world versus specialty Truckload world and than the van world, I think that probably it's a huge more benefit to the van world versus the specialty, but we're still getting I think improvement, because our revenue per mile is improving year-over-year as of now. Thomas Wadewitz: Okay. That's great. And then a quick one for David or one or two for David. Just I want to make sure I understand your comments on U.S. LTL in 1Q. So if you see flat year-over-year shipments, then that would imply, I want to say, like 3% to 4% growth in shipments per day 1Q versus 4Q. So that would be kind of a meaningful improvement. So I don't know if you were saying kind of flat shipments sequential or year-over-year and if you're saying flat year-over-year, what might be driving the kind of the improvement in activity. David Saperstein: Well, what's -- so it would be potentially flat year-over-year. Again, hard to say what's going to happen in March. But that was -- but it was -- the comment was with regard to year-over-year. What's driving the improvement is the sales team, the service and all of the things that we've been working on over the course of the past year. Now the revenue per shipment may not be positive, right? And that's the -- that's why we're looking at -- we'll see where the revenue per shipment is relative to year-over-year. But, but there is pricing pressure out there. And so that's going to be the offset to what could be strong volumes or stronger volumes as it relates to the profitability contribution. Thomas Wadewitz: And 100 basis point comment on weather impact, that's a full quarter impact in U.S. LTL? David Saperstein: Yes, we're estimating that we've lost like $5 million to $6 million already on the weather. Just through extra over time and just inefficiencies and cleaning up the dock and all that cost . Alain Bedard: Yes, versus a normal environment, because some -- see the issue of the weather, we always have weather in Q1. So this is not something that we normally talk about. But this year, it's special, because it affected our big market, which is Northeast, Midwest and Texas, right? So if the weather is an issue in Idaho or in Utah, but not too big for us, right? But when it affects Chicago, when it affects Dallas, when it affects New York. I mean this is really, really difficult because Dallas, we were shut down for 3 days because of the ice. So what David is talking about $5 million, $6 million, this is over and above what we consider to be a normal environment of weather. I mean, this is -- we're not saying because we had -- no, no, this is exceptional for this year, because weather was really bad in our major sector, okay, for TForce Freight . Operator: And your next question comes from the line of Konark Gupta from Scotiabank. Konark Gupta: Maybe just a first one on the earnings side of things. I mean, as we kind of look into the back end of 2026, hopefully, conditions improve. But is Q4 going to face a tough comp from like the [ $1.19 ] EPS you reported for Q4 of 2025. I mean if I'm looking sequentially, you have like effectively a drop of 50% in EPS from Q4 to Q1 as guided, and that's a little bit wider than what you typically see, right? So I'm just trying to make sure, we're not missing anything when we are comping or lapping the Q4 2025 and Q4 '26. Alain Bedard: Okay. So I think, Konark, that Q4, okay, 2025 versus '26 I think that we're going to be in a different position, okay, versus this year versus '25, reason being that I believe that our logistics will do way better in 4 '26 versus 4 '25 because our customers will be busier talking about the OEMs, the truck manufacturers, okay? And also the fact that we've had as an acquisition late in Q4 '25, a great company in our Logistics sector. So this is why on the logistics side, I think that we're going to do way better, okay, Q4 versus '25, '26. On the Truckload side, it's still -- I'm convinced that we're going to do better because I've never seen 93 OR. And we're taking some action, okay? I'll give you an example. One of our division on the West Coast which we are doing really well, okay, with certain accounts like the aerospace. So we have Boeing as a customer over there. We have Bombardier as a customer too. So we're doing really, really well with those guys, but we're doing so poorly with some other customers. So we took the bull by the horn, and we said, guys, no, no more of that, right? We have also another division that's from Daseke that is doing really well with one sector of their business, but they're doing really poorly with another sector. So there, again, we're going to take action there. So this is why, to me, I think that Steve and his team understand that we can run a Specialty Truckload with a 93 OR. This is completely unacceptable. And we're taking action over and above what we think that we're seeing some early signs of market improving. On the LTL side, like David was saying, I mean a big focus of Kal and the team there is really to improve our service, okay? And we are. We are improving our service. So as an example, we move way more freight on the road versus the rail. So the rail miles within TForce rates are down to about 20%. When we bought UPS rate, these guys were 38% to 40% on the rail. So for sure, when you move freight on the rail. You don't know, you don't control the service, because this is the rail, whereas if you do it yourself on the road, well, it's under your control. So we are improving our service as an example, just moving rail to road. Now like I said earlier, because we move that on a van and the van, okay, world's rate per mile is moving up, like we were talking about this environment is changing. It's also a little bit of pressure on our costs because where we used to pay, let's say, 220 miles. Now, okay, you could be start paying 250 to 270 or 280 a mile depending on the lane, right? So a little bit of pressure on that for us. But for sure, with better service, I believe that our commercial team with Chris and the rest of the boys there will help us grow for the first time organically in '26 year-over-year, right? So this is why you look at what we're saying about Q1, I think it's exceptional what we're seeing because it's still a very tough environment. Our customers don't know what's going to happen in the future because until we have a deal, like I said earlier, between U.S., Canada and Mexico, a lot of guys are sitting on the fence because don't forget, I mean, TFI is a U.S. carrier for about 75% of our revenue, but 25% to 30% of our revenue is Canadian, right? So a lot of our Canadian customers, they don't know what the future is. And also some of our U.S. customers are facing a tough time selling to Canada right now. So all of that being said, when we come up with $0.50 in Q1, it looks really bad versus $1 in Q4, but it's a special environment, okay? And we're cautious. Konark Gupta: That's great clearly. And if I can follow up maybe on logistics. I think you mentioned that sequentially speaking, at least logistics margin expanded from Q3, don't be surprised to see that. So any color you can share in terms of what's driving this improvement? I mean, is it early days? Or is it the mix? Or is there something else? Like how should we extrapolate this performance at logistics into '26. Alain Bedard: Yes. I think, Konark, that you see us improving during the course of '26. Like I said, because of this acquisition, okay, that we did because of our -- one of our large customers, the OEMs are also going to be busier. Our Canadian logistics is doing pretty good. We have a great business there. Our U.S. logistics is under a little bit of pressure with what's going on in the truckload sector in the U.S. where the rates are starting to move up on the spot. So you try to get a truck. It's a little bit more money, and you're stuck with contracted rates with customers, and these guys want to extend those contracts and we're saying, no, because the market is changing. So on the U.S. side, a little bit more pressure, okay, on our profitability there, maybe for the next few months. But all in all, I feel really good about where we're heading with our logistics. Logistics for us, with this new acquisition and a few things that we're working on should do better in '26 than in '25, Absolutely. The other thing also that's worth mentioning is that if you look at our Truckload brokerage operation in the U.S., I mean the revenue is up, okay, and it will continue to grow. So this is one area of focus of Steve and his team is to grow more of this asset-light operation versus asset-heavy operation and get a better mix like we have in Canada. In Canada, we won a hybrid model where we have our own assets, okay? But we also generate a lot of revenue without any assets. When we bought Daseke, they were doing some of that, but not a lot. So the goal doing in '25, '26 and '27 is to grow the share of the asset-light operation share of revenue, okay, versus the total revenue of the company. So you're way better positioned to improve your return on invested capital, because when you don't buy steel, your capital cost goes down, if the profitability or the revenue remains the same, your return on invested capital improved. And this is when we talk to the Truckload team say, we can't run a single-digit retail investor capital, guys. I mean if you do that, the future is bleak. So we got to do something. The market will help us, yes, but we need to help ourselves too. Operator: And your next question comes from the line of Bruce Chan from Stifel. J. Bruce Chan: You made some helpful comments around the road to rail shift in LTL. I think that makes a lot of sense for service. Maybe you could also remind us of what percentage of linehaul miles are currently outsourced on the LTL side, whether that's the truck or rail. And then given your fleet investments, do you have any plans to bring that number down this year? . Alain Bedard: Yes. So what we do is about 20% on the rail, 20%, 22% on the rail. And then we have owner up, okay, and we have third party. So the third party and owner up probably our own guys do, if I remember correctly, David, tell me -- correct me if I'm wrong. David Saperstein: Yes, our own guys are doing around 55%. Yes. So it's 45% outsourced. Alain Bedard: And of the 45% outsourced, 20% of that is rail. So 25% is third party, owner up and third party. J. Bruce Chan: Okay. Great. And then just maybe broad plans, if you're comfortable with that number as far as its use your model or whether you plan to bring that down over time? Alain Bedard: Listen, I mean, for sure, okay, if you hold your average length of all is 1,000 and more, you have to have some rail, right? So I cannot answer is 20% the right number? I would say we're getting close to the right number if the average length of haul stays above 1,000 miles. Now one thing is for sure is the 55%, like David was mentioning with our own guys that could grow probably closer to 60%, okay? Over time, yes, because you have better control when it's your own people. But the rail at 20%, we're probably close. If we remain over 1,000 miles. We're probably close to the best that we could do. Now again, this is going back to the average weight per shipment that we went from $10.75 to $12 something -- the average length of haul is down a bit, but the discussion I'm having with Kal and the rest of the team is over time, okay, we need to change our approach to the market and reduce over time the average length of haul so that we don't touch the product 3 or 4 times. We touched the product less. So in order to touch the product less, you have to do less miles, less on the average length of haul, right? it's an evolution, okay, that's going to take place over time. But there, again, what I'm saying, if you run over 1,000 miles, you need the rail. Operator: And your next question comes from the line of Ken Hoexter from Bank of America. Ken Hoexter: So Alain, maybe just a bit of a contrasting message, so maybe some clarity. You noted a weak environment, but 1Q should be flat after a down 7% ton and down 11% shipment quarter. So maybe clarity on what's driving that near 50% EPS downtick in the first quarter. And then you throw in, "Hey, it's conservative, we could do better." So is it just the weather that's stepping you back? Are there gains in the fourth quarter or any impacts from the fourth quarter acquisitions in there? Maybe just some clarity on it. . Alain Bedard: Yes. So David, do you want to give some clarity to Ken on that? . David Saperstein: Yes, sure. I mean, look, in terms of gains or anything special in the fourth quarter, the only thing special in the fourth quarter was tax for about $5 million. Other than that, it's -- there is nothing onetime in nature. The -- in terms of what's driving is the trend of volumes up. It's the work that the team is doing. What may still weigh on the profitability though is the revenue per shipment and -- and so that's why the growth in volume may not be as profitable as otherwise would be. We'll just have to see how that plays out. And then more broadly, it's very, very difficult to, especially at TForce Freight to forecast the first quarter because all the money is made in March. That's just the nature of this business. And so when we're looking at a Jan and Feb that we're very difficult with or at least January, very difficult with the dynamics that we've talked about. There's a lot that's unknown. And so we've done the best that we can, and we are being conservative about what March might be when we put together that guidance. Ken Hoexter: That was flat on shipments or on tonnage. I think you said both... David Saperstein: The shipments year-over-year potentially on shipments. Yes. Ken Hoexter: And then you previously noted, I think, 200 to 300 basis points of margin improvement at LTL in a flattish environment. I think you mentioned, if we're starting out flattish in 1Q, does that mean you're looking flattish for the year? And -- does that -- or is too big a whole? And so that 200, 300 basis points for the full year is too big? Or is that still achievable Alain, in your outlook? And how about EPS, are you then looking for it to be at least up on a year-over-year basis? . Alain Bedard: Yes. So in terms of the volume, like I said, Ken, I think for the first time '26 in our U.S. LTL we should see a little bit of organic growth, okay, on the shipment count, right? On the weight, we believe that it's going to be about flat or up a bit. On the revenue per shipment, like David was saying, okay, right now, what we're seeing is a little bit of pressure on the revenue per shipment when we look at Q1 so far. But the team is working to correct that, okay? It's not like we accept that. No, no, no, no, no, no. We cannot live with $5 less of shipment and whatever it is. I mean don't forget, our GRI, which is small, okay? It's a small number of shipments, right? But we didn't do any, but we're doing one in mid-March, okay? Most of our peers have done, there's earlier than us. And us, we waited, okay? We waited because we want to continue to improve our service. So there's no this issue with customer when you talk to them about asking for more money. So this is why we're doing that mid-March. Okay. Fine. So if we go back to the year in terms of globally TFI, my mind is, for sure, our plan is we will deliver better OE or EPS in '26 versus '25 without a doubt. That's our plan. Because our -- like I said our logistics will definitely improve that. We have visibility. We know okay, where the OEMs are going, because we talk to them, okay? We know that it's going to be weak for the first 6 months year-over-year in '26 versus '25. But the latter part of the year, we're going to do way better in Q3 and in Q4 versus '25. Okay. So we are suffering a little bit in that business in Q1 and in Q2 year-over-year. In our Truckload, we've talked a lot about that. I mean I'm convinced that we're not going to deliver a 93 OR, okay, in Q1. We are improving our year-over-year basis in Q1 and during the course of the year. And on the LTL side, I mean, we're taking some actions there, okay, improving our service, organic growth small. I think that we'll do a better job in '26 as we've done. Now we've said it clearly, and this is why our guidance is only $0.50 to $0.60 is that we had a difficult start of the year, okay, not just in U.S. LTL, in truckload as well and logistics because some of our customers are not that busy. So this is why this is what we believe is achievable, okay? And hopefully, we do better than that. David Saperstein: Yes. And the other thing I would point out on the full year is that in Truckload, we've done a lot of work in 2025 to reduce the capital intensity of Truckload, because we had way too much equipment. And so depreciation expense will be lower in the Truckload in '26 than it was in '25. And you can actually already see that if you look at the DNA of Truckload just in Q4 is $3 million lower than it was the year prior and lower as a percentage of revenue as well, right? So there's real efficiency as it relates to the capital there. And that's going to continue into '26 and the impact would probably be higher in '26 than $3 million a quarter. Alain Bedard: Yes. Because if I may add, guys, our revenue, if I remember correctly, our revenue per truck in Q4 is better even with rates per mile that are not that better. So velocity is more. Operator: And your last question comes from the line of Cameron Doerksen from National Bank. Cameron Doerksen: I just wanted to, I guess, follow up on M&A. You mentioned a few times the acquisition you closed in Q4, I guess, the Hearn industrial. I mean, obviously not huge, but you cited it a couple of times here as a really great fit. Can you just talk a little bit about that business? Because it looks like in your disclosures that not a huge from revenue point of view, but a pretty good margin profile for that business. Alain Bedard: Well, you see -- I mean those guys are doing a great job. I mean they are entrepreneur. And I think that what these guys are doing today is great. And I think that the potential for being part of the TFI family is going to help us -- help them and us, okay, do even better in the future. So this is something new for them. I'll give you an example. They don't touch freight. I mean, they do a lot of work for the -- in the automotive business, but they don't touch freight, but they have a certain degree in the freight. So that's something new for them, right? So for sure, they are in touch with our GHG division, okay? Because these guys have a lot of capacity that could be used to deliver freight for those guys. So there's going to be some great synergies, I think, between members of the family, with the Truckload sectors and all that. And for sure, these guys are lean and mean operators, very successful guys. And yes, I think it's going to be a great acquisition in our logistics sector, a little bit like the [ GHG ] and the other ones that we've done in the logistics sector. Cameron Doerksen: Okay. No, that's helpful. Maybe just a bigger picture capital allocation question. I mean you mentioned that you continue to be active with the tuck-in acquisitions. Just wondering if you've got kind of a target for leverage at year-end? I mean, you still pretty comfortable here, great free cash flow still expected in 2026. But just any guess targets there as far as leverage and is the capital allocation priorities? Alain Bedard: Yes. So capital is always the same thing. If we don't do anything of size we're going to do probably, I would say, '26 in 2026, $200 million to $300 million of M&A in terms of tuck-in, probably $200 million minimum, maybe up to $300 million, and then we get the dividend. And the rest, okay, we'll just use the cash to pay down debt or depending on the stock valuation do some buyback. I mean we have the possibility of buying back all the way up to 7 million shares that we are approved to do. Now again, $2.5 million leverage, it's okay, but we would prefer to bring that down to $2 million over time. So let's say that we do about the same free cash as we did last year. We got the dividend, we've got the M&A -- so then for sure, we'll be reducing our leverage if we don't do any stock buyback. So leverage I don't remember the plan, David. So where do we end up, we're closer to $2 million than $2.5 million. David Saperstein: Yes, no doubt. And the other thing we'll point out and we actually added this into the MD&A were just under the table where we show the leverage ratio. That leverage ratio is calculated according to the way that our banking covenants are calculated and it includes two things that some investors may not consider leverage. One is letters of credit. And the second is the book value of earn-outs, right, which are subject, of course, to the future performance target companies. So those numbers are a little bigger than they have been in the past. And so that's why we set them out in the table. And so you can see that and you can work out by backing those out, what, let's say, the real economic leverage of the company is, which is a little lower than as presented in the banking syndicate. Alain Bedard: Yes. With these numbers, David, I think we're at $2.2 million, right? . Operator: There are no further questions at this time. I will now hand the call back to Alain Bedard for any closing remarks. . Alain Bedard: Thank you. So all right then. Thank you very much, operator, and thank you, everyone, for being on today's call. We appreciate your interest in TFI International. And we're both confident in our position and enthusiastic about what 2026 will bring. As always, please reach out if you have any additional questions. I look forward to seeing many of you on this year's conference circuit. Enjoy the day, and we'll be in touch. Thank you. . Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the ICL Fourth Quarter 2025 Earnings International Conference Call. [Operator Instructions] I would now like to turn the conference call over to Peggy Reilly Tharp, Vice President of Global Investor Relations. Please go ahead. Peggy Tharp: Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations for ICL Group. And I'd like to welcome you, and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl-group.com and there will be a replay available a few hours after the live call and a transcript will be available shortly thereafter. Earlier today, we filed our presentation with the securities authorities and the stock exchanges in both Israel and the United States. Those reports as well as the press release and our presentation are also available on our website. Please be sure to review the disclaimer on Slide 2 of the presentation. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Elad Aharonson, followed by Mr. Aviram Lahav, our CFO. After the presentation, we'll open the line for a Q&A session. I would now like to turn the call over to Elad. Elad Aharonson: Thank you, Peggy, and welcome, everyone, to review our fourth quarter 2025 earnings. We delivered a solid finish to the year and achieved our annual guidance target with $1 billion of specialty-driven EBITDA. In the fourth quarter, we also made significant progress towards our new strategic principles, which you can see on Slide 3. This includes the acquisition of Bartek Ingredients, the global leader in food-grade malic and fumaric acids. Bartek serves hundreds of customers and distributors in the food, beverages and other end markets and distributes its products to more than 40 countries worldwide. This acquisition allows us to expand our portfolio deeper into specialty food solutions. It also helps to position us for further growth as we leverage our existing global food presence to expand into other food ingredient segments. It further advances our recently refined strategy, which focuses on the significant growth engines of specialty crop nutrition and specialty food solutions, 2 areas where we already have deep experience and broad exposure. We will continue to seek additional nonorganic growth opportunities in these 2 markets driven by a commitment to creating long-term value and sustainable growth for our shareholders. At the same time, we will stay focused on our mission to maximize our core business segments, and this includes our potash resources. As you know, we signed an MOU with the State of Israel regarding the Dead Sea concession assets in November of last year. In January of this year, we signed a binding agreement based on the principles agreed upon in the MOU. We secured compensation for our assets at the Dead Sea and established certainty on the timing of this payment. It also included the insurance of bromine supply through at least 2035. Additionally, as part of our strategic efforts, we have been conducting a review of our capital allocation priorities and reevaluating less synergetic and low potential activities. As a result, in the fourth quarter, we made several adjustments with the majority related to advancing our new strategic principles. These were essential in moving ICL forward and designed to help fund our 2 profitable growth engines. These shifts in our priorities will help us to redirect our resources to where better aligned opportunities. Adjustments included the discontinuation of ICL's LFP battery material projects in St. Louis and in Spain, the closure of a minor R&D facility in Israel and the initiation of a sale process for our operations in the U.K. We expect to share updates on our strategic efforts throughout 2026 and look forward to strengthening and growing ICL for the long term. Now if you will please turn to Slide 4 for a brief overview of the quarter. Sales were $1.701 billion, up 6% year-over-year with all 4 segments delivering sales growth. For our Industrial Products, Phosphate Solutions and Growing Solutions segment, sales of $1.281 billion were up 4%. We remain committed to growing our leadership position in these 3 segments. Consolidated adjusted EBITDA was $380 million in the fourth quarter, and this amount improved 10% year-over-year. For the quarter, EBITDA for our Industrial Products, Phosphate Solutions and Growing Solutions segments was $249 million. In the fourth quarter, adjusted diluted earnings per share were $0.09 and up 13% versus last year. Operating cash flow of $340 million, improved 2% on a sequential basis. In general, the quarter was in line with expectations with year-over-year growth in key adjusted financial metrics. Prices continued to increase for bromine, potash and phosphate fertilizers in the fourth quarter. And similar to the previous 3 quarters, overall performance remained varied across the wide array of end markets and regions we serve. Turning to Slide 5 and the review of annual results. Consolidated sales for 2025 were $7.153 billion and up 5% versus 2024. Sales for Industrial Products, Phosphate Solutions and growing Solutions were $5.650 billion in 2025, also up 5%. Full year EBITDA of $1.488 billion was up slightly, while EBITDA for Industrial Products, Phosphate Solutions and Growing Solutions came in at $1.021 billion. Adjusted diluted EPS was $0.36 for 2025, and we delivered operating cash flow of $1.056 billion. During the course of 2025, we faced shifting macro forces and industry issues while simultaneously achieving our goals. From an ICL perspective, we gained significant clarity regarding the value of the Dead Sea assets, which I just discussed. Also, as previously mentioned, we completed a comprehensive review of the company and identified 2 strategic growth engines, specialty crop nutrition and specialty food solutions. We intend to expand in these 2 areas while continuing to benefit from our distinctive global presence and regionally diversified operations. Now let's review our divisions and begin with our Industrial Products business on Slide 6. For the full year, sales of $1.254 billion were up slightly year-over-year with EBITDA of $280 million. For the fourth quarter, sales of $296 million were up 6% with EBITDA of $68 million, so a solid end to a good year. In the fourth quarter, bromine prices maintained their upward trajectory even as some end markets such as building and construction remained soft. For flame retardants, sales of both our brominated and phosphorus-based solutions were flat versus the prior year. For bromine-based products, higher prices were offset by lower volumes due to continued soft demand. For sales of phosphorus-based products, higher volumes and prices in the U.S. were unable to fully offset lower volumes in other regions, mainly in Europe. Sales of clear brine fluids, which are used by the oil and gas industry during well completion remained solid and were driven by increased demand in South America and Europe. Specialty minerals sales increased on strong pre-season demand for magnesium chloride after an early snowfall in the fourth quarter in the U.S. This was followed by a massive winter storm in North America in January. Turning to our Potash division on Slide 7. For the full year, sales of $1.714 billion were up 4% with EBITDA of $552 million, up 12%. In the fourth quarter, Potash sales of $473 million were also up 12% year-over-year, while EBITDA of $150 million increased 15%. Our average potash price for the fourth quarter was $348 CIF per tonne. This amount was up more than 20% year-over-year. Potash sales volume of 1.2 million metric tons in the fourth quarter were up roughly 15% on an annual basis. This marks a strong finish to 2025 as we successfully addressed operational issues in the Dead Sea related to the war. For our Spanish operations, our focus on debottlenecking and optimizing helped us to improve reliability and advance our production goals. These efforts also helped us to deliver a quarterly production record in Spain in the fourth quarter. In the fourth quarter, we also signed a contract with our Chinese customers for supply at $348 per metric ton, which is in line with other recent industry contract settlements. Finally, potash affordability remained attractive in the fourth quarter, and we continue to maximize the profitability of our potash resources. Whenever possible, we prioritize potash supply to the best global markets. Now turning to a review of the Phosphate Solutions division on Slide 8. For 2025, sales of $2.333 billion were up 5%. However, EBITDA of $528 million was impacted by higher sulfur costs. In the fourth quarter, sales increased 2% to $518 million, while EBITDA came in at $121 million. Food specialties sales increased slightly in the fourth quarter versus the previous year and reflected growing volumes in North America and Asia as we leverage our regional expansion strategy. In the fourth quarter, our overall food business gained additional sales and also expanded its new product pipeline for dairy in the U.S. and EMEA. We also saw an increase in global processed meat sales across the U.S. and EU. In China, our food sales increased 15% in the fourth quarter, our best quarter of the year. For 2025, sales were up 12% as our business expansion in this region has been successful since its debut. In total, we expanded our food project pipeline with nearly 40 new solutions since mid-2025. While we are committed to growing this business organically, you can also expect us to continue to evaluate M&A opportunities. As I mentioned earlier, in January, we completed our acquisition of approximately 50% of Bartek Ingredients. And for 2026, we are targeting a wide array of growth options. This includes expansion into emulsifiers along with other R&D efforts such as the development of a high-protein drink stabilization system for GLP-1 users. We expect additional growth to come from portfolio expansion in seafood and soy protein and as the segment looks to deliver more localized food solutions to emerging markets. In China, our YPH joint venture benefited from both higher prices and volumes and an increase in demand for battery materials in the fourth quarter. We also celebrated the 10th anniversary of our Chinese partnership in January of this year. Overall, Phosphate specialties performance continued into the fourth quarter as expected with most regions remaining stable. However, market softness was maintained in Europe, a trend that lingered as anticipated. Higher cost of raw materials and specialty sulfur persisted in the fourth quarter and show no signs of abating in 2026. This brings us to our Growing Solutions business division on Slide 9. Sales for 2025 were $2.063 billion and improved 6% year-over-year, while EBITDA of $213 million increased 5%. This growth was due to our continued strategic focus on global specialty solutions, which have been customized for our customers on a regional basis. For the fourth quarter, Growing Solutions sales increased 6% to $467 million, while EBITDA of $60 million was up 18% versus the prior year. In the fourth quarter, we saw profit improvement in both North America and Europe. In North America, higher prices helped drive an increase in profit. In Europe, we continue to benefit from our successful product mix strategy, which is focused on our higher-margin products. Sales in Asia also improved in the fourth quarter, but rising raw material costs impacted profits as expected. In Brazil, the overall market remained under pressure as farmers faced affordability issues and distributors shift their buying behavior. Although this did impact our profitability, sales performance remained solid, and we were able to expand our specialty market share. I would ask you to now turn to Slide 10 and some key takeaways. We have already made progress in advancing our strategic principles, which we announced in the third quarter. We added Bartek Ingredients to our specialty food solutions portfolio, and you can expect to see more acquisitions in the coming year. We also took a comprehensive look at our existing portfolio and elected to discontinue our downstream LFP battery materials expansion, which we announced in the third quarter. In the fourth quarter, we initiated a sale process for our Boulby operations in the U.K. in the hope of getting this facility into the best hands for the future. During 2025, we also worked diligently to provide clarity around the 2030 Dead Sea concession process, which I discussed earlier. We continue to believe that ICL is the most suitable candidate to be awarded the future concession. We currently intend to participate in this process once it begins, assuming, of course, that the terms are economically viable, and we will ensure stable regulatory environment. I would now like to look outside of ICL towards the markets where we operate. Across our minerals, which include potash, phosphate and bromine, we see prices are stable to improving, and these trends are expected to continue into the first quarter of 2026. For our specialty phosphate, we are seeing pressure related to both competitive forces and higher raw material costs, and we are actively monitoring and reacting to these dynamics. While some cost inputs are rising, the sulfur market is experiencing exceptional volatility on a global basis. Prices have surged to multiyear highs, driven by supply and geopolitical issues. These increases are causing issues across several of our businesses and significantly impacting other agriculture and chemical manufacturers. At ICL, we are actively working to mitigate higher costs, including sulfur, and we will keep you up to date on our efforts as the year progresses. We are also experiencing pressure as the shekel continues to strengthen versus the U.S. dollar. This makes it more costly for us to do business in Israel as a dollar-denominated company. However, we are using hedging techniques to help eliminate some but not all of this exposure. Now before turning the call to Aviram, I would ask you to turn to Slide 11 and a review of our guidance for 2026. For this year, we expect consolidated EBITDA comprising all 4 of our business segments to be between $1.4 billion to $1.6 billion. As the price of potash has stabilized over the past few years, we believe providing consolidated guidance is now more relevant. For potash sales volumes, we expect this amount to be between 4.5 million and 4.7 million metric tons as we continue to benefit from the operational improvements made at the Dead Sea and in Spain in 2025. Finally, we expect our annual adjusted tax rate to be approximately 30% in 2026. And with that, I would like to turn the call over to Aviram for a brief financial overview. Aviram Lahav: Thank you, Elad, and to all of you for joining us today. Let us get started on Slide 13 with a quick look at quarterly changes in key market metrics. On a macro basis, average global inflation rate improved versus the prior quarter with the exception of the U.S., which was flat and China, which swung positive. Interest rates were a bit more mixed. While rates in most regions were relatively stable, rates in the U.S. improved by nearly 40 basis points. For Brazil, while the Central Bank held its target rate unchanged at 15%, rates remain elevated on a year-over-year basis. Looking to exchange rates, the shekel has strengthened versus the U.S. dollar when compared to long-term historical rates. Wrapping up our macro metrics, you can see that U.S. housing starts trended up slightly by the end of the fourth quarter. For fertilizers metrics, the picture was more mixed. The grain price index declined on a quarterly basis with rice showing a significant reduction. On the positive side, corn and soybeans both improved in the quarter and on an annual basis with soy showing solid mid- to high single-digit growth for both periods. While farmer sentiment improved by the end of the fourth quarter, those gains were reversed in January. When asked specifically about soybeans, 21% of U.S. producers said they expect soybean exports to abate over the next 5 years with increasing competition from Brazil weighing on their minds. In the fourth quarter, potash prices moderated slightly, mainly due to sentiment and seasonality, while P2O5 prices trended higher in 2025. This is not expected to continue in perpetuity. Over the same time frame, there was a significant reduction in ocean freight rates of nearly 25%. Beyond agricultural indicators, we also track other indicators relevant to our Phosphate Solutions and Industrial Product segments. Our Phosphate Specialty Solutions are an important part of the food and beverage end markets. This is an area we are targeting for growth, both organically and via M&A. In the U.S., retail trade and food services improved both through November and year-over-year. For our Industrial Products segment, the price of bromine in China is an important metric, and these prices continue to improve in the fourth quarter. Durable goods are another indicator for Industrial Products, and they picked up slightly through November. For remodeling activity, which is a good metric for both Industrial Products and Phosphate Solutions, growth was up approximately 1% on a sequential basis and 2% year-over-year. If you now turn to Slide 14 for a look at our fourth quarter sales bridges, on a year-over-year basis, sales were up $100 million or 6% with all 4 segments demonstrating growth. Turning to the right side of the slide, you can see a $98 million benefit from higher prices this quarter, which was partially offset by a reduction in volumes. Exchange rates also had a positive impact. On Slide 15, you can see our fourth quarter adjusted EBITDA, which improved approximately 10% versus the prior year. Similar to sales, we saw higher prices and reduced volumes. There was also an impact from exchange rate fluctuations, and you should expect to see this continue in 2026 if the shekel continues to strengthen versus the dollar. We also saw a significant increase in raw material costs, especially sulfur. This trend is continued into 2026, and it is becoming more difficult to pass this increase along. Additionally, as we shared publicly last December, the Israeli Supreme Court ruled that ICL is obligated to pay fees for water extracted from wells in the Dead Sea concession area. This equaled $14 million for 2025, and this entire amount was recorded in the fourth quarter. As Elad mentioned earlier, we had a number of adjustments this quarter, so I want to spend just a few moments on Slide 16. Here, you can see a representation for these items. I would like to point out that the majority of these items are related to advancing our new strategy. These adjustments are essential in moving ICL forward as we look to fund our profitable growth engines, specialty crop nutrition and specialty food solutions and as we focus on extracting value from our core businesses. These changes will help us redirect our resources towards better aligned opportunities. First, as you know, we announced the discontinuation of our LFP battery material project in St. Louis and in Spain on our third quarter call. And in the fourth quarter, we took an adjustment of approximately $61 million. In the fourth quarter, we also closed a minor R&D facility in Israel, and this adjustment was approximately $6 million. As Elad mentioned, we also recorded an impairment of our Boulby assets in the U.K. related to our shifting strategy, and this amount is approximately $50 million. We also recently initiated a sale process for these operations. Additionally, we made a $19 million provision for early retirement programs at several other sites. Turning to the ruling related to fees for water extracted from wells in the Dead Sea concession area. While this ruling was the opposite of the legal opinion issued by the Israeli Ministry of Justice, we, nonetheless, recognized approximately $80 million in the fourth quarter of this year for prior periods. Now if you will turn to Slide 17 for a quick review of our full year sales bridges for 2025. All 4 of our segments contributed to the 5% year-over-year growth we delivered. While we experienced a reduction in volumes, we benefited from generally improving prices across our businesses. On Slide 18, you can see a breakout of our adjusted EBITDA, both by segment and inputs. Once again, we benefited from higher pricings. However, a reduction in volumes, exchange rate fluctuation and higher raw material and energy costs tempered our EBITDA growth. Before I turn the call back to the operator, I would like to quickly share a few fourth quarter financial highlights on Slide 19. Our balance sheet remains strong with available resources of $1.6 billion. Our net debt to adjusted EBITDA rate is at a stable 1.3x. And we delivered operating cash flow of $314 million. Once again, we are distributing 50% of adjusted net income to our shareholders. This translates to a total dividend of $224 million in 2025 and results in a trailing 12-month dividend yield of 3.1%. And with that, I would like to turn the call back over to the operator for the Q&A. Operator: [Operator Instructions] Your first question is from Ben Theurer from Barclays. Benjamin Theurer: Two quick ones. So first of all, thanks for the guidance. And obviously, it kind of like at the midpoint looks more or less like a similar year 2026 than what was 2025. Maybe can you help us frame the upside risks to the higher end and the downside risks to the lower end as you look into 2026 across the different segments? Like what are the drivers to get it to the upper end? And what would be issues that you may face that could drive you more towards the lower end? That would be my first question. Elad Aharonson: Okay. Thank you, Ben. So I think for the upside, I think we'll see higher potash quantities for production and sales. And maybe there will be an upside on the price per tonne of the potash. Also on the bromine, we see increase in bromine prices. We'll see what happen after the Chinese New Year. China is the biggest market for bromine and there could be upside there as well. Also, we need to see the demand. So that's about upside. And on downside, so the 2 headwinds that we have right now, one is the cost of sulfur, which went up from around $140, $150 1.5 years ago to more than $500. And the sulfur is the most dominant raw material for the phosphate portfolio. So this is a headache for us. So we mitigate it, but still it's an issue. And the second one is the exchange rate of shekel versus dollar. Our functional currency is dollar, while we have expenses in shekel here in Israel. And as the shekel continues to strengthen versus the dollar, that would be a challenge for us. Aviram Lahav: Ben, I would add one thing specifically. It applies to basically most things that Elad described, but the cost of sulfur specifically, it's also the timing in the year when it will happen. I mean basically, we are not sitting on significant inventories of sulfur, which means that when it goes up, we pretty much quickly absorb it in the cost of manufacturing. But when it will eventually go down, then we will be rid of expensive sulfur pretty quickly. Now the guidance is for the year. We are giving it in February. So basically, everybody can do the math. It depends not only the extent to which it will happen, but the timing when it will happen. I think that's quite important to mention that. Elad Aharonson: And also maybe it's worth mentioning the Brazilian market. The last season in Brazil in general, not only for ICL, was a difficult one for the agri business. I think we performed better than the average, but still it wasn't a great year in the agri business in Brazil. If next year or this year, 2026 will be a normal one or even higher than normal, then there could be an upside related to that. Benjamin Theurer: Yes. Actually, I wanted to follow up on the Growing Solutions side and what you're seeing. I mean, obviously, this is -- there's a lot of like different pieces. And you talked about the market share gains in specialty, but with the farmer affordability issues, so probably is what you wanted to comment on. So what are you seeing like on the ground in terms of like demand within the Brazilian farmers, because given that the interest rate environment is still high, we've talked about this over the last couple of quarters as that being an issue? But it feels like it could potentially get better into 2026 with maybe rates coming down, it's an election year. So there's a lot of potential. So I wanted to understand how you feel about ICL's position in Brazil, in particular, within Growing Solutions. Elad Aharonson: So I'll say the following. All in all, I'm encouraged by the progress that we are making on Growing Solutions, and you can see the nice development on EBITDA for Q4 for Growing Solutions. Having said that, Brazil, which is give or take 1/3 of Growing Solutions business, it was a difficult year in Brazil because of the reasons that you mentioned, interest and so on. We like to believe that the interest rate will go down. I don't think it will go dramatically down, but it will go a bit down. And then we'll see what happen in the next elections. We adapted our cost structure in Brazil. And I do believe that next year -- or this year, 2026, will be better for us. Talking about Growing Solutions in general, we are changing our mix of product portfolio in Europe. Europe is also around 1/3 of the business for Growing solutions and our portfolio there has to be adapted, and we started doing it in 2025. I believe we'll see the results in 2026 and onwards. Still, we'll see what happen in general in Europe. And the last comment is about the Far East, China and the region where we see a nice progress. Here, the issue is more about the cost of raw materials, and that comes back to the comment about sulfur and some other raw materials. Do you want to add, Aviram? Aviram Lahav: Yes. Maybe to say something further. Thank