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Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Fourth Quarter 2025 Operating and Financial Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference call over to Graeme Jennings, Investor Relations for IAMGOLD. Please go ahead, Mr. Jennings. Graeme Jennings: Thank you, operator, and welcome, everyone, to our conference call this morning. Joining us on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Chief Operating Officer; Annie Torkia Lagace, Chief Legal and Strategy Officer; and Dorena Quinn, Chief People Officer. We are calling today from IAMGOLD Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, Anishinaabe, the Chippewa, Haudenosaunee and the Wendat Peoples. At IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, transparency and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures included in the presentation and the reconciliations of these measures in our most recent MD&A, each under the heading non-GAAP financial measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Renaud Adams. Renaud Adams: Thank you, Graeme, and good morning, everyone, and thank you for joining us today. Last year was a monumental year for IAMGOLD. It is a year in which the company reported record revenues of nearly $3 billion enjoying gross margin of over 40% and generating operating cash flow of over $1 billion, which is notable $702 million generated in the fourth quarter alone. Now everyone on this call is aware that this is a historic time in the gold market, as the gold price increased nearly $1,700 per ounce over 2025 and exiting the year at just over $4,300 an ounce, which is still more than $600 an ounce lower than where we are today. So while we're not alone in realizing this gold market, we believe IAMGOLD is particularly well positioned to capitalize on this market for the benefit of our shareholders, stakeholders and partners. In 2025, IAMGOLD achieved significant milestones, including record quarterly productions across all sites. The first full year of production at Cote Gold, the establishment of a framework at Essakane that enables cash movements to be made at any time of the year, and the consolidation of assets in Chibougamau-Chapais, Quebec, to position the Nelligan mining complex as among the largest preproduction asset in Canada. On the financial side, we closed out the legacy gold prepay obligation midyear, delivered the balance sheet through the repayment of the $400 million high cost term loan and established a share buyback program that purchased $50 million in IAMGOLD shares in December and an additional $50 million so far in 2026, and we will continue to do so, driving up our per share valuations, all things being equal. This is a company that is taking a leadership position in the industry. IAMGOLD is a modern gold mining company that is proudly Canadian with strong cash flow and significant long-term growth opportunities ahead. We mine with a mining redefined purpose in mind, putting safety responsibility and people first. We hold ourselves accountable and embrace change, and drive innovations at every level from smarter systems to better ways of working. Now there are many highlights to discuss for IAMGOLD today. So let's get into it. Looking at the highlights from the year and the fourth quarter, we start with our safety record. Over the course of the year, our total recordable injury rates was 0.60, which was down from the year prior. We are focused on advancing our critical risk management program, including an important integration of contractor into the IAMGOLD way of safety management with a goal to reduce high potential incidents. On production, IAMGOLD closed out the year with a very strong fourth quarter in which all our mines reported record gold production. On a consolidated basis, attributable gold production for the fourth quarter was 242,400 ounces, a 28% improvement quarter-over-quarter, driving total production for the year to 765,900 ounces achieving the midpoint of the company's 2025 production guidance. The strong fourth quarter operating results helped to drive down costs on a per ounce basis. All-in sustaining cost per ounce sold was $1,750 for the fourth quarter and $1,900 for the year within the guidance range of $1,830 to $1,930. As discussed last year -- last quarter, costs this year have faced upward pressure due to the record gold prices directly translating to higher royalties. The impact of these royalties on cash costs continue to increase through the year to where they accounted for an average of approximately $330 per ounce or 24% of cash cost in the fourth quarter 2025. As we look ahead through this year where we will uncover opportunities to grow the value of our asset, we will stay diligent on our commitment to operational excellence and discipline. While we will not be able to control the gold price, we can control our cost structure and ensure that cost improvement opportunity [ compounds ] with our production profile. At Cote, we will continue to fine-tune our mining, milling and maintenance practices to position the project well for the upcoming expansion phase. With that, I will pass the call over to our CFO, to walk us through our financial highlights. Maarten? Marthinus Theunissen: Thank you, Renaud, and good morning, everyone. It was indeed a transformational year for IAMGOLD, as our solid operating results, coupled with record gold prices helped to fast track our strategy to unwind the financial leverage put in place to both Cote and allowed us to also start returning capital to shareholders in December. In the fourth quarter, the company generated record mine-site free cash flow of $626.6 million, bringing the year total to $1.2 billion. On an asset basis, in the fourth quarter, Essakane contributed $340.4 million and Cote contributed $197.0 million of attributable mine-site free cash flow. The record mine-site free cash flow was used to improve our financial position as the company's net debt was reduced by $468.8 million to $344.4 million at the end of the year, while also returning $50 million to shareholders. On the balance sheet, we completed the repayment of the $400 million term loan and also paid $50 million on our credit facility, reducing the balance to $200 million as at the end of December. IAMGOLD had $422 million in cash and cash equivalents at the end of the year and approximately $446 million available on the credit facility, resulting in total liquidity at the end of the fourth quarter of approximately $868 million. Excess cash at Essakane is repatriated through dividend and shareholder account payments, of which the company receives its share on its ownership net of withholding taxes. The shareholder account structure was introduced in 2025 and functions like an intercompany loan and allows for the company's portion of the dividend to be paid monthly using cash generated in excess of working capital requirements. The new structure allowed for cash flow in the fourth quarter, resulting from strong operating results and record gold prices to be repatriated in record time, and IAMGOLD received $291 million of payments from Essakane through the fourth quarter. Approximately $197.5 million of our consolidated cash balance was held by Essakane at the end of the year. And subsequent to year-end, these funds, combined with free cash flow generated in January, was used to make further payments against the shareholder account by Essakane, and IAMGOLD received $171 million so far this year. The other notable event was the establishment of the share buyback program. In December, the company repurchased and canceled approximately 3 million shares for approximately $43 million at an average price of $16.87 per share through a share buyback program. Subsequent to quarter end, up to the timing of our results release, IAMGOLD has purchased an additional 2.6 million shares for $50 million. For the remainder of the year, we are planning to use the cash repatriated from Essakane in 2026 to fund our buyback program. And at a gold price of $4,000 per ounce, we estimate that this could be between $400 million and $500 million during the year. The NCIB allows for the purchase of approximately 10% of IAMGOLD's public float that was outstanding as of November 2025. All common shares purchased under the NCIB will be either canceled or placed under trust to satisfy its future obligations under the company's share incentive plan. This initiative reflects management's confidence in the company's long-term value and its commitment to disciplined capital allocation. We believe the alignment of strong cash flow generation from this account and our share buyback program represents a clear value accretive opportunity for the company and our shareholders. The company intends to use the free cash flow generated by Essakane as a base level to repurchase shares under the share buyback program as the cash is generated and repatriated over the course of 2026. Naturally, the actual amount of common shares that may be purchased, if any, and the timing of such purchases will be determined by the company based on a number of factors, including the gold price, the company's financial performance, the availability of cash flows and the consideration of other uses of cash, including capital investment opportunities returned to stakeholders and debt reduction. Turning to our financial results. On a full year basis, revenues from operations totaled $2.9 billion from sale of [ 817,800 ] ounces on a 100% basis at an average realized price of $3,549 per ounce excluding the impact of the gold prepay arrangement. The strong operating results and record gold price resulted in adjusted EBITDA of approximately $1.6 billion in 2025, compared to $780.6 million in 2024 and $338.5 million in 2023. At the bottom line, adjusted earnings per share for the year totaled $1.23 up from $0.55 the prior year. Looking at the cash flow reconciliation for the year. It is a good visualization of the major drivers of our financial position to end 2025. The significant operating cash flow allowed for the delivery and conclusion of the gold prepay arrangements midyear, funding all capital programs at operations, significant delevering of the balance sheet, payment of a record dividend of Burkina Faso that allowed us to set up the shareholder account that we used to repatriate funds into Canada and the start of the NCIB program in December. As we look into this year, our priorities from a financial and capital allocation perspective are to deploy funds to areas where we see the most value add to our company, which includes the continuation of the share buyback program, utilizing cash flows from Essakane, becoming net cash positive following the repayment of the remaining balance of the credit facility, fund our operations as outlined in our guidance to ensure they are positioned well exiting the year and ensuring that we have the financial capacity to support opportunities to improve our business. And with that, I will pass the call to Bruno Lemelin, our Chief Operating Officer, to discuss our operating results. Bruno? Bruno Lemelin: Thank you, Maarten. Starting with Cote Gold, as Renaud noted, it was a very strong end to the year for Cote fourth quarter attributable gold production of 87,200 ounces or 124,600 ounces on a 100% basis. The success of Cote beyond just the fourth quarter. In its first full year of operation, Cote has produced 399,800 ounces on a 100% basis, achieving the top end of our guidance estimates. During the year, our Cote teams achieved success after success every day on many fronts, operational stability, maintenance, environmental monitoring or workforce engagement. Cote Gold completed the ramp-up and demonstrated nameplate throughput of 36,000 tonnes per day over a period of 30 consecutive days ahead of schedule in June. It was a very strong 2025 with Cote now adding strong 3 consecutive quarters in a row of the mine hitting its target and its stride. Focusing back to the quarter, mining activity totaled 11.1 million tonnes. Ore tonnes mined were a record of 4.5 million tonnes in the quarter with a strip ratio of 1.5:1. Mill throughput in Q4 totaled 2.9 million tonnes. Head grade for the fourth quarter was a record of 1.44 grams per tonne as a result of the combination of higher grade direct feed ore, a low strip ratio over the quarter and stockpiling of lower grade ore. The installation of the additional secondary crusher was completed in November and commissioned in December with both cone crusher tested and operating in parallel. As we discussed later, last quarter, we elected earlier in the year to bring in a temporary contractor aggregate crusher to supplement Cote's crushing capacity to improve the availability of the secondary crushing circuit. This allowed the plan to achieve its throughput milestone but at a higher cost as well -- as we will discuss on the next slide. With the 2 secondary cone crushers now operating, the company plans to phase out the temporary crushing circuit over the first half of 2026. Looking at costs, Cote reported fourth quarter cash costs of $1,265 per ounce and all-in sustaining costs of $1,688 per ounce. We continue to see mining and processing unit costs above where we would like them to be. A major driver of cost this year has been associated with the temporary crusher. The decision to move ahead nameplate by 5, 6 months allow for maximizing [ tonnes ] versus waiting for the installation and ramp-up of the second cone crusher in an important time for the project in the market. Looking at mining costs on an annual basis, they averaged $4.20 per tonne in 2025. We expect to see cost improvement through 2026 as further operational improvements are made, including the elimination of the contracted aggregate plant and reduction of contractors. Milling unit costs on an annual basis averaged $20 per tonne. There is a direct relationship with the amount of ore crushed with the temporary crusher in our processing costs. We expect that the removal of the aggregate plant will reduce processing costs by $4 to $5 per tonne. Additional savings are expected as we improve the life cycle of the HPGR rollers and fine-tune our maintenance cycles. Looking ahead, 2026 is the year in which our operations team is focusing on fine-tuning Cote at 36,000 tonnes per day. This year, the operations team will be focusing on unit cost improvement to stable and efficient mining and milling practices. It is important for our team to be able to operate Cote with an expected specification before we expand the operation further. On cost, all-in sustaining costs are expected to be in the range of $1,725 to $1,925 per ounce sold, which reflects an additional $50 million or about $185 an ounce of nonrecurring sustaining capital investments to improve the operating efficiency, and the long-term operating cost structure. These include the implementation of our refeed system for the coarse ore dome, additional maintenance facilities and improved dust mitigation measures. Expansion capital this year is estimated at $85 million for IAMGOLD. As we look to grow Cote, it is clear we can accelerate basic expansion projects. This includes a strategic pushback that will provide both operational flexibility in the near term and optionality for the expansion as well as the acceleration of certain expansion related improvements to the processing plant, including an additional vertimill in early 2027. This leads us to what is next for Cote, the Cote Gosselin expansion mine plan. In the fourth quarter of this year, we will release the details of the updated mine plan that envision a near-term expansion of the Cote plan, targeting a significantly larger ore base from both Cote and Gosselin. Alongside our financial results last night, IAMGOLD announced its updated mineral resources and reserves estimates. In the estimate, we saw a significant upgrading of ounces from inferred to measured and indicated at Gosselin, which now is estimated to have 6.9 million ounces of indicated ounces and 1 million ounces of inferred sources. Combining Cote and Gosselin, the Cote Gold project currently is estimated to have M&I resources inclusive of mineral reserves and on a 100% basis of 18.2 million ounces and an additional inferred mineral resources of 2.2 million ounces. Work will be ongoing this year to incorporate the end-of-year drilling and then combine their minimum resources estimate and pit shells into a single model. As currently designed, Cote has the mining capacity to average an annual ore mining rate of 50,000 tonnes per day versus our current nameplate processing rate of 36,000 tonne per day. As part of the 2026 technical report, we will look to find the right balance between an increased processing rate with mining rates targeting the combined Cote Gosselin super. Turning to Quebec. In the fourth quarter, we saw Westwood produced a record 37,900 ounces since mine restart as the underground returned high grades coupled with strong throughput in the plant. Underground mining activities in the fourth quarter average 1,129 tonnes per day, translating to 105,000 tonnes in the quarter, a record volume from underground since the mine restart with an average underground mine grade of 9.87 grams per tonne. During the first 3 quarters of the year, mining activities on the ground operated to lower-grade stope and adjust blasting technique. In the fourth quarter, Westwood refined stope design, sequencing and blasting while returning to higher grade stopes as per mine plan. Mining of the Grand Duc satellite open pit continued in the quarter with 174,000 tonnes mined with a head grade from the open pit averaging 1.19 grams per tonne. Grand Duc open pit life has been extended into 2027. We expect Grand Duc to contribute a similar amount of ore to the plant this year with -- at a slightly lower grade of between 1.1 to 1.2 grams per tonne. Mill throughput in the third quarter was 299,000 tonnes at an average grade of 4.21 grams per tonne and average recoveries of 93%. Plant utilization was 92% in the quarter, up from 75% in Q3 and in line with the average expected for 2026. As a result of the strong fourth quarter, costs on a per ounce basis declined notably. Cash costs in the fourth quarter averaged $1,288 per ounce and all-in sustained costs averaged $1,719 per ounce, well below the average of the year of around $2,100 per ounce. The cost improvement was also assisted by lower unit costs while with mining costs -- the milling unit cost declining due to the high volume of ore mining mill. Looking ahead, to this year, Westwood production is expected to be in the range of 107,000 to 113,000 ounces. Mill throughput is expected to average 1.2 million tonnes in 2026 with blended head grade expected to average 3.44 grams per tonne over the course of the year with a fairly flat production profile quarter-over-quarter to the year through the year. Cash costs at Westwood are expected to be in the range of $1,500 to $1,650 per ounce sold and all-in sustained costs in the range of $1,950 to $2,100 per ounce sold. Sustaining capital expenditures guidance is $55 million primarily consisting of underground development, renewal of the mobile fleet, upgrades in the mill and general maintenance. Expansion capital is expected to increase this year to $30 million, which is primarily associated with development works and drifts to support the study of options to extend the mine in the eastern parts of Westwood underground that could potentially be amenable to bulk mining. Looking at our mineral resources and reserve update, Westwood more than replaced depletion over 2025, with 1.1 million ounces of mineral reserves to date. Further, M&I resources inclusive of mineral reserves increased by 682,000 ounces or 40% to 2.4 million ounces as of December 31, 2025, with an additional 1.5 million ounces of inferred ounces. We are looking forward to conducting additional drilling underground at Westwood this year as we believe there is still significant potential at depth to the east and west of our current underground operation. Turning to Essakane and continuing with the Q4 team, the mine reported record production of 138,100 ounces on a 100% basis equating to 117,300 ounces on our 85% mining interest. Mining in the fourth quarter totaled 9.4 million tonnes, an increase from the prior quarter with higher ore tonnes mined of 4.1 million tonnes for a strip ratio of 1.3:1 in the quarter. The average grade of mine ore in the fourth quarter was the highest grade mine in the year as the mine sequence deeper into Phase 7. The mill reported strong throughput in the fourth quarter of 3.2 million tonnes at an average head grade of 1.5 grams per tonne considering the quarter-over-quarter step-up we have seen this year. The plant achieved recoveries of 88% in the quarter, which was below the 90% average for the year as Essakane typically sees higher graphitic carbon in the higher-grade zones, though this is mitigated with blending. Similar to Westwood, Essakane saw an improvement in cost per ounce and unit cost per tonne on the higher volumes. For the fourth quarter, Essakane reported cash cost of $1,471 per ounce and all-in sustained cost of $1,674 per ounce. As Renaud noted in his earlier remarks, royalties in the current gold market are having a measured impact on industry cost structure. And this is even more pronounced in Burkina Faso, where the new royalty decree was implemented in 2025 with royalties now uncapped and tied to gold price. In the fourth quarter, royalties accounted for $460 per ounce or approximately 36% of Essakane's cash cost. Accordingly, when we look at this year, we have guided to cash costs excluding royalties and cash costs including royalties at the gold price assumption of $4,000 per ounce. Cash costs excluding royalties are expected to be in the range of $1,150 to $1,300 per ounce sold and including royalties in the range of $1,600 to $1,750. All-in sustaining cost is expected to be in a range of $2,000 to $2,150 per ounce sold. On the production side, Essakane attributable production is expected to be in the range of 340,000 to 380,000 ounces or 400,000 to 440,000 ounces on a 100% basis, similar to production in 2025. With a production profile expected to be fairly flat quarter-over-quarter this year, mining activity will target Phase 6 and 7 in the Lao pit that is adjacent to the Essakane main zone. Our mineral resources and reserves -- Essakane reserves decreased by 640,000 ounces due to depletion and geologic model adjustment for a total of 1.7 million ounces. However, measured and indicated mineral resources reported a 50% increase in funds, offsetting a 26% decrease in grades for a total of 4.4 million ounces in measured and indicated, and an additional 853,000 ounces of inferred. We are currently studying the Block 3 project, which would add an additional 5 years of life of mine expanding Essakane until at least 2032. With that, I will pass it back to Renaud. Renaud Adams: Thank you, Bruno. I just want to take a moment to highlight the exciting development from the fourth quarter in which IAMGOLD acquired Northern Superior and Mines d’'Or Orbec consolidating their assets and properties with our assets in the Chibougamau-Chapais region of Quebec to form the Nelligan Mining Complex, which is now composed of the following deposit and high-value target. Nelligan, Monster Lake, Philibert, Chevrier, Lac Surprise, Croteau and Muus. The Nelligan Mining Complex already has a significant mineral inventory of over 4.3 million measured and indicated ounces and 7.5 million inferred ounces, positioning the project among the largest preproduction-stage gold project in Canada. The close proximity of the primary deposits to each other supports a conceptual vision of the central processing facility being fed from multiple ore sources within the 17-kilometer radius. This year, we are substantially increasing our budget to allow for a comprehensive exploration program, which will look to expand the mineralized footprint of both Nelligan and Philibert while testing Monster Lake at depth in addition to a regional exploration program or high priority targets to further grow the potential of the project. Our teams are very excited for this project, and we will be putting the pedal to the metal to have a preliminary economic assessment on the Nelligan complex in 2027. With that, I want to thank our shareholders for your great support. We truly believe it will be an exciting year for IAMGOLD with significant value growth opportunities ahead and many catalysts ahead. And now I would like to pass the call back to the operator for the Q&A. Operator? Operator: [Operator Instructions] And our first question today comes from Mohamed Sidibe from National Bank. Mohamed Sidibe: Maybe I'll start with Essakane and with the M&I increased year-over-year and the potential extension of the mine life of that asset. How should we think about Essakane within your broader portfolio and specifically, as the license is potentially expiring into 2029, please. Renaud Adams: I'll give some first comment, and I'll ask Bruno to complete more on the potential we have here. But we've been going really on the step by step. I thought we had a wonderful '24, '25. The team is working hard. You've seen the increase in the resources. We see more and more possibility of expansion. The most important thing is what I would call the acceptance of all of it, right? So we understand the geographic and geopolitic and so forth. But the reality is we've been operating this mine pretty steady state, no interruptions for nearly 3 years now. We found and -- congrats Maarten and his team and Bruno has found a very creative way to allow for cash flow. At those prices, we see a good opportunity of using this cash flow to reward our shareholders. So I think over the next few quarters, we just need to continue to beat the drum and execute on our plans and continue to repatriate and reward our shareholders. And as we advance in '26, Bruno and his teams will complete some work. We definitely see an expansion potential, which we need to continue to work and prove. But we're not there yet, but I think we've come a long way to make Essakane a very strategic element of our portfolio. Bruno, if you want to add anything? Bruno Lemelin: Yes. So thank you, Mohamed, for your questions. I've been at Essakane, like I started with IAMGOLD at Essakane in 2014 and since then, the life of mine has not stopped getting extended. So it should not come too much of a surprise. What is really good is we were able to find those additional resources within the fence north of Phase 7. So we have now Phase 8 and Phase 9 and 10 north of where we are currently mining. In South, we have the Lao pit that is also getting -- we're seeing an extension of the current Lao pit that also tried to connect South of the Essakane main zone. So there's a saddle zone and now we believe those 2 connects together. So it gives us confidence that we could be targeting at another 5 years of life of mine. That's what we're going to be coming with when we're going to start engaging with the government. It shouldn't be like too much of a problem when we first meet with the officials in terms of having the license to be extended by another 5 years, which would bring us closer to 2032, 2033. Renaud Adams: So we're not -- again, decision to be made probably later as we advance in the year in preparations for '27 plan. But meanwhile, we expect another great year and maximum free cash flow out of the asset repatriated and apply towards the shareholder program, share buyback. So more to come. Mohamed Sidibe: Maybe I'll switch to Cote Gold, specifically on the unit cost. I think, Bruno, you touched on the milling cost potentially improving $4 to $5 by the second half 2026. Could you give us a little bit more color on mining costs and where you expect to exit maybe 2026 and what we should be thinking in terms of modeling there for Cote Gold? Bruno Lemelin: Yes. So the mining costs for 2026, as we are making adjustments, some adjustments are taking time. So now we're implementing [ any one or some ] plan. There will be some testing. We should be at the year at around $370, $380 a tonne as we are getting -- we brought new equipment, new drills. We are also doing the pushback, Mohamed. And by doing this pushback, there's several infrastructure that needs to be relocated like the towers for the autonomous suite and everything. So there's a lot of activities surrounding the mining activity, that's the reason why we see [ diminishment ] in unit costs. However, it's going to take some time to see the long-term mining costs, not for this year. Renaud Adams: So what I could add to this is like at the early stage, we've seen some -- yes, we've seen some deficiencies, some areas that need some improvement. We put more capital this year addressing some like Bruno just mentioned, if you want to optimize your mining costs, well, you need to optimize your OEE, your overall performance. To do that, you need now a larger pit. You need like maintaining your -- this has all been taken into account. It may not be all achieved in '26, as Bruno mentioned. But as we file and as we present our long-term plan, we will, if needed, integrate some additional improvement in '27, '28. But the objective is over the next -- with a big chunk in '26, but over the next 2 to 3 years. We really see a path forward with the possibility of reducing the cost and bringing Cote into one of the best unit costs for this large-scale Canadian. And then when you combine with the average grade and the possibility to uplift that we've seen the grade this year and the low strip ratio of Cote, everything is in place at Cote as we optimize the cost to make it a very attractive overall all-in sustaining costs. We've discussed the royalty. There's not much we could do more than we do have a provision of buyback, which we would really pay attention to as we unlock our full potential of this scenario. So we're in a good position. We appreciate that there's a lot of work to do, Bruno and his team this year. But we feel very confident that we have a path forward and we'll try to make it as much as possible this year, but it may extend a bit in '28. Operator: Our next question comes from Sathish Kasinathan from Bank of America. Sathish Kasinathan: My first question is on Cote. On Slide 11, you mentioned that the mine plan for Cote is likely to include stage capital. Can you maybe provide a bit more color on what it means? Are you still targeting the 50,000 tonnes per day run rate or maybe even more? How should we think about it? Renaud Adams: I think the reference to the stage capital here is to being capable to focus from expansion to tailings down the road, to opening Gosselin. So what we're saying is that there is not a need to do everything on a day 1 to make an expansion at Cote Gold. As a matter of fact, you -- the Cote itself is enough to justify the expansions and eventually Gosselin. So when we say stages, we see now 6, 7 and 8, Bruno and his team is accelerating some aspect in the pit and opening the pit and so forth. So that's going to be in place by the time. And we say '29 is a focus on the expansion, '29, '30 and we have enough tailings capacity in place. So there would be a stage impact. So we just want to clarify that. It's not like you need to build everything and have everything in place on day 1. The capital will be staged capable to be fully funded through the free cash flow of the asset. Sathish Kasinathan: Okay. That is clear. Maybe one question on Essakane. So you received $171 million of cash this year at the start of the year, of which $50 million was spent -- was already used of buybacks. And you still have $219 million left from the last year's dividend declaration. So for the full year, is it fair to assume like a minimum of $390 million of share buybacks could be achieved in 2026 and depending on how much dividend is declared for this year, we could see potential upside to the number? Marthinus Theunissen: So we had $408 million of the shareholder accounts outstanding at the beginning of the year. And as you mentioned, we already received $171 million against that back. We expect that remaining balance to be repaid by the end of the second quarter, during the third quarter. But then when we get into that period, we will be declaring the 2025 dividend where the shareholder account will be reloaded again. So based on our projection, there would be more than enough shareholder accounts available this year to continue with the program where we can move money out of Burkina Faso every month as the asset generates free cash flow above its excess working capital. And then -- so the free cash flow attributable to IAMGOLD this year should -- we should be able to match that to buy back shares in the program. Sathish Kasinathan: Okay. Congrats on the strong quarter. Marthinus Theunissen: Thank you. Operator: Our next question comes from Anita Soni from CIBC. Anita Soni: Congratulation on a strong quarter and a strong year. I just wanted to ask a little bit more about Cote and Gosselin. I think you noted in the MD&A that there would be an update on the reserve -- another update on the reserves and resources for Gosselin in Q2. And my apologies if you addressed it in the opening comments, I was hopping between... Renaud Adams: Thank you for asking, Anita on this. So it's cutting here. So sorry about that. So go ahead. Anita Soni: I was just going to say, what were you expecting to provide with the Q2 update? Renaud Adams: Thank you for asking this. As Bruno showed in his portion, talking about the mineral reserve, mineral resources. So not a surprise on the resource side. It was just a depletion, as you know, like the big consolidating both Gosselin and Cote through. On the resources side, we've come quite a bit a long way and have delineated some, but this is kind of an ongoing work. So to your point, we expect to complete probably late Q1 and maybe like we're talking about Q2 potentially, but the target is by the end of Q1, somewhere there, we would complete the resource update, if you call. The final one that would serve for the plan. We're comfortably sitting in more than 18 million ounces, but there is more drilling to be incorporated. There is a merge of the block models as well. We're still discussing the final price to be used and so forth, but we had this objective of the saddle zone as well as Bruno just pointed out to me. So as you combine the block model, so you create that saddle zone that we've drilled as well. So it's not the final -- not to look at the resource update at Cote has the final work toward about our objective of 20 million ounces and we're still planning to discuss those results late Q1, early Q2. Anita Soni: Okay. And how much more drilling would that have incorporated versus what you just did? I think you converted 2 out of the 3 million ounces of inferred into M&I category. But how much more would that bring on stream? If you could just tell me like as a percentage of the drilling update? Or if you want to tell me they have the number of ounces, that would be great, too. Bruno Lemelin: We still have 29 -- 25 holes to be included. And we have also the campaign on the saddle zone that needs to be included as well. Renaud Adams: So enough -- and again, like the merge of the block model as well, like technically should also create some. So we feel very, very strong, Anita, if without giving a final number because we haven't seen it, but we feel very comfortable towards objective of 20 million ounces MI plus. Anita Soni: Yes. And then I just want to follow up on the Essakane reserves and resources as well. I noticed the grade declined. Is that -- have you -- I mean, I'm just -- I guess, you've had positive grade reconciliation at the asset. How are you basically calculating your depletion at the asset? I'm just -- like are you just basically saying, okay, well, we ended up -- we thought this ore body would be 1.2 and it ended up being 1.5. So we're deducting the 1.5 off of the average. Is that the way you're doing it? Or did you include the positive grade reconciliation in the calculations? Bruno Lemelin: Yes. So the -- we changed the block model and the block model that we'll be using this year has taken -- we have to do some adjustments. But moving forward, the block model is going to be [ cool ] to be a little bit more conservative. Therefore, that's the reason why you see the grades are going down. It does not exclude the possibility that we will see faster reconciliation specifically when you get those higher grade zone like we were doing in Phase 7. What we're trying to cap a bit is that kind of positive reconciliation in our future resources estimate. So we have something more about [indiscernible]. Operator: [Operator Instructions] Our next question comes from Sam Overwater from Scotiabank. Tanya Jakusconek: It's Tanya. I have a few questions, if I could. I just wanted to follow up on Anita's question on the reserves and resources that's coming out on Cote in Q2. So just so that I understand, so we're still targeting that 20 million out overall number. What the reserves and resources and other will show is just more of a conversion or an upgrade into the M&I and reserve category with those additional 25 holes. Is that a proper way to think about it? Renaud Adams: The way to look about it is we feel strong that when the exercise is done, we will achieve our objective of 20 million of MI and from which Bruno and the team will put the mine plan to it and convert as much as we can within an economic plan to reserve. So obviously, the reserve that we have released at the end of the year is only reflecting the all plan depleted. So we're moving from this to the new plant consolidated from which new economics mine plan. So we're definitely going to see and expect a significant increase in reserve. We just need to complete the work. But the starting point will be hopefully a 20 million-plus MI resource base, and we feel very strong about the economics of those pits. So more to come, but we feel strong about a significant increase in reserves. Tanya Jakusconek: Okay. Okay. And then how should I be thinking about this capital because you talked about a lot of this capital now being spent with $85 million or thereabout at Cote this year. How should I be thinking of the study? And I think at one point, we were thinking of $100 million to $200 million in capital. How should I be thinking about the capital for all of this? Renaud Adams: I guess if I would have all the detail, Tanya, we would have probably been a little more because we're still in trade-off. So the way to look at it is I think the growth capital that we're going to be deploying over the next few years should normally bring the pit to a point of expanded capable to provide for the -- now the mill itself, which will be the main capital of '29, '30, we're still in the trade-off and so forth. No, I do not believe you build an expansion today for $100 million to $200 million total capital but we believe that it could probably be achieved below the $500 million, but we still have to do the work. Tanya Jakusconek: Okay. I'll take a look further into it. Just on 2 other things, Bruno, I think you gave some guidance for how the year is panning out for us quarter-on-quarter stable for both Essakane and Westwood. What about Cote? Bruno Lemelin: Okay. Fair question. Cote is going to be lower for the first half of the year because we have the maintenance plan for the HPGR [ tire roll ] change in March or April. That's going to be a 5-day shutdown. We will have supplement fines ore material to feed the mill, but we're going to be running at a slower pace. We also have -- we did a very good end of the year 2025 and we took advantage of Q1 to take a lot of other maintenance. So overall, we need to expect Q1 and Q2 to be lower than Q3 and Q4. And generally, summertime at Cote is very good, like last year, Q2, Q3, Q4, we produced 36,000 tonnes per day almost like 36,000 ounces a month in average. So that gives you a bit like the kind of seasonality that we have, like we have a seasonality due to winter conditions in Q1. In Q2, we do some planned maintenance on the HPGR, and after that we are rolling until the end of the year. Tanya Jakusconek: Okay. So should I be thinking like a 45-55 or is that... Renaud Adams: Yes. I guess, anywhere between like the zone of around 40, 45, as you say. Definitely, H2 will be much stronger season-wise, second crusher fully up and running, HPGR reline and plus any other optimization that's going to come. So yes, I think it's fair to think that our second half could be at the 55% of the year. Tanya Jakusconek: Okay. And Renaud, I have you on for my one final question. Dividend, I mean we had talked on one of the previous conference calls that you were potentially thinking that once all this is done, the dividend plan could be implemented. Where are you on that? Renaud Adams: I think we feel very strong that on the step by step. I mean, as Maarten discussed, I think the first thing first is on the share buyback. There is no doubt that let's call the Canadian platform would most likely be an excess cash as well in those prices, something we're going to revisit with our Board at the end of Q2, see how the share buyback goes. Is there an opportunity to increase the share buyback using a bit of the Canadian excess? Do we start incorporating dividend? So I think we're going to have this conversation post Q2 for the second half as we realize the free cash flow on the Canadian side as well. So we feel very strong that Essakane should normally go towards share buyback. The question is after what is the next in the row. And I think we're going to postpone the decisions for the second half of the year. Operator: And this will conclude today's question-and-answer session. At this time, I'd like to turn the floor back over to Graeme Jennings for closing remarks. Graeme Jennings: Thank you very much, operator, and thanks to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud and myself. Thank you all. Be safe, and have a great day. Operator: This brings to a close today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Garmin Ltd. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Teri Seck, Director of Investor Relations. Please go ahead. Teri Seck: Good morning. We would like to welcome you to Garmin Ltd.'s Fourth Quarter and Full Year 2025 Earnings Call. Please note that the earnings press release and related slides are available at Garmin's Investor Relations site on the Internet at www.garmin.com/stock. An archive of the webcast and related transcript will also be available on our website. This morning's earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding our future financial position, revenues, segment growth rates, earnings, gross margins, operating margins, future dividends or share repurchases, market shares, product introductions, foreign currency, tariff impacts, future demand for our products and plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur, and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission. Presenting on behalf of Garmin Ltd. this morning are Cliff Pemble, President and Chief Executive Officer; and Doug Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble. Clifton Pemble: Thank you, Teri, and good morning, everyone. As announced earlier today, Garmin achieved another quarter of outstanding financial results, driven by strong broad-based demand for our products. Consolidated revenue increased 17% to more than $2.1 billion, which is a new fourth quarter record and our first quarter to exceed $2 billion. We experienced strong double-digit revenue growth in 3 business segments, reflecting the strength of our highly diversified business model. Gross margin was comparable to the prior year at 59.2% while operating margin expanded 60 basis points to 28.9%. This resulted in record fourth quarter operating income of $614 million, up 19% year-over-year and record pro forma EPS of $2.79, up 16%. 2025 was another year of remarkable growth and achievement for Garmin with record consolidated revenue, record operating income and record revenue for all business segments. We attribute this strong performance to our strategic focus on market diversification and creating superior products that are essential to our customers' lives. This approach has been a winning strategy for us since we were founded more than 36 years ago. Consolidated revenue increased 15% to $7.25 billion, which is a new annual record and up nearly $1 billion over 2024. Gross margin of 58.7% was comparable to 2024, which is a significant achievement considering the impact of generationally high tariff structures that took effect early in the year. Operating margin expanded by 60 basis points to 25.9%, resulting in record full year operating income of nearly $1.9 billion, up 18% year-over-year. Before sharing our full year outlook, I want to provide insights on what is important to us when considering forward-looking guidance. Our primary objective is to deliver the best result for Garmin on a consolidated basis. There are many factors that influence individual segment results. And we have said before that the diverse nature of Garmin's business gives us multiple paths to achieving consolidated goals. This makes individual segment growth targets less relevant, especially when viewed in isolation. With this in mind, we will continue to provide consolidated guidance measures and we will provide qualitative forward-looking insights for segments when it is helpful to do so, but we will no longer emphasize individual segment growth targets. This approach aligns with our primary objective to deliver the best results for Garmin on a consolidated basis. With this in mind, we anticipate 2026 to be another year of strong top and bottom line growth. We expect revenue to increase approximately 9% to $7.9 billion, and we expect operating income to exceed $2 billion for the first time. Many are wondering how industry-wide memory constraints will affect us. Our guidance considers everything we know about the supply chain environment, including recent cost pressures on memory components. It's our practice to continually seek efficiency throughout our entire supply chain by leveraging our vertically integrated business model and scale to optimize our cost structure. We've always used inventory as a business tool, and we have intentionally increased inventory levels of certain components and products to ensure we can meet long-term demand. We also have strong relationships with our suppliers and are working closely with them to meet the expected demand for our products. While no one wishes to see supply chain challenges, we believe we are well prepared. Our strong results and positive outlook give us confidence to propose an annual dividend of $4.20 a share, reflecting a 17% increase over the current dividend amount, which will be considered by shareholders at the upcoming annual meeting. In addition, our Board of Directors recently approved a $500 million share repurchase program, effective through December 2028. Doug will discuss our financial results and outlook in greater detail in a few minutes, but first, I'll provide a few remarks on the performance of each business segment. Starting with fitness. 2025 was another exciting year of growth as customers embrace the healthy active lifestyles our brand represents. For the year, fitness revenue increased 33% to $2.36 billion, surpassing $2 billion for the first time and was driven by wearables as we continue to benefit from both market share gains and market growth. Gross margin was 60%, a 130 basis point improvement over the prior year. Operating income increased 50% year-over-year to $726 million, and operating margin expanded 360 basis points to 31%, reflecting both improved gross margin, and operating leverage. During the quarter, we announced our collaboration with health care payments provider, Truemed, to assist customers using pre-tax Health Savings Account and Flexible Savings Account funds for qualifying purchases of select Garmin products. We recently published our annual Garmin Connect data report, which shows that on average, our users increased activity levels by 8% during the year, reflecting a high level of engagement with our products and app platforms. At the 2026 consumer electronics shows, the Venu 4 and the Forerunner 970 received innovation awards for novel features in digital health and fitness, and we announced exciting enhancements to our premium Connect+ service with nutrition tracking and insights powered by AI-based active intelligence to help users achieve nutrition goals. Looking forward, we expect another year of strong performance for fitness driven by demand for our current product lineup and contributions from new product introductions. We also expect that the fitness segment will be our strongest contributor to 2026 consolidated growth. Moving to Outdoor. Full year 2025 revenue increased 5% to $2.05 billion, also exceeding $2 billion for the first time. Growth in Outdoor was primarily driven by adventure watches with a full year of contributions from the highly successful fenix 8 series that was launched in 2024 followed by the launch of the fenix 8 Pro with inReach technology in September of 2025. Gross and operating margins were 66% and 34%, respectively, resulting in operating income of $690 million. During the quarter, we launched the inReach Mini 3 Plus satellite communicator with voice, text and photo sharing. This compact and rugged communicator offers essential SOS safety features and reliable communication that explorers can use to stay connected with loved ones while adventuring beyond cell phone coverage. And with up to 2 weeks of battery life in the 10-minute tracking mode, inReach Mini 3 Plus can be used on multi-day trips without added worry of battery charging. Several Outdoor products also received CES Innovation Awards, including the fenix 8 Pro MicroLED version, Blaze Equine Wellness System and the Descent S1 Buoy, which highlights our commitment to exploring new product categories and developing groundbreaking innovation. Looking forward, we expect full year growth in Outdoor to accelerate in 2026 compared to 2025 driven by a significant number of new product introductions. We also expect stronger performance in the back half of the year due to the timing of product launches. Looking next at aviation, full year 2025 revenue increased 13% to $987 million with growth contributions from both OEM and aftermarket product categories. Gross and operating margins expanded year-over-year to 75% and 26%, respectively, Operating income increased 22% to $257 million. During the quarter, we launched the D2 Air X15 and the D2 Mach 2, our latest aviator smartwatches with cockpit connectivity and advanced aviation, health, fitness and smartwatch features. We announced that the Garmin G5000H cockpit system was selected for the Brazilian Air Force UH-60 Black Hawk helicopter, part of a growing list of military modernization programs based on our advanced commercially available integrated cockpit systems. On December 20, 2025, our Autoland system was used by a customer for the first time, returning the aircraft and crew safely to the ground following rapid depressurization while operating in instrument flight conditions over the Rocky Mountains. This incident illustrates how our cockpit systems can improve the safety margins of flight. We are very proud of our aviation team for creating our award-winning Autoland technology. Looking forward, we expect aviation revenue will continue to grow in 2026, in line with historical norms. Turning to the marine segment. Full year 2025 revenue increased 10% to $1.18 billion, driven by growth across multiple categories led by chartplotters. Gross and operating margins were 55% and 21%, respectively, resulting in operating income of $251 million. We recently introduced the flagship GPSMAP 9000xsv lineup to further strengthen our offerings in the chartplotter category. The GPSMAP 9000xsv offers stunning 4K resolution displays, 5 gigahertz WiFi networking and industry-leading sonar performance. Also during the quarter, we launched Garmin OnBoard, a versatile man overboard and engine cutoff system that uses wireless technology, offering users freedom to move around the boat while still enjoying the protection of this important safety system. Garmin OnBoard was selected as the winner of the 2025 DAME Design Award in the Safety and Security Award category at the recent METSTRADE Marine exhibition in Amsterdam. During 2025, we received multiple awards, including being named Most Innovative Marine Company by Soundings Trade Only for the third consecutive year, NMEA Manufacturer of the Year for the 11th consecutive year, and we received the National Boating Safety Award for the fifth consecutive year. This is an unprecedented level of industry recognition, and we attribute our success to the outstanding products we offer and our strong commitment to serving customers. In 2026, we expect marine segment growth to be consistent with the prior year based on improving market conditions. Moving finally to the auto OEM segment. Full year 2025 revenue increased 9% to $665 million, primarily driven by growth in domain controllers. Gross margin was 17%, and the operating loss was $49 million for the year. At the recent Consumer Electronics Show, we introduced our next-gen Unified Cabin domain controller that adds digital key capability, seat specific audio and video and an AI system designed to make vehicle interactions more conversational and powerful. We also announced our collaboration with Meta to explore new ways of interacting with the vehicle. We continue to achieve important milestones leading up to the launch of our next domain controller program. I'm pleased to report that this program is with renowned global automaker, Mercedes-Benz and will broadly apply across their portfolio of passenger car models with significant volumes ramping up in 2027. In 2026, we expect revenue to decrease year-over-year as we have reached the peak of BMW domain controller volumes and as certain legacy programs approach end of life. We expect operating losses to narrow in 2026 as we shift certain auto OEM R&D resources to accelerate product roadmap development in other segments. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug? Douglas Boessen: Thanks, Cliff. Good morning, everyone. I'll begin by reviewing our fourth quarter and full year financial results, provide comments on the balance sheet, cash flow statement, taxes, our 2026 guidance. We posted revenue of $2.125 billion for the fourth quarter, representing a 17% increase year-over-year. Gross margin was 59.2% comparable to the prior year. Operating expense as a percentage of sales was 30.3%, a 60 basis point decrease. Operating income was $614 million, 19% year-over-year increase. Operating margin was 28.9%, a 60 basis point increase from the prior year. Our GAAP EPS was $2.73, and pro forma EPS was $2.79, a 16% increase from the prior year pro forma EPS. Looking at our full year results. We posted revenue of $7.246 billion, representing a 15% increase year-over-year. Gross margin was 58.7% comparable to the prior year. Operating expense as a percentage of sales was 32.9%, a 50 basis point decrease. Operating income was $1.876 billion, 18% increase. Operating margin was 25.9%, a 60 basis point increase from the prior year. Our GAAP EPS was $8.59, pro forma EPS was $8.56, 16% increase from the prior year pro forma EPS. Next, look at our fourth quarter revenue by segment and geography. During the fourth quarter, we achieved record revenue on a consolidated basis. We achieved double-digit growth in 3 of our 5 segments led by the fitness segment with 42% growth followed by marine segment with 18% growth, aviation segment with 16% growth. By geography, the Americas region achieved strong double-digit growth of 21%, resulting in quarterly revenue exceeding $1 billion for the first time. EMEA region, APAC region had 14% and 8% growth, respectively. For full year 2025, we achieved record revenue on a consolidated basis and record revenue for each of our 5 segments. Our geography, we achieved 18% growth in EMEA, 40% growth in Americas and 12% growth in APAC. Looking next, operating expenses. Fourth quarter operating expenses increased by approximately $80 million or 14%. Research and development increased by $36 million, primarily due to personnel-related expenses. SG&A increased by $44 million, primarily due to increased advertising and personnel-related expenses. A few highlights on the balance sheet, cash flow statement, dividends and share repurchase. We ended the quarter with cash and marketable securities of approximately $4.1 billion. Accounts receivable increased sequentially and year-over-year to approximately $1.3 billion due to strong sales in the fourth quarter. Inventory balance increased year-over-year to approximately $1.8 billion. For our fourth quarter of 2025, we generated free cash flow of $430 million, a $30 million increase from the prior year quarter. For the full year 2025, we generated free cash flow of approximately $1.4 billion, a $24 million increase from the prior year. Our full year 2025 capital expenditures were $270 million, an increase of $77 million over the prior year. For 2026, we expect free cash flow to be approximately $1.4 billion, approximately $400 million of capital expenditures. The expected year-over-year increase in capital expenditures primarily due to a new manufacturing facility in Thailand, we expect to be operational in early 2027. During 2025, we paid dividends of approximately $664 million. Also, we announced our plan to seek shareholder approval for a $0.60 increase in our annual dividend beginning with the June 2026 payment. This is a 17% increase from our current annual dividend $3.60. We proposed a cash dividend of $4.20, $1.05 per share per quarter. 2025, we purchased $181 million of company shares. Also, our Board of Directors recently approved a $500 million share purchase program through December 2028 to replace the remainder of the previous $300 million authorization. Our full year 2025 pro forma effective tax rate was 17.4% compared to 16.7% in the prior year. Increase in the current year effective tax rate is primarily due to the 2025 U.S. tax legislation, which changed capitalization requirements of certain R&D costs, resulting in a decrease in certain U.S. tax deductions and credits. Turning next to our full year 2026 guidance. We estimate revenue approximately $7.9 billion increased approximately 9% for 2025. We expect gross margin to be approximately 58.5%, a 20 basis point lower than our 2025 gross margin due to higher product costs, partially offset by favorable segment mix. We expect an operating margin of approximately 25.5%. 2026 pro forma effective tax rate is expected to be 16% a 140 basis point decrease compared to 2025. Expected year-over-year decrease in 2026 pro forma effective tax rate, primarily due to an increase in certain U.S. tax deductions, result of certain provisions in 2025 U.S. tax legislation, which came effective 2026. This results in expected pro forma earnings per share approximately $9.35, a 9% increase over 2025 pro forma earnings per share. This concludes our formal remarks. Jade, can you please open the line for Q&A. Operator: [Operator Instructions] Your first question comes from the line of Joseph Cardoso from JPM. Joseph Cardoso: Maybe if I could, for the first one, just wanted to touch on the memory side of things. Like Cliff, I appreciate the comments that you made, but I was curious if you could help contextualize more, like how material of an impact you're expecting memory to be on your 2026 guide and which areas of the portfolio are more or less impacted there? And then as we think about mitigation factors, you obviously mentioned the inventory. However, how are you thinking about other levers like de-specking or pricing to offset any headwinds here? And then I have a follow-up. Clifton Pemble: Joe, I think in terms of quantifying the impact, we don't quantify individual components of our cost structure. So we won't be sharing that. Definitely, there's pressure on memory costs. There are certainly a lot of items in our overall BoM that are pricier items like displays and that kind of thing. So we simply just manage the entire BoM to be as cost efficient as possible. There's other opportunities to make the BoMs more efficient and also make our overall supply chain more efficient, looking for cost opportunities across the spectrum. So we're working all different angles, and there isn't 1 area to identify that we would isolate because it's the entire picture. I would remind everyone that our overall margin structure is higher, and that's because we're a vertically integrated company. And so therefore, when we see some variation at the BoM level, of course, the impact to the overall margin is less impactful. Joseph Cardoso: Got it. I appreciate the color there. And then maybe just as my follow-up, obviously, another strong quarter -- actually a year for wearables and in fitness. You highlighted share gains and obviously, the market growth around product refreshes as key drivers. I'm assuming pricing has also been a tailwind this year for Garmin, correct me if I'm wrong there. But could you maybe just talk about how each of these factors have contributed at least at a high level to the wearables growth this year? And as we think about growth for 2026 that you highlighted as being a larger contributor, at least as it relates to the fitness segment as a whole. How are you thinking about each of these factors and any kind of shift in terms of contribution there. Clifton Pemble: Our 2025 results in fitness and outdoor was influenced heavily by wearables. And definitely, volume was the driver. There's some minor impact from ASP, but most of it was really volume driven. And as we look forward to 2026, we feel like the momentum in the market for our brand and for our products is still there. That's why we're basically on the qualitative side of things, saying that we expect the growth to continue, and we also expect that fitness will be the larger contributor because of the broader product line across running and advanced wellness. Joseph Cardoso: And Cliff, maybe just anything between how much is new customers versus existing customers refreshing from '25 looking at '26? Clifton Pemble: Yes. I think we're still seeing -- most of our new customers are new to Garmin. So that's a very encouraging thing, and we see strong pull-through rates on registrations, showing that as products go into the channel, they're selling out and customers are activating those. So we feel very positive about the customer trends and very positive about the retail landscape. Operator: Your next question comes from the line of Erik Woodring from Morgan Stanley. Erik Woodring: Cliff, maybe just touching on auto OEM. Back in early 2023, you first introduced the idea that this business could grow 40% annually. I think the target was scaling to $800 million of annual revenue. You didn't quite get there, but I would just love to, like, better understand from you what you learned about this business over the last 3 years, that gives you the conviction to kind of double down as we go forward? And just to carry on that is just what details can you share with us about the next evolution of this business with Mercedes as we think about 3-year growth rates or customer diversification targets or target margins. I would just love to understand kind of what you learned and how that influences the next 3 years of this business, please? And then a follow-up. Clifton Pemble: Okay. Yes. So our view in 2023 was based on what we knew at the time, which was based on projections given to us by our automotive OEM partners and of course, like everything, they go through cycles and some of their assumptions are not always correct. And in that case, I think the outlook was more positive then than what it turned out to be because of changes in the overall -- their market structure and their geographic results, whether it's between Asia, Americas or Europe. So that's the situation we found ourselves in. In terms of what we learned, I think we have been managing this business really for 2 goals. One is to achieve scale, and we're working and making good progress towards that. The other is to invest for the future so that we can demonstrate to automakers that we have the innovation capability and the operational capability to meet their needs. And I think we've definitely achieved that as well. And so as we look forward, one of the adjustments we're making is to shift some of those R&D resources that we've been using to develop new business and concepts and develop our other product lines, and we feel like we've reached a point of critical mass where automakers realize that we can do this job for them, and it would then allow us to work on the scale part of the equation. Erik Woodring: And then maybe just following up, I was kind of taken aback by your outdoor comments on 2026 or it was at least eye-catching, you're alluding to accelerating growth in new product features. I guess I was just going through the IDC data quickly. And fenix is the large majority of wearables revenue in the outdoor segment. And if history is a guide, the next fenix wouldn't launch until January 2027. So I guess, just I'm wondering inherently in your messaging about outdoor, if you're maybe messaging different timing for fenix launch or if maybe you're expecting to launch all new models in this segment? Just trying to kind of get a better understanding of exactly how to think about new product launches and the potential for acceleration in outdoor this year? Clifton Pemble: Well, we don't comment on specific product launch timing. The only thing that we would like people to know is that we do have a very active year plan for outdoor. And I would expect that many of our launches would occur in the back half of the year, which is why I commented that we expect the revenue to be stronger in the back half. So that's our plan, and we'll continue to update people as we go along throughout the year. Operator: Your next question comes from the line of Tim Long from Barclays. Alyssa Shreves: You have Alyssa on from Tim Long's team. Just a quick question on aviation. With the Black Hawk win, should we kind of assume higher military exposure in the aviation segment? Is this an area of expansion for you? Just kind of trying to think about if there's different go-to-market strategy there? And then I have a follow-up. Clifton Pemble: In terms of a project like the Black Hawk helicopter, they're using commercial off-the-shelf components from our cockpit system lineup to retrofit those aircraft and fully modernize them. And this is an example of a great program. There's lots of these kinds of programs around where they don't necessarily have to be the same kind of hardened military requirements for what people might think of for fighter jets and that kind of thing. But we still can provide modern cockpit systems to these workhorse aircraft that the military depends on. So it definitely is a growth opportunity, but they're incremental in our view. So they add to the total, and they're good wins, and we continue to pursue more. Alyssa Shreves: That's helpful. And then just a follow-up, how is -- any update on how Connect+ uptake is tracking? Clifton Pemble: So Connect+ is definitely an exciting adder to our business. We added the nutrition features I mentioned earlier. The nutrition feature really accelerated the number of free trials that we have. And so that was really good to see. And also, the conversion rate of those trials is very, very high. So we think that's a winner feature and we'll continue to expand and enhance Connect+ in order to add more value to customers there. Operator: Your next question comes from the line of Ben Bollin from Cleveland Research Company. Benjamin Bollin: Cliff, could you talk a little bit more about Mercedes in this ramp opportunity? Is this for 2027 model years, so it commences in late '26. Is this commencing in later '27 for 2028 model year? Just any thoughts on when we can start to expect some contribution from that effort? Clifton Pemble: I think there'll be some limited contributions in late 2026. It's really, I would say, inconsequential, but the ramp is really early 2027 and it's a very aggressive program and ramp with significant volumes that will be achieved over the life of the program. Benjamin Bollin: The other one I wanted to touch on is you commented a little bit about channel inventory overall. Have you seen any change in behavior of your retail partners as they've recognized that hardware costs are going up broadly in other consumer electronics. Do you think that's influencing their commitments or their visibility they're providing you? Any thoughts on pull forward that you might be seeing? That's it for me. Clifton Pemble: Yes. I think retailers really are enthused about carrying our brand. We saw a much higher level of engagement from certain retailers over the holiday season as they were happy to offer something from Garmin that was different from everything else that they typically offer. And I think their enthusiasm is really triggered by their customers. They see customers coming into the store, the customers are buying. So I feel like, overall, the retail picture, especially some of the brick-and-mortars, has been very positive. Operator: Your next question comes from the line of David MacGregor from Longbow Research. David S. MacGregor: I wanted to just start on fitness and ask you about the Truemed collaboration and how meaningful the 2026 revenue growth allowing HSA/FSA funds to be used in the purchase of select Garmin products could turn out to be. Clifton Pemble: Truemed is a way by which people can purchase the product on our website using their HSA funds. And it really is a great program, and each product that's in the program has to be evaluated and approved, but it allows people another payment approach basically on our website. So the customers come directly to our website. They purchased the product that's available to be purchased with this program. And it has quickly become one of our significant outlets, if you will, if you consider it a stand-alone outlet for our products. David S. MacGregor: Okay. Let me just follow up by, again, within fitness. Just thinking about within the wearables category, sort of nontraditional form factors, how are you thinking about the opportunity for Garmin there and from a timing standpoint? How likely we are to see developing something and introducing something there. Clifton Pemble: We don't share our future product plans in what direction we might go with those. I would point everyone to our history, which is that we explore new product categories and new form factors and deliver really great products to our customers. So that's what we'll continue to do to drive and grow the segment. David S. MacGregor: Okay. If I could just squeeze in a third one quickly. Are you able to quantify the benefit to Garmin, if the Supreme Court overturns the IEEPA tariffs? Clifton Pemble: Yes. We probably won't share specific dollar amounts, but as you can appreciate, the 20% tariff and now moving to 15% is a significant cost adder to our products. So as we mentioned in our remarks, we've done an excellent job. Our teams across the world have done phenomenal in mitigating that. And I think we've come out on the other side of that in a very, very good position and if it goes away, then certainly that changes the game in terms of our cost structure and things, but there's offsetting factors, too, with the supply chain constraints and memory issues that are going on right now. So there will be puts and takes, but we're not really counting on one approach or the other. We're assuming that everything stays pretty much as it is with regard to tariffs. Operator: Your next question comes from the line of Ivan Feinseth from Tigress Financial Partners. Ivan Feinseth: Congratulations on another great quarter and phenomenal year. While some of my questions have been answered as far as tariffs and memory concerns, it's incredible that your supply chain and your integrated manufacturing capabilities have helped to mitigate that. With the launch of your new products that have connectivity like the fenix 8 Pro and the expanded capabilities in the new inReach Mini 3. What kind of uptake are you seeing on the subscription services? And what percentage, for example, of people buying the fenix 8 Pro are opt-in for the LTE and satellite connectivity. Clifton Pemble: Yes. I think fenix 8 Pro is a product that's built around connectivity. So when somebody buys that product, they're definitely interested and motivated to activate the inReach service. We've already seen SOS events with the fenix 8 Pro, where people bought the product, are wearing them on adventures and they needed help or needed some other kind of service while they were out there, and they were able to achieve that right on the wrist. So we think it's a breakthrough platform. It's certainly not for everyone. But on the other hand, it's an important adder to our product line, and we'll continue to expand on that to add that capability to more products. Ivan Feinseth: And my follow-up question is, what kind of halo effect are you seeing on products from your acquisition last year of MYLAPS, including there was some optimism that would help with, for example, the Garmin Catalyst, and I see just launched an upgrade to the Catalyst was that -- did that have an effect and then you just launched some competitive track capabilities on the new Zumo XT3. Clifton Pemble: Yes. So MYLAPS allows us the opportunity to improve the overall race experience for customers from the sign-up process on through to race day, in race results and the devices that they wear during the race. So we feel like this is going to give us a high level of fidelity with customers as they embrace and pursue these race activities. And in terms of the other markets, one of the benefits of MYLAPS is that it's across many different markets, so running is one, but they also do, as you say, the racing and also moving into equine as well. So we just feel like that opens up new avenues for us to apply our innovation and our unique products into new areas. Operator: Your next question comes from the line of Noah Zatzkin from KeyBanc Capital Markets. Noah Zatzkin: I guess maybe zooming out, if you could just kind of share any thoughts maybe around the global wearables market, how that's kind of been trending? Has it been kind of stagnant or a tailwind to your trends? And any changes that you've seen over the last year or so, either competitively or just in overall growth rates? Clifton Pemble: So from our perspective, what we believe is happening is that the overall market has been on a growth path. I would call it in the steady growth in the mid-single to up to 10% kind of range. Everyone will get confirmation on that as data comes out for the full year. But that's our belief of what's happening in the market. So that's one driver of our overall growth, but market share has been a really important one for us as well as we've been able to take share both above and below us, from different players. And so I think people recognize the value of our products and the uniqueness of the features that they offer, and we're seeing the results of that with our market share. Noah Zatzkin: Great. Really helpful. And then maybe just one more on marine, impressive growth there in '25, given kind of the choppiness in the end market. So I think you mentioned maybe kind of consistent growth expected in '26. What's kind of underlying that from a kind of industry perspective? And in general, like any thoughts around the marine industry looking out this year would be great. Clifton Pemble: Well, what we see in marine is that the market has been -- I'd say, finding its footing and is incrementally positive as we move into 2026. So the underlying market seems, I would say, healthy. The boat shows seem very active. And it's a similar story where especially those larger boats with more equipment, they tend to be very popular and a lot of our equipment goes on those boats. And of course, in the fishing story with our products and the industry-leading sonar capability and chartplotters and mapping all of those things are driving market share for us as well. Operator: Your next question comes from the line of Ron Epstein from Bank of America. Ronald Epstein: So yes, maybe just changing gears a little bit in the aviation direction. Cliff, can you talk a little bit to the recent acquisition facility you guys bought in Meta and what your goal is for that and what that can bring to the table for Garmin? Clifton Pemble: Yes. So we were really excited to find that facility. We have lots of projects and lots of equipment that have to go into all kinds of aircraft. As you know, the process of taking our products to market is not as simple as just creating the product. They all have to be certified on each type of aircraft. And this facility allows us not only very, very significant hanger space to bring in very large aircraft, but it also allows us to build a completely new staff of people that can do certification work in aircraft modifications. So we believe over the long term that will help us reach new opportunities and more aircraft with more equipment. Ronald Epstein: And if I can read between the lines a little bit, does the facility like this give you the capability to maybe offer things on larger airplanes? Clifton Pemble: Well, it's a very large hanger. Yes, I'm excited about that. Ronald Epstein: All right. And if I may, just a quick follow-on here. Following up on -- I think it was Alyssa's question earlier about some of the defense stuff you guys are doing? With the changes in the defense acquisition system, the Department of War, Department of Defense, whatever you want to call it, has been trying to do more stuff on commercial terms with commercial contractors broadly. And you guys are almost exclusively commercial. Is that opening any doors for you to do other things that maybe weren't -- I don't know, in the plan just a year ago before they really started to push more commercial just because one would think potentially, given everything that's going on, maybe that is more opportunity for you all. Clifton Pemble: We believe that will bring more opportunities even though some of these discussions and the shift has started to gain some momentum. The actual selection and identification of programs and all of that still takes time. So we view it as a long-term opportunity, but a nice shift as people look at the equipment that's available and realize that military especially could benefit from the commercial products that we offer. Operator: Your next question comes from the line of Erik Woodring from Morgan Stanley. Erik Woodring: Just one quick follow-up, Cliff. I would just love to know how you're thinking about kind of the ratable side of your business. Over the last 3 years, that revenue capture over time has marginally decreased to around 5%, that's really seems to be mostly part of your success in the transactional business. So I'm just wondering how much of a priority is growing this ratable kind of part of your business? And is there any way. I know it kind of constitute subscriptions and services. But is there a way to help us think about margins on the ratable business versus the point-in-time business? Clifton Pemble: Yes. I think like every kind of subscription-based business, the margins tend to be higher. Service-based businesses are definitely higher that way. Our objective is to grow those within Garmin, but we also are not focusing on that as the only growth path. And so we're growing everything around it. The nice part is that our subscription base business has been growing as strongly or even stronger than the overall business, but everything else is growing around it so much that it still hasn't triggered that 10% threshold yet. So we feel like we're in a good position. We have lots of ideas of things that we can offer people going forward. And we're going to continue to build that business across every one of our segments. Operator: At this time, there are no further questions. I will now turn the call back to Teri Seck for closing remarks. Teri Seck: Thanks, everyone, for joining us today. As usual, Doug and I are available for callbacks. And we hope you have a great day. Bye. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wingstop Inc.'s Fiscal Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded today, Wednesday, February 18, 2026. On the call today are Michael Skipworth, President and Chief Executive Officer; Alex Kaleida, Senior Vice President and Chief Financial Officer; and Sarah Niehaus, Senior Director of Investor Relations. I would now like to turn the conference over to Sarah. Please go ahead. Sarah Niehaus: Thank you, and welcome to the fiscal fourth quarter and full year 2025 earnings conference call for Wingstop. Our results were published earlier this morning and are available on our Investor Relations website at ir.wingstop.com. Our discussion today includes forward-looking statements. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties that could cause our actual results to differ materially from what we currently expect. Our SEC filings describe various risks that could affect our future operating results and financial condition. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release. Lastly, for the Q&A session. We ask that each of you please keep to one question and a follow-up to allow as many participants as possible to ask a question. With that, I would like to turn the call over to Michael. Michael Skipworth: Thank you, Sarah, and good morning. We appreciate everyone joining our call. As we enter 2026, I could not be more excited about what is in front of us here at Wingstop. Our 2025 results showcase the resiliency of our asset-light, highly franchised model and demonstrated the opportunity we have to scale Wingstop to over 10,000 restaurants globally. We surpassed a milestone of 3,000 restaurants and launched six new international markets outside of the U.S. This resulted in system-wide sales growth of 12% despite a decline in same-store sales of 3%. While this was our first same-store sales decline in 22 years, I continue to be reminded of how our business has scaled in the last three years, which on a stacked basis was an impressive 35% in same-store sales growth and has allowed us to reach average unit volumes of $2 million. And as we set our sights on $3 million AUVs central to our strategy is our unit economics and our brand partner profitability. Our corporate restaurants with AUVs now approaching $2.5 million provide a great example with margins in the mid-20% range. Our brand partners see the long-term potential in their returns and are signing up for a record number of commitments, evidenced by approximately 2,300 restaurant commitments as of the end of 2025. Lastly, with an adjusted EBITDA growth of 15% in 2025, we continue to demonstrate the durability and consistency of our asset-light, capital-efficient model. I firmly believe we'll look back at 2025 as a transformational year for Wingstop with the national rollout of the Wingstop Smart Kitchen and the development of our first loyalty program. 2026 will leverage these strategies by expanding awareness and consideration to bring in new guests and increase frequency among our current guests. We have a clear view into our demand space, our core consumer and the opportunity in front of us. Our core demand space is an off-premise occasion, typically involving two or more adults eating together where a high-quality indulgent experience matters most. Flavors, variety and cook to order are top of mind for our targeted consumer and are core to what Wingstop has delivered for decades, but we also know these consumers expect a fast and consistent experience. Today, we are only capturing roughly 2% of this demand space, underscoring the significant runway ahead to the 20% we consider to be our fair share. I'm confident we are executing the strategies that will close that gap. At the center is the Wingstop Smart Kitchen, a new kitchen operating platform that fundamentally raises our game and our ability to deliver on speed and provide a consistent, high-quality experience at scale. In 2025, we set an ambitious goal to roll out Wingstop's market in more than 2,500 restaurants in less than 10 months, a scale and pace that represents the excitement our brand partners have. I'm pleased to share that as we closed out 2025, the Wingstop Smart Kitchen has been installed in all of our domestic restaurants. With the Wingstop Smart Kitchen fully deployed, the focus now shifts from rollout to execution. We have introduced new operating standards centered on our objectives with speed and accuracy supported by clear expectations and accountability. The Wingstop Smart Kitchen is a considerable culture shift for how we operate our restaurants. Our restaurants are evolving from a back-of-house operation that was based on paper kitchen tickets to an AI-enabled state-of-the-art custom-built technology that enhances the team member and guest experience. With the rollout complete, we are now measuring the new Wingstop standard, and our brand partners are including these elements in their team member incentive compensation programs. These are two best practices we have demonstrated in our corporate restaurants that will drive results. While our focus in 2025 has been on the rollout and operationalizing the Wingstop Smart Kitchen, we are already seeing early proof points. Last quarter, we discussed the progress we've seen in the Southwest region, which continues to see a mid-single-digit delta in same-store sales versus the U.S. average. Now with more restaurants operating in the Wingstop Smart Kitchen, we're seeing results across a broader set of restaurants, operating on the platform and delivering on the 10-minute speed of service. These restaurants are showing improved customer frequency compared to restaurants that have recently launched on the platform or that are not delivering our new speed standard consistently. We also see an increase in transactions at the lunch daypart, reflecting both speed of service improvement and an enhanced guest experience. The data is very encouraging. However, we can also see opportunities in specific dayparts or in key windows, such as a busy Friday or Saturday night during dinner. While we are seeing a significant improvement in speed of service in these key dayparts relative to our prior operations, consistency and a reliable experience is what our guests expect of us. And for restaurants that are delivering 10-minute times, guests are rewarding us for it, which really speaks to the long-term opportunity we have in front of us. The speed of service the Wingstop Smart Kitchen enables can meaningfully increase consideration among delivery consumers, where speed is a critical factor. We're making good progress here. On average, restaurants are consistently seen a delivery time reductions of approximately 15% year-over-year. This change in delivery times has increased menu to order conversions on our aggregators since launch. But that being said, we are not seeing the reduction in our overall delivery times match, the reduction we're seeing in the speed of service within our restaurant operations. This is something we are working on closely with our delivery partners to ensure we are realizing the full benefit of the improvements we are making in speed. It's about consistent execution at every moment we interact with guests. We have a level of visibility into our operations we haven't had before, providing us the ability to identify opportunities for retraining and execution improvements in almost a real-time basis. As our restaurants attract new guests into the brand, ensuring that first experience meets our standards is critical to driving repeat visits and long-term loyalty. That means paring speed and accuracy with the hospitality and quality that defines Wingstop. This focus on operating discipline is a critical part of how we are setting the business up for 2026. Shifting from strategic investments to activating this growth engine that will drive us towards our goal of $3 million AUVs. With the Wingstop Smart Kitchen as an enabler, we are now in a position to widen the top of the brand funnel to bring in new guests and showcase those everyday occasions that Wingstop can deliver. That's where our new brand campaign comes into play, which we're calling Wingstop is here. Wingstop is a center-of-the-plate occasion for everyone, and our campaign is focused on showcasing these occasions to expand awareness and consideration, a significant gap we've benchmarked to levels of larger or more mature national brands. Even in this current operating environment as pressures on lower income guests have persisted we continue to see resilience across key occasions and customer cohorts. Dinner remains our largest and best-performing daypart, overall guest satisfaction scores continue to improve and higher-income households, particularly those earning between $50,000 and $100,000 remain the fastest-growing cohort within our digital customer base. As we win more of our fair share of our demand space, we fully expect to diversify our customer base across income and age categories from a more concentrated base today. The early results from our new advertising campaign suggested is performing well, delivering record high brand recall, reinforcing our ability to broaden consideration and attract new guests and win our fair share. Our brand health metrics continue to remain strong. In fact, a data point to support this was in early February during the Super Bowl, a day that set a record for our business. To us, this was a powerful signal of the health and relevance of the Wingstop brand. Even in a more dynamic consumer environment, guests are still choosing to treat themselves and bring Wingstop into those moments that matter. It was our highest sales day on record. We acquired over 100,000 new guests in just 1 day and set record ticket levels. As execution strengthens through Wingstop Smart Kitchen, we are well positioned to win even more of these occasions over time. Alongside our opportunity to acquire new guests, it's equally important, we strengthen retention and drive frequency. We're still a low-frequency occasion with guests averaging only 1 visit per month. We see our new loyalty program. What we're referring to is Club Wingstop is a powerful way to deepen engagement and further enhance an already compelling value proposition for our guests. A loyalty program that we believe will be differentiated, a loyalty program designed to strengthen the emotional connection to our brand through rewards, personalization, access to experiences and a best-in-class digital ordering platform. During the fourth quarter of 2025, we launched a successful pilot of Club Wingstop to test the technology early features, enrollment strategies and reward models. This pilot has allowed us to gather enough learnings to be ready for a national launch at the end of the second quarter of 2026. While the pilot was focused on validating the functionality of the technology and the program, there are plenty of compelling signals in the data that are an affirmation of our strategy. Nearly 50% of active guests in the pilot market have already enrolled, including a majority of our heavy users. Frequency increased 7% among guests in the program versus their trend prior to the launch of the pilot. New guest retention rates are higher than benchmarks outside of the pilot market with over 30% of new guests signing up for the program. With a digital database of more than 60 million users and the Wingstop Smart Kitchen fully rolled out across the system, we believe we have the foundation in place to activate loyalty effectively. As with any program of this scale, we anticipate that the impact of loyalty will build over time as enrollment grows and engagement deepens, coinciding with feature releases and enhanced personalization strategies, we expect Club Wingstop to contribute meaningfully to our strategy of scaling AUVs to $3 million. While we continue to focus on AUV growth, a significant part of our growth story is unit development, which we believe represents a structural competitive advantage for Wingstop. For the full year, we opened 493 restaurants globally, a significant achievement against our long-term opportunity of 10,000 restaurants globally. System-wide sales grew to over $5 billion. This marks another record year in development, and in our view, is one of the strongest indicators of the health of our business. What gives us confidence looking at is not just the pace of openings, but the visibility we have into future commitments, development demand remains broad-based across our brand partners, and our committed pipeline provides line of sight into delivering mid-teens unit growth in 2026, well above our long-term algorithm of 10% plus. This growth continues to be executed through playbooks developed at the market level, allowing us to scale in a disciplined and sustainable way while protecting our industry-leading returns. As we continue to fill white space and grow our restaurant base, development itself becomes a demand driver, a larger, more visible footprint increases brand awareness, amplifying the impact of our marketing. This advantage extends beyond the U.S. as well. In 2025, we expanded into six new international markets and opened more than 100 restaurants outside of the U.S., both first for our brand. The response from consumers globally is incredibly exciting. An example of this is our recent House of Flavors that we opened in Milan during the Winter Olympics. This concept first introduced in Paris is an experiential venue that allows us to show consumers from across the globe what's special about the culture of Wingstop. We're excited to share that we'll be launching House of Flavor in key markets during the World Cup this summer. We have a proven market entry playbook and our success opening restaurants globally is fueling a strong business development pipeline. We anticipate opening our first flagship in Milan following Olympics, and building off the momentum from the House of Flavors in that country. Another new marketing entry we're excited about is India, a market that represents a significant long-term opportunity of more than 1,000 restaurants, where we are targeting an entry in 2026. Our global development reflects the confidence our brand partners have in the model and the proven portability of the brand, the investments we're making in talent and the substantial runway we see for Wingstop globally. Our focus remains on the long term, expanding the top of the funnel to capture more of our demand space executing our new operating standards through Wingstop Smart Kitchen and launching our differentiated loyalty program, Club Wingstop. All of which positions Wingstop to return to same-store sales growth as we move through 2026 and continue to grow system-wide sales. At the foundation of our strategies are our people and culture. We have taken deliberate steps to ensure our leadership structure is aligned with enabling this next phase of growth. In January, we reinstated the Chief Operating Officer role with the appointment of Raj Kapoor. Raj is a seasoned global leader who joined us nearly 3 years ago from a large prominent global business, we helped more than double the business at scale from 25,000 stores to 50,000 plus. Since Raj joined us, he's built and developed his team to execute our international playbook. A great example is the opening of six new markets this past year. He also has a lot of experience delivering on 10-minute speed of service, an operating standard that has been in place in our international markets for years. Raj will lead global operations in development and is an incredible talent who has experienced operating scale brands globally. We've studied how other successful global growth companies have scaled and applied those learnings at Wingstop. In addition to the COO role, we've taken an opportunity to optimize our leadership team to streamline decision-making, unlock growth opportunities for the talent we've been investing in and create greater clarity across the organization. This structure enhances operational consistency and accountability across the system globally while importantly, positioning our talent and company for our next phase of growth. One important element of the changes in our structure was informed by the investments in our technology innovations. As we are approaching our loyalty launch, we saw an opportunity to create two teams that I believe will keep technology innovation, data analytics and insights as a competitive advantage. The first is the formation of what we are calling a commercial team that will harness our rich database and insights to execute our personalization strategies, including the national launch of Club Wingstop. The second is the formation of an analytics center of excellence to build capabilities, unlock deeper insights and accelerate best practices at scale. 2025 was a transformational year for Wingstop with the rollout of Wingstop Smart Kitchen, building our loyalty program, accelerating our global footprint and setting up an organizational structure that is positioned for this next phase of growth. 2026 will be about executing these strategies, and I couldn't be more excited by the progress we are making. Before I hand the call over to Alex, I want to thank our brand partners, team members and shareholders for their continued support and confidence in Wingstop. With strong fundamentals and a robust development pipeline, we are executing a clear plan to drive AUV expansion, protect industry-leading unit economics and scale towards our long-term opportunity of more than 10,000 restaurants worldwide and our ambition to become a top 10 global restaurant brand. With that, I'll turn the call over to Alex. Alex Kaleida: Thanks, Michael. 2025 was marked with a high degree of uncertainty, but we see it as a year that drove further clarity and confidence with the strategies we are executing. We remain focused on protecting our best-in-class returns, expanding our global footprint and returning to same-store sales growth in 2026 and beyond. In Q4, we system-wide sales increased to $1.3 billion, approximately 9.3% versus 2024, driven primarily by 124 net new restaurants partially offset by a decline of 5.8% in domestic same-store sales, which is attributable to the macro pressures our core consumer continued to face. The acceleration in unit growth translated into an 8% increase versus the prior year in royalty revenue, franchise fees and other revenue for a total of $81.9 million. At the restaurant level, company-owned margins remained healthy and company-owned restaurants continued to outperform the broader system. Our company-owned same-store sales increased 1.6% in Q4. A combination of factors, including operating our new standards consistently and enabled by having the Wingstop Smart Kitchen in place for over a year. The customer mix in our Dallas restaurants also is more diverse than some of the more concentrated demographics in our system overall. The performance in our corporate restaurants illustrate the opportunity ahead. The combination of improved speed and consistency from the Wingstop Smart Kitchen pair with our new brand campaign is begin to show how these initiatives can work together to positively impact performance over time. Overall, company cost of sales in the fourth quarter were 75.6%, an improvement of 200 basis points versus 2024. Food costs were largely stable as a percentage of sales, benefiting from lower wing costs in our supply chain strategy, which continues to provide strong visibility and predictability into food costs. For modeling purposes, we anticipate company-owned cost of sales to be in the range of 75% for 2026. These results highlight the strength of our unit level economics, which remain among the best in the industry and continue to fuel brand partner demand for more Wingstops. SG&A increased $2.1 million versus the prior year comparable period to $33.3 million in the fourth quarter of 2025, driven primarily by headcount-related investments to support the growth and scale of the business, along with continued investments in technology. These increases were partially offset by lower incentive-based compensation versus the prior year. Overall, we remain disciplined in how we invest while ensuring we are appropriately resourced to support our long-term strategies. Our profitability remains strong. Adjusted EBITDA in Q4 increased approximately 10% versus 2024 to $61.9 million, underscoring the durability of our model. The strength of our model allowed us to deliver adjusted earnings per diluted share of $1, an increase of 5% this quarter versus 2024. This includes an $0.18 per share impact from the additional interest expense associated with our $500 million securitization transaction completed at the end of 2024. Development continues to be a major contributor to our financial model. We have scaled from 255 net new restaurants in 2023 to 349 in 2024, and now to 493 for the full year in 2025, providing meaningful growth in system sales, royalty revenue and adjusted EBITDA. Importantly, this growth is supported by attractive unit economics, with domestic AUVs at $2 million on a low upfront investment of roughly $580,000. And our asset-light model continues to generate strong free cash flow which allows us to invest in the business while also returning capital to shareholders in a disciplined and consistent manner. During 2025, we returned over $250 million of capital to shareholders through a combination of dividends and share repurchases. On February 17, 2026, our Board of Directors authorized and declared a quarterly dividend of $0.30 per share of common stock to be paid on March 27, 2026, to stockholders of record as of March 6, 2026, totaling approximately $8.3 million. In the fourth quarter, we repurchased and retired 248,278 shares at an average share price of $241.65. At the end of 2025, $91.3 million remained available under our existing share repurchase authorization. Since inception of our share repurchase program in August of 2023 we have repurchased and retired over 2.5 million shares of common stock at an average price of $258.64. Our ability to consistently return capital remains an important component of our strategy to maximize shareholder returns. Let's now move to guidance for 2026. We are continuing to execute against the long-term strategies that we have reinforced throughout 2025, strategies designed to return Wingstop same-store sales to growth. Similar to what we shared on our last call and as we entered 2026, we expect that the consumer environment to remain choppy with continued pressure on our core consumer. That said, we believe the strategies we have in place position us to navigate this current operating environment. As the Wingstop Smart Kitchen execution continues to unfold, loyalty launches nationally and our marketing efforts continue to broaden the top of the funnel, we believe these strategies will lead us to a return to same-store sales growth. With that, our 2026 outlook for domestic same-store sales is flat to low single-digit percent growth. Global unit development remains a key contributor in 2026 as embedded in our outlook. Based on the strength of our committed pipeline and the visibility we have today, we anticipate global unit growth to be between 15% and 16%, well above our long-term algorithm of 10%. This growth is driven by broad-based demand across our brand partner base and continued expansion internationally. As we look to the cadence of openings this year, we expect the first half to be a bit lighter relative to the balance of the year. This is largely related to the fact that we unveiled a new restaurant refresh design, a design that drew inspiration from our international restaurants. And while a change was not mandated, many of our brand partners have proactively elected to retool construction plans to incorporate this new design into restaurants scheduled for early 2026, which extends construction time lines modestly. Importantly, however, this does not change our full year expectations. SG&A guidance is estimated to be between $151 million and $154 million, which includes approximately $32 million of stock-based compensation expense and $3 million of restructuring charges associated with the organization changes Michael discussed earlier. By utilizing these inputs and for modeling purposes, our adjusted EBITDA growth rate translates to approximately 15% in 2026. Our financial performance in 2025 underscores the strength of Wingstop's model. We delivered double-digit revenue growth, mid-teens adjusted EBITDA growth, record unit development and provided significant capital returns, while continuing to invest behind our long-term growth strategies. We are proud of the progress we have made against our strategies and confident in our position as we enter this next phase of growth. What impresses me most about Wingstop is the people and culture that transcend the brand. While 2025 is a year with a lot of uncertainty, our team remains focused on executing our strategies and have us on our path to scaling Wingstop into a top 10 global restaurant brand. With that, operator, please open the line for questions. Operator: [Operator Instructions] The first question today comes from David Tarantino with Baird. David Tarantino: Michael, I just wanted to ask about the guidance for comps to turn positive this year. So I guess two parts to my question. One, are you already seeing signs of improvement in the first quarter relative to what you did in the fourth quarter? And then secondly, I guess, you laid out all the initiatives to try to understand, but I was hoping you could just talk about your degree of confidence in the turn there in light of all the macro cross currents. Michael Skipworth: Good morning, David. I guess to start with the first part of your question, maybe I'll start a little bit with the fourth quarter. And I would say, generally speaking, the trends played out pretty much in line with our expectations. On our last earnings call, we talked about trends had stabilized, and we saw that continue into the start of 2026. I will tell you, we're not usually want to talk about weather, but we did have with -- associated with some of the winter storms a few weeks ago. We did have at its peak over 700 restaurants that were closed and then the second wave there, another 400 restaurants. And so that obviously impacted our trend as we look at it in 2026. But as we think about the year, we anticipate sequential improvement as we progress through the year and a return to growth as these strategies come together. And what I would really say, David, is 2025 was focused on the rollout and operationalizing Smart Kitchen in 2026. We're laser-focused on execution and delivering a consistent 10-minute speed of service, and what we're seeing in the data and the results is really encouraging. Operator: The next question comes from Chris O'Cull with Stifel. Christopher O'Cull: Michael, what percentage of the system is already achieving the 10-minute ticket time consistently? And then can you give us a sense of the initiatives or training you think is going to be necessary to get the remainder on track to achieve those times? Then I had a follow-up. Michael Skipworth: Yes, Chris, it's a great question, and thank you. What I would say is, and I think we mentioned it earlier, we would say, if you look at it, roughly 50% of the restaurants are hitting 10 minutes, but that's us looking really at kind of daily and weekly averages. And what's super important and one of the things we've really started to lean into is it's every order. It's every guest occasion where we deliver that 10 minutes. And so we're really starting to cut the data and look at it super closely. And the way we're attacking this, really, it's not anything I would say new for our brand, and these are some initiatives that we actually deployed in our company-owned restaurants over a year ago. One of them starts with just an operation scorecard, where we are measuring performance against this new Wingstop standard and continuing to track progress against that. And then the other thing is our brand partners as we started 2026, and they launched their new incentive comp programs for their teams. They have incorporated these metrics, which we know from history will drive the right behavior. And so that is already having an impact as we look at just total number of orders that are delivering on a 10-minute speed of service. Just from the beginning of this year to today, we've already seen a 10 percentage point improvement. And so we're encouraged by the progress we're making, and we're focused on the execution and delivering on that 10-minute speed of service because we can see the impact of when we do and the numbers and how guests engage with our brand. Christopher O'Cull: Helpful. And then you mentioned delivery times, we're not seeing the same level of progress as the speed of service improvements in the back of the house. Why do you think that's happening? Alex Kaleida: Chris, this is Alex. Yes, it's an interesting question. I think we've got really good partners with us on our delivery marketplaces. And we talked about before just the algorithms taking some time to improve. But similar to how we're measuring success with our restaurant teams. We also have some operational things we're working through with driver performance on delivery times. So we're working through that. But we've had a step down of about 15% delivery times. And to Michael's point on the improvements we've seen this year, we're also seeing those improvements in delivery times. One other data point is on our dinner daypart on Friday-Saturday night, where a majority of new guests are coming in. We're delivering about 10 minutes about -- 30% of our restaurants are delivering 10-minute service times, but if you look at the delivery times of those getting under 30 minutes, you could probably cut that number in half in terms of percent of restaurants. So it speaks to the opportunity we're working on, that we're laser-focused and to Michael's point is all about execution this year. Operator: The next question comes from Jeffrey Bernstein with Barclays. Jeffrey Bernstein: My first question was just on the long-term guidance. I believe in the past, you've talked about mid-single digit for the next 3 to 5 years. I know that's a moving target. But what indicators would lead you to tweak that downward. I know your long-term guidance beyond that time frame is low single digit, and that is the 2026 guidance for flat to low. So I'm just wondering or maybe you're assuming a return to mid-single digit next year. Just wondering how you think about the framework of that currently assumed mid-single digit for the next few years? And then I had one follow-up. Michael Skipworth: Jeff, I think clearly, we've acknowledged and you've heard other brands acknowledge just the current environment we're in right now. But I would say what we're focused on this year is really things that we can control, and that's around execution, delivering a consistent 10-minute speed of service. And then as we look to the back end of Q2, the national launch of our loyalty program, which we're really excited about. And doing that in a way that we think will be best-in-class. And we think the combination of those two things will drive our business and allow us to return to growth, and that's what we're focused on and think that will allow us to deliver on the outlook that we shared in our prepared remarks this morning. Jeffrey Bernstein: Understood. And my follow-up is just so I was looking back for a second in terms of maybe some learnings from 2025. You called it a transformational year, but seemingly disappointing with the comp below your plan and maybe what you were initially targeting and obviously being the first negative in a long, long time. But if you were to look back, I mean, what do you believe were internal versus macro? Maybe what would you have done differently, things that maybe were in your control, or would you say you know what the entirety of the disappointment on comp was macro-driven? Michael Skipworth: Jeff, I would say when we look at 2025, we talked about it throughout the year, I think, quite a bit. But we looked at really the underlying health of the brand. And we saw really strong signals there. We saw frequency holding. We saw quality and satisfaction scores increasing. And we look at our dinner daypart as an example, a key daypart for us. It remains strong. And we did see some pockets of softness in certain dayparts like lunch and snack, but we really focused on 2025, and I think what we're really proud of is in over 2,500 restaurants, we implemented something like Wingstop Smart Kitchen, a new kitchen operating platform in 10 months, which is pretty remarkable. And so the effort by our brand partners, by their team, by our team is pretty remarkable. And so it could have been easy for us to really get caught up and solving for the short term, but our focus was making sure we're investing strategically and setting the business up for that next phase of growth. And as we look at 2026, that's what we're really excited about. Operator: The next question comes from Christine Cho with Goldman Sachs. Hyun Jin Cho: Really great to hear the impact of Smart Kitchen on speed of service, and how guests are rewarding you for that consistency. But I'd love to learn more about how it's impacting the staff and the restaurant team specifically. I think you've previously mentioned, it helps to reduce the time to train the new staff and improve kind of staff retention. Are there any early signs or metrics you can share on how it's impacting the labor productivity in the stores? Michael Skipworth: Hi, Christine, good morning. I think we shared a few times throughout 2025, that in our corporate-owned restaurants, we were experiencing some of the lowest turnover we've had. And I think that is a strong indication of the team members' experience with this new kitchen operating platform. And quite simply put, it provides a high degree of focus, and generally speaking, it makes it easier for them to do the job we're asking them to do to take care of our guests. And so that's been super encouraging. But it can't be taken lightly just the culture change this is for our restaurants where we were a brand that has shifted or evolved from operating our kitchens with paper kitchen tickets to now this new technology platform. And so change management and navigating that has been a big focus. But generally speaking, the -- as I've gone out into restaurants around the country and talk to teams, the excitement and engagement with this new kitchen operating platform is really positive. Hyun Jin Cho: Great. My follow-up is related to the advertising could you discuss how you are assessing kind of the performance of the new Wingstop this year campaign? Any early indicators that you're seeing that is helping you capture kind of a larger share of everyday dining occasions and bringing kind of new guests into the brand. Michael Skipworth: Christine, yes, that's a great question. And we're really encouraged by what we're seeing in our Wingstop is Here campaign. We mentioned it in our prepared remarks, but that -- this new spot we're running right now is delivering the highest brand call we've ever had on record, which is super encouraging to see. But one of the things we look at is really our digital database, which gives us the most visibility and insight into our overall business and to the customers. And it's easy to kind of look past the fact, if you look at 2025 and the environment we're operating in, to look past the fact that our digital database grew by 20% in 2025, which is pretty remarkable. And as we look and study that data, we're seeing still Gen Z being one of the highest growth cohorts that we have. And what's been really interesting and kind of when we look at this new ad campaign, quarter-over-quarter, we're starting to see growth emerge in other demos such as Gen X, the highest growth being in that 50,000 to 100,000, but we're actually seeing growth in the 100,000 to 150,000. And what's interesting about that cohort is they're demonstrating the frequency that's very similar to our core. So I think as I look at all of this together, I think we're really encouraged by what we see in our ad campaign, and how it's working for us. But yes, it just highlights the opportunity we have in front of us to win our fair share of our core demand space, which also we believe will translate into an opportunity to diversify our customer base a little bit. Operator: The next question comes from Brian Harbour with Morgan Stanley. Brian Harbour: Michael, could you just elaborate on some of the leadership changes that you made, and why you thought now was sort of the right time to do those? Michael Skipworth: Hi, Brian, good morning. As I take a step back and look at our business and just look at it over the last few years, the reality is our business has doubled, whether you look at it restaurant count size, systems, sales, EBITDA, significant growth. And as we looked at this next phase of growth in front of the brand, I would really distill this all down to really, it's just us playing offense and making sure we're positioned for this next phase of growth. We have the clarity around decision-making. We're unlocking the opportunities and really investing in the talent that we've hired over the last few years and setting that bench up and continuing to grow that. This new design is really around driving greater clarity around operational consistency, increasing accountability. But again, it all comes down to really just positioning the brand for this next phase of growth and our ability to execute against that. Brian Harbour: Okay. Got it. And then on the third-party delivery platforms, what do you think will sort of further optimize the times there? And I guess, secondarily, I think those guys are beta testing sort of agentic AI ordering on their platforms. Have you discussed with them how you sort of present in that scenario, how to make sure that Wingstop sort of is prioritized and still is kind of ranked highly in that situation? Michael Skipworth: Yes, Brian, I would say I don't think anything has changed. If anything, maybe it strengthen as it relates to our partnerships with our third-party delivery providers. And we've talked about it over the years, but they value our business like our business. It's good for their business. And so this is an opportunity, I think, for us to continue to grow and strengthen our businesses together, whether it's through continued innovation, as you referenced. But one of the things that's really powerful about Wingstop Smart Kitchen is it's given us a level of visibility that we didn't have before. And so we know exactly when orders are prepared when they're ready, and it's allowing us to have a little bit elevated visibility, drive accountability and make sure that we're delivering on that guest's expectation around speed as it relates to third-party delivery. And so it's something we're going to continue to work at and our partners are committed to improving that experience and increasing those times that guest experience. We're pretty excited about continuing to partner with them. Operator: The next question comes from Zack Fadem with Wells Fargo. Zachary Fadem: On the topic of value, there was a lot of success around your 20 for 20 deal over the summer. And considering the deceleration afterwards, just curious to hear the thought process around not bringing that deal back. And with wing costs still favorable, any thoughts on leaning more into value in 2026? Michael Skipworth: Yes. I think when we think about value, we actually look at the overall proposition, and it's not just price. It's the quality, it's the experience, it's the speed. It's delivering on the guest expectations. And obviously, price is a component there. And I think that's where we're going to focus as we continue to scale the brand. I think I mentioned earlier, we did see in our business in 2025, some pockets of softness in certain dayparts like lunch and snack. And there could be an opportunity targeted towards certain cohorts towards certain dayparts where we can showcase existing value on our menu today, whether that's an entry-level price point for chicken sandwich or tenders. And so I think there's some opportunity there. But I think for us, it's about winning our fair share, delivering on the total guest experience, which obviously we think quality, price and speed are going to be -- and a consistent experience are elements that allow us to win. Zachary Fadem: Got it. And then as you think through the dynamics of double-digit unit growth and comps more challenged in '25. Could you walk through some of the data and KPIs that you're looking at that give you comfort that cannibalization hadn't been worse in 2025? Alex Kaleida: Zach, this is Alex. One of this -- our approach is that really helps us guide the plan for development is these market-level playbooks that we develop that line up to our 6,000-plus restaurant target in the U.S. And we have visibility into sales predictions and data that surrounds the restaurants we make choices. And then we measure the result of those restaurant openings. And I think what gives us confidence to continue at the level of growth ever seen is the results from the restaurant openings we've had in the last few years. And we haven't seen a material change versus historical trends in cannibalization to size up for you in 2025, it might have been 40 basis points more than what we had in prior years. And when we cut the data in 2025, 90% of the impact that we're seeing is from brand partners making strategic decisions to impact the restaurants as they fortress the market. And then when you look at the characteristics of the restaurants that were impacted, and we've talked about this before, is typically restaurants that have higher volume are tend to be an older vintage or have maxed out capacity in the restaurants from these small boxes that they operate in. So nothing that we see that concerns us, and we're continuing to stay focused on that unit growth opportunity for Wingstop. Operator: The next question comes from Sara Senatore with Bank of America. Sara Senatore: Just I guess, I'll start with the follow-up and then I'll ask the real question. The comp gap between franchisees and the company, I guess it narrowed a little bit. Should I interpret that as kind of half glass half full, which is the franchisees are kind of ramping up the learning curve. I just know last quarter, you saw a really wide gap and that seemed to signal kind of the building tailwind in your company stores from the Smart Kitchen. So anything to comment on there? And then I'll ask my question. Michael Skipworth: Sara, we appreciate the question. What I would say is there's -- obviously, our company-owned restaurant portfolio, it is a small number of restaurants. And so there can be nuances within that, whether it's little things like a fire in the back of house or some other electrical issue that could cause the restaurant to be down. We're encouraged by those results that we have in our corporate restaurants. But I think if you take a little bit of a step back and look at a broader sample like the entire DFW market, it actually outperformed our corporate restaurants, which to us continues to just be further proof points around the opportunity we have with Wingstop's market. We're super excited and encouraged by the progress that we're seeing throughout the system. I referenced it earlier, where over 50% of the restaurants, they're delivering an average speed of service day in and day out. But as we start to pull it apart, and look at daypart specific, that's where we're focused, and it really comes down to execution. And we're already seeing progress against execution in 2026. And so we're going to continue to focus on that and deliver on the guests expectation around speed. Sara Senatore: Got it. That's very helpful. And then on the loyalty question, the loyalty program that you're launching, I know you mentioned it's kind of a lower frequency occasion once a month. I guess the 7% increase in frequency, you saw among guests in the program, from other across the sort of restaurant industry, we hear a wide range of what joining loyalty might mean for increased frequency. Sometimes it can be much higher than that, although I don't know how sustainable it is. Would you expect that to increase sort of further as you deploy more of this sort of targeted marketing that 7%. I just think about one time per month average frequency is maybe low for traditional QSR, but perhaps more typical fast casual. So I'm just trying to figure out how high that frequency could go, and what loyalty could do for it. Michael Skipworth: Yes, Sara, we think loyalty is going to be an incredible driver for us as we think about frequency long term. And we've talked about it before, but we're not trying to be overshoot here at all. Just one more visit a quarter from our average guest is a meaningful step towards that $3 million AUV target. And what we are seeing in our loyalty pilot gets us pretty excited. I mean this pilot, it was obviously centered around testing the technology, the features, the enrollment process, but the early signals we're getting out of it have us pretty excited about what this can mean for our business long term. We have over 50% of our active guests have enrolled. We're seeing the strongest level of adoption through our highest-value guests. And what's really exciting for us is, we're seeing over 30% of new guests signing up. This is already translating in the pilot to an improvement in retention, a slight improvement in frequency, and that's without really any national support. So as we think about additional features, us supporting the launch nationally, we're excited about what loyalty can mean for our business, not just for 2026 for long term as we think about our path to $3 million AUV. Operator: The next question comes from Jon Tower with Citi. Jon Tower: Maybe just a quick follow-up on the last point on loyalty. Are you guys embedding any sort of a headwind from an accounting standpoint related to implementing the program. Alex Kaleida: Jon, this is Alex. There's nothing material at this point to consider. And one aspect, maybe just to share a little bit differently from others is that we do anticipate, to Michael's plan, to build the $3 million that this will be margin accretive over time. And I think a lot of other loyalty benchmarks also include offer components that elevate maybe kind of discounting, ours is about rewards that can be redeemed for other things such as merge and experiences, other aspects that really drive that emotional connection for the brand. Jon Tower: Got it. And then I guess, one of the comments, Michael, you had made regarding the smart kitchens as you're starting to see more consumers kind of pivot to lunch relative to stores that don't have smart kitchen. I'm just curious, have you seen any other -- or any impact on mix as a result of that? Michael Skipworth: No, I wouldn't say anything to call out as it relates to mix. We're just seeing when we can deliver on that speed expectation, which it's pretty clear is associated with the lunch occasion and do that on a consistent basis, we're seeing strength in those restaurants in that daypart. Operator: The next question comes from Gregory Francfort with Guggenheim Securities. Gregory Francfort: My question is on international. I mean, obviously, a lot of openings this quarter. And I guess I'm just curious as you think about the unit growth guidance for next year, do you think international could run up kind of close to 30% store growth again? And how has the business performed either from a comp or AUV perspective recently? Michael Skipworth: Appreciate the question about international. And it's an area of the business that we've been talking about for what feels like years talking -- referring to it as being supercharged for growth, and it's exciting to see that come alive in the business. And I think as it relates to your comments around unit growth for international business in 2026, I think that's a good way to think about it. Those businesses are opening really strong. We're continuing to expand and build out markets. The average unit volumes we're seeing in most of these new markets is well above what we experienced here in the U.S. business. And as you can see from the excitement from our partners and the pace of development, the returns they're seeing are really strong as well. So we're encouraged by the progress we're making there and continue to see that as a really exciting part -- long-term part of the growth story here. And I think we referenced it in our prepared remarks that we have additional new markets coming online this year, one of those being India that we're really excited about and the potential there. Operator: The next question comes from Danilo Gargiulo with Bernstein. Danilo Gargiulo: Wondering if you can comment how the outside Hispanic consumer viewership at the Super Bowl may be thanks to Bad Bunny, was impacting your customer acquisition that week? Maybe if you can give some composition of your 100,000 new users on that day alone. What learnings do you draw from that experience? And how do you think that's going to be informing your advertising strategy, especially during the World Cup this summer. Michael Skipworth: Danilo, thank you for the question, and good morning. Super Bowl, we were -- we're pretty excited about what we saw in Super Bowl. It was our first Super Bowl with Wingstop Smart Kitchen deployed across the system. It's pretty incredible to think we're actually able to deliver an average speed of service on that day of 20 minutes. Clearly, that's above our 10-minute target. But I can remember the days when most restaurants would turn off their digital ordering platform because demand and volume was so high. And so we believe we saw something pretty special. As we look at the business on that day, it was a record day of sales for our business, but we brought in over 100,000 new customers. Really encouraged by what we saw in the business on that day. And I don't think it will fundamentally shift our advertising strategy as we think about 2026 or even the summer around the World Cup. You're going to see us deploy, which we referenced in our prepared remarks, deployed this House of Flavors concept in a few cities, which we think will be a great tool to continue to expand brand awareness, but we see the opportunity we have with our core demand space. It's about continuing to broaden, the top of the funnel versus maybe getting more narrowly focused on a specific cohort. Danilo Gargiulo: Great. And then I would like to follow up on the delivery opportunity because it sounds like you're working with this market and to control what's within your control, right? It's accelerating reducing the core time accelerating even just the speed of service, but there is another component of delivery, which does not depend on you, right? It depends on the third-party aggregators. And so the way that you show up on aggregator platform does not fully depend on you. You might be depending also on third parties. And I'm wondering, when you say we're still collaborating on third-party aggregators on how we show up on this platform. What kind of levers do you have at your disposal to make sure that the brand is a little more relevant for a consumer who is actually just searching for wings or more broadly in the category? Alex Kaleida: Hi, Danilo, good question. And that's part of our strategy as we partner with the marketplace to talk about how we invest together on advertising their platforms. You can almost think about them as a different vehicle to drive awareness. And so when we're -- each month, each week, we're talking about different ways to elevate Wingstop visibility. And so Michael's earlier points on the call today, they're highly motivated to invest buying Wingstop and grow our business because of the characteristics of our transaction. And so we have a lot of those partnership conversations as we go through the year to ensure that we're getting the elevated visibility in the platform through banners or listings or areas like that. Operator: The next question comes from Andy Barish with Jefferies. Andrew Barish: I wanted to circle back and double-click on the international side of things. Just a quick kind of refresher on what's changed sort of in your strategy in entering new markets? And any information on the partner in India that you guys may have put out at this point? Michael Skipworth: Andy, I would say as it relates to international and our new market entry playbook, I would say it's something that we really started to hone in and dial in within the U.K. and our entry there, and it's been something we've continued to refine and build on, and we continue to see it strengthen as each new market comes online, and the demand and the acceptance and the relevance of the brand that we're seeing with consumers around the world is pretty remarkable. We referenced in our prepared remarks, the House of Flavors that we are -- where we popped up in Milan to prepare for that new market entry here in a few months -- a couple of months. And the receptiveness of a market that is really known for being critical about food is the way I'll describe it. The receptiveness is remarkable. The demand, the number of people we've served there is super exciting to just showcase that the portability of the brand and the strategy that we're executing. And so you're going to see us continue to lean into that. It's working, and we're encouraged by what we see in each new market that we open. As it relates to India, we haven't really disclosed specifically who that partner is, and we'll get into that, but it's someone that we know very well and has proven and excited about bringing Wingstop to the India market, which we mentioned on our prepared remarks is an opportunity that represents over 1,000 restaurants. Operator: The next question comes from Peter Saleh with BTIG. Peter Saleh: I guess my first question, operationally with the Smart Kitchen. Do you feel like you need to have consistent 10-minute ticket times to feel comfortable in the launch of the loyalty program at the end of 2Q. I just worry if you launched a loyalty program, you have all this demand coming through if you're not ready operationally, so just thoughts on that would be helpful. Michael Skipworth: Peter, I might answer your question a little differently. And that is I am highly confident based on the level of focus from our brand partners, the level of focus from Raj's team, the level of focus from our teams that we will be at a consistent 10-minute speed of service as we progress through the year. And so it really doesn't have anything to do with or doesn't influence how we're thinking about loyalty. That execution is something that's within our control, and I'm confident we will deliver on that. The launch of loyalty is really around the opportunity we see, a lever we've known for years that we've had to pull, and it does have to do with the fact that we know that consumers want this. They've told us that they want loyalty with Wingstop, but we're able to do it in a very differentiated way. And clearly, delivering on consumer expectations around speed and consistency is just going to be a further catalyst to what loyalty can do for our business long term. Peter Saleh: Great. And then just lastly, can you talk a little bit about maybe how -- once you get to the 10-minute speed of service and you're comfortable, how do you communicate that faster speed of service to the consumer? Is there a way to do that or do you just let this happen organically? Alex Kaleida: Peter, it's really a bit of both. And it's kind of what we're seeing in our restaurants that are consistently operating at 10-minute service times. We are seeing that organic change and how the guests engage with us, whether you look at new guest retention, frequency, the delta and same-store sales performance, all those factors have come into play without us communicating differently. Michael also mentioned some opportunities just as we talk about the overall value proposition for the guests. And I think there's examples at a lunch or late-night daypart, where we can bring forward these compelling entry points into the brand with chicken sandwich or tenders, but they'll also -- in a daypart that speed expectations are much different than dinner. And so we think the combination of those 2 and how we bring forward these menu items will be an opportunity to showcase our speed as well. Operator: This concludes our question-and-answer session and concludes the conference call today. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the Bel Fuse Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Jean Marie Young with Three-part advisers. Please go ahead, Jean. Jean Young: Thank you, and good morning, everyone. Before we begin, I'd like to remind everybody that during today's conference call, we will make statements relating to our business that will be considered forward-looking statements under federal securities laws, such as statements regarding the company's expected operating and financial performance for future periods, including guidance for future periods in 2026. These statements are based on the company's current expectations and reflects the company's views only as of today and should not be considered representative of the company's views as of any subsequent date. The company disclaims any obligation to update any forward-looking statements or outlook. Actual results for future periods may differ materially from those projected by these forward-looking statements due to a number of risks, uncertainties and other factors. These material risks are summarized in the press release that we issued after market close yesterday. Additional information about the material risks and other important factors that could potentially impact our financial performance and cause actual results to differ materially from our expectations as discussed in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports and other documents that we have filed or may file with the SEC from time to time. We may also discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our press release. Our press release and our SEC filings are all available at the IR section of our website. Joining me today on the call is Farouq Tuweiq, President and CEO; and Lynn Hutkin, CFO. With that, I'd like to turn the call over to Farouq. Farouq? Farouq Tuweiq: Thank you, Jean, and good morning, everyone. We appreciate you joining our call today. I want to begin by expressing a big thank you to our global team for making customer service and meeting demand their top priorities and for delivering innovative technologies as a key partner to our customers. As a result, 2025 was a milestone year for Bell, with record revenue and EBITDA. We delivered net sales of $675.5 million for the full year, a 26.3% increase over 2024 and achieved a record GAP and non-GAAP EPS. We Fourth quarter sales reached $175.9 million, up 17.4% year-over-year. Our gross margins expanded to 39.1% for the year, reflecting strong execution and operational discipline. Aerospace and defense, including space, continued to be strong drivers for us in 2025. For the full year, A&D accounted for 38% of our consolidated sales with 28% from defense and 10% from commercial aerospace. Recovery in the networking end market and growth in AI applications also contributed to higher sales in 2025. Order volumes remained strong across multiple end markets throughout the year, resulting in the full year book-to-bill ratio of 1.1. We have seen continued improvement and strength heading into Q1. This sustained momentum in incoming orders highlights a healthy demand environment across our end markets and positions us well as we move into 2026. Our team delivered these record results despite headwinds from material pricing, particularly gold, copper and PCBs and unfavorable FX movements in the peso, renminbi and shekel. We're actively monitoring these factors and have and will continue to take pricing actions to mitigate incremental cost, ensuring continued margin strength. Operationally, we successfully completed the closure of our China facility in Q4, transitioning operations to a third-party supplier without interruption to the business. This move is part of our ongoing efforts to optimize our global footprint and drive cost efficiencies. We also made significant progress in strengthening our balance sheet, paying down our debt by $90 million during 2025. We -- this has created additional capacity and flexibility for future investments and potential acquisitions as we continue to pursue growth opportunities. Looking ahead to 2026, we anticipate continued growth in aerospace, defense, space and AI, the same revenue drivers that have benefited Bell over the past few quarters. Additionally, we have seen positive shift in sales across the networking, consumer premise wiring markets as well as through our distribution channel. The rebound in these areas are expected to continue into 2026. We also foresee increased raw material input costs and a weaker USD, which will require us to proactively manage pricing and pass costs along where appropriate. Our pipeline for M&A activity remains active, and we are excited about several opportunities currently in various stages of evaluation. We anticipate a better backdrop in terms of M&A opportunities as the market noise settles down a bit in 2026. As announced a few weeks ago, we're excited to welcome Tom Smelker to our executive team. Tom joins us from Mercury Systems, bringing valuable experience and a fresh perspective in aerospace and defense. His leadership will help us better align our organization with changing customer needs and industry trends. As we continue to evolve, we are reviewing our segment structures to ensure we're well positioned for future growth. With aerospace and defense now representing a significant portion of our business, we see opportunities to further tailor our leadership and strategy to the unique demands of these markets. Before turning the call over to Lynn here, I would like to take a moment to recognize Pete Bittner, President of our Connectivity Solutions business, who will be retiring in April after 23 years with Bell. Pete has been instrumental in shaping and growing this segment and leaving it in the great conditions as he pursues his next chapter, and we thank him for his many meaningful contributions. We wish you great luck, and you'll be missed, but will surely enjoy his time with his wife and family. I'd also like to take a moment to recognize Dan Bernstein, who transitioned out of the CEO role in May 2025. This last year has been 1 of significant transition for Bell, and I want to sincerely thank Dan for making it a seamless one. Our business transformation, which began years ago under Dan's leadership, laid a strong foundation for the company's continued success. His vision and commitment to Bell's growth have positioned us well for the future, and we're grateful for the guidance and dedication. On behalf of the entire organization, thank you, Dan, for your outstanding contributions and for setting Bel up for success. With that, I'll turn the call over to Lynn to run through the financial highlights from the quarter and provide color on the outlook for Q1 2026. Lynn? Lynn Hutkin: Thank you, Farouqu. From a financial standpoint, we had another strong quarter and year with continued margin expansion and solid sales growth across all segments. Fourth quarter 2025 sales were $175.9 million, up 17.4% from the same quarter last year. Full year 2025 sales totaled $675.5 million. a 26.3% increase over 2024. On an organic basis, sales grew by $41.5 million or 7.8% over 2024. All 3 product segments delivered organic growth for the quarter, demonstrating the strength of our diversified portfolio. Profitability improved alongside sales with gross margin rising to 39.4% and Q4 25, up from 37.5% in Q4 '24. I -- for the full year 2025, gross margin was 39.1% compared to 37.8% in 2024. This margin expansion was driven by improved absorption of fixed costs in our factories due to higher sales volumes and by strong execution within each segment, maintaining discipline around SKU level profitability. These results highlight our ability to drive value through operational efficiency and strategic focus. Now turning to our product groups. Power Solutions and Protection delivered another exceptional quarter with sales reaching $92.5 million in Q4 '25, an increase of 18.5% compared to the fourth quarter of last year. The sales growth in the Power Solutions segment was driven by several key end markets, including a $1.5 million increase in sales of our front-end power products, serving the network networking end market and Q4 '25 compared to Q4 last year. Fourth quarter sales into AI-specific customers reached $4 million in Q4 25 up from the $3.3 million in Q4 '24. Fuse product sales were up by $1.4 million in Q4 '25, a 31% increase from Q4 '24. Sales into consumer applications increased by $1.8 million in the current quarter, up 32% from Q4 '24. And just to note, in our Power segment, this is also where we had the acquisition last year. So there was some organic growth on the defense side as well. These areas of growth were partially offset by a decrease in sales of our rail products by $4 million and e-mobility sales were down $1.1 million as compared to Q4 '24. The gross margin for the Power segment was 44.5% for the fourth quarter of 2025, representing a 390 basis point improvement from Q4 '24. This improvement was primarily driven by higher power sales into the aerospace and defense end markets, a favorable shift in product mix and better absorption of fixed costs at our factories. Our Connectivity Solutions group achieved sales growth of 15.1% during the fourth quarter of 2025 as it reached $60.5 million compared to Q4 '24. This improvement was due to the continued strong performance in commercial aerospace applications, where sales totaled $18.2 million, an increase of $3.8 million or 26% year-over-year. Sales into space applications amounted to $2.6 million in Q4 '25, up 53% from Q4 '24. Connectivity sales through the distribution channel were up $3.8 million or 20% versus Q4 '24, primarily due to shipments into the defense end market through the distribution channel. Profitability within the Connectivity segment continued to improve with gross margin for the group rising to 37.2% in Q4 '25 from 36.6% in Q4 '24. This margin expansion reflects the benefits of operational efficiencies achieved through improved revenue, a more favorable product mix and facility consolidations completed last year. These positive factors were partially offset by minimum wage increases in Mexico. Lastly, our Magnetic Solutions group sales delivered a solid quarter with sales reaching $22.9 million in Q4 '25, a 19.1% increase compared to Q4 '24. This performance was primarily driven by higher shipments to a major networking customer. Gross margin for the group was 27.3% in Q4 '25 and down from 29.1% in Q4 '24. This margin differential was due to minimum wage increases in China, an increase in material costs, primarily in gold and PCBs and unfavorable foreign exchange impacts related to the renminbi. Research and development expenses totaled $8 million in Q4 '25 in representing an increase of $1.1 million compared to Q4 '24. This increase was primarily attributable to the inclusion of Entercom's R&D costs, which amounted to an incremental increase of $1 million during Q4 '25. We anticipate that R&D expenses in future quarters will generally remain consistent with the Q4 '25 level as we continue to invest in new technologies and solutions to support our customers and drive long-term growth. Selling, general and administrative expenses for the fourth quarter of 2025 and were $32.6 million, down $2.2 million from the $34.8 million in Q4 '24. -- primarily driven by lower acquisition-related legal and professional fees in 2025 compared to 2024. Turning to our balance sheet and cash flow. We closed the year with $57.8 million in cash, down $10.5 million from last year, primarily driven by our proactive efforts to strengthen our balance sheet, including paying down $90 million in long-term debt, resulting in $197.5 million of total debt outstanding at December 31, 2025. Additionally, we made $3.5 million in dividend payments and we invested $12 million in capital expenditures to support growth and efficiency initiatives. These outflows were partially offset by $7.8 million in proceeds from property sales, and $1 million from the sale of held to mature securities earlier in the year. During the full year 2025, we generated cash flows from operations of $80.6 million. Taking into account our swap agreements, the weighted average interest rate on our debt balance at December 31, 2025, was 4.4%. Looking ahead to the first quarter of 2026, we continue to see strength across all 3 segments. Historically, our first quarter tends to be our lowest sales quarter of the year, given the impacts of the Lunar New Year holiday in China. In light of this historical trend and based on the information available as of today, we expect Q1 26 sales to be in the range of $165 million to $180 million. Gross margin is expected to be in the range of 37% to 39% and given anticipated headwinds related to higher material costs and the unfavorable FX environment we are in. Overall, our consistent performance strategic investments and operational excellence have positioned Bel for continued success. We remain committed to driving shareholder value, innovating for our customers and capitalizing on growth opportunities across our markets. I'd now like to turn the call back to the operator to open the call for questions. Operator: [Operator Instructions] The first question is from Bobby Brooks from Northland Capital Markets. Robert Brooks: So I wanted to touch on kind of sales initiatives moving forward. So you guys brought in the new head of sales about a year ago, right? And I'd just be curious to hear where he sees the most interesting opportunities for growth. Obviously, for Roop, when you initially joined as CFO a handful of years ago, you had a massive shift in the margin profile of the company, which A lot of that was sort of low. A lot of that was sort of like low-hanging fruit that you targeted. So I'm just curious to hear if that sort of same scenario. If Ooma has seen that sort of same scenario and again, like what he sees as the largest opportunities to go after. Farouq Tuweiq: Yes. Thanks, Bobby, and good to speak with you here. I think that's a pretty nuanced question. As a reminder, we are largely in a medium- to long-term design cycle businesses, right? So as we think about influence, and we think about A&D, I'd probably suggest the largest part of E&D for 2026 is going to be simply receiving orders from the customers as they get funding and deployment. So if we were to think about sitting early on in the year here about new wins and when they get funding, you're at least a year out probably 1 to 2 years before you monetize them. And some of our shorter design cycle businesses on the other end, I would say something like fuses you could probably see a win a couple of quarters out, and that translate into some sales of some of our consumer business. So we are a long-cycle design business. There's no quick claims here. We sell technology. We want to get in with the customer. We want to do the hard stuff. -- and therefore, that does take a while. If we look at the past few quarters on some of the benefits I have in there, that has been a reflection of the work that the team has done at a global level. within the various businesses, right? So I would suggest that the wins and the performance that was probably not much due to sales efforts that happened in Q4, right? This is stuff that probably happened early on in 2026. So we are seeing the benefits of the global team folks in doubling down. When we look across the business, we have new wins across probably all of our end markets, maybe a little bit less so in places like e-mobility or maybe some of our, I'd say, rail is kind of a little bit of a slow year. But I would say more often than not, we always have new wins. And when we think about the funneling process, right, we want to make sure we're going after a robust set of opportunities that are good opportunities and try to convert them to sales. And that process, we started a while back. Now that's not to suggest that we don't have work to do. On the last call, we talked about CRM implementation in Q4. We did 3 -- a little over 3 dozen worth of contracts with our reps in the U.S. to really lean into new opportunities. So we're trying to move the whole system forward from compensation structures to software and data to a shift and it's been happening, right? It's evolutionary. So we've seen the wins. Where is it going to come from? I mean we think probably there's a lot of money going into A&D data centers, AI, a lot of obvious interest going in there. But quite frankly, our consumer business did very good last year. So I think what we like about us is we touch a lot of end markets, and we like the way they're looking today heading in 2026, a little bit more maybe than early '25 or '24. So a long answer to your I just want to caution, we're not a quick turn business, and we're trying to sell more design-in type work or modified solutions versus just purely off-the-shelf stuff. Robert Brooks: Absolutely. Really appreciate that detail color for. And then -- maybe just turn into the 1Q guide, very, very impressive, but just wanted to maybe unpack that a little bit more and maybe hoping to get a little bit more granular on the expectations for growth across the 3 segments? Lynn Hutkin: Sure, Bobby. So as we look to the first quarter, and I guess I'll compare it to this recent Q4 that just ended here. We're seeing a lot of the same areas of strength across all 3 segments. So not seeing much in the way of significant shifts or changes from Q4 to Q1. I think the only variable in there is the Lunar New Year holiday, which impacts primarily magnetics and then to a lesser extent, power. So those are the areas where we may see a little bit of softness from Q4 to Q1. But Other than that factor, everything is pretty similar to the Q4 drivers. Robert Brooks: Got it. I appreciate the color there. Congrats on the great quarter. Operator: The next question is from Christopher Glynn from Oppenheimer & Company. Christopher Glynn: I just want to build on Bobby's question about developing the commercial funnel. So you mentioned focus on designing and modified by modified burs off-shelf is how you're developing the funnel that makes sense. We've heard that. Curious if you're noting any traction in win rates for us historical as you mature this -- these strategies. Farouq Tuweiq: I think we're doing a better job at defining what a win is and how we want it to be at certain levels of margin. The other thing I think we are moving more towards 2026, and we talked about last call, is we want to really try to bring the whole Bel portfolio to our customers. I think historically, we've been really more focused around selling specific products like fuse or a connector power supply. And we do need to do a better job at doing a little bit more systems type sales to our customers. Now this is a little bit of a longer journey. . But the idea there is we want to get more alignment to the customer, solve more of their problems and challenges and really be a little bit more of a solutions address the difficult things for our customers. So it's not just simply about more shots on goal, which we are seeing. We're seeing better shots on goal, but we still want to continue to evolve to higher content on goal. So Yes, we're seeing better also the markets a little bit better place, right, so which creates more opportunity for us. I think the team also remember, we spoke on the last call, where we started creating new internal groups and structures to align to that. So for example, we created a key accounts group, right, which we have not had that most of the time it was kind of sitting inside the BUs, now we want to have a more Bel focused key account groups that bring all of our products to the customers because we do have a lot of SKUs. Same thing on the business development efforts. We're [indiscernible] the teams around end markets as we think about products and directions. So I would also argue customer service is an extremely important part of this as we create an easier user experience for our customers. And we just have a lot of different e-mail addresses to customers in different forms and everything and the like or different pricing list to our distribution partners. So I think calling these things out to not underemphasize that there is a robustness in what we're doing that needs for you a pervasive in our holistic approach to the market. So the short answer is yes, there, Chris, but it's also more than just trying to get more shots on goal. Christopher Glynn: Great. That was great color, for. And then on the AI customer base, you mentioned that as one of the continued drivers of growth next year. You've often described it as being in early stage. I think with single source to well funded more start-ups for us the headline, big 3 or 4. Just curious if any of those customers are potentially positioning for adoption curve to their technology where you can cotail, not necessarily first half of '26, but more conceptually. Farouq Tuweiq: Yes. I