you, Elad. Say something further about Brazil, I think it will resonate with you guys. It's -- credit is tricky. There's the rate of credit, there is the availability of credit. So what's happening on the ground in Brazil that, Ben, you're totally correct, the rate is extremely high. The real rate is probably around 10%, if not more than that. The nominal is about 15%, inflation is scaled at below 5%. That's exactly, by the way, why the Brazilian Central Bank is keeping rates so high. But that's only part of the story. Second thing is that commercial banks are not giving credit to -- not fully, of course, to the industry, which means that the farmers and the agriculture industry is using the suppliers as banks. And therefore, the issue of availability of credit is something that we obviously have to take into account, reckon with and decide how much exposure are we willing to take. Now notoriously, companies that have given too much credit in the Brazilian market have been beaten. It happens time after time, and we are very careful with our location, which means that we'll keep an open eye. Notwithstanding that, we can very well have a better year in '26, but this remains to be seen. So -- and by the way, during this process, you can see the pressure that exists and what's happening in the distribution companies. Distribution companies in Brazil are basically squashed between the suppliers and the -- actually the farmers. And that's a place that you really do not want to be. Okay. That's about that and that's continue. Operator: Your next question is from Joel Jackson from BMO Capital Markets. Joel Jackson: I'm going to follow up a little bit on some of this. I'm sort of surprised about the -- like, I think you've laid out the opportunities and challenges in '26. But I'm trying to figure out which businesses are up and down in '26 in your guidance. So potash volume higher, that's clear. Prices are higher, like if you just compare '25 versus '26 expectations, so potash should be up. And does that mean that you've got the other businesses like Growing Solutions and IP growing a little bit and phosphates down to get to a flattish midpoint? Aviram Lahav: No. I think the following. First of all, potash, indeed, as you said, quantities should be in a better place. Prices should be in a better place. But there is a but, the shekel is in a worse place, which means that all the -- and this is one particular division with heavy, heavy expenses. Obviously, on the shekel side, you can imagine by the size of the facilities in Israel. All of them obviously being paid for in shekel, which means that if we look at '26 and we benchmark it to '25, it should be better, but less so that was -- that it could have been if the shekel would have been at a better place. That's about the potash side. When you look at the bromine side, I would tend to say that we should be pretty much around the same ballpark that we were this year. When you look at the Phosphate Solutions side, then to an extent on the EBITDA, it makes sense that it will come somewhat lower, and this is due to the sulfur price with the caveat that we previously discussed. We don't know for how long this will prevail. And the last but not least is the Growing Solutions. It's one division that actually is not -- is actually gaining a little bit even from the currencies because it is less dependent on the shekel side, and it obviously sells around the world than most currencies vis-a-vis the dollar. The phenomenon of the weak dollar is not only vis-a-vis the shekel, it is vis-a-vis the euro, vis-a-vis the pound, et cetera, et cetera. I guess you all know that. And actually, we can find ourselves in a somewhat better position in Growing Solutions than in '26 versus '25. And all in, when you bake it all in and you look at what we are seeing for next year, we should see a very similar picture. Again, some gaining a bit, like all in, as I said about the potash, some remaining the same and some weakening to a degree. But these are not that dramatic. So if I had to take a guess, I would say that all in it's very near with a little bit going more toward the potash, a little bit less vis-a-vis the phosphate. I hope that answers your question, Joel. Joel Jackson: Very helpful. Could you remind us your sensitivity to the shekel how in U.S.? Aviram Lahav: Yes, yes, yes. Well, generally, we are above $1 billion short shekel. Obviously, it fluctuates, but you can make the math. So basically, every 1 percentage point is about $10 million. That is -- we are not actually when we -- our financials are driven by the hedged shekel. It's not the naked shekel that is the representative rate every day. So basically, we have got quite a significant amount of our exposure hedged. And therefore, our -- when rates go -- when the shekel strengthens against the dollar, it effectively strengthens less against our hedges. However, in the longer term, obviously, it takes an effect. So if this continues for a very long, and again, we do not know, the shekel at this stage is quite abnormally high for many reasons, nothing to do with our industry. The question is how long it will prevail. But generally, the yardstick every about 1%, it was about $10 million. Joel Jackson: Okay. Finally, just following up on that. What is your -- in your guidance for this year '26, what is your U.S. dollar shekel assumption? And how much of that is hedged right now? Aviram Lahav: Yes. So the naked, absolute naked, we would have taken somewhat around $310 million. But hedged, it is over $320 million, that's our assumption. It will be -- and it -- by the way, I saw quite a lot of guidance coming from companies, Israeli exporters in different fields. And I would say that anywhere from $315 million to $320 million plus is -- would be a common yardstick for where we see the market going. However, it can be... Joel Jackson: I'm sorry, how much of the billion are you hedged? I'm sorry. Aviram Lahav: Sorry, how much percentage do we hedge? Joel Jackson: How much of the billion are you hedged right now? Aviram Lahav: Yes. Around 50% at that time. Normally, we hedge around 60%, but when the rates go down, our analysis says that we can allow us to be a little bit more exposed because there's a limit to how much it can go down. Operator: [Operator Instructions] And your next question is from Laurence Alexander from Jefferies. Daniel Rizzo: This is Dan Rizzo on for Laurence. If we could just go back to Brazil for half a sec. Have we seen this before? And how long has it lasted with suppliers basically acting as the main creditors for their customers in Brazil? What happened last -- I mean and again, how long does it last? Aviram Lahav: Yes, Dan, it's -- I've been following and working in the Brazilian market about 15 years now, probably going on 20 and it waves. It is -- it has a lot of waves. I mean, basically, you're able to cope with it. If you work in a smart way -- I mean, the Brazilian market in agriculture is the #1 agricultural market in the world. If you're not in Brazil, you're actually not playing in agriculture, end of story. I mean we are active, by the way, in Brazil and other divisions as well. But predominantly, I would say, it's in agriculture. Now the Brazilian agricultural economy is obviously very, very important, especially around soy. You know the story there. And if you play it carefully, you can get very good results. Now you have to be aware at certain points of time, again, I'm trying to recollect from my past -- by the way, you can see it reflected in the currency. I've seen the real at 4. I've seen it at 160. I've seen it at 6. And now it is at 520 or something around that. It toggles. I mean, I believe that it will prevail. They will sort it out. I think that this -- the last year has seen probably a shift to a new reality. This year should be stable. Why am I saying this? Because what happens normally when things start to get tougher, it takes time for people to acclimate. I believe they have acclimated. And I believe that what we're seeing and we're seeing it in our performance, we are doing not great, but we're doing okay. Our level of doubtful debt does not grow. We are able to collect. We could have sold much more, but it would have taken a significant amount of more risk. So we are playing the game. I think we've got the experience, the knowledge how to play the game. And I do not believe that there is any particularly, let's say, bad news that should come there. I would gather that the next stage will be somewhat better than we've seen in the past year, but it remains to be seen, of course. Does that answer your question? Daniel Rizzo: That does. No, it does, it does because it sounds like we're at the trough for... Aviram Lahav: I believe so. Yes, I believe so. Yes, yes, yes. Daniel Rizzo: Okay. And then -- so with the moves you made with your portfolio with kind of deemphasizing or stopping the big battery project, how should we think about batteries going forward? Is this a temporary pause waiting for the market? Or are you just kind of moving away from this end market is not really relevant anymore? Aviram Lahav: Yes. That's a very good question. I think that something very fundamental has happened in the market. I mean, ultimately, when you look at the horizon, electricity, electric cars, electric other systems are here to stay. There's no question about that. The question is the pace and the question is who will be the winners and losers in this industry. Now if you look at the U.S. country to what was the -- what was, let's say, the aspirations and the thoughts, 1.5 years ago, they are very different at this stage for many things. It's the infrastructure, it's the support the government gives direct and indirect. And it is a situation where it will be a much, much more rockier road. You can see this by the way that Ford are reacting. You are seeing that by the way that GM are reacting. GM are not reacting the same way, but notwithstanding that, they took a significant hit and it's probably going to take a lot longer. And for somebody in novice starting to play the game, we came to a definitive conclusion that was not our game. We should have gotten a lot of support from the government. That support is off the table. Many factors were baked in. In Europe, the question -- the issue is quite different. The result is very similar, but different, different things. First of all, in Europe, there is an issue with the level of adoption -- of theoretical adoption is higher than the state. However, the propensity to consume is hampered. The real wages in Europe are not going up, and there was always the notion that the car needs to be cheap enough in order to play in this game. And of course, the Chinese are much freer to work in Europe than they are in the U.S. And the situation came, which culminated in the announcement -- dramatic announcement that Stellantis came about 2 weeks ago. They dropped a very significant amount of their project. Share was down 25% that day. It's quite dramatic. Ford pulled out of Germany, there are many stories here. So when we look at it in the global market, we obviously have got an extremely successful operation in China supplying to the best players in the market. We continue that. But our dreams of going downstream to become a full-fledged LFP producer or, let's say, the cathode side, that has been put off. And I may say, you have the CEO of the group with me. He's the one that makes the calls, but I don't think we're going to come there anytime soon, if at all. Elad Aharonson: No, no. But the bottom line is that the industry of LFP cathode material remains in China and only in China. Aviram explained about the U.S. and Europe. And we don't have any competitive advantage in moving forward in the supply chain in the -- for the cathode material. So we will remain a supplier of raw material of MEP chemical grade to others in China, which is a great market for us. We are doing great there, but we don't have to continue with the projects in Spain and in the U.S. I think it was a very good decision, if I may. Aviram Lahav: And for us, just to finally close, we said all along, if you remember, time after time that we're investing in the qualification side, we're investing in technology. But we are not going to go to continue and to set up facilities until we have all the stars aligned. I think it was a very, very smart decision. And you can see that ultimately, when things indeed didn't turn out as we would have hoped to us is relatively minor. It could have been completely different magnitude if we've gone downstream and go to manufacturing sites. So that's, I believe, the story on that one. Operator: There are no further questions at this time. I will now hand the call back over to Elad Aharonson for the closing remarks. Elad Aharonson: Okay. So thank you, everyone, for participating today. Look, we said the strategy -- new strategy in the third quarter. And as you can see, we are moving forward by executing this strategy. So on one hand, we acquired Lavie Bio for Growing Solutions. Recently, we acquired Bartek for the food business. And you can expect some more M&As along the year. As for maximizing the core, we signed this definitive agreement with the State of Israel, which is very important for us to secure the future and we are very happy with this agreement. At the same time, we improved the production rate of the potash, both in the Dead Sea and in Spain towards the end of the year, and we will continue like that in 2026, as you can see in the guidance. And as for efficiency and optimization, so we took decision to stop the LFP project, and we just explained why. Also, we put on the shelf Boulby because we are very disciplined with the capital allocation, and we want to direct the capital of the company in those areas where we see most of the potential and which are more synergistic. And probably next week -- next quarter, sorry, we'll talk about cost transformation program as we need to take care of this as well. So we are pushing and making investment on the 3 pillars of the strategy. It's a bit like transformation phase. It will take some time, not a lot, but I guess we'll all see the results soon. Again, thank you very much, and probably we'll be in touch in different forums. Thank you. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
Operator: Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the TAV Airports Investor Day live webcast to present and discuss the 2025 full year financial results. [Operator Instructions] The conference is being recorded. At this time, I would like to turn the conference over to Mr. Serkan Kaptan, CEO; and Mr. Karim Ben Salem, CFO. Mr. Kaptan, you may now proceed. Vehbi Kaptan: Thank you, Maria. Hello, and welcome to all. Thank you for joining our 2025 full year webcast presentation. I would like to start by giving you the highlights of the year's traffic first. The year was unfortunately marked by many geopolitical developments. These, of course, have affected especially the Middle Eastern traffic negatively. We have lost about 3% of our international traffic due to the geopolitical developments during the year. Strong lira was also a headwind during the year because it makes the Turkish holiday more expensive in euros or dollars. Bodrum, especially Bodrum, felt these affects the most during the year. Antalya, however, is more dominated by all-inclusive package tourism, coupled with competitive ticket prices, this makes the destination more affordable. A shorter and milder winter season also supported the traffic in Antalya. So the international traffic still managed to grow slightly at 1%. You may recall that at the beginning of the year, we have a shifted season where we had cold spring days and were suffering from a decreased traffic. And in summertime, due to the unexpected Iran-Israel clash, we suffered some traffic, but because of the milder winter season and late winter season, we managed to increase the traffic in September, October and till mid-November and managed to grow slightly around 1% for Antalya. In Izmir, which has mostly outbound Turkish traffic or visiting diaspora traffic, we see a strong lira working in our favor. The same goes for Ankara. Ankara is also being supported by the growth of AJet, which has recently based 2 new aircraft in Ankara, where we will realize strong growth in Ankara for 2026. Ajet is growing in Ankara as part of its hubbing strategy. As you know, they are based in Sabiha Gokcen in Istanbul, the secondary airport, but established their second base in Ankara, connecting almost all central Anatolian traffic via Ankara to international destinations. This strategy is working well. We have seen the output last year in 2025 with 14% international growth. And this year, we see that this growth continues very robust. The fleet growth of the other two low-cost carriers, the Turkish low-cost carriers such as Pegasus and SunExpress is also supporting both Ankara and Izmir. SunExpress mainly grows in Izmir and Pegasus continue growing in Ankara. Almaty international traffic also grew by 7%. This is because of the grounded A321neos in the airport. They continued suffering the Pratt & Whitney engine failure for the A321 and growth was limited to 7%. Normally, we would expect it to grow much more than the 7%. This is because of the high GDP per capita of the country compared to the size of the aviation sector. This year, we believe that we will realize much higher percentages on international growth in Almaty. Georgia, Georgia is also very popular with Turkish, Israeli and Russian tourists and their traffic has increased a lot this year. In 2025, in Georgia, we had a growth of 16%, and we believe that this robust growth will continue in 2026 as well. We see a boom in Georgia, both in terms of tourism and also becoming a regional gateway to other destinations. We have high single-digit growth for the rest of the portfolio, which is a great performance compared to the peer airports as well. So when we look at the January results of 2026, we see that the traffic came in very strong in most of our assets. All international assets grew very high percentages. We see the effects we talked for 2025 in the Turkish airports. The strong Turkish lira is affecting Antalya and Bodrum negatively and Izmir and Ankara positively. We have a strong winter, I would say, for Antalya. That's why the demand was low in January, but we hope the recovery to be very quick soon. And the growth of low-cost airlines is also affecting Izmir and Ankara in a positive way. Almaty made a strong start to the year with domestic aircraft diverted to international routes. The 15% international growth is closer to the real potential of the airport. Because of, again, the engine problems of A320 in Almaty, Air Astana and the other local carriers diverted their flights more to international. You will see a decreasing trend in domestic, whereas we have an increasing traffic trend in international. That's how we made the 15% growth in January. There is also a very strong travel demand between China and Almaty, which doubled when we compare the traffic to the last year and became the largest source market for the airport in January. So Chinese traffic is coming. Georgia's spectacular growth continued in January, too. In Georgia, in January, we had a growth of 19%. We believe that we will have this continued trend as well. We had 31% growth in Macedonia because as we reported last year, we were missing almost half of Wizz Air's fleet due to the neo engines. And now we have new 320 -- 321s based in the airport as of November, which has a 30% higher seat capacity because the 320s are replaced by 321neos, which brings this 30% higher seat capacity. All in all, 12% international growth was for January is a strong start for the year. But of course, January is a low month. It's a low season. These are off-season numbers and do not carry a lot of weight when we compare the 12 months. We have a more conservative passenger guidance than the numbers on this table, which we'll talk about on our guidance slide as well. So when we looked at the growth of source market slide, it shows how our passenger mix has shifted over time, especially since the pandemic. One big difference is the drop in visitors coming from Russia and Ukraine. With the sanctions in place, Russians have to fly in Russian aircraft to Turkey. Earlier, you may recall that mostly Western aircrafts were used for Russian aircraft flying to Turkey. But due to their lack of aircraft, they also started -- they decreased their flights to Turkiye, and we have lost 3.7 million Russian passengers due to the sanction. On the Ukrainian side, we had 2.7 million passengers before the tragic war, but because of the war, there is no civil aviation in Ukraine presently. We don't have any flights between Ukraine and Turkiye, but we have, of course, some Ukrainian passengers flying via Poland. We believe that we have made up for some of the loss in Ukrainian traffic with Polish traffic, which has increased significantly. You can see the growth of Poland on the chart, which also includes Ukrainian travelers flying through Poland, as I stated before. Russians used to be the #1 source market for our airports. So if the sanctions are lifted, Russians could again become #1. Bear in mind that in our forecast, in our guidance, we didn't include any sanction to be lifted. It is the status quo continuing on as per our disclosures. Compared to the last year, the best performing markets were Turkiye and North Cyprus due mostly to the strong lira. UAE, Netherlands and Kazakhstan underperformed the most, unfortunately, again, mostly due to the same reason and due to the geopolitical development. With that, I will now hand over the presentation to Karim to go over our financials. Karim Salem: Thank you, Serkan. Coming to the financials in euros and starting with revenue. It continued to be above traffic growth for the full year, and it is the continuation of the trend in previous quarters. One of the reasons for that is that, as you may know, we do not consolidate Antalya. The consequence of it is that it is in our passenger numbers. And actually, it pulls traffic growth downwards, but it is not in our reported consolidated revenue. We only consolidate the net income after purchase price amortization. So when it comes to commenting the main highlights by category and starting with catering, we had significant growth in catering revenue this year related to BTA new Antalya operations. So BTA Antalya operations also boosted the area allocation revenue, which contributed to revenue growth being above passenger. Coming to ground handling, where 73% roughly of our revenue is in Turkish lira. Our OpEx continues to increase with TL inflation. And thanks to the great management team that we have at Havas, we have been able to reflect this cost to our prices. Ground handling as a segment was also strong in our foreign airports. So ground handling was overall another factor in revenue surpassing the passenger growth. The new concession in Ankara was also strong with an additional EUR 19 million in terms of year-over-year revenue growth. In 2025, we have 2 quarters of Ankara operations under the new concession terms, but we will operate the full year 2026 under the new concession, which brings an even better perspective for 2026 regarding Ankara, sorry. The nonfuel aviation revenue growth was in low teens. The jet fuel business is also in aviation revenue that was affected by fuel market volatility and a weak U.S. dollar. Lounges continue to grow, especially in the U.S. and in Kazakhstan. And despite the closure of some unprofitable Spanish lounges, which we discussed earlier this year, we had strong growth there as well. Looking at the like-for-like duty-free spend per pax, excluding Antalya and Almaty, it is up 9% from last year. Almaty kicked off right before Q3 last year. So we are feeling the full year impact kicking in for 2025. And all in all, our duty-free revenue went up by a solid 17% for year 2025. Finally, we have car park revenue that didn't grow this year because we shut down the Oman parking operations. And one last point regarding Havas related to bus operations, Havas closed down the Adana station this year, which is the reason why you are seeing a small dip in the bus services revenue. Coming to OpEx, if we look into the operating expenses before EBITDA, these expenses continue to stay below revenue, and we continued to expand our EBITDA margin. We had a drop in jet fuel costs and a flat cost of services renders. Maintenance and utility expense growth was muted, and we had flat other operating expenses. Operationally, BTA's New Antalya operations and the new Ankara concession supported margin expansion. And just as in the third quarter, in the fourth quarter, too, a lot of assets delivered strong operating leverage. If we adjust for the impairment expenses made in the last quarter of 2024, we had higher depreciation expenses compared to last year which was due to the first full year of the new terminal in Almaty, sorry, and the end of the old concession in Ankara as well as Ankara's rent expenses for the new concession, BTA Antalya's rent expenses and TAV Operation Services lounge rent expenses in New York. In equity accounted investments, the cash picture is much better than what the numbers in equity accounted investments suggests. From Antalya One, we got a dividend of EUR 72 million this year versus a dividend of EUR 68 million last year. So in terms of free cash flow, the performance is actually better than last year. The combined EBITDA of Antalya One and new Antalya is EUR 135 million this year. It has to be compared to an EBITDA of EUR 127 million last year. Nevertheless, due to the amortization of the purchase price in Antalya One, higher deferred taxes in both and higher depreciation and finance expenses in New Antalya due to the opening of the new terminal, we were not able to show it this year under the equity accounted investment line. Coming to ATU, it had higher EBITDA this year, mostly because of Antalya, but it made a lot of investments, so its finance expenses increased. And for TGS, we see the effect of less third-party sales and the end of the pandemic compensation that we already evoked in the past. Getting down the P&L and reaching the net income line at the end, we continue to have overall strong EBITDA growth with margin expansion in the fourth quarter as well. So we had higher D&A, which we discussed earlier. Equity accounted investments had EUR 54 million more deferred tax losses compared to last year and EUR 12 million more of purchase price amortization in Antalya. The operations in Antalya, as we discussed, they are actually very strong. We have EUR 36 million more FX losses this year, which are mostly due to the appreciation of the euro and which are noncash. And with the canceling of inflation accounting in tax accounts, we accrued deferred tax losses due to the appreciation of euro versus Turkish lira. Most of this effect was actually in New Antalya and in Ankara due to the new investments made in these 2 assets. The canceling of inflation accounting increased the tax loss carryforward of these 2 assets, which had a somewhat neutralizing positive effect on deferred tax. And we used the legal revaluation right in Ankara, which was a benefit of EUR 11 million. So pretty sophisticated technical topics. But all in all, for the year, we had EUR 119 million of total noncash effect on the bottom line. If you adjust for the increase in negative noncash one-offs, the net income for 2025 becomes even EUR 170 million, which is only 7% below last year. We can see this large clearly in our free cash flow, which is standing at EUR 223 million for 2025 with a strong 44% growth over 2024. There are many moving parts in our financials, but definitely, free cash flow is the number which shows the clearest picture. We are generating a significant amount of cash for the year 2025. Coming to debt. You know that this has been an indicator that we have definitely been following over the past couple of years and especially in 2025 in connection with our guidances. With very strong cash generation throughout the year, we reached our long-term net debt-to-EBITDA guidance with an amount that finally comes out at 2.89x EBITDA for year 2025. In the fourth quarter, we had the currency-protected deposits mature and turn into cash. We had working capital improvements in many assets and the revaluation of the Almaty put, which was before standing at EUR 54 million and which is now coming out at EUR 91 million. All in all, our consolidated net debt dropped versus both last year and the last quarter. Normally, the fourth quarter is and should be seasonally weak. So the net debt drop over the previous quarter is quite a strong performance from our side. Coming to the next page. On dividend, the main highlight there is that as we have guided the market in 2025, we are restarting the distribution of dividends this year. We are planning to distribute TRY 1.3 billion, which corresponds to 50% of our IFRS net income converted to Turkish lira amount as of yesterday's exchange rate. We have invested heavily this year, and we will continue to invest at the service of our growth and our development next year as well. Against this backdrop, the decreasing of net debt and the resumption of dividend shows the strength of our balance sheet and our high capacity for cash generation. So I switch to Page #10. As many of you have followed, we were able to extend our Tbilisi concession until the end of 2031 in January. We pay fees to the state. We eliminate this and we pay a flat 30% of our passenger fees as the new lease for that 5 years period. The airport grew with a passenger CAGR of 13% during the last 20 years and EBITDA CAGR was 21%. It's a very high-growth market and a very robust operation. We are very happy to continue to serve Georgia with Tbilisi Airport for another 5 years beyond 2027. So if I go to Slide 11, Ankara Esenboga Airport. We were always guiding you that Ankara's profitability will jump with the new concession and its EBITDA would reach to EUR 45 million. On 24th of May 2025, last year, this -- the new concession of Ankara started, where we have enriched passenger fees and no cap in the collection of the international passenger fees. This is the first year of the new concession, and we have reached EUR 45 million of EBITDA with a 67% growth over the last year. This made with only a 14% year-on-year international passenger growth due to the new concession, which is much more profitable compared to the first concession. We have only seen the half year effect this year because of the new concession. As I said, it started as of 24th of May 2025. In 2026, we will see the full year effect. In the beginning of the call, I also talked about AJet's two new aircraft to be based in Ankara, which grew January traffic by 30%. So everything is looking good for Ankara for 2026. On the next slide, this is related to ATU. ATU is in Antalya now. Antalya, as you know, is a 40 million passenger airport involved with 32 million international passengers. You see the effects of ATU's Antalya operations. ATU operation also started end of April. The full operation with all terminals started mid-September. So we don't have the full year effect of ATU. It started end of first quarter. There is very high revenue growth versus next year, which is mostly due to Antalya. Year-over-year EBITDA growth was also very strong in the third quarter. EBITDA growth was not as strong in the fourth quarter because of some start-up costs and continued ramp-up. As I said, we took over late September, the existing facility, and we didn't have the chance to furnish and redo the shops or change the look or bring in new merchandise for the stores. But this year in 2026, it will be a full year effect. You will see this. Opening of the new stores and the refurbishment of existing spaces will continue until the summer. It started, but it takes time. So next year's offering, 2026 offering, both in terms of area and the number of products offered will be better than 2025. The spend per passenger in Antalya increased from EUR 6.5 per passenger to EUR 7.9 throughout the year as we continue to open more and more shops throughout 2025, and this will continue in 2026 as well. On the chart to the right, you see the spend per passenger over there. Almaty's first full year of operations and addition Antalya decreased our overall spend per pax. For Antalya, you see that per pax spending increased. But when we add up Almaty full year effect and so, if you look at the overall one, the spend per pax seems to decrease because in Almaty, we have departures and arrivals, duty-free, but at arrivals, we have limited sales that tracks the overall spend per pax to a lower amount. But if we had not added these new operations to the calculation, the like-for-like SPP would actually be EUR 10.3. So we can say that the duty-free spend per pax of the existing operations grew by 13% in 2025. You can see this growth also in our consolidated duty-free commission revenues, which grew by 17% in '25. So I would like to talk about the guidance, the realization of 2025 guidance and the expectation for the guidance. Karim discussed already about our financial results in detail. Here, you can see the results against the guidance that we had provided in the beginning of 2025. I won't go over the items one by one, but we can say that in all items, except for the CapEx, we were able to achieve our guidance targets. In CapEx items, we are slightly below our guidance, which is good, which resulted in less cash outflow from the company. In Almaty, due to the harsh winter conditions, we were behind schedule in terms of investments, in terms of CapEx. for the second phase. And due to the market conditions, we postponed some investments of Havas to '26 and '27. So it again makes us very happy to have achieved our targets for another year. For 2026, in this table, you also see our new guidance. We are looking for another great year. Growth will continue. Our base case is for the passenger traffic to be in between 116 million to 123 million passengers, whereas we expect international traffic to be between 78 million to 83 million passengers. So revenue in accordance with the traffic numbers should be between 180 to -- sorry, EUR 1.888 billion to EUR 1.988 billion. EBITDA should be between EUR 590 million to EUR 650 million. And in 2026, we will be the second year of Almaty second phase investment and the first year of Georgia expansion investment. Due to the heavy CapEx, the second phase of Almaty and the new investment for Georgia, we estimate that the CapEx to be spent will be maximum of EUR 330 million or less for 2026. I think that's all for the presentation. Operator: [Operator Instructions] Karim Salem: So I will start with the first questions received, and I'm starting with questions received from [ Melis Pojarr ] from Oyak Securities. The question being, first question being regarding guidance 2026 CapEx, could you please briefly quantify on an airport basis? Well, on that question, if the question is about, let's say, breakdown of CapEx by activity airports, what I can say is that we can say that roughly 30% of the CapEx is allotted for the second phase of investments in Almaty. Then you have another 20% to 25%, let's say, of the CapEx, which should correspond to the investments in Georgia and as part of the extension of the concession as was evoked, presented, I mean, in mid-January and reevoked a couple of minutes ago by Serkan. And then for the rest of the CapEx, we are planning solar panel investments for Ankara. We should have growth CapEx for BTA, but also for other service companies, and the rest should be maintenance CapEx. I have another question, still from [ Melis Pojarr ]. What is the reason behind 25% year-on-year decline in cost of services rendered in Q4 2025? And for that question related to the specific line of cost of services rendered, I can say that the decline is related to, I would say, several topics. Main one is corresponding to TAV IT projects. Actually, they classify some of their costs here in the cost of services renders and it has decreased. We also have an effect of the closing of Spanish lounges here as well, and it was already there earlier in the year. And we also have decreases in other companies, too, with different reasons for each company. I mean we have -- I mean, apart from TAV IT projects and Spanish lounges, we have many reasons, actually, it's very split. Vehbi Kaptan: So again, a question from [ Melis Pojarr ], Oyak Securities. What are the tenders in your radar right now? Will you attend alone? And what are the airports current and targeted KPIs? We are always looking for growth opportunities in our core geography, as we always say. Our main criteria are growth prospects and sound legal infrastructure when selecting the opportunities. You know that we were prequalified for Montenegrin airports, but we did not bid in the tender, although it was a project that we looked at extensively. The preferred bidders in the tender were announced, but the results were contested. So we are following further developments there. Egypt has started its privatization. And the first project on the privatization pipeline is Hurghada touristic Airport. in the range of 10 million passengers. And this project started with prequalification process. We are submitting our prequalification. And naturally, we are evaluating the pros and cons of this project as well. Of course, there are many other projects that we are evaluating, but the business development pipeline in our business sometimes takes years. So it's best not to put too much weight on possible new tenders unless we officially disclose that we are participating in a certain tender. Karim Salem: I'm moving with a question from Julius Nickelsen from Bank of America. Thank you, Julius. The question is the following. Could you please provide any indication on where net income should go in 2026? And should we assume that the EUR 120 million of noncash one-offs to reverse during 2026? Well, that is, I mean, one of the most important questions, of course, for 2026, and we cannot provide net income guidance because, I mean, first of all, this is the very bottom line of the P&L, and therefore, it includes, let's say, the most important level of volatility. It includes every flows, everything that flows in our P&L. And on top of this, there are many moving parts, generally speaking, below EBITDA. And I can also add that the legislative framework also shifts very quickly, especially in connection with our Turkish activities. Having said that, I think that I can quickly elaborate on the fundamentals of this movement would be useful, but I'll be very quick about two fundamentals that could make things move on one side or the other in 2026 regarding our net income. First one is inflation accounting measures and second one is FX variations. Inflation accounting measure related to the fact of taking into account, let's say, Turkish lira inflation in the way our balance sheet is revaluated and FX variation related to the way we operate in various currencies and mainly in euro, USD and TL versus the way we report, so in euros. So for these two fundamentals, we are definitely lacking long-term visibility, but just like many institutions, I would say, and for 2026 as well, even though I would say that the situation is improving, especially from the outlooks in terms of inflation for the full year of 2026. But it is still hard to give, let's say, guidance on this topic for 2026. Then another question from Julius. Any reason why EBITDA from Almaty was down 35% in Q4 2025? Is there any impact from the investments? Well, this topic has been addressed in a way during the presentation. One of the main reasons actually why it was down was the movement in FX, in euro-USD FX because you know that the main currency in which Almaty operates is USD, and it went up 10% year-on-year, meaning that when you are comparing Q4 2025 to Q4 2024, there was an appreciation of euro by 10%. And the other reason is volatility, generally speaking, in the fuel market, again, on a year-on-year basis, Q4 2025 compared to Q4 2024, and it led to lower volumes. We identified the matter Q4 2025. But I mean, going beyond this topic, we had disclosed previously that we will be shifting the revenue and EBITDA mix of the Almaty airport from fuel to aviation through tariff increases over the next couple of years. And this process is going as planned. And of course, I mean, this downward trend, we have followed it again. But the most important is that we are having a path forward with moving from a fuel-centric airport to an aviation-centric airport. Vehbi Kaptan: Thank you. So another question from Julius Nickelsen, Bank of America. How should we think about the relatively wide range of your guidance? What scenario represents the lower end of the guide on traffic and EBITDA? What needs to happen for the upper end of the guidance? So we are located in a fast-growing region, but this growth unfortunately comes with risks as well. The main of these risks being geopolitical developments. As everybody has followed, there were numerous geopolitical events throughout the year, and we lost 3% of our international passengers at 2025 due to these developments. We are still being affected by the grounded A321s with the Pratt & Whitney engines, especially in Almaty. The guidance were provided -- we provided balances our base case for strong uninterrupted growth with these kind of numerous exogenous risks in the region. And I switch to the questions of Cenk Orcan from HSBC. The traffic outlook within your 75 to 83 international passenger guidance, 4% to 11% year-on-year growth. How do you expect your Turkish airports and Antalya in particular, to perform? What is your Turkish tourism, the foreign visitors outlook this year? We talked about these a bit during the presentation. Last year, we had several factors affecting traffic, one of which was the real value of the Turkish lira. This especially affected Bodrum and Gazipasa the most and Antalya, the less. Strong TL and the growth of low-cost carriers had positive effect on Izmir and Ankara, and Ankara was especially strong with the growth of AJet. Most of these trends have not changed in 2026, but we hear of some renewed low-cost interest in Bodrum. So Bodrum could have a better 2026 compared to 2025. The foreign airports would probably continue to outperform Turkish airports in 2026 as well. And North Macedonia could be outperformer because there are new A321s base with 30% higher capacity versus the previous A320s. The second question is also about the traffic outlook. 2025 was strong domestic passenger growth at key airports in Turkey and your traffic guidance implies 0 to 5% growth in 2026. Any specific factors for normalization this year? For the domestic passenger figures, they improved due to higher ticket price caps implemented in 2025 and the increase appeared substantial because of the base year effect and the cost increase in 2026, the price cap loses its attraction for the airlines. For this reason, our base case is for domestic traffic not to be as strong as last year in 2026. Of course, material increase in price caps could change that picture. What we try to mean is that in Turkiye, as you know, we have a price cap for domestic fares. When it is low, the airline's tendency is to utilize the aircraft more in international routes or lease the aircraft outside. If the price cap is favorable to the airline, if it's higher, they rather use it in domestic routes because there is a demand, and we have an immediate effect in the growth of the domestic passengers. Karim Salem: One more question about Almaty tariffs. So the question is the following. 2025 presentation shows a lower blended average international pax fee than the 2024 presentation, $10.7 versus $13.8 for non-Kazakh airlines. Is that because $10.7 for 2025 now includes local airlines? Well, this question connects to previous presentations, and we only have provided back then the tariff for non-Kazakh airlines. And indeed, it was $13.8, as you correctly noted. However, now starting from 2025 to make a more comprehensive picture, let's say, we have now included local airlines in the calculation, thereby presenting a blended passenger fee for both Kazakh and non-Kazakh carriers. And this is the number that can be used with the departing international passenger numbers. So it's a much more useful number for everybody actually. As you can see, it increased from [ $10.3 ] in 9 months to $10.7 in full year. So it's getting along with the tariff increases that we are getting. We also got security fees, which are $5.41 for non-Kazakh and KZT 2.815 for Kazakh international passengers as part of our tariff increase process, which is, as I said previously, continuing. So now I have a question from Ashish Khetan from Citi. It relates to Ankara, sorry. Ankara EBITDA has increased significantly in 2025. Do we expect further improvement in 2026 or the full benefit of increased fee and end of guarantee structure has been materialized in 2025? Well, the answer is yes. We only have the effect of the new concession for 2 quarters in 2025. So definitely in 2026, we will have it for the full year, what we call the full year effect, and this will definitely be a boost to our profitability, the profitability of the Ankara Airport. Another point is that the AJet airline, formerly AnadoluJet is continuing to grow in the airport and providing a very important traffic growth driver at international level, especially. So all in all, we have -- we feel very good tailwinds at Ankara level, and it should continue for the full year of 2026. Other question from Ashish regarding personnel costs. How do you see personnel costs increasing in 2026 with inflation easing out? Well, I guess the question mainly relates to Turkish staff costs for 2026 since we are talking about inflation. For staff costs in Turkiye, the main moving parts will definitely be in 2026. First of all, the Turkish minimum wage rate increased rates. And then we will have a second factor, which is the average number of employees. Vehbi Kaptan: Okay. Question from Gorkem Goker, Yapi Kredi Yatirim. In what ways and how any potential end of Russia-Ukraine war would impact your operations on aggregate in light of last couple of years' realizations? Due to the sanctions imposed on Russia and the ongoing war in Ukraine, our airports are experiencing a loss of 27% of Russian traffic and 100% of Ukrainian traffic compared to 2019. Any potential resolution in this situation, coupled with the lifting of the sanctions would be beneficial for passenger numbers across all our airports, particularly in Antalya. If Ukrainian civil aviation comes back, that would also be a positive, but that could take more time. In Antalya, the proportion of Russian passengers is a key driver of overall spend per passenger as Russians are among the highest standards within the non-Turkish passenger mix. Additionally, our ground handling company, Havas, used to serve a higher number of Russian charter flights, which carry higher service charges compared to the scheduled flights by nature. The absence of these charter flights has affected Hava's EBITDA margin. Therefore, any potential end to the Russian-Ukrainian war would also positively impact Havas margins. I think that concludes our Q&A session, too. Thank you for joining us. Thank you all for our webcast, and we hope to see you in events or in Istanbul physically soon. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening.