think the answer is yes in short. The body language from our customers, I'd say, across the networking side. But specific to your question around AI, yes, and that is obviously reflected based on the bookings that came in towards the end of the year last year, the discussions that are ongoing with our customers and obviously, the ultimate outlook that we put out there in the quarter. So the answer is yes, we're seeing the positive momentum scaling and continuing to move forward. And also, let's not forget, there's a networking set of customers that bundle our product into their solutions that ultimately make it to folks like hyperscalers, right? So when we think about networking, it is obviously AI, and that is not an insignificant number for us, which is nice to see the team's efforts pay off there, but also networking side is just as important because we do touch AI in a couple of different ways, right? Christopher Glynn: Yes. Understood. And then just defense, just wanted to clarify. I get a lot of questions about the mix. I think you're pretty broad-based rotor, fixed wing, munitions, comms, radars, maybe even just curious if all those categories, if that is accurate, where the weightings are. Farouq Tuweiq: Yes, in short. Christopher Glynn: Okay. Okay. Great. Understood. I understand it... Farouq Tuweiq: Yes, I would say we want to be careful with kind of talking about at our side here, right? But all the kind of mean -- we're on all the major programs and some not major programs. So it's a very diversified portfolio anywhere to the things that you called out, munitions, things that fly, right? And we're doing more ground obviously, space is a little bit tangible to that as well. But we cover encryption communication, right? So all the things that you talked about, we probably touch it. Christopher Glynn: Great. And last one, just a housekeeping -- any thoughts on share class consolidation. I think 1 of your holders had generated a headline. Farouq Tuweiq: Yes. I would say I think from the gist of it, the -- our shareholder structure is a little bit more nuanced from the perspective of the economic differential between the 2 shares, right, versus just a vote, no vote. So that's one. I would say, as an appropriate due course, we'll have a company response and views on that at the appropriate time. I don't want to speak on the behalf of the board, but at the appropriate time, we'll address that. And also we -- I think the -- what we're trying to do here, Chris, and we've really been at this for the last handful of years here, is we want to our fiduciary dairies to serve the best interest of all of our shareholders, As and the Bs. And as we build a company that's set up for the future, with good performance and investing in our employees and our customers, ultimately, that's kind of what moves the needle. So I just wonder, we're very aware of the fiduciary duty, but I think the Board at the appropriate time, will have a response. That's a little more formal to this. Operator: The next question is from Theodore O'Neill from Litchfield Hills Research. Theodore O'Neill: Congratulations on the good quarter. . Farouq Tuweiq: Thank you, Theo. Theodore O'Neill: So are you guys seeing any impact from the spike in prices on memory? . Farouq Tuweiq: I was going to say, our customers, I would say, largely are the ones that feel it. We not directly are impacted by that. Obviously, we have our other let's say, spike in prices that we're dealing with, like gold and copper we spoke about. But on the memory specifically, it's more, I'd say our customers are influenced by that. Theodore O'Neill: Okay. And on the gold, copper and print circuit board side and the weaker dollar, do you have the ability to hedge some of those? Or do you pass the pricing on? How do you adjust for that? Farouq Tuweiq: Yes, that's a good point. Today, we hedge our FX exposure from a raw material perspective, we're in the business of providing solutions to our customers and technology. So we want to focus on what we're good at. We're not running a prop desk care trying to hedge everything, right? So I think our approach has been we want to try to do our best to mitigate and offset price increases, but to the ability -- and work with our customers to the extent that we can't. We, unfortunately, have to pass that along, and I think that's not unique to us and really kind of in line with the supply chain behavior. But ultimately, we want to be great partners to the extent we can offset it. Sometimes we will find alternative sources. We want to be a solutions provider really to our partners. But in cases we can't, we need to do the unfortunate decision of passing it along. Theodore O'Neill: Okay. And finally, on the Aerospace side, do you have any exposure to the drone market. Farouq Tuweiq: I would say we generally do, yes, I think the drill market is going through some interesting things, right, where there is, let's call it, more consumer that tends to get retrofitted as we're seeing out in the world in, like Ukraine. That's not really our market. We're more in the military kind of U.S. primes and some of the European and Israeli OEMs, the stuff they manufacture. So we're not in the, let's say, drones that you and I are maybe buying or in the more sophisticated drone game. . Operator: The next question is from Greg Palm from Craig-Hallum Capital Group. Unknown Analyst: This is Dany Egerton for Greg today. Maybe just hitting again on A&D and maybe unpacking how you saw that develop in the quarter maybe between Enercon and Corbel and maybe what you saw in some cross-sell business. And then obviously, we know kind of about the increased spend. But as you look into 2026 here, what gets you excited about the growth in this business? And what kind of visibility do you have here? Lynn Hutkin: Yes. So Danny, I'll take the first part of that question. So the growth that we saw when we talk about defense, it's both in our legacy singe business and through Enercon -- we definitely saw growth in the Enercon business. As we look at the business, I think it's important to also keep in mind what we sell through our distribution channel. So there are direct sales and then there are sales through distribution, which we don't really break out into those end markets today. But we did see, as we mentioned in the commentary, we did see a nice increase in distribution that related to growth in defense for that fine business. So I would say that it was pretty split between the 2. So both Sinch and Enercon had robust growth in defense in Q4. Farouq Tuweiq: One thing we would just add [indiscernible] 6, right? We're seeing the build rates on the plan side continue to increase and head in the right direction. Also a lot of the programs around munitions and given kind of what's going on in the world, these are well-funded programs. So we think there'll be a prioritization to make sure those get to fruition and the finish line. So as we look at the amalgamation of that, we feel pretty good as to where we stand compared to what's funded out there. . Unknown Analyst: Okay. No, that's very helpful. Then maybe if I can just touch on gross margin here, which was pretty strong in the quarter, especially in power. I know you mentioned some of those headwinds with FX and input costs, but any way to quantify those? And then as we kind of have that push-pull between input costs and passing on price in any way to think about potential margin expansion in '26? Lynn Hutkin: Yes. I think as we look at the fourth quarter, I think we thought that we may have had some additional FX headwinds in Q4. But we have had hedging programs in place, as Bruce mentioned. So we're still seeing the benefits of those prior hedging programs come through the current period. So as we look we do foresee some margin pressure there on FX. I mean if you look at the peso rent and chuckle, they're all moving in an unfavorable direction. And we do hedge probably half of that, but that's going to start rolling off -- so we definitely see pressures there. And then even on the material side, that's something that -- it takes time to ultimately come through our numbers, right, as we're buying raw materials today, that's something that will flow through our financials at a later date. So we do think that we will see margin pressures in '26. And this is why we're really being mindful of pricing actions that we may need to take with customers. Farouq Tuweiq: And 1 thing to just kind of flag in the pricing, right? It's a little bit of -- it's not as simple as we wake up and raise our prices, right? There's a little bit of cadence to that. So some of the contemplations are do you reprice the backlog, do you come up with an updated pricing list for distribution, which takes, I think, something like 30 days before it's effective. So there's a little bit of a time issue. The other thing I would say, and we've talked about this in the past, while our margins are great, and we'll always continue to try and push margin expansion, we have pivoted from a margin gain to a growth game. So we need to make sure that we are winning our fair share of business and opportunities out there that we can get in on. And to enable that, there is some potential investment that we've been doing a little bit around the go-to-market, the systems piece of it and the people piece of it. So I just want to make sure -- and I know the margin gets a lot of discussions on the Bell earnings. And obviously, we're very proud of our margins. But we are hitting some headwinds that we've got to make sure that we have in the middle of this kind of growth that's coming that we're positioned appropriately for not picking up too much. Operator: The next question is from Luke Junk from Baird. Luke Junk: Just wanted to double click on what we've been talking about in terms of what you've been doing to realign the sales force really thinking more about how do you attack markets or key customers, but something that you said in the script, kind of caught my attention in -- with oncoming in to head the connectivity business, that there might be some like opportunities even further down in the organization. Am I hearing that right in terms of aligning operations, maybe even from a, let's say, manufacturing footprint to better attack some of these discrete opportunities? Farouq Tuweiq: Thanks for the question there. Look, I would say a couple of things to maybe answer it from the back way of your question here. So on the operational side, we I can't remember 7, 8 facilities. We've done a lot. So what's going to dictate facility moves is the current state of the business and the customer demand, right? We pride ourselves and were our customers. So obviously, for a while, there was a lot of discussion around China and India than that froze. If that kind of starts up for some people at a startup, we were going to move to some of our products to India. So I would say, given the geopolitical world that we live in and the realignment of localization of supply chains, we are in these, let's say, active discussions, right? But in terms of Bel as a stand-alone basis in putting a political supply chains, our facilities are pretty good. So we have to react to the fundamentals of the market. I think our biggest opportunity here is around the go-to-market and sales piece of it. I think maybe just to highlight on moving a facility for us is a big task, and it's not simply is just moving equipment, building some buffer supply, moving equipment from place A to place B., you need to set up a lot of kind of the legal structures. And if you're talking about A&D, there's a lot of regulatory hurdles to jump through. As we're setting up, for example, our Slovakia factory to be more A&D facing to the European markets we're living through the complexity and spider web of getting all the clearances and certifications on defense weaponry control. In addition to that, customers usually always have to want to come up to your facility and do audits and usually there's feedback and that takes a whole issue. So it's not easy. We don't take these decisions on moving facilities lightly. So we need our customer market changing dynamics to force our hand on a facility move. Go-to-market our products today that we have that can be bundled together that can be brought to bear as we talked about, the key accounts group earlier, that is our biggest opportunity at hand. And then operations, there's always things to be done, sure. But I think we've done so many of them that we need to live in growth land. And if we're not going to move a facility unless it's going to help us grow, right? Luke Junk: Yes. That's super helpful. Near term, just curious from a guidance standpoint, New Year, obviously, having a seasonal impact as we've normally seen the business, but it's pretty late this year. I think it's almost as late as it can be just from a calendar standpoint. Would you normally have maybe a little better feel for that seasonal impact in the fiscal year? Is there any conservatism just because of your timing and the guidance? Farouq Tuweiq: I think as you know, Luke, in public land, right, everybody is always trying to figure out the optimal way to guide the Street. Our perspective from guidance is we want to land in a range and we build it to around the midpoint, right? So we're not trying to -- we don't build it to the high end point of our range and hope to guide we go over a range. We build it to the midpoint. -- right, to allow for some room for shifting from quarter-to-quarter. Obviously, we're in A&D, that tends to be kind of sometimes funny business. If we allow for some overordering fuses, yes, given how late we are in the quarter, talking about Q4 right here, we are roughly in the back of February, yes, we have better visibility. But to put your comment on question specifically about Chinese New Year, it's 2 weeks off, right? Everybody can trust down. It's not just us. It's all the CNs, it's all our customers in the Far East, right? So as a result of that, everybody goes pencils down for 2 weeks. And when they come back, it doesn't just turn on a dime. Usually, there's a week of, let's say, tough start time getting back into the groove, getting things going. So you're probably talking is somewhere between 2 to 3 weeks loss on a 3-month period, all right? That's not insignificant. So I wouldn't say conservatism. I would say we wanted to do what we say we're going to do and we're in our best guess. So we're not trying to be conservative on that. Luke Junk: Fair enough. And then I just want to zoom out for my last question. The Power side of networking. Obviously, you've got some exposure there. I mean, the higher levels of power that power these more capable chips really becoming quite apparent in that world right now. And I'm just wondering to what extent you're seeing any pull-through from a design cycle point of view for high-voltage components from either your Tier 1 customers or your direct customers in that world? And especially if there's any IP that might be leverageable either, I think, rail or mobility, both have some high-voltage IP that might be interesting. Farouq Tuweiq: Yes, I would just say -- I think there's a couple of things to unpack there, right? Specifically the AI networking world, it's always going to go to more high power, higher density, less energy right, more efficiency. So that's a constant theme over ever. Now we are seeing, I would say, some new designs coming in relatively maybe in a short period of time, maybe back of the day, it was a 3- to 4-year device cycle, things are coming in a little bit sooner. So we are, for example, selling some products -- but we're already working on the next gen stuff. So that has happened a little bit quicker. I will also say, generally, right, we do have exceptions, but we're not really an IP business, right? We R&D to fix or address a problem. And then what we want to do is we want to -- we do a pretty good job at this inside of each of our business units is how do we leverage what we've developed for somebody to either standardize it or select modifications and then we extend the recap products, whether we do distribution or other similar customers. The other thing we are seeing, which is actually interesting in some of our actual e-mobility products, given the nature of those products, we are starting to see some military folks looking at, let's say, high-end products and services but not quite military grades. So kind of I guess, we're calling semi military being used. So we are seeing that extension of the R&D effort that has gone to e-mobility into other markets. Now we haven't won anything yet, but we're feeling good about potential wins coming if that makes. So that's how we extend our R&D dollars. We're not looking to reinvent the world every time. Operator: The next question is from Jacob Parsons from Needham & Company. Unknown Analyst: I'm just asking a question on behalf of Jim Ricchiuti. So we've been kind of hearing a better tone in the commercial aerospace market. Really, particularly with the leading domestic players in the marketplace. So how are you guys thinking about this area of the business in 2026 and potential for better growth within the Connectivity Solutions area. Farouq Tuweiq: So as it relates to commercial air specifically, right? I mean for better or for worse, we are -- from an OEM perspective are attached to the hit to our largest North American customer. And the way that we're going to make more money and to be clear, we service that customer both our Connectivity and our Power A&D business. So the way we're going to grow revenue is a direct correlation to increase build rates right? And we've lived the ugly side of that when there was kind of the all the union negotiation. If you recall, I think it was Q4 last year, there was a shutdown at kind of threw our business a little out of whack or back in the days of the grounding of the MAX. So we are going to see how that correlates to the build right. So what we always point close to is, I think they're very public about build rates and what's going to get approved and not approved. So take a view on that, and that should have a direct correlation back to us. On the Connectivity business, so not the Power business, there is an element to it, right? So as we think about MRO cycle, I can think about are people on the planes flying being consumed and miles are being put on these planes. And up to every so often, those mine to be kind of retrofitted or MRO, right? So we think flights and when we look at the earnings of the -- some of the flight operators out there, people are flying and planes are moving. So we feel both good on the OEM and MRO side. Unknown Analyst: Yes. That's all super, super helpful. And if I can just kind of get 1 more in. So I'm curious, how's the book-to-bill ratio varied much by market vertical and which areas of the business have you guys seen the biggest changes relative to last quarter? Lynn Hutkin: Yes. So I think on the book-to-bill side, Farouq had mentioned we were at 1.1% for the full year. I think our book-to-bill has strengthened as the year progressed. In Q4, our book-to-bill was 1.3. And I would say that strength was seen across all 3 product segments. So there's not 1 segment that is really high, while someone else is below 1. All 3 are very strong in Q4. Operator: The next question is from Hendi Susanto from Gabelli Funds. Hendi Susanto: I have several questions. Park, can you help unpack more details on your AI opportunities in terms of end products or devices to help us build better ideas. Some products that come to mind are like power modules, network switches, traditional compute, AI surfaces and optical networking. Perhaps you can help us build better ideas of your devices? Farouq Tuweiq: Yes. I would say, Hendi, we want to be a little bit careful here, but our products are going to are more around the power side of the business, and the Bel Power is kind of where it's at. I would say from a direct where we know things are going for AI. Obviously, our magnetics business is also beneficiary from the networking guys and then they're kind of the RJ-45s kind of what we call magnetic solutions, which is really more maybe a potential interconnect product. So that's how we go at it largely. Our connectivity business doesn't do too much into those end markets given that we're really more low volume, medium volume harsh environment applications in that product that coupled with it being more copper based. So that's how we kind of go at the AI piece of it. Generally, we do some stuff with the hyperscalers, but that's not really our focus market. So if you remember, we got in trouble there back in 2020. So we want to make sure we pick slots where technology and service matters versus just a copy product with a race to the bottom on pricing. Hendi Susanto: Yes. And if I may quickly check if there are products that may carry some opportunity for physical AI or humanoid robots? Farouq Tuweiq: I think the humanoid market is still getting settled. Today, it's definitely not a big dollar amount. It's very much R&D-centric. I think there's a question around from a humanoids perspective, is that ultimately a consumer product like auto, or is that going to be a technology play? I still think we're far out from mass production. But today, it has not been a discussion level for us. That's a dominant one. Hendi Susanto: Okay. And then what are your latest view and outlook on pockets of market recovery and inventory rebuild activities among customers? Farouq Tuweiq: I don't think we -- right. I think the inventory rebuild is kind of stacking up the shelf really on the customers. I think given that everybody, I'd say, went through a pretty difficult lesson back in '23 and '24 and overlaid with the tariff geopolitical world we're in, I'd say people are generally ordering more to demand versus building up the shelf. And quite frankly, I think that's probably a good thing in the sense, right? If you want to be able to shelf then you've got to deal with the hangover. So today, we feel largely and I'm sure there's exceptions. Obviously, we touch a lot of markets. But largely, we feel to shift to demand versus ship to put on a shelf and build a buffer stock because obviously, with tariffs, if things move, the things that you put on the shelf all of a sudden really changed pretty quickly. So I think there's a little bit of nervousness around that from our customer perspective. Hendi Susanto: Yes. And then, Lynn, I have a question on seasonality of sales in aerospace and defense. Is there a -- like if I look at Enercon cells, I'm trying to figure out what seasonality we need to model? And then plus considering that you are -- you may also like winning like more design. So what kind of seasonality can we expect in 2026 in aerospace and defense? Farouq Tuweiq: I'd say generally, aerospace and defense is not a seasonal business where we play, right? North America, Israel, Europe, right? I would say it's really more around sometimes they move for a core to the other when things get funding, right? That's kind of where the choppiest comes from. But it's not really a seasonal to seasonal play, I would say, if there was a seasonality I mean not to the Enercom business, obviously, our connector business. But there is some less working days generally in Q4 just with the holidays and Thanksgiving but -- and some of the Jewish holidays in October. But other than that, I would not say it's a seasonal business. Hendi Susanto: Okay. And then I have a question on capital allocation and debt payment, especially following the $90 million of debt payment in 2025. What is your playbook for capital allocation and debt payment? Farouq Tuweiq: Yes, Go ahead, Lynn. . Lynn Hutkin: So I think as we look at capital allocation, Priority #1 is reinvesting in the business through CapEx. We have regular weight dividends that we continue to pay. Barring anything on the M&A front, debt paydown is where it would be. And I think from a dollar perspective, the last couple of quarters, it's -- they've been robust debt paydowns to the tune of, call it, between $20 million and $30 million a quarter. and we would look to continue doing that going forward. Now keep in mind, Q1 tends to be a cash -- heavy cash utilization quarter just with our annual bonus payment, insurance payments, things like that. So I expect Q1 would be on the lower side. But as we look to Q2, 3, 4, that would be around the level of debt paydown, assuming there isn't anything on the M&A front. Operator: The next question is from Bobby Brooks from Northland Capital Markets. Robert Brooks: So just wanted to circle back and ask specifically kind of on Enercon and cross-selling opportunities there. Obviously, obviously, you mentioned this spend more specifically with aerospace and defense, these are long-cycle programs, right? So these aren't happening in 1 quarter and seeing the outcome the next. But just curious to hear if maybe that's still on the back burner just because demand was so robust in 2025 and the segments kind of just had a deal with the demand that they were seeing. So just kind of curious to hear more on that. Farouq Tuweiq: Yes. No back burners here. Yes, we understand we've got to prioritize. But also remember, we have to live in new wins, land, right, because we can't influence when orders come from our customers, right? When the program gets funding, can they sell it, right? What does the military budgets look like? And then you get an order. The thing that we can influence is going after new programs and aligning ourselves to new wins and new design cycles, right? So as we go after these, we are doing a better job at collaborating I think we're doing a better job at ensuring that both the connectivity and the power side of the house understand what they're going after, weekly calls and putting in some incentives along the way, we can do a little bit better job, but that process is in place. . And what's interesting is we're definitely seeing some of this, let's say, go to market. So there was some -- a couple of interesting quotes in Israel, where I was lining to earn from our e-mobility products that there was a need locally in Israel that our team flagged, but they didn't need quite the, let's say, high levelness of the military stuff but they need really complex products, which are e-mobility and Slovakia teams do a great job at. So we're trying to quote those into Israel. So I classify that as kind of a real-time opportunity that we're chasing. And we've seen a few of those as well. Another example of this is there was a cabling need at our let's say, U.S. Enercom business, which our competivity Group can assist with. So they're working on kind of getting all that qualified and approved normally, in this case, Entercom had to go outside and deal with others, but we're able to capture more of this. And so the opportunities are real but in the spirit of greeting is, we'd always love to do more. But I think as we're getting more bids out there now at a joint level, we're seeing some nice traction. Hopefully, we continue to do that and kick that to gear a little bit more. Operator: There are no further questions at this time. I would like to turn the floor back over to Farouq Tuweiq for closing comments. . Farouq Tuweiq: Thank you for that. Again, I could not be more proud of the team for the great year. Again, also thank you for all of you guys joining the call today, taking interest in what we think is a very, very exciting time for Bel. So thank you, and look forward to speaking to you in a couple of months from now. . Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, ladies and gentlemen, and welcome to the RioCan Real Estate Investment Trust Fourth Quarter 2025 Conference Call and Webcast. As a reminder, this conference call is being recorded. I would like to turn the conference over to Ms. Jennifer Suess, Senior Vice President, General Counsel, ESG and Corporate Secretary. Ms. Suess, you may begin. Jennifer Suess: Thank you, and good morning, everyone. I am Jennifer Suess, Senior Vice President, General Counsel, ESG and Corporate Secretary of RioCan. Before we begin, I am required to read the following cautionary statement. In talking about our financial and operating performance and in responding to your questions, we may make forward-looking statements, including statements concerning RioCan's objectives, its strategies to achieve those objectives as well as statements with respect to management's beliefs, plans, estimates and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. In discussing our financial and operating performance, and in responding to your questions, we will also be referencing certain financial measures that are not generally accepted accounting principle measures GAAP, under IFRS. These measures do not have any standardized definition prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flows and profitability. RioCan's management uses these measures to aid in assessing the trust's underlying core performance and provides these additional measures so that investors may do the same. Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward-looking statements, together with details on our use of non-GAAP financial measures can be found in the financial statements filed yesterday and management's discussion and analysis related thereto, as applicable, together with RioCan's most recent annual information form that are all available on our website and at www.sedarplus.com. I will now turn the call over to RioCan's President and CEO, Jonathan Gitlin. Jonathan Gitlin: Thank you, Jennifer, and good morning to everyone joining us today. We're pleased to report RioCan's fourth quarter and full year results. At our 2025 Investor Day, we were clear about our priorities, driving growth through our productive retail core and supporting that growth through disciplined strategic capital allocation. We're delivering on those commitments. In the fourth quarter, the strength of RioCan's portfolio and the effectiveness of our retail-focused strategy were once again demonstrated by 4.5% same-property NOI growth. This was propelled by the continued outperformance of our core retail assets. We delivered on our capital allocation priorities, repatriating $742 million of capital to strengthen the balance sheet and support NCIB activity. Net debt to EBITDA was reduced to 8.6x, and we repurchased $179 million of units through 2025 and year-to-date 2026. Our NCIB activity reflects our conviction that the current unit price does not capture the value and earnings power of our business. We're investing in a portfolio with tremendous growth prospects. Our performance is underpinned by a proven future-focused platform. We continue to strengthen our operational and technological capabilities while maintaining top-tier employee engagement results even as we further reduced G&A. RioCan's disciplined execution is complemented by strong ESG performance, including our #1 ranking among North American retail peers in the 2025 GRESB real estate assessment. Taken together, our results reflect the power of our productive retail core, the quality of our assets and a platform that delivers consistent performance. In a market characterized by a shortage of well-located retail space, RioCan continues to deliver consistent and durable growth. RioCan's operating momentum remained strong through the fourth quarter. Retail committed occupancy ended the year at 98.5%. Leasing performance continued to be exceptional with record full year blended leasing spreads of 21.1%. Our 2025 retention ratio of 93.1% underscores the value tenants place on RioCan's locations and its operating capabilities. It also enables us to enhance income quality, improve portfolio resilience while minimizing capital outlay. Commercial same-property NOI growth accelerated to 4.5% in the fourth quarter and totaled 3.6% for the full year, highlighting the consistency and resilience of our cash flows. These results are not coincidental. They are the direct outcome of a portfolio concentrated in Canada's largest and most desirable markets anchored by necessity-based retailers and supported by structurally constrained new supply. We're seeing the benefits of what we believe is a leasing super cycle for our portfolio. This is a time when many long-term leases that were signed in the early 2000s are expiring. Shorter-term leases negotiated during the pandemic are also maturing. This gives us flexibility and discretion to shape our tenant base. We are retaining and resetting rents for high-quality tenants. We're equally deliberate in replacing those tenants that no longer align with our strategic objectives. RioCan is an independent Canadian REIT. Our independence means we are accountable solely to our unitholders with no parent company or sponsoring owner influencing our leasing or operational decisions. This independence, combined with strong retailer demand and the depth and expertise of our leasing team puts us in the advantageous position of being highly selective. We can choose the right tenants on the right terms. Premium retail space in Canada's major markets is scarce. And in my opinion, given the high barriers to entry in the Canadian market, this will be an enduring condition. Retailers are focused on well-located centers with strong demographic attributes and compelling co-tenancies. This precisely describes the centers in RioCan's portfolio. In recent years, we introduced grocery to a significant number of assets. Today, 86% of our sites include a grocery component. This anchors daily traffic and supports consistent performance through all market cycles. Beyond grocery, we're deliberately curating the ideal tenant mix for the communities that we serve. We know these communities well, and we understand the daily needs of their residents. As a result, the vast majority of our portfolio is aligned with necessity-based daily uses, including retailers such as Loblaws, Metro, Sobeys, Shoppers Drug Mart and Dollarama. These are the retailers that fulfill essential everyday shopping needs and drive reliable repeat visits. These attributes create daily use destinations that generate consistent traffic, strong sales productivity and resilient income through all market cycles. Our tenants are not simply maintaining their footprints, they're actively investing and expanding. This sustained demand continues to validate the long-term strength of our retail platform. Our leasing strategy continues to unlock meaningful mark-to-market opportunity throughout our portfolio. In 2025, we completed leases for 5 million square feet. The average net rent for new leases was about $29.65 per square foot, which is approximately 28% higher than our overall average rent. This highlights the mark-to-market growth potential embedded in RioCan's portfolio. This result isn't a one-off. Rents on new leases since 2022 were on average about 27% above those of existing leases. We expect this trend to continue for at least the next 3 years. During this period, we have 10.1 million square feet of leases maturing, hence, my reference to a leasing super cycle. Combined with contractual rent steps and disciplined capital deployment, there is a clear and sustainable runway for continued core FFO growth. As we move into 2026, our business is simpler, focused and exceptionally well positioned to capitalize on favorable retail fundamentals and the significant embedded mark-to-market opportunity within our portfolio. Our leasing momentum, together with long-term contractual rent steps and disciplined capital deployment into the high-return retail opportunities flows directly into the durability and predictability captured in our core FFO. Core FFO provides a clear measure of the durable earnings power of our retail platform. It represents an important evolution in how we reflect the performance of our business. Core FFO captures the recurring earnings generated through leasing execution and disciplined capital deployment while removing items that are not representative of the underlying operating strength of the portfolio. Because it is driven primarily by occupied space, contractual rents and the intentional allocation of capital to high-return uses, core FFO provides a clear line of sight into the stability and predictability of our income. As we look ahead to 2026, we're guiding to same-property NOI growth of 3.5% to 4% and core FFO of $1.60 to $1.62 per unit. This core FFO guidance is in line with the 3-year outlook we provided at Investor Day. In many ways, core FFO best captures what differentiates RioCan today, a high-quality, necessity-based retail portfolio operating in supply-constrained markets where leasing momentum and disciplined capital allocation work together to provide consistent, repeatable results and high risk-adjusted returns. Our outlook reflects confidence in our ability to deliver resilient income, sustainable distributions and long-term value creation. This quarter's performance is not an outlier. It is another clear validation of the strength of our portfolio and our strategy. In closing, RioCan enters 2026 with considerable momentum, an exceptional portfolio and a disciplined strategy that consistently generates results. We're in the midst of a multiyear value creation phase underpinned by visible and sustained growth that we believe is not fully reflected in RioCan's current unit price valuation. Our team remains highly focused. Our capital is positioned to drive ongoing growth and our portfolio is well aligned with the evolving needs of retailers and communities. Thank you for your continued trust and support, and I will hand the call over to Dennis Blasutti, and then look forward to your questions. Dennis Blasutti: Thank you, Jonathan, and good morning to everyone on the call. I'll start with some additional detail on our 2025 results, and then I'll walk through our 2026 outlook. Starting with FFO. We delivered $1.87 per unit in 2025, near the high end of our guidance range. This performance was underpinned by same-property NOI growth of 3.6%, slightly ahead of guidance, reflecting continued strength in our retail-focused strategy. Record operating KPIs such as 21.1% blended leasing spreads were key drivers. This strong organic growth excludes onetime items such as lease termination fees and highlights the strength of our team and portfolio. Core FFO for the year was $1.55 per unit, in line with our Investor Day projections. We view core FFO as a durable earnings base that we will grow from compounding value as our income grows. We have reached the natural conclusion of our development cycle with several key projects now complete, the capital intensity of our business is moderating. Total development spend in 2025 came in at $254 million, and we expect this to significantly decline next year, which I will touch on later. During the year, we delivered 366,000 square feet of completed developments from PUD to IPP. This included 102,000 square feet of retail. These deliveries included finalization of The Well, parks and crossings new Winners and HomeSense [indiscernible] Dollarama and Service Canada as well as residential projects such as Fort Street Lofts and Queen & Ashbridge. We also made strong progress on capital recycling. We sold $406.6 million of RioCan Living assets and closed $221.7 million of condos for a total of $628.3 million. Subsequent to year-end, we also went firm on the disposition of our Underwood residential building in Calgary for $46.5 million. Taken together, we are halfway towards our $1.3 billion to $1.4 billion target with a number of other assets in negotiations. Through successful condo closings, we have reduced our residual condo balance to $130 million, which is immaterial in the context of RioCan's balance sheet. In addition, we sold $113.4 million of noncore and lower growth commercial assets, bringing the total capital repatriation to $788.2 million. Through this disciplined capital recycling program, we continue to improve our portfolio quality while funding growth and improving our balance sheet. We allocated much of this capital to debt reduction and unit repurchases. As a result, net debt to EBITDA improved to 8.6x, a half turn improvement from the 9.1x at the end of last year and well within our target range. Our balance sheet is in a strong position, supported by a suite of improved credit metrics. We ended the year with $1.5 billion of liquidity. Our ratio of unsecured debt to total debt improved to 63% from 56% last year, which, as a result, increased our unencumbered asset pool by $1 billion to $9.2 billion. We continue to view unit repurchases as an attractive use of capital, particularly when our units traded at a significant discount to our historical norms. At current prices, our units imply a forward multiple of approximately 12x using 2026 core FFO, representing a 20% discount to our long-term historical average of 15x. Our IFRS NAV, which is valued bottom up, also implies a multiple of 15x, consistent with our long-term average. Given the improvements we've made to our business and our positive outlook, we believe this dislocation in our valuation presents a highly attractive entry point for investors. Since the beginning of 2025, we have allocated $179 million to unit repurchases. And since 2022, we have repurchased 19 million units or 6% of the company, reinforcing our focus on long-term value creation for unitholders. Subsequent to year-end, we closed on the previously announced acquisitions from the HPC JV. All backfill tenants at Georgian Mall and Oakville Place are now signed. Total capital for these build-outs is less than previous projections at approximately $20 million or $100 per square foot with a stabilized NOI yield of 20% on cost with annual growth in the leases thereafter. Turning now to our forward-looking targets. Our 2026 guidance is in line with the framework that we outlined at our Investor Day, striking the appropriate balance of opportunity and risk. We expect core FFO per unit of $1.60 to $1.62, representing a growth rate consistent with our Investor Day projections. This is supported by same-property NOI growth of 3.5% to 4%. We have strong visibility into this target given that approximately 75% is contractually secured through rent steps and ramp-up of previously signed leases. With the strong operating backdrop, we expect to steadily grow this high-quality earnings stream. We also continue to see opportunities to invest within our existing portfolio. In 2026, we expect to invest $95 million to $150 million into retail-focused projects, including Yonge Eglinton Center Improvement Plan, the new Costco at Burloak, Georgian Mall and Oakville Place backfills, including the addition of grocery to both those centers, Westgate Shopping Center de-malling in addition of a grocery store and additional infill pad density at Windfield Farms. Consistent with our Investor Day framework, we apply a 9% unlevered IRR hurdle rate for these types of projects. For the projects included in our 2026 plan, we expect to outperform this target with a going-in yield averaging 8% to 9% plus future growth averaging approximately 3%. We expect mixed-use development expenditures of $45 million to $55 million in 2026, a significant decline from prior years. 2026 spending represents a small amount of cost to complete and pipeline advancement costs. Maintenance CapEx is expected to return to normalized levels of approximately $55 million, a decrease of $16 million from 2025. Note that we report our AFFO using a normalized CapEx, so this decrease in spend will not impact our reported AFFO growth rate, which will approximate our FFO growth rate. However, for any of you who use actual CapEx when calculating AFFO results, this lower spend will lead to a higher year-on-year growth rate in this metric. We are reaffirming our target range for net debt to EBITDA of 8 to 9x, a range that when taken together with our suite of balance sheet metrics, results in low financial risk. We continue to manage financial risk by growing our unencumbered asset pool with a percentage of unsecured debt to total debt expected to be in the high 60s by the end of 2026 as we progress toward our 70% target. We also remain focused on maintaining a well-balanced debt ladder and ensuring that we have strong liquidity. Lastly, we continue to advance our RioCan Living disposition program. While execution and timing remain market dependent, the quality of this portfolio gives us confidence to achieve our $1.3 billion to $1.4 billion target. In closing, we have a highly productive retail portfolio that is positioned to deliver resilient durable cash flows. We have the capital to grow and a strong balance sheet that derisks our growth trajectory. As we execute our plan over time, we believe the value of our business will be appropriately reflected in our unit price. With that, I'll turn the call back over to the operator for questions. Operator: [Operator Instructions] Our first question comes from the line of Sam Damiani with TD Securities. Sam Damiani: I just want to say it's great to see the results coming in with expectations and the predictability of the new core FFO metric. So it just makes following the company much easier. I guess, first off, just on the guidance for core FFO, it's a very tight range of $1.60 to $1.62. I'm just wondering if there's any reason why you didn't start with a wider range. Jonathan Gitlin: Thanks for your earlier comment. The reason is because core FFO is quite predictable. It's quite hard to come by additional core FFO, and it's quite hard, we hope to lose core FFO given that it's rooted in a lot of very predictable operational outcomes. And so we felt that it was prudent and also more accurate in giving that tighter guidance range. We felt this would help shape a lot of analyst views as well as investor views, and we have quite a bit of confidence in that tighter range. So that's the backdrop. Sam Damiani: I appreciate that. And just, I guess, going back to Q4, the core FFO print came in sort of right at sort of the outlook, the guidance, but I think the guidance was technically for -- at a minimum of $1.55 for 2025. Is there any reason why the results didn't exceed the minimum of that guidance for 2025? Jonathan Gitlin: I think that ultimately, the guidance was in line with what we suggested at Investor Day. It might have been on the lower end of the guidance, but I think it was just a matter of timing on certain income that we had coming in. I don't think there's any technical reasons, Sam, that I can give you at this point. Dennis, I don't know if there's anything you can offer? Dennis Blasutti: No, I wouldn't expand much on that. I think there's just maybe a bit of timing items on whether it's costs or other things as well. So it's just a few little small things like that. Just -- it was never expected to be that much different than $155 million anyway. So we're just, I think, pleased that it came in as expected. Sam Damiani: Yes, for sure. And it was a small amount regardless. Last one for me, just on -- and you did address this, Dennis, in your comments, but any more specific commentary you can offer in terms of the quantity and cadence of RioCan Living dispositions in 2026 beyond the under wood, of course? Jonathan Gitlin: We're feeling good about it, Sam. There's a high quality of assets and therefore, a high degree of interest in those assets. The market will do what the market will do, but we've had a lot of preliminary -- actually, I'd say, advanced discussions on a number of the existing RioCan Living assets. And so we feel quite confident that there's going to be a nice consistent cadence throughout the course of the year. And as Dennis suggested in his remarks earlier, we feel confident that the ultimate target of approximately $1.3 billion is very much achievable whether that falls on either side of '26 or early '27, again, like I said, some of it is market dependent. But as a whole, we feel quite confident that we'll achieve that number. Operator: Our next question comes from the line of Lorne Kalmar with Desjardins. Lorne Kalmar: Maybe just sticking with the disposition side, but switching over to the commercial side because you guys have done some good work there. Wondering if you can give us an idea of the quantum of noncore commercial dispositions you expect to do in 2026. Jonathan Gitlin: We haven't put out guidance in that regard. We are obviously always in -- we're getting a lot of inbounds, Lorne, for what has become a highly sought after product type in necessity-based open-air shopping centers. And really, we've also pruned our portfolio such that we don't have a lot of noncore retail assets. That being said, if there are certain low-growth assets, then we would consider entering into either joint ventures or selling them on a wholesale basis. And -- but we did not provide any specific guidance along the lines of how much we would dispose of any commercial assets. Lorne Kalmar: Okay. Fair enough. And then I guess with all this repatriation of capital, there are a few levers to pull here. Obviously, debt is a priority. But beyond that, you've been active on the NCIB. Just wondering how you make the capital allocation decision, whether to go on the NCIB or acquisitions or prioritize debt. Jonathan Gitlin: Well, the first priority is keeping the balance sheet in good shape, Lorne, as we suggested at our Investor Day in November, it's critical for us to have between 8 and 9x net debt-to-EBITDA, along with a whole suite of other debt metrics, including liquidity, including debt service coverage ratios, including unencumbered asset pool. And all of those things we feel are in good shape. And because of that, it permitted us to take some of our additional capital and put it towards NCIB which at this point is such a logical use of capital. It's really a way of giving back to our shareholders. And I really do feel that we are -- and obviously, it's a biased view, but I do believe that RioCan's units are undervalued relative to the future performance perspective we have. And therefore, we thought that buying back units in that type of pricing range was a very prudent use of capital and in line with what we had suggested at our Investor Day. So that was really the decision-making process. There are other uses of capital that Dennis had alluded to in his remarks, such as putting money towards our property, building out pads and strips and also just reshuffling tenancies in certain properties like at Burloak where we've -- we're in the process of erecting a Costco. And I think those will also be part of the decision-making process. But in this type of market, it is definitely -- NCIB stands out as a very clear-cut accretive use of capital. Dennis Blasutti: So the only thing I'd add there is that I think one thing to kind of think about in this environment is rates have come down with spreads tightening and the underlying is moving to a level where paying down debt is simply not accretive to FFO per unit or value. And so it's something to just sort of think about when we have so many other stronger opportunities from an accretion perspective, that we've kept our range intentionally a little wide to -- on net debt to EBITDA to allow for us to take advantage of opportunities to reinvest in our own portfolio, et cetera. And then really thinking about the balance sheet from a financial risk perspective, anywhere inside that range in conjunction with our ladder and all the other suite of metrics that Jonathan mentioned is a low-risk balance sheet in our view. So we do -- we've intentionally left ourselves flexibility to take advantage of accretive opportunities. Things like acquiring Georgian and Oakville, those are accretive opportunities. We're going to add a ton of value through the re-leasing effort. But at day 1, it is a negative impact on net debt to EBITDA because you have to wait for the EBITDA to ramp up. But 4 quarters later, it's a positive impact, right? So there's -- you can get a timing lag in the metrics. But ultimately, we think buying those assets was -- is going to be a very good -- it's going to bear out to be a very good decision. Lorne Kalmar: Okay. And then maybe just sticking with that one last one. Is there a reality where you guys go below the 8x net debt to EBITDA? Or you don't see much point in that? Jonathan Gitlin: Anything is possible. It really depends on what the other opportunities are. But when we have such accretive and logical uses of capital outside of just paying down debt, we are going to take advantage of those. And we see that we have a runway with respect to our stock price being where it is and the availability of capital because of the repatriation of RioCan Living assets. So I think for the foreseeable future, that's where we'll focus our efforts along with some of the other property level improvements and build-outs that I was talking about before. But again, we're committed to that range of 8 to 9x going below that. it's not something in the short to medium term that we see happening. Operator: Our next question comes from the line of Mike Markidis with BMO. Michael Markidis: Just a quick question on the reinvestment CapEx of $95 million to $115 million of the existing portfolio. Is that sort of what we should be thinking about what you're capable of delivering? Or is there a potential for that to ramp higher in '27 and '28? Jonathan Gitlin: So I think it is a fairly good estimate for going forward. It will depend, Mike, on what the opportunity set is in '27 and '28. But right now, I think that as a run rate is a reasonable assessment. Michael Markidis: Okay. Great. And then, Jonathan, you had mentioned some -- or you alluded to strong demand for the types of asset RioCan owns. What's the acquisition market like out there? I mean, obviously, the pricing is tight. Is there a lot of product available for sale? And if so, would RioCan potentially look at doing -- I mean, I think you mentioned JVs on some noncore assets, but what about on core assets in terms of trying to extend your platform? Jonathan Gitlin: Sorry, to buy or to sell, Mike? Michael Markidis: Well, it could go both ways. You could see the JV and then continue to expand. Jonathan Gitlin: So yes, the market is tight at this point. There's a lot of very strong retail that's held by a lot of very well-heeled entities, whether they're REITs or pension funds. And there's just no push or need to sell them. So you're not seeing a lot of high-quality assets that would fit RioCan's existing high-quality retail profile available to acquire. And when they do become available, they're at cap rates that are extremely tight and they're generally getting those. So that allows me to flip to the other perspective, which is the ability to sell certain interest in assets. And that's something we definitely are exploring where we take, let's say, lower growth assets that are of high quality, bringing in a partner, and we use our platform to create value through a fee stream, but also repatriate capital that we could put to work in a very accretive manner. I think that's something we would avail ourselves of, and we alluded to it in our MD&A that there are certain discussions taking place at this point in time in that regard. And I think that's a model that is definitely -- again, it really -- it shows the strength of RioCan's platform, and I think a lot of partners would covet that type of management oversight. And then once you have that type of partnership, I'm going to use an old term here, but it gives you a bit of a hunting partner, especially if you have a well-heeled institutional partner who has equal sensibility around what is good to own. So I do think if we are -- if we have capital available to us and we have the opportunity to utilize someone else's balance sheet, but we get a fee stream, it certainly makes acquisition a little more palatable. But in today's existing market for us just to go out and buy 100% of a high-quality retail asset, I think it would be very hard pressed to go over our 9% unlevered hurdle because you're just -- if you're finding an asset that has 3% growth, it's not going to be at a 6% cap, it's going to be something lower. So that's the quandary that we'd be in from just a straight-out acquisition perspective. And quite frankly, Mike, just going back to the point I made earlier, I've got an awesome portfolio right in front of me that I know, that I love. And if I could buy a piece of that at what is a much higher yield than what the open market or the private market would permit, I would do that all day long, hence, the $175 million of NCIB that we participated in since early 2025. Michael Markidis: Okay. Got it. And then last one before I turn it back. I know you said exploring in discussions, that's probably -- you may want to punt this question, but what would be the sort of potential range or quantum of assets that you would be looking to potentially sell to a JV partner? Jonathan Gitlin: I mean -- again, it's -- it really -- we don't have it in our business plan at this point. So there's no specific number. We would just balance as we always do, the considerations around what could we do with the capital and what the type of accretion would be from a fee stream perspective. And so there's no set quantum, Mike, but we would balance it with all the other considerations. I know it's a bit of a vague answer. Operator: Our next question comes from the line of Mario Saric with Scotiabank. Mario Saric: Just sticking to the potential kind of dispositions that are not in the plan. Jonathan, you mentioned or referenced kind of low growth assets as being a possibility relative to your kind of 3-year, 3.5% kind of same Park NOI target, what would you kind of consider as being low growth? And what percentage of the portfolio could that comprise? Jonathan Gitlin: Yes. So we put out guidance, as you know, Mario, of between 3.5% to 4%. We said at our Investor Day that we -- for us, we expect to get at least 3.5% same-property NOI. And that came through -- those guidance numbers came through a very in-depth review of the entire portfolio, every single property, every single tenancy from bottom up. And it gives us in doing that exercise and in very intense asset management, gives us a good perspective of what assets are going to contribute over the next 3 years and what assets are going to take away from that objective. And thankfully, the vast majority of our portfolio will contribute. There are some, however, that have larger anchor tenants that have, let's say, flat projections going forward. I'll give you, for instance, Walmart, we know that a lot of their historic leases have limited growth, if any. And -- but they're high quality. They're excellent and predictable creators of an income stream, which a lot of institutional investors, I think, would covet in this type of environment. So for us, those don't necessarily contribute to the quantitative output of 3.5%. But from a qualitative perspective, they're good, they're predictable and they're very strong assets with limited risk. So for us, if we could keep a 50% interest, sell a 50% interest and get a fee stream, all of a sudden, it takes a lower growth asset and it makes it a little more aggressively growth oriented because of the fee stream that is attached to it. So for us, that's -- there's a few of those assets in our portfolio, not, as I said, an overwhelming amount because of all the work we've done over the last few years to really curtail the portfolio through dispositions and the addition of excellent properties through developments or acquisitions. Mario Saric: Okay. And it may or may not be related, but you -- I was hoping you could expand on the commentary pertaining to RioCan's tenant independence. I think you also highlighted that in the letter to unitholders this quarter, perhaps maybe some examples where you think that benefit has been crystallized. Just curious on some expanded thoughts on... Jonathan Gitlin: Sure. Look, we have a landscape in Canada where we've got a lot of exceptional REITs, but there are some of them that are affiliated with other entities. And operationally, I would have to think that there are certain constraints and limitations around what the landlord could do based on what the interest of the tenants are. We, of course, have similar considerations. We always take into consideration the needs of our tenants long term, but we are the ultimate decision makers. There is absolutely no influence from any other entity other than our own. And I think that does in a growth environment like we're in today, this super cycle that I think we're in, it allows us to really take the governors off and do what is best for our unitholders without having consideration to any other constituents. So it really -- I think it puts us in a very advantageous position going forward relative to some of those that might have to take a much deeper view and consideration of their anchor tenants wishes and desires. And it just means for things like if you have a vista, you can obstruct it a little bit even if -- I would say that if you have an anchor tenant who is a more influential party, they would tell you not to do that, we can go ahead and do that. So there's just -- there's little things like that. But of course, it also allows us to drive rents as aggressively as possible. And I think if you look at some of the sponsored REITs, there are lower rent lifts than we get. And I think that's now starting to be demonstrative of the fact pattern I just talked about. Mario Saric: Got it. Okay. My last question, more of a qualitative question. Your comment on expected strong blended lease spreads over the next 3 years. You talked about a bit at the Investor Day. How much of that confidence would you say is RioCan specific versus a call on broader market expectations? And kind of can you delve into a couple of the factors or top factors or trends that you think can sustain these types of blended lease spreads for that long, 3 years is not a short time frame? Jonathan Gitlin: So Mario, I missed the first part of your question. I think you just said general retail fundamentals? Or was there something more specific? Mario Saric: Sorry, no, I was just -- I was asking about your comment on the call earlier just talking about the expectation for strong blended lease spreads over... Jonathan Gitlin: Leasing spreads, sure. Mario Saric: How much of that is RioCan specific versus the broader market? Jonathan Gitlin: Sure. So I feel very -- I mean, the team feels very confident in our ability to continue to generate leasing spreads. I think it's a byproduct of the fact that, yes, it is a very strong retail market that will impact every on all retail landlords in a similar manner. We just think it will be more acute with RioCan because we do start from a bit of a -- the mark-to-market opportunities are quite evident with our average rents across the portfolio being about 28% lower than what we're getting now on new rents. And so I think that really helps us. I also think we've got a very significant improvements to our portfolio over the last little while and a high demographic profile that tenants are really, really following and in favor of. And I think that allows us to really push rents and get them closer to where the overall market would permit. And I can't speak for our peers, but I certainly know that it gives us a great deal of confidence in capturing that mark-to-market, and that will drive growth for us going forward. We're -- as I said, we've gone through each one of our assets, each one of our tenancies, tenant by tenant, space by space to get a good sense of what we can extract from them. And that's what is rooted in that guidance or at least that's what the guidance is rooted in, and we feel very confident in our ability to capture that going forward. Operator: Our next question comes from the line of Dean Wilkinson with CIBC. Dean Wilkinson: Just want to hook back on the leverage, the share buyback and some of the other stuff around that. Would it be fair to say as you drift more towards 8x on net debt to EBITDA that we could see a ramp-up in that share buyback and the $50 million that we've seen so far this year, kind of perhaps that's what you're looking at on a quarterly basis, absent any other opportunities? And is that factored into that guidance number, Dennis? Jonathan Gitlin: Dennis, do you want to take that? Dennis Blasutti: Sure. So I don't think we've really spelled out exactly how we would allocate capital. I think we are sort of leaving ourselves the flexibility to allocate capital as based on the opportunities in front of us. So we haven't put a specific number out on NCIB. We did put a number out in our Investor Day, just looking at our ability to allocate excess capital every year as well as we still would have another nearly $700 million of capital coming back from RioCan Living. So certainly, share buybacks would be a priority, but it will be dependent on where the share price sits at a given point in time when the capital is available to us and of course, trading off against -- we're constantly trading off, as you'd imagine, against other opportunities. So that's how I would explain that. I think the volume of capital turn gives you a sense in terms of the sale -- of the asset sales. Dean Wilkinson: Right, right. I guess the other one to look at then in just terms of retained capital is the distribution and increases. Now that we're looking at a core FFO or core AFFO number, do you have a target payout ratio in mind there on that metric? And how are you thinking about sort of the dividend or distribution as we go forward? Jonathan Gitlin: So the target payout ratio, we had projected that at Investor Day. And I think that is a number that we fully anticipate sticking with. We -- our dividend or distribution policy is something that is going to be a year-by-year consideration, and it really depends on what else we could do with those funds. For us, it's all about having a high amount of discipline. And we have such great opportunities for that capital at this point. And we feel that the NCIB is just an alternative way of giving back to our unitholders. So it really is going to be a consideration of what other alternatives we have at that point as to whether or not the distribution gets raised. And at this point, we have a pretty robust distribution relative to our peers and given the strength of our portfolio. So we feel pretty confident about it. But it's going to be something that we will revisit next year for sure, and we will make the appropriate recommendation to our Board based on where things sit at that point in time. Dennis Blasutti: Yes. So the target we put out is, just as a reminder, is approximately 70% core FFO and approximately 80% core AFFO. So I think that's just -- and we should be able to stick in around that range. And then as our income grows, potentially grow the distribution or as Jonathan said, there's other ways to return capital to shareholders and NCIB right now appears to be the more efficient and value-accretive method of doing that. And our yield, we do, as Jonathan said, believe our yield is quite attractive. And it's actually reasonably tax efficient as well. We're about 60% taxable, which matters to some certain unitholders out there. Dean Wilkinson: For sure. It's a big consideration. Just then the last one for me, just looking at the RioCan Living and obviously, there's been a lot of talk in the condos, all the rest of that stuff. We don't need to go through that. You've got some operating weakness there, which would be expected given the environment that we're in. Are you looking at kind of building some vacancy in the portfolio to allow for potential purchasers to have a bit more of attractive upside there? Or just how are you thinking of managing that over the next 12 months or so given that it's something that you're looking to offload? Jonathan Gitlin: Sure. I'll start, and I can hand it over to John Ballantyne, if he has any further color. But we operate these assets as though we'll own them forever. We are not creating vacancy. Whatever vacancy you're seeing is a byproduct of a market that is tougher given the face of a lot of condo deliveries, which serve as a competition for some of the RioCan Living assets at this point. But no, we're not going about creating vacancy to create more upside for potential purchasers. Quite frankly, the market is sort of doing that for us. If you could see our occupancy, it has slipped over the last few quarters. And I think that's plenty. But John, do you have any further... John Ballantyne: No, I would just add to what you said, Jonathan. We're managing these properties very carefully, both on the efficiency basis on the cost, but as well as working incentives and really keeping a close eye on market rates, particularly in the GTA, where it has been very volatile. So no, we're actually looking to maximize the revenues where we can on these properties and making them sale ready. Operator: Our next question comes from the line of Fred Blondeau with Green Street. Frederic Blondeau: On the Yorkdale HBC sublease matter, how do you see insolvency proceedings moving ahead now that the court has disallowed the receivers or proposed tenant Fairweather to take up the vacated space? Jonathan Gitlin: I think the court rendered its decisions. Now we're considering next steps, and we'll keep everyone apprised. But I think at this point, that's all I would comment about it. And again, as we've already suggested, Fred. And from a financial perspective, we've already through a combination of offsets and write-downs, we think it has de minimis impact, if any, on RioCan financially going forward. Dennis Blasutti: And just a really fast summary on that, Fred, sorry, just a quick summary on just the overall JV, not just the Yorkdale asset. Every other asset is either sold or for sale or we foreclosed on it. So out of the 13 assets, this Yorkdale one is the only one that's sort of left to be dealt with. And as Jonathan said, there is no expected financial impact from this JV going forward. So from our perspective, this chapter is behind us, and the assets have been dealt with or there's a couple that are still in the sale process with a broker. That's easy enough to deal with and really that's in the hands of the creditors. So from a RioCan perspective, this is a closed chapter. Frederic Blondeau: Yes. Absolutely. But I guess my real question would was more like should a tenant not be found in time? Would there be any damages that the REIT could possibly face and it looks like from your previous answer, like it's pretty much dealt with at the moment. Jonathan Gitlin: That is correct. No damages that are of any materiality. Frederic Blondeau: Okay. And one last for me, maybe a bit more -- a bit easier. Given that the Canadian tenant pool is not that deep, I was wondering which particular tenant types would allow for the growth in new lease rents over the next, call it, over the next 2, 3 years? Jonathan Gitlin: So the Canadian tenant pool, I mean, I think it is pretty deep relative to the amount of retail space we have, if you're comparing it to the United States. We have about 60% of the retail space that they have per capita. And I think I've given that, our tenant pool is pretty deep and growing. And so we think that there's a lot of very strong tenants that are expanding in scope, but also very -- I would say, very intelligently. If you look at a lot of the new stores that we're doing, they are grocery stores, but they're the discount banners for a lot of the existing incumbent grocery stores. So for instance, a lot of the new Loblaws deals we're doing, they're not full-line Loblaws. They are either No Frills or they're TNT. For Sobeys, I'd say the same thing with FreshCo. And that's the theme across our portfolio. We're doing a lot of Dollarama deals, a lot of good life fitness deals or their discount banner. And we're seeing a lot of tenants like TJX thrive in this kind of environment because they do offer -- well, they do offer products that are going to be attainable in any type of economic backdrop. And that's really the type of tenant that we seek out to fill our centers. But Oliver Harrison, do you have any further commentary on some of the other retailers that are really providing strength to our growth profile? Oliver Harrison: No, it's more of a portfolio opportunity, which is just we also have, as Jonathan said earlier, the leasing super cycle, we do have a number of long-term leases that are now sort of coming to maturity. And as a result, we have a substantial opportunity to bring those up to market. A lot of them are grocers. A lot of them are value retailers that have performed extremely well over the period of time where they've been in this fixed rent structure, which creates a great opportunity for us to maximize the leasing opportunity while still ensuring that they are financially stable. Operator: Our next question comes from the line of Pammi Bir with RBC. Pammi Bir: I just want to come back to the comments around the lower CapEx at Georgian Mall and Oakville on some of those replacement tenants. What were some of the drivers there that drove some of the costs down? Jonathan Gitlin: Well, I think we ended up doing a single tenancy at Oakville, which really spares us of any demising costs. And it was really just some good work by our leasing team and ensuring that the commitment for landlords work and TIs was generally reduced. And I think that's a byproduct of the fact that the space was so desirable that we had a bit of leverage in those negotiations. But then also, it was our construction team who's done a good job of ensuring that we're getting the best possible pricing on any of the landlords work we have to do. So it's a combination of factors. But ultimately, we're very pleased with the result because it attaches to a significant lift in both the tenant quality as well as the income coming in from that space now. So it's a really big win for RioCan, and it's just made bigger by the fact that the costs have been reduced. Did I miss anything, Oliver? Or is that... Pammi Bir: Great. Okay. Sorry. And just maybe -- I just want to come back to The Well actually. In terms of the retail, it has been a few years. Can you maybe just talk about how the performance has sort of gone relative to maybe your underwriting? And I'm just curious if it might be approaching perhaps in terms of the retail at least that target organic growth guidance that you set for the overall portfolio in the 3.5%, 4% range? Or is it still early days there? Jonathan Gitlin: Sure. So as expected, the first-generation tenants, we knew there would be some volatility in it or at least some opportunity to play around with that mix to ensure that we ultimately get it right. When you're starting de novo and you're creating a unique space like that, you know that you're going to take some shots on tenancies that just don't work out, and we knew that going in. So our plan when going in had a fairly liberal view on what could happen in terms of certain tenants not working out. And I think what we've seen is actually very much in line with that liberal view. And some of the good news is that it's created so much momentum and specifically over the last year, we've seen so much foot traffic increase that the second-generation tenants that we are bringing in or we expect to bring in over the short term are going to be of higher quality, far more durable and also, I think, more in fitting with that community. So we feel very strongly that we're actually at a good point with the Well, where we're getting to a point where it is close to stabilization. And I think that the -- again, the continued traffic, the continued kind of like attention it gets in that downtown West neighborhood will continue to improve the visits there. And the last thing I'd say is that we've done a good job of filling up the office. We had it leased up, but now we've actually got it occupied. And I think that will also help move some of the retail a little bit more aggressively. But again, we've never relied on the office tenancies to make the retail work. But it's not the worst thing that we get people actually in the offices there. Oliver, do you have any further color on that? Oliver Harrison: Just that we've been doing this for a long time and having kind of experienced opening up new shopping centers. We were very intentional in terms of the structures that we put in place vis-a-vis a lot of these tenancies, whether it was rent structure, whether it was control options in the landlord's favor. So we've created a situation where we now have the ability to capitalize on the traffic that the site is driving, both from an upgrade from a tenancy perspective, but also significant lifts from a rent perspective. And as a result of that, we're very confident that in addition to improving the tenant mix in the retail at the Well over the short to medium term, it's also going to be a great performer from a same property NOI perspective. John Ballantyne: Yes. And I would just add to that. In addition to the lifts we're seeing on the tenant side, we are seeing significant ups in both activations, digital signage and parking revenues as well. So as the site traffic -- trapped to the site continues to grow, those revenues are growing as well. Pammi Bir: That's great. Just last one on -- are these next generation of tenants are more of them on net lease deals as opposed to points? Or are you seeing that at this point still kind of maybe leaning a bit more to percentage rents? Oliver Harrison: No, it would be a more conventional rent structure, i.e., minimum rent plus additionals, less reliant on percentage rent, save and except for them outperforming their natural breakpoints, but that's not going to happen for a little while. Operator: Our next question is a follow-up from Sam Damiani with TD Securities. Sam Damiani: Just had a quick follow-up. I think Dennis your comment that New Yorkdale is kind of the last location being dealt with. But wasn't the Ottawa property also you had some plans there. I'm just curious if those plans are still moving forward or if you've kind of walked away there. Dennis Blasutti: So we, in fact, could not get to a position where we thought we could get a sufficient return on incremental capital that would be required to move that business plan forward. So it has actually been moved into a sale process. Operator: I am showing no further questions at this time. I would now like to pass the conference back to President and CEO, Jonathan Gitlin. Jonathan Gitlin: Thanks very much, and thanks, everyone, for joining. I just wanted to end with saying that RioCan is entering its next chapter from a position of strength. We focused on our retail core, resilient assets, disciplined capital allocation and a platform that is built for the future. We believe the conditions are firmly in place to deliver steady, durable growth and lasting value. Thanks, everyone, and we'll speak to you next quarter. Operator: That concludes today's call. Thank you for your participation, and have a wonderful rest of your day.