Jens Brückner: Good morning, ladies and gentlemen. A very warm welcome to the full year 2025 results presentation of EFG International. As usual, we will be presenting our results with speeches from the management team. We have today with us our CEO, Giorgio Pradelli; and obviously, our CFO and Deputy CEO, Dimitris Politis. And after the presentations, we have enough time, obviously, for your questions. We will start with questions in the room first and then move to potential questions from the call. Otherwise, as usually, I point out the disclaimer in the presentation. And without holding up further, I hand over to Giorgio. Thank you. Piergiorgio Pradelli: Thank you, Jens, and good morning. Also from my side, a warm welcome to everyone who is here in the room with us in Zurich and to everyone who will follow the presentation via webcast. Today, I'm very pleased to be here with Dimitris to present to you the full year 2025 presentation. I think 2025 has been a very strong year for EFG. It has been a year of strong progress. The operating business is firing on all cylinders, and it has been basically a record year. We have been able to grow very strongly from organic growth. Today, or actually in a few days is 10 years from the acquisition of BSI, and we are very pleased that we have started a new series of acquisitions. We have done 3 acquisitions in the last 12 months, and we were able to report the highest ever level of assets under management. We were able to translate this growth in record revenues, and we were able to -- despite the fact that actually we had to mitigate declining interest rates and a weak dollar that, as you know, there have been for us, headwinds in 2025 and most probably will remain headwinds in 2026, but this record operating income was translated in record operating profitability. And also, we made a lot of progress in dealing with our legacy matters, and we delivered a record IFRS net profit, and we are in a position to propose a record dividend per share to our shareholders. Let us now move to Page 4 and just to give you some of the highlights of our results for 2025. As I said, it has been a year of strong organic growth, strong NNA complemented by M&A. The NNA has been CHF 11.3 billion. This is 6.8% growth year-on-year. And this is actually the second highest level of NNA growth, the highest since the global financial crisis. And I'm very pleased because we have had an acceleration in the fourth quarter. As I mentioned earlier, we were able to do 3 acquisitions in the last 12 months. Two acquisitions are already in the numbers. They amount to CHF 12 billion, and they basically are equivalent to 1-year NNA, if you wish. As I mentioned earlier, our strong growth in terms of organic has been complemented by M&A, has been translated in the highest level ever of assets under management, CHF 185 billion. This growth has been translated in an impressive, I would say, operating performance, it's almost CHF 500 million, CHF 493 million. This is 26% year-on-year. And as I said, this strong operating growth has allowed us to absorb also dealing with some of the legacy matters that we know we have to derisk. All in all, at the end, as you know, we had a positive element in the first half of the year was CHF 45 million due to insurance recovery from a legacy matter that we closed in 2022. In the second half, we had a provision of CHF 59 million for another litigation that dates back to 15, 20 years back. All in all, it's CHF 14 million. We had also another legacy topic is about insurance. Insurance, there is some volatility. Dimitris will go in more detail. But again, we have absorbed also this volatile topic, and we are able to deliver CHF 325 million IFRS net profit, which is the highest in record. And this will allow us to deliver or to propose the highest dividend ever, CHF 0.65 per share. What I think is remarkable is that this is the fifth consecutive increase in our dividend, and this obviously shows how strong our operating profit is. Moving to the next slide. On Slide 6, we can see that 2025 has been a very strong year, but this is also the conclusion of our last cycle, the cycle 2023 to 2025. And what is remarkable here, we already discussed at length 3 months ago in this room during our Investors Day, is that we were able to deliver a consistent, sustainable and profitable growth over the last cycle, but also you can go back to 2019, and you see that this has been a continuous improvement of the operating performance. Now with this, I would like to give the floor to Dimitris, our CFO and Deputy CEO. Dimitrios Politis: Good morning from me, and thank you for attending the full year 2025 results presentation. I would like to start with, as usual, with the view of the performance of EFG over the cycle. Here on Page 8, you see the performance on the profits starting from 2019 up to 2025. It is fair to say that we are concluding this cycle, the '23-'25 business cycle, which is the last one, with record profits. The profits are at CHF 325 million. We are also posting the highest ever EPS with CHF 1.03 per share, and our return on tangible equity is above 18%. One element to highlight, you'll see on the top right, is the fact that in this business cycle, what was really marked as very positive performance has been revenue performance. In the last 3 years, we've managed to increase our revenues by 31%. In contrast, in the previous cycle, the growth was only 8%. So our strategy of building volume, building AUM and defending or expanding the margin has been very successful through the cycle. At the same time, you will see that efficiency has improved. Back in 2019, the cost-to-income ratio was about 84% or even higher. Now we are below 70%. And clearly, this has led to the expansion of EPS. We started with CHF 0.30 per share. Now we are above CHF 1, which allows also what Giorgio mentioned, which is the fifth consecutive increase in dividend per share in the last 5 years. Now the next page is a bit more focusing simply on 2025, and these are the key highlights for this year. Clearly, our strong operating performance continues in 2025. Business development, 6.8% growth in net new assets. The revenue margin was at 98 basis points compared to 96 last year, and we hired or signed 79 CROs. I think what is very important is the figure at the bottom of the page, the AUM have now grown to CHF 185 billion, which is a very good starting point for this business cycle. In terms of profitability, revenue growth was 11% in the year, or 8% excluding the exceptionals. Cost-to-income ratio improved compared to last year. The cost-to-income that we post as a headline is 69.8%. And the bottom line profit, again, is at a record CHF 325 million, or CHF 339 million if we were to exclude the exceptionals. Finally, in terms of the soundness of the balance sheet, core Tier 1 is at 14%. We had a fantastic capital generation of over 500 basis points during the course of the year. LCR is very strong at 270%, and the dividend is at CHF 0.65 per share. Now zooming a bit even closer to the last 2 months, because we gave you a trading update in November, which included 10-month results. If you look at the chart, what we mentioned in November is the first bar, which is about CHF 320 million in the first 10 months. If you look at the performance in the last 2 months, we added more than CHF 60 million of bottom line in 2 months. The run rate of over CHF 30 million per month is the highest level in terms of run rate. So both in terms of profitability run rate and also in terms of revenue margin run rates, the figures are higher than what we communicated back in November of 2025. As Giorgio said, we also have 2 exceptionals in the year. On a net basis, they create a drag of CHF 14 million net in the P&L. So if we were to exclude the exceptionals, our bottom line number would have been CHF 339 million, which is a 6% increase year-on-year. In terms of other elements in the profitability, I would say that we also had limited contribution from life insurance, which brings me to the next page, Page 11. And this page is important because on this page, we try to strip out the noise and make sure that we give you a clear indication of how the core private banking business is evolving. So what you see here in the chart is operating profit. It's simply revenues less costs, and we have indicated separately the contribution from life insurance. What you will notice is that in 2025, the core private banking business delivered CHF 425 million of operating profit, which is an increase of 18% compared to the last year. This is the highest increase in core banking operating profit that we've seen in the last business cycle. What does that mean? That means that the investments that we made in the first part of this business cycle, and I remind you that there were investments that had to do with hiring in 2023 and 2024, also investment in technology that were made in that period. So all these investments are now paying off, and we're seeing the impact in P&L of those investments which were made 1 or 2 years ago. In terms of the metrics that you would follow in order to figure out whether these investments are going well or not, what I can report is that -- and you see it also in the figures is we've seen consistent strong business development. The last 2 years, the NNA growth has been above the 4% to 6% range that we actually communicated as our target. And also what we've been managing to do is turning this growth into increased profits. In terms of how you do that is clearly we need revenues and the revenue margin to be resilient. I'll come back to that later. And you also need cost discipline, and I'll also come back to that later with specific pages on it, because we've also seen that on the cost side, our saving targets have been exceeding the initial targets that we have communicated. Just to note that, as you know, we have concluded 2 acquisitions in 2025. These acquisitions had a small negative impact in P&L in 2025, simply because the acquisition costs were higher and they were only included in the P&L for a couple of months. Finally, life insurance, or the contribution from life insurance has been a lot more muted in 2025. This comes because we have also derisked our position. As you know, we have taken action already in previous years, but also in 2025 to reduce our exposure. And we also expect that going forward, the contribution from life insurance is going to be a lot lower than it used to be in previous years. The next 2 pages are the summary of the financials, so I'll skip those 2. I'll go to Page 14. So Page 14 is the usual set of numbers that matches our financial targets. These are the financial targets for '23 to '25. As mentioned earlier, we had a 4% to 6% growth range for NNA. We've been beating that the last couple of years. The revenue margin has been very resilient against our target of 85 basis points. The cost-to-income ratio has been consistently coming down. The target was 69%, and the return on tangible equity in the last 3 years now has been above the 15% to 18% target that we have set ourselves back in 2022. Finally, in terms of the targets, and this is probably the last time that we'll be seeing this page on this presentation. This is the conclusion of the '23 to '25. You will see that the performance against the targets has been very strong. I think one element that we also communicated was that we were targeting a 15% growth in profits on average during the period every year. The actual delivery has been 19%. So in terms of bottom line, which is clearly what we're aiming for, we have been doing better than what we have promised. Now going a bit more into the growth on Page 16. The growth in AUM is 12%. So we went from CHF 165.5 billion to CHF 185 billion in 2025. More importantly, the net new asset growth was CHF 11.3 billion with pretty much all cylinders firing at very good rates, which is on the next page. CHF 11.3 billion is the highest nominal amount of NNA that we've had at EFG since the great financial crisis. So in the last 15 years or almost 20 years now, this is the highest NNA of CHF 11.3 billion that we have published. Markets were favorable. As we all know, currencies were completely against us with the dollar weakening significantly. And we also added CHF 11.7 billion coming from 2 acquisitions, Cite Gestion and ISG. And in January 2026, we also announced a third one, the acquisition of Quilvest, which will add another CHF 4 billion once it is concluded. What really pleases me is the figures on the right. We've had a couple of periods where new CROs have been, call it, the sole almost contributors to NNA growth. In 2025, we've seen a reversal to a composition which looks more like what we've seen in previous years, so before 2023, about 65% of our NNA is coming from new CROs and about 35% of NNA is coming from existing CROs. In terms of the geographical split of the business development, this is on the next page, Page 17. You'll see that every single region is posting a growth which is above 4%. So every single region is at least within the 4% to 6%. And we have 2 with Asia Pacific and the Americas, which are above the 6% growth range. So in reality, overall, it's a very good performance. It's all the regions firing at very good levels, and this is a testament to our diversified business model in terms of how we deliver growth. We have also delivered growth by hiring CROs, and this is on the next page, on Page 18. Our total number of CROs at the end of 2025 was 763. This comes with 238 CROs in Shaw and Partners in Australia. And we also have 67 new CROs that joined through acquisitions in 2025. If you see in the middle, our hiring patterns, clearly, in 2023, the numbers were very high, and this came from a dislocation with Credit Suisse-UBS. Although we just hired about 1/4 of the people in that year from Credit Suisse. All the rest came from about 20 other banks. The numbers have gone down in '24 and '25. They are reverting pretty much to the levels that we have set out as our target gross hiring numbers of 50 to 70 CROs. So in 2025, we actually hired 51 CROs, and we also extended offers to sign to another 28 for a total of 79 CROs that have been hired or have been signed to hire. In terms of the AUM to CRO, this is on the right-hand side. Why is this important? This is important because it's a very good measure of efficiency. And the more you can have a higher AUM per CRO, the more efficient we become. As you see, we've been growing throughout the years. On a like-for-like basis, we were at CHF 363 million per CRO at the end of 2025. If you were to include the acquisitions, you are at CHF 342 million, simply because the acquisitions come with smaller-sized CROs given the nature. At the same time, one of the reasons that we've managed to increase this is that we've been effective in performance managing our CROs, and you see that both on the load and also on the number of CROs. Now moving a bit more to the P&L. As I mentioned earlier, we have a very specific strategy, which is about building scale, and it's also about defending or even expanding our margin. What does that mean? What is the result of that? That means that our top line has been growing, has been growing significantly throughout the last 3 years, but also our revenue mix is becoming of a high quality. If you look at what has happened in 2025, you'll notice that our commission income, which is our bread and butter, this is the highest quality revenue that we have, our commission income grew by 17%, and this is on the back of, firstly, AUMs expanding, but also us gaining 3 percentage points year-on-year on the commission margin. So we've been managing to expanding the margin on top of growing the volume. On the other hand, we've discussed many times that interest income or interest-related income can be a source of vulnerability, because the rates have been going down. Actually, what we see in 2025 is that in the second half of 2025, interest-related income is marginally up compared to the first half, which probably means that we have reached close to the bottom of that phase of absorbing rate drops throughout the last couple of years. At the same time, we've seen a lot of client activity in currencies and metals. Of course, this is linked to the increased volatility, both in currencies and metals in the last couple of years. And this has helped net other income. And clearly, we've had a more limited contribution from life insurance in the net other income as well. In terms of going back to our strategy of how we intend to grow going forward, clearly, we will have to defend margin. I'll come back to why we believe that our margin is resilient on the next page. But one thing to note is that in terms of the growth element, so the AUM, the starting point in 2026 is CHF 185 billion of AUM. The average AUM in 2025 were CHF 170 billion. So we have a 10% head start in nominal AUM as we start the year in 2026. Next page, Page 20. It's about resilient revenue margin. You will see that the revenue margin that we have in the second half of the year is at 93 basis points. When we had the Investor Day in November of last year, that figure was 92 basis points. So we have actually seen an expansion of the revenue margin in the last 2 months of the year. In terms of our expectations going forward, look, the 2 key topics are interest rates and also can we continue expanding commission margin. On the interest rates, you see the sensitivity that we show on the top right. The sensitivity is CHF 36 million of drop in revenues if all 4 major currencies lose 100 basis points in the rates. Clearly, that scenario is not realistic at least for 2026, given the information that we have. So our expectation is that the sensitivity to interest rates is now a lot more muted. Maybe we lose a basis point in 2026, but clearly, it is marginal compared to our overall level of 93 basis points of revenue margin, which is way ahead of the 85 basis points, which is the average for the last 10 years. At the bottom, you'll also see the fact and the efforts we have been making to expand our commission margin. Firstly, you see mandate penetration. It has reached 67% at the end of the year. This is against our target of 65% to 70% that we had for this business cycle. And also, you'll see that the breakdown between recurring commissions and nonrecurring commissions is also moving in the right direction. And we have now a 46% -- 46 basis point commission margin for the full year 2025. Moving on to costs on Page 21. You'll see that we have operating expenses up 6%. This is the nominal growth. But this growth also masks the fact that we've done 2 acquisitions. These 2 acquisitions account for about 2.5% of that growth. So if you were to strip that out, the real growth is 3.7%. What is more important is that the FTEs in comparable terms have been going down. So we closed the year 2024 with 3,114. On a like-for-like basis, the year 2025 closed at 3,037. So we are about 80 FTEs down. Clearly, we have added more because we've done 2 acquisitions. And the salary costs have been going down at the same time. There is growth in the personnel side because of variable compensation, and this is something that is expected. Actually, in my view, the only cost that I can accept going up is variable compensation, because it means that we're making probably 5x that revenue when it comes to revenues. So the operating leverage is very high. We had stable other expenses. So general and admin expenses were pretty much flat compared to last year, and we still carry some legal and litigation fees. Now moving to the next page, which is Page 22. This is a page on how we think about cost management. And several people in the room or on the phone call this self-help. We call it finding or creating room, so that we can grow our business. And you will see that because if you look at the chart in terms of the last bar of the chart where it's under cost management actions, you'll see that, again, in 2025, we've managed to reduce our cost by about 3% during the course of the year, and that created exactly the room to invest in hiring and other investments, which is the first bar in that chart. Actually, even the numbers like the investment is CHF 36 million and the cost saving is CHF 38 million. So that matches very well in terms of our strategy in cost and efficiency management. The only 2 reasons costs have gone up are variable compensation, the CHF 28 million that you see in the second bar. And in the fourth bar, it's also the costs that come from the acquisition of Cite Gestion and ISG. Furthermore, at the bottom right, you'll see that as also communicated in November, we have exceeded our efficiency and cost management targets under the Simplicity project. The initial target was CHF 40 million. That target was up to CHF 60 million and the actual conclusion is CHF 66 million. There have been a number of actions included in this program. It's about rationalization. It's about automation. It's about reviewing processes end-to-end. And we already have a new program, which is running for the '26 to '28 cycle with a scope of CHF 70 million to CHF 80 million of efficiency and cost savings. Moving on to the balance sheet. In terms of the balance sheet on the left, no big movements. We still have about CHF 18 billion or more than CHF 18 billion of very liquid assets on the balance sheet. Core capital ratio, CET1 capital ratio at 14%, total capital ratio of 17.3%. The loan-to-deposit ratio is at 58%, and both liquidity ratios are at very good levels, at where they were last year or even better. And finally, we bought 11.8 million of treasury shares throughout 2025. And there is a new action on the buyback. The Board decided that the buyback continues in '26 and '27 for a total of up to 9 million shares to be acquired until July 2027. In terms of the impact from acquisitions, the acquisitions cost 130 basis points on the core Tier 1 ratio. Now as Giorgio mentioned, clearly, our primary focus is on expanding the core business. At the same time, we need to make sure that we successfully derisk the balance sheet from the legacy positions that come from pretty much 20 years ago. On the left-hand side, you see the actions that we have taken on the life insurance space. We've been quite active in 2025. Two major actions. One was to dispose of the entire synthetic portfolio and the second one was to unload about 1/4 of our physical holdings in life insurance policies. I'm very pleased to say that the carrying value of that portfolio now is about CHF 260 million as at the end of 2025. It was CHF 360 million at the end of 2024, and it was over CHF 500 million when we started this business cycle. So there's been continuous derisking and the numbers are going down. Hence, I expect some volatility coming from it. But overall, I don't expect big numbers to be coming through the P&L going forward. On the right-hand side, we have the legacy litigation cases. Some are in the life insurance space. We've resolved 3 there. There's one more pending, probably end of 2026 or early 2027. And then you have the 2 exceptionals that also Giorgio described earlier. The positive one is the first one, which is the recovery from an insurance on an old matter. And the second one is the provision on a litigation case, which we took in December. On a combined basis, these 2 created a CHF 14 million drag on our reported P&L. In terms of capital, which is on the next page, Page 25, we had one of the strongest capital generations in the last few years. In terms of gross levels, we were over 5 percentage points of capital generation. On a net basis, after risk-weighted assets and dividends, the net capital generation was 1.6% for the 12 months. This is part of the capital-light model, and we do expect that we'll be running at very strong organic capital generation going forward. What you see after that is the buyback which, combined with the dividend, enhances the returns that we offer to our shareholder. And then quite a few one-off items. So the acquisitions cost 130 basis points. The provision for the litigation case was 100. And we have 2 currency impacts. One is, call it, the normal currency. And then the second one refers simply to the Tier 1 instrument that we hold. The reason we show it separately is that if we decide to call that instrument, that will come back. So although you see that the core Tier 1 ratio that we report at year-end is at 14%, effectively, if we were to call that instrument, it would have been 14.4% after we unwind. With 14% or 14.4%, we are clearly very comfortably within our 12% to 15% capital ratio that we communicated back in November. And with the combination of the strong capital generation, we look forward to discussing even more M&A activity if it fits the plans and conditions that we hold. Which brings me nicely to Quilvest. This is the last M&A that we announced back in January. You see some of the figures here. I will not spend too much time on it. The only thing I'd like to say is that it looks small. It's CHF 4 billion AUM. But the beauty of Quilvest is the very high quality of its clients. And given the fact that it has been a small bank for many years, we believe that we can expand dramatically the offering to these clients. So it is an acquisition where we are looking to make sure that 1 plus 1 makes 3 and make sure that we create value for all the stakeholders. And to close, and this is on Page 27. I think that we are at the juncture where we are officially closing '23 to '25, and we are officially opening '26 to '28. We are definitely closing 2025 on a very high note, record growth, record profitability, record momentum in the profitability that we are posting. So I think we have all the ingredients to feel very comfortable about the next cycle. The priorities for '26, unfortunately, in our business just remain pretty much the same. It's not that we're changing priorities. So it's going to be about business development. It's going to be about making sure that we maintain the high growth in the top line, preserve margin. And at the same time, that we maintain our cost discipline while we're doing all these things. And the last part is, clearly, we did 2 acquisitions in 2025. Now we need to make sure we put them to work. These acquisitions, as I said earlier, had a negative impact in 2025. They have already started having a positive impact in 2026. But it's a matter of making sure that we exploit our investments to the full potential to make sure that we further expand profitability in 2026 and beyond. In terms of the next cycle, these are the financial targets that you see on the right. And just to repeat, 4% to 6% growth in terms of net new assets, revenue margin in excess of 85 basis points, cost-to-income ratio of 68%, and a return on tangible equity of 20%. On that note, I'd like to thank you very much, and I pass it back to Giorgio for priorities and outlook. Thank you. Piergiorgio Pradelli: Thank you, Dimitris. And let us now focus on the outlook, what we can see for 2026 and beyond and what are our priorities for 2026 to 2028. I would like to start with this page. You have seen this page during the Investors Day. This is our strategic framework. And 3 months ago, we basically said that we want to continue to build on our strength. We want to continue to focus on our clients. When I think about clients, I always think about net new assets, because if we do a good job with our clients, we can increase the share of wallet and we can attract new clients. Obviously, we want to deliver the best possible content to our clients in order to increase the level of engagement and ultimately, the level of margin and operating income. And finally, we need to translate all this into a growing profitability via Simplicity and operating leverage. At the same time, we have identified 3 new areas for growth, opportunities of growth. And we spoke about branding and client experience. We spoke about commercial excellence, and we spoke about tech-enabled services and processes when we introduced the concept of the augmented CROs. Again, it's early days. We just started the new cycle and only 3 months past from the Investors Day, but we believe that we have done already quite good progress in all these 3 areas, and we would like to give you a quick update. First of all, about branding, we stated in November 2025 that brand is important for us, it's important for our clients, and we wanted to strengthen our brand. Our ambition was to become or is to become one of the top 3 Swiss private banking brands by 2028. And in terms of brand finance, we have a ranking among the top 250 brands globally. We are very pleased because the brand finance report will come out at the beginning of March, I think the 4th of March, but we are allowed to present a preview of our results, and we are very pleased because the brand value has increased in excess of 50% to CHF 629 million. And what is also very important, we have gained more than 50 places, 50 positions, and we are now 262 in the ranking, which is obviously very close to the 250 that was our original objective for 2028. So I think this progress reflects our investments in an enhanced client experience and a higher brand recognition across markets where we invested quite a lot in the last few years. Now the second area is about the technology and is about launching the augmented CRO. Obviously, these days, I'm very pleased that we brought this concept 3 months ago, because, as you know, these days, everybody talks about AI basically substituting asset managers. And in the U.S., there was also a debate whether AI will substitute players like Charles Schwab and others. We always said, and we said it 3 months ago, and we continue to believe that is that AI and technology and the human factor are complementary. And obviously, we believe that our client relationship officers are among the best in the industry, but we believe that we can improve further if we are able to give them not only great teams around them in the areas of investment solutions, wealth solutions, credit solutions and global markets, but also the best possible digital solutions. We have announced 3 months ago that we have started a cooperation with BlackRock for the Aladdin system. We are pleased to report now that this has been rolled out in Switzerland, which is our biggest region, and our client relationship officers are very pleased. We have also launched the CRO Atlas, which is basically a tool that allows the CRO to have clear insights about their clients, the portfolio, the businesses, and we expect an increased ability for our client relationship officer to increase the share of wallet and the client engagement. And again, we started to do our first steps regarding AI. We have rolled out Ally, which is our in-house AI platform to all the new locations, and we have seen that the adoption has been incredible, which obviously shows how people are interested in this tool. So we continue to go forward in this direction. It's a journey. But again, the progress in the first 3 months is very encouraging and the new CRO team, again, is very committed to make us one of the best firms also in this area. The third point is about commercial excellence, and we start seeing some improvements in terms of client engagement and share of wallet. Dimitris already mentioned that our existing CROs are improving in terms of gathering assets, which is obviously a function of attracting new clients, but also a function of improving the share of wallet. And as I mentioned earlier, content for us is very important. Obviously, we have great teams in our investment and wealth solutions that provide solutions to our clients. But clearly, it is also important to create an ecosystem with top players in the market, and we have announced yesterday a cooperation, a partnership with Capital Group, one of the biggest active asset manager in the world. And we have been cooperating already for a long time, but we have decided to deepen our partnership, and I think this is a mean in a way to further enhance our personalized offering and impartial advice to our clients, which ultimately will support basically our business. Now 3 months ago, at the end of November, we presented to you our operating model. Our operating model continues to deliver. In essence, we continue to focus on growth, translating both organic and via acquisition. We translate this growth in growing profitability. We use part of the profitability that we generate in investing in order to transform the bank for the better, and this generates attractive returns. As you have seen in 2025, we were able to deliver very attractive returns to our shareholders indeed. Now looking at 2026, I must say that the year started as 2025 ended. This situation where there is a lot of volatility and uncertainty driven from geopolitics to financial markets, and we can debate for hours about the situation. But this volatility, coupled with the attitude of our investors, which is actually quite risk-on, is quite constructive and positive for our clients, because we see that the level of engagement and the level of transactions that our clients are doing with our CROs and with our dealing floors is at very high level. And we expect this to continue as long as the overall attitude is risk-on. If we are going to have another risk-off situation like in April last year, then we will have to see and obviously react. But for the time being, the year started very, very well. And for us, the priorities, as Dimitris said, do not change quarter after quarter, but I would like to emphasize them again. Number one obviously is about maintaining our growth momentum. So net new assets and client engagement remains our top priority. Second, after NNA, we have now M&A. M&A is important. As mentioned already, we have done 3 acquisitions in the last 12 months. This is CHF 16 billion, not dollars. I think maybe earlier, I mentioned dollars. No, no, we continue to report in Swiss francs. And obviously, it is important that these acquisitions start basically being integrated and start delivering in terms of profit contribution starting in 2026. The third priority after NNA and M&A remains to defend our margin. Margin resilience is very, very important. And again, we have managed very well, I believe, in 2025 to mitigate the headwinds in terms of declining interest rates and a weaker U.S. dollar. As Dimitris says, I think that by now, the declining interest rate is like when you sail, the wind is becoming softer. So it's not really an issue anymore. I think we will be able to absorb the 1 basis point that Dimitris has indicated. The weaker dollar, this is a bit more complicated, because as we see these days, it's very difficult to predict the direction. I think there was, at the end of the year and beginning of this year, some wishful thinking by many market participants that we could see a rebound. We have not seen that yet. And so we will have to continue to focus on what we can control. And what we can control is, for sure, the net commission income and all the advisory activity in terms of investment solutions, wealth solutions, credit solutions and global markets. Next priority remains obviously to generate operating leverage. We discussed 3 months ago about the golden rule to try to grow revenues at a double rate of cost. Last year, depending on how you look at it, we were very, very close to that. I think we will continue this year and technology, for sure, will allow us to improve productivity and efficiency. And finally, we are obviously very committed to deliver for 2026, and we are very confident to meet the 2028 financial targets. Now we are entering a new cycle. We are closing, I think, today -- well, we have still the general assembly in a month. But after that, we will close the 2023, 2025 cycle once and for all. But again, it has been a fantastic ride, and we are starting the new cycle in a position of strength. And so all the initiatives -- just to be very clear, all the initiatives that I was mentioning before at the end of the day are geared in ensuring that we deliver a consistent performance, and we unlock the power of compounding, as you can see on the right-hand side of Slide 34. And again, our objective at the end of the day is to generate a double-digit net profit growth at around 15% and to achieve a return on tangible equity of 20%. So in closing and looking ahead, first of all, I would like to mention that our aspiration, our vision is to be the private bank of choice for generations of clients. I think that the momentum of the last years shows that we are already, for many clients, the private banking of choice for generations of clients. Obviously, we want to become for a bigger number of clients and to be really recognized for delivering fully personalized service and impartial advice. To close, I would like to say that 2025 has shown that we are closing the cycle with a strong momentum. And as I said, we were able to translate this in record profit and very attractive returns for our shareholders. We also made 3 acquisitions in our key markets in the last 12 months. And this, in my view, is important to be emphasized how we can successfully complement organic growth with strategic M&A acquisitions. So overall, our business model is not only, I would say, resilient, but is also geared towards profitable and sustainable growth. And this is the case today and will remain the case in the next cycle. Obviously, as a management team and all our teams at EFG that I thank here for the commitment and the dedication to EFG are fully focused on the execution of the budget, first of all, for 2026, and the 2028 strategic plan. And clearly, we are very confident to deliver value for all our shareholders. And with this, I thank you for your attention. I close here the formal presentation and hand over back to Jens to open the Q&A session. Jens, the floor is yours. Jens Brückner: Thank you, Giorgio. Thank you, Dimitris, for your presentations. As just said, we're starting the Q&A session in the room. So if we have a question, please let's start with Máté over there, so first question. Mate Nemes: Máté Nemes from UBS. I have a couple of questions. The first one would be on your comments that run rates in a number of areas were better versus what you expected at the time of the CMD that relates to the last 2 months of the year. Could you talk about what surprised positively? What are the areas that perhaps you are more positive about versus the November CMD? That's the first question. The next one would be on the litigation provision that you booked in December. Could you share more details around this? What led to this provision? What triggered this? And how do you see the case unfold from here? And the last question would be on capital and the FX impact specifically. Can you talk about your capital hedging approach? Does the 60 basis point negative impact mean that you're not applying FX hedges and there's a considerable mismatch between CET1 capital and RWAs? Dimitrios Politis: Let me start with the run rate. So I think there are two points on the run rate. The one is the actual bottom, bottom line, and we tried to show this on Page -- hold on a second. This is on Page 9 of the presentation, where you see that in the period between July and October 2025, we actually had CHF 100 million for those 4 months. And then that number went close to CHF 165 million for the 6 months. So clearly, the last 2 months have been very strong in terms of profit generation. So this is, for us, very positive. And as Giorgio said, we also see continued strength in the delivery of the profits also in the month of January of 2026. Now the second point is on the revenue margin, which is described on Page 19 of the presentation. For the second half of the year, we were at 93 basis points. Back in November, we reported that for the 10 months, we were -- or for the 4 months, which were the last 4 months at the time, we were at 92. So there, we also see an uptick, which makes us feel more positive. In terms of why things are better than what we're expecting, there are three reasons. One is the mandate penetration effort continues, and we see that translating into commission income and commission margin. The second one is that we had good client activity in the last 2 months and in January of 2026. And the third one is the pressure on interest-related income seems to be coming down. So a combination of all three is what helps us feel more comfortable and more confident that, okay, maybe we do not stay at 93 going forward, we -- it is certain that we'll have some erosion from the 93, but the starting point is a very solid starting point from which to work on. Piergiorgio Pradelli: And clearly, as you mentioned, the fact that our AUM is now 10% higher than the average of previous year is another element of support to our business. Dimitrios Politis: Now the second question was about the litigation and bear with me because there is -- I am somewhat limited in terms of the information I can disclose on that, as you can understand. Just to remind everybody, this is legacy litigation. It pertains to events that happened approximately 20 years ago and it was first disclosed in the financial statements back in 2019 in the contingent liability section. It is a complicated case. It is a case, which is now the trial is happening in London in the U.K. The plaintiff is PIFSS, which is the Kuwait state pension fund. And we have about 30 defendants in that case, including EFG and some other banks. Now in terms of more specifically about where we are in the case, the court proceedings, the court hearings started in March 2025, and they are still running. So we are in month 11 of court hearings. We do expect that the court hearing will last probably another couple of months. And we expect the verdict to come out in around the summer of 2026. Clearly, we continue to defend the case. We have very strong defenses, and we will continue arguing our case over the next 2 months still. But given the fact that we've gone through 11 months of trial means that we have gathered more information about the possible outcomes of the case. And we have now reached the stage where under the IFRS accounting rules, we can reliably estimate, and this is the reason why we posted -- we recorded this provision in our P&L and in our balance sheet in December 2025. Again, timing-wise, verdict is expected at the -- somewhere around summer of this year. And Máté, you had a question about capital, the capital impact and the currency. The way we work on currencies is that we try to match the composition of our equity with our composition of risk-weighted assets, which is a bit of a natural hedge, if you wish, which means that if currencies are moving one way, than I would expect -- so if you have an adverse effect in your equity, I expect that you get a positive effect in your risk-weighted assets and you try to match the two. So you're not managing the equity as a number, you're not managing risk-weighted assets as a number, you're managing core Tier 1 ratio as a number. This is how we think of it. But clearly, we disclosed the movement in the currency translation adjustment here because in 2025, it's a more significant number. And on the other element, which pertains to the Tier 1, it's a bit of a nod way that IFRS deals with it. Although the impact is only on the Tier 1 instrument, you cannot change that, the holding value of that instrument, you need to impact core Tier 1. That's the reason we're saying that if it gets called, that 40 basis points gets released. So our effective core Tier 1 ratio is now 14.4%, the way we think about it. Sorry for the detailed explanation. Jens Brückner: Great. And we have here the next question, please. Daniel Regli: This is Daniel Regli from Zürcher KB. I have two follow-up questions. One is on the gross margins and the development there, particularly, obviously, in H2, we saw kind of an uptick in the recurring commission margin. If you can just maybe reiterate a bit your explanations there and how far this is sustainable into the next years? And then secondly, obviously, again, on the net interest margin or the margin outlook on interest income. Just maybe help me understand a bit more how you exactly come to, let's say, 1 basis point pressure? What do you do? I think markets still expect some rate cuts in U.S. dollars as well. And then lastly, on the net new assets development, obviously, congratulations to the strong net new assets development, particularly Asia Pacific and Americas, but obviously also in Continental Europe. Can you maybe elaborate a bit more what drove the strong asset flows? And maybe also explain a bit what extent was driven by maybe some releveraging, particularly in Asia? Dimitrios Politis: So let me start with the margin question. I'll start with the interest margin or interest-related margin, and I'll point you to Page 19 of the presentation. So on Page 19 of the presentation, we show the sensitivity to rates. And what you see at the top right part of the page is that if we lose 100 basis points on all 4 key currencies, the net impact for us is a reduction in revenue by CHF 36 million. Clearly, the majority is coming from the dollar. Clearly, we don't expect that all 4 currencies will lose 100 basis points in 2026. By the way, CHF 36 million is 2 basis points. So we don't expect to lose on all currencies and even on the dollar, maybe the 4 cuts is a bit too aggressive. So we estimate that, roughly speaking, it's not going to be a 2 basis point hit but a 1 basis hit in terms of the interest-related margin in 2026. Now to your other question about commission margin, the 2 reasons why the commission margin has increased is mandate penetration, which you see at the bottom right, going to 67%. And the second part is client activity. And so we are -- we have an even higher target for mandate penetration for the next business cycle, so the one that we currently just started, '26 to '28. And we see client activity continuing. Now again, if client activity pulls back, then especially in the nonrecurring side, you will see a drop, while the recurring side should be a lot more resilient going forward. Giorgio, if you want to take the growth? Piergiorgio Pradelli: Yes. In terms of NNA, as you know, first of all, this has been our 14th consecutive semester of NNA growth. So basically, this is 7 consecutive years. And clearly, we have a methodology and a focus on growing our business, which goes beyond 2025 and will continue in the next cycle. As you have seen on Page 16, I think that what is remarkable is that the growth has been basically very strong across regions. If you see basically all the regions are within our targets. Even more mature markets like Switzerland and the U.K. are within our margin. It is a combination, as Dimitris was saying, between new CROs, but also existing CROs, existing CROs have improved their performance. It is correct what you say in the sense that we did not have, like in previous years, deleveraging. We have seen back leveraging coming in. Obviously, we believe that the fact that interest rates are coming down at the short end and the curve is steepening. This allows clients to play the carry trade and obviously, they engage much more in terms of Lombard lending. But -- and this is on Page 40 and 41. If you look at our dynamics, basically our total NNA has been CHF 11.3 billion. The increase in lending is CHF 1.5 billion. This is about 13% of the total AUM. And if you go to the following page, on Page 41, you see that at the level of the stock, if you can go on Page 41, please, you see that the level of the stock is 11%. So the growth in lending is clearly 13% of the total NNA and is in line with our normal lending penetration. So I would say, yes, we are pleased that the deleveraging has stopped. But our growth is not lending-led. Asia has been -- just to make the points of Asia and the Americas, obviously, Asia Pacific is in excess of our margin, 8.5%. And we have had growth also in terms of hiring CROs. They've been all very successful and they're doing extremely well. And the Americas also there has been a growth in all the areas. We have opened in Panama. We have focused on Brazil. So it has been across the region. Jens Brückner: Great. Do we have another question in the room at this stage? Nothing -- the gentleman there, please? Unknown Analyst: [indiscernible]. You see the strong negative reaction on the stock market today with minus 9% due to your litigation case in the U.K. You had 36% of growth in the net benefit in the first half year 2025. Now you announced only 1% of growth. Why the benefits slowed down so much? You spoke about the litigation case in the U.K., which cost you CHF 60 million, but combined to the other positive litigation case in Korea, it only was CHF 40 million? So are there other reasons for the slowing down of the net benefit? And why did you communicate only now and not in December about this litigation case? And second question about the U.S. dollar exposure in your assets. I think you have 60% of exposure in assets. Is there any trend at your clients that they want to reduce that U.S. dollar exposure due to geopolitical reasons? Piergiorgio Pradelli: Maybe I can start on the stock price. And it's the first time I hear how the stock is doing because we have, the 3 of us, a pact that before going to the presentation, we never look at the stock price. So I was not aware, but let me tell you that our job is to manage the operating business of the company. And we have been told very young, not to focus on the stock price. And if the operating company and the operating performance of the company works very well, then the stock price will follow. I cannot comment -- I will not comment about today's stock price. Clearly, as you said, the overall drag for the exceptional is CHF 14 million. It is unfortunate that the positive was in the first half and the negative in the second half, but these are one-offs and have no impact, as we discussed on the operating performance of the company. You want to mention about the timing? Dimitrios Politis: Well, the timing comes with the ability to reliably estimate and that ability and the full estimate came very recently. So the appropriate timing to release that was with the full year results today. Piergiorgio Pradelli: Maybe the other element why this exception was CHF 14 million and the fact that the net profit if you look -- I think that the question was about the difference between the operating profit and the net profit is also due to the volatility of life insurance that it was mentioned on Page 10, I think. Page 10. If you go to Page 10. You can see here the difference in terms of performance of the life insurance that in 2024 was quite strong at CHF 32 million. And obviously, in 2025 was positive, but much less strong. And clearly, again, here, these are legacy matters. We cannot influence them directly with management actions. So the combination of the drag due to the exceptionals and the fact that life insurance was lower than the previous year, this is one of the explanations. Otherwise, the operating profit, as we said, is at record level, almost at CHF 500 million. Jens Brückner: Second question about the U.S. dollar. Piergiorgio Pradelli: U.S. dollar. Dimitrios Politis: Question on the U.S. dollar. Look, we see some clients that are moving away from the U.S. dollar. So we see some clients that now are also considering other currencies. If you look at the composition of our AUM, which is at the back of the presentation, clearly, this has not moved substantially. I'm trying to get the page. Piergiorgio Pradelli: Page 41. Dimitrios Politis: Page 41. So like the U.S. dollar was 47% last year. It's still 47% of currency this year. So it is more anecdotal than actually us seeing a significant trend in terms of the currencies that our clients wish to use. Jens Brückner: Okay. If we have no follow-up, then we move to the question on the phone, please. Operator: The first question from the phone comes from the line of Hannah Leivdal from Citi. Hannah Leivdal: I have two, please, if I may. So the first one is on your balance sheet and capital position is strong. But equally, your annual report outlines the number of legal cases outstanding. So what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside feeding into this versus what is available for M&A and other growth initiatives? And my second question is on the... Jens Brückner: Sorry to interrupt. We have a hard time understanding you. Maybe can you move your microphone a bit? Hannah Leivdal: Is that better? Jens Brückner: No, that's worse. Hannah Leivdal: Oh, it's worse. How about now? Is this any better? Or this is worse? Jens Brückner: A bit, yes, better. Hannah Leivdal: A bit better? Jens Brückner: Yes, let's try. Hannah Leivdal: I'll try again and then interrupt me. So I was asking on the balance sheet and capital position being very strong, but equally your annual report outlines a number of legal cases outstanding. So I was wanting to ask what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside paving into this versus what is available for M&A and other growth initiatives? Dimitrios Politis: So I think I heard the question. So I'll try to answer to the best that I can. So the -- as you say, our current CET1 position is effectively 14.4%. And I guide you to Page 24 of the presentation because through the latest provision that we took, we have derisked the largest single risk item we had in our -- on our balance sheet. It was the -- it is the largest contingent liability that we actually have on the balance sheet. So in terms of risk profile, now I believe that we are a lot sounder than we were before. At 14.4% of core Tier 1, we have about CHF 260 million of excess capital from our own management floor of 12%. And even more importantly, I would guide you to the capital generation that we have every year. So this year, it was over 5 percentage points of gross and 1.6% on net capital, which is the result of a capital-light model, clearly for a private bank like us. So I think that given where we are, we are very comfortable with our capital position. We are generating capital which we can use for new acquisitions. And we do have also a capital buffer of CHF 260 million, which we can also use for other acquisition if we wish to do so. By the way, if you want to discuss acquisitions, it is not that the acquisitions are simply done in cash. There's always -- or usually, there is a share element included in the acquisitions that gives us even more firepower. Hopefully, I've answered the question because I could not hear you very, very well. Hannah Leivdal: Yes, that's very clear. I have another one, but I don't know if you can hear me. If it's any better? Dimitrios Politis: Just go ahead. Hannah Leivdal: Okay. Yes. So on the treasury swap margin, I just wanted to ask why did this increase in the second half despite narrowing spreads versus Swiss rates? And what was the swap volume in 2025, please? Dimitrios Politis: The reason that the treasury swap activities, the revenues from that increased in the second half is because the volume of our swaps increased. As you say -- as you rightly say, maybe the margin between the 2 currencies has not moved that much or even has narrowed a bit in the period, but it was through higher volumes of currency swaps that, that increased. And clearly, what also happened is that the NII element decreased because it's the other side of the same equation. Jens Brückner: Thank you for your question. I think we have another question on the phone, can we get that one, please? Operator: Next question from the phone comes from the line of Andreas Venditti from Vontobel. Andreas Venditti: I hope you can hear me better than my colleague just now. On M&A, you mentioned the negative profit... Jens Brückner: We can't understand you. That is even worse than before. Can we try to get the sound regulator or try again? Andreas Venditti: Can you hear me? Jens Brückner: No, not really. Andreas Venditti: Okay. Never mind. I'll come back to you, Jens. Jens Brückner: Now it's good. Now it's better. Andreas Venditti: It's better. Okay. I don't move, so I hope it's better. On M&A, you mentioned a negative impact on profits from the two small acquisitions. I guess it's a small number, but still to ask on this. Can you maybe quantify the negative impact, I guess, on the cost side, mainly from this on 2025 numbers? Dimitrios Politis: As you expect, Andreas, the overall contribution is a small single-digit negative number. And the reason it is negative is that we included the profits of Cite Gestion and ISG for a few months, like Cite Gestion was 2, 3 months. And we had some acquisition costs, which are the one-off part of doing M&A. And the balance of those 2 was negative. Clearly, both companies were profitable with actually profits growing significantly compared to the last year in 2025. It's just the timing of the acquisition and the amount of the M&A-related one-off costs that get us to this small negative result in 2025. Jens Brückner: Okay, does that answer the question? Do you have another one or it's good? I think we lost him. Is there another question in the room or not at this moment. Máté has another follow-up. Okay, let's take that one. Mate Nemes: Yes. Just one question. I wanted to ask you about the Lia AI platform that you rolled out in 2025. Could you talk about the capabilities and the exact use cases of that platform? Piergiorgio Pradelli: Yes, thank you. I think there are several use cases that we are using, in particular in the Investment Solutions area. Then there is the general, let's say, use cases that you have with a normal ChatGPT like chatbox. And clearly, the areas where we are trying to develop much more is everything related to compliance and risk. I've always been saying that right tech for us is more important at times than fintech. But these are the key areas where we are expanding. And the next level, but we are not there yet, will be how to improve the client experience because all the use cases I mentioned were more about efficiency on the backstage, and that will be the next area where we're going to focus on. Jens Brückner: Okay. I think there's no further questions on the phone. If there's nothing in the room, then I hand that back to Giorgio for the final remarks. Piergiorgio Pradelli: No. First of all, thank you for attending. Again, I would like to reiterate that 2025 has been a very strong year where we have achieved a record AUM, record profitability and record top line. Clearly, it's also a year where we have done progress in dealing with the legacy matters, and we closed successfully our 2023 and 2025 strategic cycle, and we are very confident starting in a position of strength, the 2026-2028 cycle. And as a management team, we are committed in executing our sustainable and profitable growth strategy as we have done in the previous period. With this, thank you very much for your attention.
Operator: Good morning, and welcome to Bausch + Lomb's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead. George Gadkowski: Thank you. Good morning, everyone, and welcome to our fourth quarter 2025 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders; Chief Financial Officer, Mr. Sam Eldessouky; and President of Global Pharmaceuticals and International Consumer, Mr. Andrew Stewart. In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide 1 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent. Brenton L. Saunders: Thank you, George, and good morning. I'm going to start by highlighting Q4 and full year results, which show we don't just talk about strategy, we execute it. Sam will put more context around our performance and provide 2026 guidance, and Andrew will cover opportunities to expand our leadership in dry eye. I'll close with a look at why we continue to be so excited about 2026 and beyond. When you hear me talk about execution today, this is exactly what I mean. In the fourth quarter, we didn't just grow. We grew smarter and faster than the market. When you see 7% constant currency revenue growth and 27% adjusted EBITDA growth, that's real operating leverage and a clear sign of our commitment to financial excellence. The discipline we built into the organization is paying off. This isn't a onetime exercise. It's the direct result of teams making better decisions, a fundamental shift in our cost structure and executing consistently across our businesses. We plan to harness that momentum to deliver on our 3-year plan. Results don't come from slides or strategy decks. They come from people who believe in what they're doing, take ownership and execute every day. That mindset across our company is what made our record performance in the fourth quarter possible, and it's a privilege to lead a global team committed to winning together. I highlighted fourth quarter growth on the previous slide, but would note that both $1.4 billion in revenue and $330 million adjusted EBITDA are a high watermark for our company that's been around for quite some time. While it's important to remember that there is seasonality to our business, which is especially true as our Pharmaceutical segment becomes more prominent, we did what we said we would do in the quarter. Our ongoing focus on selling excellence is best illustrated by our continuously expanding dry eye portfolio with Miebo generating $112 million in the fourth quarter revenue. We continue to be impressed by Miebo's trajectory and turn towards profitability as we exit the launch phase. The latest demonstration of our commitment to operational excellence and staying nimble to drive sustained, profitable growth comes from our Surgical business, where we made several strategic fourth quarter moves to position us for margin improvement. Finally, as I shared at Investor Day, our pipeline isn't theatrical. It's active in delivering. From the imminent launches to active recruitment for forthcoming trials, we're translating R&D into revenue and impact. That's what builds confidence in future growth. If there are any skeptics of our 3-year plan coming out of Investor Day, this slide is for you. We didn't overpromise in 2025, we executed, and the outcomes speak for themselves, 6% constant currency revenue growth, excluding the enVista recall, was faster than the market and at the midpoint of our planned CAGR through 2028. Adjusted EBITDA margin came in at 17.5%, with an impressive 23.5% in the fourth quarter. Importantly, margin expansion steadily increased throughout the year, putting us on a path to achieve margin targets in 2026 and beyond. You've heard me and Sam reference say-do mentality before. Here it is on paper. Financial discipline is no longer a onetime effort or a cost savings program. We've built the muscle around planning, prioritization and accountability, which puts us in a much stronger position to drive sustained margin improvement over time. People hear pipeline and think long term. What they should think is momentum because something meaningful is happening across our portfolio at all times. PreserVision AREDS3 started to ship on February 2, and Blink Triple Care preservative-free is expected to ship on March 1. CE mark submission for seeLYRA, our next-generation femtosecond laser is expected to take place next week with anticipated approval in the second half of the year. All trial recruitment is on schedule, and we recently received top line data from our first external study for our new bioactive contact lens material. We're pleased to report the study met our expectations and heightens our probability of success. Our in-house R&D team has started its analysis, which will allow us to make improvements to the lens, and we remain on track for our second external study and plan 2028 launch. When it comes to our pipeline, the future isn't waiting, it's already underway. This 2025 performance summary highlights the breadth of our offerings and shows why diversification is a competitive advantage. We've built a company that covers eye health end-to-end, and today, every part of the business is contributing. That's what durable growth looks like. The spotlight products drive that point home. They can be found behind the pharmacy counter, in the operating room or a few clicks away. Some, like Artelac, have demonstrated strong growth in important markets outside the U.S., as we implement our strategy to focus on core formulations. Others, like LUMIFY, are prime for additional exposure and opportunity as next-generation offerings are introduced. I'll now turn it over to Sam for a deeper dive on Q4 and full year financial metrics including cash flow figures that I know he is particularly proud of. He'll also provide 2026 guidance, which is aligned with our 3-year growth plan. Sam? Osama Eldessouky: Thank you, Brent, and good morning, everyone. Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all of my references to adjusted EBITDA will exclude acquired IPR&D. As Brent mentioned, Q4 was a record quarter. We delivered the highest revenue and the highest adjusted EBITDA in the history of Bausch + Lomb. We also delivered an adjusted EBITDA margin of 23.5%, which is the highest level we have achieved as a stand-alone company since our IPO. In the quarter, we drove meaningful operating leverage with adjusted EBITDA growth of 27% on a year-over-year basis. Building on our strong third quarter performance, in Q4, we continued to deliver on the commitments we outlined at Investor Day and showed how our relentless execution will set us up to achieve the 3-year targets we outlined in November. Turning now to our financial results on Slides 9 and 10. Total company revenue for the quarter was $1.405 billion, up 7%. Full year revenue was $5.101 billion, up 5% and up 6% excluding the enVista recall. We saw revenue growth across all our segments, both in the quarter and the full year. Currency was a tailwind to revenue of approximately $37 million in the fourth quarter and approximately $58 million for the full year. Now, let's dive into each of our segments in more detail. Vision Care fourth quarter revenue of $778 million increased by 5%, driven by growth in both consumer and contact lenses. Full year Vision Care revenue was $2.923 billion, up 6%. Let me go over a few highlights. Following double-digit growth in Q4 in the prior year, the Consumer business delivered 3% growth in the quarter. For the full year, the Consumer business grew 5%. LUMIFY generated $63 million of revenue, up 24% in Q4, and $221 million of revenue for the full year, up 16%. The Consumer dry eye portfolio delivered $116 million of revenue in the fourth quarter, up 6%. The growth was led by Blink, which grew 33%. Full year Consumer dry eye revenue was $436 million, up 14%. Eye vitamins, PreserVision and Ocuvite grew by 2% in the fourth quarter and 2% for the full year. Contact Lens revenue growth was 8% in the fourth quarter and 7% for the full year. The growth was again led by DD SiHy, which was up 17% in the fourth quarter and 28% for the full year. Additionally, Ultra was up 16% in the fourth quarter and 9% for the full year. In Q4, our Contact Lens business saw growth in both the U.S. and international markets. The U.S. was up 11% and international was up 6% in the quarter. For the full year, the U.S. was up 9%, and international was up 5%. In China, Contact Lenses continued to perform well and grew by 7% in the quarter and 8% for the full year. Moving now to the Surgical segment. Fourth quarter revenue was $249 million, an increase of 3%. Excluding the impact of the enVista recall, Q4 revenue growth was 6%. For the full year, Surgical revenue was $894 million, up 4% and up 10% excluding the recall. In Q4, Implantables were up 5% and 24% sequentially. For the full year, Implantables were up 4%. Premium IOLs were up 20% for Q4 and 26% for the full year. Consumables were up 4% in the fourth quarter and 5% for the full year. Finally, Equipment was up 2% in Q4 and 3% for the full year. Revenue in the Pharma segment was $378 million in Q4, which is an increase of 14%. For the full year, Pharma revenue was $1.284 billion, up 6%. Our U.S. Branded Rx business was up 21% in the quarter and 13% for the full year. Strong Miebo execution once again led the growth. Miebo delivered $112 million of revenue in Q4, an increase of 111% year-over-year and 33% sequentially. For the full year, Miebo revenue was $316 million, which represents impressive growth of 84%. Xiidra continues to track in line with our expectations, and our team is executing our strategy. In the quarter, Xiidra revenue was $95 million and $331 million for the full year. Our International Pharma business was up 5% in the quarter and 6% for the full year. Finally, we are seeing meaningful progress in our U.S. Generics business, where we saw growth sequentially and on a year-over-year basis. In the fourth quarter, U.S. Generics was up 4% on a year-over-year basis and 24% sequentially. Now, let me walk through some of the key non-GAAP line items on Slides 11 and 12. Adjusted gross margin for the fourth quarter was 62.1%. This absorbs an impact of approximately 80 basis points related to tariffs. For the full year, adjusted gross margin was 61%. In Q4, we invested $94 million in adjusted R&D, in line with Q4 2024. Full year adjusted R&D was $371 million, up 8%. Fourth quarter adjusted EBITDA was $330 million, up 27% on a reported basis. The adjusted EBITDA margin was 23.5% in Q4, which represents year-over-year expansion of 330 basis points. As I previewed at Investor Day, we are continuing to focus on efficiencies in SG&A, and we are seeing the benefits in operating leverage. Full year adjusted EBITDA was $891 million. We are pleased with the work we've done on cash flow optimization. Adjusted cash flow from operations was $152 million in the quarter and $381 million for the full year. Adjusted free cash flow for the quarter was approximately $76 million and $32 million for the full year. CapEx for the full year was $349 million, which includes approximately $30 million of capitalized interest. Net interest expense was $95 million for the quarter and $376 million for the full year excluding a $33 million charge related to refinancing fees. The full year 2025 adjusted tax rate was 10%, which is lower than our previous guidance of approximately 15%. The lower tax rate was mainly driven by the impact of the enVista recall and other onetime adjustments. Adjusted EPS, excluding Acquired IPR&D was $0.32 for the quarter and $0.51 for the full year. Adjusted EPS in Q4 includes a onetime noncash charge of $0.08 related to a revaluation of stock-based compensation to reflect our strong performance and favorable long-term outlook for the company. Excluding this charge, EPS for the quarter was $0.40 and $0.59 for the full year. Now, turning to our 2026 guidance on Slide 16. For 2026, we expect to build on the results we have delivered in 2025 and to continue to execute to achieve our 3-year financial targets outlined at Investor Day. The fundamentals of our business and the eye care market remains strong. We expect our revenue to once again grow faster than the market, and we expect each of our segments to deliver growth in 2026. We expect full year revenue to be in the range of $5.375 billion to $5.475 billion, which represents constant currency growth of 5% to 7%. Based on current exchange rates, for the full year 2026, we estimate currency tailwinds of approximately $30 million to revenue. We expect to continue to execute our margin expansion strategy. We are setting our adjusted EBITDA guidance in the range of $1 billion to $1.050 billion. This reflects a margin of approximately 19% at the midpoint of the guidance range and adjusted EBITDA growth of approximately 15% on a year-over-year basis. We expect to drive meaningful operating leverage in 2026, with adjusted EBITDA growing at a rate of nearly 3x that of revenue. In terms of the other key assumptions underlying our guidance, we expect adjusted gross margin to be approximately 62%, and we expect investments in R&D to be in the range of 7.5% to 8% of revenue. Throughout 2025, we've taken steps to address our debt maturities and cost of debt. We expect interest expense to be approximately $365 million. We expect our adjusted tax rate to be approximately 19%, and we expect our full year CapEx to be approximately $285 million. In terms of our quarterly phasing, we continue to expect the natural seasonality of our business with the first quarter being the lowest and the fourth quarter being the highest. This seasonality is expected to become more pronounced as the dry eye franchise continues to grow. To conclude, we have laid the foundation for revenue growth and margin expansion. We started seeing early results in Q3 2025 and delivered a record quarter in Q4. This gives us a clear signal that the strategy is working. The business is proving to be on a solid path to delivering our long-term targets, and our focus for 2026 will remain on execution. And now, I'll turn the call back to Brent. Brenton L. Saunders: Thanks, Sam. I'm now going to turn it over to Andrew Stewart for a look at Miebo and Xiidra performance and an overview of the immense opportunity in dry eye. Andrew Stewart: Thanks, Brent. Miebo performance in 2025 was exceptional, with 113% year-over-year prescription growth that generated $316 million in revenue. We hit a significant milestone on January 2, crossing the 2 million prescription mark. Going forward, we expect a steady increase in prescription growth and profitability as more patients experience the therapeutic benefit of Miebo and our level of investment stabilizes. With broad market access and natural progression in the medication's life cycle, we anticipate normal seasonality from Miebo prescriptions, similar to what we see for Xiidra and other branded medications in the category. We previously shared that Miebo peak sales could reach $500 million. Based on its success, less than 3 years since launch, we now believe peak sales could exceed $600 million. I'm going to pick up on Brent's theme around execution. When describing Xiidra's 2025 performance, we said we would drive prescription growth, and that's exactly what we did. Total prescriptions grew 6% year-over-year in the fourth quarter, marking the highest quarterly total since launch. In 2026, we anticipate revenue growth and higher profitability, as we evolve our market access strategy. Xiidra and Miebo continue to have best-in-class commercial and Medicare coverage with 4 out of 5 patients covered. Ultimately, we expect both of our flagship dry eye medications to be even bigger contributors to the bottom line in 2026. Dry eye disease is one of the largest and most underpenetrated categories in eye health. Today, approximately 1 in 10 patients are actively treated with prescription therapy, leaving substantial runway for increased adoption. The global market is expected to nearly double in the next 4 years, and much of the recent prescription growth can be attributed to Miebo. For the past 2 years, eye care professionals have been able to more effectively treat patients with the first therapeutic product that can manage evaporative dry eye. This has helped lead to a 5x increase in year-over-year average weekly dry eye prescribers. The overall dry eye market continues to expand due to several factors, most notably an aging population, environmental factors and a dramatic increase in screen time. From over-the-counter products that provide symptomatic relief, prescription therapies that treat both signs and symptoms and diagnostic tools that help eye care professionals better serve their patients, our comprehensive portfolio of dry eye products is second to none and positions Bausch + Lomb to be the biggest beneficiary as more consumers and patients seek treatment. We're not just participating in dry eye, we're leading it. We have the broadest portfolio, the deepest expertise and the strongest presence in the category and in one of the fastest-growing areas of eye health. That's exactly where you want to be. Brenton L. Saunders: Thanks, Andrew. Earlier, I mentioned 2 imminent consumer launches, which tell very different but equally powerful stories. One is about evolution, taking a proven product and unlocking a much larger opportunity. The other is about acceleration, a brand we brought back to life that's now growing faster than ever. Two distinct paths, both driving meaningful upside. Let's start with PreserVision, the #1 eye vitamin brand. We partnered with the National Eye Institute for decades to help reduce the risk of progression in moderate-to-advanced AMD, which has led to continuous evolution of the product. The latest and most advanced iteration is AREDS3, which incorporates B vitamin Science. This new formulation allows us to engage patients earlier when the population is significantly larger and the opportunity is greatest. It transforms our role from treating progression to supporting the full continuum of care. Blink is a great example of what focused execution can do. We revitalized the franchise and built real momentum with 38% constant currency revenue growth in 2025, but we're not standing still. We're building on that success with an advanced preservative-free lipid-based formulation of Triple Care to reach even more consumers as demand continues to rise. These launches show how we create growth from strength, science and momentum. Our Contact Lens business has outperformed the global market for 2 straight years with 9% average constant currency revenue growth over 2024 and 2025 compared to mid-single-digit growth for the industry. Where others have faced significant headwinds, the impact for Bausch + Lomb has been less pronounced. China is a prime example. While there is some consumer softness, our lens business there grew 7% on a constant currency basis in the fourth quarter. Our consistency comes from disciplined execution and a steady, deliberate global rollout of innovation. Activity in the first half of this year drives that point home. In January alone, we launched Daily SiHy multifocal lenses in several European countries with an anticipated April launch in France. The same offering launched in Korea and New Zealand this month. In Surgical, I'm happy to report that this will be the last time we proactively referenced the voluntary enVista recall at earnings, and here's why. When we returned to market in late April, we said our plan was to reach Q1 2025 levels by Q1 2026. We met that goal in the fourth quarter, well ahead of schedule, and the strong uptake we're seeing is the result of great execution, trust and offering a product surgeons genuinely prefer. What did that mean for our Premium IOL portfolio last quarter? It helped drive 20% constant currency revenue growth, contributing to 5% constant currency revenue growth in our Implantables business. The fact that Implantables grew despite the recall is particularly noteworthy and speaks to the potential in this category. We expect to build on that momentum in 2026 and beyond as our existing premium offerings become further entrenched and new options are introduced around the world. As made clear by fourth quarter and full year 2025 results, we're not just talking about execution, we're proving it. We said what we were going to do, and then, we went out and did it product by product, milestone by milestone, business by business. The results are real and measurable. We view our progress to date as a foundation, not a finish line. The most important chapters of this story are yet to be written, but our commitment to execution makes us confident in what comes next. Our pipeline is the envy of the industry and puts Bausch + Lomb firmly on the path to sustained growth and long-term success. Let's take your questions. Operator? Operator: [Operator Instructions] Your first question for today is from Patrick Wood with Morgan Stanley. Patrick Wood: Perfect. I guess the first one, just big picture, when we're looking forward into '26 and the growth guide that we have, how are you guys thinking about the composition of that? Brent, from your perspective, what are the key areas to execute on to make that happen? And should we look at the strong momentum as we exited '25 by product line as a good inference for like where we should be hitting in terms of growth by category for '26? Brenton L. Saunders: Yes. Thanks, Patrick. Look, you heard me in the presentation using the word execution. You heard me probably mention the word execution at least a dozen times throughout the prepared remarks. And let me just try to take a step back and then come at your question. Look, as you just heard, in Q4 '25, we delivered 7% growth and the highest revenue and highest EBITDA in the history of our company, right, 172-plus years. More importantly, we delivered 27% EBITDA growth and 23.5% EBITDA margin. Yes, Q4 is seasonally our strongest quarter, but seasonality alone, right, doesn't produce that level of operating leverage. What you're actually seeing is real structural improvement in the P&L. The quarter reflects the impact of Vision 27, our program that we put in place at the beginning of the year, and we're shifting mix towards higher-margin products, improving pricing discipline, driving productivity across the organization and operating with a more fixed cost infrastructure. That means growth now drops through at a higher rate. So when we grow, we see it in the bottom line. Remember, we're only 1 year into the 3-year program that -- of Vision 27. So what Q4 shows is what disciplined execution can do. It's not a one-off result. It really is evidence of the foundational change we now have in how we run this company. Execution really isn't a slogan. It's really about the daily work of aligning the organization around clear priorities, making trade-offs and following through. It's focusing on the few things that matter and doing them consistently well. And over time, that builds consistency, and it builds credibility, both internally and externally, with all you and our shareholders. Look, I get it, trust is earned quarter-by-quarter. When we say we'll improve margins, we're going to improve margins. When we commit to advancing the R&D pipeline, we hit those milestones. And so that steady drumbeat of delivery is how we change perceptions, and most importantly, create long-term value. So as we continue to progress the pipeline, where we're making strong scientific and clinical progress, really the financial model becomes more compelling if you take a step back and think about it. We now have a platform in Bausch + Lomb that can absorb the innovation and scale it efficiently. So I think, Patrick, when you look at it, Q4 really demonstrates what strong, good execution looks like, and it shows our culture is changing, our model is improving and our leverage in the P&L is real. And most importantly, we're really early in the journey. I really do believe our best days are ahead because of the foundation we have built is stronger than it's ever been. And so look, as I think about '26, Q4 showed a lot of momentum, and we're going to ride that momentum into this year. Patrick Wood: Super clear. And then just as a quick follow-up. Miebo, now potentially $600 million, everyone was bullish about this when it first came into the market. But I would guess it's come in quite a bit ahead of certainly where we expected, probably where you guys expected, too. Are there any like key lessons for that when you're thinking about your pipeline going forward, the surprise of how well Miebo has done? What do you put that down to? And what are the kind of lessons associated with that, that you then can use for the rest of the pipeline? Brenton L. Saunders: Yes. I'll take a shot at it, and then, maybe Andrew wants to add a few thoughts as well since we have him on the call for the first time. Look, when I arrived, Miebo was finishing its what was being filed and waiting approval. And you're right, the organization had good plans for it, but nothing -- its peak sales were lower than current sales are today, right? And what we did is we upgraded the team, right? Talent matters across the whole organization, including the field force, most importantly. . We made some big investments, which some investors were skeptical of, right, because it did impact the P&L. But we said, look, we have a really good medicine here. We have a great category that's untapped. And we think that we can do something special with this Miebo because of its benefit-risk profile is so positive. And we made very strategic smart, thoughtful investment. And now, it's time to harness that. And keep in mind, Patrick, the $600 million is not $600 million. It exceeds $600 million, right? We're not satisfied at $600 million, right? That's just our latest, I guess, elevation of peak sales. But I think this thing can keep going from there. And so we have what we need. The table is set, right? We have our fixed -- as I mentioned in the previous answer, we have a fixed cost infrastructure. It's now getting leverage through that. And so don't take away from this that we're not investing in Miebo. What we are is we're holding our investments steady, so the benefit of all the growth flows through the P&L to the bottom line. But Andrew, anything else you'd add? Andrew Stewart: Yes. Look, 2 things, Brent. I think, one, when you take a great medicine, as you mentioned, something that has a phenomenal safety profile with an extremely fast, rapid onset in terms of efficacy for patients and you marry that to great execution, best-in-class field force execution and a marketing approach that I think has been second to none in the dry eye space, you put those 2 ingredients together and you have great success. And I think when we look at our pipeline for the future, taking those types of execution successes forward will be a key to how we move forward with the company. Operator: Your next question is from Young Li with Jefferies. Young Li: I guess, first one, maybe a follow-up on Miebo, really strong results and you upped the peak rev. It sounded like you're sort of holding the investment on that side relatively steady. Can you maybe comment a little bit more about the -- how that impacts the growth trajectory of Miebo? Hard to comment on steady growth, but would love to hear a little bit more about that. Brenton L. Saunders: Yes. So I mean, I think what you're going to see is continued strong growth of Miebo. I would -- Sam and I both said in the prepared remarks, I think as you think about particularly modeling 2026 or any -- frankly, any year on a go-forward basis, you have to think about the seasonality, right? Just the way copays and deductibles work in the prescription market make Q1 the softest and Q4 the strongest. And so where in the past, when you're in launch mode, you see kind of quarter-by-quarter continuous improvement, you're going to see more seasonality on a go-forward basis there. But if you look at Miebo for the year, we have big expectations for growth in Miebo and profitability. I don't know, Sam or Andrew, if you want to add anything? Osama Eldessouky: Yes. That's exactly right. And I think Young, one of the key things we talked about at Investor Day, and hopefully, you guys have seen it in our results in Q3, and then, also you've seen in Q4 is that we said we're going to be focused with more targeted investments. We built the infrastructure around the dry eye franchise and really shifting from what we refer to as the launch phase to the growth phase, which is really continuing to invest behind the franchise as a whole and making sure we're targeted with this investment to continue to drive the top line growth. Andrew Stewart: Look, I think another key theme for 2026 is as we think about our access and affordability strategy. We're coming to a point of steady state. We're comfortable with the access that we have. We're nearly 4 out of 5 patients for both commercial and Medicare have access to Miebo. And so that puts us in a great position to continuing to support patients and physicians, as they get more experience with the product and add more patients to Miebo's as we go through the year. Brenton L. Saunders: Young, did you have a second question? Young Li: Yes. That was very helpful. Yes, it would be great if I can ask a second one. I wanted to get your thoughts on sort of the state of the market as well as the competitive dynamics. Your portfolio right now has improved significantly since the IPO. You've got a really robust pipeline of products. But for this year, there's players that's coming with more supply on the contact lens side. There's new entrants on U.S. IOLs, recent launches that's ramping for Premium IOLs, capital, dry eye drugs. So just wanted to hear your thoughts on how that can impact '26? And maybe which segment faces the toughest competitive challenges? Brenton L. Saunders: Yes. So look, I think we take all competition seriously. I think if we break it down into kind of 3 -- the 3 markets you just discussed, I think pharma, while we have a real competitor there from a very strong company, I think we feel very good about our position, right? We have the #1 and #2 brand. Andrew mentioned we have very strong access for patients, and we have a lot of momentum. And we have frankly, for evaporative, inflammatory dry eye, which are the largest 2 components of the market, we have the best medicines for patients. And so I think we're established very well there in competition. If you take contact lens second, I think when you look at the state of the market in '25, the market probably grew -- data is not perfect in contact lens. It's a little harder to put together, but our numbers suggest that the market grew somewhere around 4% in 2025. For the full year, we grew 7% and 8% in the fourth quarter. So fourth quarter almost doubled market growth. A lot of that is based off of 2 things. It's our Daily SiHy putting up incredible growth, right, 17% in the quarter, 28% for the year, I believe, in the numbers. And that's driven by continued launch of modalities. And in the prepared remarks, I mentioned we're still -- the only market that has the 3 main modalities is the U.S. The rest of the world is still in launch mode. And so you're going to see a continuous speed over the next year or 2 of launching those modalities and driving growth. But Ultra was still up in the fourth quarter, 16%. So we're not creating a leaky bucket. We're doing what we need to do. And where the industry saw some weakness in Asia and China, as an example, we grew lens 7% in China in Q4 and 8% for the year. So our DTC model, we're direct with a fully integrated direct-to-consumer model in China, gives us a lot of flexibility to meet the consumer where they need to be and where they're purchasing. Southeast Asia still remains a little flat. But I suspect the market is going to grow a little better and improve overall in '26, maybe 4.5% or better. And so I think we're in a strong position. And then, of course, we're moving full steam ahead with new product launches in 2028 that we're pretty excited about. So I think our cycle of growth and in the competitive state in the lens -- contact lens market is -- I think we're in a strong position. Surgical, probably the most competitive market of the 3. But again, I look at our execution and the quality of the products we have. I mean, 4% implantable growth in 2025 is pretty damn impressive when you consider we had a significant recall of our entire enVista platform in the year, right? And so I'm not excluding anything to get the 4%. That is the actual growth. And when you look at what happened in the quarter, you have 20% premium IOL growth and 26% full year premium growth. And so that -- what I mentioned in the prepared remarks, this move to higher-margin mix products is happening in surgical. We know that surgeons do like the enVista platform and really do like our trifocal Envy. We're also launching Lux products outside the U.S., premium brands. And of course, enVista Beyond is completing its clinical trial. So we have a steady cycle of new launches and continued execution there. And I feel pretty good we can grow faster than market in all 3 businesses. And that's why we're putting up top line numbers that are faster than the market. Operator: Your next question for today is from Joanne Wuensch with Citibank. Joanne Wuensch: You gave us a little, I think they're called, Easter eggs, but I'm going to call it a nugget as that would be early, like that I'm seasonally moving forward. About the clinical data that you saw for the new material for the contact lenses, could you expand on that a little bit? And what did you see that increased your confidence? Brenton L. Saunders: Yes, Joanne, thank you. I'm going to turn it over to Yehia in a second, but I'm going to steal that Easter egg thing that, that I feel like I'm playing a video game. So that's awesome. No, look, we got the top line. The team just got it right before earlier, I think late last week or thereabout. So we're still going through the data. It's quite an immense amount of data, but we're pleased. And I'll just say this, and then, turn it over to Yehia, getting the way you develop contact lenses are different than a lot of other products. And I think we told you at Investor Day, we plan to do one external clinical study to get data to iterate. We'll do a second external study, and then, we'll do the registration and claim studies for a 2028 launch. So we're exactly where we need to be. But every time you pass one of these thresholds, your confidence about the fact you have a real product that can make a difference increases. And that's why I'm so excited about where we are right now. But let me turn it over to Yehia. Yehia Hashad: Yes. Thank you, Brent, and good morning, Joanne. Yes, we are really pleased to share the early highlights from the first clinical evaluation of our Halo daily disposable contact lens. Actually, this study was designed to assess the overall clinical performance, safety and tolerability in a controlled setting. The study enrolled about 130 participants, all of whom have completed the study. And importantly, there were no adverse events or device deficiencies have been reported. But the most important thing, this is the first time we actually apply our optical system to this, and all participants, the majority -- the vast majority of them experienced very good visual acuity. Based on the investigators even, they agreed that the lens has delivered a clear vision in almost 98.5% of subjects. So currently, we are -- as Brent mentioned, we are -- actually just got the results, and it's even ahead of schedule. And we are digging deeper doing deeper analysis to inform further optimization and also the lens design for the next external study. As Brent mentioned, we remain on track with our development timeline and targeting 2028 launch, and actually, this study increased our confidence in the platform as we are moving forward. Brenton L. Saunders: Yes. I think, Joanne, our probability of success that this is real and a real product is significantly higher than it was at Investor Day, which is why we're excited. Joanne Wuensch: Excellent. I'll ask my second question, which is you're making progress on pulling the financial levers for EBITDA expansion? As you look throughout 2026, and we think about setting up our models, is there anything we should think about the progression throughout the 4 quarters? Brenton L. Saunders: Yes, absolutely. I'll turn it over to Sam. But I said it in the prepared remarks, I think as you look at phasing, right, we've always had seasonality as long as I've been here since the IPO of Q1 being the weakest, Q4 being the highest. But I think you're going to see that be more pronounced now as a lot of that seasonality is driven by the prescription dry eye business. And as we continue to have great success with Miebo and Xiidra, they become a bigger part of our overall sales and profitability. And so that will have a larger impact on seasonality than we've seen in years past. But Sam, why don't you? Osama Eldessouky: Yes. Thank you, Brent. And Joanne, I -- let me give you a little bit more details on the phasing. But it's just important to highlight the point that Brent made, which is the whole aspect of Q1 being the lowest, Q4 as being the highest, that's the natural business. And again, as we see the progress that we're making in dry eye franchise, that's going to be even more pronounced as we go forward. So that's a very important framework as we think about phasing. But what's important here with all the work that we've done in the second -- especially in the second half of 2025, setting up our, I'll call it, building blocks for our leverage, operating leverage as we go forward, both in Q3 and Q4, and we're seeing that work. We expect that sort of to carry forward with us in 2026. So when you think about from a revenue perspective, we usually start our first quarter achievement on revenue roughly about 22% of the midpoint of the guidance. That probably remains a good starting point for 2026. On EBITDA, we -- if you look at last year achievement, midpoint was about 14%. We expect this year with all the work that will be about 18% achievement of the midpoint of the guide. So we're seeing a nice improvement because when you step back and reflect on the guidance, we're growing our -- the guidance that we provided this morning, midpoint of that is about 6% of the top line, but it's about 15% growth on EBITDA at the midpoint. So we're seeing that really leverage pull through throughout the next 2026, especially in the first half of the year. Brenton L. Saunders: Yes. I mean, I think one of the things I'm most proud about what we're starting to do is that leverage in the first slide in the deck, right -- in the quarter, right, 7% top line and 27% bottom line; guidance, midpoint of 16% -- 6% on the top line and 15% on the bottom, right? So you're seeing like 3x leverage or better in the P&L. And that's financial excellence in action, right? And so we said we're going to focus on financial excellence, and now, we're going to deliver it. Operator: Your next question is from Larry Biegelsen with Wells Fargo. Lei Huang: This is Lei calling in for Larry. Can you hear me okay? Brenton L. Saunders: Yes, we hear you, Lei. Yes. Lei Huang: My first question is on Xiidra. It looks like 2025 played out as you expected. There was some volume growth, but you had headwinds like IRA and such. How should we think about Xiidra performance in '26? You had the recent payer change at the start of the year, can we think about maybe -- but you also expect net price to be better in '26, so can we think something along the lines of maybe mid-single-digit sales growth? Is price improvement offset by volume decline? And then, I have a follow-up. Brenton L. Saunders: Yes. So, Lei, I think I'll ask Andrew to make a comment here, too. But I think you're exactly right. 