Operator: Good day, everyone, and welcome to Fresh Del Monte Produce's Fourth Quarter and Full Fiscal Year 2025 Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. [Operator Instructions] For opening remarks and introductions, I would like to turn today's call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Ms. Christine Cannella. Please go ahead, Ms. Cannella. Christine Cannella: Thank you, Kate. Good morning, everyone, and thank you for joining our fourth quarter and full fiscal year 2025 conference call. Joining me in today's discussion are Mr. Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Ms. Monica Vicente, Senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier via Business Wire. You may also visit the company's IR website at investorrelations.freshdelmonte.com to access today's earnings materials and to register for future distributions. This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release and our call today include non-GAAP measures. Reconciliations of these non-GAAP financial measures are set forth in the press release and earnings presentation, which is available on our website. I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the safe harbor provisions of the federal securities laws. In today's press release and in our SEC filings, we detail risks that may cause our future results to differ materially from these forward-looking statements. Our statements are as of today, February 18, 2026, and we have no obligation to update any forward-looking statements we may make. During the call, we will provide a business outlook, along with an overview of our financial results, followed by a question-and-answer session. With that, I will now turn today's call over to Mr. Mohammad Abu-Ghazaleh. Please go ahead. Mohammad Abu-Ghazaleh: Thank you, Christine. Good morning, everyone, and thank you for joining us. Fiscal 2025 marked a clear inflection point for Fresh Del Monte. It was not just a year of performance, it was a year of preparation. Our results this quarter underscores a fundamental shift in our approach for the past 2 years. We have moved from a broad market strategy to a relentless focus on our core strengths. By streamlining our portfolio and divesting from noncore distractions, we have ensured that our best-performing categories receive the capital and focus they deserve. This strategic narrowing is supported by a culture of rigorous financial discipline and accountability. Rather than pursuing scale indiscriminately, we have prioritized operational efficiency and high-return investments. Together, those choices strengthened our balance sheet, expanded margins and generated the cash flow needed to preserve flexibility and reinvest for long-term leadership. Those choices were deliberate. They were about focus. They were about discipline, and they were about ensuring that when the right moment arrived, we were ready to act from a position of strength. That moment is now. As many of you have been following, we are in a process of acquiring select assets from California-based Del Monte Foods through a court supervised bankruptcy process. Earlier this month, the U.S. Bankruptcy Court approved Fresh Del Monte as the purchaser of global Del Monte brand, along with select core assets. With that approval, we moved meaningfully closer to closing. We expect the transaction to close before the end of first quarter subject to customary regulatory approvals, including HSR antitrust clearance and remaining closing conditions. This decision is not about expansion or -- for expansion sake. It's about alignment. For nearly 40 years, the Del Monte brand has existed across separate platforms. Today, we have the opportunity to unify the brand under a company with a deep agricultural roots, global operating scale and decades of experience managing complex food systems across geographies and categories. There is a strong sense internally that this feels like a reunion. For me, this moment is deeply personal. Bringing Del Monte back together has been a long-held conviction of mine. And it is coming to fruition on the 30th anniversary of when I acquired Fresh Del Monte in 1996. I truly believe that uniting the fresh and staple food under a single strategy honors the Del Monte legacy while positioning the brand for continued relevance and growth. It allows us to show up more consistently for consumers and to build a stronger, more flexible platform focused on efficiency innovation and long-term value creation. Del Monte is 140 years old brand and one of the most recognized names in food worldwide, built on trust, quality and longevity. These are established businesses with experienced teams, strong customer relationships and products that consumers know well. Our first priority is continuity. As we move through the remaining regulatory reviews and closing conditions, our focus is on stability for customers, retailers, partners and employees. Post closing, the acquired business will function as a dedicated unit, ensuring immediate operational continuity while we take a measured approach to integrating capabilities. By utilizing a light touch integration strategy, the Food division will retain its autonomy to preserve its agility and customer focus. We will serve as a growth accelerator, empowering the unit with our capital resources, supply chain scale and logistic infrastructure. Our Food division teams, both commercial and production across Latin America, Europe, Africa and the Middle East will work hand-in-hand with our Food division in North America to expand and leverage on the capabilities of each other. Fresh Del Monte has spent decades operating at global scale across fresh and value-added categories. This experience give us confidence not just in completing this transaction, but in managing what comes next. We see a clear opportunity to build a more unified platform that supports durable long-term value creation. As we look ahead to 2026, our priorities remain clear, disciplined decision-making, thoughtful capital allocation and execution anchored on our core strength. With that, I will turn over to Monica to discuss our financial results. Monica Vicente: Thank you, Mr. Abu-Ghazaleh, and thank you, everyone, for joining us today. Before getting into the financial results, I would like to highlight several important developments. First, as Mr. Abu-Ghazaleh mentioned, we recently received court approval to pursue the acquisition of select assets of Del Monte Foods Corporation. The assets include the vegetable tomato and refrigerated fruit businesses, primarily under the Del Monte, S&W and Contadina brands. The transaction also includes global ownership of the Del Monte brand and related intellectual property subject to existing licensing agreements. Operationally, we expect to acquire 4 facilities in the United States, 2 facilities in Mexico and 1 operation in Venezuela as well as related customer and supplier contracts and inventory at closing. The purchase price is $285 million plus the assumption of certain liabilities. The transaction remains subject to HSR antitrust clearance with closing expected in the first quarter. Given the court supervised nature of the process and the carve-out of assets from an integrated business, it is premature to comment on accretion, synergies or fair value at this time. Details on segment reporting, expected financial contributions and integration priorities will be provided during our first quarter 2026 earnings call. Turning to our fourth quarter. We continue to simplify and optimize our portfolio. We sold 3 older break bulk vessels as part of our ongoing efforts to modernize and rightsize our logistics footprint. As a result, our own fleet now consists of 6 modern vessels, appropriately sized to support our global supply chain while maintaining operational flexibility. We also completed the previously announced divestiture of Mann Packing which closed in December 2025. This represents an important milestone in simplifying our portfolio and exiting a business that was no longer aligned with our long-term strategic and financial objectives. Accordingly, today's discussion will reference results both as reported and where appropriate on an adjusted basis to provide a clear view of the underlying performance of our continuing business. Turning to our financial performance, starting with the fourth quarter. As Christine mentioned, reconciliations are available in today's press release and earnings presentation on our website. Net sales were $1.02 billion, driven by higher net sales in our Other Products and Services and Banana segments, reflecting strong demand for our third-party ocean freight business, and the Banana segment benefited from higher per unit selling prices. These gains were supported by tariff-related price adjustments in North America as well as favorable foreign exchange related to the euro. The increase was partially offset by lower net sales in our fresh and value-added segment, which was largely the result of reduced sales volume in the fresh-cut vegetable product line following the strategic operational actions we took in late 2024. On an adjusted basis, net sales were $968 million. Gross profit was $106 million, reflecting higher gross profit across all business segments. The increase was due to higher per unit selling prices, partially offset by higher overall per unit distribution costs as well as increased production and procurement costs in our banana segment. Gross margin increased to 10.4%. Adjusted gross profit was $109 million and adjusted gross margin increased to 11.3%. Operating income was $46 million, which was driven by higher gross profit, partially offset by lower gain on the sale of property, plant and equipment, reflecting the prior year sale of our Toronto distribution center. Adjusted operating income was $48 million. Fresh Del Monte net income was $32 million and adjusted basis Fresh Del Mante net income was $33 million. Our diluted earnings per share was $0.67 and adjusted diluted earnings per share were $0.70. Adjusted EBITDA was $67 million. Turning to our full year 2025 financial performance. Net sales were $4.3 billion, driven by higher net sales across all our business segments. The increase reflected higher per unit selling prices in the fresh and value-added and banana segment. The effects of tariff-related price adjustments in North America as well as favorable impact from foreign exchange rates related to the euro and British pound. The increase was partially offset by lower sales volume in our fresh-cut vegetable product line following the strategic operational actions previously mentioned. Adjusted net sales were $4.1 billion. Gross profit was $399 million, driven by higher net sales in our fresh and value-added segment. The increase was partially offset by higher per unit production and procurement costs in our banana segment, along with increased distribution costs. Gross margin increased to 9.2%. Adjusted gross profit was $427 million and adjusted gross margin increased to 10.4% Operating income was $137 million, reflecting higher asset impairment charges related to low productivity in banana farms in the Philippines and charges related to the divestiture of Mann Packing, along with a lower gain on property disposal of property, plant and equipment. The decrease was partially offset by higher gross profit. Adjusted operating income was $222 million. Fresh Del Monte net income was $91 million, while on an adjusted basis, net income attributed to Fresh Del Monte was $178 million. Our diluted earnings per share was $1.88, and adjusted diluted earnings per share was $3.68 per share. Adjusted EBITDA was $300 million. I will now go more into details of the full year performance for each of our business segments, starting with fresh and value-added product segment. Net sales were $2.6 billion, driven by higher per unit selling prices in our pineapples and higher per unit selling prices and sales volume in our fresh-cut product line, supported by strong market demand. Pricing also benefited from tariff-related increases in North America and favorable exchange rate from a stronger British pound. The increase was partially offset by lower net sales in our fresh-cut vegetable product lines, reflecting the previously mentioned operational changes. Adjusted net sales were $2.4 billion. Gross profit was $299 million, driven by the higher net sales in our pineapple product line, reflecting a favorable mix of our premium pineapple varieties. The increase was partially offset by higher distribution costs. Gross margin increased to 11.4%. Adjusted gross profit was $328 million and adjusted gross margin increased to 13.7%. Moving to our banana segment. Net sales were $1.5 billion, driven by higher per unit selling prices in North America, reflecting tariff-related adjustments and lower industry supply, supported by increased market demand and favorable foreign exchange from a stronger euro. Sales volume also improved in the Middle East as the prior year was impacted by shipment disruptions related to the Red Sea conflict. The increase was partially offset by lower sales volume in Asia due to reduced supply and softer market demand. Gross profit was $71 million. The decrease reflects higher per unit production and procurement costs due to adverse weather in our growing regions, processes, including Black Sigatoka, higher distribution costs and an allowance recorded on our receivable from an independent grower in Asia related to low productivity. The decrease was partially offset by higher net sales. Gross margin decreased to 4.8%. Adjusted gross profit was $70 million and adjusted gross margin was 4.7%. Lastly, our full year results for Other Products and Services segment. Net sales were $210 million, driven by higher net sales in our third-party ocean freight business, reflecting increased volume and a more favorable cargo mix as well as higher net sales in our Specialty Ingredients business. The increase was partially offset by lower net sales in our Jordan poultry and meats business due to reduced sales volume and lower per unit selling prices. Gross profit was $29 million, driven by higher net sales, partially offset by higher production costs. Gross margin decreased to 13.7%. Now moving to select financial data for the full year 2025. Our income tax provision for the full year was $37 million, reflecting changes in the global tax and regulatory environment and higher earnings in certain jurisdictions. Net cash provided by operating activities was $245 million, driven by net earnings and changes in noncash items. Working capital movements also impacted operating cash flow, reflecting lower accounts receivable balances compared to the prior year, partially offset by lower accounts payable and accrued expenses due to the timing of customer receipts and supplier payments. At year-end, long-term debt was $173 million, and our adjusted leverage ratio remained below 1x EBITDA. We entered 2026 with a strong capital structure that supports both our ongoing investments and the acquisition we expect to close in the first quarter. Capital expenditures for the full year totaled $64 million. Investments during 2025 focused on enhancing our banana and pineapple operations in Central America, upgrading operations and production facilities in North America and improving pineapple operations in Kenya. As announced in our press release, our Board of Directors declared a quarterly cash dividend of $0.30 per share payable on March 27, 2026, to shareholders of record as of March 4, 2026. On an annualized basis, this equates to $1.20 per share, representing a dividend yield of approximately 3% based on our current share price. During the year, we repurchased 866,000 shares of our common stock for $30 million at an average price of $34.44 per share. As of December, we had $120 million available under our share repurchase program. Together, our dividend policy and share repurchase activity reflect our disciplined approach to capital allocation. In addition to sustaining a competitive and reliable return to shareholders, we continue to prioritize strategic investments that support long-term growth, including the Del Monte Foods transaction. We believe this balanced approach positions us well to create long-term shareholder value. Turning to our outlook for the full year 2026. We will share expectations for our business segments and outline our key financial priorities, including SG&A and cash flows. Our guidance reflects baseline assumptions and the information available to us today. Our 2026 outlook excludes the divested Mann Packing business, which we exited in December 2025 and does not include any contribution from the Del Monte Foods pending transaction. As always, our guidance incorporates a range of risks and uncertainties, including macroeconomic conditions, industry dynamics and other factors outside of our control. We expect net sales on a continuing operating basis to be 1% to 2% higher for the full year, driven by higher per unit selling prices. As far as gross margin by segment, in our fresh and value-added segment, we expect gross margin to be in the range of 12% to 14%. Demand for our premium pineapple varieties remain strong. However, industry-wide supply constraints limit our ability to fully benefit from increased market demand. In our banana segment, we expect gross margin to be in the range of 5% to 6%. This outlook reflects ongoing cost pressures, including disease management in our own farms and competitive conditions across contracted and spot fruit sourcing. We also expect some disruption from logistic challenges, including weather-related impacts and congestion at key ports. Notably, our Q1 projections account for headwinds caused by the extreme snowfall and freezing conditions across the United States earlier this quarter. These weather events disrupted domestic distribution networks and slowed throughput at several of our primary Northern terminals in addition to shutdowns at some of our fresh-cut facilities and distribution centers during that period. Market demand in North America and Europe remains strong. The Middle East is stable and market demand in Asia, particularly Japan and Korea continues to trend lower year-over-year. For our Other Products and Services segment, we expect gross margin to be in the range of 12% to 13%. Moving on to our selling, general and administrative expenses. We expect to be in the range of $210 million to $215 million, reflecting wage inflation and targeted investments in technology and organizational support. For the full year, we expect net cash provided by operating activities to be in the range of $220 million to $230 million. This concludes our financial review. We can now turn the call over to Q&A. Kate? Operator: [Operator Instructions] Your first question comes from the line of Mitchell Pinheiro with Sturdivant & Company. Mitchell Pinheiro: So I got a bunch of questions. First, it was -- what really stood out in the quarter to me was margins in your fresh-cut -- your value add, I should say, your value add. And I'm curious, you talked about in your guidance, a gross margin in the 12% to 14% range. The adjusted gross margin in this last quarter was 14.8%. Are you taking a little bit of a conservative view? Or -- you talked about pineapples and some cost pressures there and just in general, is it a conservative view? Or is 14.8% something that you think you could attain on a more sustainable basis longer term? Monica Vicente: We feel comfortable with the guidance we're giving of 12% to 14%. As you may recall, we actually are increasing it by the 100 basis points. So we feel comfortable with 12% to 14% for the year. Mitchell Pinheiro: Okay. And within the fresh and value add, you didn't talk a lot about fresh-cut. Could you talk a little bit about the trends there in the fourth quarter and how -- what you expect for 2026? Monica Vicente: Fresh-cut is performing very well. Demand is strong. Our volumes are up and as well as pricing. So one of the things we expect next year or 2026 is continued strong demand for the fresh-cut line with good margins. Mitchell Pinheiro: Okay. And is that -- yes. And is that demand geographically broad-based? Or is there any particular geography that's outperforming? Monica Vicente: Well, the U.S. is our largest fresh-cut business, but the U.K. is also very strong. So that has been performing very well as well. Mitchell Pinheiro: Okay. And so can you talk a little bit about your pineapple business? You talked about -- obviously, there's strong demand, but you have supply issues. Any update on maybe when supply expand a little bit. And also talk, if you could, about how you're looking with the Honeyglow and the Pink pineapple. Mohammad Abu-Ghazaleh: As far as the pineapple concerned, it is a fact that the market demand is higher than the supply as we speak right now. Our idea is that we are expanding our production in Costa Rica. We are -- as we speak, we are planting new acreage. So that would be mainly for North America and some to Europe. But we are as well expanding production into Brazil to support our European market, but that will take 2, 3 years from now to be able to supply this market. So we, in general, are expanding somehow our volumes through new plantation. However, don't forget that there is a restriction on land availability as well as government approvals to -- it's becoming an issue, of course, in Costa Rica that you cannot plant everywhere and there are restrictions regarding environment and other reasons as well. So in our opinion that the market for pineapples, in particular to us is stable, continuing stable. Now as far as pink pineapple, as we mentioned, I mean, on many occasions before, Mitch, that we did not increase our acreage. And so whatever we have right now is going -- at full production is going into the market. And now it is -- the pricing, of course, it's a different category from the main gold pineapple. So that is also helping us. The Honeyglow is also a growing category. But you know that this is also restricted by weather and by the way that they manage the farms. We do have a good percentage of our volume now coming as Honeyglow into the market. And that, of course, achieves a premium pricing to the main variety. But all in all, I think that demand continues to outstrip supply as we speak, especially for Del Monte. Del Monte has a different quality, different pineapple from the rest of the industry. Mitchell Pinheiro: Great. Okay. And then -- so on the banana side, you still got, obviously, the cost pressures with your -- and it remains competitive. I was curious in the last quarter, I didn't see any breakdown, but how did North America fare relative to Europe and the rest of the world, Middle East and Asia in bananas? Mohammad Abu-Ghazaleh: North America has been doing quite reasonably well. We have -- as you know, that we did not go for volume, we went for profitability. And we have said that before on many occasions that we are not going out for volume, but rather than for the bottom line. And if any business makes sense to us, of course, we do the sale. But -- and that's why you see our banana business maybe in volume has gone down, but we maintained our margins and our profitability. So that's the kind of policy we are going to be following going forward, maintaining that we deliver the highest quality product to the market, but also at a price that can make sense to us and bring the margins that this business should generate. Monica Vicente: And Mitch, what really impacted our margins in banana this year was Asia mostly. So unfortunately, that dragged the margin down. Mitchell Pinheiro: Okay. Okay. And then a couple of other things. Monica, did you -- if I missed it, did you give the -- your capital spending estimates for 2026? Mohammad Abu-Ghazaleh: No. I think as we are going into the acquisition of Del Monte Food, we prefer that we can postpone this to the next quarter. So we will have better idea. Mitchell Pinheiro: Okay. And outside of Del Monte, anything unusual this year in terms of your capital purchases or relatively normal? Mohammad Abu-Ghazaleh: No, relatively normal, Mitch. It will be more or less in the same range of the past few years. Mitchell Pinheiro: Okay. And then when you look at the Del Monte, the potential asset purchase here, is there -- I know we're not giving accretion and guidance along those lines. But can you talk a little bit about perhaps sales growth of that business, how -- the parts that you're purchasing, do you have any sort of idea like and expected sales growth? And also, as you look at margins, would this be something accretive to your current gross margin? I mean, just give us some idea of the profitability of the business? Or anything you can help add there would be helpful. Monica Vicente: I know everybody is anxious to hear this, Mitch, but we'd rather wait until Q1 to really give some good guidance on how we feel about this business. As you understand this, this was a process through a bankruptcy court, and it's been -- we'd rather wait until Q1. Mitchell Pinheiro: Okay. Well, that's fair enough. Does Mohammad, you talked about this has been a long held conviction of yours to get the Del Monte brand back together again. So as much as it's part of that, is the long-held conviction, is it because you see the opportunity to really drive some extended profit growth out of that? Is there something -- or is it just combining it just helps -- I don't know, just helps the story better? Or is there really a profit accelerator here that is driving your conviction? Mohammad Abu-Ghazaleh: Well, my conviction always is to make money. My conviction is not -- I love the word unifying the brand together. Of course, that's a great achievement and the legacy to bring back Del Monte under one roof. But at the end of the day, our shareholders will be looking for what this means to them, and that's what exactly what we are looking for. But I can assure you that our objective is how can we accelerate margins and accelerate profitability on both sides of the aisle. And I just want to highlight one thing here, which is a fact that Del Monte will become the only multinational in the food industry that has 2 divisions, fresh and food. There is no other company equal to Del Monte in the future. That, I think, by itself is something that will not be easily repeated anywhere in the world. Don't forget that Fresh Del Monte as we are, we are a multinational across the world with everything on the map from production to supply chain to logistics to -- you name it. And now with the addition of the food, then we will become not only a consumer goods company, but we will be the only unique company in the world that will have fresh and packaged or processed or can in all aspects. So that, in my opinion, is a unique advantage and a unique position that Del Monte will enjoy going forward in the future. Operator: I will turn the call back over to Mr. Mohammad Abu-Ghazaleh for closing remarks. Mohammad Abu-Ghazaleh: I would like to thank everyone for joining this call, and I wish you a great day and look forward to speaking with you on our next call. Thank you, and have a good day. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Daniel Schneider: All right. Well, good afternoon, good morning to everyone. This is Photocure ASA Fourth Quarter and Full Year 2025 Results. I'm Dan Schneider, President and CEO. Today with me is Erik Dahl, CFO; and Priyam Shah, our Vice President of IR. Just a reminder, the usual disclaimers are in effect for today's presentation. So I'd like to start off with the strategic priorities and initiatives of Photocure. Our strategic priorities guide how we execute and allocate resources across the company. At a high level, our strategy is centered around 3 key pillars: Strengthen the core Hexvix/Cysview business, advance blue light cystoscopy as a definitive standard of care in bladder cancer, and third, expand our reach into a broader uro-oncology and precision diagnostics space. Taking a deeper dive on the first pillar, accelerate and expand, we need to deliver on our financial guidance for disciplined growth in revenue and EBITDA in our core business and continue generating operating leverage. We also need to drive the BLC mobile strategy, ForTec, in the U.S. that hits the hospital markets or the hospitals who otherwise would have access to blue light cystoscopy. And in the EU, it's important we increase our penetration in our high priority growth markets through BLC expansion and additional image quality upgrades throughout the continent and also expand our geographic footprint, for example, most recently Spain last year, and leverage our distribution partnerships throughout the globe. In the second pillar, positioning and access, we are building the foundations for BLC as a primary precision diagnostic tool to facilitate early and appropriate use of new NMIBC therapeutics, detection, surveillance, and therapeutic monitoring. We also need to support high-def BLC technologies that are entering the market, upgrades of key OEM partners and support the efforts to allow other manufacturers into the U.S. market, whether it be reclass or other processes. And finally, partnering with Richard Wolf on building adoption in Europe for the flexible blue light cystoscopy interim solution while we continue to advance the development of the high-def 4K state-of-the-art and the world's only BLC Flex system for global use. These efforts will not only drive near-term growth, but also will solidify our long-term competitive positioning. The third pillar, acquire and transform. We're looking ahead and actively assessing opportunities within non-muscle invasive bladder cancer and other uro-oncology indications with a focus on the rapidly growing interest in precision diagnostics indications, things such as biomarkers, artificial intelligence, and new technologies, diversifying our portfolio and building upon our commercial footprint and bladder cancer expertise. Two real-time examples of this are our collaborations with Richard Wolf and ForTec to bring 4K Flex and mobile solutions by leveraging our existing global commercial infrastructure in the broader uro-oncology segment. And secondly, further in the life cycle of management as demonstrated by our recent strategic collaboration with Claritas ICS to develop the world's first and only BLC AI system. M&A is a focus in 2026 in an effort to expand our uro-oncology footprint, grow faster, and increase our ability to generate strong cash flow. So Q4 highlights. Product growth, overall, we had 9% product growth revenue, 10% on the total year ex-FX. In North America, we delivered 13% unit growth and 17% product revenue growth ex-foreign exchange, offsetting the continued Flex unit decline. Flex currently is less than 5% of our total U.S. business. The installed base of Saphira blue light equipment continued to increase with 1 tower placement and 6 upgrades in the U.S. in Q4. And I'd like to make a comment that the fourth quarter of last year, KARL STORZ was running a promotion, and we believe that some of the sales will flow into first quarter of this year as the POs have been cut. We had a fantastic 19% unit growth in the rigid surgical market, inclusive of ForTec Medical's mobile solution. As a reminder, ForTec added 6 more rigid Saphira to their national fleet in September and began deploying them, and this is all underscoring the growing demand for BLC. And the number of active accounts has now increased by 22% year-over-year to 384 active accounts, setting the stage for continued momentum into the future. In Europe, revenue was up 4%, units up 4%. We continue to execute in EU with strong growth from the DACH and Nordic countries driven by Olympus upgrades and continued execution focus. The launch early in 2025 of the Olympus Visera III equipment continues to gain momentum with now 60 new installs in the field. Upgrades throughout the world have proven to increase the usage of BLC with Hexvix and Cysview and remains a very important part of our strategy. We also generated positive EBITDA of NOK 1.9 million, NOK 8.4 million commercial EBITDA. It's our 11th quarter in a row of positive EBITDA, which continues building operating leverage throughout 2025, and we believe into 2026. A strong balance sheet with NOK 238.9 million cash and no term debt. And as a reminder, we also completed our 500,000 share buyback program last year in quarter 2. Later in today's presentation, I will share several key performance metrics underscoring the growing business of scaling and operational leverage. Important news flow in Q4 data publications, presentations, and abstracts. On November 19, we published the new budget impact model study in 4 European countries concludes that BLC use offers a clinically meaningful and economically rational approach to non-muscle invasive bladder cancer. On December 8, the impact of avoiding recurrence, the new BRAVO study abstract at SUO 2025 demonstrated cost neutrality in blue light versus white light cystoscopy comparison. In industry news, on November 28, we received a prestigious 2025 innovation prize from the Norwegian Cancer Society. The prize is recognition of our commitment to advancing cancer diagnostics and improving patient outcomes in bladder care. In partner news, on October 15, as previously announced in the Q3 earnings call in October, we formed a partnership with Intelligent Scopes Corporation, signed an agreement for a strategic partnership to develop artificial intelligence to couple with blue light cystoscopy. And on January 12 post period, new publication of Hexvix trial data from China, pivotal trial by Asieris showed that BLC significantly improves the detection of bladder cancer using modern high-def equipment. The data shows proportion of patients with additional bladder cancer lesions detected by BLC was 43.3% during the rigorous trial and the updated equipment. So let's go to segment trends. Strong unit growth in both regions. Both North America and Europe delivered continued growth. In North America, the business has significantly overcome the continued decline of Flex surveillance market, while the rigid surgical market delivered a 19% unit growth in Q4, an all-time high. In Europe, Q4 units surpassed previous Q4 high watermark as momentum continues to build throughout the region. Europe is beginning to see the impact of the Olympus Visera III upgrade rollout, particularly in the DACH, France, and Nordic countries. Sixty installs through Q4 with more in the pipeline, especially in that region of Europe. Upgrades continue to deliver positive double-digit impact. Reminder on the impact of these upgrades, 40% of the Europe is dominated by Olympus. So it's very important that this remains an important part of our strategy throughout the European continent. Turning specifically to North America. We see adjusted rigid growth increasing 19% with the addition of ForTec Mobile Solution, while Flex units are now less than 5% of total sales, which were 17% to 20% of the total North American business. There were 7 new Saphira installed, 6 upgrades, 1 new. As I mentioned, a promotional program did run in the fourth quarter and has continued into this first quarter of this year and account growth of roughly 22% year-over-year. This bodes very well for quarters ahead. ForTec Mobile Solution is now reaching 134 accounts as of the start of the service. That's plus 13 from the end of Q3 with -- and over 230 different physicians are now trained since launch, demonstrating growing momentum and demand. The ForTec Mobile Solution Saphira upgrades are key drivers to the U.S. business. Access to BLC in the U.S. remains a top priority as demonstrated by our ongoing efforts in the FDA reclassification and reimbursement initiatives. I want to repeat, supporting the growth are many discussions, presentations at U.S. medical congresses such as SUO recently in December, where there is a growing belief that BLC's ability to see more assures physicians of their ability to perform a more complete TURBT, which leads to more accurate pathology, staging, and risk stratification and ultimately helps urologists make an informed precision medicine decision. Europe also remains strong with solid growth in the DACH and Nordic countries, which is -- which make up as a majority of the revenue. The priority markets continue increasing, France, Italy, and U.K., we're seeing double-digit growth. And as I mentioned earlier, there have already been 60 Olympus upgrades in Europe through Q4 of last year. Taking a look at the U.S. specifically, significant growth of 22% in active accounts. And remind you, the definition of active accounts are accounts that have been ordered in the last 12 months. I get often asked what inactivates an account. And a lot of times, it is old standard definition of equipment that has gone down and the account is waiting to either upgrade or go to the mobile solution. So we do have ebb and flow within the active accounts, but we are up on a total net of 22%. This includes ForTec mobile accounts that are building momentum. The program already is exceeding everyone's expectations as well as accounts due to BLC upgrades. We believe the balance of the old stores standard definition blue light machines will be upgraded over the next 2 years. This is an important initiative as upgrades provide double-digit uplift in sales in those accounts. We see continued momentum in the overall interest and adoption of blue light cystoscopy with Cysview in the U.S. So the U.S. is a highly underpenetrated market for BLC with potential for exponential upside growth. This is an illustrative representation. Despite the progress we are making, we are still in the very early stages in the U.S. as the U.S. remains the single largest opportunity for Photocure and is still significantly underpenetrated with less than 10% market share today. We have a long runway for growth as awareness, access, and equipment availability expand. Bladder cancer represents a major unmet need in the U.S. Each year, there are approximately 85,000 new cases and more than 730,000 patients living with the disease. You have the total number of TURBTs and surveillance cystoscopies in the U.S. here on the upper right. And in the U.S. and Europe, there are over 700,000 surgical procedures with 1.6 million surveillance cystoscopies done in offices annually. The total addressable market for flexible cystoscopy alone exceeds USD 1.3 billion globally. The blue light cystoscopy is uniquely positioned to capture a meaningful portion of that opportunity. Add another 700,000 for rigid and the total TAM for BLC is USD 2 billion with the majority in the untapped U.S. market. We expect several catalysts, and that's what's depicted in this representation to drive the next wave of growth in the U.S. market. First, we continue to work towards improved CMS reimbursement, which we are pursuing through direct conversations with CMS and through legislative efforts in Washington, D.C., both would further support the adoption of BLC across academic and community settings. We also see the return of Flex system to the market that will enable broader access for outpatient and office-based procedures. We also see the entry of additional OEM partners, what would expand the installed base dramatically and provide more choice to urologists and all types of institutions. And finally, FDA reclassification of blue light cystoscopy equipment for which there is an ongoing citizens' petition, could be a potential milestone that would significantly lower the barriers and accelerate uptake nationwide. And finally, and probably one of the most dramatic things going on is the momentum in the macro environment as reinforced at major medical congresses and increasing publications. The expensive precision therapeutics that are hitting the market are turning to precision diagnostics like blue light cystoscopy and bladder care, it is necessary to find the right patients who can benefit. Taken together, these drivers support the long-term growth trajectory for the U.S. business that is both scalable and sustainable. The bottom line is we have a proven product, a growing clinical endorsement, and in a traded market, giving us potential for exponential upside as these catalysts materialize in the near term. Growth initiatives. As I mentioned, first, let me talk about our organic growth initiatives. We now have 134 ForTec using accounts with over 230 different users gaining experience. These are physicians and patients who otherwise would not have access to BLC. Our development partnership with Richard Wolf is progressing well, while a flexible BLC interim solution has been made available in advance of the future launch of the state-of-the-art system that has both high-def 4K. This is a $1.3 billion TAM market between the U.S. and the EU5. The third box, and the trends are clearly blowing in the favor of BLC, the momentum and pressure continues to build behind the notion of accurate diagnosis and complete resections in line with precision pathway for bladder cancer patient care. We believe BLC can play a central part in determining the precision pathway. As previously announced in the last earnings call, our recent partnership with Intelligent Scopes Corporation, a U.S.-based subsidiary of Claritas HealthTech is to develop AI software for real-time tumor detection using BLC. Through this collaboration, Photocure and ISC are combining complementary strengths. Photocure's leadership in bladder cancer detection and ISC's deep artificial intelligence expertise to build an intelligent diagnostic platform designed to improve accuracy and consistency in tumor detection. The pilot program that we underwent analyzed data from over 200 BLC procedures with over 80,000 images, demonstrating early performance and very strong performance in detecting high-risk and early-stage lesions that otherwise would not be detected. Joint development work is underway and the ENAiBLE clinical study has been initiated in both the U.S. and Europe, following which we plan to pursue both FDA and CE submissions with Photocure holding the exclusive global commercialization rights once the software receives clearance. This initiative extends Photocure's technology moat towards data-driven precision care, paving the way for future AI-enabled diagnostics in uro-oncology, importantly, it adds high-margin, scalable software component to our business model, creating durable value beyond current consumable base. And why do we feel strongly about organic BLC adoption? The environment for adoption for BLC is stronger than ever. The guidelines from AUA, EAU and various other bodies now recommend BLC and the newer guidelines are only getting stronger. The Italian Society of Urology was the most recent addition in the third quarter, which now recommends BLC for the first TURBT, the second resection, and recurrence of non-muscle invasive bladder cancer in populations of high risk. The science itself from over 300 publications in multiple well-powered randomized studies provides a wealth of clinical evidence. Over 40 independent studies have confirmed improved detection and reduced recurrence, and we have the world's largest bladder cancer registry. And then again, our OEM partners are investing on anticipated volume growth and rising ties in bladder cancer diagnostics. By upgrading their systems with rollouts of 4K and high-def capabilities, the new OEMs are increasingly wanting to enter the U.S. market to offer BLC. As mentioned earlier, publications are now providing evidence that BLC significantly improves the detection of bladder cancer using modern high-def equipment. Data shows proportion of patients with additional bladder cancer lesions detected by BLC was 43.3% during a rigorous Chinese trial by Asieris with the updated 4K high-def equipment. And there's a rapidly evolving therapeutic landscape of bladder cancer care. Another major source of tailwinds behind the interest in bladder cancer diagnostics is a rapidly evolving therapeutic landscape. Bladder cancer remains a prevalent malignancy with high recurrence despite the standard therapies. BCG is a cornerstone of treatment for non-muscle invasive bladder cancer. However, nearly half of the patients experienced relapse or develop resistance, highlighting the need for alternative strategies. Recent advancements in immunotherapy have reshaped the therapeutic landscape in bladder cancer. Immune checkpoint inhibitors restore T cell function and show clinical activity in BCG unresponsive disease. Viral vector-based approaches provide localized immune activation, while cellular platforms such as CAR-T or CAR-NK therapies offer precision targeting of tumor antigens. Concurrently, other novel delivery systems and antibody drug conjugates enhance efficacy and safety by improving tumor-specific cytotoxicity. Collectively, these strategies significantly -- signify a paradigm shift from traditional intravesical therapy towards a personalized and durable immunotherapeutic intervention. After decades of little advancements, there are now 6 FDA-approved drugs on the U.S. market, 3 were approved in the second half of last year, and there are 26 total unique therapy-focused NMIBC trials ongoing currently. That's a positive development. What it also does is raise the bar for diagnosis. As these therapies are becoming more advanced, they are also becoming more expensive and missing disease becomes even more costly. Every NMIBC case will become more complex with all the new personalized treatments and combo immunotherapies and bladder sparing options. Improving outcomes and guiding the future of management of bladder cancer will depend on precision pathways, starting with precision diagnostic like BLC along with monitoring to offer a more comprehensive approach to risk assessment, surveillance, and treatment planning in the complex NMIBC cases. Hence, our ambition goes beyond single product and organic BLC equipment enhancements. The future of bladder cancer is precision diagnostics and combining high-resolution imaging, both rigid and flexible BLC, along with the potential expansion to various other advanced cytologies, computational histology, biomarkers, artificial intelligence, and longitudinal monitoring will be critical in bladder cancer patient care continuum. Blue light cystoscopy is the foundation of that ecosystem, and Photocure is building towards an integrated future of molecular digital framework. We have spent significant time and effort in evaluating the right areas of focus to expand our portfolio offerings, and we believe that these are the targeted areas that will truly allow us to further our additional aspects of the continuum of care in bladder cancer diagnostics and management. We anticipate having more granular updates for you throughout 2026. And finally, we'll talk about Asieris, a value-generating program. Our partnership with Asieris continues to progress favorably. We have now taken in over USD 18 million in milestones across both Hexvix and Cevira programs, with the potential for additional milestones and royalties as the programs advance through regulatory and commercial goalposts. As a reminder, key points about Hexvix's commercial partnership with Asieris. Hexvix has already received marketing authorization in China. What they're waiting for is the Chinese approval for the Richard Wolf system for blue light cystoscopy. We expect the commercial launch following device approval this year. The timing of that is unknown, but we believe is imminent. The key points about the Cevira out-license approach to Asieris, so the Cevira NDA remains under regulatory review as we await clearance. We are in regular dialogue with Asieris. We are aware that Cevira is still under regulatory review, and it is following the normal information exchanges between the applicant Asieris and the NMPA. Any additional questions should be submitted to Asieris as this is their product. If and when it's approved, it would be one of the first products approved in China and before the rest of the world. Asieris has had pre-submission meetings with the EU and U.S. regulators to determine a way forward in both of these large markets. And Asieris has also disclosed they have interest in pursuing a secondary indication for Cevira, which brings additional milestone payments upon approval. I'd now like to turn it over to Erik and the financials. Erik, to you. Erik Dahl: Thank you, Dan. Please stay on Slide 16, please. In this section, the financial section, we will review the consolidated income statement, segment reports for our 2 main segments and finally, headlines from the cash flow and the balance sheet. A couple of words about foreign exchange before we get started. U.S. dollar, as I guess everybody know, weakened in the quarter, resulting in about NOK 5.6 million, unfavorable impact on revenue from foreign exchange. In Europe, on the other hand, the revenues were not materially impacted by foreign exchange. Final comment before we start on the analysis. I will always use Norwegian kroner, and please bear that in mind. If there is another currency, I will mention that. Moving on to Slide 17, the consolidated income statement. Looking at consolidated Hexvix/Cysview product revenue, for the quarter, NOK 135 million, it's the highest ever and 9% above Q4 2024 in constant currency. Including FX impact, the year-over-year growth was 5% in the quarter. Full year Hexvix/Cysview revenue was NOK 530 million, growing 10% year-over-year in constant currencies and at the top end of our guidance for the year. The revenue growth was driven by volume growth as well as price increases in both regions. Hexvix/Cysview market unit sales, in-market unit sales increased 13% in North America and 4% in Europe in Q4. For the full year, the increase in volume was 9% in North America and 4% in Europe. The sales have, to some extent, been negatively impacted by the phase down of Cysview usage in the flexible BLC setting in U.S. On the positive side, we have seen strong development in the sale and distribution by our partner, ForTec. Total revenue, including milestones was NOK 136 million in Q4, and the decline from 2024 is due to a NOK 12.1 million milestone in 2024, and we have no milestone revenues in 2025. Full year total revenue was NOK 532.6 million year-over-year, an increase of 1%, impacted by milestone revenues of NOK 34 million in '24 and none in 2025. Cost of goods sold in Q4 2025 was NOK 10 million compared to NOK 7.5 million in 2024. The increase in COGS was driven by sales volume increase as well as onetime IFRS inventory value adjustments and FX movements as well as activities to increase productivity capacity -- production capacity. And we expect COGS to move back to normal levels throughout this year and next year. Total operating expenses, excluding business development expenses was NOK 119.9 million in Q4, a year-over-year reduction of 2%. Full year operating expenses, excluding business development expenses was NOK 444 million, an increase of 2% year-over-year. The increase included investments in medical programs, merit, and inflation, partly offset by FX. Business development expenses were NOK 4 million in Q4 compared to NOK 5.2 million in Q4 2024. Operating expenses within business development are related to cycle management for Hexvix -- life cycle management for Hexvix/Cysview, our cooperation with Richard Wolf on the flexible BLC system as well as business development efforts that can diversify our business and significantly increase our growth rate. The expense level obviously may vary from quarter-to-quarter given the one-off nature of these expenses. EBITDA in Q4, excluding milestones and business development expenses was NOK 5.9 million compared to NOK 1.6 million in 2024. Full year EBITDA, excluding milestones and business development was NOK 46.2 million compared to NOK 24 million full year 2024. Depreciation and amortization, NOK 7.4 million in Q4. Main cost item is the amortization of the intangible assets related to the return of the European business from Ipsen in 2020. Net financial items was a net cost of NOK 3.9 million in Q4, driven by Ipsen earn-out payment, partly offset by interest income and FX gain. And tax expenses is a net income of NOK 1.5 million for the quarter. After tax, we have for Q4, a net loss of NOK 8 million and for the full year a net loss of NOK 1.5 million. Now to the segment performance. Next slide, please, Slide 18. For the segment reporting, we will focus on the 2 main segments, North America and Europe. The North America segment includes U.S. and Canada. And revenue for the North America increased 17% in Q4 in constant currencies. The main drivers are volume increases of 13% and increased average prices of 4%. FX impact was negative 10%. Revenues were negatively impacted by the phase down of Cysview usage in the flexible BLC setting, however, to a lesser extent than previous quarters. On the positive side, we have seen strong development within the sale and distribution of our partner, ForTec. Q4 direct costs decreased 1%, driven by FX impact, which was offsetting increases driven mainly by product -- project expenses, merit, and inflation. And Q4 contribution was NOK 10.8 million compared to NOK 7.8 million in 2024. Full year contribution was NOK 31.8 million, an improvement of NOK 10.8 million from 2024. Full year EBITDA negative NOK 14.5 million, a year-over-year improvement of NOK 6.6 million. Looking at the European business, we had year-over-year a revenue increase of 4% in Q4, mainly driven by volume in the DACH region and high priority growth markets. Direct costs decreased year-over-year 5% in Q4, driven by FTE adjustments, partly offset by merit and inflation. And we ended Q4 with a contribution of NOK 34 million compared to NOK 31 million in 2024. Full year EBITDA, NOK 76 million, a year-over-year improvement of NOK 12.4 million. As a conclusion on the segment reporting, what we see is significant growth and improved profitability in both regions. Now to the cash flow and balance sheet. Next slide, 19, please. So first, cash flow from operations in Q4, negative NOK 0.5 million. For the full year, cash flow from operations was NOK 26 million compared to NOK 76 million in Q4 2024. The full year change was mainly driven by milestones from Asieris in 2024 and negative working capital movement in 2025 due to increased product revenue year-over-year. Cash flow from investments in Q4 and full year include interest received and paid as well as investments in tangible and intangible assets, including production capacity. Cash flow from financing in Q4 and full year was negative, driven by earn-out payments to Ipsen and for the full year, also the share buyback program. In total, we paid NOK 29.6 million for the 500,000 shares we acquired in the year. This total gives a net cash flow in Q4 negative NOK 8.9 million compared to positive NOK 2.8 million in 2024 and full year net cash flow was negative NOK 55 million and in 2024, positive NOK 4.4 million -- NOK 34.4 million, sorry. And with this net cash flow, we ended 2025 with a cash balance of NOK 238.9 million. Going on to -- moving on to the balance sheet. We ended the year with total assets of NOK 707 million. Noncurrent assets was NOK 321 million at the end of 2025, and this included customer relationship with NOK 79 million and customer relationship is the intangible assets identified in the purchase price allocation for the Ipsen transaction. Noncurrent assets also include goodwill from the Ipsen transaction of NOK 144 million and a tax asset of NOK 56 million. Inventory and receivables were NOK 146 million at the end of 2025, and the increase from 2024 is NOK 16.8 million and driven by increased revenue as well as inventory. Long-term liabilities was $116.9 million and include the liability related to Ipsen transaction totaling NOK 100 million. Finally, equity at the end of the year was NOK 484 million, which is 68% of total assets. And this concludes the financial section. Thank you. Dan, back to you. Daniel Schneider: Thank you, Erik. All right. For this section, we thought it would be important to share with you 2 slides on key performance metrics, underscoring the fast-developing scale and leveraging within the core business. This graphic is on the second page of the earnings report. Over the last 3 years, we have delivered consistent profitable growth across all key operating metrics while keeping headcount flat. Product revenues increased 42%, unit volumes grew 18%, while North America rigid and mobile volumes grew 40%. The gross profit expanded 39%, while OpEx has remained relatively flat. The most notable development over this period has been operating leverage. Commercial EBITDA improved from negative NOK 35 million to a positive NOK 56 million, with margins improving from 7% to 11% and continuing. This reflects sustained procedure adoption, growing utilization and the durability of our commercial model, which is shown in the graphical format on the next page. Taken together, these trends demonstrate that we are not just growing, we are scaling. We have shown that incremental revenue increasing drops through to the EBITDA. These performance trends clearly demonstrate our ability to scale the business, all while maintaining a focused commercial footprint. So let's go into summary. So fourth quarter revenue and EBITDA overall, a solid quarter with 9% product revenue growth in Q4, 10% on the year. We now have had 11 quarters in a row of positive EBITDA. The commercial EBITDA at NOK 8.4 million ex-BD and Milestones, NOK 5.9 million, but we continue to invest in key growth initiatives that we believe will, one, position us for long-term success; two, generate future revenue growth; and three, increase our operating leverage. The Flex and surveillance market now and in the future, Richard Wolf and Photocure's joint development program is well on track and will bring Flex back to the surveillance market. We are now 15 months into development, which is going quite well, and we estimate a market readiness in 2027. In the interim, we are beginning to reintroduce interim Flex by Richard Wolf in Europe. The first cases took place in late June and early July in the U.K. and the purpose of this interim solution is to keep interest high and collect data. North American account growth of installs and upgrades in mobile. North American unit sales grew 19%. We grew our active U.S. accounts by 22% year-over-year. New and reactivated accounts by upgrades, for example, and we believe this is a great indicator of our performance. We continue to work with KARL STORZ to grow the installed base of BLC equipment in the U.S., a key priority for KARL STORZ, and we expect this to continue to expand. KARL STORZ initiated the promo program last year, and I believe it has a little bit of a lag-time in purchase orders that we will fulfill here in the first quarter of this year. The ForTec national mobile rollout continues to gain traction and contribute to our growth, creating a new business by expanding access to otherwise inaccessible accounts with a novel mobile business model. There are now over 120 accounts that have tried the solution with nearly 200 users, and the momentum continues to build, bringing BLC access to so many desperate bladder cancer patients throughout the United States. In the EU, revenue was up 4%, 3% unit growth, particularly driven by DACH and double-digit growth in the priority markets. We continue to facilitate the imaging quality upgrades in nearly -- in our nearly 600 targeted accounts, and we believe that the Olympus Blue Light upgrade will help strengthen this initiative. So far, 60 Visera III upgrades have been installed since January 1, primarily in Germany, France, Nordic, and Austria and a strong pipeline and aligned interest with Olympus exists. We have a strong cash balance of NOK 239 million. And finally, we continue to advance several business development initiatives in next-generation precision diagnostics, including the partnership with Intelligent Scope Corporation/Claritas, which is the artificial intelligence software that we're developing in real time to help in blue light procedures. So the anticipated milestones, we are guiding 7% to 11% top line growth, all while continuing to show operating leverage on our commercial business. We will continue increasing Cysview and Hexvix account utilization through upgrades, installs, and a mobile solution, in particular in the U.S. The advanced development of the next-generation state-of-the-art 4K high-def Flex system to access and unlock the potential within the next 1.2 million surveillance procedures done in the U.S. and EU5. In addition, we want to expedite the strategic partnership with ICS to develop the blue light AI system, what we believe will be a game changer in bladder cancer precision diagnostics. We'll continue to generate data and present, in particular, data on health economics, positioning blue light cystoscopy as the go-to precision diagnostic in bladder care. We also want to increase access to BLC in the U.S. vis-a-vis the citizen's petition or the alternative pathways to U.S. approvals. And finally, we'll continue to support Asieris' progress across both Hexvix and Cevira with potential to receive significant milestones. And with that, I think we can open up to questions. Unknown Executive: The first question is if you could put some flavor on the Tower development in the fourth quarter. Daniel Schneider: Yes. As I mentioned, last half of 2025, KARL STORZ initiated a promotional program. They -- we believe or what we're hearing is that it -- some of the installs they expect in the fourth quarter will flow into first quarter this year. But one thing I do want to remind everyone, we are highly focused on throughput of existing towers right now. The swell of interest in precision diagnostics and blue light cystoscopy being the foundation of bladder cancer care, it's extremely important that we're there supporting it. The second part is KARL STORZ in the U.S. has roughly 1/3 of the market. So when you think about installs and then also mobile coming in with it, we take a look at it more in terms of account growth rather than installs. And the account growth was 22% in the fourth quarter. So we're very pleased with that. Unknown Executive: The next question is about Ipsen and if there have been any discussion with them to pay a onetime amount and remove the earnout? Erik Dahl: This is Erik. Yes, they are in discussions. We have approached them. However, we didn't agree on the amount and the yield. So, well, takes 2 hands to clap. Unknown Executive: Then there are questions about the guidance. Note that there are several similar questions being submitted, which although some have been thoroughly outlined by the management in the presentation. But the first question on guidance is, in your guidance, can you clarify what continued operating leverage flow-through means? Priyam Shah: Sure. I can take that one. So the Hexvix/Cysview commercial business has a strong operating leverage. What that means is that a significant portion of incremental revenue flows straight through to the commercial EBITDA because most of the costs are fixed. We demonstrated that in 2025 with the commercial EBITDA margins going up from 7% to 11%. So every additional procedure unit sales -- sold contributes disproportionately to profit growth. That's what that implies. Unknown Executive: On your 2026 guidance, how do you see growth rate in North America versus Europe? Should we expect it to be similar to 2025? Daniel Schneider: Yes. I think you can expect it to be fairly similar. We expect growth rates in the high teens in North America, primarily driven through rigid and mobile solutions. Flex still remains a very small drag on the business as it represents less than 5% of the business, but it's still 5% of the business, and it could drop out completely, but we overcome that. In Europe, we expect, again, same sort of mid-single digit, reminding everyone that the DACH, Germany, and Austria are fairly mature markets, but the priority growth markets are expected to grow at double digits. And when I say significant, double digits in 2026. So that blended growth rate ends up being sort of in the mid-single-digit growth rate. Unknown Executive: When do you expect Flex approval? Daniel Schneider: We got to get through the development first, and that's well on track. We've seen the prototype. It's a slick system. We're super excited about it. When we announced this, we said it would be a 2-year development. We're 15 months into it. So I think the development and then, hopefully, we have a submission maybe later this year with hopefully approval in Europe for sure. And if we can find our pathway through the U.S., which we believe we can, we get a U.S. approval as well as we look into 2027. We'll give more updates as we go. The development piece is well on track, and it's super exciting. The system is very, very good 4K hi-def. But when we get to the regulatory, we'll give some more updates as we submit and move forward through the process. But we're super excited about it. And let me add one more thing to that, [ Geir ]. The market is really starting to mature for the Flex. I think 7, 8 years ago when they launched all -- the only option out there was BCG. Now with these precision therapeutics coming out, the payer world is demanding proper surveillance and monitoring of these medications that can cost up to USD 1 million. So we think we're hitting the market just perfectly right, and we're super excited about that. And we're going to have the world's only blue light flexible system and have exclusive rights to that, so. Unknown Executive: We are heading towards the end of the Q&A section, but has any new OMM scope manufacturer filed with the FDA for clearance? If not, any input as of when that will happen? Daniel Schneider: We're not aware of any yet, but we do expect it this year. Unknown Executive: Last question, and could you comment some more about the CMS reimbursement discussion and potential impact? Daniel Schneider: Yes. So this is a situation in the U.S. CMS has us in a bundled procedure payment, meaning, basically, if the procedure is reimbursed at, call it, USD 5,000, if they do a white light procedure, they get USD 5,000. If they do a blue light procedure, they get USD 5,000. But in the blue light procedure, part of the cost of that procedure is the medicine itself. So the net -- call it, the net profit is a little bit less. Now it still covers it. It's not a negative economic situation, but it is a negative profit situation. What we want to do is use the analog of the radiopharma business, which 1-1/2 years ago was decoupled. So radiopharma procedures and the product they use get separate reimbursements. We want blue light cystoscopy with Cysview to be decoupled. They would reimburse Cysview separately with a profit margin. And then the procedure would be the same procedural reimbursement, whether it's white light or blue light, it's economically neutral. So that's what we're going for. We're doing this in concert with a couple of other companies who have similar situations. We're the ones sort of orchestrating this. I remain optimistic. The goal is to get this through and get a decision potentially by late summer. And then it would -- if we're successful, this would implement in 2027. And I will tell you that it had a dramatic impact on the radiopharma business. So we believe this is a very much an impactful effort on our part. Unknown Executive: That concludes the Q&A segment, Mr. Schneider. Daniel Schneider: Thank you, Geir. All right. Well, thank you, everyone. Thank you, Priyam and Erik, for joining. Geir for consolidating questions. We look forward to seeing everyone at Q2. Have a great day.