2025 for Xiidra was setting a new base between a onetime payment for managed care in the IRA, right? We kind of set that new base. And now, it's important to grow off that base. And I think we will. I think that mid-single digit is exactly how we're thinking about it. But Andrew, do you want to add some comments on Xiidra '26? Andrew Stewart: Yes. Look, Brent, I think you covered the operational aspects of '25 versus what our expectations are in '26 exactly right. When we think about the totality of coverage, we're very happy there with the rates that we're able to achieve across all of our different commercial and Medicare stakeholders. Look, when you think about CVS, specifically when we're talking about coverage, they're a really important customer. We'll continue to find ways to partner with them as we do in our Consumer portfolio, as they manage a large number of Medicare lives today. And when it comes to the commercial book of business, we're eager to find ways that we can continue to work together. And right now, we have to always balance the affordability of the asset versus our ability to invest long term for the stakeholders of B&L. Brenton L. Saunders: But I think it's fair to say you'll see slower TRx growth as a result of that, but higher revenue growth. Andrew Stewart: That's correct. Brenton L. Saunders: Yes. Osama Eldessouky: And, Lei, maybe just I'll add a couple of data points to what Andrew and Brent said and just to help you as you think about your modeling and how you guys think about Xiidra. So as a starting point, it did play out exactly as we expected in 2025. But what's more important is we knew that as we start jumping into 2026, the net revenue for Xiidra will grow. So we're expecting that growth -- to see that growth. How that growth will come through is, as Brent said, it will be an element where we see a slower TRxs, but we'll see a much better net pricing. We usually talk about our, call it, gross to net roughly about the mid-70s. We start seeing that to step down to closer to the low 70s. So that net benefit you'll start seeing into how Xiidra will play out between '25 and '26. Lei Huang: That's very helpful. And then just 1 follow-up is your -- is on EBITDA margin. So at Investor Day, you talked about roughly 600 basis points of EBITDA margin through '28 to get to roughly 23% margin. That's roughly 200 basis points a year. So you guided to roughly 19% for this year. Can you just talk about your confidence for -- through 2028 on the margin? And how we think about maybe just the next couple of years, if we should think about fairly equal steps of margin improvement? Brenton L. Saunders: Yes. So I think we feel very confident about what we presented the 3-year plan at Investor Day. In fact, I would say sitting here almost, what, 8 weeks later, I feel more confident than I did. And the reason being is you saw execution improvement in the fourth quarter. Now, there's some seasonality, as I mentioned, but still you're seeing that foundational change in the P&L and the leverage that it can drive as we continue. So I think that's right. We've got a running start, right? We thought we'd end the year at around 17%. We got to 17.5%. And so we're going into the year with a running start. And there's nothing better than momentum. But I would say this. When I think about my 13,000 colleagues in Bausch + Lomb around the world, they all know our goal on this one, and everyone is focused on it. We have very disciplined project teams, many of them, lots of people working on margin improvement from commercial teams to supply chain. This is a full court press with a lot of focus inside the company. We are going to do everything we can to make sure we not only meet but potentially exceed those margin goals. Operator: [Operator Instructions] Your next question for today is from Matt Miksic with Barclays. Matthew Miksic: Congrats on a strong quarter here. I had 1 question on IOLs. So bounced back pretty nicely from the recall. It seems like 20% growth in AT-IOLs, and the feedback we get from clinicians is positive on the enVista line. Maybe if you could talk about any puts and takes that you're still kind of working through with respect to the recall? And what we should expect in terms of folks kind of getting back on board with that launch that had pretty strong momentum into the end of '24 and early '25, but kind of obviously got stopped there for several months in the middle of last year? Brenton L. Saunders: Yes, a great question. So if you really dig into it and look at what happened as a result of the recall. And as I said in the prepared remarks, hopefully, this is the last time we talk about the voluntary recall. The fact that we got back to the market the way we did, the way we communicated with customers and surgeons so openly and transparently, I think really created a bond of trust with our customers. But the reality of the market is those patients were implanted with different IOLs during the period we were out of the market, right? You don't get those patients back. You have to earn each implant back one by one, doctor by doctor. And so what happens in this market, as you may know, is for the premium IOLs, you have a much more instant sales cycle, right? A lot of surgeons can buy whatever premium IOL they want. But for monofocal, they tend to contract. And so the bounce back came faster for Envy and Aspire to some degree. But for the base monofocal lens, we still have some work to do because when we were out a lot of ASCs and practices signed contracts for monofocals that we have to wait until they expire to get that business back. And so there is still a little bit of a hangover in the monofocal portion of the market, but we'll earn that back this year. And so I think we feel very confident that it's clearly in the rearview mirror, and now, it's back on our front foot and winning trust with doctors and patients day by day. Operator: Your next question is from David Roman with Goldman Sachs. David Roman: I want to just actually maybe to focus a little bit on the consumer business. If you kind of look across the different product families there, we do see kind of a divergence in trends across a number of the different categories. Can you maybe help us think about just the direction of travel in the consumer franchise? And what we should -- how we should expect some of these different LUMIFY driving growth? Or how we should think about some of the different factors in '26 in that franchise? Brenton L. Saunders: Yes. So for the full year, we grew about 5%. There was probably about 100 basis points of destocking, remember, throughout the year. It started with -- as a kind of impact of tariffs, right, as retailers made room for -- in their warehouses for products that were tariff impacted. They destocked roughly about 2 weeks across the board and virtually across all customer classes. And so we absorbed that in the year. And so consumption in '25 was higher than sales, which is obviously a sign of destocking. I think when you look at the hero brands, LUMIFY, obviously, up 16% for the year. We launched preservative-free. And of course, we're getting ready to file LUMIFY Lux for a launch next year. So we have a nice continuous innovation stream there. Blink, a brand that we brought back to life, was up about 14% for the year, right? I think that's the number, Sam, right? So really good growth. We're launching the preservative-free for Triple Care in the second quarter or late this quarter. So again, innovation helps drive growth. But I think the area where we saw kind of a little bit more flatness is in our largest product line, PreserVision or vitamins, which were only up 2% in the quarter and in the year. And to be fair, when you think about PreserVision, right, it's a very large category. We have roughly 90-plus percent market share, so we kind of are the category. There's been no innovation there for 13 years. And the way to get growth back into that category, and I hope, significant growth over time, is through innovation. So AREDS3, which started to ship to retailers within the last week or 2, and you'll start to see really launching throughout this quarter and next, is really going to revive that market and bring it back to growth again. And I think you'll see that really play out in the back half of the year, as we build the foundation with ECPs first and then turn on consumer. And the fact that we're expanding the market, almost tripling the size of the market of who should be recommended PreserVision, I think, gives us a lot of optimism that, that category can grow again, meaningfully. Operator: Our final question is coming from Robbie Marcus with JPMorgan. Lilia-Celine Lozada: This is Lily on for Robbie. I want to circle back to the EBITDA guidance. Can you help give a bit more color and bridge us to the 19% EBITDA margin this year and walk through some of the pieces on operating expenses, especially that get you there? When I look at the fourth quarter, gross margin was a bit softer than what we were thinking. You have R&D increasing as a percentage of sales this year. And so what's driving all that SG&A leverage this year? And what gives you the confidence and visibility in that improvement? Brenton L. Saunders: Yes. Well, I think Sam is probably best to answer this. Sam? Osama Eldessouky: Sure. So, Lily, when you think about the components of how we think about the leverage and expansion in the EBITDA margin, it's really the building blocks for this is a couple of areas. One is we talked about the SG&A and the leverage that we talked in terms around -- the efficiency around our fixed cost structure and how we're bringing the fixed cost structure down. And we saw that play out very nice for us in Q4. Starting Q2, we saw that in Q4. That will continue with us as we think about '26. We also talked about the operating leverage within sort of shifting from the growth -- from the launch to the growth mode, and you're seeing that with the targeted investments that we're doing around selling in A&P. So as you think about where -- as we end 2025, just keep in mind, we -- you mentioned gross margin is soft. It does absorb roughly about 80 basis points of tariffs that we're seeing. So when you look at that on a comparable basis to '24, you have to factor that in. But now, pivoting and looking forward to 2026, we're projecting roughly about 200 basis points improvement coming -- 100 basis points coming from the gross margin moving from about 61% to 62%. Also, the SG&A will probably yield another 100 basis points of improvement. Offsetting that would be about 50 basis points of increasing our R&D investment, moving up from about 7% to roughly more towards the 7.5%. So you'll see that movement in sort of taking and that gives you the -- really the 150 basis points that we'll see jumping from our 17.5% EBITDA in 2025 to about 19% EBITDA in 2026 margin. Brenton L. Saunders: The other thing I would say, Lily, is as you think about the fourth quarter, delivering 7% top line and 27% EBITDA growth, what -- if you really peel that onion one more step, what makes me so proud that we could deliver those results as we did it with about 500 fewer colleagues than we had in the same quarter of the year before. And so you're really seeing a change in the foundational structure of our company being more efficient and really focusing on driving that leverage in the P&L to get that margin improvement. Lilia-Celine Lozada: Great. That's helpful. And then, just as a quick follow-up, can you talk about how you're thinking about reported free cash flow this year on a reported basis in 2025? I think that was about $66 million. So how should we be thinking about that trending in 2026? And what are some of the puts and takes we should be keeping in mind? Osama Eldessouky: Yes. So we're very pleased with the work that we've done throughout '25 on the cash flow in general. And I'll tell you, when we -- how we think about sort of cash flow where we ended the year roughly about 42% conversion. And you keep in mind that the business has been growing throughout 2025. And with that growth that we've seen in the business, we've taken roughly about 12 days out of working capital in terms of operationally throughout 2025. So that's really helped us with driving both on the cash flow from operation that I referenced in my prepared remarks, $152 million in the quarter, that's $381 million for the full year, and also being a positive from a free cash flow this year. So as we look forward to 2026, that progress will continue. So I expect we're going to be progressing towards the -- about 45% or so of conversion. Keep in mind, we targeted 50-plus conversion by 2028. So we're really making nice strides and nice progress towards that target. And more importantly, our CapEx is also stepping down as we communicated at Investor Day. So roughly -- in '25, our CapEx was roughly about anywhere between 6% to 7% of revenue. As we look into 2026, we expected that to be about 5% to 6%. So you're seeing that step down in CapEx spend, which provides even more support around the free cash flow. So it's really a lot of great work that's been done by the team here, and we're very proud of it, and it's a nice progress in the right direction. Brenton L. Saunders: One more question, operator. Operator: Your final question for today is from Douglas Miehm with RBC. Douglas Miehm: Brent, this is a question that has more to do -- I believe that you're going to have a strong 3 years ahead of you. Margins are going to continue to increase, et cetera, et cetera. But as we think about valuation and the multiple that should be assigned to this company over time, especially given the strength in the operations, the various businesses, your execution, et cetera, et cetera, 1 thing that's going to likely hold the company back in terms of that multiple expansion is the float. And is there anything that you can speak to us today about how you're hoping to resolve that situation? Because it looks like you're going to have a lot of good news on the operational front. But I'm just thinking from a market perspective, how you'd like to guide us. Brenton L. Saunders: Yes. So look, I agree with you. And I think one point I'll make, and then, I'll answer the question. As I said in the -- I think it was in the first question from Patrick, what's really exciting about the R&D pipeline that really starts to kick in meaningfully in '28 and beyond is that we actually have the structure or platform that allows us to absorb that innovation and scale, right, and flow through to the bottom line much more rapidly than it would have otherwise, right? The pipeline was built to enhance our existing markets and selling infrastructure. And so that really is strategically important for us as we think about launching those products in the future. But you're right, I think obviously, we hear from investors about the float. I fully agree with you. It's something that has to be resolved in time. Unfortunately, as I've mentioned many times, it's not within our control. It's a BHC issue. But if you listen to their commentary at JPMorgan earlier in January, they do plan to sell shares in time. I just don't have a timeline to provide and maybe you want to get on their call tomorrow or today end of day -- end of day today. It feels like that's a day away. But at the end of the day today and ask them as well because it's really their decision. But I do expect it to happen. I just can't give a timeline. All right. So operator, I'll just make a quick closing remark, thank everyone for joining us. Most importantly, I'd like to thank my colleagues from Bausch & Lomb around the world for their great execution in 2025, and we look forward to watching them execute and build our company in 2026. But look, as I mentioned at the beginning, I think Q4 really is another proof point in what good execution looks like. And it shows that we are immensely focused on execution. It is really part of our culture now. And we have all the building blocks we need in our bag today to deliver on our 3-year plan, and we are immensely focused on getting it right and delivering. So we look forward to keeping you updated, and we will obviously always be available to answer any questions if you need us. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the JELD-WEN's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to James Armstrong, Vice President of Investor Relations. James, please go ahead. James Armstrong: Thank you, and good morning. We issued our fourth quarter and full year 2025 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors.jeld-wen.com. We will be referencing this presentation during our call. Today, I am joined by Bill Christensen, Chief Executive Officer; and Samantha Stoddard, Chief Financial Officer. Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SEC. JELD-WEN does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation. With that, I would like to now turn the call over to Bill. William Christensen: Thank you, James, and good morning, everyone. Before turning to results, I want to thank the teams across JELD-WEN. The fourth quarter remains challenging and the progress we made required sustained effort in an environment that continued to put volume pressure on the business. Our employees stayed focused on customers, operated with discipline and worked through the realities of the market. I'm grateful for their commitment and their work continues to strengthen the foundation of the company as we move forward. The macro environment remained very soft during the fourth quarter, consistent with what we expected coming into the period. End markets did not improve meaningfully and demand across both new construction and repair and remodel continue to be under pressure. Despite those market challenges, we delivered results at the high end of our expectations. That outcome reflects disciplined execution and sustained effort across the organization to manage through a difficult environment. As seen on Slide 4, we delivered the high end of the sales and adjusted EBITDA range we forecasted through a combination of top line performance and cost actions. Sales came in stronger than we expected, driven by the hard work of our sales team, combined with improving operational execution, including continued progress with on-time in full delivery. At the same time, we took deliberate labor and cost actions to better align the business with market conditions, consistent with what we outlined in November, including reducing full-time positions by approximately 14% or about 2,300 people in full year 2025. These actions were structural and reflected our view that demand is unlikely to improve meaningfully in the near term. While cost actions played an important role, we remain focused on serving customers and securing the long-term health of the business. Adjusted EBITDA also came in better than we expected. The quarter included a few million dollars of in-period items that were timing related and are not expected to recur. However, excluding those items, underlying adjusted EBITDA would have been above our guidance range. Cash performance followed that improvement. Free cash flow came in approximately $20 million ahead of our expectations, even with higher capital spending due to carryover projects, reflecting tighter working capital management and the benefits of the cost actions we have taken. Additionally, we completed the sale leaseback of our Coral Springs, Florida facility in the fourth quarter, giving us net proceeds of roughly $38 million, increasing our liquidity position. However, as the macro environment remains soft, volumes and margins continue to face pressure. And while operational performance is improving, there is more work to be done. For the full year, we delivered sales of $3.2 billion and adjusted EBITDA of $120 million. While that result was at the high end of the guidance we provided after the third quarter, it is well below where we expected to finish the year when we began. The macro environment remained difficult throughout the year, particularly in retail and lower-priced new housing and demand did not recover as we had originally anticipated. At the same time, we experienced more disruption from service challenges earlier in the year than we expected as we work to rightsize the business, reposition our operations and implement more standard ways of working across our manufacturing landscape. That said, the business exits the year in a more stable position than it entered it. Over the second half of the year, we made meaningful progress improving service levels as production transitions from consolidations were completed both in North America and Europe, backlogs worked down and operations stabilized. Our on-time and full performance has improved as equipment ramped and processes have become more consistent, particularly late in the third quarter and into the fourth. We are also implementing a common manufacturing operating system across the North American network, which is allowing us to identify issues faster and balance operations more effectively than we could earlier in the year. While we still have a lot of work to do, service performance is moving in the right direction. As we look ahead, our focus remains on controlling what we can control. Customers continue to tell us that service matters most and where service has improved, we are seeing opportunities to regain volume. We have taken structural actions to align costs with current market realities while being careful not to undermine service. Market conditions remain soft, and we are not counting on a near-term recovery, but we are improving execution and putting in place operating practices that position the business to perform better when demand eventually improves. In addition, we continue to work through the strategic review of our European business. While the process is ongoing and we have nothing to announce at this time, we believe this review or other potential actions could provide meaningful liquidity and help further strengthen the balance sheet. We are evaluating alternatives thoughtfully and deliberately with a focus on improving financial flexibility while preserving long-term value. In addition to the European review, we continue to evaluate other actions, including smaller noncore assets and selective sale-leaseback opportunities as seen with the Coral Springs transaction. Our liquidity position remains strong. At the end of the year, we had approximately $136 million of cash and about $350 million of availability on our revolver. We have no debt maturities until December of 2027. And while those maturities are not imminent, we expect to address them before they become current. Importantly, our only relevant covenant requires a minimum of approximately $40 million in total liquidity, which is well below our current position. Over the past year, we have increasingly focused the business on execution and decisions within our control. We have taken meaningful steps to improve service, simplify operations, align cost with demand and secure our financial position. These actions are beginning to show up in more stable performance and better control of the business. As market conditions eventually improve, we believe JELD-WEN will be operating from a stronger position with better service, greater discipline and a more resilient foundation. With that, I'll hand it over to Samantha to review our financial results in greater detail. Samantha Stoddard: Thank you, Bill. Turning to the financial results on Slide 6. Fourth quarter net revenue was $802 million, down 10% year-over-year from $896 million in the prior year. Core revenue declined 8%, driven primarily by lower volume. Mix was stable year-over-year following the shift towards lower-cost products we saw in 2024, and pricing was a slight positive. Overall, the revenue performance reflects continued pressure from soft end markets rather than changes in customer mix or pricing discipline. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million or 4.5% of sales in the fourth quarter of last year. The decline was driven primarily by lower volumes, resulting in unfavorable operating leverage as well as ongoing price and cost pressure. These headwinds were partially offset by continued productivity improvements and lower SG&A costs. The fourth quarter is also seasonally weaker from a margin perspective and adjusted EBITDA was also impacted by approximately $7 million of timing-related items that are not expected to recur. Excluding those items, underlying adjusted EBITDA performance would have been higher. From a cash flow perspective, we were roughly free cash flow neutral in the quarter. Operating cash flow was largely offset by capital spending, and we benefited from a $55 million reduction in net working capital, driven primarily by lower accounts receivable and inventory levels, consistent with normal fourth quarter seasonality. As Bill mentioned, we also completed a sale leaseback of our Coral Springs facility during the quarter, generating approximately $38 million in net proceeds. Overall, our focus during the quarter was on disciplined cash usage and managing liquidity carefully in a very challenging macro environment. As a result of lower EBITDA, net debt leverage increased to 8.6x at year-end. Importantly, this increase was driven by earnings pressure rather than incremental borrowing. We did not add debt or draw on our revolver during the fourth quarter. Reducing leverage remains a priority, and we continue to manage the business with a disciplined focus on cash, cost and balance sheet flexibility. Turning to Slide 7. The year-over-year change in revenue was driven primarily by lower volumes. Fourth quarter sales were $802 million compared to $896 million in the prior year. Core revenue declined 8%, reflecting a $77 million headwind from volume mix, with the impact overwhelmingly volume related. Pricing contributed a modest $2 million benefit in the quarter. The year-over-year comparison also reflects a $41 million reduction related to the court order divestiture of the Towanda operation. Foreign exchange provided a $22 million tailwind driven by the weaker U.S. dollar. Taken together, these factors explain the revenue decline in the quarter and are consistent with the market conditions and operational dynamics we discussed earlier. Turning to Slide 8. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million in the prior year. The year-over-year decline reflects a combination of volume-related pressure and ongoing price/cost headwinds, partially offset by productivity improvements and lower SG&A. Lower volumes were a meaningful headwind, reducing adjusted EBITDA by approximately $21 million. In addition, price/cost dynamics contributed to an additional $21 million headwind as cost inflation, particularly due to tariffs, glass and metals continued to outpace pricing recovery. The year-over-year comparison also includes a $7 million reduction related to the court order divestiture of the Towanda operation. These headwinds were partially offset by improved execution across the business. Productivity contributed a $12 million benefit in the quarter, reflecting continued operational improvements, although that benefit was muted by lower production volumes. SG&A was also $12 million lower year-over-year, driven by the cost actions we have taken throughout the year and into the fourth quarter to better align the organization with current market conditions. Turning to Slide 9 and our segment results. In North America, fourth quarter revenue was $522 million compared to $640 million in the prior year. The year-over-year decline was driven primarily by lower volumes, along with the impact of the court order divestiture of the Towanda operation. Adjusted EBITDA for North America was $14 million compared to $42 million last year, with adjusted EBITDA margin declining to 2.6% from 6.6%. The reduction in profitability reflects volume-related pressure and continued price/cost headwinds, partially offset by productivity actions taken during the year. In Europe, revenue was $280 million, up from $256 million in the prior year, primarily reflecting the benefit of a weaker U.S. dollar. On a constant currency basis, volumes and mix were lower year-over-year, consistent with continued soft demand across key markets. FX translation accounted for all of the 900 basis point year-over-year improvement in sales. Adjusted EBITDA for Europe was $12 million compared to $17 million last year, with adjusted EBITDA margin of 4.1% versus 6.5% in the prior year. Productivity was slightly positive, but those benefits were more than offset by lower volume mix, along with higher SG&A costs. With that, I'll turn it back over to Bill to discuss our updated market outlook and how we're positioning JELD-WEN for the path ahead. William Christensen: Thanks, Samantha. Turning to Slide 11. I want to provide our market outlook for 2026 and the assumptions that underpin our guidance. We continue to see a challenging and uncertain environment, and our outlook reflects disciplined actions rather than any expectation of a meaningful near-term recovery. In North America, we expect the overall market for windows and doors to be down low to mid-single digits. Within that, we anticipate new single-family construction to be down low single digits with repair and remodel activity down mid-single digits. Multifamily activity in the U.S. is expected to be relatively stable, while Canada remains under pressure. We continue to expect high single-digit declines in the Canadian market, reflecting the ongoing economic slowdown and weaker housing activity. In Europe, we are seeing signs of stabilization. We expect volumes to be broadly flat year-over-year with no material improvements, but also no further deterioration from current levels. Demand remains subdued, but year-over-year conditions appear to be more stable than what we have experienced earlier in the current cycle. Importantly, our company volume expectations are more conservative than the underlying market. As we move through the last year, we have taken pricing actions to cover cost inflation. As a result, we do expect to lose some volume and are prioritizing pricing discipline. That share pressure is intentional and reflected in our guidance. While we are seeing improving service levels and have actions in place to regain share over time, we are not assuming any benefit from service-driven volume recovery in our outlook. Taken together, this framework reflects a cautious view of the market and a disciplined approach as to how we are managing the business. Our guidance is built on our view of current demand levels with pricing actions largely already implemented and a focus on protecting margins while improving execution rather than relying on external market volume improvement. Turning to Slide 12. I'll walk through our full year 2026 guidance. Our outlook reflects continued uncertainty in the market and disciplined assumptions around demand, pricing and execution. For the year, we expect net revenue in the range of $2.95 billion to $3.1 billion. Core revenue is expected to decline between 5% and 10%, driven by a combination of macroeconomic pressure and a continued competitive market as we work towards a more neutral price/cost position. While pricing remains slightly negative relative to cost inflation, much of our pricing action has already been implemented and our guidance assumes continued pricing discipline, consistent with how we have managed the business historically. We expect adjusted EBITDA to be in the range of $100 million to $150 million. The range is driven primarily by volume uncertainty rather than execution risk. Our outlook reflects current demand levels and does not assume a material improvement in the market over the course of the year. On cash flow, we expect operating cash flow of approximately $40 million and capital expenditures of approximately $100 million, resulting in a free cash flow use of approximately $60 million for the year. Capital spending at this level is largely maintenance in nature. Cash usage is expected to be weighted toward the first quarter, which is typically our seasonally highest period for working capital. Restructuring cash outflows are not likely to be of similar magnitude compared to prior year, and we would expect working capital to improve as the year progresses. Our guidance assumes no portfolio changes and reflects Europe continuing to operate as part of the company. At the same time, we continue to evaluate a range of strategic options, including our ongoing review of the European business, as well as additional actions to improve liquidity, such as selective sale-leaseback opportunities and reviews of other select parts of the portfolio. Finally, we expect to use our revolver during the first quarter due to normal seasonal working capital needs and would expect to pay down much of that usage by year-end. Overall, our guidance reflects a cautious view of the market, disciplined pricing and cost management and a continued focus on executing through uncertainty. Turning to Slide 13. This chart bridges our 2025 adjusted EBITDA of $120 million to the midpoint of our 2026 guidance of $125 million. Moving from left to right, the first headwind reflects market volume and mix, which we expect to reduce EBITDA by approximately $25 million, consistent with the continued pressure we see across our end markets. We also expect a $60 million headwind from share loss driven by a combination of pricing discipline and the lingering impact of prior service challenges. As we discussed earlier, we have taken pricing actions to address ongoing cost inflation. And at the same time, we are continuing to work through the residual effects of poor service performance earlier in the cycle. This share impact is assumed to persist through the year and is reflected in our guidance. Price and costs represent an additional $10 million headwind as cost inflation, particularly in tariffs, glass and metals continues to modestly outpace pricing. Much of our pricing action has already been implemented, and this assumption reflects a more normalized price/cost relationship than we have seen in recent years. These headwinds are more than offset by actions within our control. We expect approximately $75 million of benefits from rightsizing the business and improving base productivity, reflecting actions that are largely already executed and fully realized over the course of the year. In addition, we expect about $35 million of carryover benefit from our multiyear transformation program. This carryover reflects automation, footprint changes and system improvements and represents a transition from a discrete program to a more steady-state operating model. The remaining items include approximately $10 million of headwind from compensation and other timing-related items, reflecting a more normal incentive compensation environment and reversal adjustments from prior periods, partially offset by foreign exchange and other items. Taken together, these factors bridge us to the midpoint of our 2026 adjusted EBITDA guidance. This bridge reflects both the reality of the continued market pressure and the impact of disciplined actions we have taken to adapt the business. As we noted earlier, the range around our guidance is driven primarily by volume sensitivity rather than execution risk. Before we close, I want to step back and talk about how we are improving execution and building greater consistency into the business. In the past, we operated under what we call the JELD-WEN Excellence Model, or JEM. While that framework brought structure, it was largely a one-size-fits-all approach. It relied heavily on top-down driven metrics and did not consistently trigger structured problem solving tied to local daily management routines. As a result, issues were often identified but not always addressed with the speed, rigor and accountability required to sustain improvement. We have now moved to a more disciplined A3 operating system across our manufacturing network. This is a practical management system designed to improve how we define problems, identify root causes and execute countermeasures. Unlike the prior model, it adapts to the specific needs of each site. It uses multiple KPIs across safety, quality, delivery, cost and growth and connects hourly, daily and longer-term work streams into a single layered operating rhythm. This structure creates clearer ownership and faster escalation when performance drifts. Slide 14 shows what this looks like in practice at our Kissimmee, Florida facility, which was one of the first three plants to implement the new operating model. In 2024, our on-time in full right first-time performance at that facility was approximately 55%. Through 2025, that improved steadily. And by year-end, the plant was consistently operating above 95%. Importantly, that improvement has been sustained. The system allowed teams to identify disruptions early and correct them before they materially impacted customers. The same discipline is reflected in past due performance and inventory control. We entered 2025 with more than $5 million of past due orders at the facility. And by December, that had been reduced to approximately $200,000. Inventory accuracy and material flow have also improved, supporting more stable production and better day-to-day execution. While Kissimmee is one example, this is not isolated. We have rolled out or are in the process of rolling out this operating model across North America, and we are seeing similar improvements as it takes hold. Our customers are beginning to see the impact of service becomes more consistent and reliable. Moving to Slide 15. I want to close by stepping back and putting the quarter and the year into perspective. In the fourth quarter, we performed at the high end of our expectations even as conditions remain challenging and demand did not materially improve. That performance did not come from a change in the environment. It came from tighter execution across the business. As we look ahead, our focus is on continuing what we've already put in motion. We are sizing the business to current market realities, not to a recovery that may take time to materialize. We are managing the company with a high degree of discipline, particularly around cost and cash, recognizing the importance of preserving flexibility in a soft and uncertain macro environment. These are not short-term measures. They reflect how we intend to run the business going forward. At the same time, we are continuing to drive improvements in customer service and reliability. As you heard about the operating system example and the work underway at Kissimmee, we are deploying systems that improve consistency and allow us to respond more quickly when performance drifts. Our goal is to rebuild trust and position JELD-WEN as the door and window supplier of choice by being dependable, responsive and disciplined every day. We are encouraged by the early signs that customers are beginning to see the difference, but we know this must be proven over time. I want to briefly recognize the work of our teams across the organization. The progress we are making is the result of focused execution and a willingness to address difficult issues. There is more to do, and we are clear-eyed about that. We remain committed to running this company with consistency, accountability and discipline. The environment may remain challenging, but we are taking responsibility for the outcomes we can influence and continuing to strengthen how JELD-WEN operates. With that, I will turn the call over to James for questions. James Armstrong: Thanks, Bill. Operator, we are now ready to begin Q&A. Operator: [Operator Instructions] Your first question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is around that price versus volume dynamic that you spoke to in your prepared remarks. Can you talk a bit more about how we should think of the amount that price may decelerate as we move through the year? And how much of that you're willing to give up in relation to volume as you continue to face some of those cost headwinds that you mentioned? William Christensen: Yes. Thanks for the question, Susan. So as we signaled in the prepared remarks, our pricing actions are more or less into the market. So there was a lot of negotiation and work with our customers through the last number of months to get ourselves ready for 2026. So as you can see on the bridge and where we're showing the look forward in 2026, we still expect headwind from a price/cost standpoint, mainly due to some tail inflation and some of the input cost increases that we're seeing on glass. But we believe that, that brings us back into a reasonable pocket, which clearly we have not been in through the last few years. So we feel fairly good headed into this year about where we are and the partnerships with our customers to drive performance and make sure we're delivering what we need to for our customers. Samantha Stoddard: So, just on that, Susan, from a phasing standpoint on price. So with price being implemented and being put in already, we're expecting that to be fully into our financials in Q2. So we do expect Q1 to be down year-over-year with slightly positive EBITDA, and that's really because of the price dynamic that I just spoke about, which you'll see that pick back up in Q2. In addition, the year-over-year headwinds from Towanda being included in the majority of January 2025 and not in '26 and then some of the winter storms. So I just wanted to give you kind of that pricing phasing as well. Susan Maklari: Yes. No, that's very helpful, Samantha. My second question is moving to the slide that you walked us through outlining the efforts at the Kissimmee facility. It sounds as if there's been some very basic blocking and tackling that's happened across your operations. And can you talk a bit about where you are in terms of implementing this across the business? And how we think about that freeing you up to then tackle some of the larger productivity and efficiency projects that are sitting out there and also that ability to eventually regain share? William Christensen: Yes. So thanks for the question. That's exactly why we wanted to share this progression, Susan, to make it very clear that we are making progress. And of course, in a down market environment, it's challenging because, obviously, the volume reductions have eroded a lot of the efforts that we are making behind the scenes. So the first message is we have a system that is working and is being implemented. I'd probably say we're 85% of the way there through 2025, meaning spreading it across to all of our sites, really having the leadership and the layered audit structure and an ownership at site level on controlling their own destiny and serving the customer. So great progress there, and we're very happy with that. I think the second fact is it still remains a challenging environment, but we are controlling what we can control. And a lot of the things that we're doing here are to shop floor-based improvement activities and layered structuring of problem solving and less requiring large capital expenditures to drive scale improvement. Of course, we think we'll get there when the volume returns. But again, this is more us focused on controlling what we can control. And I think the third lever is productivity. There's also a lot of opportunity on productivity. Clearly, if the volume does recover, it's a lot easier for us to gain productivity benefit across our North American and European network. And right now, that's one of the biggest challenges that we have, the scaling up of the volume is not allowing that productivity drop through. Samantha Stoddard: So, Susan, your comment is spot on about the blocking and tackling. And I think Bill highlighting and showing some of that improvement will give color into some of the guidance bridge that you see. And that's the slide that we have in 13, it's the 2026 guidance. So the two large green bars add up to about $110 million. 50% or just more than 50% of that is structural cost actions that we executed. So that is in the bag that were done in '25, especially in Q4 that then carries over into '26. You have about 25% of it that are executed actions that need to be scaled full year. This is exactly what Bill is talking about when it comes to the operating model and scaling that from a full year standpoint. And then the remaining 25% is productivity projects that are identified and are in progress using this simple model that is really driving root cause and solving some of the challenges even despite the operating headwinds of lower volumes. Operator: And that concludes our question-and-answer session. I will now turn the conference back over to James Armstrong for closing comments. James Armstrong: Thank you for joining our call today. If you have any follow-ups, please reach out, and I would be happy to answer any questions. This ends our call, and please have a great day. Operator: This concludes today's call. Thank you for your participation, and you may now disconnect.
Operator: Good morning, and welcome to the OneSpaWorld Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Allison Malkin, Investor Relations. Please go ahead. Allison Malkin: Thank you. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call and Webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward-looking statements. These forward-looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our fourth quarter and fiscal year 2025 earnings release, which was furnished to the SEC today on Form 8-K. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman and Chief Executive Officer; and Stephen Lazarus, President, Chief Operating Officer and Chief Financial Officer. Leonard will begin with a review of our fourth quarter 2025 performance and provide an update on our key priorities for 2026. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question-and-answer portion of the call. I would now like to turn the call over to Leonard. Leonard Fluxman: Thank you, Allison. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call. It's a pleasure to speak with you all today about our record fourth quarter. The period capped a year of exceptional performance underpinned by innovation across our global operating platform and the delivery of extraordinary guest experiences and excellent results for our cruise line and destination resort partners. During the quarter, we advanced our strategic priorities, driving growth in key operating metrics and introducing 2 new ship builds. This served to further cement our market leadership and resulted in double-digit growth in total revenues and adjusted EBITDA. Our unique capabilities and the successful execution of our strategy have produced 19 consecutive quarters of year-over-year growth or fourth consecutive year of record performance of both metrics. We continue to identify ways to elevate our positioning, increase efficiency and accelerate growth. Innovation, AI and the reorganization of certain operations that year held included the strategic decision to exit land-based health and wellness centers in Asia and reorganized operations in the United Kingdom and Italy have us poised to achieve this objective. We begin 2026 even more strongly positioned to maximize our powerful standing as the preeminent operator of health and wellness centers at sea. I'm extremely proud of the team that assisted in delivering the year-end equally confident that the year ahead will represent another year of outstanding performance. At year-end, we operated health and wellness centers on 206 ships with an average ship count of 199 for the quarter. This compares with a total of 199 ships at year-end and an average ship count of 188 ships in fiscal 2024. Also at year-end, we had 4,582 cruise ship personnel on vessels compared with 4,352 cruise ship personnel on vessels at year-end in fiscal 2024. Along with our strong financial results, the quarter year -- and year included noteworthy progress towards our key strategic priorities. Let me share some of those highlights with you. First, we captured highly visible new ship growth with current cruise line partners. We continue to solidify our market leadership, introducing 2 new health and wellness centers, aboard 2 new ship builds Disney Destiny and Star Seeker during the quarter, which brought our total ship build to 8 for the year. In 2026, we'll introduce health and wellness centers on 6 new ship builds, 3 of which are expected to commence voyages in the first half of the year. Second, we continue to expand higher-value services and products. These higher-value services include Medi-Spa and Acupuncture, to name a few, increases our addressable market and help to grow some ship [ build ] revenue performance. We continue to introduce these services to more ships and expand offerings with the latest innovations and adding to our growth. In addition, we continue to elevate the innovation in our MedSpa services with the expansion of further rollout of next-generation technology with Thermage FLX CoolSculpting Elite and Acupuncture LED, which offer improved results and reduced treatment time by up to 50%. These new technologies generated between 23% and 40% revenue growth in Q4 versus last year. In addition, the adoption of LED light therapy with acupuncture remains a high conversion add-on to treatment. At year-end, Medi-Spa services were available on 153 ships, up from 147 ships at year-end of fiscal '24. We expect to have Medi-Spa offerings on 157 ships by year-end 2026. Thirdly, we focused on enhancing health and wellness center productivity. This is best reflected in the delivery of across-the-board increases in key operating metrics, including revenue per passenger per day, weekly revenue, pre-cruise revenue and revenue per staff per day. Our unique ability to identify onboard and retain staff is leading to this performance. We continue to be known as a great place to work and take pride in being a desired employer striving to create an environment that fosters retention. These and other onboard employee initiatives have led to a 4 percentage point increase in staff retention versus 2024. Importantly, experienced staff generates significantly higher revenue per day versus first stop contract. And lastly, we possess a strong and durable balance sheet, which, combined with our ongoing successful growth enabled us to advance each of our capital allocation objectives in the quarter. These are invest in our future growth, return value to our shareholders and reduce debt. During the year, we returned nearly $93 million to shareholders during the year through our stock buyback and quarterly dividend and reduced outstanding debt. Our asset-light business model delivers consistent after tax free cash flow. With this, combined with our positive long-term growth prospects, has made us poised to continue to advance our value creation objectives going forward. We remain confident in our ability to continue our strong performance in 2026. Our positive outlook is supported by the continued innovation of our product and service offerings and the unwavering commitment to service excellence by outstanding staff, further buoyed by the implementation of emerging AI technologies that enhance our unique global positioning. These growth drivers are complemented by the contribution from the annualization of new ships that entered service in 2025, 6 of which commenced voyages in the second half of the year as well as the introduction of 6 new health and wellness centers beginning voyages in 2026. In summary, we believe our highly visible revenue growth, along with the continued discipline with which we execute our asset-light business model, positions us very well to deliver strong results for our stakeholders and shareholders in the near and long term. As Stephen will share momentarily, we have reiterated our 2026 guidance and expect total revenues, excluding revenues associated with restructured operations and adjusted EBITDA to increase high single digits at the midpoint of the range. With that, I will turn the call over to Stephen, who will provide more details on our third quarter financial results and guidance. Stephen? Stephen Lazarus: Thank you, Leonard. Good morning, everyone. We ended the year on a high note, delivering record performance in total revenues and adjusted EBITDA in the fourth quarter and continued strong and predictable cash flow generation. This record performance reflects our investment in breakthrough technology applications across our business, reinforcing our market-leading strengths and deepening our cruise line and resort partnerships. At year-end, we implemented strategic actions to focus operational and capital investment on our highest growth and most profitable operations, exiting land-based health and wellness centers in Asia and reorganizing operations in the United Kingdom and Italy. In addition, our initiatives in AI will serve to accelerate our strategic growth initiatives and increase efficiency, further building our revenue and profitability growth potential. Let me provide some highlights prior to reviewing our financials and guidance. First, as it relates to revenue enhancements. As I mentioned with our Q3 results, we have implemented a machine-learning algorithmic engine to improve revenue and utilization, which is progressing well. In addition, we recently began work and allows us to implement a true dynamic price optimization model that we will start to introduce with prebooking. Today, we have over 11,500 itineraries that are open for prebooking, which makes it virtually impossible to have true dynamic pricing with only humans involved. And we're confident that adding these genetic AI tools will improve utilization and yields. By leveraging advanced recommendations and algorithmic optimization, this initiative aims to unlock additional revenue and improve utilization. Second, on the operational efficiency and scalability side, we are seeing early success with our rollout of our onboard virtual assistant. This AI assistant, helps our managers receive and respond to questions immediately and meaningfully reduce help desk hours. For example, this tool enables our managers to close voyages and start booking the next cruise faster than before. Currently, 80% of all questions are answered within seconds by the virtual assistant, which is compared to perhaps a day or more if only humans were involved. Our virtual assistance tool has now been deployed across 180 vessels, up from 40 vessels in the third quarter. Third, automation and streamlining is part of our broad efficiency initiative to continue to explore and develop solutions to reduce manual work simplify operations shoreside and improved scalability at our corporate locations. Although still in the early stages, our steering committee needs regularly to analyze different metrics such as time to implementation, cost of implementation, potential impact and difficulty, return on investment and the prioritization of where to focus next. This is very exciting work for all of us, has strong buying across our organization, and we hope will further enhance productivity, operational scalability and our key operating metrics over time. Overall, our AI initiatives demonstrate our commitment to leveraging cutting-edge technology to strengthen our market position and deliver value for our shareholders. Turning now to a review of the fourth quarter and fiscal year, starting with the quarter. Total revenue increased 11% to $242.1 million compared to $217.2 million for the fourth quarter of 2024. Growth was driven by fleet expansion from 2025 new ship builds, a 2% increase in revenue days and a 1% increase in average guest spend contributing $15.5 million, $8.7 million and $2.1 million, respectively, the increase in total revenues. Of this $2.8 million was attributable to increased guest spend from prebook services. Growth in our Maritime total revenue was offset by a $1.3 million decrease in destination resorts total revenue partially due to the closure of hotels where we had previously operated. Cost of services increased $18.5 million attributable to the $21.5 million increase in service revenues compared to the fourth quarter of 2024. Cost of product increased $3.4 million attributable to the $3.4 million increase in product revenue compared to the fourth quarter of 2024 a $0.3 million quarter-over-quarter increase in freight expense related to the timing of purchases and $0.3 million of nonrecurring inventory write-off charges in the fourth quarter of 2025 related to the exit from its -- from our land-based health and wellness centers in Asia. Admin expenses were $4.9 million compared to $5.8 million in the fourth quarter of 2024, with the decrease being primarily attributable to higher professional fees incurred in the prior year quarter, including approximately $700,000 related to incremental public company costs such as Sarbanes-Oxley compliance. Salaries, benefits and payroll taxes were $8.9 million compared to $9.3 million in the fourth quarter of 2024. This decrease was primarily attributable to lower incentive-based compensation of approximately $500,000 compared to the fourth quarter of prior year. Restructuring expenses were $2.7 million in the fourth quarter of 2025 attributable to the aforementioned reorganization of operations in the United Kingdom and Italy and the exiting of resort health and wellness operations in Asia. Long-lived asset impairment was $3 million compared to $400,000 in the fourth quarter of 2024. Due to exiting resort operations in Asia, the fourth quarter of 2025 included a $2.8 million impairment charge with respect to the value of associated long-lived assets. $2.2 million attributable to intangible assets and $600,000 attributable to property and equipment and right-of-use assets. Net income was $12.1 million or net income per diluted share of 12p as compared to net income of $14.4 million or net income per diluted share of 14p for the prior year. The decrease was primarily attributable to the recognition of these restructuring expenses and [indiscernible] asset impairments totaling $5.7 million during the current quarter partially offset by $4.4 million improvement in income from operations. Adjusted net income was $24.3 million or adjusted net income per diluted share of 24p as compared to adjusted net income of $21.4 million or adjusted net income per diluted share of 20p in the fourth quarter of prior year. And finally, adjusted EBITDA was $31.2 million compared to adjusted EBITDA of $26.7 million in the fourth quarter of 2024. For the fiscal year, total revenue of $961 million increased 7% compared to $895 million from the prior year. Adjusted net income rose 15% to $102.9 million or 99p per diluted share from adjusted net income of $89.7 million or $0.85 per diluted share in 2024. And adjusted EBITDA increased 10% to $123.3 million as compared to adjusted EBITDA of $112.1 million in fiscal 2024. Our strong balance sheet included total cash of $17.5 million at year-end, reflecting the disbursement of $17.5 million throughout the year in quarterly dividend payments, investment of $75.4 million to repurchase 3.9 million of our common shares and payment of $15 million on our term loan. In addition, we had full availability of our $50 million revolving line of credit, giving us total liquidity of $67.5 million at year-end. Total debt, net of deferred financing costs was $84 million at December 31, 2025, compared to $98.6 million at December 31, 2024. Also at quarter end, we had $37.5 million remaining on our prior $75 million share repurchase authorization. We expect the disciplined execution of our growth initiatives and strong cash flow generation driven by our asset-light business model to enable the payment of our ongoing quarterly dividend while evaluating opportunities to repurchase our shares and retire debt. We believe this positions us well to create long-term value for our shareholders. Turning now to guidance. We are reaffirming our fiscal 2026 outlook and begin the year with strong momentum and confidence to deliver another record performance. Based on our market outlook, outstanding team proven strategies and execution, scaling innovations, new ship builds and strong capitalization, we expect fiscal 2026 total revenues to exceed the $1 billion mark for the first time. Total revenues are expected in the range of $1.01 billion to $1.03 billion, representing high single-digit increases at the midpoint of our guidance range from actual 2025 results, excluding exited and reorganized operations mentioned previously. Adjusted EBITDA continues to be expected in the range of $128 million to $138 million, representing high single-digit increases at the midpoint of our guidance from actual fiscal 2025 results. And for the first quarter of 2026, we expect total revenue in the range of $241 million to $246 million, with adjusted EBITDA expected in the range of $30 million to $32 million. Please bear in mind that exited and reorganized revenue contributed $5.3 million to first quarter 2025 revenue and $23 million to fiscal 2025 revenues. And with that, we will open the calls up for questions. Gary, if you could take over, please. Operator: [Operator Instructions] Our first question today is from Steve Wieczynski from Stifel. Jackson Gibb: This is Jackson Gibb on for Steve Wieczynski. I wanted to dig in a little further on the AI integration. And with another quarter under your belt, is there any more color you can give on the potential benefits you guys could realize from this investment, whether that's on the cost side or the revenue side? And any updated thoughts on how that might impact margins? Up to this point, you guys have kind of talked about these initiatives starting to show up meaningfully in the second half of 2026. Is that cadence still accurate? And would we be correct to assume you have not factored in any of this potential impact to current full year guidance? Stephen Lazarus: Yes, Jackson. As previously mentioned and you reiterated, we did say that we will begin to talk about that after our second quarter results with more specificity. So -- we remain on track to do that. We are encouraged, obviously, by the initial results, and that is reflected in the incremental rollout of these initiatives, 2 vessels and starting of additional initiatives as well. So we remain pleased with where we're at. And to your last point, yes, our current guidance does not include potential impact from these initiatives. Jackson Gibb: Okay. Got it. And then switching gears for my follow-up. I was hoping to get a little bit more detail around how consumer trends are shaping up, specifically attachment rates and how you're going about discounting. Are you seeing any differences worth calling out in these metrics or anything that stands out as far as changes in spend patterns across different brands, geographies, ship sizes, et cetera. And then how are you thinking about your ability to take price throughout 2026 relative to price action taken in 2025? Stephen Lazarus: So I'll address the last part first. As you know, in 2025, we effectively did not take service price increases. We do always continue to evaluate that. And if there's opportunity to do so. In 2026, we will certainly address an action our comments. Again, from a guidance perspective, we are not assuming any service price increases embedded at this point in time. We'll see how things play out. With regards to the consumer, we had previously mentioned in the fourth quarter of last year, a little bit of softness in November, and we did not see that reoccur in December, which was great. So far year-to-date, we are definitely seeing overall higher prices being accepted by the consumer. So on a net basis, we are selling at a higher price. There may be slightly additional discounting. But at the end of the day, the net that's going to the customer in our facility, which remains high. And it's also therefore a reflection of, as you will have noted, our first quarter guidance, which we feel good about and is about consensus, and we think is a reflection of what we anticipate going forward with the consumer. Operator: The next question is from Gregory Miller with Truist. Gregory Miller: I'd like to ask first about the dynamic price optimization model that you spoke about in your prepared remarks. Melissa, missed it on the -- in your remarks this morning, have you discussed in terms of detail in terms of the rollout? Are there certain banners or itineraries or vessels that you're going to start this implementation first? Or is this going to be a broader rollout across the fleet. Stephen Lazarus: Specifically as it relates to that initiative, Greg, the first place we will begin with is actually on prebooking -- so effectively, it will cover 94% of the vessels that today are on that prebooking platform. I would like to say it's still relatively early stages. Obviously, we're excited about it because, as mentioned, the share volume of itineraries available on the prebooking platform, make it effectively impossible for humans to have a true dynamic pricing impact that can literally look at day-to-day even ultimately, hour to hour where we might want to adjust things. So we are excited about it when we roll it out, the phases will be #1, pre-booking once we get that working and finalized, there will be a relatively quick rollout to the remaining vessels. But realistically, we're talking here into the back half of the year. Gregory Miller: Okay. Shifting gears, I was on 1 of your ships recently. And I noticed that the spa menu appeared reformatted. It looked like the offerings were perhaps more condensed and just different stylistically than what I've seen in the past. And I'm curious if you have any intentions of a broader rollout of reformatting your spa menus in terms of the offerings that you're presenting to passengers on board. Leonard Fluxman: No. Actually, we took a very proactive approach in doing that. So I'm glad you noticed. We decided to condense and rather focus guest choice on sort of the more popular items versus a full Chinese menu of everything and anything as opposed to the top choices that everybody takes. But also a focus to moving people into specific price points and time slots. So it's a much more manageable and conversion into the higher treatment rates, particularly around face and body -- so I just think narrowing the aperture to the more popular treatments that we want to sell with a higher retail attachments is sort of the strategy and science behind a narrower menu. We have no intention of broadening it because at the -- from what we did and looked at it statistically, there was just no purpose in having an extensive menu that we did would have like 3 years ago. Operator: [Operator Instructions] Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks. Leonard Fluxman: All right. Thank you, everybody, for joining us today. As Stephen mentioned, we've got off to a great start here in the first quarter and look forward to speaking with you all on our next investor call as well as conferences that we may attend through the first quarter entering the second quarter. So thank you, and look forward to speaking to you next time. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 and Year-end 2025 Hecla Mining Company Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations. Please go ahead. Michael Parkin: Thank you, Kelvin. Good morning, and thank you all for joining us for Hecla's Fourth Quarter and Full Year 2025 Results Conference Call. I'm Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On the call today with us is Rob Krcmarov, President and Chief Executive Officer; Russell Lawlar, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; Kurt Allen, Vice President, Exploration; Matt Blattman, Vice President, Technical Services; as well as other members of our management team. At the conclusion of our prepared remarks, we will all be available to answer questions. Turning to Slide 2, cautionary statements. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slide 2 in our earnings release and in our 10-K filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I will now pass the call over to Rob. Robert Krcmarov: Thank you, Mike, and good morning, everyone. Turning to Slide 3. 2025 was a transformational year for Hecla, one marked by disciplined execution and strategic clarity. Hecla's 135-year legacy as the oldest company on the New York Stock Exchange is our foundation, but it's not our destination. What drives us forward is our clear, compelling strategy to become and be recognized as the premier silver company in North America. So let me walk you through how we're executing against this strategy. Our foundation rests on 3 critical pillars. First, legacy and longevity. 135 years old. We're the oldest mining company on the NYSE. We protect value through market cycles for over a century. Second, top jurisdictions. All of our mines and projects from Greens Creek in Alaska to Lucky Friday in Idaho to Keno Hill in the Yukon to Midas in Nevada, they operate in the best and safest mining jurisdictions in North America. This jurisdictional advantage is a competitive advantage that protects our cash flows, reduces our risk profile and safeguards our license to operate. Third, silver focused. We've made a deliberate choice to build peer-leading silver exposure in both our revenue mix and our reserve base. While we produce gold, lead, zinc and copper as important byproducts, silver is the strategic anchor of our business. Our strategy delivers 4 key outcomes: Portfolio value surfacing. So we're actively managing our portfolio, retaining and investing in our world-class silver assets while strategically divesting noncore assets. The pending sale of Casa Berardi, which we announced last month is an example of this disciplined approach to capital allocation. It was a difficult decision, but one as fundamentally as a silver company, we had to make. Operational excellence. We're relentlessly focused on core asset optimization and execution. Not at the expense of safety or sustainability, they are the foundation of everything that we do and key drivers of productivity, not a compliance exercise. Investment discipline. This is the new Hecla. We utilize strict capital discipline with target ROIC thresholds to guide us in our path forward. Every dollar we deploy is intended to generate returns for our shareholders. And finally, organic growth. Through disciplined exploration programs, we are surfacing value for shareholders. And I think our recent Nevada exploration demonstrates this approach. We're working to discover and build the next generation of production from assets that we already own. This strategy is not abstract. It's delivering tangible results, as you'll see on the next slide. So moving to Slide 4. 2025 was a transformational year for Hecla. On the financial front, we delivered records, record revenue of $1.4 billion, record profitability, net income applicable to shareholders of $321 million or $0.49 per share, record adjusted EBITDA, $670 million. But the headline number that matters most is what these records enabled, which is substantial deleveraging and balance sheet transformation. Our total debt has declined to just $276 million. Our gross debt to adjusted EBITDA ratio, 0.4x. We generated operating cash flow of $563 million, which translated to $310 million in free cash flow, with each mine generating positive free cash flow last year. On the operational front, we executed well, hit our top end of silver production guidance at 17 million ounces, exceeded our gold production guidance with 150,000 ounces produced. Lucky Friday delivered a record 5.3 million ounces of silver production, exceeding the top end of the guidance range. It was as recently as 2021 that Lucky Friday was producing 3.6 million ounces, nearly a 50% increase in just 4 years. Keno Hill achieved new record production of over 3 million ounces while achieving first year profitability and positive free cash flow under Hecla ownership. Our Lucky Friday surface cooling project is 79% complete and on track for mid-2026 completion. That's a critical investment in the health and safety of our workforce and a key milestone as we work towards making Lucky Friday a zero discharge facility. And we received our finding of no significant impact or FONSI at Aurora, which is a major permitting milestone, allowing us to kick off exploration activities this year at the historic very high-grade gold, silver producer in -- past producer in Western Nevada. Turning to Slide 5. Now I want to talk about the pending sale of Casa Berardi to Orezone Gold Corporation. This transaction represents portfolio optimization and action. Casa Berardi is a gold mine in a Tier 1 jurisdiction. It has a nice future, has had a nice run with us. Its mid-range mine plan is for a gold miner, some with a different schedule than us. So we plan to redirect capital and management focus towards our silver assets. We still have upside exposure with a 10% stake in Orezone. Why does this matter strategically? Well, there's 4 reasons. First is strategic portfolio optimization. So we're sharpening our focus. Capital that was tied up in gold would now flow towards silver assets with superior economics and longer reserve lives. Second is the enhanced market position. Upon closing, Hecla should be recognized unambiguously as the premier North American silver mining company. So silver would represent about 73% of our consolidated revenues, the highest silver revenue exposure among all our multi-asset mining peers with all our operating mines in the best jurisdictions. Third, strengthened balance sheet. We plan to use cash proceeds towards debt reduction and enhance financial flexibility. This positions us to a debt-free balance sheet with prices sustaining or better. Fourth is value maximization. We maintain exposure to Casa Berardi's upside through our OreZone shares with OreZone well positioned to extract additional value from the asset given their focus and expertise in gold. I think this is a sophisticated capital allocation. This is how we maximize shareholder returns. And so now I'll pass the call over to Russell. Russell Lawlar: Thank you, Rob. As we turn to Slide 7, let me take you through our financial scorecard because the numbers tell a compelling story of transformation. On balance sheet strength, our gross leverage ratio improved to 75% from 1.6x in 2024 to 0.4x in 2025, while our net leverage ratio improved 94% from 1.6x to 0.1x. And at current metal prices, we're positioned to achieve a debt-free balance sheet within 2026. This balance sheet transformation has set the company up for future growth with a substantial reduction to risk. On margin and return generation, our silver all-in sustaining cost per ounce margin improved from a very strong 54% in 2024 to 75% in 2025. This reflects both strong realized prices and disciplined cost management. And our free cash flow surged from $4 million last year to $310 million this year. While our return on invested capital improved 3x from 4% to 12%, we're now generating returns well above our cost of capital. These changes all sum up to cash on our balance sheet increasing ninefold from $27 million coming into the year to $242 million coming out of the year. This represents a complete transformation from a leveraged balance sheet to a position of financial strength in a single year. As we turn to Slide 8, I'll walk through some of the details from the fourth quarter because they show a sustained momentum and operational consistency. During the fourth quarter, we generated $439 million in revenue. Silver accounted for 59% of that total, but notably, excluding Casa Berardi, our silver exposure is expected to increase to approximately 73%, which would provide the highest silver exposure among our peer group, not to mention jurisdictional profile or other unique attributes. Our realized silver price in the fourth quarter was nearly $70 per ounce, beating the quarterly average by over $14 per ounce. Our all-in sustaining cost was $18.11 per ounce, putting the -- our silver margin at $51 per ounce or 74% of the realized price. This is exceptional profitability. Our adjusted EBITDA was $670 million in 2025, which coupled with gross debt deleveraging improved our net leverage ratio from 0.3x last quarter to 0.1x this quarter, demonstrating the momentum in our deleveraging trajectory. We generated almost $135 million in free cash flow on a consolidated basis during the quarter, and all our operations contributed positively. This excellent quarter and the resulting cash flow was due to better pricing, but also executing on a variety of strategic initiatives across all our assets. As we turn to Slide 9, the bar chart here illustrates our projected cash flows across a range of silver and gold price scenarios. As we discussed during our Investor Day, Hecla has among the best leverage to silver prices compared to peers, which could improve upon closing of the Casa Berardi sale. This analysis on the slide assumes the Casa sale is completed and at $75 silver and $4,500 gold, we forecast cash flows of about $600 million, but this grows to about $850 million at $100 silver and $5,500 gold. our forecast and at these metal price scenarios, we estimate nearly 70% of our revenue would be tied to silver sales, which is an industry best. Turning to Slide 10. I want to continue to emphasize our capital allocation framework because it's central to how we create shareholder value. We've shared this framework over the recent months, and it guides every decision we make at Hecla. We maintain an unwavering commitment to 6 key pillars in priority order. First, safety and environmental excellence, which is first and foremost. Second, sustaining growth capital maintains our asset base, derisking our assets and providing a solid base to build from as we provide high return organic growth. On exploration, it provides asymmetric potential returns and is critical in the long-term strategy of any mining company. As we think about deleveraging and strengthening of our balance sheet, this provides financial resilience and flexibility and ensures ability to invest when opportunities arise. If we think about strategic investments, whether internal or external, will be guided by our predetermined return on investment criteria. And we -- and lastly, as we think about shareholder returns, we'll look to return additional capital to shareholders when appropriate with a focus on maintaining strict return on investment criteria. This framework ensures disciplined decision-making aligned with long-term value creation. I'll now turn the call to Carlos. Carlos Aguiar: Thank you, Russell. Turning to Slide 12. Before we move to asset-by-asset operational results, I want to start with what matters most. Operational excellence begins with safety. Our 2025 total recordable injury frequency rate was 1.69, which is a 13% reduction year-over-year. So this single year improvement reflects a multiyear of systematically driving down our TRIFR through dedicated focus on keeping our employees and contractors safe. This is not luck. It's culture, systems and commitment, and it matters because safe mines are productive mines. In 2024, we reaffirmed our commitment to safety values to a company-wide safety day and the rollout of Safety 365: Work safe. Home Safe. In 2025, we focused intensively on the specific drivers of incidents. And in 2026, we are implementing a formal Fatality Prevention Program alongside continued improvement of all safety systems. Moving to Slide 13. Let me walk through our 3 operating silver mines, starting with Greens Creek, our flagship world-class, low-cost silver mine in Alaska that has been in production for over 35 years and is expected to continue delivering exceptional economics for many years to come. In Q4, Greens Creek produced 2 million ounces of silver with AISC of under $3 per ounce after by-product credits, generating $102 million in operating cash flow and nearly $80 million in free cash flow. For the full year 2025, Greens Creek delivered 8.7 million ounces of silver at the top end of guidance with AISC of under negative $2 per ounce after by-product credits. For 2026, we are projecting 7.5 million to 8.1 million ounces of silver and 51,000 to 55,000 ounces of gold with AISC guided to nearly 0 after by-product credits. This is a testament to the extraordinary economics of this asset. What's remarkable about Greens Creek is the longevity of the resource base. We had a 12-year reserve mine plan, but through ongoing exploration success, we see a pathway of sustained reserve replacement well beyond that time frame. That's why we are investing today in our tailings facility, building out capacity through 2045. When this mine started 35 years ago, it had a 10-year mine life. Today, 12 years of reserves ahead plus significant reserves, we are actively working to convert to reserves. Greens Creek is a mine in a Tier 1 jurisdiction with world-class economics. It is the cornerstone of our portfolio. Turning to Slide 14. Lucky Friday is our primary silver mine in Idaho, a deep underground operation with a 15-year reserve mine plan, producing consistently high-grade silver ore. I'm extremely excited about this mine. I spent 10 years working in that place. In Q4, Lucky Friday produced 1.3 million ounces of silver with AISC under $26 per ounce after by-product credits, generating $57 million in operating cash flow and over $33 million in free cash flow. For the full year 2025, the mine delivered record production of 5.3 million ounces of silver, exceeding the top end of guidance with AISC of under $22 per ounce after by-product credits. For 2026, we are guiding to 4.7 million to 5.2 million ounces of silver production with AISC of $23.50 to $26 per ounce after byproduct credits. The expected year-over-year increase in AISC reflects higher profit sharing payments to our workforce. This is a good thing. These payments are tied directly to profitability, which we expect to remain strong given the current metal prices. A key near-term project at Lucky Friday is our surface cooling project, which is 79% complete and on track for completion by mid-2026, which will significantly improve underground health and safety. Turning to Slide 15. Keno Hill's transformation story. Hecla acquired Keno Hill in 2022. And last year, the mine achieved its first full year of profitability and positive free cash flow generation. This is a significant milestone. In Q4, Keno Hill produced 597,000 ounces of silver, generating $33 million in operating cash flow and over $17 million in free cash flow. For the full year 2025, we exceeded 3 million ounces, a new production record and above the top end of guidance. For 2026, we are guiding to 2.9 million to 3.2 million ounces of silver production with capital investment of $61 million to $66 million as we continue to advance towards steady-state operations. What's exceptional about Keno Hill, it's current profitability while still on path to its nameplate capacity. As we reach the planned throughput rate of 440 tons per day, we are modeling robust positive free cash flow generation potential across a wide range of silver prices, as you can see in the bar chart on this slide. Keno Hill represents the optionality and upside within our portfolio. I will now hand it over to Kurt to discuss exploration. Kurt Allen: Thanks, Carlos. Moving to Slide 17. Our exploration strategy is straightforward: discover and develop the next generation of production from within our existing portfolio of high-quality projects. Moving to Slide 18. Our primary growth engine is the Nevada platform. At Midas, recent drilling returned outstanding results, including 6.1 feet at 0.46 ounces per ton gold and 0.93 ounces per ton silver at Sinter offset and 2.2 feet at 0.95 ounces per ton gold and 0.6 ounces per ton silver at Pogo. These confirm high-grade mineralization and support a potential near-term production restart with existing mill infrastructure on site. Aurora achieved a major milestone, receiving our FONSI from the U.S. Forest Service, clearing a path for 2026 exploration at this historic high-grade gold-silver producer. Regarding mine life extension, Greens Creek definition drilling delivered. We added 3.7 million silver ounces through model updates, replaced 9.5 million ounces depleted through mining and grew the reserves by 2.4 million ounces net. With a 12-year reserve life and 88.7 million silver ounces in measured and indicated resources, Greens Creek continues to demonstrate longevity potential. Lucky Friday nearly replaced reserves, reducing only 200,000 silver ounces during a record 5.3 million silver ounce production year and with 40.5 million ounces of measured and indicated resources beyond reserves, providing a clear runway for continued reserve replacement. Now we're investing $45 million to $55 million in 2026 exploration, heavily weighted towards Nevada and near-mine opportunities. This directly supports achieving greater than 100% reserve replacement and building the pipeline to drive us toward 20 million ounces annually. We're discovering high-grade mineralization on lands we control, in jurisdictions we understand with infrastructure often already in place, organic growth with superior economics. I'll now turn the call back to Rob. Robert Krcmarov: Thank you, Kurt. Let me now address our medium-term outlook because it shows some of the depth of optionality that's within our portfolio. Our 2026 silver production outlook calls for 15.1 million to 16.5 million ounces. But as we've shown recently at our Investor Day, we've got a credible pathway to 20 million ounces over the medium term. We've got multiple projects that could drive us towards that 20 million ounce target. So first, continued ramp-up of Keno Hill to the permitted capacity of 440 tons per day that could drive meaningful production growth from current levels. Second, the potential Midas production restart that Kurt just spoke about. Midas is an exceptional gold and silver project in Nevada that Hecla operated historically. As Kurt pointed out, we have the mill infrastructure in place. And we're currently advancing exploration at Midas with exceptional drill results that we just spoke about. And that supports greater exploration investment in the project this year. A development decision on Midas could add meaningful gold and silver production over the medium to longer term at low capital intensity, representing a potential significant value surfacing opportunity. But the upside doesn't end there. Touching on just a couple of our other projects, we see potential to optimize Lucky Friday even further from the current record production levels it's been achieving. At Greens Creek, we've identified the potential for reprocessing of historic dry stack tailings to extract value from the significant metals contained within. These are projects within our control, within our existing portfolio, projects that offer the potential for significant value creation that we don't need to execute expensive M&A to own. That's why we believe 20 million ounces of silver production over the medium term is achievable with further upside potential over the long term. So what we've presented today is a company in transformation, a company that's moved from financially leveraged and free cash flow constrained into one with a robust balance sheet, strong cash generation and the financial flexibility to invest in our project pipeline to surface value for shareholders over the long term. We're executing operationally at the highest level across our entire portfolio. We're maintaining strict capital allocation discipline across all 6 pillars of our framework. We're strategically focused on becoming the premier North American silver producer, and we have multiple near-term and medium-term growth projects within our existing asset base. 2025 was a year of multiple records. 2026 and beyond present exceptional opportunities. We're executing our strategy with precision, and we're confident in delivering sustainable shareholder value. Thank you. And with that, I'll turn it over to questions. Operator: [Operator Instructions] Your first question comes from the line of Heiko Ihle of H.C. Wainwright. Heiko Ihle: Exploration at Keno Hill, anything you've seen there that was maybe a bit unexpected, better or worse than internal plans so far this year? And building on all of that, the costs -- the ongoing costs of exploration per meter so far this year, how has pricing been? And what are you sort of modeling out for the remainder of the year, please? Kurt Allen: Yes. Our -- I guess, things that we've seen that in the exploration from 2025, I mean, we've intercepted what we think is a new high-grade ore shoot off the deep Birmingham, and it's open for expansion. And that's going to be one of our focuses this year as well as drilling around the rest of the Birmingham and the Flame & Moth. Now our budget for Keno Hill this year is $13 million. The direct drilling costs, I think, are on the order of USD 180 to USD 190. I'll have to check that number, though, Heiko, and get back to you. The exploration potential there is quite spectacular. Heiko Ihle: Fair. And then just one quick clarification before I go back in the queue. On Casa, and I went through the press release that you guys issued earlier today again. Just to be clear, you're getting all cash flows from Casa through the closing date, correct? There won't be any backdating or anything. I mean, with gold above $5,000 again as of today, obviously, there's real money to be made every single hour. Russell Lawlar: Yes. Heiko, that's right. We'll get cash flows through closing. And then obviously, then the structure of the deal will bring further cash flows. Operator: Your next question comes from the line of Cosmos Chiu of CIBC. Cosmos Chiu: Maybe my first question is an accounting question, again, on Casa Berardi. I'm just wondering about the accounting -- sort of treatment accounting impact that could come from Casa. I realized or I kind of looked at the cost for Q1, your guidance, gold cost guidance, and I saw that it's actually higher now. It's only 1 quarter's worth of Casa. So does that feed into your earnings? How does that impact earnings? And the second part is, will you be looking to book some type of gain on the transaction? I forget what the book value might be. And then overall, what's the timing of some of these accounting transactions? Russell Lawlar: Yes. So Cosmos, a couple of things here. First, in terms of the guidance, we took an estimate through the first quarter. So we expect we'll close the deal sometime in the first quarter. So we took a full first quarter versus of production estimated cost, that kind of thing. I will say, in January, there was a significant weather in the Abitibi in Eastern Canada. I think you probably saw some of that in Toronto. And as a result, January's production was a bit lower than estimated. But since we only have a quarter of a year essentially, we just didn't have the time to recoup that production. So that's why you see the cost on a per ounce basis is higher. And then as we think about the recording of the transaction, so that will flow through our financials through closing. In Q1, we would anticipate Casa Berardi would be held for sale. So that essentially kind of comes out of the core part of our financial statements. But you will still see in the net income line, the impact of Casa's operations through closing. It just separated, right? And I'm trying to think -- there's a few other things in there. As we think about the value of the transaction, we -- obviously, there's a portion of that, which is deferred and contingent. So we have to go through a fair value process to book the kind of estimated fair value of that, and then we'll compare that to the carrying value. I would actually expect we'll see some type of a loss on the transaction versus a gain just because the carrying value is likely going to be a bit higher than that, but we're working through that process now. So I won't speculate or try to tell you what that might be. And tell me if I marked off all your questions. I may have missed one. Cosmos Chiu: Okay. Great. And so likely, it's going to be a Q1 sort of -- if it closes in Q1, it will be a sort of Q1 accounting transaction, and I'm sure you'll give us some kind of guidance ahead of it. Russell Lawlar: Yes, that's right. And obviously, we guided production and costs such that you all have the information needed to kind of see what the ongoing cash flows and that type of thing you'd expect to see from Casa. Cosmos Chiu: Great. And then maybe my second question is on strategy. And Rob, it's good to hear that you're going to be silver focused, looking to be the premier silver company and looking to redeploy some of those proceeds coming from Casa into growing your silver sort of portfolio. But again, I guess my question is, if I look at your exploration budget, a big chunk of it is heading to Nevada, which is more gold-rich. You do have some longer-term exploration assets, including in the Silver Valley, also San Juan Silver, but that's, again, longer dated. So I guess my question is, if you can walk us through your thinking behind how you can continue to grow your silver production, your silver focus? And do you need to look externally, and I think you answered that question, but I'll ask you anyways, do you need to look externally to really unlock the full silver potential of Hecla? Robert Krcmarov: Yes. Thanks for the question, Cosmos. It's very much on my mind that we need to continue to grow our silver portfolio. Now one of the things is while we've been focused on divesting a few assets and potentially farming out some more to come, we need to bring new projects in the pipeline. And so I've tasked Kurt with establishing a project generation and a new business -- let's call it, a new business group, which is what I had when I was at my previous company. And their task is to get us into some new silver districts early on, monitor competitor intelligence, particularly in the new -- in the junior space, where we can potentially spot some emerging new discoveries and try and partner up with those. On M&A, it's obviously something that we'll continue to consider going forward. But obviously, there's a scarcity of silver-producing assets. And I've spoken about our criteria at our Investor Day, what's going to drive some of that. So yes, I'm very aware that we need to replenish the pipeline and Kurt has recruited someone just recently actually with a lot of experience. Kurt Allen: Yes, yes. We've got a recruit in. He's quite experienced. So it will be good with the program going forward. Yes. Cosmos Chiu: Great, Kurt, you've got quite a task. Operator: Your next question comes from the line of Alex Terentiew of National Bank. Alexander Terentiew: Just a couple of questions from me. First, on Lucky Friday. Your cooling -- surface cooling project should be done as you're seeing here midyear. I'm just wondering kind of longer term, with this project being completed, opportunities to reduce costs here. How does this kind of factor into the long-term plan? I mean, Rob, you made a comment about optimizing Lucky Friday as another venue of potential upside longer term. So just kind of wondering how this project factors into the longer-term potential of the mine. Robert Krcmarov: Yes. Thanks for the question, Alex. So the surface cooling project should be done by about midyear. It's primarily driven for, I guess, health and safety reasons or the well-being of our workers. We're obviously deep at Lucky Friday. It's a hot mine. And so as we go into successively deeper values, bearing in mind that we have a long, long mine life here, we still have many levels to develop ahead of us, so this is really setting the foundation for the future. But the other thing I'd ask you to consider is that, obviously, when workers are comfortable, they're generally more productive. And so that could have an impact. The other thing I spoke about on our Investor Day is that even though we broke successive records in throughput at Lucky Friday, our GM there, Chris Neville, he still believes that he might be able to wring some more out of that. Anything you want to add, Carlos, on that? Carlos Aguiar: Yes. And it's part of the optimization plan, right? We have different steps where we have continuous improvement and the hoisting capacity and securing the areas in the deep underground, this is the cooling system. So it's -- we say it in New York, right, the best decade of Lucky Friday is still ahead of us because we have plenty of opportunities going up an order proportion of production. Alexander Terentiew: Yes, makes sense. Okay. Another question just on Midas. Obviously, the stuff you guys have going on there in Nevada is pretty exciting. I mean you've got the good infrastructure, some really high-grade intercepts. I know this is a -- I wouldn't call it long term, but a longer-term plan anyways. Can you just kind of remind me or refresh me over the next 1 to 2 years, what can we expect to see there in terms of your guys' plans to move that forward? Robert Krcmarov: So a lot of it hinges on building up a critical mass of high-grade resources to get it back into construction. Again, just to recap, we've got the mill, we've got the tailings dam. We have some new discoveries. Out where one of the new discoveries is there's a resource that was discovered roughly 4 years ago, I guess, it's somewhere around 180,000 to 200,000 ounces at well above the historic Midas production grade. So that's the head start that we have. Now 4 years ago, when that was discovered, the drilling came up against the fault. Across the other side of the fault, there was no mineralization. And so the groundwork that was laid over the last couple of years has basically identified where the offset has gone. And now we've picked up the scent again and starting to drill mineralization. And I guess the starting resource, we're not talking about 1 million ounces to get this thing going. We're talking about 300,000, 400,000 ounces. So we're already a significant portion of the way there. And really, the focus on this year is going to be on exploration. At the same time, we'll do some studies. Matt, maybe you can talk about that. Matt Blattman: Yes. I mean this is out in -- the discoveries are out in an area that has no or very little historic mining. So we have -- we've got to collect data on the geotechnical side, the metallurgical performance and hydrogeologic, everything in mining is about water ultimately. So we need to collect that information. So in order to fast track this, we're going to be collecting that data and doing studies in parallel with that exploration. So as soon as we have a resource model, we can start doing more technical feasibility work. Robert Krcmarov: And at some point, we'll appoint a dedicated project manager to that. We're planning on success. Operator: The next question comes from the line of John Tumazos of John Tumazos Very Independent Research. John Tumazos: Could you refresh us on the capacity tons per day of the Midas mill, what you think the initial throughput would be, whether you can fill it up and whether the grades would compare to back in the heyday, something like 10 grams gold, 10 ounces of silver per ton? Robert Krcmarov: It was -- I think it was 1,200 tons per day is the permitted capacity of the Midas mill. Matt Blattman: That's right. The permit is 450,000 tons a year, which works out to about 1,200 tons a day. Robert Krcmarov: Yes. And sorry, what was the second part of your question, John? John Tumazos: How many tons per day do you think you're going to put through it? And what might the grades be? In the old days, it was something like 10 grams gold, 10 ounces silver. Robert Krcmarov: I think it's too early to say, John. I mean we're in the early discovery stages. We need to pin down a more robust resource. The historic grades, you're right, it was 0.4 ounces per ton, so roughly 12, 13 grams per ton and significant silver as well, actually. Operator: There are no further questions at this time. And with that, I will now turn the call over to Rob Krcmarov, CEO, for closing remarks. Please go ahead. Robert Krcmarov: Well, thank you all for your thoughtful questions and your continued interest and support of Hecla. 2025 was a genuine year of transformation financially, operationally and strategically. And so we enter this year with a stronger balance sheet, a sharper focus and what we believe is the most compelling silver portfolio in North America. We've got a lot of work ahead of us. We know that, and we're looking forward to it, and we'll talk again at Q1. So thank you, everyone. Have a great day. Operator: Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.