Operator: Hello. Welcome to the Dream Industrial REIT Fourth Quarter Conference Call for Wednesday, February 18, 2026. [Operator Instructions] And the conference is being recorded. [Operator Instructions] During this call, management of Dream Industrial REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Industrial REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties and is contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.ca. Your host for today will be Mr. Alexander Sannikov, CEO of Dream Industrial REIT. Mr. Sannikov, please proceed. Alexander Sannikov: Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's year-end 2025 Conference Call. Here with me today is Gord Wadley, our recently appointed Chief Operating Officer, who we are happy to welcome to the industrial team and Lenis Quan, our Chief Financial Officer. 2025 was characterized by significant volatility and unprecedented changes to the global trade environment. Despite this volatility, our results once again demonstrated the resilience of our business. In 2025, we delivered FFO per unit of $1.05, a 5% increase year-over-year. Our average in-place rent increased by 8%, driving comparative properties NOI growth of approximately 6% for the full year. After a turbulent start of 2025, the leasing environment strengthened towards the second half of the year. We have seen a solid uptick in leasing velocity across our key markets, translating into positive absorption and stabilization of asking rents. Across our platform, we signed over 10 million square feet of leases at 30% spreads during the year, including 1.2 million square feet of development leasing. We ended the year with in-place and committed occupancy of 96.2% and a healthy tenant retention ratio of approximately 70%. Over the past few years, we have successfully captured meaningful upside embedded within our portfolio. There is still significant mark-to-market opportunity in the next 2 to 3 years, especially in our Canadian portfolio. In addition, we expect market rent growth to resume in the second half of 2026 and into 2027, following over 2 years of muted market rent development. During this time, we worked diligently to enhance our business by adding strong ancillary revenue drivers complementing our core operations and allowing us to continue driving FFO and cash flow growth irrespective of the amount of upward pressure on market rents. Our solar and our private capital business are the most established within our portfolio of ancillary revenue opportunities. These businesses continue to see healthy growth trajectory, significantly outpacing the growth rates in our core business and are already meaningfully contributing to our FFO and cash flow. Through the execution of these levers, we have significantly grown our free cash flow and meaningfully reduce our payout ratio over the last 5 years. In addition to deploying the retained cash flow, we are actively recycling capital to enhance our return profile further. During the year, we completed or firmed up on over $850 million of dispositions at premium to our IFRS values, including the formation of the DCI joint venture with CPP Investments. The first tranche of the recapitalization of our 3.6 million square foot portfolio by the DCI JV closed in early February, resulting in estimated net proceeds of $375 million. The opportunity offering -- the deployment opportunities offering the strongest risk-adjusted returns within our investable universe are all unique to our business and include our intensification program, activation of our land bank, solar and co-investments in our private partnerships. Beyond these opportunities, we're looking to deploy our capital into selective unit buybacks and accretive acquisitions. Our on-balance sheet acquisition pipeline is robust with over $350 million of opportunities currently in exclusive negotiations. These are mid-day infill assets in our core existing markets with growing in cap rates on these assets is just below 6% on average, and there's strong reversion opportunity translating into mark-to-market cap rate in the mid-7% range. As we deploy the proceeds from already completed and firmed dispositions. We intend to continue recycling capital out of nonstrategic assets into our core strategy, focusing on urban infill midday assets and selective new development that benefit from structural demand tailwinds. Looking ahead, while we recognize that the geopolitical uncertainty and trade tensions will continue to persist in 2026, our key growth drivers remain firmly intact. We are encouraged by the operational tailwinds, a strong access to capital and attractive deployment opportunities, all underpinned by a solid balance sheet. With now, I will turn it over to Gord to discuss our operational highlights. Gordon Wadley: That's great. Thank you very much for the introduction, Alex. It's really good to be with you all again today and share firsthand some of the great work our team is doing across the platform. I'm really looking forward to executing on the robust opportunity set within the industrial business. Our portfolio continues to generate very stable and consistent cash flow growth, which is a testament not just to the quality and location of our assets but also the leasing and operating teams we have in each region that ensure we are achieving our goals. In the fourth quarter, just from a macro perspective, the Canadian industrial leasing market continued to stabilize with 6 million square feet of net absorption recorded during the quarter. This represents the strongest pace of absorption in the last 12 quarters. Combine this with a shrinking supply pipeline and a transition to more build-to-suit developments, the outlook for fundamentals has improved across most of our operating regions. Across our specific occupier markets, we continue to observe sustained demand for our assets in core urban locations. Since the beginning of October, we've completed over 2.1 million square feet of leasing at an average rental spread of 14.3%, bringing year-to-date leasing to a very strong 7.4 million square feet at an average spread of 19.6%. This directly underscores the embedded mark-to-market opportunities across our portfolio. As Alex pointed out earlier, we're very encouraged by the recent leasing trends across key markets. Starting with the GTA. This market continues to lead the country in terms of absorption and leasing momentum. We recorded one of the strongest quarters of net absorption in 2025 in the region. This was driven in large part by solid demand across small and mid-bay product and improving activity in larger format space. I'm quite pleased to share that our team did approximately 2.5 million square feet of leasing in this market across the platform over the course of 2025 alone and approximately 610,000 square feet in Q4 with a rental rate spread of 58%. We're also seeing significant new requirements in the market that have been waiting on the sidelines since the normalization process in 2024. Based on recent market research from major brokerage houses, there's been over 40 million square feet of active industrial requirements across Canada. When you look at markets such as Calgary and Vancouver, active requirements significantly outpaced current availability in that market and account for 40% of current availability in the GTA. In Quebec, I wanted to touch on that small and mid-day leasing supported modest occupancy gains in Q4 2025, driven by the lease up of smaller vacancies. While elevated sublease availability and excess large bay inventory continued to weigh on overall market conditions, pushing the overall vacancy rate to just under 6%. Despite these near-term headwinds, demand for very well-located and functional mid-bay space remains quite healthy, especially for on-island product, with small to mid-bay availability stabilizing in low to mid-single-digit range. Good renewal activity, strong tenant relations and steady absorption has allowed our team to maintain occupancy and capture rental growth where conditions support it. A great example that I want to draw everyone's attention to of this momentum is our 366,000 square foot asset in Montreal, where we successfully regeared the entire building occupied by 3 tenants to market rents. These renewals were completed at starting rental rates of $13 to $14, with average annual escalations of 3%, achieving a spread of over 70% compared to prior rents. Notably, we also regeared 137,000 square foot lease within the building 5 years sooner and did better than expectations. In Western Canada, leasing conditions remain very strong. During the fourth quarter, we transacted over 800,000 square feet. Calgary and Edmonton benefited from solid renewal and backfill activity and leasing spreads since October have averaged to high teens. At our Balzak 20 development, we completed 20 new leases during the quarter, achieving full lease-up at rents in the mid-$10 per square foot range, with approximately 3% annual steps. This commences in early 2026. We also stabilized our Balzak 50 development through a 245,000 square foot lease at starting rents of $9.75 per square foot with escalations of about 2.5%. These 2 marquee developments in Calgary are now 100% leased and expected annual NOI contribution of over $10 million. The strong leasing performance highlights sustained industrial demand for the Calgary region and reinforces our strategy of delivering modern, well-located logistics assets to meet the need of national and global occupiers. In Europe, we're also observing very robust leasing activity. The leasing market has been somewhat less impacted by tariffs in 2025, and we have continued to see very resilient fundamentals with new demand drivers for industrial space such as defense and nearshoring becoming more prominent. Availability has stabilized in the low mid- to single-digit range and is trending downwards with increasing take-up and declining supply. Our team expect market rent growth across our core markets in the Netherlands and Germany to outpace inflation in the very near term. To date, we've already addressed over 40% of our 2026 expiries. And since the start of 2026, we have signed or advanced negotiations on over 1.3 million square feet of space, positioning us very well as we move throughout the year. I will now turn it over to my friend, Lenis to discuss the financial highlights. Thank you. Lenis Quan: Thanks, Gord. We are pleased with our 2025 financial performance as our business continues to deliver stable and consistent growth. Despite slower leasing of existing vacancies amid tariff-related disruptions that affected roughly 1/3 of the early part of 2025, our portfolio delivered solid cost comparative property NOI growth of 8.4% for the quarter and 5.7% for the year. This strong organic growth allowed us to absorb higher cost of refinancing and also the impact of early refinancing over $500 million of low-cost debt in 2025. We delivered diluted FFO per unit of $0.27 for the fourth quarter, 5.3% higher than the prior year quarter. For the full year, diluted FFO per unit was $1.05, representing a 4.9% increase year-over-year. Our net asset value at year-end was $16.60 per unit, reflecting stable investment property value. The slight quarter-over-quarter decrease in NAV primarily reflects transaction costs largely the incentive fee payable on the gain realized with the sale of the initial assets into the new DCI venture with CPP Investments. During the fourth quarter, DBRS upgraded our credit rating to BBB high with stable trends. Following the upgrade, we secured interest rate savings on our various corporate bank unsecured facilities, which represent approximately $0.05 on FFO per unit this year. We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity. We successfully addressed all of our 2025 debt maturities. We repaid the maturing Series A debentures in December by temporarily drawing on our credit facility and ended 2025 with leverage in our target range and with a net debt-to-EBITDA ratio of 7.9x. In early February, we repaid the majority of the balance on our credit facility following the closing of the first tranche of asset sales to the DCI venture. Over the next few quarters, we expect to deploy these proceeds on an accretive basis towards a combination of unit buybacks and strategic growth initiatives. And in conjunction with this objective, we suspended the DRIP, our distribution reinvestment plan as of the end of 2025. Through last Friday, in 2026, we have repurchased $2.4 million of units at a weighted average price of $13.08 or a total of $32 million under our NCIB program. With growing cash flow generated from the business and current available liquidity of over $700 million after repaying our facility draws, we retain sufficient capital to fund our value-add and strategic initiatives, including funding our development pipeline, solar programs and contributing to our private capital partnerships. Our 2025 performance highlights the resilience of our business. The multiple growth drivers we have built position us well to continue delivering on our operational and financial targets. For the full year 2026, we expect to maintain stable average in-place occupancy in the high 94% to low 96% range. We expect comparative properties NOI growth for the first half to be relatively consistent with the Q4 2025 growth rate. And depending on timing of leasing, we expect 2026 full year CPNOI growth to be stronger than the full year 2025. We expect to deploy the proceeds from the sale of the initial DCI portfolio over the course of the next few quarters, more weighted towards Q2 and Q3. As such, average leverage is forecasted to be in the low to mid 7x debt-to-EBITDA range to almost 1 turn lower than at year-end on a run rate basis as we deploy the proceeds. As a result, we currently expect our Q1 FFO per unit to be slightly lower than that of Q4 2025 with the quarterly run rate accelerating as we deploy the sale proceeds. For the full year, our current outlook for FFO per unit is $1.08 to $1.10. As we execute on our leasing and capital deployment targets, we will update our outlook. In addition to the above factors, our FFO growth expectation is predicated on current foreign exchange rates and interest rate expectations. I will turn it back to Alex to wrap up. Alexander Sannikov: Thank you, Lenis. Over the past 5 years, our cost of debt has gradually increased by approximately 200 basis points. During this time, we delivered FFO per unit growth of 30%, equating to an annual growth rate of approximately 6% to 7%. Going forward, our business remains on a strong growth trajectory, and we expect to continue delivering solid results to our unitholders. We will now open it up for questions. Operator: [Operator Instructions] Your first question comes from Kyle Stanley with Desjardin. Kyle Stanley: Gord, you gave a really good overview of kind of the market dynamics and leasing demand looks quite strong in the fourth quarter. I'm wondering, as we've kind of begun the first quarter of this year, have you seen any changes year-to-date that would either be more positive or somewhat concerning? And maybe where is your pipeline today versus where it would have been last quarter? I believe last quarter, with reporting, you disclosed roughly $1.7 million of leases under negotiation on both the on-balance sheet and JV portfolio. So just curious how that looks today. . Gordon Wadley: It looks good. It looks very consistent. I appreciate the question. It looks very consistent to what we saw last quarter. And the fundamentals are largely in line going into Q1. So we feel pretty good about the start of the year. . Kyle Stanley: Okay. Just looking at the Calgary assets, the development assets that have been leased up, I think the disclosure highlights $10 million of NOI on a run rate basis. I'm wondering if you can disclose how much of that $10 million of NOI was baked into the fourth quarter results. And I'm just trying to think about bringing that -- the ramp up online through 2026. . Alexander Sannikov: Very limited was -- in the fourth quarter, there's been some space income producing. It is going to gradually build up into 2026 and you'll see the run rate in the second half kicking in. Kyle Stanley: Okay. Okay. Perfect. And then maybe just higher-level question as it relates to the new defense strategy. Obviously, we just kind of rolled out yesterday and still very early days. But clearly, it seems like it should be positive for manufacturing activity. And although Dream Industrial doesn't necessarily play in the manufacturing space as much. I just want to get your high-level thoughts on what this could do for demand going forward. . Alexander Sannikov: Yes. Thanks for this question, Kyle. As you say, we're not in manufacturing space. However, because of the assets that we have, which is infill mid-bay product, primarily in Canada. These assets are pretty flexible. So they can be used for last mile distribution. They can also be used for light industrial. And we do have some occupiers who are in light industrial and manufacturing operations within our properties. And so these manufacturing facilities will benefit from these defense-driven demand drivers. But broadly, industrial sector, we expect will benefit from that, primarily the more closer in mid-bay product is going to benefit mostly as opposed to kind of big box logistics and fulfillment type centers. So we are encouraged by what we're seeing, and we're starting to see early drivers from that emerging. In addition, I would say that we are seeing a slight uptick in user acquisition activity connected to defense needs in particular. Operator: The next question comes from Himanshu Gupta with Scotiabank. . Himanshu Gupta: So just on the 2026 FFO guidance, does that include full deployment of net proceeds from the JV the end of the year and NCIB as well. And the question is just wondering when we will see the accretion from that CPP JV in numbers. Lenis Quan: Thanks, Himanshu. We do expect to deploy the proceeds over the course of the year. The first tranche closed in February, second tranche is targeted to close by the second half of the year. So that would help just with timing of deployment. So we do expect to have it -- we're targeting how it's only deployed by the end of the year. So the -- looking at Q4, kind of that run rate will be higher than what Q1 would be as the proceeds are fully deployed. So a stronger run rate through the end of the year and into 2027. And I think in terms of types of deployment and buyback activity, I think it is going to be dependent on the opportunities. We've stated a target on the buyback program, but I think we want to just monitor other deployment activities, returns and where the unit prices and how the unit prices are acting. Himanshu Gupta: Okay. Do you still expect like low to mid-single-digit FFO accretion from this transaction? It looks like more in next year than this year? Alexander Sannikov: Thanks for this follow-up, Himanshu. As we communicated in the original announcement press release, we do expect that the accretion is going to fully materialize when we get the balance sheet fully deployed, which as Lenis just commented, will happen in 2026. So the accretion will build up through the second half towards the run rate. We still expect accretion to be there. And it is moderately accretive for the full year 2026 as we communicated in December when we announced the transaction. So the thesis remains intact. Himanshu Gupta: Okay. And then when you say balance sheet fully deployed in terms of acquisition activity, fair to say most of the acquisitions will be done in Europe and then the remaining on the JV in Canada? Alexander Sannikov: We expect that on balance sheet acquisitions in Canada will be around 30% to 40% of the volume for this year. And obviously, our co-investments in private partnerships are going to be mostly in Canada as well. Himanshu Gupta: Okay. And my last question is Alex, in your prepared remarks, you mentioned market rent growth to resume in second half of this year and then next year as well. Can you elaborate like which markets you think can lead the market rent growth recovery here? And do you assume like limited new supply in the near-term? Alexander Sannikov: We're already seeing market rent growth in the West. So we expect that, that will continue. Certain segments of the market in Calgary and Edmonton will likely outperform others. But broadly, we expect the market rent growth to continue in the West. And when it comes to Toronto and Montreal, we would indeed expect second half to start seeing rental growth again primarily in the tighter end of the market, which is small and mid-bay product, leading the way and then that gradually translating into growth in market rent for larger bay assets starting perhaps in Toronto, where we are seeing more robust pace of absorption. Operator: The next question comes from Brad Sturges of Raymond James. . Bradley Sturges: Just to clarify comments there, Lenis, on the same-property NOI. I think you said for the first half of the year, you expect NOI growth to be similar to what Q4 to was. Is that correct? Would there be any guidance for the full year? Or maybe I missed that in the opening comments. . Lenis Quan: Thanks, Brad. That's right. For the first half of the year, we were expecting the same property growth to be consistent with fourth quarter. We reported 8.4% in the fourth quarter. So to be in and around that range. Obviously, as we complete more of the leasing towards the year, we commented that we expect full year growth to be stronger than full year 2025 growth. Alexander Sannikov: Just to build on that, Brad, I think what we're effectively saying is we are confident that it's going to be stronger than 2025 in 2026. The degree to which it's going to be stronger is going to depend on the timing of leasing. But we think the 2025 is an achievable hurdle. Bradley Sturges: I guess for now, we should think about it as sort of similar growth for now and then we'll kind of see on timing as the year progresses? Alexander Sannikov: And we'll update you on timing again. . Bradley Sturges: Yes. Okay. You talked about private partnerships. Obviously, you've had success in Canada. Just any updates on European opportunities at this point? Is this -- is there any kind of changes in opportunity there that you might be able to get across the line this year? Alexander Sannikov: No change in the outlook and we're still exploring opportunities in Europe. We did put more emphasis on to the Canadian JV with CPP Investment in the second half of 2025. So that took precedent over any European joint venture formation, perhaps pushing back the European joint venture by a couple of quarters, but it still is on our radar to explore, and we are advancing dialogue there. Bradley Sturges: Okay. And just on -- last question just on your development opportunity, I guess, more specifically like expansion and intensification. How does that opportunity shape up for this year? Could you see some more projects get out into the pipeline this year? . Alexander Sannikov: Thanks for that follow-up. Yes, we do, and we are tracking a number of opportunities. Some of them on a build-to-suit basis, some of them on a speculated basis, both in Canada and in Europe. And in Canada, that would include the wholly owned portfolio, but also our private ventures. So we are continuing to pursue opportunities to activate our land bank selective thing. Operator: The next question comes from Mike Markidis with BMO. Michael Markidis: Just wanted to lean into the JVs in Canada a little bit, Alex. I mean I think there are -- you've outlined it a little bit in the MD&A and in your comments, but there are differences between the JVs. But maybe you could walk us through sort of the different strategies within DSI, DCI and what's on your balance sheet. . Alexander Sannikov: Thank you for this follow-up, Mike. As we articulated in the announcement press release in December when the DCI venture was formed, the on-balance sheet strategy in Canada is going to lean into newer quality, you can describe it as generally core plus mid-bay infill assets, whether we've acquired them or build them that's generally what we are going to be pursuing more of for the on balance sheet strategy. The DSI joint venture is very mature. We continue to be active in looking at opportunities, both acquisitions and dispositions. And with the in DCI joint ventures, it's just starting. It has generally more of a value-add lens to evaluating opportunities, both from a profile of assets but also from a kind of target underwriting time lines and perhaps the leverage point as well. So quite different from the DSI joint venture given its scale and overall setup. So that's how these ventures fit together and from our standpoint, without maybe going into 2 granular specifics, we believe they fit well together and we can be active across of interest and we'll have more capital available to cover opportunities that we weren't covering before. Michael Markidis: Okay. And then just your comment on DSI being very mature and obviously still looking at acquisitions in dispute. But from a net square footage or net asset value perspective, do you expect that to grow? Or will be the focus be more on growing DCI just because it's earlier stage at this point? . Alexander Sannikov: It is hard to comment specifically. We do have acquisitions identified for the DSI joint venture. We have assets that we just closed on in Q1, and we have another asset in due diligence right now. And equally, we will look at recycling opportunities as we have in the past. It's really difficult to comment on the net growth or net contraction we will pursue both, and we'll aim to achieve the best total return outcome for the venture through this capital recycling activity. Michael Markidis: Okay. And globally, I guess, Canada is a pretty small place. and you now got 3 different strategies running in Canada. Is there room for any more at this juncture? Or do you think you're pretty much set up from a private capital perspective on the Canadian assets for the Canadian landscape? . Alexander Sannikov: We feel like we reasonably set up, we don't have a core segment of the market of it right now. So there could be room for that, but we're not actively pursuing that at the moment. Michael Markidis: Okay. I guess last one or maybe 2 last ones for me quickly. Just, is there -- I mean, obviously, things can change and an asset could become more of a core value add versus what you deem as being core plus today. But is there any more seeding or transfer of assets from the wholly owned into either of the JV is contemplated in the near term? Alexander Sannikov: Nothing is currently contemplated. Michael Markidis: Okay. Last one for me. I know you guys have a core fund in the U.S. just it's been relatively inactive if you can give us some updated thoughts on the landscape down there and if there be potential to raise capital for a U.S. strategy over the next year or two? Alexander Sannikov: We are seeing better opportunities in the U.S. now than we were, let's say, 2 years ago. So that is both on the acquisition side and on the capital raising side. So we are spending more time there. And hopefully, we'll see more growth for that vehicle or -- if not, then we'll perhaps start exploring other opportunities more likely in private capital partnership set up to grow the U.S. business. We are generally encouraged by the trends we're seeing for the U.S. market for that vehicle, although it is early days. Operator: The question comes from Sam Damiani with TD Cowen. Sam Damiani: Alex, just on your comment for market rent growth sort of to resume in the latter half of this year into next year. What do you need to see from a market sort of data point perspective to, I guess, give you more confidence or would be more certain that market rent growth is going to resume under that time line. . Alexander Sannikov: Thanks for this follow-up, Sam. We expect to -- that we will need to see consistent pace of absorption, consistent trends either stable to downward on the availability rates and that will then lead to greater confidence by the landlord community to for stronger rents. And there are some less significant metrics and factors such as sublease availability that will contribute to that. We think that it's not going to be a broad-based rental growth to start. It's going to affect certain subsegments of the market first. Where we're seeing, for example, if you look into statistics for the GTA is that there's quite significant difference between vacancy rate for small assets versus large assets as a proxy for a small bay versus large bay. And so with these smaller assets showing tighter vacancy rates and availability rates. So we will likely see or we expect to see stronger rental growth for that segment of the market sooner than the larger bay. And it is going to be market-specific not just segment specific, as we commented before, we expect to see stronger perhaps rental growth in the West and maybe sooner than we would in the GTA and the GMA. Sam Damiani: Okay. That's helpful. And do you -- between the DSI, the DCI, I appreciate the new acronyms there and the balance sheet strategy, I mean, which of those sort of 3 buckets would be -- you expect to see the most acquisition activity in 2026? Alexander Sannikov: Well, for the own balance sheet program, we expect to deploy the capital that we have, whether it's in the unit buybacks or the acquisition. So we expect that is going to be all deployed in 2026. When it comes to private ventures. It is difficult to comment. These are early days for the DCI JV. We don't want to comment on behalf of our partners indirectly. So we'll report on our progress, including the pipeline that we are pursuing for debenture as we make progress. Sam Damiani: Appreciate that. Last one for me, and I apologize if this might have been asked, but we're working on a European JV, is that still in the works? Has it -- have you progressed on that sort of path since November, December? . Alexander Sannikov: So we commented earlier, Sam, you may have missed that, yes, it's still something that we are pursuing. We did put more emphasis on the DCI JV in the second half of 2025. We didn't want to pursue kind of 2 joint ventures at the same time. So it did push out the European JV formation by maybe a couple of quarters, but it still is something that we are exploring. Operator: The next question comes from Matt Kornack with National Bank. . Matt Kornack: It was evident with the results that you sold some vacancy but also some mark-to-market potential. Obviously, the cap rate was quite low on what you achieved. But can you give us a sense of the: a, whether the residual portfolio that you wholly owned should operate at a higher occupancy; and b, just the ability to get kind of cap rates more in line with your IFRS cap rate in terms of deploying some of that capital? Alexander Sannikov: Yes. Thanks, Matt. So the margin opportunity in the DCI initial portfolio was quantified in the announcement press release and if you refer to that, you'll see that the mark-to-market opportunity as of September 30 in the DCI initial portfolio and on balance sheet holding on portfolio was pretty close. Two, as we approach year-end, the mark-to-market opportunity for the wholly owned portfolio did decline a little bit just as a function of NOI growth and in-place rental growth as opposed to kind of changing the balance dramatically. When it comes to the occupancy outlook, as Lenis commented, we think that mid-90% range for our portfolio, call it high-94% range to low-96% range is the right run rate. For 2026, we obviously are aiming higher but as we've consistently highlighted for multi-tenant portfolio like ours, high 96% to 97% range is relatively full. We're unlikely to exceed that for a prolonged period of time. Matt Kornack: Makes sense. And then as we think about -- and again, we've all asked about this market rent growth inflection, but is there kind of a magic number on occupancy before tenants start to get a little nancy and want to pay up the rent or make decisions to move into space that would maybe precipitate that change in market rent? . Alexander Sannikov: Our observation is that every market is different in that regard. So there are markets where rents grow at 6% to 7% vacancy and there are markets where rents are growing at 3% vacancy. So it is highly market-specific and increasingly a subsector specific. So what we generally expect we need to see is just consistent pace of absorption and consistent development of availability rates, flat to down. Matt Kornack: Okay. And then just looking at your projects in planning, I think, to get to the 6% to 7% estimated unlevered yield. It looks like you need kind of in the $18 rent level. Obviously, different markets. So maybe it's achievable in some and not others. But can you give us a sense, is that still kind of the gravitational pull higher in terms of market rents is that it's more expensive to deliver this type of space than what you're currently getting for space in the market. . Alexander Sannikov: Yes. A lot of our products planning are in Brampton or they weighted towards Brampton by cost to complete. And rents for new products in Brampton are in that high-teens range, and that is pulling the average a little bit. Operator: [Operator Instructions] Your next question comes from Pammi Bir with RBC Capital Markets. Pammi Bir: Not sure if you can quantify this, but with the 2026 same-property NOI guidance, does the sale of the assets to the DCI JV, help or detract from that outlook that you provided, I think you're greater than 2025? Gordon Wadley: Without commenting specifically on the DCI JV, it is probably adding the numbers a little bit in the first half and relatively neutral in the second half. Maybe DCI JV, you could see high growth into 2027 as some of the vacancies get leased up. Pammi Bir: Okay. Got it. And then just on the when is the -- again, coming back to the guidance on same property NOI. Just putting all the comments together and the occupancy numbers that you quoted, is it fair to say that at this point, the way you see it is the bulk of the growth in 2026 is going to be from higher rents as opposed to occupancy gains. Lenis Quan: Yes, there will be some slight from occupancy gains. But I mean, obviously, it's going to be higher rents. There's the base escalators in Canada indexation in Europe. But I mean certainly, the trend over the last few years has been on capturing the higher rents as we've rolled over leases, and that will continue. I think we included some disclosures as to kind of over the next few years, the spreads of where our in-place rents are by market versus the average market rents for the region. So there's still quite a bit of upside to capture. Pammi Bir: Okay. Got it. And then just maybe last one, sticking with the lease maturities and tenants. Any on your watch list at the moment? And any large known vacancies coming back to you in the next few quarters or that you're aware for this year? Alexander Sannikov: We have a couple of vacancies coming back to us. There's one unit in Spain that is coming back to us in the first quarter that we expect to re-tenant at higher rents after demising that unit, that's 200,000 square feet there's a couple of idiosyncratic units that are on known vacates, but then there's vacant units currently vacant units in the pipeline. So overall, as Lenis said, occupancy and run rate plus/minus at the range where we are at today for 2026 on average is a good modeling level. . Pammi Bir: Okay. Great. Alexander Sannikov: Just kind of following up on your CPNOI question, Pammi. As you know, over the last year or two, while occupancy wasn't contributing to the NOI growth, it was actually taking away a little bit as occupancy was declining slightly. And so as we expect that the occupancy is going to stabilize in-place occupancy is going to stabilize at today's level, then it's going to be less of a negative factor to the overall CPNOI equation. . Operator: The next question comes from Tal Woolley with CIBC. Tal Woolley: Lenis, in the outlook for this year. I think just looking at your numbers, you did about $11 million in management fees in 2025. I'm just wondering on the timing of the JV closings and the expected ramp-up of its asset base. If we're looking at incremental management fee in the order of like $3 million to $4 million for 2026 and then growing thereafter. . Lenis Quan: Yes, I think that would be -- it seems like a reasonable estimate. Obviously, the new venture is going to close in 2 tranches, so it'll take a little bit of time for that new component to kick in throughout the year, but certainly, by the second half of the year, that will be in there. A lot of the margin is also dependent on leasing, there's a recent component as well, but there's a little higher margin on that as well. So that's a little bit lumpier, but obviously something that we focus on as well. Tal Woolley: Okay. And just if I'm modeling this, which is an exit cap rate and around 6%. I'm not going to get too much in trouble if I use that. Alexander Sannikov: Tell forward purpose you modeling as cap rate? Tal Woolley: Sorry for the portfolio disposition. For the $805 million. Alexander Sannikov: We would suggest you refer to the announcement press release where we quantified the in-place rents. And the disclosure we provided in the announcement press release will also allow you to calculate roughly the market rents the portfolio and then that would be a more accurate way of modeling the NOI impact. Tal Woolley: Okay. And then I just -- I apologize if I missed this earlier, but just with respect to the potential defense opportunity there is in the industrial space here in Canada, is this something like you're not especially interested in, just given that you guys are -- tend to focus more here in the country on small and mid-bay product versus larger stuff. What sort of strategy are you trying to develop to address the potential demand there? . Alexander Sannikov: Thanks, Tal. We are very interested in it. And we actually think that our product is going to be a beneficiary of the additional defense requirements and activity relating to defense industries because of the flexible nature of our real estate. So occupiers for this kind of product tend to look for closer infill assets with strong power connectivity to public transit, and that's exactly the type of assets that we are targeting to own and own already. And so we are very much focusing on the defense opportunity. and how it can affect our portfolio. Tal Woolley: Do you have an estimate of how much square foot do you have occupied by defense-related tenants right now, whether it's contractors, the government itself? . Alexander Sannikov: We are -- we do -- we haven't disclosed that yet, but we'll probably provide more color over time. It is meaningful across our managed portfolio. We have a number of that are already in defense sector. And we have some light industrial and manufacturing. We have buildings with strong power connections, connectivity and that drives, again, demand from light industrial-type occupiers. So this is something that we are going to quantify more as we observe kind of how the defense requirements develop. Tal Woolley: Okay. And then I think in mid-December, you were sort of talking about how you were in due diligence and late-stage negotiations on roughly $600 million of product. I'm just wondering if you can talk about the progress made there and where and what type of -- where are you finding these assets right now? And so any quantification of like what the sellers -- like who's selling this stuff right now? . Alexander Sannikov: Yes. So we commented in our prepared remarks that we have over $350 million of assets in exclusive negotiations. Going in cap rate, we are currently underwriting these assets too, it is just under 6% with mark-to-market cap rate in the mid-7% range. And these are mid-day assets in our target markets. So this is the type of product that you will be very familiar with as you look at what we've been acquiring over the last few years. Tal Woolley: And no large portfolios out there at all? Alexander Sannikov: We are monitoring a number of portfolio situations across our footprint. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Sannikov for any closing remarks. . Alexander Sannikov: Thank you for your support and interest in Dream Industrial REIT. We look forward to reporting on our progress next quarter. Goodbye. . Operator: This brings to close today's conference call. You may now disconnect. Thank you for participating, and have a pleasant day.
Operator: Ladies and gentlemen, thank you for standing by. I'm Polina, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. Please note Eregli Demir ve Celik Fabrikalari T.A.S, may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through the disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board through regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into the account effect they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are not longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at this particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Mr. Idil Onay Ergin, Investor Relations Director. Mr. Ergin, you may now proceed. Idil Onay: Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the last quarter of 2025. First, I will go through our Investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. Our presentation consist of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap and HRC prices. In the fourth quarter of 2025, the coking coal markets experienced buyers strongest price period of the year despite weak steel demand and low profitability. During this period, coking coal prices averaged around $200 per quarter, while closing the year $218 per tonne above the annual average. Iron ore prices showed more resilience in the fourth quarter compared to the previous quarter, fluctuating between $102 and $109 per tonne and stabilizing at an average of $106 per tonne. Despite uncertainty regarding demand from China and strengthening global supply, the ability of Chinese producers to maintain production at a certain level, along with the speculative pricing kept prices mostly above $105 per tonne. It is expected that iron ore prices will remain sensitive to stimulus expectations and policy news from China in the short term. Despite buyers cautious spends, seasonal supply constraints enable suppliers to maintain a firm position resulting in Turkish imported scrap prices closing Q4 at an average of $359 per tonne above the annual average while there was no sharp decline in square prices throughout the quarter, a clear wait-and-see sentiment prevailed in the market. On the bottom right, we show HRC prices in Black Sea, China and South Europe. The global HRC market has left behind a period in which protectionist measures and trade policies became more decisive. The European Union steps to reduce import quotas and uncertainties surrounding sea import appetite while gradually increasing the bargaining power of European producers. In Asia, HRC prices remain fragile due to low demand from China and policy uncertainties, while a flat positive but cautious outlook prevails in the global HRC market. Q4 market expectations converged that as we enter 2026, the impact of protective measures will be felt more clearly and prices will be shaped by a cost-based search for equilibrium. On Page 4, you will see the production consumption, exports and import figures of Turkish steel market. In December, Turkish crude steel production rose to 3.5 million tonnes, representing a 7% increase compared to the previous month and 19% rise year-on-year, reaching the highest monthly output of the past 15 years according to the official data from the Turkish Steel Producers Association. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while production and consumption rose by 3%, exports of steel products grew by 13% in volume during the year and reached 15 million tonnes. In the January, December 2025 period, the European Union continues to be the leading export destination with a 37% annual growth, while the MENA region ranked as the second largest market. Imports also increased by 9% to 19 million tonnes over the same period. As a result, the export import coverage ratio, which was 74% in 2024 increased to 78% in 2025. It was observed that the total imports were largely realized under the inward processing regime. As we shared in the last quarter's call, with the circular published by the Trade Ministry on September 16, 2025, it was made mandatory for 25% of the input of products processed to export to be supplied domestically. This change was welcomed in terms of domestic steel production. As a result, total flat product imports in December decreased to 653,000 tonnes down 23% compared to the previous month and 12% compared to the December 2024, marking the lowest monthly level recorded in the past 9 months. In the context of global steel trade policy, the European Union and other major markets have implemented or proposed enhanced safeguard measures to counteract increasing import pressures. The European Commission has moved forward towards tightening steel import quotas and increasing out-of-quota duties, including potential reductions in tariff-free quota levels and higher tariffs for excess shipments, steps aimed at protecting domestic industries and reducing reliance on imports. Asian countries, which have been the most negatively affected by this policy increased their exports to unprotected markets. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 12 months results. We achieved USD 5.3 billion revenue. Also, we generated $501 million EBITDA and $13 million net profit. On Page 7, you will see the operational indicators of our company. Following the commissioning of the last 2 investments in our current investment package in the second quarter of 2025, our crude steel capacity utilization ratio, which was 75% in the second quarter and 90% in the third quarter increased to 95% in the fourth quarter. Accordingly, sales and production levels returned to their normal levels. Strong demand, we achieved sales of 2.2 million tonnes in the last quarter, sales volumes of over 8.2 million tonnes in 2026. So let's take a look at segmental breakdown of domestic sales and export volumes on Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from general manufacturing and auto to pipeline profile and distribution chains on a percentage basis. We see similar changes between sectors in the long products, although its share in total sales is relatively small. We achieved an export volume of 1.5 million tonnes in 2025, representing 20% export share in total sales. Although our main focus is the domestic market, we also consider export as an alternative market. On Page 9, you can find a breakdown of revenue for domestic and export sales. 79% of the revenue comes from domestic sales in line with the domestic volume. Despite import pressure in the domestic market, we achieved to generate $501 million EBITDA. We generated $64 EBITDA per tonne in 12 months. Our EBITDA per tonne guidance for 2026 stands in the range of $75 to $85 per tonne. In 2026, we expect EBITDA per tonne to increase through cost reductions and increased efficiency resulting from newly commissioned facilities, increasing HRC prices and our company's increasing sales volumes. We generated $13 million net profit in 2025 as a result of legislative amendments stating that statutory financial statements will not be subject to inflation accounting. The deferred tax income recorded in March, June and September financial statements was reversed. Despite the increase in EBITDA, this noncash item had a negative impact on net profit in Q4. On Page 10, you can see how we reached a net profit from EBITDA. One of the largest items was depreciation, which was $278 million in 12 months. The other major item in this chart was financial expenses of $206 million due to the increase in deferred tax expense following the cancellation of inflation accounting, the tax expense amounted to $706 million -- excuse me, $76 million. And other expenses, net profit was -- after the other expenses, net profit was $13 million. The inventory provision release of $26 million is not included in the EBITDA calculation since it is a one-off adjustment. While calculating the net profit, $26 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the third quarter due to the extension of the trade payables maturity, as we shared in our previous quarter calls. Additionally, a dividend payment of $43 million was distributed in the third quarter. Also, we spent around $483 million to investment activities in 12 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 25% in Q4 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. We succeeded in keeping net debt EBITDA below 2 multipliers at the end of the year as a result of increased capacity and efficiency following the commissioning of our investments. EBITDA has increased. Therefore, CapEx decreased and the multiplier remains below 2. We expect to keep the net debt-EBITDA ratio around 2 multipliers in 2026. Slide 12 represents our cost of sales breakdown. In 2025 compared to 2024 due to the decrease in coal prices, the percentage of coking coal costs decreased in the raw material basket, which is in line with the trends in raw material markets. Since we can see the costs in first quarter, costs will increase in the first quarter of 2026 due to the rising coal prices. This cost increase will be offset by an increase in sales prices. Page 13 represents the historical capital expenditures. Total CapEx was $1.1 billion in 2024 and $775 million in 2025. As a reminder, the new first blast furnace in [Technical Difficulty] gold mine, as you already know, we announced the inferred resource in November '25. We expect that reserve announcement for the gold mine to be made at the beginning of the second quarter. Investment decisions will be made after this announcement is shared. We expect that CapEx will be approximately $800 million in 2026 with maintenance and other ongoing investments. Maintenance will be around $58 million per year as usual. Investments such as solar power plants, port and crane investments and energy efficiency investments are included in the CapEx figure of 2026. As you already know, this figure is accrual based and the cash outflow will be lower due to the advanced payments. On Page 14, just as a reminder, we announced our net zero road map in 2024. There are no changes to this road map, the details of which we previously shared. The first investment in this package solar power plants are planned to be partially commissioned by the end of 2026. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening. Operator: [Operator Instructions] The first question is from the line of Fairclough Jason with Bank of America. Jason Fairclough: It is always very comprehensive. Look, a couple of related questions here about the balance sheet. So on the one hand, you've got quite a lot of cash sitting there. I mean I see $2.7 billion of cash, which feels like a very large cash balance. But on the other hand, if we look at the free cash flow over the past year, most of it's been driven by working capital and particularly the payables balance. So I guess my question is, how are you thinking about working capital from here? Do we actually need to normalize that payables balance? Or is this the new normal? Idil Onay: Jason, thanks for the question. So this is our normal level after this quarter because actually, it all depends on the raw material prices and steel prices from now on. Considering that Q1 comes clearer in terms of both price and cost, increasing figures in Q1 compared to Q4 in net working capital. So there won't be any one-offs in net working capital. So we can say that it's all depends on the raw material prices and steel prices from now on. Jason Fairclough: Okay. The other thing and a super simple one. Could you just repeat the EBITDA per tonne guidance? I heard it, but I didn't quite hear it. I think the phone cut out when you said it. Idil Onay: Guidance for -- sorry, I just missed it, guidance for. Jason Fairclough: For EBITDA per tonne for '26? Idil Onay: Yes, sure. So we expect to have EBITDA per tonne between $75 to $85 per tonne for 2026. Operator: The next question is from the line of Gabriel Alain with Morgan Stanley. Alain Gabriel: I have a couple. Following up on Jason's question on the guidance for 2026 deal, the $75 to $85, how much of that is driven by self-help, i.e., the cost savings you will be or the efficiency gains from your new investments in your production footprint? And how much of that is your underlying assumption of a margin recovery in the market? That's my first question. Idil Onay: So as you remember, by the way, I'm sure you remember that we said we are expecting full impact from our newly commissioned investments in Q1. So we will reach to the full positive impact of $40 per tonne from our NIM investments, and it will stay at that level. So almost $40 plus from investments but we're also expecting higher sales amount, tonnage, higher tonnage, higher volumes in 2026. I said above 8.2 million tonnes, but most probably it's going to be between 8.2 million tonnes to 8.4 million tonnes. So when you compare with the 2025 level of 7.8 million tonnes, it is higher. And we will also gain some EBITDA. We will increase our EBITDA from the increasing sales tonnage. But almost $40 in the first quarter, we will see the full impact of our higher efficiency because of the new investments. Alain Gabriel: And this $40 compares to how much that you've achieved in, let's say, Q4 '25, just looking at the deltas of the bridges year-on-year? Idil Onay: Roughly, we said in Q3 2025, we got $20 additional impact. And in Q4, it's roughly around $30. And in Q1 2026, it's going to be around $40. But of course, you need to take into the consideration that the market prices are not staying the same. So these additional numbers should be added to the current prices. Alain Gabriel: Yes, absolutely. Absolutely. And my second question is on the business and how it's adapting to CBAM and the upcoming safeguards in Europe. Are you still able to sell into Europe easily now? Are you diverting your tonnes elsewhere? Can you give us a bit more color how you are adapting to this new environment in Europe, which is impacting Turkey as well? Idil Onay: So when you look at the export in Q4, so you will see a slight decrease. But actually, it's intentional. It's intended to be like that because obviously, the local market is more strong right now. The demand is stronger. So normally, when you look at the previous year's results, the export share was between 10% to 15%. So that was our normal levels for long years. Only 2025 was exceptional. Our export share in the total sales to 20%. But obviously, the domestic market is strong again but demand is strong again. So internationally, we -- strategically, the company prefers to sell their products domestically. So our order book is full for 2.5 months. I'm sure you remember, normally, I say it's full for 2 months. But right now, it's 2.5 months. So we already sold almost 2 million tonnes in Q1. So I can say that the demand is really good in the local market. But of course, we will sell to European markets and other export markets. But most probably, we are going back to our previous levels of 10% to 15% in the total sales. Alain Gabriel: And then last question from my side is on the CapEx guidance of $800 million. You mentioned that's on an accrual basis. How much would that be on a cash outflow basis? Idil Onay: Actually, I guided $600 million for 2026. Alain Gabriel: Okay. That's the cash component. Operator: The next question is from the line of Meyiwa Zenande with UBS. I'm very sorry. The question is from Bystrova, Evgeniia with Barclays. Evgeniia Bystrova: Just a couple of follow-ups. So first of all, on the CapEx guidance, I think I was confused because during the presentation, you said on accrual basis, the CapEx would be $800 million in 2026. But just now you said $600 million is the cash component. Is that correct? And then -- so my second follow-up is regarding the local market. So you're saying that the local market is very strong in terms of demand. Could you please maybe break down what exactly are the drivers of such strong local demand? And if you're expecting CBAM in any way to affect the prices that you're selling into Europe at? And finally, on payables, I didn't quite get your answer. So you're saying that another inflow in Q4 was expected. And from now on, we shouldn't expect such inflows on working capital in the cash flow statement. Is that correct to understand? Idil Onay: So the CapEx for 2026 is expected around $600 million. If I said $800 million, so it's a mistake, sorry, let me correct that. For 2026, we are expecting $600 million as CapEx. So it's all included all of our CapEx, maintenance, et cetera. So as we spent $775 million in 2025, so it is decreasing because we already commissioned most of the largest investment of our company, such as blast furnaces and coke batteries in the second quarter. So the rest is just solar power plant, basically, port and crane investments and energy efficiency investments generally. These are the list of investments that we are planning. So the second question was about the sales. Actually, the main thing -- the demand was strong. The demand was quite strong for some time but we prefer export markets because of the prices. But right now, we experienced higher prices in the local market. And with the strong demand, we prefer to operate in the local market. But of course, there will be export share but we have the flexibility to change some of the European exports to the local market because we have the enough demand in the local market, obviously. So that's why we are expecting higher sales tonnages also between 8.2 million tonnes to 8.4 million tonnes for 2026. So basically, the demand was always good, but the price wasn't that good. But in this year, in 2026, we also experienced strong demand and better prices. And also, we are expecting to see higher prices in the local market. And the last question -- can you just remind me the last question about working capital? Evgeniia Bystrova: Yes. I just wanted to understand the payables move because I think after Q2, you said that basically you're not expecting another working capital inflow in the cash flow statement. However, we have seen another payables like inflow from payables in Q3 and Q4. So I'm just trying to understand what will happen in 2026. Previously, you said that current net working capital is like an optimal level for you. So is that a right understanding from me that we shouldn't expect any working capital inflows on the payables side in 2026? Idil Onay: So in 2025, we just changed the trade payables system actually. So I mean, our net working capital has changed due to the extension of the trade payables maturity. So this is what happened in 2025. But from now on, we expect stable working capital, also cash based. But as I shared with Jason, it all depends on the raw material prices and steel prices. Evgeniia Bystrova: Okay. And what -- sorry, one last follow-up. And what is the specific driver that has kept local domestic prices higher than export prices in Turkey? Idil Onay: Actually, domestic prices are not higher than export prices. Obviously, right now, European market is very protected. So every day almost, we see higher prices in the European markets. So when you compare with the Turkish prices, European prices are obviously higher. But we know that the trade Ministry is working on some kind of revisions to increase the protectionism in Turkey. So they are working to increase that 25% of obligation to use local product when they are using emerge processing regime. We know that the trade Ministry is also working on some kind of revision to increase that level and also apply that obligation to -- for the coal product as well. So -- and some other revisions and the systems, for example, they are working on ETS emission trading system in Turkey, et cetera. So we know that our trade Ministry is working on trying to increase the protectionism in Turkey. And most probably, we will hear in the second half of the year. So these will help to increase the domestic sales prices. So that's why we are trying to focus in the domestic market. Operator: The next question is from the line of Jones, Andrew with UBS. Andrew Jones: Just a couple of questions or clarification. Just firstly, I think you said to Alain that there was about $30 a tonne included in the fourth quarter EBITDA per tonne from these projects. And for next year, it's $40. So we're basically saying that we're going up from $71 plus $10 effectively as we go into the first quarter without any market movement. So your guidance of roughly $80 a tonne for next year, is that basically assuming pretty flat market spreads compared to what we saw in the fourth quarter? I've got a follow-up, but I'll stop there. Idil Onay: Okay. So yes, I said $20 additional EBITDA per tonne contribution to EBITDA per tonne in Q3, Q4, $30, and we are expecting full impact of $40 contribution to our EBITDA per tonne. But as I shared with Alain, the market prices are not staying in the same level. So in Q4, the sales prices were decreasing. So I mean, we didn't really see the $10 plus $10 between Q3 to Q4. But obviously, we will experience $40 in Q1, but it all depends on the current prices, of course, raw material prices and sales prices. Andrew Jones: That's clear. Okay. And then just on the CapEx, I mean, what's the trend in the coming years? Because obviously, the pellet tires are still going -- I mean, if we exclude any gold mine stuff, I mean, when does the [indiscernible] CapEx kick in? Like what does 2027, '28 look like? What's the general profile we're expecting there? Idil Onay: Well, we are not expecting any number, any figure higher than $600 million. So for 2026, it's going to be around $600 million. I mean, I don't think we will see even $650 million. This is our expectation. But for the next years for 2027, 2028, we are expecting similar numbers $550 million to $600 million for coming years. Operator: The next question is from the line of Ive Erica with MetLife Investment Management. Erica Ive: Just a couple of more follow-ups on CapEx of $600 million, including 6. What could it be the cash outflow given that I understand there is this accrued component? Basically, I'm asking it will be the actual cash outflow lower than $600 million. Idil Onay: Okay. Sorry, Erica, there was a technical problem. So actually, the cash number should be close to $600 million with the advance paid. So most probably, we will see close figures to $600 million as cash for investments. Erica Ive: Okay. That's very helpful. And then on the working capital balance, right? I mean, in terms of movement for the year, based as well on what you explained about payable and so on, shall we expect a muted movement, so something closer to 0 in terms of movement for the year? How should we see or a small -- still a small outflow? Idil Onay: Actually, we are not expecting anything -- any change -- any material change in net working capital in 2026. So of course, it all depends on the raw material prices and steel prices. But right now, our trade payables maturity already. We have finished the extension of the trade payables maturity. So except from this change in 2025, we are not expecting any change from the company because of the company. It all depends on the market prices. I mean there is -- I mean let me just explain why we are expecting for the market prices. So there is a maturity mismatch in our balance sheet. We sell products and pay for raw materials mainly in cash. So when the steel prices and raw materials are in an increasing trend, our work will always require additional cash and our working capital increases. So on the reverse side, there is going to be a release from the working capital. Erica Ive: Okay. That explains. Okay. Good. And last question is on net leverage. Do you have a figure in mind that you try to reach in 2026? Idil Onay: Actually, yes, it's going to be around 2 multiplier. So we achieved less than 2 multiplier in Q4. It was 1.9 multiplier net debt EBITDA level. So we believe that we will be able to keep our net debt-EBITDA level around 2 multiplier because obviously, the capital expenditures will be less and that will -- and the EBITDA also will increase. So with the help of these 2, we will be able to keep net debt EBITDA around 2 multiplier. Erica Ive: And obviously, that excludes any investment in a gold mine, I guess... Idil Onay: Yes, it is. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Ergin for any closing comments. Thank you. Idil Onay: Thank you very much for joining us. We hope to meet you again at our first quarter conference call. Have a nice day. Thank you. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Leszek Iwaszko: Good morning. Thank you for standing by. Let me welcome you to Orange Polska conference call in which we will summarize our achievements in 2025. My name is Leszek Iwaszko, and I'm in charge of Investor Relations. The format of the call will be a presentation made by the management team, followed by a Q&A session. Speakers for today will be our CEO, Liudmila Climoc; and CFO, Jacek Kunicki. So I'm passing the floor to Liudmila to begin the presentation. Liudmila Climoc: Thank you. Thank you, Leszek. Good morning. Happy to welcome you at our conference summarizing last year results, and let's start. In March last year, we have presented to you our new 4-year strategy, Lead the Future. And today, I'm very pleased to say that 2025 was a strong start. We have progressed in all key pillars of our strategy and prepared a solid ground for next years. First on the line is our commercial performance that was excellent in both retail and wholesale. In retail, we uplifted both customer base and ARPO. In wholesale, we started to benefit from new important business development streams. And commercial growth is an essential pillar for value creation in our plan. Second, to mention is network. In order to win customers, we are committed to bringing first-class connectivity at home, at work, on the move. And in 2025, we significantly progressed in 5G coverage, already 85% of Polish population can enjoy 5G with better quality, higher speed, better latency. Orange Fiber is now reaching almost 10 million homes. It's 2/3 of households in Poland, and we have added 1 million last year. And the third important contributor to our results was transformation, transformation and efficiency. One of the main pillars of Lead the Future. We increased our efficiency by better cost and by better CapEx management, increasing profit margins and improving cash conversion as a result. We have initiated a new transformation program last year that brought the first results, but we expect more to come in next years. Lead the Future is focused at value creation for our shareholders. And in 2025, we clearly demonstrated it by growing our financials. I'm very proud that we delivered 47% in total shareholder return through growth of our share price and paid dividend. Speaking about the financials, let's have a look on how we have performed versus guidance. So here, you see the slide illustrating it. We did very well. Growth rates on revenue and EBITDAaL was overachieved. We promised the range of low single digits. In both cases, we achieved mid-single. We overachieved on revenues, thanks to positive dynamic in IT&IS and in wholesale, but the main engine of revenue growth is our core telco services with strong 6.5% growth. EBITDAaL benefited from strong profitability of core telco and wholesale, but also combined with cost efficiencies in. For eCapEx guidance, it is met at the low end of the range, despite lower-than-expected sales of real estate, we managed to -- we managed our investments very efficiently. As you see, our growth story is developing faster than originally expected. And let's see what were the main commercial performance drivers for this. So looking on the commercial parts, 2025 is very strong. We attracted new customers and simultaneously, we grew ARPO in all key services in a very balanced way. In convergence, both customer base and ARPO increased by a solid 4%. For fiber, customer base increased by 10% and ARPO by almost 5% and I'm very pleased with this performance in convergence and fiber as competition here continues to be the most intense. We estimate -- so that we further improved our market share in high-speed broadband. So Orange is the [ synonym ] of fiber. Mobile performance in 2025 was exemplary, almost 350,000 customers joined us with mobile postpaid offer. It's almost 4% growth. The highest number in a few years. And both segments were contributing consumer and business and also all brands were contributing to this performance. ARPO increased by less than 1%, and it is explained by a strong contribution of more than 5% growth of ARPO for main brand, which is diluted by an increasing share of the B brand in our total customer base. Pace of growth in all services is in line with what we said for us as an ambition in Lead the Future, and it is demonstrating that we have the right strategy and we are navigating well in the competitive environment in Poland. So to zoom on our commercial tools, let's move to the next slide. Our focus in Lead the Future is on building new relationships, reaching new families with our services and further using it as a pull for further growth with additional services and with conversions. In 2025, we achieved it by pursuing a bold marketing plan. We visibly improved our marketing communication, refreshing the main brand in order to reach younger segment, changed the visual identity of our prepaid products and our B brand, Nju also received a new format. We put together -- we put also higher focus on stand-alone offers. Our new multi-SIM family offer proved to be a very successful in second part of the year. We boosted content proposition for our fiber and TV offer, making it significantly more attractive. And these elements combined with AI-enabled tailored offers contributed to customer loyalty for the existing base and allowed us also to attract new customers. On the value side, we further pursued our more for more strategy. ARPO benefited from good demand for higher data plan in mobile and also higher speeds for fiber offer. Customers with higher speed options in fiber already account for almost half of our customer base. As a result, the number of Orange households where we are present with, our services was growing, reversing a multiyear trend. And this represents fundamental change for us that is also offering very promising prospects for future. This was about retail. Let's now look at wholesale on Slide 8. Last year was particularly strong for our wholesale line of business, both our own and also in our core -- FiberCo Swiatlowód Inwestycje. As you see on the slide, we have recorded a solid 13% of wholesale revenue growth, excluding legacy services, much better dynamic versus previous years. And I will mention 3 drivers that were contributing to it. First is a new fiber backhaul contract, which was bringing results in the last 4 months of 2025. In 2026, this year, it will help us to fill the gap left by national roaming contract that has expired in 2025. Second is the accelerated growth of revenues from access to our fiber network to other operators. And accordingly, growing monetization of our infrastructure. We reported an impressive 36% growth of wholesale customers on our network, a result of opening of our network for wholesale, which took place in the second part of 2024. And the third pillar driver is services, which we rendered to our FiberCo Swiatlowód Inwestycje, like lease of infrastructure delivery of services, network maintenance, they are growing in line with growing scale of FiberCo. Speaking about our 50% co-owned FiberCo. 