Kenny Green: Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's Results Zoom Webinar. My name is Kenny Green, and I'm part of the Investor Relations team at Camtek. [Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, CEO; Mr. Moshe Eisenberg, CFO; and Mr. Ramy Langer, COO. Rafi has a cold and has lost his voice. So Ramy will be providing the opening remarks followed by Moshe, who will then summarize the financial results of the quarter. Following that, we will open the call for the question-and-answer session. Before we begin, I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes, risks and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact Camtek's results, please review Camtek's earnings release and SEC filings and specifically the forward-looking statements and risk factors identified in the results press release issued earlier today and such other factors discussed in Camtek's most recent annual report on SEC Form 20-F. Camtek does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of the financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release. And now I'd like to hand the call over to Mr. Ramy Langer, Camtek's COO. Ramy, please go ahead. Ramy Langer: Thanks, Kenny. Hello, everyone. Camtek concluded the fourth quarter and full year with record results. Fourth quarter revenues reached a quarterly record of $128 million, representing an increase of 9% year-over-year. Gross margin was 51% and operating margin was 29%. For the full year, I'm excited with our revenues, which totaled $496 million, reflecting 16% year-over-year growth. Gross margin was 51.6% and operating margin reached 30%. These results bring us to our milestone of $0.5 billion in revenues. In terms of revenue mix for the full year, approximately 50% was driven by AI-related products, 20% came from the other advanced packaging applications. The remaining revenue was distributed across CMOS image sensors, compound semiconductors, front-end and general 2D applications. Regarding our outlook for the first quarter of 2026. In our previous meeting, we indicated that we expect our revenues to be more second half weighted following a somewhat slower start to the year and that we expect 2026 to be a growth year compared to 2025. In line with this, our revenue guidance for the first quarter is to be around $120 million. At the same time, I am pleased to share that the months passed since our previous guidance significantly reinforced our confidence in our forecast regarding the strength of the second half and in our ability to achieve a full year growth in 2026. Moreover, at this point of time, we expect 2026 to be another double-digit growth year for Camtek. This confidence is derived from our pipeline of order and backlog as well as ongoing interaction with our customers. As you are aware, key customer of ours have made public announcements regarding their investment plans for the coming year, and are discussing with us about their plans for the latter part of the year in this respect. Customers have been verifying with us ability to ship and install a double-digit number of systems within a relatively short time frame. Certain customers are finalizing development of their next-generation devices and want clarity on which of our system models best fit their requirements. The primary growth engine of the semiconductor industry continues to be high-performance computing components designed for AI applications. As I said, the growth curve expected in 2026 is largely linked to the pace of which device manufacturers, particularly memory suppliers plan to expand their production capacity. As an example, last week, we announced a $25 million order received from an IDM customer for multiple Hawk systems. This order is in addition to previous orders placed in recent months by this customer, bringing the total to approximately $45 million. The customer continues to expand its manufacturing capacity by building new fabs to meet growing demand for components produced for AI applications, and we expect additional orders from this customer. We expect additional major customers of ours to expand their production capacity after this year to meet rising demand for their products. Another major factor supporting our outlook is the proven exceptional performance of our systems, particularly the Hawk and the Eagle Gen 5, both models were launched about a year ago, and we have already installed dozens of systems of each over the past year. Moreover, since this introduction, we have continued to invest efforts in our R&D and completed the development of new capabilities to meet the requirements of our customers' next-generation products. We have already demonstrated these new capabilities to several customers and received strong validation and interest. The transition to HBM4 is already in process, and represents a major opportunity for us. We are the tool of reference for 3D metrology at all major players. We have a significant market share in 2D inspection, which we expect to expand in 2026. We, therefore, expect to not only maintain our market share in AI-related applications, but to increase it meaningfully. Moreover, as our products introduce to the market superior new capabilities, we expect them to enable us to penetrate additional production steps and expand our total available market. To summarize, 2 major developments coincided during the last several months. We have experienced a significantly increased orders flow and pipeline, thus improving our visibility. In parallel, we have completed the development of new capabilities to meet the requirements of our customers' next-generation products, which we expect to enable us to increase our market share in our total available market. We are excited with what we can achieve in 2026. And now Moshe will review the financial results. Moshe Eisenberg: Thank you, Ramy. Revenue for the fourth quarter came in at a record $128.1 million, an increase of 9% compared with the fourth quarter of 2024. For the full year, revenues came in at $496.9 million, an increase of 16% compared with 2024. The geographic revenue split for the quarter was as follows: Asia was 89%, and the rest of the world accounted for the remainder 11%. Gross profit for the quarter was $65.4 million. The gross margin for the quarter was 51.1%, similar to the previous quarter and slightly better than the 50.6% reported in the fourth quarter of last year. Operating expenses in the quarter were $28.7 million compared to $23.1 million in the fourth quarter of last year and $27.2 million in the previous quarter. Operating profit in the quarter was $36.7 million compared to the $36.3 million reported in the fourth quarter of last year, and $37.6 million in the third quarter. Operating margin was 28.6% compared to 30.9% and 29.9%, respectively. For the year, operating margin was 30%, similar to 2024. Financial income for the quarter was $8.2 million compared to $6.2 million reported last year and $6.5 million in the previous quarter. Within that, interest income increased due to the increased cash balance from the strong cash generation and the convertible notes issued towards the end of the third quarter. Net income for the fourth quarter of 2025 was $40.7 million or $0.81 per diluted share. This is compared to a net income of $37.7 million or $0.77 per share in the fourth quarter of last year. Total diluted number of shares as of the end of the fourth quarter was 51.3 million. Turning to some high-level balance sheet and cash flow metrics. Cash and cash equivalents, including short- and long-term deposits and marketable securities as of December 31, 2025, were $851.1 million. This compared with $794 million at the end of the third quarter. The fourth quarter was characterized by a very strong cash generation of $61.2 million from operations. This is a result of a strong collection and reduction in accounts receivables as well as optimization in our inventory levels. Accounts receivables were down by $22 million to $90.8 million compared to $112.5 million in the previous quarter. Our days sales outstanding decreased to 65 days from 81 days last quarter. Inventory level is down by $50 million. Having increased our inventory level in the last few quarters to support the launch of the Hawk and the Eagle Gen 5, it is now back to the right level to support the expected revenues in the coming quarters. As for guidance, as Ramy said before, we expect revenues of around $120 million in the first quarter, with growth expected in the second quarter and more significant growth in the second half of 2026. And with that, Ramy and I will be open to take your questions. Kenny? Kenny Green: [Operator Instructions] First question will be from Brian Chin of Stifel. Brian Chin: Can you hear me? Kenny Green: Yes. Brian Chin: Maybe firstly, just to reference the big accelerating increase in demand that you referenced. Where is that more prevalent? Is it more concentrated on HBM or on the chiplet logic side? And at this time, is the larger step-up occurring in Q3 or Q4? Ramy Langer: Well, Brian, so first of all, I would say it's the -- what we call high-performance computing or the AI-related products that are all ramping up. And I would say that I can't go at this stage to the resolution, whether it's Q3 or Q4, this is really customer-dependent. I can say that it's in the second half, you will -- we will see the step. Brian Chin: Got it. Can you still hear me? Ramy Langer: Yes. Kenny Green: Yes, yes. Brian Chin: Maybe for a follow-up, I think in the past, you've noted that you expected 50% plus of your system shipments this year to be either one of the newer platforms, Hawk or Eagle Gen 5. Is that still the case? Or is there an update to that? And this year, we'll have HBM4 sort of coexist alongside HBM3E. Can you maybe outline sort of that decision point that some of your customers are having either moving to Hawk or potentially sticking with the latest Eagle? And also, are you seeing any reuse of existing systems? Is that any factor why shipments are lower in first half? Ramy Langer: So let me start to talk about the Eagle versus the Hawk. I think the Hawk is going primarily to people that want very high throughputs and long-term capability. The Hawk can reach accuracies, performance that is much higher than the Eagle, the G5. The G5 is a fantastic machine, very high flexibility, very popular in the OSATs world. So therefore, there is room for both of them. But definitely, when you go to very high volumes, these customers will gradually move to the Hawk. Now the Hawk and the G5 accounted to about 30% of our revenues this year. We expect it to be at least 50% in 2026. Did I answer your question clear, Brian? Brian Chin: Yes. That was helpful. And is there any reuse that you're seeing as sort of HBM4 and 3E both coexist? Or just the fact that 3E is still pretty strong and prevalent limiting the amount of reuse your customers can have? Ramy Langer: Well, it's very hard for us to really know the 3E versus the HBM4. But I think gradually, the industry will go to HBM4, and this will be the product that most people will be using. And definitely, the move to HBM4 is a very important opportunity for us. As we've discussed in previous calls, there is a lot more dense structures. The requirements there are much higher. It is more metrology and inspection intensive. So all in all, this move is very positive for us. Kenny Green: Our next question will be from Charles Shi of Needham. Yu Shi: Maybe the first one, I want to dig a little bit deeper into the Hawk versus G5, the question here, Eagle G5. I remember, Hawk was more positioned for high-end logic type of applications and Eagle G5. You also mentioned it's a high -- it's a good productivity, good cost of ownership. And I thought that you probably more positioned the G5 as maybe more for the memory for high-bandwidth memory, but of course, for the OSAT market. Is some of that changing right now? Because I'm getting the sense maybe Hawk is seeing more of the adoption or maybe a faster adoption by your customers, maybe also including the memories? Ramy Langer: No, no, this is not the case. What we are seeing, and this is -- the Hawk is targeted for those applications that are high-end applications. If you go to a very large number of bumps, let's say, 150 million and more, people and with low structures with the bumps comparatively shallow, these applications will definitely go to the Hawk. The accuracies that are required there and definitely the throughputs that are required there are very high. So we will see these kind of applications go towards the Hawk. The second applications that will go to Hawk in general will be to those application people that are looking to go to 100 nanometers. So when we look at applications that are more related to front end, related to hybrid bonding, those people that will want down the road to use the machine for hybrid bonding, those people will naturally adopt the Hawk. And the G5, obviously, it is -- we've got thousands of machines in the market. So you would see some customers using the Eagle platform adopt the G5 because they know it, they feel more comfortable with it. But I think the strength of the G5 is very, very, I would say, high flexibility, very good accuracy, very good ROI. So all in all, it will continue to be a very popular machine. But definitely, on the other hand, when you go to the high-bandwidth memory, the higher ones, the 4 and the 5, definitely, those customers will, to a certain extent, use the Hawk. Yu Shi: Okay. So is it fair to say for memory market, especially for HBM market, we still should consider G5 as the workhorse and Hawk is more deployed more selectively at this point? Ramy Langer: The way you should look at it, we have hundreds of Eagles, many hundreds of Eagles already doing these applications. But I think some of the future capacity that will be built will be more tended towards the Hawk. Yu Shi: That was very clear. I want to -- checking with you guys, what's the expectation for China this year, if there's any number you can give to us, maybe a percentage of total revenue expected or year-on-year growth? What's the China expectation for this year? Ramy Langer: Well, first of all, the China expectation this year is all in all positive. We do not see any signs of weakness, and we expect to see the revenues in China, they're going to be, I would say, stable. And keep in mind that most of the sales to China are OSATs. And -- which are engaged in a lot of applications. So it's a primarily stable market. I think there is growth in OSATs in general, in China. So I don't see any changes compared to previous years. Kenny Green: Our next question will be from Jim Schneider of Goldman Sachs. James Schneider: Relative to the double-digit growth outlook you talked about for the year and some of your competitors who have cited 15% to 20% WFE growth for 2026. Can you maybe frame for us where you expect your overall revenue to fall this year relative to some of those broader WFE forecast? Would you expect the inspection market to sort of undergrow the broader WFE envelope this year? And if not, would you expect this is more of a timing issue where you have a little bit weaker first half of the year and then you sort of catch up in terms of revenue growth in 2027? Ramy Langer: So first of all, we said in the prepared notes, that we are going to achieve double digits this year in 2026. Now it's too early to quantify at this time, but looking at our results, in the last few years, we always did better than the WFE because we are focused on the fastest-growing segments. But if I want to give you a little bit more color on what we are seeing this year. So compared to what we discussed here a quarter ago, we are seeing a much better visibility, and this is resulting from the new orders that we have received, a much better pipeline following our discussions with customers and understanding the forecast much better. We understand today the timing of the expected orders. So the full visibility and our confidence in 2026 and specifically in the second half is very high. James Schneider: Okay. And then can you maybe just talk about how we should expect your gross margin trajectory to go throughout the year? I think you've previously cited that the improving ASPs on Hawk, et cetera, would drive gross margin expansion. Is this something you can expect that the gross margins to continue to increase throughout the year as you build volume? Moshe Eisenberg: Yes, absolutely. We are looking into an improved gross margin throughout the year. And as we expect to grow the revenue in the second half of the year, we expect to improve the margins. We did take certain measures to improve the bill of materials. We took other measures in terms of supply chain, and we believe that we are positioned well to benefit from this and improve the gross margin later in the year. Kenny Green: Our next question is from Shane Brett of Morgan Stanley. Shane Brett: I have a question on the competitive dynamics. Just has there been any change to the competitive dynamics for HBM sockets? Just how should we think about your share at these memory customers? Ramy Langer: So thank you for the question. So I want to make it very clear. We have not lost any market share to competitors. We also estimate that we will be able to increase our market share this year. I talked in the prepared notes about our efforts in the R&D that yielded exceptional solutions and capabilities. And these capabilities will enable us to increase our market share by penetrating into more inspection and metrology steps. Shane Brett: Great. That's very encouraging to hear. And for my follow-up, so some OSATs have mentioned pretty monstrous CapEx numbers throughout this earnings period. Just can you talk about your business with these customers? And just how a broadening of advanced packaging beyond the leading foundries benefits Camtek? Ramy Langer: So definitely, we see what is called the CoWoS technology, moving to OSAT. Some of it, call it CoWoS, some of it call it CoWoS like technologies. All in all, I would say that the OSAT, this is our home ground. This is where we are very strong. We dominate this market. We have hundreds of machines in this area. It's about 50% of our business. So definitely, the move to these technologies are very important in the OSAT. This will definitely benefit Camtek. And I would say one more thing that, of course, the OSATs are very important to our business. But on the other side, we have a very strong position at all the big players. When we talk about the HBM, when we talk about the CoWoS, we talk about TSMC. All of these are our customers, and we are very -- and we have a very good market position, and we plan to continue and grow with them. Kenny Green: Our next question will be from Craig Ellis of B. Riley. Craig Ellis: I wanted to start stitching together a couple of earlier answers and implications for the year's growth. So it sounds like what you're saying, guys, with the real strong uptake you're getting across OSATs, IDMs and foundry for Hawk and Eagle that this year, there should be real strong IDM growth since that's where you've got your HBM exposure, good growth in OSAT and I suspect good growth in foundry with 2.5D. Is that a fair characterization of how we should look at growth across your different customer classes? Ramy Langer: I think it's an excellent view, and I totally agree with your comment. This is how we see the market. As you said, they are the big customers, the HBM, the foundries that definitely are going to be very dominant this year, and we expect growth there. But the OSATs, which is, give or take, 50% of our business are continuing to invest on one side in advanced packaging applications, but moreover, are starting to adapt the CoWoS of the AI technologies, and this is for real. I mean this is real. I mean, I think they are talking about it openly, and they are also talking about significant growth this year, and we have really -- in this respect, we already have POs on hand. We have in the backlog. And definitely, the focus is very positive. Craig Ellis: That's helpful. And then the follow-up is related to one of Jim's questions, but also tying in some further color on gross margin. So can you just identify, guys, if we were to see demand go from double-digits, low end, 10% towards something that was more WFE like? Do you feel like you have the materials, the production capacity, the shift flexibility to meet that degree of upside through the year? And then Moshe, are there any things we should be aware of on gross margin, if you were to be chasing demand that was near WFE like? And can you just clarify what we should expect with gross margin in the first quarter, given the decline in volume? Are we going to stay at 51% plus? Or do we go down to 50%? And then what about the OpEx contour through the year? Ramy Langer: Before you answer, so I just want to answer regarding the operational aspects. So we are ready to respond to any demand that will come from the market. So whether it will be very high teens or mid-teens or whatever the number will end up from the operational point of view, we are ready. Moshe Eisenberg: Yes. I mean we do have -- just to complete, we do have the capacity, we have the inventory and all the supply chain ready for the growth. So from an operational perspective, we are all aligned. In terms of gross margin, as I said, we do expect an improvement in the second half of the year. The first half of the year will still be around the same level between 50.5% to 51.5%. That's the current level of gross margin in the business. With respect to OpEx, we do expect to see some increase in the first half of the year as a result of R&D investments. We see a lot of opportunities ahead of us. I think we've made it very clear that we are expecting a strong second half. And as a result, we plan to invest in R&D in the first half of the year in order to capture these opportunities, and we will see some increase in operating expenses as a result of that. Kenny Green: Our next question will be from Edward Yang of Oppenheimer. Edward Yang: Ramy, you talked about maintaining market share and expanding it. Are you watching any specific time frames or decision points? Do you have any systems under qualification? Just wondering if there are any specific catalysts you have in mind. Ramy Langer: So in general, I cannot disclose exactly the time frame and the decision times. What I can tell you that there are several steps, different customers that we already confirmed and we're already shipping machines to those steps or will ship as we move into the year. And we are in a very good position at other places to capture additional steps and these are based on work that has been done already and being confirmed by the customer. And we are more going into the validation process. So definitely, we are very confident that not only we will maintain our market share, we will be able to increase it and go to additional steps in 2026 as the year progresses. Edward Yang: Got it. And just for my follow-up, you also mentioned you do -- you always do better than WFE. We've heard some diverging views on WFE growth for 2026. A couple of larger depth and edge players are pointing to above 20% growth. One of your process control peers are looking for something more like low double-digits growth. Just curious where you mean? Ramy Langer: I said before in one of the previous questions that from our point of view, it's too early to quantify the number. We will start with the year, and we'll see how things progress, and then we will meet every quarter. And I think we will be far more knowledgeable as we go ahead. But definitely, it's too early to quantify. Kenny Green: Our next question will be from Gus Richard of Northland. Auguste Richard: When I look at test and probe, those companies expect to be up sequentially in Q1. You're down sequentially in Q1. I know they're different applications. I know they're different things, but they tend to move together. And could you sort of help explain why there's this divergence in the current quarter? Ramy Langer: Gus, a slow start of 2026 is primarily driven by the timing of the orders of our customers. And big part of their capacity expansion and especially the big ones is planned for the second half. And this is the reason for the slow start. Auguste Richard: Okay. Sort of looking at KLA's results, they talked about their packaging-related revenue being up 70% in last year. And I'm wondering, are they -- and I don't believe your packaging revenue in advanced packaging was that strong. Are they addressing different markets? What's the disconnect between their growth rate and yours? Ramy Langer: So first of all, I don't know for which baseline they're counting. So I don't want to make a mistake here. But I suspect that we are not talking here apples to apples, but we are comparing here some different steps and some areas that we do not play in with. From our point of view and what we see in the segments and what we call, in our markets, in our applications and the customers that we serve everybody, we have not lost any market share. On the contrary, we expect to gain, and we expect even to increase our total available market. So from that point of view, we feel comfortable. I think we discussed in previous calls how we see the competition with KLA. We understand the strength of KLA. But definitely, we have a lot of advantages in the fact that we are well entrenched in the market that we're playing in. We have an inherent advantage by offering on our tools, the 3D metrology and the 2D inspection, which is very important to the advanced packaging. And I think in general, the unique combination of technology, scale and flexibility is a key reason why we are performing so well in this market, and I don't expect this to change. Kenny Green: Our next question will be from Michael Mani of Bank of America. Michael Mani: I wanted to ask on the chiplet business. So first off, and I know you don't really segment this out anymore, but just in general, for last year, how much of the growth, especially in AI came from the chiplet side of the house? And then as you look out to this year, especially as it pertains to your lead customer in the chiplet business, how do you feel about your share position there? I think you said you felt good about your position, but if you could just elaborate on that, like what applications are you potentially gaining share in, especially on the 2D side of the business? Could that -- is that part of the reason you're seeing more strength in the second half? Just any kind of clarity there would be great. Ramy Langer: So Michael -- so first of all, we did not -- in the past, and I cannot break down whether it's chiplets on HBM, we refer to the business as a high-performance computing, which is about 50% of the business. But of course, you know and I think it is well known, and I think TSMC made a note -- made a comment in one of the previous announcements that Camtek is a significant vendor to them. So it's not a secret. Yes, we are there. We have a share of the chiplet business. We are doing a few steps there. And this is where further on, obviously, I cannot comment on exactly which of the steps, but it's not only one step, it's multiple steps. I expect this business is a healthy business. And as I said in my comments before and also in the prepared notes, we did not lose any market share. We expect to gain market share. And this is the case also related to chiplets. We don't see it differently. And so we are very optimistic about, obviously, the HBM market, but the chiplet or the high-performance computing as a whole. Michael Mani: Great. And for my follow-up, I was hoping you could provide a finer point on your capacity. I know you talked about this in response to a previous question. But in the past, you've talked about, I think, up to $650 million in capacity potential from a revenue perspective. As you look out over the next couple of years, what is definitely a materially -- significantly stronger demand environment, it seems. Do you feel like that's still the right size of the footprint to address all that demand? And if you were in a position where you needed to add capacity, how quickly from a lead time perspective, would you be able to build that out? Or given your strong cash position, would you seek to acquire that from some other vendors? Ramy Langer: Yes. So Michael, let me answer your question. So first of all, at this stage, we don't have limitation on our current capacity. We've made some changes internally. We changed the process. We are -- as we go on and we are becoming far more efficient from year-to-year, we are doing things better and more efficiently. So we've increased the capacity that we have on hand today. I think it is well over $700 million in capacity. So I don't foresee any issues. In parallel, we started already to expand our capacity. I cannot give comments at this stage, but we will have additional capacity in Europe. I believe it will happen late '26, and we will start to be able to use this capacity. So all in all, we are in a good position from the capacity and the all, I would say, operational organization, it is well organized. The performance is very well. We have enough buffers in place in case that the business will be even better than we think. So from that point of view, I feel very comfortable. Kenny Green: Our next question will be from Vedvati Shrotre of Evercore. Vedvati Shrotre: So I kind of wanted to understand how far your visibility is going now. We all understand it's a strong demand environment. Your backlog is growing. You're seeing the orders come in. So do you have visibility going beyond like 4Q '26 now? Ramy Langer: Vedvati, so thank you for the question. So I alluded more in my discussion previously to '26. But I think we're starting to see also signs of '27. And I would say it's obviously not the backlog, but it's definitely customers are talking to us about shipping machines in the first and second quarter of '27. So yes, the industry is ramping up, and it's starting to think not just '26, '27. And so I would say I haven't gone into the numbers very thoroughly. But definitely, we are seeing signs of '27, people thinking about '27 and putting some numbers, some initial numbers. So it's a positive answer. Vedvati Shrotre: Understood. And for my follow-up, so I know this was asked a couple of times on the call back -- on the call, and so I've tried again. But the advanced packaging growth by some of the depth and edge players is in the 40% levels. And then if you listen to your bigger peer on process control, they think it's like high teens kind of level. So there's a big disparity on how the advanced packaging market would look. And since you guys, I think, have the highest exposure, like could you give us a sense of where that lands for you and what you're seeing? Ramy Langer: So I think the main applications today, when you talk about advanced packaging, I think the leading applications is Fan-Out. There is a lot of Fan-Out. And there are many variations on it. From high-resolution Fan-Out, regular Fan-Out. But definitely, this is a big market. And of course, what's called the regular bump inspection in the OSATs, everything today is advanced packaging. And the growth of this market, it's definitely double digits. How far in the double digits? It's -- I can't pull this number from my sleeve now. But -- and it's too soon to quantify how it will be in '26, but definitely, it's a good growth number. Kenny Green: So that will end the Q&A session. Before I hand over to Rafi for his closing statements, in the coming hours, we will upload the recording of the conference call to the IR section of Camtek's website at www.camtek.com. I'd also like to thank everybody for joining this call. And Ramy, please go ahead with the closing statements. Ramy Langer: I want to express my gratitude to all our investors for your ongoing interest and support in our business. Special thanks goes to our employees all over the world and management teams for their outstanding performance. I want to mention the Chinese New Year that's celebrated by many of our customers and many of our employees around the world. I would like to extend our best wishes for them and for a successful and prosperous year of the Fire Horse. I look forward to our next conversation in the upcoming quarter. Thank you, and goodbye.
Operator: Good morning, everyone, and welcome to the La-Z-Boy Fiscal 2026 Third Quarter Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Becks, Director of Investor Relations and Corporate Development at La-Z-Boy. Mark, the floor is yours. Mark Becks: Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2026 third quarter. Joining me on today's call are Melinda Whittington, La-Z-Boy Incorporated's Board Chair, President and Chief Executive Officer; and Taylor Luebke, SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for 1 year. And a telephone replay of the call will be available for 1 week beginning this afternoon. I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors, as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website and includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda. Melinda Whittington: Thanks, Mark. Good morning, everyone. Yesterday, following the close of market, we reported our strong January-ended third quarter results. These results are proof that we continue to strengthen our enterprise and increase the agility of our business. Highlights for our third quarter included total delivered sales of $542 million, up 4% versus prior year. In our Retail segment, both written and delivered sales increased 11% versus prior year. And we opened 4 new company-owned stores during the quarter, bringing us to 16 new company-owned stores in the last 12 months and 4 closed. In our Wholesale segment, delivered sales grew 1% versus prior year. And we made continued progress on our distribution and home delivery transformation project with the completion of our Western U.S. phase of the network. Our GAAP operating margin was 5.5% and adjusted operating margin was 6.1%, coming in toward the high end of our guidance range. And we again generated strong operating cash flow of $89 million for the quarter, increasing 57% versus last year's comparable period. Amid the ongoing challenging consumer environment, we continue to create our own momentum, led by retail expansion. As I noted, total written sales for our company-owned Retail segment increased 11% versus last year's third quarter, driven by new and acquired stores. Written same-store sales, which exclude the benefit of new and acquired stores, decreased 4% for the quarter. Continued challenging traffic, consistent with our industry, was partially offset by strong in-store execution, including higher conversion rates, average ticket and design sales. Within the quarter, same-store sales trends were strongest in January, turning positive versus a year ago until widespread adverse weather slowed traffic in late January and continuing into early February across much of the United States. While we don't believe these weather events will impact overall furniture demand, we do expect some timing effects carrying into our fourth quarter deliveries as consumers reengage on planned purchases. Separately, for Joybird, total written sales for our third quarter decreased 13% compared to a year ago as this consumer segment continues to be particularly volatile against the current macroeconomic backdrop. During the quarter, we also progressed our strategic initiatives. We successfully integrated our 15-store acquisition in the Southeast region of the United States. We formally announced the planned closure of our U.K. manufacturing facility, where production will cease by the end of the fiscal year. We completed the sale of our Kincaid upholstery business just after the close of our third quarter. And we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid, targeted to be complete by the fiscal year-end. Stepping back, I'd like to spend a few more minutes highlighting some of the structural improvements our team has achieved through these current initiatives and highlight the progress made as we advance our Century Vision strategy for our next 100 years. We are pleased to have successfully integrated our acquisition of the 15-store network in the Southeast region. This transaction was our largest single retail acquisition in the company's history, adding $80 million in annualized retail sales and $40 million net to the total enterprise. The seamless integration into our company-owned network reflects the collective efforts of many internal stakeholders, and the stores are performing well. Independent store acquisitions are an important part of our Century Vision strategy as they are immediately sales and profit accretive and provide ownership of a new market with potential white space opportunities. We will continue to pursue these types of acquisitions as they become available. Opening new La-Z-Boy stores is also a key lever to growing our Retail business and expanding our brand reach. In addition to completing our largest ever acquisition this quarter, we also are achieving the most significant period of new store expansion in our company's history. We opened 4 new company-owned stores in the quarter. And in the last 12 months, we opened 16 new stores, while closing 4. In total, we've added 29 net company-owned stores over the past year. Our total network of stores, including independently owned, has expanded to 374. And our current proportion of company-owned stores is now at an all-time high of 60% of the total network. We see opportunity to grow the La-Z-Boy store network to over 400 stores as we broaden our brand reach and delight and inspire even more consumers. We expect to open 16 new stores in total for this fiscal and continue at a pace of opening roughly 10 stores a year for the next several years. Momentum in our Wholesale segment also remained solid as we delivered our seventh consecutive quarter of sales growth in our core North American La-Z-Boy wholesale business, and we continue to grow our strategic compatible distribution with key partners like Slumberland and Rooms To Go. Wholesale customers value the strength of the La-Z-Boy brand, the enduring quality and the differentiated product functionality offered by our North American manufacturing capabilities. Our vertically integrated model with approximately 90% of upholstered products produced in the United States remains a key competitive advantage as we navigate the current challenging macroeconomic environment and has served as our foundation throughout our 99-year history. We're making meaningful progress on building an even more agile supply chain through our multiyear distribution and home delivery transformation project. During the third quarter, we completed the Western U.S. 1/3 of this project, serviced by our new Arizona centralized hub. And we recently broke ground on our new Dayton, Tennessee centralized hub, which will serve our Eastern region. This transformation will improve an already strong consumer experience, ensure faster speed of delivery and enable an expanded delivery reach. And in aggregate, we expect this project to deliver between 50 to 75 basis points of Wholesale margin improvement, up to 50 basis points to the entire enterprise once completed. As part of our strategic road map to expand brand reach, leveraging our iconic brand, we are creating integrated strategies for our retail and marketing teams. These strategies have enabled more cohesive and focused plans for our store network, improving execution and reducing redundancy. As a result, we are better positioned to capture consumer demand, improve responsiveness and navigate the volatile environment with greater discipline and agility. Our new brand identity continues to receive positive media attention. In December, La-Z-Boy was cited by Ad Age as one of the top 5 rebrands of 2025. The mention went on to say, La-Z-Boy's brand refresh felt like a full-bodied exhale, designed to make comfort feel as intentional as its famously cushy chairs. We plan to continue building off this success and expanding brand relevance with new and innovative ways to delight and inspire our consumers. Lastly, during our third quarter, we drove further progress in optimizing our portfolio and enabling focus on our core vertically integrated North American upholstery business. We formally announced the planned closure of our U.K. manufacturing facility, where we expect production will cease by the end of our fiscal '26. And we have solidified alternative sourcing for this business, leveraging our global supply chain network to ensure we are well positioned to grow with our new customer base. We also completed the sale of our Kincaid upholstery business just subsequent to our fiscal third quarter-end. We were pleased to transition this business in full to its new owners who are former employees of the company. And finally, we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid. Importantly, these changes will not impact our ability to offer casegoods as part of beautiful whole home solutions for consumers in our La-Z-Boy stores, Comfort Studios and branded spaces. In fact, these changes will enhance our offerings in the future, opening up broader sourcing and driving efficiency in the process. We expect these final casegoods initiatives to be substantially complete by our fiscal year-end in April. And now, let me turn the call over to Taylor to review the financial results in more detail. Taylor? Taylor Luebke: Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis. We believe the adjusted presentation better reflects underlying operating trends and performance of the business. Adjusted results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2026 third quarter sales increased 4% from prior year to $542 million as growth in our Retail and Wholesale business were partially offset by lower delivered volume in our Joybird business. Consolidated GAAP operating income was $30 million and adjusted operating income was $33 million. Consolidated GAAP operating margin was 5.5% and adjusted operating margin was 6.1%. The change was largely driven by investments in our distribution and home delivery transformation project. Diluted earnings per share totaled $0.52 on a GAAP basis, and adjusted diluted EPS was $0.61. As I move to the segment discussion, my comments from here will focus on our adjusted reporting unless specifically stated otherwise. Starting with the Retail segment. For the third quarter, delivered sales increased 11% to $252 million, driven by acquired and new stores. Retail adjusted operating margin was flat versus a year ago at 10.7% as accretion from acquisitions was offset by investment in new stores and fixed cost deleverage from lower delivered same-store sales. For our Wholesale segment, delivered sales increased 1% to $367 million versus last year, driven by modest growth across the majority of our businesses, including our core North America La-Z-Boy wholesale business. Adjusted operating margin for the Wholesale segment was 6% in the third quarter versus 6.5% last year, driven primarily by investments in our distribution and home delivery transformation project and unfavorable foreign exchange rates. For Joybird, reported in Corporate and Other, delivered sales were $36 million, down 3% on lower delivered sales volume. Joybird operating loss increased versus the prior year, primarily due to fixed cost deleverage on lower Joybird delivered sales. Moving on to our consolidated adjusted gross margin and SG&A performance for fiscal 2026 third quarter. Consolidated adjusted gross margin for the entire company increased 10 basis points versus the prior year third quarter. The increase in gross margin was primarily driven by the shift in consolidated mix towards our Retail segment, which has a higher gross margin rate than our Wholesale segment, partially offset by investments in our distribution and home delivery transformation project. Adjusted SG&A as a percent of sales for the quarter increased by 80 basis points compared with last year, also due to the shift in consolidated mix towards our Retail segment, which carries a higher fixed cost structure relative to Wholesale, as well as fixed cost deleverage on lower delivered same-store sales. Our effective tax rate on a GAAP basis for the third quarter was 31.3% versus 25.1% in the third quarter of fiscal 2025. The year-over-year increase was primarily due to nondeductible operating losses and onetime charges related to our supply chain optimization actions in our U.K. business. We expect our tax rate to normalize in fiscal 2027. Turning to liquidity. We ended the quarter with $306 million in cash and no externally funded debt. Our balance sheet remains strong, supported by the consistent cash generation of our operating model even as we absorbed a significant acquisition in the quarter. We generated a strong $89 million in cash from operating activities in the third quarter, increasing 57% versus last year's comparable period, with improved working capital and an increase in customer deposits. We invested $18 million in capital expenditures during the quarter, primarily related to investment in new La-Z-Boy stores, as well as remodels, manufacturing-related investments, and spending related to our distribution and home delivery transformation. We also completed our 15-store acquisition in the Southeast region at the beginning of the quarter for a total of $86 million. We continue to believe that the best use of our cash and the highest return on investment is prudently reinvesting back into the business. As such, we remain committed to disciplined investments in new stores, acquisitions, and our distribution and home delivery transformation project to profitably grow our core business. Regarding cash return to shareholders, year-to-date, we returned $55 million to shareholders through dividends and share repurchases, including $28 million paid in dividends and $27 million in share repurchases. Also, in the quarter, we resumed more normalized share buybacks of $14 million, which leaves 3 million shares available under our existing share repurchase authorization. We expect consistent share repurchases ongoing, assuming ordinary business and economic conditions. We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. Capital allocation in fiscal 2026 is tilted more towards the business through investments in the recent 15-store acquisition and our distribution and home delivery transformation project. Longer term, our capital allocation target remains consistent to reinvest 50% of operating cash flow back into the business and return 50% to shareholders in share repurchases and dividends. Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our fourth quarter. We expect fiscal fourth quarter sales to be in the range of $560 million to $580 million and adjusted operating margin to be in the range of 7.5% to 9%, reflecting a continued cautious view on the macroeconomic backdrop, as well as the short-term impact of recent adverse weather events. We expect to open 5 new company-owned stores in the fourth quarter, bringing us to 16 for our full fiscal year. We expect capital expenditures to be in the range of $80 million to $90 million. This includes investments for new stores and remodels, our distribution and home delivery transformation project, and continued manufacturing-related investments. And as a reminder, we expect the financial benefits of our strategic initiatives to have an annualized impact of approximately a $30 million net sales decrease and an adjusted operating margin improvement of 75 to 100 basis points to the entire enterprise. This represents the combined impacts of our 15-store acquisition, our casegoods exit, our planned closure of the U.K. plant and our management reorganization. We expect the benefit of all of these initiatives when they are substantially completed by the end of this fiscal year. And these impacts do not include the additional long-term margin improvement we expect from our distribution and home delivery transformation project. And note, at this time, we do not expect these strategic initiatives to have a material onetime gain or loss to the enterprise. Lastly, we expect our tax rate for the full year to be in the range of 27% to 29%. And with that, I will turn the call back to Melinda. Melinda Whittington: Thanks, Taylor. The furniture industry and broader macroeconomic environment continue to be challenging. What has not changed is our iconic brand and the ability to delight and inspire millions of consumers. As a testament to our enduring impact and cultural relevance, La-Z-Boy Incorporated has been recognized by Time Magazine as one of America's most iconic companies for 2026. This unsolicited award reflects the lasting connection generations of families have built with our beloved brand over our 99-year history. As we look ahead, we'll continue to honor our heritage of comfort, customization and quality, while evolving to succeed in any environment. We will continue to leverage our vertically integrated model with approximately 90% of upholstered products produced in the United States, create our own momentum and position ourselves to disproportionately benefit when the industry does rebound. This, combined with our mission of delivering the transformational power of comfort, will enable us to drive value for all stakeholders. I'd like to thank our dedicated employees for their continued commitment to bringing our beloved products into more homes. And I wish everyone the best in the year ahead. Now, I'll turn the call back to Mark. Mark Becks: Thank you, Melinda. We will begin the question-and-answer period now. Jenny, please review the instructions for getting into the queue to ask questions. Operator: [Operator Instructions] Our first question is coming from Bobby Griffin of Raymond James. Robert Griffin: I guess, Taylor or Melinda, I wanted to dive in kind of on some of the strategic kind of actions you guys have taken so far. And congrats on the speed of getting a lot of those underway. Taylor, can you maybe level set us that margin improvement that you're referencing, what base year should we use? Because when you look back in fiscal year '25, we were about a 7.6% EBIT margin. Then it starts to slide, given you start to do some of the distribution changes. So like level set us on where we should think about the improvement off of what base. And then, I got some follow-up questions on that. Taylor Luebke: Yes, Bobby. So when we announced these strategic initiatives, and you're right, we're really pleased with the progress we've made over a very short period of time with selling our upholstery business, as well as solidifying our plan for the U.K. supply. The 75 to 100 basis points that we put out there was based on, call it, the trailing 12 months of the enterprise results at the point of quarter 2. So you can think of that as the right basis on which we expect to deliver that. Robert Griffin: Okay. And is there any -- like when we think about completing that by the end of FY '26, and then we can do the simple math on adding that to the trailing 12, is there any offsets that would keep all that savings from flowing through? Like is there an investment piece that you would need to use for advertising or anything like that? Or is that really going to be dropped down to, call it, the bottom line? Taylor Luebke: Bobby, we put it out there because we expect to realize it, again, against a pretty -- a generally consistent kind of macro consumer backdrop is how we look ahead. So our intent is it flows through, all else being equal. Robert Griffin: Very good. Okay. That's helpful. And then Melinda, I want to maybe dive in on the comments you made about developing more agile business post some of these changes. What do you think that gives La-Z-Boy as you think about kind of navigating the next 3 to 5 years in today's kind of consumer environment? Is it quicker product development? You can move faster on stores? Like just anything there to kind of help us think about how that could change the business and how you go to market? Melinda Whittington: Yes. Thanks for the question, Bobby. I guess, at a couple of levels -- I'll start with some of like the transformation work on our supply chain. 99 years of building product in the United States for the North American consumer, we're quite good at it. But the consumer preferences change, the -- where it makes the most sense to position your supply chain, the way that people want to be compensated and are motivated, those are all things that we constantly look at and have evolved over time. And so, I think the distribution transformation project is just one of those examples where we had a fairly organic network to support our stores. But as the stores footprint has changed so dramatically, we had a huge opportunity to just rethink that process. And in the end, not only is that going to deliver bottom line savings to the company and to the shareholder, but it's going to be an even more enhanced consumer experience. Broader delivery ranges is one example, and a better employee experience as well, because it will be efficient. On the consumer side, as I think about our store network and then our in-home consumer insights, we are constantly evaluating how to have the right product, the right messaging and the right shopping experience for the consumer. All things must begin with the consumer. And our broader retail ownership and omnichannel experience give us more control of that. So it's staying in touch with kind of where the puck is heading, making sure we're predicting that and then being responsive to that. So I guess, I'd say, kind of building the machine to constantly evolve over the future. Operator: Our next question is coming from Taylor Zick of KeyBanc Capital. Taylor Zick: Melinda, maybe just to start here, I kind of wanted to ask about the cadence of trends during the quarter. You provided some good commentary already, but just kind of knowing that there was improved trends in the prior year post election and then you noted some January impacts as well. But any color you can kind of provide on maybe what the underlying trends were in your third quarter versus your second quarter? Melinda Whittington: Yes. I would start by saying the consumer remains choppy, right? So we've talked about that for a while that the consumers are broadly -- we have a bifurcated consumer that we have some that are really -- it's aspirational to step into our brand and invest in quality, and so we sharpened price points. At the same time, we still have a very strong consumer interested in whole room solutions and upgrades and really investing in their home with us. So with that said, if I look back over Q3, to your point, over 2 years, Q3 was actually positive. And looking across the 3 months in our quarter, January was our strongest, actually turned positive on a same-store sales basis until -- and then was impacted by weather right here at the very end. I'll step into sort of the President's Day that began our fourth quarter. We're actually quite pleased with how President's Day came out. Our results -- our trends were positive versus a year ago. So I think that speaks well. But at the same time, we continue to manage prudently, just knowing that -- and we believe the consumer is still pinched and probably will be for a while, and ultimately, the product is discretionary. So we feel good about the momentum we're making, but we continue to be prudent in how we go forward. Taylor Zick: Great. That's super helpful. And you answered my second question already. Maybe, Taylor, I can squeeze one in for you. Maybe on the 4Q guidance here, your 7.5% to 9% operating margin puts margins down a little over 100 basis points despite a higher mix of retail and some of your strategic actions within the portfolio. Can you kind of just help us understand the puts and takes there? I know some of the pressures from the short-term headwinds from the distribution and home delivery redesign coming through. But is there anything else we should keep in mind for fourth quarter? Taylor Luebke: Taylor, thanks for the question. No, actually, we still feel really good about the growth potential, as well as margin potential, of the business. And as Melinda had mentioned in prepared remarks and otherwise, we continue to manage through the near-term challenges and the choppy consumer, but also build for the future with our retail expansion, our distribution projects, as well as our, call it, strategic initiatives. Overall, on margin, we've had good momentum on our Wholesale. Retail continues to hold at a strong double digit, which incredibly pleased about. There is just the near-term headwinds of traffic continues to be challenged, which adds deleveraging impacts on our larger fixed cost basis. So we continue to hone our operations and manage in the near term, but also deliver some of these bigger transformative things for the long term and deliver margin improvements ongoing behind the likes of the strategic initiatives we mentioned to Bobby [indiscernible], the 75 to 100 basis points, as we enter into our fiscal '27, as well as the 50 basis points to the enterprise, which is the longer-term benefit of our distribution and home transformation project. Operator: [Operator Instructions] Our next question is coming from Anthony Lebiedzinski of Sidoti & Company. Anthony Lebiedzinski: So Melinda and Taylor, you both mentioned that the consumer environment is choppy, certainly nothing terribly new there. But as we look at the guidance for 4Q, can you perhaps try to separate how much of the guidance is tied to weather issues versus the macro environment? Melinda Whittington: Anthony, I think how I'd broadly look at it is, we don't -- we're not expecting any big change in sort of the consumer environment in Q4 relative to what we've seen throughout most of this fiscal year. And the only piece of a little bit of conservatism in there versus just a continued trend on the consumer is just this weather impact that hit sort of right at the end of our Q3 and into our Q4, and you saw that in -- impacts in the written. And so, by the time that consumer reengages -- again, we saw some of that with strong President's Day. But by the time that consumer reengages both in our stores and then with our wholesale customers, and that turns into orders and restocks and deliveries, I think that puts a little bit more pressure on Q4 than we otherwise would have. Taylor Luebke: Net of it, if I could just chime in, Anthony, we don't believe we've lost -- us or the industry lost furniture sales other than it's a timing impact on -- some may phase out into quarter 1, based on when that consumer decides to reengage in their shopping journey. We're ready to meet demand and delight and inspire them when they come in our store. Anthony Lebiedzinski: Got it. Thanks for that great color. So, on the Wholesale side, you guys highlighted Slumberland and Rooms To Go. As you look forward here, I mean, do you see further opportunities to expand your brand reach on the Wholesale side? Would love to get your thoughts on that, and how you're thinking about the opportunities there? Melinda Whittington: Yes. Strategic partnerships are a very important part of our business and our growth plan going forward as well. While we certainly disproportionately focus on our own retail because we can own that entire consumer experience and obviously own more of the financial benefits as well, we also recognize that strategic partners are a way of reaching consumers that we otherwise are never going to reach in a very fragmented market. We happened to call out Slumberland and Rooms To Go just because they are great examples of -- Slumberland, we've done business with for decades and continue to partner and grow with them in strategic ways that are good for our brand and compatible distribution across multiple outlets. And similarly, Rooms To Go is a vibrant growing operation that reaches a lot of consumers, particularly in the Southeast, and is a newer partner that we've added just over the last couple of years. If I look at -- in even just, call it, the last 12 months, we have continued to add some big strategic partners. I think we've called out Farmers down in the Southeast, which reaches a consumer that's not serviced today by our Furniture Galleries, and that was -- these are hundreds of store kind of networks. We opened up Living Spaces, which is a very sophisticated retailer out West. So we have seen those opportunities. And so, I think there are still opportunity. That said, I think our bigger growth potential in the next several years is to continue expanding with those strategic partners as opposed to adding a ton of strategic partners. It's important to us to work with folks that are really going to appreciate the brand and not create too much conflict out there that just doesn't end up making sense. Instead, we want to make sure we're reaching consumers where they want to shop and continuing to expand our brand. Anthony Lebiedzinski: That's very helpful. And my last question is with regards to Joybird. So the sales there have continued to trend below the rest of the business. How are you guys thinking about Joybird, not just for the next couple of quarters, but maybe longer term? Any updated thoughts on Joybird that you may have? Melinda Whittington: Yes. Joybird is tough. We really -- we've done the work to believe in it. It resonates with the consumer. It fits well into our portfolio as a -- and our aspiration to be a vertically integrated branded retailer. It's a good strategic green shoot. While it's small, it's mighty. But we are continuing to see a particularly volatile consumer there. That consumer is younger, more urban-focused and just disproportionately impacted by some of the macroeconomic challenges. So we continue to take actions towards getting that business rightsized to grow profitably, and we'll continue to work through and monitor that. Operator: And we have another question in from Bobby Griffin of Raymond James. Robert Griffin: Melinda, I just wanted to maybe circle back on the U.K. You called out you have an alternate source of product there lined up. Just maybe, like, now with kind of the changes there, do you still look at the opportunity there the same that was historically as when it was the prior kind of a pretty big single customer for you guys? And I understand there's been some retail transition there, but the new retail partner is actually larger. So how does that setup look going forward? And what is ultimately the potential there? Could that get back to the same level as before and with maybe even better margins, given the new setup or structure? Melinda Whittington: Yes. Thanks for that question, Bobby. You're right. It's been, gosh, a little over 2 years ago now, where [ FCS ], which was a publicly traded company and our biggest customer globally, which is kind of crazy given the relative size of our international business, but was actually bought out by a private company that chose not to work with brands anymore. And so, we pretty quickly pivoted. We had long-time discussions with DFS, which as you astutely noted, is 3x, 4x bigger than FCS and probably a better fit for our brand and our customer base. But between FCS and DFS, they'd always required exclusivity. So we are well underway with DFS. They continue to be super pleased. We've had some introductions where they've called out that we've been one of their fastest-growing, if not the fastest-growing introduction they've had. But at the same time, it just -- it's taking a while. It's taking longer, frankly, than we probably forecasted to just get up to the kind of run rates of where we were with FCS, particularly given that U.K. economy and the macroeconomic environment is also quite challenged. So we are super pleased with DFS. They are pleased with us. We are continuing to grow that business, and we want to serve that consumer. That said, at the kind of volume levels that we're seeing through this multiyear transition, it just didn't make sense to have a fully dedicated plant there in the U.K. So, as we leverage our overall global network, we think we're getting that rightsized. We think we get that cost structure right as well, so it makes sense for us, it makes sense for DFS and it makes sense for the consumer to grow that business. And we actually think, to your point, it will accelerate it -- accelerate that growth. And then, historically, our U.K. business margins were fairly consistent with other wholesale that we would see like in our core North America, and we anticipate being able to get back to those kind of ranges over time. Robert Griffin: Very good. And then, does the new setup from the manufacturing side of things or the sourcing side, does that allow other international type growth opportunities any different than before? Just anything there? Melinda Whittington: No change. Yes, no change. We still have -- yes, we still have the opportunity there. Again, international expansion, less of a focus area for us right now just because that core North America business has so much opportunity. But no, we're not losing any optionality more broadly. Operator: We have now reached the end of our question-and-answer session. I will now hand back over to Mark for any closing comments. Mark Becks: Thanks, Jenny. We'll be in our offices for the rest of the day to handle any follow-up calls. Thanks, and have a great day. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.