2025 was a very important milestone here. It marked completion of the initial investment program, which was set in 2021, in line with our plan, FiberCo network reached 2.4 million households. In 2026, new program has started with fully secured financing, and we are very pleased with operational and with financial dynamics. Despite the fact that FiberCo is still at a very early stage of development, significantly investing into the network expansion. Swiatlowód Inwestycje EBITDA of last year exceeded PLN 140 million with a margin of 35%. We expect this to increase along the growing network acceleration. And obviously, we plan to strengthen it further by Nexera deal of course, subject to regulatory approval, which we are awaiting now. This acquisition is expected to be highly synergetic. Now switching to connectivity on Slide 9. In 2025, we reinforced our commitment to provide the fastest, the most reliable and trusted connectivity in Poland. And I want to start from mobile. We made big progress in 2025. Major projects of radio access modernization, which we have started several years ago is now almost finished. It is making our network more energy efficient and will enable usage of new spectrum for -- new spectrum bands for 5G. For 5G, it was the second year of rollout on C-band spectrum. We are covering now already 60% of population in Poland, meaning that we are very much advanced on the market. Rollout on 700 megahertz spectrum, aiming wide coverage has started just 6 months ago, and we are already at 64% population coverage. These both spectrum bands, we boosted 5G coverage to 85% by end of last year from below 40% a year ago. And we -- as well, we have completed the commissioning of obsolete 3G, allocating frequencies to 4G and enabling us to increase network capacity and improve the quality of services, which we are providing. In fiber, we are investing both in the reach and the coverage of the network, but also in service quality. Orange Fiber from a quality perspective was again validated by independent benchmarks where our fiber network is ranked again #1 in 2025. Fiber reach continues to grow fast. We have added another 1 million households to the coverage, reaching 10 million homes in total. It was mostly delivered by Swiatlowód Inwestycje and also by access to other third parties, FiberCo's networks. Our own build is targeting wide zones with projects supported by EU subsidies. Rollout as well accelerated in 2025, as we have invested almost PLN 90 million in this project, and it will be completed this year in 2026 with investment effort of over PLN 100 million -- PLN 120 million. Let's zoom now on transformation. With Lead the Future, we have initiated a new wave of transformation. You remember the ambition of our Transform and Innovate pillar to boost efficiency, which will be leading to improved profit margins. We will achieve it through automation, through process reengineering and opportunities which are arising from integrating AI in our operations. Firstly, in sales and customer care operations. Here, digital channels are progressing, and we see them being much more efficient and much better responding to customer expectations to be served online fast with seamless experience. And as a result, we are approaching 30% in share of digital sales with ambition to reach 35% by 2028. My Orange app is our key asset here contributing to this target. We are constantly improving it, adding new functionalities and using AI for personalization. In customer care, we are making another step change with AI agents. For instance, in 2025, we launched an agent, which helps our advisors to provide optimal remedy for technical problem solving. This reduced number of contacts and improving customer experience. We are working on more agentic solutions to be implemented in this year 2026 for better quality and better productivity. Secondly, in network operations, we improved cost efficiency last year, and we are aiming to do more. To reduce cost of service delivery and network maintenance, we use more remote tools, self-installation, boxless solutions for content and TV, and AI supported dispatching of technicians. We have started progressive decommissioning of legacy copper network targeting first areas with less customers, less usage and accordingly less profitable. And recent deregulation decision will allow us to do it at a much better speed. And finally, we are reducing costs across all our functions, making ourselves leaner and more agile. In recent months, we have made several organizational changes aiming to streamline our operations. And as a part of this process, we signed a new social plan with our social partner under which number of employees will be reduced by 12% over the next 2 years. And finally, I want to stop at the moment at our sustainability agenda and achievements. I'm convinced that growth and responsibility go together. And our actions bring a real difference and contribute to the development of Polish society and economy. And we are very proud of our progress in 2025. In today's fast-changing world, there is a growing need for education on responsible and safe use of technology. And here, we concentrate our energy, the number of beneficiaries of various digital programs was growing and exceeded 200,000 last year. And as well last year, our Orange Foundation has celebrated 20 years anniversary, a proof of our long-term commitment for society and for digital inclusion. On environmental area, in 2025, we significantly reduced CO2 emissions. Actually, we almost reached our goal, which we set for 2028. This was possible as all the electricity we consumed came from non-emission sources. And finally, in 2025, we reinforced our efforts in the area of circular economy, thanks to newly launched platform, we significantly improved the collection of used handsets. And also, we significantly increased the share of refurbished fixed devices that we distribute. It brings a positive impact on the environment, but also is improving our cost base. So this being said, I want to pass the floor to Jacek to give more deep dive on our financials. Jacek Kunicki: Thank you, Liudmila. Good morning, everyone. Let's start with the financial summary. Our financial results last year were strong and they came above expectations. We have increased both revenues and EBITDA by over 4% year-over-year and expanding operating activity is the main driver of our value creation. What is important is that this growth is built on a solid sustainable foundations. We've executed a disciplined investment plan, allocating capital to growth areas and decreasing CapEx intensity. We are confident to further optimize capital allocation going forward. As a result, we have converted the EBITDA growth to cash flows, reaching PLN 1 billion of organic cash flows in 2025. These achievements have also built solid foundations for further growth of shareholder value in the future. Let's now look at details of our performance, starting with revenues. Q4 revenues have increased by a strong 4.6% year-on-year. Please note that all key products have contributed to this achievement. Let me comment on two of them with the highest impact. First, core telecom services, which are key for our growth, value creation and margins. We're pleased with the sustainable strong performance stemming from a simultaneous growth of the number of customers in the key product areas and of their respective ARPOs. Core telecom revenues were up 5.5%, so at the high end of our midterm guidance. This was achieved versus a high comparable base of Q4 2024, when we implemented price increases for the customer base of prepaid. The second item is wholesale. It was an exceptional quarter for wholesale with 27% year-on-year revenue expansion. Q4 included the full impact of the fiber backhaul contract signed in the prior quarter in Q3. And also, it was the last quarter with revenues from national roaming. We expect to further grow the value of our wholesale business going forward. To sum up on the top line, first, we're happy with the pace of revenue growth and the key drivers of our margin. Second, revenue growth is supported by all major product lines. This includes IT&IS revenues, which have returned to a double-digit growth of sales in 2025, a dynamic that will continue this year. Let's now switch to profitability. We're pleased with a strong 6% growth of the EBITDA after lease in the fourth quarter. This was driven by a 5% increase of the direct margin. It reflected consistent margin expansion from core telco services coupled with them discussed significant contribution from wholesale. Indirect costs have increased year-over-year, but mostly because of a PLN 30 million impact coming from 2024 when we recorded a catch-up of the fiber rollout margin in the last quarter of 2024. This item apart indirect expenses grew by less than 1% year-over-year as cost pressures were contained by the savings program. Our cost transformation is accelerating. It delivered savings in workforce, network operations and G&A, and we plan to increase the savings run rate that will be visible in 2026. To recap on EBITDA. First, we delivered a strong 4% growth in the full year of 2025 with an acceleration in the second half of the year. Second, the growth is built on sustainable drivers as the increasing revenues and margins are converted to EBITDA via our high operating leverage. Let's now turn to net income on the next slide. We achieved PLN 760 million of net income last year. This included PLN 150 million provision for a 1,000 employee headcount restructuring to be done in 2026 and 2027. It is important to our transformation and it will increase our efficiency going forward. Excluding this provision, net income was on a comparable level to 2024. On the one hand, it was driven up by growing EBITDA, a factor that will consistently boost our net results going forward. On the other hand, it was brought down by 2 elements that we don't expect to repeat in the future. First, depreciation, which was driven up by purchase of the 5G license, changing asset mix and one-offs with opposite impacts in both 2024 and 2025. Here, we judge depreciation to have reached its peak in 2025. Second item is finance costs, which increased as a consequence of higher debt due to the purchase of the 5G license and higher interest on the PLN 1.2 billion refinancing, which we had made back in the middle of 2024. We expect significant growth of net income this year in 2026. As the EBITDA growth is its fundamental underlying driver while the negative impacts visible in 2025 are largely nonrecurrent. Let's now switch to capital expenses on the next page. Our economic CapEx amounted to PLN 1.8 billion. So it was at the very low end of our guidance. CapEx intensity measured as a percentage of revenues, has decreased to 13.8% in 2025, in line with our midterm ambitions. We allocated 40% of CapEx to fiber and mobile networks. In fixed, this included fiber rollout in white zones and connections dedicated to the B2B. In mobile, we have significantly progressed with 5G deployment as discussed by Liudmila a few minutes ago. Please note that this year, in 2026, we will finalize the EU subsidized fiber build, and we will reach the peak of the run rate of 5G rollout. This latter program should be nearly finished by the turn of 2028 and 2029 and both of these present us with an obvious opportunity to further decrease CapEx intensity after 2028. Let's now look at cash flow on page -- on the next slide. We generated PLN 1 billion of organic cash flows last year. This good result was achieved thanks to growing operating cash flows, and these were coming from the EBITDA, so a sustainable underlying positive driver. It was offset by less cash from the sale of real estate and 2025 was challenging in this area, and some key transactions were delayed through 2026. As a result, we expect higher inflows from this activity this year. Obviously, the free cash flow was influenced by the acquisition of the 5G license. But now we have the last of the new spectrum acquisitions for 5G behind us. So the cash flow prospects going forward are much more predictable. On the balance sheet side, the balance sheet remains very strong, and we have already secured the refinancing of the PLN 3.7 billion debt that is due next year. For the conclusion, I wanted to reflect on our value creation model shown on the next slide, which we have presented alongside with the Lead the Future strategy. Our 2025 achievements confirm that it is working well. It increased the key drivers of shareholder value creation and their underlying dynamics inspire confidence about the good prospects for the future. That is all from me, and I hand the floor back to Liudmila for the outlook and conclusions. Liudmila Climoc: Thank you, Jacek. So now coming to our priorities for 2026. We have 4 main areas and all 4 are rooted in our strategy in Lead the Future and it starts with profitable commercial growth. On consumer market, we aim to deliver a solid growth of core telco services, and we are going to achieve it through our balanced volume and value strategy in mobile, in fiber and in convergence. Secondly, we aim to achieve profitable growth in B2B. For small businesses, we will differentiate by complementing telco products with digital services, such as KlikAI web creator that we have just launched in subscription model. For large businesses, we bring new operating model that will group all our IT&IS competencies under one roof in order to unlock more potential. So commercial growth will be accompanied by high-intensity transformation to improve our profitability. As we discussed today, we have high ambitions in this area. Our commercial ambitions require a reliable and high-quality connectivity in order to answer to customer demand and accordingly investments in innovative solutions and tools that bring value for customers and for our operations. And this is the -- reflecting the way how we will prioritize on our investments, of course, keeping an eye on return. And now let's turn the page to see how this translates into financial targets for 2026. We aim to create significant value for shareholders this year. 47% in total shareholder return in 2025 is impressive, and we will make every fourth to sustain this positive momentum. We plan to grow revenues at low single-digit rate, noting that it is essential to maintain a solid dynamic of core telco. We expect another year of solid EBITDAaL growth in the range of 3% to 5%. It will be achieved through a combination of profitable commercial growth and cost transformation. Higher revenues and high EBITDA will be achieved with similar level of investments like in 2025, meaning a decrease in CapEx intensity obviously, roll out of 5G and completion of fiber project and white zones will be key for 2026. In line with the midterm objectives, we provide guidance for organic cash flow. It reflects our internal focus on these key return metrics. And we are very happy to achieve PLN 1 billion in organic cash flow in 2025, and we are aiming to generate at least PLN 1.1 billion in cash in 2026, a double-digit percentage growth as our objective speaks for itself. And looking at the midterm guidance on the next slide. As you have seen, 2025 results were good. And we also expect strong outputs in 2026. We are confident regarding our ability to reach this ambition. And as a consequence, we are more optimistic regarding the greater value in the future. And as such, we are upgrading our midterm guidance. For EBITDAaL, we are maintaining guidance of CAGR at low to mid-single digit. However, we clearly see that the current trends make high end of this range more probable. Regarding eCapEx, we are making our commitment more concrete. This -- we will spend PLN 1.8 billion per year. This means growth in revenues and EBITDA with a stable level of investments, so improving our CapEx efficiency. The combination of solid EBITDAaL growth and flat eCapEx enabled us to be more bullish regarding cash generation. We are now expect to generate at least PLN 1.4 billion of organic cash flow in 2028. This implies at least 40% growth versus 2025 level and a double-digit CAGR. This guidance clearly illustrate better prospects for future, for value creation, for our shareholders, dividend is also very important in this regard. So let's have a look on it on next slide. As presented today, we delivered our objectives for 2025, and we enjoy more optimistic future prospects. As a consequence, we recommend a cash dividend of PLN 0.61 per share from 2025 profits. This is a 15% increase versus last year. The level of PLN 0.61 per share now becomes a floor for the remaining years of Lead the Future plan. A year ago, you remember, we told you that we are working to create conditions to enable us to grow dividend, and we are very glad to be able to deliver on that, and we will continue with these efforts going forward. This concludes our presentation. And in just a moment, we will be ready to take your questions. Leszek Iwaszko: Yes. Please give us a moment. We will return for Q&A. Leszek Iwaszko: Welcome back. For Q&A session, we are joined by 4 more board members. Jolanta Dudek, Deputy CEO, in charge of Consumer Market; Bozena Lesniewska, Deputy CEO, in charge of Business Market; Witold Drozdz, in charge of Corporate Affairs; and Maciej Nowohonski, Board member in charge of wholesale market. [Operator Instructions] We have a first question coming from the line of Dominik Niszcz from Trigon. Dominik Niszcz: I have two questions, one on CapEx and the second on mobile B2B. So I would like to ask for a comment on CapEx in the context of rising prices of certain network components, you actually are not increasing your CapEx guidance in the long term, but lowering it from around 14% of revenues to at 13%. So should we understand that despite rising equipment prices, you believe there is no need for such high investment volumes as you previously assumed? And what is the price growth component in 2026? Jacek Kunicki: Thank you, Dominik. I would reiterate, yes, our CapEx guidance well, is an all-in guidance. It's not excluding any price increases or price decreases because you have some elements increasing in prices indeed and the memory chip crisis, it is resulting in some prices that might be temporarily or permanently increased. It also includes the fact that while eCapEx in '25, '24 was heavily supported by the sale of real estate, the proceeds from sale of real estate, this stream of both cash flows and CapEx support will inevitably be disappearing by the end of the plan. And it does involve a lot of effort on our side to make sure that we invest today in platforms and in systems that allow us to be more efficient tomorrow. This goes for IT expenses. And you will see by comparing the structure of our CapEx today to the structure of our assets or even to the structure of the CapEx 6 or 7 years ago that proportionately, we're investing more, and this is linked with IT transformation. It allows us to be more efficient on the side of the OpEx, but it also gives us future CapEx benefits as we will have less labor-intensive and also capital works. So yes, you will have both elements increasing our CapEx or pushing it upwards and the memory chip prices are a part of this. You will also have elements that will be relieving some of the pressure and giving us a potential to decrease CapEx. The fiber projects are near completion this year and starting from next year, this means roughly PLN 100 million less of CapEx dedicated to these type of programs. We will have the CapEx peak for the 5G rollout for 2 or 3 years and then CapEx for 5G rollout will be going down. The CapEx structure is obviously changing in according with the needs. But looking at the different projects that we have in the pipe, looking at the stage of advancement, looking at the fact that we have just finalized the renewal of the radio access network, we feel confident to be able to grow the EBITDA and revenues based on the same absolute level of CapEx. Dominik Niszcz: Okay. And second question, mobile B2C, what is the share of B2B segment in your stand-alone mobile revenues? And what is behind the current weakness in this market in your view? So is it more related to the condition and number of small businesses in Poland or rather to competitive pressure from other operators? Liudmila Climoc: Thank you for the question. I understand it's more for B2B. Yes. So from the perspective of last year, mobile was growing slightly less than in the previous year. As I will remind that in the previous year for a few years, consequently, we work on the price hikes and the growth of both ARPO and the overall revenue was for a few years at the level between 4% to 6%. Now we noticed the slowdown on the market. We are in the market. This growth, especially for the small companies is a little above the 1% for the overall '25, the situation differs segment by segment. In higher segments, we have the severe price fight between operators about the big customers, big deals. And here, we treated very selectively always having in mind that we create the value and the margin for the company and some deals are not tackled by us or even we are not going below the certain threshold that still allow us to generate the margin. So all in all, the difference between segments is very huge. We see the slowdown of the overall market according to the comparison of the results of the -- all operators, which we have till at the end of Q3 because the Q4 is not released yet fully, we see it was around the slowdown to around 1%, 1% a little plus, and we are accordingly in this market, keeping our very high market share above 32% since plenty of years. Leszek Iwaszko: Next question will be coming from the line of Marcin Nowak from IPOPEMA. Marcin Nowak: I have two questions. The first question would be about your optimism because it has been mentioned a few times during the presentation that your outlook is quite optimistic going forward. So my question is if still your guidance is more on the cautious side or more optimistic side going forward? And the second question is regarding the recent fine from the anti-monopoly office. Is it already fully covered in -- it was already fully covered in the second quarter under -- in an item below EBITDA or maybe there we should expect some more provisions related to that? Jacek Kunicki: Thank you, Marcin. Very relevant questions. I guess what we try to do is when we give a guidance, we try to give a range in which you would find the borders of our optimism or pessimism. And likewise, when we guide for EBITDA, it's 3% to 5%. So if we would be -- if we are on a cautious side, we will be closer to 3%. If we are on the optimistic side, we will be closer to 5%. I guess what -- and where we try to give you a little bit of flavor is we did not change the guidance for the midterm, and this is EBITDA -- low to mid-single-digit growth. But the optimism that we see right now, and it's not groundless, it's based on very solid trends in the B2C market is based on good positive business development in wholesale, and it's based on an accelerating pace of transformation that we're observing. That allowed us to, first, deliver the good results for '25, deliver a guidance, which is closer to mid than too low for the '26. And we do see that current trends would be with some degree of optimism point us towards the mid rather than low single-digit increase of EBITDA CAGR for the midterm. As for the cash flow, we did not change our stance. The cash flow guidance was and is at least -- it was at least PLN 1.2 billion. Now we expect to have at least PLN 1.4 billion. It means we will be working to try and make sure that we can deliver more cash, if possible. On the fine -- on the second question, Marcin, on the fine, we will not comment on an ongoing proceeding. So no comments regarding any items below EBITDA, no comments on the provision side, everything relating to risks, claims and litigations is appropriately described in the notes to the balance sheet, which you will find us publishing roughly mid-March. Leszek Iwaszko: Next question will be coming from the line of Ali Naqvi from HSBC. Ali Naqvi: You mentioned that you'll be seeing some reduction in capital intensity after your 2028, 2029 period. Could you give any kind of quantification of what that could go down to? And then your leverage is lower versus peers and the low end of the below market telcos. I appreciate you may be restricted in doing buybacks, but to keep the balance sheet more efficient, have you considered doing special cash returns, especially considering you're quite confident of the organic free cash flow you're going to generate to 2028? Jacek Kunicki: Okay. So on the capital intensity, First, we will be progressing with capital intensity reduction even before we are going to pass the peak of the 5G rollout. If you imagine us keeping CapEx at PLN 1.8 billion and growing the EBITDA by -- let's be optimistic, mid-single-digit CAGR, then it is clearly decreasing CapEx intensity. CapEx intensity means that CapEx as a percentage of revenues will be trending towards 13% by the end of the plan. And so that is step one. And then well, I think we will not guide for the CapEx in the period after the strategy. But clearly, the 5G rollout represents a few hundred million that we are spending each year. And this is something that will first decrease towards the end of the plan. And at some point in time, when we will have the 5G rollout completed. Of course, we will have other business priorities back then. But definitely, completing a rollout of 5G that is today consuming a few hundred million yearly, it does present us with an opportunity to decide do we increase investments in other areas that could be value accretive, productive? Or do we further decrease the CapEx going forward, knowing that already by that time, we will be trending towards 13% of revenues. So it's 2 phases, okay? One is relative to revenues to decrease CapEx by 2028. And then after we will have the 5G completed, we will have a decision to make, do we see other sources of good projects to invest this capital or do we further reduce capital intensity. On the shareholder remuneration, today, we are happy with a very strong balance sheet. I think it does give us ample balance sheet flexibility going forward. As far as shareholder remuneration is concerned, we haven't considered buybacks because of the limitations that you're aware of. And for the dividends, we have the policy that today's recommendation once voted by shareholders on the AGM will become the floor for the dividend going forward within the period of the strategy. And obviously, I will repeat the same message that I said 1 year ago. We will be working to create conditions that will enable us to be in a possibility to further increase shareholder remuneration in form of a dividend going forward. Leszek Iwaszko: Thank you. We do not have any more voice questions. So maybe I will read the instructions. [Operator Instructions] But there is one more question that came to us online. In the meantime, we have more voice questions, but we take those later. But the question on -- that came to us via text is, in the commentary through the Q4 results, the CEO pointed out that we are poised to generate substantial profits in the coming years from fiber backhaul business concluded in the second half of '25. Could you please say a few words about this agreement? Maciej Nowohonski: So good morning, everyone. Thank you very much for the question. And excuse me for my voice -- which definitely has seen better days, but this is in contrast to what we actually achieved on the wholesale line of business, the performance there is really satisfactory to us. I will not get down into the details of the commercial terms and conditions of the contracts that we are signing. But to give you color of what is happening on the holding market, I think, first of all, you are looking at the different markets in Europe and all across the globe, and you can compare or differentiate conditions on these markets, in Poland, particularly what strikes you probably is still the fragmentation of the market, and on this fragmented market, Orange Polska stands out in terms of the infrastructure. And we actually enjoying the basically, the success, which is purely generated from that, that we are strong in infrastructure, the market on which operators buy from other operators is large and is growing. The wholesale fiber, which normally, I would say, is connected with the wholesale activity is only a part of this market. And there is plenty of operators, which are actually interested to buy infrastructure and capacity for the transport network. And we basically respond to that constructing within the last 5 years, very strong activity and competence on that market. We are truly a partner to other operators on wholesale activity. And the result of that is visible in the contracts that we are winning on that front. So we will enjoy that particular contract for the coming years. Obviously, there is plenty of things to execute, but we are confident that we are able to do that with success. Leszek Iwaszko: Next voice question is coming from the line of Nora Nagy from Erste Group. Nora Nagy: Congratulations on the solid results. Two questions from my side, please. Firstly, on the tariff indexation, if you plan to implement it in 2026? And then if so, on which services? Jolanta Dudek: Hello, everyone. Thank you for these questions. In B2C, this year, we have implemented 2 price hikes for tariffs, first in Jan for mobile and in Feb for fixed broadband. In the meantime, we informed our customers about CPE clauses price hike for customers with indefinite contracts. So simple answer, we -- this year, we continue what has been done last year, and we have just implemented those 2 price hikes. Jacek Kunicki: And I think just to complement, I think on the price hikes that Jola mentioned were for the customer [ x ], so for the acquisitions and retentions, mobile and broadband. And the indexation obviously applies to the customer base that had eligible -- was eligible because they had the clauses in the contracts, and they were out of loyalty. Nora Nagy: Yes. And then secondly, how do you see the mobile phone services of Revolut in Poland? Shall we expect the company to focus more on the low-cost segment following the Revolut market entry? Jolanta Dudek: So as far as Revolut offer concerns, we expect that this offer will be dedicated mainly for the niche segments. And why, first of all, we do not see the impact on mobile number portability to Revolut. The second, this is the offer only limited to e-SIM. Third point, this offer has roaming packages on top and it's limited only to mobile, while home market is going to -- is focused on packages. So for the time being, we do not see the important impact on our base and on our market. Leszek Iwaszko: Another voice question is coming from line of Dawid Górzynski from PKO BP. Dawid Gorzynski: Actually, I have three questions. So maybe I will address them one by one. First one is on your assumptions behind over PLN 1.1 billion organic cash flow for this year. I wonder like what do you assume for the value of assets sold? And regarding cash CapEx, what maybe other differences between eCapEx and cash CapEx this year, if cash CapEx may be like higher than eCapEx because of some reasons. Jacek Kunicki: So for this -- thank you for your question. The PLN 1.1 billion organic cash flow. the base is what we achieved this year. The main growth driver is the growing EBITDA because we do expect to have 3% to 5% EBITDA growth, and we do expect for this EBITDA growth to convert to cash. We did not make bold, unorthodox assumptions on working capital. And we have assumed eCapEx to be flat at around PLN 1.8 billion. And eCapEx includes both the CapEx spending and also the inflows from sale of real estate. As I mentioned, last year, real estate sales were a bit below our expectations due to a challenging market and due to some key transactions being delayed even from late December. So on the one hand, the delay of the transactions gives us some boost and potential to do more this year from real estate sales than we did last year. But then on the other hand, it's not a recurring business. We really need to be prudent on our assumptions for real estate sales and for how much we are able to sell because this is a transaction by transaction and a buyer-by-buyer market. So I will go back. It's the EBITDA that is driving the better prospects for cash flow, not some wild assumptions on neither working cap nor on the real estate sales. We will obviously do our best to maximize real estate sales, minimize working cap. But the underlying driver is the EBITDA growth. Dawid Gorzynski: Second question on the Cybersecurity bill that is awaiting the sign from the President in Poland. Do you assume any impact of that bill on like potential requirement on replacing high-risk infrastructure? And perfectly, if you can quantify that impact for next year? Witold Drozdz: Obviously, we monitor closely this legislation. The deadline for signing is tomorrow. So we will see if it is signed or not. However, as it introduces some regulations that are that -- or will not introduce, but anyway, it refers to some fields of regulation that we are aware of, and it is also fully in line with the policy that we pursue for years, then we do not expect any substantial impact from the perspective of our business and results. Maybe Jacek... Leszek Iwaszko: Your third question, Dawid. Dawid Gorzynski: And yes, last question on Nexera deal and that chance or the requirement if -- do you think that the debt in Nexera will need to be repaid or it may be stood in the company? Jacek Kunicki: Thank you very much. So here, for Nexera, we are after having signed the SPA, we have not yet had the closing of this transaction. So obviously, this means that the process is really preliminary. Our intent is to keep the debt on the balance sheet of Nexera. We think that this asset will be performing much better than -- this transaction gives much better prospects for Nexera going forward. Orange Polska and APG are highly reputable buyers. We have substantial synergies of this transaction with Swiatlowód Inwestycje, we clearly have an intent to bring Nexera under the umbrella of Swiatlowód Inwestycje. So this also means that these better prospects mean better financial prospects for the company, and we will be discussing this with the financing banks. The intent clearly is to keep the debt and as much as we can of the debt on the balance sheet of Nexera. We are not in a position today to share with you exactly where we are in this process also because of an early stage. We are just after signing the SPA, we will be keeping you updated on what we have finally achieved. But definitely, the intent, the goal is to keep the debt on the balance sheet of Nexera. Leszek Iwaszko: We have one more text question. I will read it. It comes from Piotr Raciborski from Wood & Co. What impact of changes in working capital on organic cash flow? Do you expect in 2026, I guess you're -- unless you want to add the asset, but I think it was answered just a moment ago. Jacek Kunicki: Yes. I mean we will see how the business evolves. We will see how the inventory levels, the receivables will evolve over time. We will need to monitor this as we go forward. I would prefer not to disclose extremely specific assumptions, but it's -- the growth of the organic cash flow is not built on an assumption -- explicit assumption of a significant improvement or a significant decrease -- increase of working cap. It is based on the growth of EBITDA and the growth of EBITDA is coming from -- predominantly from core telecom services. So that does not imply huge requirements for working cap. And it's coming from cost transformation. And again, this is not something -- it's not sale of handsets in installments. It's not something that is requiring us to freeze up large amounts of working capital as a result of this. So this is what makes us confident going forward, is that the progression of cash flows is based on solid, sustainable, repetitive growth patterns coming from the core business. And this is what makes this growth very healthy. And this is why we think we can sustain it, not only for 2026, but we can sustain the good progress all the way up to 2028, hence, the improving prospects for the midterm guidance. Leszek Iwaszko: Thank you. We have no more questions. So thank you very much for listening, watching us, asking questions in case you wanted to meet us, please give us a note on that. Otherwise, we will come back in April with Q1 results. Thank you very much. Jacek Kunicki: Thank you very much. Liudmila Climoc: Thank you.
Operator: Greetings, and welcome to the MFA Financial Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Hal Schwartz, General Counsel. Thank you. You may begin. Harold Schwartz: Thank you, operator, and good morning, everyone. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc., which reflect management's beliefs, expectations and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature, including those containing words such as will, believe, expect, anticipate, estimate, should, could, would or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made. These types of statements are subject to various known and unknown risks, uncertainties, assumptions and other factors, including those described in MFA's annual report on Form 10-K for the year ended December 31, 2024, and other reports that it may file from time to time with the Securities and Exchange Commission. These risks, uncertainties and other factors could cause MFA's actual results to differ materially from those projected, expressed or implied in any forward-looking statements it makes. For additional information regarding MFA's use of forward-looking statements, please see the relevant disclosure in the press release announcing MFA's fourth quarter and full year 2025 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO, Craig Knutson. Craig Knutson: Thank you, Hal. Good morning, everyone, and thank you for joining us for MFA Financial's fourth quarter and year-end 2025 earnings call. With me today are Bryan Wulfsohn, our President and Chief Investment Officer; Mike Roper, our CFO; and other members of our senior management team. I'll begin with some general remarks on 2025, touch on the macro and political landscapes and will then provide an update on MFA's initiatives to foster earnings growth and increase ROEs. I will then turn the call over to Mike, followed by Bryan, before we open up for questions. After 3 very difficult years for fixed income investors, 2025 felt like an exit from a dark tunnel. The Bloomberg U.S. Aggregate Index was up 7.3% in 2025 after being down 7.1% for the prior 3 years or just under 2.5% annually. Following a 100 basis point reduction in the Fed funds rate via 3 rate cuts in the last 3 months of 2024, we had to wait 9 months until September of 2025 for the next rate cut, which was quickly followed by 2 more in October and December. Treasury rates also declined during the year, with 2-year yields dropping 77 basis points and 10-year yields dropping by 39 basis points. More importantly, the 210 spread steepened from 32 basis points at the beginning of the year to 70 basis points at the end of the year. This positively sloped yield curve, while perhaps somewhat modest, is a welcome change from the environment we faced from 2022 to 2024. Additionally, volatility has declined. The MOVE index began 2025 at just under 100, 98.8 before briefly spiking after Liberation Day in early April to almost 140 and then trended down for the succeeding months, ending the year at just under 64. Now to put this in context, the MOVE index was above 100 for almost the entirety of 2022, 2023 and 2024. The combination of lower rates, lower volatility and a positively sloped yield curve are all favorable for the mortgage market and for our business. With recent developments in Washington, D.C. and a strong focus on housing affordability, it seems likely that government policy, while certainly never certain, will continue to be supportive for our markets. The recent initiative for the GSEs to buy $200 billion of Agency MBS, the nomination of a new Fed chair with the expectation of further rate cuts later in 2026 and the repeated mantra of do no harm with respect to the mortgage market are all constructive for our market and for our business. We are excited about 2026 as we start the year with these tailwinds at our back. In the fourth quarter of 2025, MFA continued to execute on our strategic initiatives to cap off a solid year of performance. Our total economic return in the fourth quarter was 3.1% and 9% for the full year of 2025. Total shareholder return for the year was 6%. During our last earnings call in November, I provided details on several strategic actions that we were initiating to increase earnings and grow ROEs over the coming year. I'm happy to report material progress on these fronts. While the results will take several quarters to be fully reflected in our financials, the building blocks are in place. As discussed on our last call, we have deployed over $100 million of excess cash into our target assets in order to reduce the cash drag on earnings. We acquired $1.9 billion of loans and securities in the fourth quarter, including $1.2 billion of agencies purchased early in the quarter, $443 million of non-QM loans and Lima One also originated $226 million of new business purpose loans in Q4. We have highlighted the underappreciated optionality in our outstanding securitization ladder for quite some time now. With a constructive rate environment and tight securitization spreads, we believe we will have significant opportunity to call some of these deals and relever the underlying loans, reducing our cost of funds, while also generating incremental cash to redeploy. We're also excited about the prospects for 2026 at Lima One. We hired 45 new salespeople in 2025. We are debuting a new wholesale channel, and we are relaunching multifamily lending in the first quarter of 2026. In addition, we have rolled out several best-in-class technology platforms to enhance the borrower experience and drive operational efficiencies at Lima. The results of these initiatives are not immediate, but we again feel that the building blocks are in place. A number of us visited Greenville in late January to attend Lima's annual meeting, and the energy and enthusiasm at Lima One is palpable. Growth at Lima One in 2026, we believe will contribute materially to MFA's earnings. We continue to work diligently to resolve delinquent loans in the portfolio. This can be maddeningly time-consuming, but our team has been working out delinquent loans for over a decade, the majority of which, by the way, were purchased as nonperforming loans. And our team is the best in the business at this and uniquely suited to the task. We resolved over $150 million of delinquent loans in the fourth quarter, unlocking substantial capital to be redeployed at mid-teen ROEs. We've made substantial progress in reducing G&A expenses, both at Lima and at MFA. 2025 G&A was $119 million, down from $132 million in 2024. Many of these actions take some time to be realized depending on when in the year they occur and whether or not there are severance expenses associated with them. We're confident that we will continue to make progress on expense reductions in 2026. Finally, our listeners will recall that we began a program in the third quarter of 2025 to issue additional shares of our 2 preferred stock issues via an ATM and use the proceeds to repurchase our common stock at a significant discount to book. The stock buyback authorization expired at the end of last year, but our Board has reauthorized this program, and we expect that we will continue to utilize these 2 programs when the trading window opens after we file our 10-K. While this program is modest in size thus far, this is very accretive. And importantly, because we are issuing equity in the form of preferred stock, we are not shrinking our equity base despite repurchasing common stock. In the aggregate, we believe we are taking meaningful active measures to materially increase earnings and ROEs, and we expect to begin to see these results in 2026. And I'll now turn the call over to Mike to discuss the financial results. Michael Roper: Thanks, Craig, and good morning, everyone. At December 31, GAAP book value was $13.20 per share and economic book value was $13.75 per share, each up modestly from the end of September. For the quarter, MFA again paid a common dividend of $0.36 and delivered a total economic return of 3.1%. For the full year, MFA paid common dividends of $1.44 and delivered a total economic return of approximately 9%. We were happy to report in late January that approximately 40% of our 2025 common dividends were treated as a tax-deferred return of capital to our shareholders. This is the sixth straight year that a substantial portion of our common dividends were treated as a nontaxable distribution. This preferential tax treatment is the result of meticulous tax planning and a significant fully reserved deferred tax asset that gives us additional flexibility to efficiently structure transactions to minimize or deferred tax burden for our shareholders. Though there can be no assurances about the tax treatment of future distributions, this favorable tax treatment has substantially increased the after-tax dividend yield realized by holders of our common stock. Switching back to our results. For the fourth quarter, MFA generated GAAP earnings of $54.3 million or $0.42 per basic common share. Net interest income for the quarter was $55.5 million, a modest decline from $56.8 million in the third quarter, driven primarily by lower yields on our legacy RPL/NPL loan portfolio and interest reversals associated with increased nonaccrual loans in our multifamily transitional loan portfolio. These declines were largely offset by higher interest income on both Agency MBS and non-QM loans as a result of our significant asset purchases during the quarter. In the fourth quarter, we again improved our operational efficiency with further progress on our expense reduction initiatives. Quarterly G&A expenses totaled $27 million, a $2 million decline from approximately $29 million last quarter. For the full year, G&A expenses were $119.4 million versus $131.9 million in 2024, a decline of approximately 9.5% at the high end of the 7% to 10% reduction we had previewed earlier this year. We continue to make progress on additional initiatives that we expect will bring further reductions to our run rate expenses during 2026. Distributable earnings for the fourth quarter were approximately $27.8 million or $0.27 per share, an increase from $0.20 per share in the third quarter. The increase was primarily attributable to $0.09 of lower credit-related charges, which were partially offset by $0.03 of lower gains from sales of REO during the quarter. We continue to see progress from our efforts to grow our return on equity, and we expect our DE to reconverge with our common dividend in the back half of 2026. Moving to our capital. As Craig alluded to, during the quarter, we sold approximately 163,000 shares of our Series C preferred stock and approximately 53,000 shares of our Series B preferred stock for cumulative proceeds of approximately $5 million. We used these proceeds to repurchase approximately 540,000 shares of our common stock at a weighted average discount to our economic book value of approximately 33%. Given current market conditions and the trading level of our common stock, we expect to continue to issue preferred shares and repurchase our common shares as a way to enhance returns to our common shareholders without sacrificing scale. Finally, subsequent to quarter end, we estimate that our economic book value has increased by approximately 3% since the end of the year. I'd now like to turn the call over to Bryan, who will discuss our investment portfolio and Lima One. Bryan Wulfsohn: Thanks, Mike. We acquired nearly $2 billion of residential mortgage assets in the fourth quarter. As Craig mentioned, this included $1.2 billion of Agency securities, $443 million of non-QM loans and $226 million of business purpose loans originated by Lima One. We grew our agency book by over 50% to $3.3 billion during the quarter. Most of our investments were made in late October before spreads tightened significantly. We continue to focus on low pay-up spec pools that offer some prepay protection. Our agency portfolio is comprised mostly of 5.5% purchased at par or at a slight discount to par. We've slowed purchases since the tightening that occurred in late 2025 and especially into the year after the President's directed to the GSEs to buy mortgage bonds. That said, it still remains possible to generate a low double-digit ROE on levered agency investments, and we may buy more depending on capital needs elsewhere in the business. Our non-QM whole loan portfolio remains our biggest asset class at $5.3 billion, and we had another successful quarter sourcing, buying, managing and securitizing non-QM loans. We acquired $443 million of new loans with an average coupon of 7.3% and an LTV just shy of 69%. We remain laser-focused on credit quality. We buy loans from only select counterparties and still review every loan prior to acquisition. Turning to Lima One. Lima originated $226 million of new loans in the fourth quarter. This included $83 million of new construction loans, $48 million of rehab loans, $25 million of bridge loans and $70 million of rental term loans. We continue to sell Lima's production of those longer duration rental loans at a premium to third-party investors. This quarter, we sold $45 million, generating $1.4 million of gain on sale income. Lima as a whole produced $5.7 million of mortgage banking income. Although origination volume was lower in the fourth quarter due to seasonality, we continue to make progress positioning Lima for growth. We are relaunching multifamily lending with an entirely new underwriting team, and our wholesale channel is now live. We've also made further investments in Lima's sales force and technology capabilities and expect all of these efforts to bear fruit in 2026. Moving to our credit performance. We made good progress throughout 2025, resolving nonperforming loans on our balance sheet. The delinquency rates across our entire loan portfolio ended the year at just over 7%, down from 7.5% a year ago. We did see a 30 basis point increase during the fourth quarter, which was driven primarily by several defaults in our legacy multifamily portfolio. As a reminder, we have been actively managing the runoff of that book for the past 2 years, and as we start to approach the tail of that process, we expect that delinquency rate in the legacy portfolio to remain elevated, particularly as loans pay off and its overall size continues to decline. It's important to note that these assets are accounted for at fair value, and the remaining loans were held at a $42 million discount to par at year-end. We will continue to work hard to wrap up the resolution of that book. Finally, moving to our financing. We issued our 21st non-QM securitization in December, selling $424 million of bonds at an average cost of 5.26%. Securitization spreads have tightened in recent months and remain highly attractive for regular issuers such as ourselves. And once again, I'd like to thank many of our investors who have consistently supported our non-QM program and look forward to seeing some of you at the conference next week. As Craig highlighted earlier, given the recent movement in credit spreads, we continue to relever and look at -- to relever some of our securitizations in the months ahead. We currently have $2.3 billion of currently callable securitized debt outstanding, which, in some instances, has materially delevered since issuance. We expect that calling and reissuing deals will be a significant source of liquidity for us in 2026 and will unlock appreciable equity to be deployed in our target assets in the months ahead. And with that, we'll turn the call over to the operator for questions. Operator: [Operator Instructions] And your first question comes from Bose George with KBW. Bose George: Can you just talk about where you see the run rate ROE on your EAD once these loss provisions are through? And then can you remind us also, like there's capital that's tied up with the delinquent loans, how much that's going to sort of contribute to that number as well? Michael Roper: Bose, thanks for the question. So I guess a few things. One, it's kind of hard to predict, obviously, when exactly these credit losses will be realized. Bryan alluded to in his remarks that we hold the multifamily transitional loan portfolio at a $42 million discount to par. And given the short duration of those assets, we expect that most of that is attributable to what's eventually going to flush as credit losses through our DE. I think if you think about sort of DE on a loss less basis or DE before credit charges, I think this year, it was in the 8% to 9% range. And I think as we get to the back half of next year, certainly closer to that 10%, 10.5%, 11% range is sort of the run rate. Obviously, we've done a lot of work. And as Craig alluded to, both last time and this time, a number of initiatives take some time to flush through. But if you think about the dividend on our book value, it's about 10.5%. And as I mentioned in my prepared remarks, we expect the DE to reconverge with the level of the dividend in the back half of 2026. Bose George: Okay. Great. That's helpful. And then can you just discuss the reentry into the multifamily market? Are you focusing on the different loan types? Or is the underwriting process different? Just yes, can you just talk about the 2.0 version versus the older version? Bryan Wulfsohn: Sure. So we're sort of targeting up in quality a little bit and up in unit size and value size. So when you think about the prior instance, average loan amounts might have been between 3 and 10. Now we're sort of targeting between 5 and 25. So moving up a Tier 2 in quality. And sort of the idea behind the program is it's similar to the rental loans, it's an originate-to-sell model, so to sort of capture the origination fees and then capture some servicing fee on the back end, not necessarily to put on MFA's balance sheet. Bose George: Okay. Okay, great. Craig Knutson: Thanks, Bose. Operator: And your next question comes from Doug Harter with UBS. Douglas Harter: As you think about the deals that are potential -- could potentially be called, how do you think about the returns you're generating on that capital today and where that could be redeployed into? Bryan Wulfsohn: So in terms of -- it's really depending on the deal, right? We're still -- we still could be generating a mid-teen type return on that deal. But in addition, we can unlock, say, incremental whatever, $10 million to $20 million to $30 million of liquidity sort of per deal that can then be reinvested at that -- at our target ROEs of sort of the mid-teens. So it really is -- you think about it as the existing deal is $15 million, then add another $30 million or $40 million of additional sort of equity that could be redeployed to earn another $15 million. So it's all sort of additive. Douglas Harter: Got it. And how should we think about the sizing? I mean, you mentioned the large potential that could be called. How should we think about timing and the magnitude that you guys could get done this year? Bryan Wulfsohn: So I mean, realistically, we could get done several deals in the coming quarters, which could unlock sort of, say, $50 million to $100 million of capital that can then be redeployed. So it's a this year activity. Operator: Your next question comes from Matthew Erdner with JonesTrading. Matthew Erdner: As you guys went into agency during this quarter, how should we think about capital allocation going forward as you guys do start to call some of these securities, resolve some of the loans and just get capital back? Bryan Wulfsohn: So the expectation is, given the tightening that we've seen in agencies, it would -- we will probably tend to target over time into the non-QM and BPL asset classes. You can't just necessarily go out and buy $1 billion in loans in a day. So initially, you may see some investments increased in the agency portfolio, which would then sort of wind down over time and transfer into the non-QM and BPL space. Matthew Erdner: Got it. That's helpful. And then kind of switching gears to the rental product now. What's come out of the administration, the potential institutional ban, what kind of clients are you guys dealing with? And would that have kind of any impact on your day-to-day? Bryan Wulfsohn: It's pretty unclear whether anything is going to happen, but we don't lend to the largest buyers of single-family homes to rent. So we do believe sort of whatever comes of this, theoretically, right, could be an opportunity for the more mom-and-pops to absorb some more market share, which could be beneficial to Lima One from a lending perspective. But there's still -- it's very unclear what will come of this. Matthew Erdner: Right. Right. That's helpful. Appreciate the comments, guys. Craig Knutson: Thanks, Matthew. Operator: Your next question comes from Eric Hagen with BTIG. Eric Hagen: The move to issue preferred and buy back the common, can you say which series of the preferred that you're issuing? And then more holistically, like how do you think about the shape of the capital structure and like the right mix of preferred versus common right now? Michael Roper: Yes. Eric, thanks for the question. So during the quarter, we did about 160,000 of the C and about 50,000 of the B. And if you think about the issuance, we're selling more of the C pretty regularly. As far as the capital structure, certainly, there's room in the structure to add more preferred. But that market has been somewhat closed for a while now. But given this is an ATM program, it's easy to issue at the margin. But definitely, if the market becomes more attractive, we'd be capable of adding additional preferred to the capital stack. Eric Hagen: Got it. Okay. That's helpful. Following up on the resecuritization opportunity, I mean, how tight do non-QM spreads really need to be in order for you to see like a benefit? Is there a way to sensitize the opportunity relative to where non-QM spreads are currently? And does that opportunity necessarily go away if spreads are wider? Or is there still some capital that you can draw out of that portfolio even if spreads are a little wider than they are today? Bryan Wulfsohn: So there's sort of 2 reasons the opportunity exists. One is that spreads are attractive in a lot of cases to reissue. However, just the natural delevering that occurs in the structure is also creates the opportunity. So it's just sort of an equation and spreads could -- it probably still works if spreads are even 25, 30, 40, 50 wider depending on the amount of delevering that has occurred in a deal. There might be 1 or 2 deals at the margin that are more attractive to do given that spreads are tighter. But realistically, it doesn't change our strategy materially if there was a widening in spreads from here. Eric Hagen: Right. Got you. Craig Knutson: Thanks, Eric. Harold Schwartz: Thanks, Eric. Operator: [Operator Instructions] Your next question comes from Mikhail Goberman with Citizens JMP. Mikhail Goberman: I hope everyone is doing well. Just swing it back to Lima One real quick. What are you guys' expectations for margins holding up throughout the year, total volumes throughout the year and how that sort of product mix is going to develop as you add in the wholesale and multifamily lending? Bryan Wulfsohn: Yes. I mean in terms of margins; we are seeing healthy spreads when you think about our -- the potential issuance of RTL securitization versus where coupons are today on the short-term loan. So it might be sort of low 5 handle cost of funds and rates on new loans are somewhere between 8% to 11%. So there's a very healthy spread there when you think about ROEs. When we look towards the loan sale pipeline of the term loans, given the demand, given where spreads have gone, we've seen significant premiums. If you sort of look at where it was in the last quarter, sort of north of 103. We're sort of still seeing that type of execution today in the market based upon a mid- to high 6s coupon that's originated. So that continues to be attractive. When we think about sort of the volumes of this year, we would project sort of -- we think there's a lot of potential for growth given that we did sort of 0 in the way of multifamily and didn't really have a wholesale channel in the prior year. So we think there is sort of opportunity for sort of incremental growth, and it could be material growth throughout the year. But these things are sort of just coming online in the first quarter, and it takes some time for them to get up to speed. So we do think it's more of a back half of the year is where we see that incremental growth. So it's unclear what necessarily we'll see for the full year 2026, but I think the run rate will be sort of materially higher in the back half. Mikhail Goberman: That's very helpful. Craig Knutson: Thank you. Harold Schwartz: Thank you. Operator: Thank you. And there are no further questions at this time. So I'll now hand the floor back to Craig Knutson for closing remarks. Craig Knutson: All right. Thank you, everyone, for your interest in MFA Financial. We look forward to speaking with you again in May when we announce our first quarter results. Operator: Thank you. This concludes today's call. All parties may disconnect.
Operator: Good day, and welcome to the BrightSpire Capital Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. David Palame, General Counsel. Please go ahead, sir. David Palamé: Good morning, and welcome to BrightSpire Capital's Fourth Quarter and Full Year 2025 Earnings Conference Call. We will refer to BrightSpire Capital as BrightSpire, BRSP or the company throughout this call. Speaking on the call today are the company's Chief Executive Officer, Mike Mazzei; President and Chief Operating Officer, Andy Witt; and Chief Financial Officer, Frank Saracino. Before I hand the call over, please note that on this call, certain information presented contains forward-looking statements. These statements, which are based on management's current expectations, are subject to risks, uncertainties and assumptions. Potential risks and uncertainties could cause the company's business and financial results to differ materially. For a discussion of risks that could affect results, please see the Risk Factors section of our most recent 10-K and other risk factors and forward-looking statements in the company's current and periodic reports filed with the SEC from time to time. All information discussed on this call is as of today, February 18, 2026, and the company does not intend and undertakes no duty to update for future events or circumstances. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release and supplemental presentation, which was released yesterday afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Before I turn the call over to Mike, I will provide a brief recap on our results. The company reported fourth quarter GAAP net loss attributable to common stockholders of $14.4 million or $0.12 per share, distributable earnings loss of $35.5 million or $0.28 per share and adjusted distributable earnings of $19.3 million or $0.15 per share. Current liquidity stands at $168 million, of which $98 million is unrestricted cash. The company also reported GAAP net book value of $7.30 per share and undepreciated book value of $8.44 per share as of December 31, 2025. Finally, during this call, management may refer to distributable earnings as DE. With that, I would now like to turn the call over to Mike. Michael Mazzei: Thanks, David, and welcome to our fourth quarter 2025 earnings call. As we reflect on the past year, I'm pleased to highlight the significant progress we've made across our business. We entered 2025 focused on rotating the portfolio by addressing challenged investments while simultaneously increasing our new loan originations. Throughout the course of the fourth quarter and into the new year, we have continued to reduce watch list loans and REO property exposure. As a result of these efforts, we've improved the quality of the portfolio, ensuring a solid foundation for future growth. Perhaps most importantly, we gained considerable momentum in originations. As the year progressed, our pipeline grew steadily with loan inquiries and quoting activity increasing with each quarter. Against this backdrop, the fourth quarter ended the year on a high note and was one of our most active periods in several years. Since commencing originations at the tail end of 2024, we have closed 32 new loans for $941 million of total commitments, of which 13 loans of $416 million were closed during the fourth quarter, our largest funding quarter since restarting originations. As of December 31, the loan portfolio increased by $315 million to $2.7 billion. That equates to a 13% increase from the third quarter. We also had a very active period executing REO sales as well as resolving loans from the watch list. We made the strategic decision to accelerate the resolutions in this part of our portfolio. We concluded that the certainty associated with monetizing these assets and reinvesting the proceeds outweighed the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value to effectuate these sales during and subsequent to quarter end. In the fourth quarter supplemental presentation available on our website, we included 2 pages summarizing the watch list and REO activity. The materials illustrate the substantial progress made to date, along with our projected resolution time line for each of these 2 segments of our portfolio. I want to reiterate that these resolutions continue to be a major focus as they represent a critical source of capital for new loan originations. Over the coming months, our goal is to cut our current as is watch list exposure to 2 loans totaling approximately $66 million. Further, each of the remaining REO assets has a business plan for their ultimate exit. This, of course, does not reflect the possibility of any downgrades in the future. Also, as David mentioned, our adjusted DE for the fourth quarter was $0.15 per share. As discussed on previous calls, when we resized our dividend to $0.16, we noted there could be a brief period of modest coverage shortfall primarily related to the timing of capital deployment. For the full year 2025, we covered our entire annual dividend. However, as anticipated in this last quarter, our adjusted DE reflects a dividend coverage of just $0.01 shy of breakeven. Our plan is to once again cover the dividend by midyear and achieve a positive coverage by year-end. Turning our attention to the market. Commercial real estate debt capital markets are wide open with a surge of new issuance in the first 45 days. This was met with high investor demand, especially for CRE CLOs, which is driven by strong historical credit performance and attractive spreads versus other credit sectors. Along those lines, I'm pleased to report that we announced the closing of BrightSpire's fourth managed CLO. This transaction was $955 million and features a $98 million ramp as well as a 2.5-year reinvestment period, further expanding our lending capacity and flexibility. This transaction was also very well received with 19 investors participating across all offered tranches, including the sale of the lowest rated investment-grade tranche. Looking ahead at the demand side for CRE loans, we expect there will be a significant tailwind from continued increases in property sales transactions. On one side, property equity investors are anxious to see monetizations of legacy assets. While on the flip side, mortgage lenders are also encouraging borrowers to refinance or sell these same underlying assets. This is precisely what we are experiencing in our own portfolio. We are, therefore, optimistic that there will be a solid demand for loan originations as more assets change hands in 2026. In closing, allow me to reiterate and underscore our priorities for 2026. First, grow the loan book to approximately $3.5 billion. Second, to accomplish this, we must continue to resolve our remaining watch list loans and monetize the majority of our remaining REO, most notably the San Jose Hotel. Third, execute on a fifth CLO in the second half of the year to match fund our loans and further maximize our capital deployment efficiency. And lastly, in accomplishing these initiatives, we will grow earnings and reestablish positive dividend coverage by year-end. I would like to thank our team, clients and banking partners for their contributions and collaborations throughout the year. With that, I would like to turn the call over to our President, Andy Witt. Andy? Andrew Witt: Thank you, Mike. It has been a transformational year for BrightSpire and a productive fourth quarter. This year was punctuated by a robust fourth quarter originations activity. It was our most active quarter in 2025, closing on $416 million in commitments across 12 multifamily loans and 1 mixed-use loan. Repayments during the quarter were minimal and largely attributable to 2 loan payoffs. As a result, our loan book as of quarter end grew to approximately $2.7 billion, up from $2.4 billion last quarter. The portfolio is comprised of 98 loans with an average loan balance of $27 million and a risk ranking of 3.1, consistent with the previous quarter. Following quarter end, we have closed on an additional 3 loans for $118 million. We anticipate the loan book will expand to nearly $3 billion by approximately halfway through the year. Furthermore, we anticipate our loan book will continue to grow in the back half of the year, targeting at least a $3.5 billion loan portfolio by year-end. As it relates to portfolio management, during the fourth quarter and subsequently, we have been active and made significant progress. I will start with a review of watch list loans. During the fourth quarter, 2 loans were added to the watch list, both associated with the same borrower, bringing the total watch list to $220 million or 8% of our loan portfolio. As it relates to these 2 loans, our Dallas-based asset manager observed a notable shift in borrower behavior and property performance. As a result of these observations and further analysis, we decided the best course of action was to accelerate a resolution of the entire borrower relationship comprised of 3 loans, one of which was already on the watch list. Ultimately, we moved decisively, taking ownership of one property by foreclosure and working cooperatively with the borrower to market the other 2 properties. Following quarter end, 2 watch list loans have been resolved via sales processes that were previously underway. As mentioned earlier, 2 additional properties are in the process of being sold and one watch list loan property is now REO. Pro forma for the anticipated sales of these 2 properties, our watch list would consist of 2 remaining loans, a Dallas office loan and an Austin multifamily loan for a combined total of $66 million. Repayment proceeds from the resolution of these watch list loans will be repatriated and deployed into new loans. The plan for the Dallas property, which was foreclosed on post quarter end is to implement a value-add business plan, stabilizing operating performance and ultimately, to sell the property. As for the REO portion of the portfolio, during the quarter, we sold 1 of the 2 Long Island City office properties as well as the Oregon office property. At the end of Q4 2025, REO exposure stood at $315 million across 6 properties. As previously noted, post quarter end, a Dallas multifamily property from the watch list moved to REO through foreclosure, bringing the total number of REO properties to 7 with an aggregate balance of approximately $360 million. Currently, the remaining Long Island City property is under contract to be sold. We expect that transaction to close during Q1. Additionally, 2 multifamily properties are listed for sale, one located in Fort Worth, Texas and the other in Mesa, Arizona. Pro forma for the sale of these 3 properties, our remaining REO will be comprised of 4 assets totaling $266 million. The San Jose Hotel represents 50% of the remaining balance with 2 multifamily and 1 residential predevelopment property making up the remainder. We anticipate marketing the majority, if not all, of the remaining REO properties for sale during the back half of 2026. In closing, we made substantial progress throughout 2025, managing and growing the loan portfolio, particularly during the fourth quarter. The decisive actions taken this quarter should result in resolution proceeds, which will fuel continued portfolio and earnings growth throughout the course of 2026. With that, I will turn the call over to Frank Saracino, our Chief Financial Officer. Frank? Frank Saracino: Thank you, Andy, and good morning, everyone. For the fourth quarter, we generated adjusted DE of $19.3 million or $0.15 per share. Fourth quarter DE was a loss of $35.5 million or $0.28 per share. DE includes specific reserves of approximately $54.9 million. Additionally, we reported total company GAAP net loss of $14.4 million or $0.12 per share, which also included an approximately $8 million impairment charge related to the sale of our Long Island City office properties. For the full year of 2025, we generated adjusted DE of $83.6 million or $0.64 per share, representing a return on undepreciated shareholders' average equity of approximately 7.4%. Our dividend for the year of $0.64 per share was fully covered on time. Quarter-over-quarter, total company GAAP net book value decreased to $7.30 from $7.53 per share in the third quarter. We reported undepreciated book value of $8.44 versus $8.68 per share in the third quarter. As Mike mentioned earlier, we made the strategic decision to pull forward the resolution of certain watch list and REO assets, noting that resolving and reinvesting these proceeds from these investments outweighed the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value. During the quarter, we also repurchased