Operator: Good day, and thank you for standing by. Welcome to the Constellium Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jason Hershiser, Director of Investor Relations at Constellium. Jason Hershiser: Thank you, Josh. I would like to welcome everyone to our fourth quarter and full year 2025 earnings call. On the call today, we have our Chief Executive Officer, Ingrid Joerg; and our Chief Financial Officer, Jack Guo. After the presentation, we will have a Q&A session. A copy of the slide presentation for today's call is available on our website at constellium.com, and today's call is being recorded. Before we begin, I'd like to encourage everyone to visit the company's website and take a look at our recent filings. Today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the company's anticipated financial and operating performance, future events and expectations and may involve known and unknown risks and uncertainties. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the factors presented under the heading Risk Factors in our annual report on Form 10-K. All information in this presentation is as of the date of the presentation. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. In addition, today's presentation includes information regarding certain non-GAAP financial measures. Please see the reconciliations of non-GAAP financial measures attached in today's slide presentation, which supplement our GAAP disclosures. And with that, I would now like to hand the call over to Ingrid. Ingrid Joerg: Thank you, Jason. Good morning, good afternoon, everyone, and thank you for your interest in Constellium. Let's begin on Slide #5. I want to start with safety, our #1 priority. In 2025, we achieved a recordable case rate of 1.9, an improvement compared to 2024 and much better than the industry average. While we did not meet our ambitious target of 1.5, this progress reinforces our commitment to safety and reminds us that reaching our goal will require continued strong efforts across the organization. Our safety journey is never complete, and we all need to remain committed to this critical priority every day. Now let's turn to Slide #6 and discuss the highlights from our fourth quarter performance. Shipments were 365,000 tons were up 11% compared to the fourth quarter of 2024 due to higher shipments in each of our operating segments. Revenue of $2.2 billion increased 28% compared to the fourth quarter of 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Remember, while our revenues are affected by changes in metal prices, we operate a pass-through business model, which minimizes our exposure to metal price risk. Our net income of $113 million in the quarter compares to a net loss of $47 million in the fourth quarter last year. The main driver of the increase was higher gross profit in the quarter versus last year. Compared to the fourth quarter last year, adjusted EBITDA increased 124% to $280 million in the fourth quarter this year. So this includes a positive noncash impact from metal price lag of $67 million. If we exclude the impact of price lag, which, as you know, is the way we view the real economic performance of the business, we achieved an adjusted EBITDA of $213 million in the quarter. This is a new fourth quarter record for us and is up 113% versus the $100 million in the fourth quarter last year. Our free cash flow in the quarter was strong at $110 million. And during the quarter, we returned $40 million to shareholders through the repurchase of 2.4 million shares. Now please turn to Slide #7 for our full year 2025 highlights. For the full year, shipments were 1.5 million tons were up 4% compared to 2024. Revenue of $8.4 billion increased 15% compared to 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Our net income of $275 million compares to a net income of $60 million in 2024. The main driver of the increase was higher gross profit versus the prior year. Adjusted EBITDA increased 36% to $846 million in 2025, though this includes a positive noncash impact from metal price lag of $126 million. Again, if we exclude the impact of metal price lag, the real economic performance of the business reflects adjusted EBITDA of $720 million for the year compared to $575 million we achieved in 2024 and represents our second best year ever. Moving now to free cash flow. Our free cash flow for the year was $178 million in 2025. During the year, we returned $115 million to shareholders through the repurchase of 8.9 million shares. We reduced our leverage by the end of 2025 to 2.5x, which is at the upper end of our target range. Constellium achieved strong results in 2025 that were ahead of our own expectations coming into the year and despite the uncertain macroeconomic and end market environment. I want to thank each of our 11,500 employees for their commitment and relentless focus on safety and serving our customers. We delivered strong execution and demonstrated our ability to control costs throughout the year in 2025, and we believe we are well positioned heading into 2026 to capitalize on market opportunities as they arise. With that, I will now hand the call over to Jack for further details on the financial performance. Jack? Jack Guo: Thank you, Ingrid, and thank you, everyone, for joining the call today. Please turn now to Slide 9, and let's discuss our A&T segment performance. Adjusted EBITDA of $83 million increased 43% compared to the fourth quarter last year. Volume was a tailwind of $31 million due to higher TID shipments. TID shipments were up 41% versus last year. First, as we continue to see increased demand from onshoring in the U.S. And secondly, we also benefited from higher shipments in Valais following recovery from the flood last year. Aerospace shipments were stable in the quarter versus last year as commercial OEMs continue to work through excess aluminum inventory in the supply chain. Demand in space and military aircraft remained generally healthy. Price and mix was a headwind of $28 million due to unfavorable mix in the quarter, partially offset by improved contractual and spot pricing in Aerospace and TID. Costs were a tailwind of $18 million, primarily as a result of lower operating costs. FX and other was also a tailwind of $4 million in the quarter due to the weaker U.S. dollar. For the full year 2025, A&T generated adjusted EBITDA of $339 million, an increase of 16% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except volume was a headwind of $1 million for the full year. Now turn to Slide 10, and let's focus on our PARP segment performance. Adjusted EBITDA of $136 million increased 143% compared to the fourth quarter last year and is a new quarterly record for PARP. Volume was a tailwind of $19 million in the quarter. Packaging shipments increased 15% in the quarter versus last year as demand remained healthy in both North America and Europe. In North America, we also benefited at Muscle Shoals from continued improvement of operational performance in the quarter. Automotive shipments were relatively stable in the quarter overall, though we did benefit in both regions from the current supply shortages in North America of aluminum automotive body sheet. Price and mix was a tailwind of $15 million, mainly as a result of improved pricing and favorable mix in the quarter. Costs were a tailwind of $40 million, primarily as a result of favorable metal costs given improved scrap spreads and higher metal pricing environment in North America and increased consumption of scrap given the Muscle Shoals improvement, which is partially offset by higher operating costs. FX and other was a tailwind of $6 million in the quarter. For the full year 2025, PARP generated adjusted EBITDA of $353 million, an increase of 46% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, though we benefited more in the fourth quarter from favorable metal costs compared to the full year. Now turn to Slide 11, and let's focus on the AS&I segment. Adjusted EBITDA of $5 million increased by $1 million compared to the fourth quarter of last year. Volume was a $4 million tailwind as a result of higher shipments in industry-touted products, partially offset by lower shipments in automotive. Industry shipments were up 33% in the quarter versus last year as we had higher shipments in Valais following recovery from the flood last year. The industrial markets in Europe appear to have bottomed, although they remain at depressed levels. Automotive shipments were down 10% in the quarter with weakness in both North America and Europe. Even though the broad automotive market in North America are relatively stable, our automotive structures business was negatively affected by the current supply shortages of aluminum automotive body sheet and its impact on production of certain platforms in the region, which automotive structures business supply to. Price and mix was a $6 million headwind in the quarter. Costs were a tailwind of $1 million, primarily due to lower operating costs, partially offset by the impact of tariffs. FX and other was a tailwind of $2 million in the quarter. For the full year 2025, AS&I generated adjusted EBITDA of $72 million, a decrease of 3% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except that volume was stable for the full year. And in the third quarter, we received net customer compensation for the underperformance of an automotive program. It is not on the slide here, but our holdings and corporate expense for the full year 2025 was $44 million, up $11 million compared to the prior year. The increase is primarily due to higher labor costs and costs associated with corporate transformation projects. We currently expect holdings and corporate expense to run at approximately $50 million in 2026. Now please turn to Slide 12. It is not on the slide here, but I wanted to summarize the current cost environment we're facing. As you know, we operate a pass-through business model, so we're not materially exposed to changes in the market price of primary aluminum, our largest cost input. On other metal costs, following the U.S. tariff announcements in 2025, market aluminum prices in the U.S., which includes the LME aluminum price plus the Midwest premium have risen sharply to historical levels. Spot scrap spreads for aluminum, mainly used beverage cans or UBCs have also improved from historically tight levels experienced in the second half of 2024 and into 2025. Both of these dynamics unfolded as we moved through the year in 2025. Given that a portion of our scrap purchases were negotiated previously, we did not benefit much from this dynamic in 2025 until the fourth quarter and the favorable impact was augmented through strong performance at Muscle Shoals in the quarter. As we look at 2026, we expect to benefit from these trends, especially in the first half. Moving on to inflation. Inflationary pressures continue today across operating cost categories, including labor, energy, maintenance and supplies, albeit at more normal levels. Regarding tariffs, we have made some progress on pass-throughs and other actions to mitigate a portion of our gross tariff exposure, and we believe at this stage, our direct tariff exposure remains manageable and the current tariff and trade policies are net positive for us. In terms of the overall cost management, we have demonstrated strong cost performance in the past, and we're confident in our ability to maintain a right-sized cost structure in any environment. On that front, we're pleased today to announce our next group-wide excellence program, which we're calling Vision 2028. This program will target both operational efficiencies and cost reduction across our businesses and is one of the building blocks in our road map to our 2028 targets. We look forward to updating you on our progress going forward. Now let's turn to Slide 13 and discuss our free cash flow. We generated $178 million of free cash flow in 2025, well ahead of a very challenged 2024. The increase in free cash flow in 2025 was primarily a result of higher segment adjusted EBITDA and lower capital expenditures, partially offset by higher cash interest. Looking at 2026, we expect to generate free cash flow in excess of $200 million for the full year. We expect CapEx to be approximately $115 million, which includes approximately $100 million of return-seeking CapEx, primarily related to key aerospace and recycling and casting projects we announced previously at Issoire, Muscle Shoals and Ravenswood. We expect cash interest of approximately $125 million and cash taxes of approximately $70 million, and we expect working capital and other to be a use of cash for the full year. As Ingrid mentioned previously, we continued our share buyback activities in the quarter. During the quarter, we repurchased 2.4 million shares for $40 million, bringing our 2025 total to 8.9 million shares for $115 million. We have approximately $106 million remaining on our existing share repurchase program, which we intend to complete by using our free cash flow generated this year. Now let's turn to Slide 14 and discuss our balance sheet and liquidity position. At the end of the fourth quarter, our net debt of $1.8 billion was up approximately $50 million compared to the end of 2024, with the largest driver being the translation impact from the weaker U.S. dollar at the end of the year. We reduced our leverage to 2.5x at the end of 2025, which is at the upper end of our target range. We expect leverage to trend lower in 2026 and to maintain our target leverage range of 1.5 to 2.5x over time. As you can see in our debt summary, we have no bond maturities until 2028. And as of the end of 2025, we had no outstanding borrowings under the Pan-U.S. ABL facility. Our liquidity increased by around $140 million from the end of 2024 and remains very strong at $866 million as of the end of 2025. With that, I'll now hand the call over to Ingrid. Ingrid Joerg: Thank you, Jack. Let's turn to Slide 16 and discuss our current end market outlook. The majority of our portfolio today is serving end markets benefiting from durable and attractive secular growth trends in which aluminum, a light and infinitely recyclable material plays a critical role. Turning first to the aerospace market. Commercial aircraft backlogs are at record levels today and continue to grow. Major aerospace OEMs remain focused on increasing build rates for both narrow-body and wide-body aircraft as evidenced by higher plane deliveries year-over-year and rising delivery ambitions in the near term. Although supply chain challenges have continued to slow deliveries below what OEMs were expecting for several years in a row now, demand is steady for the most part and aluminum destocking in the supply chain appears to be easing. Demand for high value-add products, which is one of our core focus areas remains strong. We remain confident that the long-term fundamentals driving commercial aerospace demand remain intact, including growing passenger traffic and greater demand for new, more fuel-efficient aircraft. In addition, demand remains stable in the business and regional jet market, whereas demand for space and military aircraft is strengthening. We believe we are a leading provider of proprietary aluminum solutions for those customers in the space and military aviation markets today. As you know, we are investing in additional capacities and capabilities such as our third Airware casthouse in Issoire, which we expect to start up by the end of this year to further strengthen our position in the future. Looking across our entire commercial and military aviation and space businesses, we believe our product portfolio is unmatched in the industry, and we have industry-leading R&D capabilities for aluminum aerospace solutions. Given the visibility over the next several years, we are raising our adjusted EBITDA per ton target for our A&T business to $1,300, which is up from $1,100 that we provided last year. Turning now to packaging. Demand remains healthy in both North America and Europe. The long-term outlook for packaging continues to be favorable as evidenced by the growing consumer preference for the sustainable aluminum beverage can, capacity growth plans from the can makers in both regions and the greenfield investments ongoing here in the U.S. We continue to see aluminum gain share against other substrates in the beverage market and the majority of new beverage products are launched in aluminum cans today due to its sustainable attributes. Aluminum cans are highly recyclable, and we are well positioned to capitalize on the benefits from recycling packaging materials at our facilities in Muscle Shoals and Neuf-Brisach. Packaging markets are relatively stable and recession resilient as we have seen many times in the past. Longer term, we continue to expect packaging markets to grow low to mid-single digits in both North America and Europe, providing a strong baseload for our operations in both regions. Now let's turn to automotive, which continues to be a bit of a different story in North America versus Europe. In North America, demand is relatively stable, though the tariff environment is creating some uncertainties. Last year, one of our competitors' U.S.-based facilities was impacted by fire, a very unfortunate event and which has created an interruption in the aluminum rolled product supply chain in North America. The entire industry continues to mobilize to ensure we limit the impact on our customers. In the fourth quarter, we started to benefit on the rolled product side as we were able to help our customers during this outage. On the automotive structures side, we were negatively impacted as some OEMs were forced to reduce production on certain platforms impacted by the disruption on the rolled product side. The overall impact in 2025 was a net positive on our results, which we expect to continue into the first half of 2026. Automotive demand in Europe remains weak, particularly in the premium vehicle segment where we have greater exposure. European markets are seeing increased Chinese competition and have lowered their battery electric vehicle ambitions. Automotive production in Europe is also feeling the impact of the current Section 232 auto tariffs given the number of vehicles Europe exports to the U.S. Longer term, we believe electric and hybrid vehicles will continue to grow, but at a lower rate than previously expected. Secular trends such as lightweighting, fuel efficiency and safety will continue to drive the demand for aluminum products. As a result, we remain positive on this market over the longer term in both regions despite the weakness we are seeing today. As you can see on the page, these 3 core end markets represent over 80% of our last 12 months revenue. Turning lastly to other specialties. These markets are typically dependent upon the health of the industrial economies in each region, including drivers like the interest rate environment, industrial production levels and consumer spending patterns. Industrial market conditions in North America and Europe became more stable in the second half of 2025, and we believe the markets, particularly in Europe, have bottomed after 3 years of market downturn. Nevertheless, we expect the specialties markets in Europe to remain relatively weak in the near term. We do believe TID markets in North America provide us with some opportunities today given the current tariffs make imports less competitive compared to domestic production. We also believe there are some opportunities in land-based defense and semiconductor markets given current market dynamics. In most industrial markets, we are focused on niche high value-added applications. To conclude on the end markets, we like the fundamentals in each of the markets we serve, and we strongly believe that the diversification of our end markets is an asset for the company in any environment. Turning lastly now to Slide 17. We detail our key messages and financial guidance. Our team delivered strong execution and results in 2025 that were well ahead of our expectations coming into the year. Excluding metal price lag, our adjusted EBITDA in 2025 was our second best year ever. We returned $115 million to shareholders in the year with the repurchase of 8.9 million shares, and we reduced our leverage to 2.5x by year-end. We remain focused on strong cost control, free cash flow generation and commercial and capital discipline. Based on our current outlook, for 2026, we are targeting adjusted EBITDA, excluding the noncash impact of metal price lag in the range of $780 million to $820 million and free cash flow in excess of $200 million. Our guidance assumes the recent demand trends in our end markets that I described earlier will continue into at least the early part of 2026 and the overall macroeconomic environment to remain relatively stable. Looking into the future, we also want to reiterate our targets of adjusted EBITDA, excluding the noncash impact of metal price lag of $900 million and free cash flow of $300 million by 2028. To conclude, we are extremely well positioned for the long-term success and remain focused on executing our strategy and shareholder value creation. With that, operator, we will now open the Q&A session. Operator: [Operator Instructions] And our first question comes from Katja Jancic with BMO Capital Markets. Katja Jancic: Maybe starting on the '26 guide. Can you let us know how much of a benefit for scrap spreads is embedded in this guide? Jack Guo: Katja, so I think it's -- thank you for the question. Regarding the scrap benefits for 2026, and here, I'm going to go on for a little bit. Obviously, it's -- we believe it's a tailwind for us in 2026. Our expectation is given our scrap consumption needs are fully contracted in the first quarter, we should see similar type of benefits as we've seen in the fourth quarter of 2025. And if you were to kind of look at the bridge for Q4 2025 for PARP business unit, you'll see that -- and we called this out, right, the metal benefits in the system, so it includes the European plants as well as Muscle Shoals more than offset a little bit of higher operating costs, if you will. So the net impact is $40 million, which gives you an idea on the amount of benefits we had in the fourth quarter of 2025, and we believe that should continue to carry into at least the first quarter of 2026. Now, obviously, there is quite a bit of interest on this topic. So I think it is -- we think it's important to have some context. Number one, as we mentioned and discussed previously, the recycling economics is quite complex. There are really a lot of elements at work. Here, we're talking about the market, the aluminum price levels. We're talking about scrap spreads. We're talking about scrap consumption levels, productivity, melt loss type of scrap we procure and it's not just UVCs. We also consume other types of scrap. And even within UVCs, you have different grades. So it gets really, really complicated. And if you just -- even if you just take 3 of the many elements there, it becomes a 3-dimensional matrix. So it's very complicated as they can work in sync or they can work against one another. I think another important point to understand is recycling economics have averaged out over time. And that was the case when markets were much more stable and call it, the pre-2024 time periods where we have mentioned previously that the annual swings could vary between sort of the $20 million to $30 million range. But they have averaged out over time. And that is also the case in times which are more volatile like between 2024 to today. And if you just rewind a little bit, in '24, we saw a sharp contraction in scrap spreads, and we had challenges at Muscle Shoals. So we experienced actually $15 million to $20 million worth of quarterly headwind, if you will. And then you kind of multiply that by 4, you'll get the full year headwind. So it's quite substantial. And then we saw a similar type of headwind in the first half of 2025, which was more pronounced in the first quarter to a lesser extent in the second quarter as spot spreads tightened, but Muscle Shoals was doing better and the Midwest saw a sharp rise -- sharp increase due to the tariffs. But overall, if you look at '24 to the first half of 2025, that was an extremely challenging 18 months for us from a metal profit perspective. Now Q3 2025 was stable. And then in the fourth quarter, as I mentioned, we benefited from favorable environment and quite strong performance at Muscle Shoals, which have allowed us to recoup the losses we had in the first half of 2025, plus a bit more. So now looking at 2026, I've already covered the first quarter. And looking at the future quarters, we do have some open volumes, and we're working very hard to lock in those additional open volumes beyond the first quarter. But the incremental benefits based on the current expectation is that they should gradually taper off as we move through the year. But overall, we should -- our expectation is that we should be able to recoup the losses we had from 2024. So that's a long answer, but it gives you a lot of kind of color around the scrap topic. And I think the takeaway is, one, it's a very complicated topic. Number two, it does average out over time. And number three, recycling, it requires a lot of investments, which we have made. It requires a lot of know-how. We've been operating it for decades. It is one of the cylinders in our engine as we mentioned previously. And when the market conditions are more favorable like it is today, you can count on us to make the best out of the opportunity. Katja Jancic: Okay. And I understand that it's complicated. But let's say if these scraps stay at the current level. And then looking more to your '28 target of $900 million, it seems that, that target might be conservative. Can you just remind us how we get there? Or what are some of the moving parts there? Ingrid Joerg: Katja, thank you for this follow-up question. I'll let Jack come in later. But maybe with respect to 2028, I think when we talked the first time a year ago about our bridge, we said we were going to take more conservative assumptions on the metal side. So what you are seeing today is that we are ahead due to metal benefits versus our 2028 target. But obviously, this is a very dynamic market environment and things can change very, very quickly. So Midwest premium can change very quickly and the percentages of spreads can change very quickly, which is why we have taken a conservative assumption in the first place. We don't know if the current situation that we experienced in 2026 are going to last and for how long they are going to last, which is why we have preferred to remain at a more prudent stance and assumption in our 2028 targets. Operator: Our next question comes from Bill Peterson with JPMorgan. William Peterson: Maybe outside of the scrap spread, I'm trying to get a sense for some other factors within the 2026 guidance. For example, what is your latest thoughts on the aerospace recovery? How much can be attributed to Vision 2028? Any sort of assumptions related to one of the peers in the space with their rolling mill ramping for the automotive space? Trying to get a sense for some other puts and takes within the full year guidance. Ingrid Joerg: Thank you very much for the question, Bill. I start and let Jack complete. Let me start on the market side, maybe. I think we believe that packaging is going to remain a good driver of growth for us going into next year. We see both regions, U.S. and Europe with solid performance. And we have been having quite a good turnaround in our Muscle Shoals operations. And so we have been growing on the packaging side, and we expect to continue to grow. On the automotive side, I think we have a very mixed picture between the U.S. and Europe. The U.S. seems to be rather stable. But remember, we do -- we only have one continuous annealing line in the U.S. So our capacity on the rolled product side is limited to this one line. We have seen nice benefits in Q4 from this unfortunate event that happened in the U.S. supply chain. And we've also had benefits in Europe, which we expect to last until the first half of 2026. As you know, the European automotive market has remained weak, and we have not seen any change. It seems that the market has bottomed out, but it's very hard to predict at this point in time. On the aerospace side, we see the business as steady. We see quite a good and strong mix on the aerospace products today in 2026. We have a little bit more visibility today than we had during our last call on '26 and maybe also 2027. We feel that military jets and space is going to continue to grow and be positive for us. Just as a reminder, we are also going to get our new Airware casthouse that will ramp up towards the end of this year. So most of the benefit you should expect coming in -- starting to come in 2027 and not this year, but we are fully on track with the expansion of our Airware capacities and capabilities. I think on the more negative side is maybe that industrial markets and specialty markets in Europe remain weak. We also feel they have bottomed out, but we do not see a recovery coming in Europe as of yet. So I think there's a good mixture of positives and also some uncertainties in the market that we see for 2026. On the recycling side, we continue to expand our recycling with the investments we've made in the past and the strong operating performance that we also had in Q4. So it was not just because of scrap spreads, but also strong operating performance, and we expect that to continue in 2026. As Jack already explained, the second half scrap spreads may be less favorable. So this is something that we will update as we go along. Important also to note that inflationary pressures are continuing. That's why we are very focused on cost control and controlling what we can control in this fluid environment, market environment that we're experiencing. And with our Vision 2028 program, we want to underpin our road map to 2028 in terms of operating efficiencies, which is something that we need to focus on every year. William Peterson: Okay. Great. Maybe it's a little bit early days, but there's been some news here about some potential tariff relief on downstream or derivative products. Trying to get a sense of maybe if there's any overlap with your own product suite that you sell into the U.S. What are you hearing on the ground? And I guess, specifically, is there any risk if there's relief on derivative products that, that could have some impact on your business? Any sort of thoughts would be helpful. Ingrid Joerg: I think the situation remains very fluid as it comes to tariffs. So with the information we are having today, we do not see any impact on us. And we continue to believe that tariffs are a net positive for us given that we will have stronger demand within the North American market. Operator: Our next question comes from Mike McNulty with Deutsche Bank. Corinne Blanchard: This is Corinne. Can you hear me? Jack Guo: Yes, Corinne. Corinne Blanchard: So maybe a few questions. And first of all, congratulations. I mean, this is an amazing quarter and a pretty good outlook what you're giving us here. Can you talk maybe about the cadence that we can expect in terms of EBITDA and free cash flow? And then the second question, Ingrid, if you can go back on the Vision 2028. I think we know that you're probably going to focus quite a lot on cost control, but I'm interested to hear more about the operational efficiencies and especially in terms of debottlenecking, like where are the opportunity that you're seeing in which market? Jack Guo: Thank you for the question. So I'll start, Corinne, and I appreciate the comments. I'll start on the cadence question and then Ingrid can help out on the Vision '28. So in terms of '26 cadence for EBITDA, I think as you know, Q1 and first half, typically, there's seasonality in our business. So from a seasonality perspective, they tend to be stronger than the second half. That's normal course. Now for '26, I've mentioned about the incremental benefits we expect to see in the first quarter from favorable recycling economics, right, recycling profits. So that should come in the first quarter. And on top of it, we expect to see a full quarter of benefits related to the automotive supply due to the unfortunate fire that happened at one of our competitors' plants last year. So we should see a full quarter benefit. So Q1 is set up nicely, and it should be stronger than Q4 of 2025 based on the current expectation. And then from a free cash flow perspective, typically, we build working capital in the first quarter and then into the first half of the year, and then we would release working capital. So that gives you an idea on the cadence for free cash flow. Ingrid Joerg: Thanks, Corinne. So in terms of Vision 2028, this is a program that is really going to support our 2028 target. We have net productivity assumed in our bridge, and this program is there to support achieving those numbers. So in terms of major pillars, we're certainly targeting asset reliability. You see when Muscle Shoals is running well that it's a very important driver of profitability for us. So asset reliability remains an opportunity across our system, which will support the throughput maximization. And it goes along with the portfolio optimization of the products that we make today. Given that some markets are rather weak and others have continued growth ahead of us, we want to better optimize how we are using our assets, and this project is going to help us work more on cross qualification so that we optimize our overall footprint and not just optimize one site. So asset reliability throughput and optimized load, we have debottlenecking activities that are part of our bridge to 2028 with some limited investment that is embedded in our numbers. And then on top of it, I think we also have still opportunity to improve recycling and metal cost reduction. These are really going to be the focus areas of this program. In terms of which markets additional capacity should be going to, I think it's clear from what we see in the market, it's on the packaging side. So can sheet, we would continue to like to grow with the market in both regions. And then obviously, on the aerospace side, as this is our highest margin product. And with the new casthouse coming in on the aero side, we would like to continue to grow this business for space, military, but also commercial aviation. And we have invested in some finishing capability in our sites that will allow us to support the ramp of the aerospace that is expected to come somewhere around '27. Operator: [Operator Instructions] Our next question comes from [indiscernible] with Wells Fargo. Timna Tanners: I think I'm the only person from Wells Fargo. This is Timna. I hope you all are doing well. I wanted to dig down back to Katja's question, if I could. Just if you look at the second half cadence and annualize it, that's above where the midpoint is on your guidance. So just trying to really understand what takes a step down, maybe more in the second half. Can you help elaborate on that and please give us the assumptions on the Midwest premium and scrap spread that's baked into your guidance? Jack Guo: So I'll start. So the way to think about it is Q4 '25, we've seen a fairly substantial amount of metal benefits, as I mentioned previously, right? But then the first half is quite challenged. Then from a relative comparison perspective as we go through the year, Q1 of '25 was extremely weak. Q2 was also weak. So the incremental benefits on the metal side, you would expect it to kind of to be more significant in the first half of 2026. I think that's one point. Then the other piece of it is we have more certainty, more visibility. Obviously, as we stand here today in February, looking at Q1 and into the first half of the year and some of the markets, the visibility there is not as certain into the second half. Timna Tanners: Okay. So does that mean that you have assumption of the Midwest premium and scrap spreads stronger in the first half than the second half? I was hoping for quantification, but even if we just know that, that's the way to think about it would be helpful. Jack Guo: I think there is more volume consumption -- volume that's locked in the first quarter relative to the future quarters. So we have more exposure. Timna Tanners: Got you. And then if I could, we're hearing a bit about demand destruction, a little bit of switching to steel away from aluminum in some auto and tractor trailer applications, but also opportunities for aluminum to take share from copper. So I was hoping you could comment on that. And along those same lines, would be great to get any thoughts on the CBAM impact as there were some public quotes from Constellium on that topic recently. Ingrid Joerg: Okay. Let me start, Timna. So I think with respect to aluminum substitution in automotive, we really do not see any evidence of that and particularly nothing related to the outage that has happened in North America. You know that these design decisions, I mean, it takes a long time to change design is very, very costly, and we develop a lot of platform-specific products. And usually, once you're on the program, it doesn't really -- or on the platform, it really doesn't happen that you get substituted. So we haven't seen any impact or any talk from our customers with respect to substitution with steel. The trailer bills are low right now, and that's more related, I think, also to the general economic situation. But clearly, we haven't seen it, and we do not expect it because the trend to lightweight, the trend -- the better safety needs and the fuel economy, this is just going to stay. So we are not worried that on the automotive or transportation market, anything like this could happen. And then with respect to copper, I have to say I have -- I'm not aware of this. In terms of substitution of materials, we have been able to substitute some materials in the past with our more high-performing alloys on the aerospace side, for example, but not particularly related to the copper. Now going to your question on CBAM, we are -- even though CBAM has been adjusted a little bit, we still think it's negative for the industry in Europe. We need to really create a level playing field with people importing into Europe, we need much more than what is on the table right now. We think the CBAM is going to be reflected in the regional premium in Europe. And so it's for people who are exporting a lot from Europe, it's not going to be good to pay higher metal prices in Europe for exports. We produce mostly local for local, so we are not really directly impacted by this. But clearly, the CBAM design as it is today, is flawed and will not prevent carbon leakage, and it could potentially lead to resource reshuffling, material coming into Europe based on recycled content that is very, very difficult to prove. So overall, we continue as an industry to oppose to its current design, and we're working with industry associations like European aluminum to work on changing it and adjusting it to the needs that the industry has. Operator: I would now like to turn the call back over to Ingrid Joerg, CEO of Constellium, for any closing remarks. Ingrid Joerg: Well, thank you, everybody, for your interest in Constellium. As you see, we have delivered strong results in 2025. And today, we provided a strong outlook for 2026. We are very happy with the steps that we are making towards our 2028 targets, and we look forward to updating you on our progress in April. Thank you very much, everyone. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.