approximately 1.1 million shares of stock at an average share price of $5.39, which resulted in approximately $0.03 of book value accretion. Given the strong origination momentum and improvements in the portfolio, we continue to believe the stock is significantly undervalued. Looking at reserves. During 4Q, we recorded specific CECL reserves of approximately $54.9 million. As Andy mentioned earlier, we took ownership of a Dallas multifamily property that was previously held on the watch list, resolved 2 watch list loans via sales process and have 2 properties underlying 2 additional watch list loans anticipated to close in the first half of this year. Since these loans are either resolved or will be resolved imminently, we have charged off the reserves. Our general CECL provision decreased to $88 million or 315 basis points on total loan commitments versus $127 million or 517 basis points reported in the third quarter. Our debt-to-assets ratio is 66%, and our debt-to-equity ratio stands at 2.3x. Lastly, our liquidity as of today stands at approximately $168 million. This includes $98 million of cash, of which $64 million will be received tomorrow associated with our CLO execution and unwind of the 2021 FL1 CLO. Additionally, we have $70 million available under our credit facility. This concludes our prepared remarks. And with that, let's open it up for questions. Operator? Operator: [Operator Instructions] And our first question today will come from Gabe Poggi with Raymond James. Gabriel Poggi: Mike, Andy, how do you think about the amount of -- just ballpark here, leverageable capital that sits underneath the various assets have been resolved or are in process of resolution kind of year-to-date? That's question one. And question 2 is a quick follow-up of just how do you think about the credit portfolio on a -- from a go-forward basis, you've only got now 2 4-rated watch list loans, a few assets in REO. What's the general kind of sense on where the book sits now from a 2026 credit perspective? Michael Mazzei: Gabe, it's Mike. Welcome back. Pleasure to have you. Thanks for your question. When you look at our portfolio and we talk about getting to the back half of the year where we get to positive coverage, that's really linked to your question. We have about given the foreclosure we had subsequent to quarter end, we have about $200-plus million of equity tied up in REO assets, which are basically a drag on the portfolio. The only thing throwing off anything meaningful there is the San Jose Hotel, whose NOI is probably just shy of $9 million. So really, at the tail end of the year, you get a full game in the sense that we unwind that REO as best we can and redeploy that capital into 12-plus ROE levered assets, and that's really what's going to kick us up. So to answer your question directly, about $200 million of latent capital is tied up in the portfolio right now, and we plan on getting out of that toward the end of the year. And as Andy said, a large part of that is the ROE on the San Jose Hotel. We're doing some deferred maintenance on that right now, much needed. We have a lot of things going on in San Jose during the course of the year that will help the cash flow. And so I think we're looking more towards the back half of the year for that asset. So the 2 multifamily assets that are REO just need to be stabilized like we've done with the rest of the portfolio, and we'll sell those at the back half of the year. In terms of credit and the overall portfolio, given the turnover that you're seeing, we're feeling pretty good about it. We haven't said that for a while, but we are seeing a lot of positive things happen, especially with the movement of the watch list and the REO assets that we're embracing right now. So we're pretty optimistic about the credit in the underlying portfolio. And then you look at the average loan size, we've got rid of some of the bigger assets. Our average loan size is down $30 million, maybe it's slightly less. And so we're feeling pretty good about the diversification in the portfolio. Gabriel Poggi: A nice job on the recycling or the resolving of the book. Operator: The next question will come from Timothy D'Agostino with B. Riley Securities. Timothy D'Agostino: I just want to touch on the San Jose property a little bit more. If you could just provide a little bit of color there. I know you said a couple of earnings calls ago that you're probably holding this through second half of '26 due to events like the Super Bowl, March Madness, the World Cup. I was just wondering with Super Bowl behind us, how that event went for the hotel? And are things progressing there ahead of expectations or at expectations? Michael Mazzei: Thanks for the question. No, the event went very well. The staff handled the volume incredibly well. We're doing some things in the hotel. We're upgrading the lobby, and we're upgrading the elevators and all of that takes a little bit of time. The lobby is well underway. We want to redo some of the washrooms in the ballroom and get that done. These are things that if you sold the property today, any buyer would look at those items and take those off of the sale price. So we want to get that done and get that behind us. And we also have, as you said, these major events coming up that we want to see through, including in July, we have the CrossFit National Championship there and CrossFit is using our hotel as the headquarters for that staging event. So we're looking forward to that as well. We did have some nonrecurring stuff that hit the NOI last year, some cancellation of events that fell right to the bottom line. We're not modeling that this year. Those were basically windfalls. So we're not modeling that this year. So we do expect -- right now, we're budgeting plus or minus for our purposes of our accrual, about $9 million of NOI, and we hope to punch through that as we get to the end of the year to get to more of a double-digit NOI cash flow. And then we'll consider selling the asset. But at this point in time, we're pretty comfortable. We're holding it well, well below replacement cost. We're seeing other assets trade at higher dollars per key. So we're going to be patient. But again, because we have a lot of capital tied up in that asset, it's throwing off some cash flow, but about $80 million, $85 million of equity based on the leverage we have on it today, we really want to sell that asset and redeploy into the loan book. Timothy D'Agostino: Okay. Great. And then just a quick follow-up. Could you just provide maybe a little more color on kind of the plan for the net lease and other real estate portfolio in '26? I know you touched a bunch on the loan portfolio, but it would be great to get some color there. Michael Mazzei: Okay. So the net lease is really made up of 3 components. We have a triple net to Labcorp in Indianapolis. We have a triple net to Northrop Industries in Colorado, and we have the largest part of that is the Albertsons portfolio. And nothing really is happening there at this moment. We have lease term on the Labcorp until 2030. That debt doesn't mature until 2027 and the Albertson debt not until 2028. Quite frankly, we're not really looking to grow the triple net portfolio. So if we could get into a position where we may be able to sell some of those assets, we'd consider doing it. But right now, there's really nothing going on in that portfolio. Operator: The next question will come from Chris Muller with Citizens Capital Markets. Christopher Muller: So it's nice to see originations picking up and looks like that momentum is carrying into the first quarter so far. I guess, how are you guys thinking about the pace of originations in 2026? Is 4Q a good baseline? Or will it be more back weighted in the year? Michael Mazzei: Andy, do you want to take that? Andrew Witt: Sure. Thank you, Mike. In terms of the pace of originations, we had a great quarter in Q4 with just over $400 million, and we're on track here in Q1 in terms of loans closed and those that we have visibility in execution on at just over $300 million. And we think that's probably a pretty good rate going forward, somewhere between $300 million and $400 million a quarter is what we're modeling from a go-forward perspective. Christopher Muller: Got it. That's helpful. And then just a quick follow-up. On the multifamily foreclosure that was subsequent to quarter end, should we expect to see a realized loss in the first quarter related to that? Andrew Witt: No, everything was taken in the fourth quarter, in the fourth quarter, so it came through CECL. Christopher Muller: So was that the $8 million impairment that hit the income statement? Andrew Witt: No, that's for Long Island City. So the amount of the loss was associated with one of our specific reserves in the $59 million. Operator: [Operator Instructions] And our next question will come from Gaurav Mehta with Alliance Global Partners. Gaurav Mehta: I wanted to follow up on your comments around strong demand for loan originations. I was wondering if you could maybe provide some more color on which sectors you're seeing the demand? Is it mostly multifamily? Or are you guys open to the sector as well? Michael Mazzei: We expect a lot of demand for credit in multifamily for the things that we laid out in the prepared remarks. We have seen -- we're pretty much at the end of the rope here. You've got 2021, '22 loans that are getting to the point where they have passed their first extension hurdles. Some are getting close to maturity now. We are seeing the equity getting exhausted and they want to move on. They want to get that equity repatriated back to the limited partners. So that's one of the drivers that we're seeing. The other driver we're seeing are lenders like us and what we just described in our own portfolio. We're encouraging borrowers to move assets, those same assets. And we think the confluence of those 2 things are really going to push volume in 2026. We saw a little bit of a dip in originations in the fourth quarter, and we just equate that to some of these owners were saying, hey, it's past Thanksgiving. I'm not going to put something in the market at this point in time for refi or for sale. But we're starting to see that activity pick up tremendously in January and February, especially with the conferences, the mortgage banking conferences and the multifamily conference in Vegas, that just transpired after those conferences, it's very typical to see volume pick up. So I think while transaction volume was up in 2025 over 2024, we anticipate in multifamily, the transaction volume will exceed 25 this year. So we're very optimistic about the demand for credit because we think we're just going to see a lot of assets changing hands. Operator: The next question will come from Matthew Erdner with JonesTrading. Matthew Erdner: I'd like to kind of stay on the credit side there. Spreads have compressed a good bit since this time last year. How are you guys thinking about that going forward and more competition kind of being in the space? Michael Mazzei: I've been doing this for 40 years, and there's never been a year but for a handful where we haven't had severe competition. So that's kind of business as usual. But what I'll say is I'll emphasize the points that we had around the capital markets. We just executed a CLO. The demand for that and for the army of CLOs that came out before and after us, the demand was incredible. I would have actually expected and told the team, hey, we may see spreads widen given that supply, and we saw the opposite. Every deal, the demand was better. I think the market is outperforming the corporate market. We're seeing what's going on in the BDC market, the term loan market. and what's going on in software stock prices and the concern that's having in corporate credit. And we're seeing the opposite in the CRE market. A lot of it has already been dealt with over the past 2 years, and the CRE CLO market has performed very well. So spreads have come in. Bank lenders on our warehouse lines have also brought in spreads commensurately with loan spreads. We have seen loan spreads kind of floor out here. Maybe that's because of the supply that we're seeing. So we don't anticipate a tremendous amount of more tightening in the loan spread market. But right now, as long as we're getting the ROEs that we need based on where we're financing things and the liability structure, it's okay. And we've seen that. The market has been met with a lot of demand from investors on the CRE CLO side. Matt add anything to that? We have Matt, who runs our capital markets here as well. Matthew Heslin: Yes. No, as Mike said, we saw tremendous demand. A lot of that market has kind of migrated to full multi. Our deal was predominantly multi, but with the ability to reinvest in various property types. So we're trying to keep our options open over the next 2.5 years to deploy capital where we see fit, whether it be in some limited amount in hospitality, industrial, retail. So we're trying to keep options open and deploy where it's accretive. Matthew Erdner: Got it. That's very helpful. And then a quick follow-up. The loans that you guys originated in the fourth quarter, what was kind of the timing of that throughout? Or was it pretty paced throughout the quarter? Michael Mazzei: It got pretty aggressive through the end of the quarter. A lot of deals pulled forward actually from the first quarter where borrowers wanted to close by year-end. So we did have some pull forward there. So I think we'll see the first quarter not be like the fourth quarter, but I think it will pick up during the course of the year. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mike Mazzei for any closing remarks. Please go ahead, sir. Michael Mazzei: We're very excited about the momentum we've had coming into 2026, both from our origination side and from the resolution of the assets in the watch list and REO. We're very much looking forward to updating you on our progress on those matters in April, and we thank you for joining us today. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to KP Tissue's Fourth Quarter 2025 Results Conference Call. Note that today's call is being recorded for replay. [Operator Instructions]. I will now turn the call over to Doris Grbic, Director of Investor Relations. You may begin your conference. Doris Grbic: Thank you, operator. Good morning, everyone, and thank you for joining us to review Kruger Products Fourth Quarter 2025 Financial Results. With me this morning is Dino Bianco, the CEO of KP Tissue and Kruger Products; and Michael Keays, the CFO of KP Tissue and Kruger Products. Today's discussion will include certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to known and unknown risks and uncertainties. A list of risk factors can be found in our public filings. In addition, today's discussion will include certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measure can be found in our MD&A. The press release reporting our Q4 2025 results was published this morning and will be available on our website at kptissueinc.com. The financial statements and MD&A will also be posted on our website and on SEDAR. The investor presentation to accompany today's discussion can be found in the Investor Relations section of our website. I will now turn the call over to our CEO, Dino Bianco. Dino? Dino Bianco: Thank you, Doris. Good morning, everyone, and thank you for joining us for our fourth quarter and full year earnings call for fiscal 2025. 2025 proved to be a strong year across many areas of our business, marked by share gains in revenue growth, strong margins and greater profitability, along with enhanced operational efficiency and an improved safety record. We are particularly pleased, revenue growth was well diversified both in Canada, leveraging our leadership position in this mature market and in the U.S., which is our growth engine for future years. In the fourth quarter of 2025, our momentum culminated with adjusted EBITDA growing more than 25% year-over-year to generate a run rate above $80 million for a second consecutive quarter. In addition, expanded in-sourcing a paper from our Sherbrooke expansion project improved the margins of our Away-From-Home segment and overall business. Going forward, we intend to build on this solid foundation to deliver growth in 2026 and beyond. Now let's take a closer look at the quarterly numbers on Slide 6. Revenue improved nearly 4% in the fourth quarter of 2025, mainly driven by higher sales volume in both our Consumer and Away-From-Home businesses. Revenue in Canada grew 5.1% in the fourth quarter, while U.S. sales rose 2.2% year-over-year. It should be noted that our U.S. segment was facing a high comparable with revenue up almost 20% in Q4 last year. However, we're very pleased with the incremental growth year-over-year in the U.S. market as our annual growth rate was 8.2%. In terms of profitability, adjusted EBITDA increased 26% year-over-year to reach $84.2 million. The strong growth in adjusted EBITDA can be attributed to higher sales volume and improved productivity at our manufacturing sites, along with lower pulp costs and freight rates. These factors were partially offset by a number of items that Michael will provide more details on in his financial review. On Slide 7, I would like to highlight our revenue growth of 7.5% and adjusted EBITDA increase of 20.2% in fiscal 2025. Following 3 consecutive years of profitable growth, we head into 2026 a strong momentum and are well positioned for further growth. On Slide 8, average pulp prices in Canadian dollars varied between a decline of 6.6% to an increase of 3.3% in the fourth quarter of 2025 compared to the previous quarter. On a year-over-year basis, average prices for NBSK and BEK declined 7.3% and 5.3%, respectively. Moving forward into 2026. Industry analysts continue to expect pulp prices to upwards over the year. Let's move to our operations slide on Page 9 -- slide 9. Production rates for our paper machine and converting operations remained positive in the fourth quarter, helping us exceed our targets for the full year. At Memphis, our renewed asset strategy focused on producing premium products drove robust sequential improvements across both paper machine and converting lines. As well, our new state-of-the-art converting line in Memphis remains on track for startup in early Q2 2026. In terms of our newly proposed projects in the Western United States, we're in the process of firming up the location, project scope and financial details of the new TAD facility, which is slated to open in 2028. We anticipate making a detailed announcement in the first half of 2026. Finally, we are proud to report that we achieved record safety results across our manufacturing assets in 2025, with several sites achieving key milestones throughout the year. Let's turn to our brand support on Slide 10. During the fourth quarter, we continued developing equity building campaigns behind Cashmere, SpongeTowels, Bonterra and Scotties to reinforce these brand names with our consumers. Cashmere bathroom tissue was recently featured in a full episode of Project Runway Canada design challenge. We are pleased with the exposure our Cashmere brand received from this televised event. Also during the fourth quarter, we also initiated a Scott for Scotties activation with Toronto Raptors Star, Scotty Barnes. The campaign featured a playful stunt on social media, which the NBA basketball star changes named to Scotties with an "S" to promote our facial tissue brand across Canada. Limited edition Scotties Barnes Boxes were also released in December as part of this solution. In addition, we recently unveiled the sixth edition of the Kruger Big Assist program, which has made hockey more accessible to Canadian families through $1 million in donations to date. The program is highlighted in a Parent Assist new TV commercial airing during CBC's broadcast of the Olympic Winter Games, Milano-Cortina 2026. The ad recognizes and celebrates the dedication and sacrifice of minor hockey parents across the country. Also airing during the CBC's broadcast is Kruger BigAssist content series, which shines a light on 12 Canadian hockey icons, both men and women, representing Team Canada at the Winter Olympics. And finally, we expanded support on Scotties seasonal cubes in the fourth quarter with the release of the Toronto Maple ease, Montreal Canadian and holiday Qube formats. Let's turn to Slide 11, where the data presented is taken for Nielsen and shows Kruger Products branded market share in Canada over a 52-week period ending December 27, 2025. The numbers reflect incremental growth year-over-year for Kruger products in bathroom tissue, which is a highly competitive product category. Also in terms of facial tissue, we increased share by 130 basis points from the same period last year to reach 46.3% share of the Canadian market. These share gains were driven by new innovations and continued support behind our market-leading Scotties brand, as I previously mentioned. And likewise, we grew share by 130 basis points on the paper towel category, raising our total to 25.3%. This was driven by our Maiden Canada promotions, leveraging our dual marketing strategy for both high-quality and base level towels as well as expanding our product portfolio with new formats and sizing options for consumers. Looking at our Away-from-Home segment on Slide 12. Revenue increased moderately over year in the fourth quarter on higher volume, but decreased sequentially due to seasonality. Similarly, profitability improved compared to the fourth quarter last year, highlighted by a healthy 11% adjusted EBITDA margin but declined from the previous quarter. As mentioned earlier, the network in-sourcing of paper contributed AFH's greater profitability on a year-over-year basis in the fourth quarter. Also the launch of Cashmere, Scotties and Titan Away-from-Home are already showing strong performance in this market. And finally, we continue to monitor the AFH market environment given ongoing economic uncertainty. I will now turn the call over to Michael. Michael Keays: Thank you, Dino, and good morning, everyone. Please turn to Slide 13 for a summary of our financial performance for the fourth quarter of 2025. As Dino mentioned, we generated an adjusted EBITDA of $84.2 million on sales of $560.1 million in the quarter, representing a strong year-over-year adjusted EBITDA growth of 26%. Net income totaled $23.4 million in Q4 2025 compared to a net loss of $13.7 million in the fourth quarter of 2024. The year-over-year increase is due to a favorable foreign exchange difference of $29.7 million and a higher adjusted EBITDA of $17.4 million. These items were partially offset by increased income from noncontrolling interest of $4.7 million, higher income tax expense of $3.8 million as well as higher interest and other finance costs of $1.6 million. In our quarterly segmented view on Slide 14, revenue from our consumer business grew 4.3% year-over-year to $472.3 million and this increase was driven by higher sales volume, both in Canada and the U.S. In our Away-from-Home segment, revenue improved 1% year-over-year to $87.8 million. This increase was also due to slightly higher sales volume in both Canada and U.S. The consumer adjusted EBITDA in the fourth quarter totaled $78.1 million compared to $64 million in Q4 2024, with a margin of 16.5%, representing an improvement of 2 points over the same period last year. On a sequential basis, the consumer adjusted EBITDA remained stable from Q3 2025. For our Away-from-Home business, adjusted EBITDA amounted to $9.7 million compared to $4.6 million in Q4 2024. The margin more than doubled year-over-year to 11%, partially driven by the expected benefit of in-sourcing our paper supply post Sherbrooke extension, as Dino mentioned, and sequentially, the AFH adjusted EBITDA decreased $0.7 million from Q3 2025. Moving on to Slide 15. We show our consolidated revenue for Q4 2025, which improved 3.8% year-over-year to $560.1 million on the strength of higher sales volume across both segments. On a geographic basis, revenue in Canada grew $15 million or 5.1% year-over-year, while the U.S. revenue rose $5.5 million or 2.2%. On Slide 16, we provide details of our year-over-year profitability. The adjusted EBITDA increased $17.4 million to $84.2 million, resulting in a margin of 15% compared to 12.4% for the same period last year. The year-over-year increase was driven by the higher sales volume, favorable productivity at our manufacturing sites, lower pulp prices and a reduced freight costs. These items were partially offset by higher manufacturing overhead costs and increased SG&A expenses. Now let's turn to Slide 17, where we compare Q4 revenue to Q3. Revenue decreased slightly by $1 million sequentially or 0.2%, primarily due to lower U.S. sales volume. Geographically, revenue in Canada increased by $5 million or 1.7% while the U.S. revenue declined by $6 million or 2.3%. It's worth noting that Q3 is historically our strongest volume quarter, making the decrease in U.S. sale largely a timing effect this quarter. On Slide 18, the adjusted EBITDA in the fourth quarter dropped by $1.5 million or 1.8%, driven by higher SG&A expenses, elevated freight and warehousing costs, increased marketing expenses, greater manufacturing overhead costs and lower U.S. sales volume. These factors were partially offset by the reduced pulp price, bringing the adjusted EBITDA margin to a comparable level to Q3 at 15%. Turning to our balance sheet and financial position on Slide 19. Our cash position continued to improve, reaching $196.1 million at the end of the fourth quarter, up from $149.1 million at the end of Q3 2025. The increase was primarily due to the higher adjusted EBITDA and a decrease in working capital at the end of the year. Long-term debt at quarter end stood at $1.741 billion, a decrease of $9.4 million sequentially, reducing the net debt by $55.7 million. Our leverage ratio also declined to 3.1x compared to 3.4x in Q3 2025, demonstrating further a commitment to strengthening our balance sheet. To conclude my section, we will review capital expenditures on Slide 20. Our CapEx for Q4 2025 totaled $33.4 million and for the full fiscal year, CapEx totaled $78 million. For 2026, we have raised our CapEx range to be between $100 million and $120 million, which includes some spending for the new converting line in Memphis and other strategic projects, as previously shared. Thank you for joining us this morning, and I'll now turn the call back to Dino. Dino Bianco: Thank you, Michael. Please turn to Slide 22 for my closing comments, which reflects sustained momentum from the last 3 years of profitable growth. We are finalizing details for a new TAD tissue plant in the Western United States that will better serve our fast-growing U.S. business with ultra-premium tissue products, which is slated to open in 2028. We will continue managing our margins and navigating through volatile economic conditions. We are investing in our operations to enhance efficiency and support growing capacity all the while keeping our people safe. We intend to continue to build market share across our brand portfolio on a long-term basis. And as mentioned on many calls, our Away-from-Home business has built a sustainable business model and is well positioned to maintain this positive momentum going forward. And of course, we will continue to build the foundation of our organization through capabilities that will enhance our adaptability and resilience in years to come. Finally, let's turn to our outlook for the first quarter 2026, where we expect adjusted EBITDA to be in a similar range of Q4 2025. We'd be happy now to take your questions. Operator: [Operator Instructions]. First, we will hear from Ahmed Abdullah at National Bank of Canada. Ahmed Abdullah: On the CapEx raise, does that include any preparatory spend for the TAD project? Michael Keays: Good morning, Ahmed. Yes, it would include a small amount for the TAD project. Mainly first year expenses, which will be still fairly low for 2026. Our base CapEx will be anywhere from $50 million to $70 million this year. Line 11, which is the previously announced project would be anywhere from $25 million to $35 million. So that leaves a very small amount that could be expected for the TAD 3 project, at least in the first year, but nothing significant. Ahmed Abdullah: Okay. And you highlighted the U.S. as your growth engine. What are the share trends that you're seeing there? And kind of what's driving that for you? Is it distribution wins, promos, or any other trends that you can highlight would be helpful. Dino Bianco: Yes, it's Dino. Yes, it's our growth engine because we're relatively a small player there, and we have been supporting some key customers. And those customers continue to grow. And every time we pick up new distribution, could be a new customer or new warehouses of an existing customer, it has a fairly multiplier impact on our growth rate given our smaller base there. So we see that as a great growth opportunity with existing assets that we have. And then, of course, when the new asset comes on board in a few years, that will continue to fuel the growth and continue to serve our growing customers. Ahmed Abdullah: Okay. That's helpful. And just on volume versus price mix for the quarter. Is there any comments you can give us there on any impact from price that helped you in the quarter? Or is it purely we can assume 100% volume driven? Michael Keays: There would be 100% volume driven, Ahmed, for this quarter. No specific price impact as pulp has been fairly stable or a slight decline in the quarter. Operator: Next question will be from Hamir Patel at CIBC Capital Markets. Hamir Patel: We're seeing pulp list prices heading higher here in 2026. Are you considering additional consumer tissue price hikes or de-sheeting in either Canada or the U.S.? Dino Bianco: Yes, Hamir. Good morning. One thing we've built over the last few years is a very robust pricing model for our businesses, both on the branded -- well, branded Away-from-Home and our private label supply. We always look at a bundle of inputs, not just pulp. We look at, obviously, energy, labor, freight labor -- other inflation. And we use that to determine whether we should go up, when we should go up or whether we should go down. So we'll just let it go through that model. I can't pulp predictions are just at their forecast. We'll watch the market and be ready to react accordingly if and when it does go up according to our pricing model. Hamir Patel: Fair enough. And when we look at it prices for North America, how should we think about actual realized costs. Because I know that historically, we see list -- the sort of discount off list increase every year. So what was that sort of discount factor for 2026 for the industry? Dino Bianco: Yes. I don't know if I quote to you -- as you said, it's a big number, and it seems to grow a couple of percentage points each year. I don't know if I can quote to you what it is this year relative to last year probably I'll give you a wide range. It's probably in the 40% to 60% range. And then you have a discount. There is a wide range there. I mean we focus on -- honestly, we focus on our landed cost which moves directionally with the list, but we just focus on what is our landed cost of pulp. And we believe that to be common to market, and we will then use that as our input to determine any pricing action we need to take. Hamir Patel: Okay. That's fair enough. And just last question I had here. On the Away-From-Home side, it looks like margins, they've been over 10% for the last 3 quarters in a row. Should we think of that as kind of a consistently double-digit margin business going forward? Dino Bianco: Yes. Look, you asked me this question about 5 years ago. I think I said, I think we can get to 10%. And we have. And I'd also say it's a sustainable business model. It isn't just a one-off, we got lucky. So I really believe this is the model that we run. The team has done a great job. Certainly, in-sourcing papers helped, but we've got better OEs on our operations. We've got a stronger pricing model. We've got a better mix of premium products, a really robust growth in the United States. So a lot of things going well in that business, which I believe will it be 10% every quarter? I don't know there's still volatility in the business, but I think long term, this is a business that should be in the low double digits. Operator: Next question will be from Sean Steuart at TD Cowen. Sean Steuart: A couple of questions on the TAD project coming. I guess we're going to get details in the coming months. But what are the remaining hurdles, milestones that need to be addressed before you make the final decision, whether it's site location or project scope. Maybe we'll start there. Dino Bianco: Yes, it's a great question, Sean. And it's exactly the right question because it is really activity-based that will determine when we make the decision versus time, but we're assuming those activities will be concluded in time for us to make an announcement in the first half. So really, the big 3 are working -- and we've been working tirelessly with a couple of communities, but one in particular, around solidifying the and incentives, operational plan, labor stats, et cetera. So we've been working through that. We hope to get that finalized in the coming weeks. The community is very anxious, and so are we, to get that resolved. The second area is making sure we've got all our permitting in place, construction permits, air permits, et cetera, so we're well ahead on that. And then the big one is making sure that we've got our project financing secured, which we are working actively with our lenders on that. So I believe the conclusion of those three things will happen over the next month to 2 months, and we should be in a position to make an announcement, as I said, in the first half. Sean Steuart: Thanks, Dino, for that. And then following on that, Michael, you guys have been comfortable taking leverage ratios higher through previous big CapEx initiatives. Can you speak to any threshold you're managing around for this project as you speak with your lending -- your lenders on this project going forward? Michael Keays: Yes, Sean. Obviously, we wouldn't get back to a situation where we were like in 2021, 2022, with this project. And our balance sheet is a much stronger position today than it was also at the beginning of our last few projects, whether it's the first TAD in Sherbrooke or the Sherbrooke expansion. So the leverage ratio could get back above 4 during a short period of time, but we would expect to be able to maintain an acceptable ratio of between 4 and 5. So during that construction period, if not below. So I think we'll take a prudent approach here based on what we know today and then our experience over the last few years to be able to get this project across the finish line. Operator: [Operator Instructions]. Next, we will hear from Frederic Tremblay at Desjardins. Frederic Tremblay: Question on in-sourcing paper in AFH. Have you feel like there's more to do there? Or have you reached the maximum quantity that you can get internally for that? Do you feel that we've seen the full margin benefit from paper in-sourcing in AFH? Dino Bianco: Yes. I think it will be stable for a period of time. It depends on the use, we grow before the new paper machine comes on board with the TAD project. Because even though that won't necessarily be AFH, it will reset the network again. I think we're going to be okay. There may be times that we might have to buy on the market, but nowhere near being a structural part of that business like it was last year. It will be more tactical as we need paper or unique types of paper. So I don't see it as being a major thing, but I still see us needing to buy paper in the market in certain quantities when needed. Frederic Tremblay: Okay. And then switching to the new U.S. facility. You mentioned earlier on the call supporting growth of existing customers and targeting new customers as well. Do you have a bit of color on your expectations for customer mix on this new facility? Is it mainly going to support your current client base? Or are you targeting an expansion of the customer base with that facility? Dino Bianco: Yes. I mean that's a great question. We represent customers either in whole or part that over 70% of the ACV of customers in the United States. So there are some customers we're not in, but we think we have a wide enough base. And given the fact that this facility will be in the Western United States, I think it gives us a great opportunity to service the Western divisions and warehouses of those existing customers who are also growing significantly in the West. So it lines us up quite well. with existing customers and their growth and maybe an underserved area being the Western U.S. business. So may there be new customers, I think at the -- on the margin, yes. But the way we built our model, we will be able to satisfy the output of that facility with our existing customers and the growth from those existing customers. Operator: Thank you. And at this time, we have no other questions registered. So I would like to turn the call back over to Dino Bianco. Dino Bianco: Thank you. Before I conclude, as 2025 has come to a successful end for a conclusion for our business, I really want to thank our 3,000 employees across North America for the amazing work that they are doing to drive these results and set up our company for continued success. As I said on the call, we certainly had strong financials, but also strong safety, strong share growth, capability building, operational performance. There's lots going on in the business, all moving in the right direction. And as important as it is in delivering our current results, we're setting ourselves up for future success. So I'm so proud of everything we have accomplished. On that note, I also want to thank all of you on the call today. We look forward to speaking with you again following the release of our first quarter results for 2026. So thank you. Have an amazing day. Thank you. Michael Keays: Thank you. Operator: Thank you, sir. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
Operator: Welcome to Medivir Q4 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Jens Lindberg. Jens Lindberg: Please go ahead. Thank you. Welcome, everyone, to the Medivir quarterly results webcast. We look back at a very eventful quarter marked by great progress and very optimistic outlook to the future. And today, we very much look forward to sharing more details about the great progress, but also -- in our pipeline, but also how we see the future shaping up for the company. If we look back at the quarter, thanks to the recently announced directed share issue to Carl Bennet AB, we're able to add another program to our in-house pipeline as it enables us to initiate the clinical development with MIV-711 in osteogenesis imperfecta, which is a new and strategically important indication for us, and it has comparable market opportunity as we're already seeing with fostrox in liver cancer. The news also comes on the back of MIV-711 being granted orphan drug designation by the FDA. Our second in-house program, the collaboration with Dr. Chon and the Korean Cancer Study Group continues to progress very well. And among other things, the 8 hospitals that will participate in the study have been selected and are eagerly looking forward to get going with the study. And then finally, when it comes to our partnered programs, we've seen very exciting news from our partner, Vetbiolix, with the published landmark proof-of-concept study for MIV-701 in periodontal disease in dogs. But perhaps even more importantly, they have already recruited, as recently announced, 20% of the subjects in their next study, which will be the key study to confirm that MIV-701 is the first disease-modifying treatment, which is also then the critical step to unlock its blockbuster potential. If we take a look at the pipeline, we do have a broad pipeline of first-in-class programs, all of them targeting populations with significant unmet medical need and programs that have the ability to potentially transform care for patients. And today, we'll focus on 3 of the programs. Those have been highlighted here in green, 2 in-house programs and one of the out-licensed. Please note, I made a slight, slight change to the MIV-711 line as I've had some questions today. Just wanted to clarify that the next development step in osteogenesis imperfecta is in osteogenesis imperfecta patients. We don't see a need to do any sort of further healthy volunteer work as a Phase I asset because we've already done that as part of our OA program. So the next step, clinical step is in Phase II and a Phase II proof-of-concept study. Important information, and you'll see that when you access the presentation on our website. Today's presenters here in the room are apart from myself, our Chief Medical Officer, Pia Baumann; and our Chief Financial Officer, Magnus Christensen. And joining us for the Q&A is our Chief Scientific Officer, Fredrik Oberg as well. So with that, let's move into the meatier part of the session, and we'll start with MIV-711, then on the back of the recent directed share issue and what that will enable us to do. And Pia will provide a bit more background on the disease and why we think there's exciting opportunity for MIV-711 and how we see things progressing going forward. Pia Baumann: Thank you, Jens. So just start with what is osteogenesis imperfecta. And it's a mainly inherited rare disorder where 85% have a mutation in the genes that actually is what collagen 1. And this results in varying degree and severity of the disease, and it could also impact life length. There's a significant unmet need in this population because there are no systemic treatment approved, and for the disease itself, it's characterized by, you have defective bone and cartilage causing that the bones becomes fragile and stiff. It's also called -- maybe you recognize this as brittle bone disease. And this leads to that you will have frequent fractures. Depending on the type of OI you have, I will come back to that, it leads to deformities, pain and impacted mobility. So bisphosphonates are used off-label, and it's often used in growing children to reduce the risk of deformities and particularly in the vertebral spine and also to reduce pain and improve final adult length. So that is the background. We can go to the next slide. So the next slide is showing the different types of OI. And these subtypes are divided into 1, 2 and 4 primarily for those who can actually be suitable for treatment, and it's divided due to clinical severity. So I've already said that it's a heterogeneous disease, which means that there's multiple different types. And some of them are actually not -- they are little like the type 2 and the others that are in the sort of below part of this slide. So we're only going to talk about type 1, type 3 and type 4, which are the main types. And type 1 is mild, is considered mild, but it could also be very different depending on how it actually is displayed in the different patients. And this is making up around 50% of all OI, and they have usually normal height or can have a short stature depending on how severe it is in that type and actually have up to 30 fractures during a lifespan without any treatment. So when we say it's mild, it's still considerable impact on your quality of life. Type 3, which is the next one is severe with the patients having considerable reduced length or stature with deformities and severe scoliosis and can have up to 100 fractures during their lifespan. And type 4 is somewhere in between. It's called moderate and they have -- they are usually short and have variable form of deformities and scoliosis and can have up to around 50 fractures during their lifespan. So this is sort of what we have to work with in. These type 1, type 3 and type 4 would be the types that are considered also for treatment with MIV-711. We can go to the next slide. So just to put the effect of this OI mutation in context, as I said, it's causing mutation in the collagen 1 gene. And to put it in the context of what normally is going on when it comes to building and maintaining strength and functionality of our bone and also to briefly explain what molecular players, as you see here, that are involved in normal bone remodeling, which is -- it's a continuous process that essentially removes the old bone and replaces it with new fresh bone and minerals. And this is a simplified picture as you see here. And there are essentially 2 players. It's the osteoclast and the osteoblast. And then you also have an enzyme cathepsin K, which is what we are inhibiting. So the osteoclasts are the ones that are responsible for resorbing the bone. And normally, it's the old bone, right? It secretes an enzyme, that's the cathepsin K. And that cathepsin K cleaves and degrades type 1 collagen that is the main component of the bone. Then the osteoblasts are responsible for the production of new bone matrix and mineralization because when you have eaten up the old bone, you can replace it with new fresh bone. And the coupling between resorption and formation of new bone are crucial for maintaining this healthy bone, and this is the interplay that is impacted in OI. We can go to the next slide. So in OI, which affects type 1 collagen, I'm saying it a couple of times here because it's -- this is a little bit complicated. The type 1 collagen is the skeleton of the bone, and it maintains flexible strength and normal mineralization, healthy bone. It is a major component of the bone making up to around 90% of the bone matrix. And the OI mutation leads to reduced or defect type 1 collagen, resulting in this imbalance between the osteoblast and the osteoclast interplay that we showed on the previous slide. And this results in increased bone resorption and reduced formation of qualitative bone. And we have also seen in studies increased level of cathepsin K in pediatric studies, which also sort of -- is what we are trying to inhibit in order to restore this balance. We can go to the next slide. So we have the cathepsin K inhibitor MIV-711 that is highly selective on inhibiting cathepsin K. And this could, as I said, restore the balance between the bone resorption and the bone formation in OI. So by inhibiting cathepsin K, the degradation of type 1 collagen can be prevented. The increased bone degradation activity can thereby be inhibited selectively while still preserving the continuous bone remodeling that you saw on the first slide, the interplay and coupling between the osteoclast and osteoblast. This results in the restoration of the balance between bone resorption and bone remodeling to ensure best possible quality of bone in OI. So this is the hypothesis behind this. And we can go to the next slide. So as I said, there are no approved systemic treatments in OI, and MIV-711 have a different approach to those used off-label or are under investigation. So MIV-711 inhibits, as we said, cathepsin K and effectively prevents bone resorption while saving osteoclast functionality and preserves this bone remodeling. This is really, really important, this fact that we have the interplay impact. While, for example, bisphosphonates that are used off-label prevents bone resorption by killing off the osteoclast. And then you also lose the function and the coupling and the bone remodeling. And this creates a negative impact on the formation of new bone. So essentially, you keep the old bone that you have, but you inhibit more resorption. Anti-sclerostin has been investigated in OI. And recently, in December, they announced that their Phase III study had failed. It has been investigated due to the fact that it seemed to be effective inducing new bone formation and also have an indirect reduction of bone resorption. However, the benefit diminished already after 6 to 12 months due to induction of, if you call it, escape pathway or feedback loops that makes it more or less -- ineffective. So this is sort of where we are with other treatments that has been used or are under investigation in OI. So we can go to the next slide. So what do we have? What data do we have that makes us believe that MIV-711 could be very important for these patients. And that is that cathepsin K inhibition has shown significant benefit across multiple bone-related disorders. In OA or in osteoarthritis with MIV-711, it shows a statistically significant improvement in preventing bone and cartilage degradation. And other cathepsin K inhibitors have shown benefits also in osteoporosis with reduction in fracture rate and improved bone mineral density. So -- and just to say that osteoporosis itself shares commonalities with OI such as bone fragility and bone mass loss. That's why this is important as well. And we have also seen a significant and dose-dependent improvement in bone volume and quality versus placebo in osteogenesis imperfecta mouse model. So in essence, the clinical benefit that we have seen of cathepsin K inhibition, this is really supported by the proof of concept in this OI mouse model, and it indicates for us that we would have a high likelihood of success in OI. And that's why we can go to the next slide. We are now initiating or planning for a Phase II proof-of-concept study with MIV-711 in OI that eventually will inform the next pivotal development phase. This study will enroll about 20 patients randomized to 2 arms of MIV-711 with a high dose and a low dose. And the patient will be treated orally. This is an oral compound, and it will be given once daily for 12 months. And the endpoint will include biomarkers for bone resorption and bone mineral density, PK, safety, et cetera. And enrollment is planned to take place at sites in Europe, and there is a huge advantage when it comes to include these kind of patients into a clinical trial, and that is that the patients are already identified and known at the sites why we are hoping that enrollment will be really, really fast. So I will leave it there to Jens. Jens Lindberg: Thank you, Pia. And I think the feedback that we've gotten from KOLs so far is that these patients are also quite eager to participate in clinical studies due to the significant unmet medical need. So from a commercial viewpoint, if we take then the next step in terms of estimated prevalent population, candidates for treatment, et cetera, then we are looking at somewhere around roughly estimated 80,000 patients across EU, U.S., Japan and Korea. And Pia broke down earlier the subtypes, which is type 1, type 3, type 4, there is a subgroup of type 1 that are many times not diagnosed because they might be too mild. So what we're estimating is that 2/3 of patients are potential candidates suitable for treatment options and to be included in the study. So that leads to -- because of the significant unmet medical need, no approved treatment options. We had anti-sclerostin antibody failure in Q4, and Ultragenyx are looking to scale back. So the opportunity for to be the first approved treatment option is definitely still there. So when we estimate that market opportunity across the market, we're looking at least a USD 3.5 billion annually commercial opportunity. And this is in these regions. It's a bit more difficult due to prevalence not having prevalence numbers in countries like China, but there is no reason why there would be less patients in China. So that's a potential upside opportunity. As the U.S. administration has recently voted to prolong the pediatric disease designation program, we will, of course, move forward and file for that. There's precedent to receive it. And with that comes then, of course, the potential for a priority review voucher. So to sum up, we do have a highly selective cathepsin K inhibitor that across multiple bone-related disorders and including our own mouse model work in OI signals potential benefit with regards to improving bone volume, improving bone quality, preventing fractures. And as we now move with speed to initiate the Phase II proof-of-concept study, there is the potential to be the first approved treatment options in this -- for these patients. And as mentioned, the total market opportunity is significant. I would argue conservatively estimated at $3.5 billion across key markets then with other markets outside of U.S., EU, Japan and Korea as potential upside. So with that, we'll stop with regards to MIV-711, and we very much look forward to sharing further progress as we continue to work to design and get the study up and running. And we'll move to our second in-house program, which is fostrox, which continues to be just as important as it was before, and we continue to move with as much speed as we were before with regards to initiating the FLEX-HCC study as the next step. And Pia? Pia Baumann: Thank you. And I'm happy to share again that the collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well. It is super positive to see that the interest in participating in the study has been considerable. And we don't know about the process in selecting this, but we know that there are many hospitals that wanted to participate. So now 8 hospitals have been selected. Importantly, among this, as you can see on this map here, the 3 largest hospitals, Samsung, Asan and Soul Natural have all committed to this study, which is a real quality indicator. This is also a testament to the fantastic work done by Dr. Chon and his team at Bundang Hospital, and we are more than pleased with the collaboration and actually the process that is ongoing. And I'm sure you already know this, but I'm going to say it anyway, as with all studies, formal study approval processes is needed, and it's ongoing also here. And when it's completed, the investigators are eager to start recruiting patients and very much also due to the fact that there are no other studies ongoing in second-line liver cancer in Korea currently. And the unmet need, as we have talked about so many times before, after progressing or intolerance to immuno-oncology, the unmet need is super, super high. And when we know more about exact when the recruitment will start, we will, of course, communicate this with you. So as a little bit of a reminder for -- I'm sure that you have seen this a couple of times now. This is the study design. And as I said, we have 8 hospitals selected. And with these 8 hospitals, as I said before, the 3 largest ones, this really support that we will have a speed of enrollment of the patients and an ability to generate top line results already in 2027. 80 patients will be enrolled in the study. As I said, they have -- all will have received prior immunotherapy combination, and they will be randomized to either fostrox plus Lenvima or Lenvima alone. They will be assessed for response every 6 weeks with the CT/MRI scan and the primary endpoint will be overall response rate. And importantly, also, this overall response rate will be evaluated by a blinded independent committee to ensure that we really have quality results coming out from this study. So I will give it back to Jens. Jens Lindberg: And without going into this one, I will just say that there continues to be an almost complete lack of movement and progress when it comes to second-line advanced liver cancer outside of our program. So in terms of where we are and in terms of what we're moving forward, we are at the forefront and continue to aim to pace to be the first approved treatment option for these patients. Let's move into the final bit before we take the financials and the Q&A. So just a few notes and slides on the program that is called VBX-1000, which is the Vetbiolix name for MIV-701 and the progress that they have made over the past quarter. So just to provide a little bit of a background, this is also a cathepsin K inhibitor, but suitable for use -- not suitable for use in human, but suitable for use in animals. Vetbiolix, a French biotech -- veterinary biotech company in-licensed it. And they are developing it as a first step for periodontal disease in cats and in dogs. And you see picture here in terms of what it is. So basically, periodontal disease leads to a lot of pain. It leads to tooth loss, it leads to infection. There are no treatment available to stop the process today. And as it progresses through the steps, basically, surgery will be a removal of tooth, which is troublesome, painful and quite expensive, will be the final step of the process. And there are no treatments available. And MIV-711 is the one and only disease-modifying treatment candidate in development as we speak. And they recently presented the first proof-of-concept study. The study actually looked reasonably similar to the one we showed before on MIV-711 in osteogenesis imperfecta, 2-arm study, 10 subjects in each arm, high dose, low dose. But most importantly, they showed clear evidence of potential for disease-modifying benefit, significant effect on biomarkers, but also significant effect on bone parameters such as alveolar bone loss, et cetera. So very encouraging first step and no safety concerns. They are now then moving forward. And just to take a couple of seconds to talk about the potential financial upside here for us as a company. This was out-licensed a few years back. The agreement is quite backloaded in the sense that there are quite small milestones throughout the process, but a healthy share when it comes to royalty revenues and potential partnership payments if Vetbiolix out-license the compound. And the question is then how big of an opportunity is this for a potential bigger player in the animal health field. The dog population is today estimated to be 90 million in the U.S., 70 million in EU. And as many as 80% of those dogs over 3 years of age will suffer from periodontal disease. Some animals, it will be quicker and some animals, it will be slightly later. But as many as 80% will suffer from periodontal disease by the age of 3. Again, no unmet -- so no approved treatment options, providing for a significant unmet medical need. No other treatment options in development to compete with MIV-701. So for us, there is a significant financial upside, which we haven't talked about that much before, and we didn't feel it was necessary until they now move into this step because the step that they are now taking is the critical step to unlock the potential. And for us, significant upside through royalties and potential partnership -- share of partnership payments. We've done in our estimation, in our modeling the annual royalty revenues if this hits and this becomes launched as the first disease-modifying treatment option, the annual royalty revenues that we would anticipate after a global launch are equivalent to the company's current market cap. So it's a sizable upside. And it is the next step, which will basically -- no, I'm looking for a good word. It's the next step that will show whether this potential is there or not. So they have -- we recently announced that they have initiated a randomized, double-blind, placebo-controlled pilot study in dogs to confirm the efficacy. They've included 10 dogs to date out of 51 in total. So 20% of the dogs have already been included quite quickly. And Vetbiolix have announced that they are expecting the top line results already this year during quarter 4. So that will be basically the determining factor as to whether the blockbuster potential is there and if the potential for the financial upside for us. But the data that they've shown in the proof-of-concept study was quite convincing. And if you look at the size of the study here and the number of patients, it's a relatively small study, which is a testament to the -- looking for a word now, not the potential, how confident they are in the efficacy they saw in the proof-of-concept study and the likelihood of this reading out positively. So we're very much looking forward to following the recruitment process and the readout of the results. With that, I will stop on the programs, and we'll move into the financial highlights and Magnus? Magnus Christensen: Thank you, Jens. Can you please turn to Slide 27, where you can see the financial summary for quarter 4 and for the whole financial year 2025. And as always, all numbers are SEK million. The revenue in quarter 4 was a bit higher than the previous quarter and is primarily related to the out-license of remetinostat and of course, royalty income from Xerclear. Other external expenses were significantly lower in the quarter as it has been throughout the year, and it's reflecting lower clinical costs for the year. Personnel costs were slightly higher and it's primarily due to provisions for the personnel under notice of termination that we had in the quarter 4 this year. And during the period, we booked the write-down of the birinapant project of SEK 29.8 million, and this has no cash impact on the company. So it's more a book written down value. The operating loss for Q4 amounted to minus SEK 42 million, higher than last year, but is related to the birinapant write-down, as I mentioned. And the cash flow from the operating activities in Q4 was approximately minus SEK 6 million. We have a strong financial position at the year-end. We completed a rights issue, raising approximately SEK 151 million before transaction costs, which meant that our cash balance at the year-end was SEK 119 million. In addition to that, as Jens mentioned, we completed a recently directed share issue of SEK 45 million to Carl Bennett AB, enabling the continued clinical development of MIV-711 in osteogenesis imperfecta. And with this, I will hand back to Jens. Jens Lindberg: And I think that concludes the presentation. And operator, we can move into the Q&A session of the call. Operator: [Operator Instructions] The next question comes from Richard Ramanius from Redeye. Richard Ramanius: I have a few questions on which of your candidates or each of the new candidates. Could you give us some more details about the way to the market for MYB-711? What's more need to take it to an approval? Jens Lindberg: Basically, we see -- the good thing about osteogenesis imperfecta as a treatment from a regulatory pathway point of view is that the anti-sclerostin antibodies and the recent interactions they've had with FDA and other regulatory authorities, it paves the way and shows the way in terms of what is needed. So we see basically, I would arguably a 2-step approach, i.e., the first step is establishing the clinical proof of concept, which we are doing with this study. That takes us into a pivotal phase of development. So then the next phase would then be a larger, and I say larger than sort of 2020 size of that study doesn't need to be super large, but we need to continue to do some work. But the next phase would be pivotal phase. And I guess the one outstanding question that needs to work through, this is adult program -- adult and pediatric population is whether we can combine the 2 populations in one study or whether we need to run them as sub-studies or separate programs. But the next phase would be a pivotal development phase. Richard Ramanius: Okay. And could you give us some more details about the royalty agreement you have on VBX-1000? Jens Lindberg: I mean we haven't communicated any in terms of any numbers before. What we have said is that the development milestones, the regulatory milestones right now, including also approval milestones, they are small, I would even say, minor. When we made the deal with Vetbiolix, there was a focus on having a healthy share of royalties and potential partnership payments or out-licensing -- share of out-licensing from Vetbiolix. So we haven't disclosed the percentage, but it's arguably a very healthy percentage, and that's what we focused on. So when I say -- when we do the calculations on the compound having the opportunity to generate as a disease-modifying treatment for us, royalty revenue stream, annual royalty stream of -- in line with our current market cap, I am also not including milestone payments from potential partnering deals that Vetbiolix does. So if they out-license and they generate upfront, they generate milestone payments, we will also take a healthy part of that share as well. Richard Ramanius: Final question. What is the runway after the latest funding? Magnus Christensen: Richard, I mean, as I said, we have a strong financial position at year-end and with the directed issue to Carl Bennet. And as we stated in the Q4 report, we assess that existing cash resources are sufficient to cover the planned Phase II study in liver cancer and osteogenesis imperfecta. And that's according to our current plan assumptions that we have today. So I hope that answers your question. And before we said, I mean, rights issue, we had money end of '27. And with the directed issue now, of course, we have -- according to the plans, we have cash runway into 2028. Operator: The next question comes from Klas Palin from DNB Carnegie. Klas Palin: I would like to start with MIV-711 and this proof-of-concept study. Where do you stand when it comes to preparations? And perhaps also, I noticed that it's a 12-month treatment. How long -- even though Magnus indicated that your cash runway was into 2028, but how long do you think the study will take to finalize? Pia Baumann: Good questions. So when it comes to the preparations, I'm sure that you saw the press release when we got some financial from Carl Bennet, which means that we have actually planned for this study before, but we obviously need to do all the preparations that you need to do when it comes to studies. What we are doing currently is that we are pulling together a scientific expert council to get external advice. This is a disease that has many different aspects on it since it goes from pediatric until adulthood. And we need to understand thoroughly what kind of patient population we should include in order to get the results that we are requiring for proof of concept. That is the first one. The treatment time for the patient is 12 months, and that is to get to the primary endpoint that we will select. The benefit for this trial I would say that usually is not in place in other trials and particularly not in oncology trials that we have been doing before is that the patients are already there. They know who the patients are since the majority of them has been diagnosed already at birth or before birth since it's a dominant [ inheritage ] of this genetic mutation, which means that since they're already in place, you can go to those sites you want to go to and they more or less can give you the patient at once. So the enrollment time is usually really short in this kind of stats. Jens Lindberg: The other element to comment on one of the timing challenges many times in studies like this is the CMC element. One of the benefits is that we do have active product ingredient with MIV-711 since before that we can use. And so there's no need to synthesize additional. So we can cut some of the CMC processes underway as well. So we're moving forward with speed. We can -- we will be able to recruit the patients quite quickly and then they're treated for 12 months. As I think you're picking up here, we're a bit reluctant to give you a date on when the study will start because there's always -- I mean, clearly, we need to do the regulatory interaction and get the formal approval processes in place. But it's very clear from the early interactions with the scientific community and also from the patient advocacy group is that there is an eagerness for studies to happen and there is an eagerness for them to participate. So in terms of getting there, we have a nice, do you say, wind in the back with regards to support in terms of getting there. Klas Palin: Great. And just also I wonder, I mean, I guess, is this positioning -- are you positioning this treatment and your hypothesis is that this could be a lifelong therapy for these OI patients? Or how should we think about that? Pia Baumann: I would say that it depends on -- since it's so different depending on what kind of severity you have of this disease, it could be different depending on when you start, first of all. As it is currently, they start already when they are more or less up to 2 years old if they want to use bisphosphonate because that is what they use off-label in order to give them something. If you think about that, then it's all the way until you stop growing. So that is in the pediatric disease. Obviously, that is not a study we can do. So we need to have another endpoint. But when it comes to older patients, it depends on what phase they are in. And as I said, osteoporosis is a little bit similar to this disease when it comes to adults, and it starts earlier in the 40s and the 50s. And then they could need treatment all the way until they get older. So I would see it as a sequenced treatment during the time in their life when they need more support in order to keep their bones in a position that they reduce the fracture rate and degenerative pain and mobility issues. So -- but again, when you develop something, you need to do a study that you have an endpoint. And I think the development of anti-sclerostin, for example, and other treatments for osteogenesis imperfecta has really paved the way for what -- how we can look at this. And obviously, we want to learn from -- I'm not saying there are mistakes, but we are actually going to look into that very, very carefully before deciding exactly how we are going to move on with further development. Jens Lindberg: If -- I'll say the following as well, Klas, in order to -- if I were you and I would look at it from a modeling perspective, I would divide it into basically 3 on the back of what Pia said, pediatric setting, that would be a chronic treatment through as the children are growing, and I would look at the share of patients and how many will be treated in that setting. Then you have the period when they stop growing until age of 40, 50, where maybe the need will be somewhat lower, at least depending on subtypes. And then the need will increase again when you enter the later stage kind of osteoporosis stage of the patient's life. So I would arguably say the highest share of treatment among patient population in the pediatric setting and then the lower share in that middle section of life and then it increases again, maybe not to the pediatric setting share but to clearly a higher share of patients treated from that 45 to 50 and onwards. That's how I would look at it. Pia Baumann: You also need to add that some of the patients are not diagnosed until the enter osteoporosis age, right? So you might [indiscernible] think about that as well. Jens Lindberg: Does that help, Klas? Klas Palin: Yes, sure. Absolutely. And I just want to jump to VBX-1000 and just a clarification there. But I guess the deal with Vetbiolix, it spans over the patent life. And that's from -- how long is the patent life? Jens Lindberg: Yes, patent life and the patent life from an animal use perspective is long. That's a wobbly answer. And I'm saying that I know the number, and that's why I'm saying -- or the date, and that's why I'm saying long. I'm just a little bit unsure what Vetbiolix has communicated themselves externally because they've done additional patent application work on it. I'm looking at Fredrik now here to see whether he's guiding me towards, okay, well, this has been shared in terms of -- would you like to add anything, Fredrik? Fredrik Öberg: Yes, I'm not sure what they have communicated. So maybe we should be careful about that. But yes, the medical use in animals, that patent has a quite long future. Jens Lindberg: Yes. And it wasn't too long ago, it was initiated. We'll put it that way. So with regards to kind of modeling out in terms of a commercial opportunity, it does -- it's not tomorrow, there's a change, it is quite long. Klas Palin: Even though they have filed a patent, it's relevant for your deal? Jens Lindberg: Yes, yes. Yes. Short answer, yes. No hesitation on that. Klas Palin: Okay. Perfect. I have no further question, but just want to congratulate you on all the progress you have made recently. Jens Lindberg: Thank you, Klaus. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jens Lindberg: Thank you. And to pick up on Klas' note then, to summarize, we're quite happy where we are. We look back at the very eventful quarter and the progress made and the future outlook of the company. We are moving with speed to initiate the clinical development of MIV-711 in osteogenesis imperfecta, an opportunity comparable to the size of the fostrox opportunity and the potential to be the first approved treatment options in a significant unmet medical need disease. The collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well, and the hospitals are ready and eager to get going as we have -- when we get the final approval processes in place to start recruiting patients. And our partner, Vetbiolix has taken quite massive strides towards confirming 701 as a disease-modifying treatment for periodontal disease in dogs and then unlocking blockbuster potential for the drug and for us and clearly significant value upside potential. So with that, thank you, everyone, for calling in, and have a great rest of the day.
Kevin Gallagher: Good morning, and welcome to the presentation of Santos' 2025 full year results. I'm speaking today from the traditional lands of the Kaurna people of the Adelaide Plains and pay my respects to Elders past and present. I also acknowledge and recognize the support of traditional owners and indigenous people everywhere Santos operates around the world. Before we start, I draw your attention to the usual disclaimer on Slide 2. Santos delivered a strong result despite lower commodity prices with the base business continuing to demonstrate the resilience of our disciplined low-cost operating model. I'll begin with an overview of our results before handing over to our Chief Financial Officer, Lachie Harris, to present the financial details. Our Chief Operating Officer, Brett Darley, will then discuss the operational performance of our base business. Following Brett's presentation, I'll take you through our outlook and strategic priorities for 2026. Then we'll open the call up to questions. In 2025, personal and process safety performance were outstanding, with Santos ranking in the top quartile of our sector globally for personal safety and outperforming the global benchmark for process safety. Our lost time injury rate and total recordable injury rate were Santos' best on record. Process safety performance measured by the loss of containment incident rate was the best in more than a decade. While we are proud of these outcomes, we remain focused on continuous improvement, and I'd like to take this opportunity to thank all of our employees across our global operations for their hard work and commitment to continual improvement. Slide 5 summarizes our 2025 financial results. The business generated strong revenues and delivered free cash flow from operations of $1.8 billion, EBITDAX of $3.4 billion and underlying profit after tax of almost $900 million. Our gearing was 26.9% including leases and 21.5% excluding leases, notwithstanding a capital-intensive period. This performance demonstrates the value of our disciplined focus on costs, reliability and margin. Accordingly, the Board has resolved to pay a final dividend of $0.0103 per share, 48% of free cash flow from operations in the second half. Underpinned by our disciplined low-cost operating model, the base business continues to improve reliability and reduce costs. Total production for the year was 87.7 million barrels of oil equivalent, an increase on 2024, and unit production cost was the lowest in a decade at $6.78. Pleasingly, we received more than 900,000 ACCUs for Moomba CCS Phase 1. PNG LNG plant was at capacity throughout 2025. In GLNG, we saw plant reliability of more than 99.5%, and our marketing and trading team signed 3 new LNG sales and purchase agreements in the year. Compounding growth in shareholder returns is driven by consistent value extraction from the underlying portfolio and the disciplined application of our capital allocation framework. For 2025, the $0.0103 per share will be returned to shareholders in the final dividend, equivalent to 48% of free cash flow from operations in the second half, exceeding our commitment under the capital allocation framework. The total amount returned to shareholders for the year is $0.0237 per share, which is 43% of free cash flow from operations. The Board's decision to increase returns to shareholders reflects the fact that Barossa is now producing and gearing has passed its peak at a lower level than previously anticipated. Over the last 7 years, compound annual dividend growth of more than 13% has been achieved despite a period of major capital investment and significant global inflation. Santos delivered Barossa, a Tier 1 long-life asset, within around 6 months of the original planned start date and without drawing on additional budget contingency. On a project of this scale and complexity, that is a significant achievement. It demonstrates outstanding project self-execution and disciplined contractor management despite the challenges of COVID, global supply chain disruption, uncertain regulatory approvals and unprecedented litigation. Just as importantly, it demonstrates our capability to execute major development projects while continuing to run the base business efficiently, reliably and safely. We've taken a very considered approach to the final stages of commissioning to ensure offshore operations achieve a high level of reliability as quickly as possible once full production is achieved. The project has a high level of technical complexity with technology deployed to improve operational efficiency and emissions. And we're currently producing at just under half rates while we go through a sequence of compressor dry gas field change-outs, and we are targeting ramping up to full production rates in the next few weeks. Mechanical completion of Pikka Phase 1 was achieved in January, with ramp-up to plateau production rates expected around the middle of the year. Dynamic commissioning is underway at the seawater treatment plant, Nanushuk Drillsite B and the Nanushuk processing facility. The Nanushuk Drillsite B has been handed over to operations, another key milestone towards first oil. Drilling performance remains exceptional. We're now drilling the 26th well and continue to push technical limits. Two combination wells have been completed, including a record 10,000-foot horizontal section that delivers 2 bottom hole locations with a single well. Combination wells deliver savings on cost as well as rig time, accelerating the drilling schedule and getting more reservoir sections online earlier. 20 development wells have been flowed back, including 10 producers, with average expected start-up flow rates of approximately 7,000 barrels per day per well, in line with pre-drill expectations. The 23rd well delivered the highest productivity to date with expectations of flow rates of approximately 8,000 barrels per day. Once the flow rates, Barossa and Pikka Phase 1 together are expected to lift Santos' production by around 25% by 2027 compared to 2025 levels. In 2026, as these 2 major development projects are integrated into the base business and we rightsize the business, we expect a reduction in headcount of around 10% across the business from 2024 levels. Moving to Slide 10. Santos holds a unique and diversified resource base with a 17-year 2P reserves life and a 10-year 1P life, supported by almost 4.7 billion barrels of oil equivalent and reserves and contingent resources. The quality and depth of our inventory underpins our strategy to continue to backfill existing infrastructure and grow production. We are optimistic of making significant resource additions following the appraisal campaigns in the Beetaloo and Bedout Basins over the next 18 months or so. Across the portfolio, we have a deep inventory of opportunities embedded in the base business. These have the potential to leverage existing infrastructure to lift production and deliver strong returns, supporting our ambition to maintain production between 100 million and 120 million barrels of oil equivalent in the near term with clear pathways to sustain growth beyond that. Slide 11 demonstrates the disciplined low-cost operating model in action. With a relatively steady production over the last few years, we have still managed to reduce unit production costs during this period, generating strong cash flows despite falling commodity prices, resulting in our ability to increase shareholder returns over the same period. Additionally, we have delivered 2 major developments, Moomba CCS and Barossa and are closing in on the start-up of Pikka Phase 1. All of this has been achieved while maintaining balance sheet strength, improving our personal and process safety performance and lowering our emissions. Santos has already achieved its 2030 emissions target, supported by the world-class Moomba CCS project, reinforcing the role lower carbon gas can play in delivering energy security while reducing emissions. Our strategy remains clear: generate strong cash flow, reward shareholders, reinvest to backfill our infrastructure and to build new capacity and grow production and continue to operate safely and reliably. I'll now hand over to Lachie to provide an overview of our financial results. Lachlan Harris: Thanks, Kevin, and good morning, everyone. I'll step through the financial performance for 2025, which reflects a resilient base business and disciplined execution across the portfolio. In terms of our 2025 financial highlights, free cash flow breakeven from operations was $27.43 per barrel, demonstrating the ongoing cost discipline from our base business. All-in free cash flow breakeven was $58.90 per barrel. Going forward, we will target an all-in free cash flow breakeven of $45 to $50 per barrel. At this range, we will have capacity to invest in projects that add high-quality production volumes, reserves and resources and continue progressing our organic pre-FEED opportunities. Unit production costs was $6.78 per barrel, the best result in a decade, achieved with FX tailwinds and cost discipline. Total 2025 dividends of $770 million include the final dividend declared of $335 million. Slide 14 details our balance sheet strength. Pleasingly, gearing finished the year at 26.9% including leases, which is a real positive, noting we're at the conclusion of our peak capital investment phase, Barossa is in production and Pikka Phase 1 nearing production. We remain committed to a resilient balance sheet and maintaining an investment-grade credit rating as production and cash flow increase following the delivery of Barossa and Pikka Phase 1. This financial strength provides flexibility to fund growth, deliver shareholder returns and actively manage gearing. Our continued investment-grade credit ratings from Fitch, Moody's and S&P reflect Santos' disciplined capital management and low-cost operating model that has been in place since 2016. Our long-dated debt maturity profile supports financial stability with an average weighted term to maturity of 5 years. In 2025, we accelerated the final repayment of the PNG LNG project financing facility, fully repaying the debt. The early repayment reduces interest costs and removes restricted cash requirements, which helps strengthen our liquidity position. Santos now has approximately $4.3 billion of liquidity across cash and undrawn facilities. There are no scheduled debt maturities in 2026, with the next due in September 2027. During 2025, we also successfully completed a $1 billion senior unsecured 10-year bond offering in the U.S. 144A/RegS market. This attractively priced long-term capital further strengthens our funding base and supports disciplined growth from our high-quality diversified portfolio. Consistent with our capital management framework, we continue to protect and strengthen the balance sheet to safeguard our financial position through hedging strategies for both commodity and FX exposure. Hedging has been undertaken at rates well below the long-term Australian dollar FX average, providing strong protection for the balance sheet. The strength of this balance sheet is what has funded the development projects whilst provided strong returns to shareholders. Our underlying earnings show that product sales revenue remained strong at over $4.9 billion, generating EBITDAX of $3.4 billion and underlying profit of $898 million. Underlying profit is lower than the prior year, reflecting lower commodity prices and a higher effective income tax rate. Our 2025 free cash flow from operations highlights the strength of Santos' diversified portfolio, high-performing core assets, secure LNG contracts, inflation-linked domestic gas contracts and continued cost discipline. Pleasingly, we continue to maintain high gross profit margins across the portfolio, with a gross profit margin of 33.7% this year. We have delivered savings of around $50 million and continue to target an annual savings run rate of $150 million. As we have previously advised, once Barossa and Pikka Phase 1 are online, we expect our free cash flow sensitivity to increase from around $400 million for every $10 movement in Brent oil up to $550 million to $600 million for every $10 movement. As outlined earlier, we achieved record low unit production cost of $6.78 per barrel in 2025, supported by FX tailwinds and disciplined cost control. Our track record shows we continue to outperform our peers in this space with an unwavering commitment to cost discipline. In addition, we remain focused on our target of less than $7 per BOE unit production cost. Santos is Australia's low-cost operator, and that is not a slogan. It is a competitive advantage. With the production from Barossa and Pikka Phase 1 coming online, Santos is positioned to fully fund the base business and growth capital requirements. This includes exploration and appraisal, decommissioning, corporate and funding costs and investment in growth at an all-in free cash flow breakeven of $45 to $50 per barrel. Our portfolio will keep production between 100 million to 120 million barrels of oil equivalent over the next few years, but the $45 to $50 framework allows us to pre-invest in our next stage of growth, including exploration and appraisal projects such as Papua LNG, Beetaloo and the Bedout Basin. Cash flow in excess of our all-in free cash flow breakeven will be returned to shareholders at a minimum of 60%, with the remaining 40% available for degearing the balance sheet or increased shareholder returns. With a strong balance sheet, Santos has the ability to take advantages of opportunities for value-accretive growth. Thank you. And I'll now hand over to our Chief Operating Officer, Brett Darley. Brett Darley: Thanks, Lachie, and good morning, everyone. Let me turn now to the operational performance. Our base business has delivered another strong year. Safety remains a leading indicator of operating capability, and we achieved our lowest lost time injury rate on record. We are getting more from our infrastructure with reliability above 98% across PNG gas, PNG LNG plant and GLNG upstream facilities. The GLNG plant at Curtis Island achieved 99.5% reliability. A key competitive advantage for Santos is our ability to self-execute projects. In 2025, 296 wells were drilled globally. We reduced drill duration in the Cooper by 2.5 days per well, drilled a record 8,200-meter horizontal well in Alaska and completed the first triple lateral CSG well in Queensland. In 2025, PNG LNG sustained an annualized run rate of 8.6 million tonnes per annum, supported by plant reliability of more than 98% and the first full year production from Angore. PNG LNG effectively ran full for the year with upstream capacity exceeding planned capacity. We intentionally choke back some of our operated wells, a strong position that highlights the depth and flexibility of our resource base. Our Santos operated fields provided 17% of PNG LNG gas supply with upstream operated gas reliability of 98%. The Hides F2 well was completed with a safe and accelerated start-up in the first quarter -- in the fourth quarter. Initial production is averaging around 60 TJs a day, further adding volume and resilience to our supply base. Alongside strong operational delivery, we maintained our disciplined cost performance. Upstream PNG production costs decreased $0.34 per BOE compared to 2024. And overall, we delivered a 5% reduction in unit production costs. This improvement was driven by targeted initiatives, including the reorg of our supply chain and logistics services, delivering around $1.3 million in sustainable annual savings and optimization of maintenance programs, contributing more than $5 million in savings in 2025. Put simply, PNG LNG is performing. Costs are improving, and we've got a deep runway ahead of us. It's a high-quality, long-life asset in a very strong position. GLNG and our Queensland CSG operations delivered another year of strong performance. GLNG produced 6 million tonnes of LNG, shipping 101 cargoes, with more than 99.5% plant reliability. We also completed Train 2 shutdown safely and on schedule. GLNG continued to support the East Coast domestic gas market, supplying 11 petajoules through seasonal shaping and working with our joint venture partners to exercise contractual flexibility so we can continue supporting the domestic gas market in '26. Upstream supply remained stable with record production rates from Roma of 223 terajoules per day and record average production from Scotia of 105 terajoules per day, underpinned by high facility reliability. And we continue to focus on disciplined cost performance. In 2025, we completed several compressor facility upgrades, enabling the shutdown of a legacy facility. These initiatives delivered around AUD 5 million per annum in production cost savings and unlocked an additional 15 terajoules a day of incremental production. At the well level, we continue to push technical boundaries. Pump life has improved through solids handling initiatives and the rollout of our smart PCP digital program, which reduces failure rates and improves uptime. We also extended our well design capability drilling our first triple lateral CSG well and achieving our longest in-seam lateral length at 3.2 kilometers, increasing reservoir access and improving recovery. In Western Australia, our focus on reliability and disciplined execution and infrastructure-led value continues to deliver strong results. Varanus Island averaged 99% reliability in 2025. Production costs improved by around $66 million compared to '24, with unit production costs now approximately $6.15 per BOE, benefiting from strong contribution from the Halyard-2 well and FX tailwinds. The Halyard-2 infill wells is a strong example of our self-execute capability. It came online in the first quarter and has exceeded pre-drill deliverability expectations by 38%, reinforcing the value of developing reserves close to existing infrastructure. The same self-execute, low-cost tieback model underpins approval of the John Brookes 7 infill well as the next Varanus Island backfill opportunity, while the Varanus Island compression project Phase 2 has developed around 24 million barrels of oil equivalent of 2P reserves. The Cooper Basin was impacted by a record-breaking flood event on a scale not seen since 1974, affecting more than 200 wells and several upstream compressor facilities. Our focus throughout has been the safe recovery of these facilities, and I'm pleased to say production rates have now returned to pre-flood levels. We have safely reinstated about 70% of impacted wells and facilities and restored more than 2,500 kilometers of road access. Importantly, drilling activity continued uninterrupted, with 104 wells drilled and 80 wells connected during the year. As a result, 30 wells are now ready for connection in early '26 once residual flood water is received and full access to flowline routes is restored. Beyond recovery, we continue to advance the long-term potential of the Cooper Basin. Whilst the Cooper has its challenges, we've been progressing our resource opportunities, including the Granite Wash and the Pachawarra tight gas plays. Our future investments will focus on these areas that provide higher margins and contain the majority of our future resource base. We've also progressed in the planning of a new way of operating these areas with the development of the Moomba Central Optimization project. This project will transform the cost structure in the central area of the basin, and we have plans in place to change the way we are thinking about the Cooper Basin more broadly. In 2025, we also implemented our integrated remote drilling ops center, the IROC, which will improve safety and cost by taking people out of the field and reducing evaluation costs and is expected to deliver around $5.5 million in annual recurring savings. It will also improve our stimulation and completion activities, improving overall well productivity. I'll now hand back to Kevin. Kevin Gallagher: Thanks, Brett, and thanks, Lachie. If you step back and look at the global energy system, the starting point is simple, energy demand continues to rise. The transition isn't replacing one source with another. It's adding new supply to meet structural growth. Gas plays a unique role in that system. It is the only scalable, dispatchable fuel capable of supporting renewables while maintaining grid stability. That makes it a foundation fuel for economies that are growing. Asia remains at the center of LNG demand growth, with consumption forecast to expand strongly through to 2050. Santos is well positioned with advantaged supply into the region, Tier 1 customers and a track record of reliability. In a world of geopolitical uncertainty and shifting trade dynamics, that reliability carries a premium. Customers are prioritizing dependable partners. At the same time, oil demand remains resilient. Projects, such as Pikka, add competitive low breakeven supply that strengthens our portfolio and long-term cash generation. That structural demand growth is not theoretical for Santos. It's already embedded in the quality and performance of our LNG portfolio. Our LNG marketing business continues to capture value through disciplined end use customer-focused contracting. The LNG portfolio is 83% contracted over the next 5 years, with portfolio pricing realized at 14.6% slope to Brent in 2025. Our average contract price remains above peers and supports strong cash margins. Our proximity to Asian demand centers provides a structural advantage with lower shipping costs, lower emissions and faster responsiveness compared to more distant suppliers. That advantage is matched by portfolio flexibility. With multiple LNG sources, we can direct volumes into highest value markets and respond to seasonal and market disruptions. Our LNG portfolio is also weighted toward higher heating value gas, primarily from PNG LNG and Barossa, which together account for over 75% of our equity LNG volumes. Customers place a premium on richer LNG, and that is reflected directly in our realized prices relative to our peers. That demand and portfolio strength gives us a clear platform for execution, which brings me to our 2026 strategic priorities. There are 8 priorities that will guide our focus in 2026. Together, they form a single operating framework focused on safety, cost discipline and long-term value creation. I'll step through each of them. The first priority is delivering steady-state production for Barossa, establishing it as a reliable Tier 1 long-life cash engine for the portfolio. Barossa is expected to achieve full rates in just a few weeks' time. And throughout the next few months, we'll work to overcome the usual early issues on any new project to achieve the sort of reliability we see across the rest of our operating assets. The second priority is bringing Pikka Phase 1 to plateau production rate with a focus on a safe, controlled ramp-up, to steady performance. We expect to achieve this very important milestone in the second quarter, and then that focus will turn to achieving the expected levels of reliability of any other Santos asset. The third priority is delivering on PNG LNG backfill projects. PNG remains a core asset in our long-term portfolio, supported by a prolific resource base. Our focus is on sustaining plateau production through near-term backfill opportunities, including the APF pipeline tie-in and an oil infill drilling program. These are practical, very high-return projects designed to extend asset life and preserve cash generation. The fourth priority is progressing Papua LNG to final investment decision. Papua represents the next phase of development of our -- for our PNG platform and is underpinned by a net 2C resource of 1.6 Tcf. Just the other day, I was pleased to hear encouraging comments from the operator CEO clarifying the improved cost position that we are aiming to get an FID decision around the middle of the year. The fifth priority is commencing Beetaloo appraisal activities. Beetaloo is a transformational opportunity for Australia and Santos. The scale of the resource is globally significant and has the potential to reshape our long-term production profile. This is not a marginal resource addition. It is a new basin with the potential to supply both domestic and LNG markets, subject to successful appraisal. Our 2026 program is focused on proving commercial flow at scale and demonstrating the basin's development potential. Importantly, Beetaloo sits within a supportive jurisdiction that has established a clear pathway for responsible development. Alongside Beetaloo, the sixth priority is progressing the Bedout Basin appraisal program. This work expands future supply options. We've already discovered 5 fields in the basin supporting a net 2C contingent resource of 230 million barrels of oil equivalent. The integrated gas and liquids concept is about building scalable value from that emerging position. We're planning to drill up to 3 gas exploration wells in 2027 to further define that potential and optimize development concept. A future gas development could be brought back to Devil Creek gas plant to access the domestic gas market and/or toll through adjacent LNG processing infrastructure to provide access to the export markets. It's early stage, but the ingredients for a material high rate of return future production hub are there. And now that we are nearing the end of the current capital-intensive investment phase, we're keen to get back to focusing on moving this opportunity forward. Moomba CCS has established a proven operating model for large-scale carbon storage. The seventh priority is extending that capability through development of a Northern Australia CCS hub. Northern Australia is well positioned to become a CCS center, supported by significant geological storage capacity and proximity to regional emitters. We have completed critical technical work underpinning a development for Bayu-Undan, which has the potential to be one of the world's largest CCS projects. With existing wells and facilities already in place, Bayu-Undan could provide low-cost, large-scale commercial storage for regional CO2 volumes. In parallel, we are progressing feasibility work on additional storage options in the Bonaparte Basin, including G-11. That upcoming work program is focused on expanding Australian storage capacity and building a scalable hub framework. The eighth priority is to conduct a strategic review of our Australian integrated oil and gas portfolio, including the Cooper Basin, West Australia and Narrabri. This review is underway, and we will share further details at our Investor Day in May. In closing, the momentum we built in 2025, driven by strong base business performance and first production from Barossa, carries directly into 2026. With first LNG from Barossa and our execution agenda already underway, we are focused on disciplined delivery and continued value creation for shareholders. Thank you. It's now time for questions. Operator: [Operator Instructions] The first question today comes from Rob Koh from Morgan Stanley. Robert Koh: Congrats on the high quality of your results and Santos team. My first question just relates to Barossa. I wonder if you can give us any commentary on the CO2 that's coming out of the field in the early days. And then I guess related to that, looking at your climate strategy document, you're kind of looking like Bayu-Undan CCS FID readiness in about 2027. And just wondering if you could outline some of the critical path towards that, if that's correct. Kevin Gallagher: Yes. Thank you, Rob. I'm not quite sure about the first question. I'll try and answer that as I understand it. But I think you mean during the commissioning phase. So yes, there is always a little bit more CO2 emissions as you do some flaring as you're commissioning activities. But obviously, once we go into full production, it will be in line with our environmental plan commitments for the production phase. And as you probably are aware, under the safeguard mechanism rules, Barossa has to offset all of its reservoir emissions from day 1. And so that will be our plan until we are able to develop a CCS solution for that project. So we will be offsetting those emissions from day 1. In terms of the second part on Bayu-Undan, yes, we're FID-ready now. We've completed the FEED work, a little bit of work to do before we take FID. So I'd say we're FEED-complete, and there's a little pre-FID phase where we require to do basically the finalized costs and cost estimates from contractors. But the engineering design work is fundamentally done for that project. That would be an excellent project, and we're in discussions with the regulators about moving forward and trying to progress the approvals to support that project. And it's really those activities that are required before we can go to the next step and take FID. Our estimate of how long that would take. Yes, I think 2027 second half is probably realistic in terms of as quickly as we could get there. But really, it depends on how we get on with the 2 governments -- the 2 national governments in terms of getting the various approvals, cross-border approvals for the transport of CO2 and the development approvals in Timor-Leste. Robert Koh: Okay. Great. That's super helpful. My second question is on the topic of decommissioning. And just wondering -- you've given us guidance for this year. Just wondering if you can maybe give us a steer on the longer-term outlook. And then also, I guess, during 2025, I think you came in a little bit under budget at [ Newton near Exeter ], except for the cyclone impact. So I'm just wondering if you can share any kind of learnings for future efficiency of decommissioning. Kevin Gallagher: Look, first of all, I'd like to say the majority of our decommissioning activities are in Western Australia. And the team there under Jason Young have performed fantastically over the last 2 years. We've given them the challenge of expediting decommissioning in an extremely cost-efficient industry-leading way. And they've come through with lots of innovations in order to take cost out of that because as we all know, it's a cost -- every dollar you spend on decommissioning comes with no return on it, yes? So I can't think of it as investment spend. It's necessary spend, but it's not investment spend. And the guys have done a fantastic job. Over the last couple of years, I think we've liquidated something like USD 600 million to USD 700 million of liability off of the balance sheet. And as much as the liabilities have only come down a little bit in that time, that's because as we build new projects like Barossa and Pikka, they go back on to the decommissioning liabilities on our books. But of course, they're 20-plus years out. And so we're liquidating a lot of that near-term stuff. And we'll continue to do that for the next 2 or 3 years. I think anywhere from the sort of $200 million to $300 million per year is probably a good way to think about the level of activity over the next few years. You point to some of the cost underspend on some of these projects. There's been many scopes that the team have been able to deliver under budget. And I think the WA job you're referring to is about $22 million overall under budget for our scope of work last year. There are lots of learnings, and we're continually recycling some of that stuff back through the organization so that we can continue to drive the costs required to decommissioning our activities down. But the entire team -- and it's not only the operations team, it's the commercial teams looking at good commercial solutions. For example, we're able to sell a vessel rather than have to decommission it for someone else to use it last year, and that was a bit of a win for us. And you can see in the Van Gogh FPSO, the time it took from shutting the field down to that vessel exiting the country was a best-in-class. So the guys are pushing every boundary, and we're really proud of the effort of turning in there. But there's a lot of work to go over the next few years. We'll continue to drive those costs down, continue to learn. But as you know, in decommissioning, there's a lot can go wrong. So building that capability in-house is something we've put a lot of effort into the last few years to minimize that risk and minimize that cost exposure. Operator: The next question comes from Tom Allen from UBS. Tom Allen: On Santos' free cash flow sensitivity to changes in oil, when Barossa and Pikka Phase 1 are at full run rate, Santos is guiding 40% to 50% stronger free cash flow sensitivity per $10 barrel change in oil price. So the higher production volumes and lower headcount are clearly a key driver. But what else? The changes to baseline CapEx are implied there, too, or broader cost reduction initiatives? Kevin Gallagher: Yes, Tom, all of those things matter, right? And as does FX, there's a lot of variables go into that. But one of the biggest contributors is, of course, the fact that if you think from 2027 onwards, 60% of our production is LNG, 20% will be from Alaska and 20% from our Australian integrated oil and gas assets. Those higher margin barrels that are coming in from Barossa and coming in from Alaska are driving that free cash flow sensitivity in the right direction. And so from '27, I'd like to think Santos is now a company that if you go back a decade or so ago, we had a 13.5% investment in a Tier 1 asset. And at the time, we're running a sale process for that because we have balance sheet challenges at the time as an organization. If you look at us today or certainly from '27, we'll have 3 Tier 1 assets, we'll be 51% in Alaska equity, 50% equity in Barossa and we're 39.5% equity in PNG. That dominates our portfolio, and that is giving us a much higher percentage of higher-margin barrels, which is increasing that cash flow sensitivity. Tom Allen: Just on your broader options to accelerate deleveraging. So we've seen a couple of capital recycling initiatives last quarter. You sold the stakes in Mahalo and up in the Bonaparte Basin. Can you comment on broader initiatives that Santos has to accelerate deleveraging, perhaps tidy up the portfolio further? I think on the call just now, you've called out on your eighth strategic priority in regard to the strategic review, you made a mentioned at the Cooper Basin, Narrabri and WA. Anything you can share further? Kevin Gallagher: Tom, I admire your effort to get me to tell you what the answer is. I'll give you credit for that. But look, I mean, we've talked about the strategic review, but I go back to the fact that really what's driving that, and we've said all along, is once Barossa and Pikka come online, Santos' portfolio changes because as much as 60% of our production will be coming from our LNG assets and 20% from the oil project in Alaska, the other 20% is from our Australian integrated oil and gas assets. And those 3 Tier 1 assets all have high-value growth opportunities around those as well. And so what changes now is, of course, we've put in place the $45 to $50 all-in free cash flow target going forward for the organization. And within that, we still want to grow the business, right? So it's the best margin, and the highest value opportunities will win. That's where we will invest. And so it changes the way we think about what and where we invest -- what we invest in and where we invest. And so the review then is really looking at how those assets and the opportunities around those assets fit into our future growth ambitions as an organization. And I'm not going to comment on what will likely come out of that review, but we'll share that with you when we get to our Investor Day in a couple of months' time. And what I would say, of course, is we'll continue where it makes sense to clean up the portfolio to do that. We're not going to put targets out there for asset sell-downs or anything like that because we know how precarious that can be from past experience, right? But we'll continue if those opportunities come up to clean up the portfolio. We'll continue to look at that and execute it where it makes sense. Tom Allen: And maybe a follow-up. Your capital framework clearly calls out that you still need to support growth, and you've got quite a broad set of growth options. So can you clarify how you prioritize them? Will projects simply compete for capital based on their forecast returns? Or are there other drivers? Perhaps you've commented now on your future portfolio product mix, but there are other strategic drivers that will bring some projects ahead of others? Kevin Gallagher: We're going to run the business for value. I mean it's really as simple as that. And so we'll be looking at those rate of returns, the best returns projects will win every time. And obviously, we've got a very strong LNG production position. Our high heating value LNG has a very high priority and high value for us because not only does that allow us to get better prices for LNG, allow a lot of portfolio optimization opportunities that are quite seasonal to create more value. We've done a bit of that over the last year or so, and there'll be a bit of that in 2026 as well. So really, I think the best way to kind of describe what our priority, our focus is there, Tom, is that we'll be running it for value. And so it's really the best value outcomes and the best value projects that we're going to win. Operator: The next question comes from Adam Martin from E&P. Adam Martin: I suppose first question, Kevin, just on the gas market review, just any sort of thoughts, any implications for the business going forward, just on the federal gas market review there, please? Kevin Gallagher: Look, thanks, Mark -- Adam, sorry. That's a very good question and good opportunity to communicate a few things we've done. Look, I think the main thing to understand with this is that we see no material value impact to reducing third-party gas intake into GLNG. There's a couple of fields we'll continue to take gas from that were developed specifically for GLNG. But from 2027, GLNG feed gas will come predominantly from equity gas plus those strategic partner fields that we developed for GLNG. And we're working with our partners, and we've already made agreements with partners for certain mitigations in terms of contract reshaping or whatever to limit any liability type impact. But the bottom line is that it doesn't make sense to buy third-party gas off the domestic market to sell into the LNG markets. The free market is working, and those barrels would be zero value barrels. GLNG is actually a better asset without doing that. And so as I say, we see no material impact to Santos. We're going to continue drilling and developing our indigenous resource over the next few years. So you'll see that grow that -- we should expect that to grow between now and sort of 2029, 2030. And we will not be renewing the third-party contracts that still exist as they come up for renewal in a couple of years. And what does that mean now? That mean that the LNG sales will drop back a bit. The production will not be impacted at all. In fact, our production will increase over the next few years. LNG sales will come back. But in terms of margin or our earnings from that project, we don't see them materially impacted at all because, as I say, the third-party gas really is zero margin barrels or very low-margin barrels. What does that mean for the domestic market? Well, that means that some of that gas we won't be contracting can be turned back into the domestic market, and that will relieve pressure on the domestic market and in my view, should alleviate any shortfall concerns for 2027. Adam Martin: And second question, just on the Beetaloo. We've obviously seen some encouraging well performance, well cost data come out from other operators in the basin. What are you looking to do differently this time around? I think your well costs are pretty high. It was a few years ago. And obviously, flow rates are pretty low. But any changes around well design that you need to do differently just for these upcoming wells, I think it's the second half of the year, please? Kevin Gallagher: Yes. Look, I mean, I think when we drilled it, I mean, it was early days of drilling in the basin. And I have to say, it looked like a well that I drilled. It wasn't particularly impressive. But we've got better drillers there now. We've got a very experienced team, a lot of shale experience in the team. We've also seen, of course, the drilling performance of other people as that experience has been built over the last 5 years or so in the basin. So we've got -- we're in the process of contracting rigs and get everything set up for that operation. But Brett, why don't you just give an indication of how you see the drilling plans for 2026, '27 and what the plant's appraisal plan is? Brett Darley: Yes. Thanks, Kevin. So yes, there's been a lot of drilling up there. So there's been 12 wells drilled since we've drilled there last time. And ultimately, we want to make sure we learn from that. Tamboran is a partner in that block with us, and they have obviously been getting some good performance, and we'll be definitely leveraging everything we can from the other operators, including Tamboran. And we are making sure we're learning from what's happening in the U.S. as well. So we're going to embed all the learnings we can, and we've got a team focused on delivering this. It's a very focused plan. Our plan is to drill these 3 wells, fracture stimulate them as if they were production wells and produce them for 12 months plus to get appraisal results that ultimately will allow us to make an FID decision out of this program. So a very, very targeted, and we've got the best people on the job. We will have people from the U.S. involved, whether they work directly for us or through our contractors, to make sure that not only have we learned from what's happened in the Beetaloo Basin over the last couple of years, but the latest technologies from the U.S. And based on the work that we've done, we're actually very optimistic in terms of the cost of supply target that we need to achieve here for the future development opportunity. And we're targeting a total booking from the wells we drilled previously and this appraisal campaign of just under 5 Tcf of 2C resource. So it's a very significant and important appraisal program, which hopefully will result in a significant booking of 2C resource. Operator: The next question comes from Dale Koenders from Barrenjoey. Dale Koenders: Just firstly, on the cost out, the 10% reduction in headcount. Is this in the $150 million savings targeted? Is it net of inflation and other increases? Can you provide a bit more color around those numbers? Kevin Gallagher: Yes. Look, I mean, we see that as quite a natural -- well, a big part of it anyway is a natural transition, Dale, as you transition from the projects' phase, if you like, the 2 big projects we've had ongoing, it's pretty natural that your headcount goes up as you build these projects. And as they come off, a lot of those people roll off the organization, you move more into the operations phase. And some of it's more from efficiencies and technology improvements allowing us to see some headcount or FTE reductions as a consequence of that. I'd see most of that occurring over this year as these projects come online. And so yes, it's pretty short to medium term. It is included in the $150 million number. It's not in addition to. I mean that's important to clarify. But yes, we see it this year, and it's mainly a combination of rolling off from projects and some efficiency gains and improvements just through technology and different ways of working. Dale Koenders: So does that mean it's part of the $45 to $50 per barrel breakeven number and the $7 per BOE OpEx guidance? It's already included in those numbers? Or is it incremental to them? Kevin Gallagher: No, no, it's already included in those numbers. Dale Koenders: Okay. Second question, just on the strategic review. The concept of, I guess, exiting the mature high-cost assets with higher sustaining CapEx requirements to leave a higher-quality LNG core, the idea has been around for a while. Are there any other questions or outcomes or considerations you're thinking of that you can provide a bit more color and a bit more meat around the volumes of the strategic review? Kevin Gallagher: Yes. Look, I mean, what we're not saying is that we're selling anything or buying anything. I think that's very important to clarify upfront. Those may end up being outcomes that come from the strategic review. But we're looking differently at the way we think about those assets, how they compete in the portfolio going forward. If they're not going to get capital, what does that mean? If they're not going to compete against Alaska expansion and growth opportunities or they're not going to compete in near-field opportunities, including oil field drilling and PNG, how are they going to -- what are we going to do with them? What is the plan for those assets? And so everything is on the table in that review, and I look forward to sharing the detail of that at our Investor Day in May, and that our target is to complete the work. We're well advanced in that work. We've been doing it for a little while. We'll complete that work, and then we'll share it with our investors as I say, at the Investor Day in May. Operator: The next question comes from Tom Wallington from Citi. Tom Wallington: Just on Pikka, with development now largely derisked and now having line of sight to first oil and also noting that execution to date has been a standout, could you please refresh us specifically on what milestones or operating performances you might look to be seeing in terms of progressing a brownfield expansion? And just how we should think about the potential timing, noting that you talk about running the business for value and the other growth opportunities that are also competing with this particular opportunity? Kevin Gallagher: Yes. Look, thank you, Tom. Look, I mean, it's not been without our challenges, right? I mean on the execution front, it's been excellent. The drilling has been superb. Costs could have been better, right? We've got to be frank about that. I mean we're not pleased. The team are not pleased themselves that we've spent more than we intended to spend along the way in inflation in the region, the high activity levels in the region have driven inflation there above what we were expecting. So that's not been a great outcome on the cost side. But I have to say the execution of the projects, they're very high quality. I always get nervous talking about like the -- taking the victory lap before you've actually won the game. And so I'm not going to get carried away. We've got that last 5% or so or last few percent of the project to close out, and we're commissioning, and we're getting close to that. We all know that with projects, we've had a few bumps after we started up in Barossa, which is not unusual. I think something like 20% of FPSOs that have come to Australia have departed pretty soon afterwards to go back to the shipyards for one reason or another. And fortunately, touchwood, I've not seen anything like that through the hookup, and commissioning at Barossa has been pretty good, but we've had a few bumps. And no doubt, there'll be a few little things, and we've got the iron out with Alaska as well. But the team is very focused. We're running a very strong commissioning quality assurance process through this process because we want a strong ramp-up. And the key to this project is really starting up and getting the water injection plant up and running so that we have a pressure support for the reservoir because if we can start up early, that's easy. But if we can't go to full rates, if we start producing too fast. Without the water injection support, we'll end up leaving barrels behind. So it's really getting the water injection plant up and running, get the pressure support in place. And then it's all about how quickly we can ramp up to full production to plateau rates. But what I'm very pleased about is the subsurface indications are in line with all the pre-drill expectations. And of course, when you're developing anything in a new basin for the first time, that's one of the key deliverables. You can fix little things on the plant. What you can't fix is you get a bad reservoir outcome. So, so far, that's looking very, very promising. And as I said in my notes earlier on, the last well that we just tested was significantly higher in terms of its productivity or deliverability than the previous -- or the average for the wells to date. So that's very encouraging. In terms of timing, we're still on track for first oil late Q1. But really, it's not about the first oil date. It's really about the ramp-up from that because that ramp-up is determined by how quickly we get the injection system up and running and the pressure support for the reservoir. And so the plan is to ramp up across Q2, reaching plateau at the end of Q2. But of course, if we get the injection up and running and we get a few more wells drilled in that time frame, there's the opportunity that, that could be quicker, yes. Operator: The next question comes from Nik Burns from Jarden Australia. Nik Burns: First one, just a clarification on your $45 to $50 all-in free cash flow breakeven target. Just wondering how prescriptive that number is? Like does that set a hard upper limit on investment every year? Or is it an average over, say, 3 years? Just noting the fact that in 2026, it looks like you're going to come in below that number. So whether that provides some flexibility over the next couple of years to maybe lift it above that range? Kevin Gallagher: I'm going to throw that one to Lachie. That's a good one for Lachie to handle. Lachlan Harris: Thanks, Kevin. Thanks, Nik. Yes, look, we'll guide each year to the -- where we think that, that will range -- will hit on an annual basis. We're going to take a conservative approach within our well-defined parameters, but we'll guide each year to the $45 to $50. Obviously, it aligns with our gearing target of 15% to 25%. And as we said, we do have a lot of investments that we can look to optimize. So we'll give guidance every year, $45 to $50, I think, will be where we'll be targeting across the range. Kevin Gallagher: Yes. And I think we've set out to 2030, that's what our sort of forecast at this point in time would be. And I think what I would add to that is Lachie made a very good point there. 15% to 25% is our target gearing range. At the lower end of that, our interest payments are significantly lower, and that frees up more capital to reinvest in the business within that framework as well. So degearing is actually an important part of the strategy. Nik Burns: So that should mean we should be thinking that over the next 2 or 3 years, you could be well below that number as you look to target lower gearing ahead of a pickup in investment towards the end of this decade? Kevin Gallagher: Well, it could be either/or, right? I mean, it depends. I mean, we're looking -- we talked about some of the development opportunities that we're progressing through appraisal over the next couple of years. So there's no major development spend on the balance sheet in the next couple of years. But depending on the results of those, we might have one in, say, '28, for example, right? And there's nothing scheduled there right now, but whether that was something in the Beetaloo or the Bedout, who knows? We'll wait and see what the results of those programs are, and we'll make those decisions as we go. But it could be either/or, quite frankly. Nik Burns: Got it. My second question is just on Papua LNG. You talked, Kevin, about the improved cost estimates coming through from the operator. There's been some speculation. I think the JV was targeting a reduction in costs from around USD 18 billion to around USD 14 billion. Are you able to sort of quantify whether those costs are coming at around that level? Kevin Gallagher: Well, I saw a transcript the other day from Patrick, it's Tal, and he was talking in the $14 billion to $15 billion range. I think that was public. And well, it's probably now, I guess. But he did actually say that. And the financing progressing, the project financing progressing. Everything is heading in the right direction. There's a few things we still have to get ironed out. But ultimately, ourselves Exxon, Total are working towards a 2026 fit, and we'd like that to be around the middle of the year. So we're hoping that's around the middle of the year. And in that $45 to $50 guidance we've given you, we have assumed Papua is in that. We have assumed that Papua is in. That's very important. Operator: The next question comes from Gordon Ramsay from RBC Capital Markets. Gordon Ramsay: Kevin, I just picked up on this and maybe it's nothing. You previously have stated that the combined production increase from Barossa and Pikka is going to be 25% to 30% by 2027. You're now saying 25%. Is that just being conservative? There's no change there. Is there any kind of risk that you're taking into account that you might not have seen before? Kevin Gallagher: No. Look, I mean, I'd still say it's in that range, Gordon. I've been a bit conservative with the number because you guys always pick me up in that stuff, right? So as you just have done. But look, I'd say we've been a bit conservative there. But it's in that range, right? 25% to 30%. But it kind of -- am I being conservative? Yes, a little. But it's also about phasing and timing and when things come on. And we don't know. I still -- I'll always say we still don't know how Alaska will perform until it comes on. We were assuming 80,000 barrels a day. That's what we're aiming for as a plateau rate. I'm sure we'll get there. The team are confident we'll get there based on the well test. But until it's flowing, I don't want to bank it, yes. Gordon Ramsay: Okay. And just second question, I'll just follow up on Alaska. I mean, congratulations on good IPs and the dual completions that you delivering on these new wells. Can you comment on what annual decline curve you might be expecting from the Pikka wells? I know they're starting up really well, but do you have a feel for what Santos' target would be, let's say, 12 months out or 2 years out on some of these wells? Kevin Gallagher: Look, I actually can't give you that number off top of my head, Gordon. What I can tell you is that we're looking at a 5- to 6-year plateau with about -- I think it's about 2.5 -- let's say, 2 to 3 years of sustaining drilling going forward, just keeping that performing at those levels before it starts to come off plateau. So 5 to 6 years on plateau, and you're probably looking at 8 wells, 9 wells a year or whatever during that period. Operator: The next question comes from Henry Meyer from Goldman Sachs. Henry Meyer: Jumping back to Barossa. Could you share any detail on the challenges that were observed during that early commissioning and what the current state of the FPSO performance is as you ramp over the next few weeks, Kevin, you mentioned? Kevin Gallagher: Yes. Look, I mean, I think the very first thing I would say is that the processing kit is performing really well. So from a process-integrity point of view, which is often one of the biggest issues you have with a new gas plant or oil facility, we've not had leaks and things like that, which has been very, very encouraging. And so my hat goes -- I take my hat off to BWO for the quality of the process that have installed. In terms of the issues we've had, a couple of unusual ones. I think I communicated last year that we had a heat sensor software issue that caused us 2 or 3 weeks to reset the settings on each one of those, 356 of them, I think, across our facilities. And that was more of a software issue. And it's, I guess, part and parcel with the risks you take with all the high-tech stuff we have in our facilities these days. And then following that, our GRE fire water and safety -- or utility water systems, I should say, had some connection failures. That we looked at systemically, and we had to go through a program of strengthening all of those connections across the facility because we figured -- I'm not sure if that was a design error or not, but we figured it's a systemic issue that we want to address for the longer term and not take any risks on that. And that cost us 2 or 3 weeks around Christmas time. Following that, everything has been working well. I mean we've had the usual little kind of tuning type issues you get in any new facility. But there was a product issue with seals on compressors that our main equipment manufacturer issued to BWO. And we've taken the decision to run through -- to run it at half rates just now while we take compressors offline and change those seals now rather than take the risk of any failures occurring further down the line. So it's a bit like when the airlines give you a product-upgrade type alert that you ground the planes and fix them, right? So what we're kind of doing is we're taking some of the compressors offline right now, so running at half rates while we replace them, and we've got them coming on over the next 2 weeks. And then as I say, 2 or 3 weeks from now, I fully expect we'll have the potential to be pretty close to, if not at full rates, yes. Henry Meyer: Excellent. And covering a lot of ground with all the assets, maybe jumping into Cooper Basin. Kevin Gallagher: And what I should have said, Henry, just to close on that. Obviously, we've had a couple of cargoes already shipped and another one in the next few days. So we're still producing and still getting cargoes out just at a slower rate until we get the full rates in a few weeks' time. Henry Meyer: Sounds good. Cooper Basin, just any details on the Moomba Central Optimization program, the CapEx you're expecting there and improvements to cost and production going forward? Kevin Gallagher: Look, that's a really exciting project for the Cooper Basin because that is a project that certainly makes one part of the Cooper Basin become very competitive in our portfolio. And without going into great details about it, Brett, maybe you just want to give a sort of 1-minute summary of the scope and why the cost will be coming down so much with that investment. Brett Darley: Yes, thanks, Kevin. Yes. Look, we've been working on a couple of things over the last couple of years, along with our joint venture Beach, and it's really about trying to maximize the value of the Cooper Basin. Part of that is getting a resource and proving up that we can develop our -- the resources in the future, and we've made some great progress with Granite Wash and our tight Patchawarra formations around -- pretty much around our central facilities. So we've got a basin that's got hundreds and hundreds of oil and gas fields in an area the size of Wales. And what we've been trying to do is get focus on the areas that are going to provide our resources into the future and actually do it at a lower cost. So targeting starts with the rocks, and we've been spending a lot of time there, and we've been proving up the economics of those rocks. And then ultimately, that area, which is closer to Moomba around our central and northern fields, that area holds the most of our future production. But it is also our oldest facilities are least reliable, the ones that require the most manning. So that step with Moomba Central Optimization will be completely modernize the Cooper in that area -- in a very targeted area, increasing reliability, reducing costs incredibly significantly and also allowing greater flow from those areas, which we're currently constrained on producing, so debottlenecking and producing further capacity to bring that gas back to Moomba, and it will completely transform the cost base in the Cooper Basin. Kevin Gallagher: Thanks, Brett. Operator: The next question comes from Mark Wiseman from Macquarie Group. Mark Wiseman: I've just got 2 questions, one on the Beetaloo and one on the LNG marketing book. Firstly, on the Beetaloo, with an improved well design and lower well costs over time, we feel pretty optimistic that you should be able to achieve an economic outcome there. But could you provide some perspective just on pipeline and the GLNG joint venture and the willingness of that JV to process Beetaloo gas through Train 2. It has been one of the more challenging JVs in your portfolio. Is there a risk that you appraise the Beetaloo but face delays on the commercial structuring? Any insight on that would be great. Kevin Gallagher: Well, look, I mean, that's a great question, Mark. There's a lot of parts to it. In terms of timing, as Brett said, we're looking to drill the 2 to 3 appraisal wells starting second half this year through first half of next year and then put them on production for 9 to 12 months, producing them to get the information we need to fully appraise to take us to the point where we would be confident to go forward and develop. That's -- hopefully, that will get us pretty close to 5 Tcf of resource booked that we then get confident about going and developing. We've already done a lot of work in what that sort of development would look like. We've had teams going over looking at Permian developments and stuff like that to identify how to do this very efficiently in the Northern Territory and what the cost of supply would be. We've looked at that cost of supply both to GLNG and also to Darwin. We've started to work with both governments on pipeline approval processes to get the various licenses. And so we're not in that sort of loop that we have been in for a long time, say, with Narrabri, for example. Different regimes and different processes. But making sure we're not going to be held up doing those approvals over the longer term. So we're very confident in the time line. In terms of when would you be ready to take an FID, you're probably looking at earliest, sometime late '28 or something like that, probably earliest based on the time you'd be producing the wells, more like probably early '29. And if you just think of that as being a 3- to 5-year development -- probably 3, 4 years because pipeline is probably the critical path there because the rest of it is just an upstream drilling project. That's the earliest you're looking then at any sort of backfill or feedstock opportunities for, say, GLNG. Look, I'm pretty confident when it comes to GLNG that when that becomes available, the partners would obviously be very keen for any material resource to come through. It's a value -- a value-based decision-making process, I would expect. But if you start to look at GLNG's production profile through GLNG, it's still pretty strong in the early 2030s, still over 5 million tonnes per annum in the 2030s. I think it's still around about a full train in 2040s, 2045, just based on a natural decline curve for the CSG field. So it's a very strong production profile. But there is one train that starts to open up, I'd say, mid 2030s. And that would be a good opportunity for it. But you shouldn't discount the opportunity to go North, to Darwin as well because that's probably a more economic and lower cost of supply option. And of course, Santos does have EIS approval for a second train at Darwin. We're the only project that has an approval for its second train already. We have that. And so with the right partners, the right opportunities, there's also the opportunity to expand Darwin. GLNG would be a more expensive pipeline operation. But of course, you already have a train in place. So that's an advantage for GLNG. But Darwin has the opportunity to expand. And of course, if you start thinking further out to Barossa backfill, a successful Beetaloo development offers backfill opportunities, relatively low-cost backfill opportunities for Barossa in the future as well. So what excites us about the Beetaloo Basin is that it's got the potential to fill all of our LNG operations or assets in Australia for decades to come if, it's a big if at this stage, the appraisal program goes well, and we're able to develop that basin economically. Mark Wiseman: That's fantastic, Kevin. And perhaps my second question on the marketing book. You mentioned 83% contracted over the next 4 or 5 years. Is there more work to do on the LNG book? Are you -- as you gain confidence in Barossa and you start to hit nameplate there, do you layer in more contracts and reduce your spot exposure even further? Kevin Gallagher: Well, look, Mark, I mean, our plan is to try and maintain the portfolio around about the 80% to 85% contracted, leaving a bit of spot exposure in there as well. And that also allows us to do some of that portfolio optimization if we don't have it all contracted as well. So our guys have done a great job. If you look at that chart, I think, on Slide 26, you can see the actual realized prices in terms of slope to Brent, well above benchmark. And you can see on the WoodMac chart that our relative prices to our competition are significantly higher. And the guys, look, we've got a great M&T team led by Sean Pitt, a fantastic team, doing a great job, delivering a lot of value. And you can see the results in that chart. And that's a chart that's done independently of us. But we'll continue to -- I mean, I guess what Sean and the team are doing, we've got some of our portfolio contracted much longer than that, 10 years plus into the future. What we're saying is it's about 83% over a 5-year horizon. And as we keep rolling 1 year to the next, we'll continue to do short and midterm contracting opportunistically that makes sense for us. We'll continue to try and form more new partnerships with end users in our key markets, and we're building very strong relationships, long-term relationships with great partners, great customers in Japan and Korea, and we'll continue to do that going forward. Now I'm getting the hook. I believe I'm 50 minutes -- 60 minutes over to you. So I think there's 2 or 3 people left in the line that I'm not going to be able to go to. So I apologize for that, and I look forward to catching up with some of you on a road show over the next week or so. So thank you very much.
Operator: Ladies and gentlemen, thank you for standing by. I'm Polina, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. Please note Eregli Demir ve Celik Fabrikalari T.A.S, may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through the disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board through regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into the account effect they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are not longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at this particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Mr. Idil Onay Ergin, Investor Relations Director. Mr. Ergin, you may now proceed. Idil Onay: Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the last quarter of 2025. First, I will go through our Investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. Our presentation consist of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap and HRC prices. In the fourth quarter of 2025, the coking coal markets experienced buyers strongest price period of the year despite weak steel demand and low profitability. During this period, coking coal prices averaged around $200 per quarter, while closing the year $218 per tonne above the annual average. Iron ore prices showed more resilience in the fourth quarter compared to the previous quarter, fluctuating between $102 and $109 per tonne and stabilizing at an average of $106 per tonne. Despite uncertainty regarding demand from China and strengthening global supply, the ability of Chinese producers to maintain production at a certain level, along with the speculative pricing kept prices mostly above $105 per tonne. It is expected that iron ore prices will remain sensitive to stimulus expectations and policy news from China in the short term. Despite buyers cautious spends, seasonal supply constraints enable suppliers to maintain a firm position resulting in Turkish imported scrap prices closing Q4 at an average of $359 per tonne above the annual average while there was no sharp decline in square prices throughout the quarter, a clear wait-and-see sentiment prevailed in the market. On the bottom right, we show HRC prices in Black Sea, China and South Europe. The global HRC market has left behind a period in which protectionist measures and trade policies became more decisive. The European Union steps to reduce import quotas and uncertainties surrounding sea import appetite while gradually increasing the bargaining power of European producers. In Asia, HRC prices remain fragile due to low demand from China and policy uncertainties, while a flat positive but cautious outlook prevails in the global HRC market. Q4 market expectations converged that as we enter 2026, the impact of protective measures will be felt more clearly and prices will be shaped by a cost-based search for equilibrium. On Page 4, you will see the production consumption, exports and import figures of Turkish steel market. In December, Turkish crude steel production rose to 3.5 million tonnes, representing a 7% increase compared to the previous month and 19% rise year-on-year, reaching the highest monthly output of the past 15 years according to the official data from the Turkish Steel Producers Association. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while production and consumption rose by 3%, exports of steel products grew by 13% in volume during the year and reached 15 million tonnes. In the January, December 2025 period, the European Union continues to be the leading export destination with a 37% annual growth, while the MENA region ranked as the second largest market. Imports also increased by 9% to 19 million tonnes over the same period. As a result, the export import coverage ratio, which was 74% in 2024 increased to 78% in 2025. It was observed that the total imports were largely realized under the inward processing regime. As we shared in the last quarter's call, with the circular published by the Trade Ministry on September 16, 2025, it was made mandatory for 25% of the input of products processed to export to be supplied domestically. This change was welcomed in terms of domestic steel production. As a result, total flat product imports in December decreased to 653,000 tonnes down 23% compared to the previous month and 12% compared to the December 2024, marking the lowest monthly level recorded in the past 9 months. In the context of global steel trade policy, the European Union and other major markets have implemented or proposed enhanced safeguard measures to counteract increasing import pressures. The European Commission has moved forward towards tightening steel import quotas and increasing out-of-quota duties, including potential reductions in tariff-free quota levels and higher tariffs for excess shipments, steps aimed at protecting domestic industries and reducing reliance on imports. Asian countries, which have been the most negatively affected by this policy increased their exports to unprotected markets. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 12 months results. We achieved USD 5.3 billion revenue. Also, we generated $501 million EBITDA and $13 million net profit. On Page 7, you will see the operational indicators of our company. Following the commissioning of the last 2 investments in our current investment package in the second quarter of 2025, our crude steel capacity utilization ratio, which was 75% in the second quarter and 90% in the third quarter increased to 95% in the fourth quarter. Accordingly, sales and production levels returned to their normal levels. Strong demand, we achieved sales of 2.2 million tonnes in the last quarter, sales volumes of over 8.2 million tonnes in 2026. So let's take a look at segmental breakdown of domestic sales and export volumes on Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from general manufacturing and auto to pipeline profile and distribution chains on a percentage basis. We see similar changes between sectors in the long products, although its share in total sales is relatively small. We achieved an export volume of 1.5 million tonnes in 2025, representing 20% export share in total sales. Although our main focus is the domestic market, we also consider export as an alternative market. On Page 9, you can find a breakdown of revenue for domestic and export sales. 79% of the revenue comes from domestic sales in line with the domestic volume. Despite import pressure in the domestic market, we achieved to generate $501 million EBITDA. We generated $64 EBITDA per tonne in 12 months. Our EBITDA per tonne guidance for 2026 stands in the range of $75 to $85 per tonne. In 2026, we expect EBITDA per tonne to increase through cost reductions and increased efficiency resulting from newly commissioned facilities, increasing HRC prices and our company's increasing sales volumes. We generated $13 million net profit in 2025 as a result of legislative amendments stating that statutory financial statements will not be subject to inflation accounting. The deferred tax income recorded in March, June and September financial statements was reversed. Despite the increase in EBITDA, this noncash item had a negative impact on net profit in Q4. On Page 10, you can see how we reached a net profit from EBITDA. One of the largest items was depreciation, which was $278 million in 12 months. The other major item in this chart was financial expenses of $206 million due to the increase in deferred tax expense following the cancellation of inflation accounting, the tax expense amounted to $706 million -- excuse me, $76 million. And other expenses, net profit was -- after the other expenses, net profit was $13 million. The inventory provision release of $26 million is not included in the EBITDA calculation since it is a one-off adjustment. While calculating the net profit, $26 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the third quarter due to the extension of the trade payables maturity, as we shared in our previous quarter calls. Additionally, a dividend payment of $43 million was distributed in the third quarter. Also, we spent around $483 million to investment activities in 12 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 25% in Q4 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. We succeeded in keeping net debt EBITDA below 2 multipliers at the end of the year as a result of increased capacity and efficiency following the commissioning of our investments. EBITDA has increased. Therefore, CapEx decreased and the multiplier remains below 2. We expect to keep the net debt-EBITDA ratio around 2 multipliers in 2026. Slide 12 represents our cost of sales breakdown. In 2025 compared to 2024 due to the decrease in coal prices, the percentage of coking coal costs decreased in the raw material basket, which is in line with the trends in raw material markets. Since we can see the costs in first quarter, costs will increase in the first quarter of 2026 due to the rising coal prices. This cost increase will be offset by an increase in sales prices. Page 13 represents the historical capital expenditures. Total CapEx was $1.1 billion in 2024 and $775 million in 2025. As a reminder, the new first blast furnace in [Technical Difficulty] gold mine, as you already know, we announced the inferred resource in November '25. We expect that reserve announcement for the gold mine to be made at the beginning of the second quarter. Investment decisions will be made after this announcement is shared. We expect that CapEx will be approximately $800 million in 2026 with maintenance and other ongoing investments. Maintenance will be around $58 million per year as usual. Investments such as solar power plants, port and crane investments and energy efficiency investments are included in the CapEx figure of 2026. As you already know, this figure is accrual based and the cash outflow will be lower due to the advanced payments. On Page 14, just as a reminder, we announced our net zero road map in 2024. There are no changes to this road map, the details of which we previously shared. The first investment in this package solar power plants are planned to be partially commissioned by the end of 2026. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening. Operator: [Operator Instructions] The first question is from the line of Fairclough Jason with Bank of America. Jason Fairclough: It is always very comprehensive. Look, a couple of related questions here about the balance sheet. So on the one hand, you've got quite a lot of cash sitting there. I mean I see $2.7 billion of cash, which feels like a very large cash balance. But on the other hand, if we look at the free cash flow over the past year, most of it's been driven by working capital and particularly the payables balance. So I guess my question is, how are you thinking about working capital from here? Do we actually need to normalize that payables balance? Or is this the new normal? Idil Onay: Jason, thanks for the question. So this is our normal level after this quarter because actually, it all depends on the raw material prices and steel prices from now on. Considering that Q1 comes clearer in terms of both price and cost, increasing figures in Q1 compared to Q4 in net working capital. So there won't be any one-offs in net working capital. So we can say that it's all depends on the raw material prices and steel prices from now on. Jason Fairclough: Okay. The other thing and a super simple one. Could you just repeat the EBITDA per tonne guidance? I heard it, but I didn't quite hear it. I think the phone cut out when you said it. Idil Onay: Guidance for -- sorry, I just missed it, guidance for. Jason Fairclough: For EBITDA per tonne for '26? Idil Onay: Yes, sure. So we expect to have EBITDA per tonne between $75 to $85 per tonne for 2026. Operator: The next question is from the line of Gabriel Alain with Morgan Stanley. Alain Gabriel: I have a couple. Following up on Jason's question on the guidance for 2026 deal, the $75 to $85, how much of that is driven by self-help, i.e., the cost savings you will be or the efficiency gains from your new investments in your production footprint? And how much of that is your underlying assumption of a margin recovery in the market? That's my first question. Idil Onay: So as you remember, by the way, I'm sure you remember that we said we are expecting full impact from our newly commissioned investments in Q1. So we will reach to the full positive impact of $40 per tonne from our NIM investments, and it will stay at that level. So almost $40 plus from investments but we're also expecting higher sales amount, tonnage, higher tonnage, higher volumes in 2026. I said above 8.2 million tonnes, but most probably it's going to be between 8.2 million tonnes to 8.4 million tonnes. So when you compare with the 2025 level of 7.8 million tonnes, it is higher. And we will also gain some EBITDA. We will increase our EBITDA from the increasing sales tonnage. But almost $40 in the first quarter, we will see the full impact of our higher efficiency because of the new investments. Alain Gabriel: And this $40 compares to how much that you've achieved in, let's say, Q4 '25, just looking at the deltas of the bridges year-on-year? Idil Onay: Roughly, we said in Q3 2025, we got $20 additional impact. And in Q4, it's roughly around $30. And in Q1 2026, it's going to be around $40. But of course, you need to take into the consideration that the market prices are not staying the same. So these additional numbers should be added to the current prices. Alain Gabriel: Yes, absolutely. Absolutely. And my second question is on the business and how it's adapting to CBAM and the upcoming safeguards in Europe. Are you still able to sell into Europe easily now? Are you diverting your tonnes elsewhere? Can you give us a bit more color how you are adapting to this new environment in Europe, which is impacting Turkey as well? Idil Onay: So when you look at the export in Q4, so you will see a slight decrease. But actually, it's intentional. It's intended to be like that because obviously, the local market is more strong right now. The demand is stronger. So normally, when you look at the previous year's results, the export share was between 10% to 15%. So that was our normal levels for long years. Only 2025 was exceptional. Our export share in the total sales to 20%. But obviously, the domestic market is strong again but demand is strong again. So internationally, we -- strategically, the company prefers to sell their products domestically. So our order book is full for 2.5 months. I'm sure you remember, normally, I say it's full for 2 months. But right now, it's 2.5 months. So we already sold almost 2 million tonnes in Q1. So I can say that the demand is really good in the local market. But of course, we will sell to European markets and other export markets. But most probably, we are going back to our previous levels of 10% to 15% in the total sales. Alain Gabriel: And then last question from my side is on the CapEx guidance of $800 million. You mentioned that's on an accrual basis. How much would that be on a cash outflow basis? Idil Onay: Actually, I guided $600 million for 2026. Alain Gabriel: Okay. That's the cash component. Operator: The next question is from the line of Meyiwa Zenande with UBS. I'm very sorry. The question is from Bystrova, Evgeniia with Barclays. Evgeniia Bystrova: Just a couple of follow-ups. So first of all, on the CapEx guidance, I think I was confused because during the presentation, you said on accrual basis, the CapEx would be $800 million in 2026. But just now you said $600 million is the cash component. Is that correct? And then -- so my second follow-up is regarding the local market. So you're saying that the local market is very strong in terms of demand. Could you please maybe break down what exactly are the drivers of such strong local demand? And if you're expecting CBAM in any way to affect the prices that you're selling into Europe at? And finally, on payables, I didn't quite get your answer. So you're saying that another inflow in Q4 was expected. And from now on, we shouldn't expect such inflows on working capital in the cash flow statement. Is that correct to understand? Idil Onay: So the CapEx for 2026 is expected around $600 million. If I said $800 million, so it's a mistake, sorry, let me correct that. For 2026, we are expecting $600 million as CapEx. So it's all included all of our CapEx, maintenance, et cetera. So as we spent $775 million in 2025, so it is decreasing because we already commissioned most of the largest investment of our company, such as blast furnaces and coke batteries in the second quarter. So the rest is just solar power plant, basically, port and crane investments and energy efficiency investments generally. These are the list of investments that we are planning. So the second question was about the sales. Actually, the main thing -- the demand was strong. The demand was quite strong for some time but we prefer export markets because of the prices. But right now, we experienced higher prices in the local market. And with the strong demand, we prefer to operate in the local market. But of course, there will be export share but we have the flexibility to change some of the European exports to the local market because we have the enough demand in the local market, obviously. So that's why we are expecting higher sales tonnages also between 8.2 million tonnes to 8.4 million tonnes for 2026. So basically, the demand was always good, but the price wasn't that good. But in this year, in 2026, we also experienced strong demand and better prices. And also, we are expecting to see higher prices in the local market. And the last question -- can you just remind me the last question about working capital? Evgeniia Bystrova: Yes. I just wanted to understand the payables move because I think after Q2, you said that basically you're not expecting another working capital inflow in the cash flow statement. However, we have seen another payables like inflow from payables in Q3 and Q4. So I'm just trying to understand what will happen in 2026. Previously, you said that current net working capital is like an optimal level for you. So is that a right understanding from me that we shouldn't expect any working capital inflows on the payables side in 2026? Idil Onay: So in 2025, we just changed the trade payables system actually. So I mean, our net working capital has changed due to the extension of the trade payables maturity. So this is what happened in 2025. But from now on, we expect stable working capital, also cash based. But as I shared with Jason, it all depends on the raw material prices and steel prices. Evgeniia Bystrova: Okay. And what -- sorry, one last follow-up. And what is the specific driver that has kept local domestic prices higher than export prices in Turkey? Idil Onay: Actually, domestic prices are not higher than export prices. Obviously, right now, European market is very protected. So every day almost, we see higher prices in the European markets. So when you compare with the Turkish prices, European prices are obviously higher. But we know that the trade Ministry is working on some kind of revisions to increase the protectionism in Turkey. So they are working to increase that 25% of obligation to use local product when they are using emerge processing regime. We know that the trade Ministry is also working on some kind of revision to increase that level and also apply that obligation to -- for the coal product as well. So -- and some other revisions and the systems, for example, they are working on ETS emission trading system in Turkey, et cetera. So we know that our trade Ministry is working on trying to increase the protectionism in Turkey. And most probably, we will hear in the second half of the year. So these will help to increase the domestic sales prices. So that's why we are trying to focus in the domestic market. Operator: The next question is from the line of Jones, Andrew with UBS. Andrew Jones: Just a couple of questions or clarification. Just firstly, I think you said to Alain that there was about $30 a tonne included in the fourth quarter EBITDA per tonne from these projects. And for next year, it's $40. So we're basically saying that we're going up from $71 plus $10 effectively as we go into the first quarter without any market movement. So your guidance of roughly $80 a tonne for next year, is that basically assuming pretty flat market spreads compared to what we saw in the fourth quarter? I've got a follow-up, but I'll stop there. Idil Onay: Okay. So yes, I said $20 additional EBITDA per tonne contribution to EBITDA per tonne in Q3, Q4, $30, and we are expecting full impact of $40 contribution to our EBITDA per tonne. But as I shared with Alain, the market prices are not staying in the same level. So in Q4, the sales prices were decreasing. So I mean, we didn't really see the $10 plus $10 between Q3 to Q4. But obviously, we will experience $40 in Q1, but it all depends on the current prices, of course, raw material prices and sales prices. Andrew Jones: That's clear. Okay. And then just on the CapEx, I mean, what's the trend in the coming years? Because obviously, the pellet tires are still going -- I mean, if we exclude any gold mine stuff, I mean, when does the [indiscernible] CapEx kick in? Like what does 2027, '28 look like? What's the general profile we're expecting there? Idil Onay: Well, we are not expecting any number, any figure higher than $600 million. So for 2026, it's going to be around $600 million. I mean, I don't think we will see even $650 million. This is our expectation. But for the next years for 2027, 2028, we are expecting similar numbers $550 million to $600 million for coming years. Operator: The next question is from the line of Ive Erica with MetLife Investment Management. Erica Ive: Just a couple of more follow-ups on CapEx of $600 million, including 6. What could it be the cash outflow given that I understand there is this accrued component? Basically, I'm asking it will be the actual cash outflow lower than $600 million. Idil Onay: Okay. Sorry, Erica, there was a technical problem. So actually, the cash number should be close to $600 million with the advance paid. So most probably, we will see close figures to $600 million as cash for investments. Erica Ive: Okay. That's very helpful. And then on the working capital balance, right? I mean, in terms of movement for the year, based as well on what you explained about payable and so on, shall we expect a muted movement, so something closer to 0 in terms of movement for the year? How should we see or a small -- still a small outflow? Idil Onay: Actually, we are not expecting anything -- any change -- any material change in net working capital in 2026. So of course, it all depends on the raw material prices and steel prices. But right now, our trade payables maturity already. We have finished the extension of the trade payables maturity. So except from this change in 2025, we are not expecting any change from the company because of the company. It all depends on the market prices. I mean there is -- I mean let me just explain why we are expecting for the market prices. So there is a maturity mismatch in our balance sheet. We sell products and pay for raw materials mainly in cash. So when the steel prices and raw materials are in an increasing trend, our work will always require additional cash and our working capital increases. So on the reverse side, there is going to be a release from the working capital. Erica Ive: Okay. That explains. Okay. Good. And last question is on net leverage. Do you have a figure in mind that you try to reach in 2026? Idil Onay: Actually, yes, it's going to be around 2 multiplier. So we achieved less than 2 multiplier in Q4. It was 1.9 multiplier net debt EBITDA level. So we believe that we will be able to keep our net debt-EBITDA level around 2 multiplier because obviously, the capital expenditures will be less and that will -- and the EBITDA also will increase. So with the help of these 2, we will be able to keep net debt EBITDA around 2 multiplier. Erica Ive: And obviously, that excludes any investment in a gold mine, I guess... Idil Onay: Yes, it is. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Ergin for any closing comments. Thank you. Idil Onay: Thank you very much for joining us. We hope to meet you again at our first quarter conference call. Have a nice day. Thank you. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Operator: Greetings, and welcome to the Select Water Solutions Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Williams, Vice President, Corporate Finance and Investor Relations. Garrett, please go ahead. Garrett Williams: Thank you, operator, and good morning, everyone. We appreciate you joining us for Select Water Solutions conference call and webcast to review our financial and operational results for the fourth quarter and full year of 2025. With me today are John Schmitz, our Founder, Chairman, President and Chief Executive Officer; Chris George, Executive Vice President and Chief Financial Officer; Michael Skarke, Executive Vice President and Chief Operating Officer; and Mike Lyons, Executive Vice President and Chief Strategy and Technology Officer. Before I turn the call over to John, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our website at selectwater.com. There will also be a recorded telephonic replay available until March 4, 2026. The access information for this replay was also included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, February 18, 2026, and therefore, time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of Select's management. However, various risks, uncertainties and contingencies could cause our actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listeners are encouraged to read our annual report on Form 10-K, our current reports on Form 8-K as well as our quarterly reports on Form 10-Q to understand these risks, uncertainties and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now I would like to turn the call over to John. John Schmitz: Thanks, Garrett. Good morning, and thank you for joining us. I am pleased to be discussing Select Water Solutions again with you today. 2025 was another record-setting year for Select, both operationally and financially. I'll start with some of our 2025 highlights and provide an update on our key strategic development efforts. Now I'll hand it off to Chris to speak to the fourth quarter and the financial outlook in more detail. In 2025, we improved our consolidated margins, streamlined our Water Services segment and drove significant market share gains in our Chemical Technologies segment. We made key investments in long-term diversification efforts across the municipal and industrial space and advanced our technology efforts in both beneficial reuse and mineral extraction. But importantly, we made great strides in our core water infrastructure growth strategy including the ongoing build-out of our premier Northern Delaware water infrastructure network. During 2025, we grew recycled produced water volumes by 18% resulting in more than 330 million barrels of recycled during the year. We also hit a significant milestone during the fourth quarter, achieving 1 billion barrels recycled since the beginning of 2021 which helped drive the water infrastructure revenue growth of more than 800% across that same 5-year period. During that time, we've seen Water Infrastructure grow from our smallest segment to now our largest segment by profitability. Importantly, we continue to add inventory and underwrite future infrastructure growth and in 2025, we executed multiple new MVCs and added nearly 1 million new dedicated acreage with an average contract term of 11 years. Accordingly, we are well on track towards growing our Water Infrastructure to our stated target of greater than 60% of our consolidated gross profit in the next 24 months supported by sizable additional year-over-year growth of 20% to 25% in 2026 as compared to '25. Our industry faces significant evolving produced water challenges, and these challenges are perhaps most keenly felt in the Northern Delaware Basin. We've made a strategic choice to focus in this basin, which contains some of the most productive geology and lowest breakevens in the industry but also produces the highest water cuts in a region with decreasing disposal availability and increasing regulatory scrutiny. In the Northern Delaware, our recycling first infrastructure network gathers hundreds of thousands of barrels per day with our facilities acting as distribution hubs that can balance water longs and shorts across a broad regional footprint through expansive dual aligned pipeline networks. Additionally, the network can be balanced as needed with our interconnected traditional disposal solutions are alternatively enable future beneficial reuse and out of basin disposal solutions. Our unique infrastructure model sets at Select to be the cost advantage provider versus other competitors in the industry creating significant economic value and cost savings for our customers while generating attractive long-term returns for Select. We also continue to partner with our customers to find the most economic and operationally efficient ways to enhance the utilization of their existing infrastructure. Notably, at times, this may result in our customers operationally transferring our direct conveyance of their existing water-related infrastructure assets to us. Select's ability to integrate these assets into our existing commercial network drives greater operational efficiencies, reduce cost and yields enhanced systems reliability. Throughout 2025, we have been conveyed multiple recycling, disposal and storage facilities from key partner customers. This continued in the fourth quarter as we reached an agreement with a top customer for the direct conveyance of 3 existing treated produced water storage facilities as well as a permit for additional disposal facilities in Eddy County, New Mexico. We have since drilled and completed this disposal facility with immediate plans to integrate it into our broader network. We believe this is a strong endorsement of our customers' trust in Select and the value-added solutions we are providing. When combined with an additional disposal acquisition we completed in the fourth quarter, we added 55,000 barrels per day of new disposal capacity in the Northern Delaware during the quarter. These new assets and contract awards, combined with the significant backlog of our ongoing construction projects will drive additional network capacity and geographic reach across the entirety of the Northern Delaware Basin, supporting the strong 20% to 25% growth outlook I mentioned for the Water Infrastructure segment in 2026. We are also finding new ways to leverage the produced water volumes within our existing infrastructure asset base to generate incremental cash flow and high margin royalty stream without requiring incremental capital investment. This includes recently announced strategic partnership for produced water lithium extraction in both the Haynesville and the Permian regions, which should begin contributing initial royalty revenues by early 2027 and growing from there. In summary, our Water Infrastructure growth strategy is working. I'm excited to see the continued growth from this segment in the years ahead. Now shifting briefly over to our other segments before I hand it over to Chris. Our Chemical Technologies segment proved adaptable during 2025, achieving tremendous growth and market share gains in spite of a softer activity environment. This included 19% year-over-year revenue growth and more importantly, 45% growth in gross profit before D&A. Our research and development efforts continue to drive new product enhancements and demand for advanced chemical technologies. Growing lateral lengths and increased focus on enhancing recovery rates for oil in place continue to drive demand from our highest quality friction reducers and our advanced surfactant product offering. I am very pleased with our recent market share gains and technology advancements and I am cautiously optimistic about the renewed focus from our customers on securing high-quality offerings that improve well performance. On the Water Services side, we were focused on streamlining this segment throughout the past year to simplify our service offerings and position us for the long-term operational efficiency and margin enhancement. Overall, our Water Services segment performed quite well against a challenging market environment in 2025, maintaining its market-leading positions across each of the segment's core service offerings. We continue to evaluate strategic alternatives for our Peak rentals business with a measured and disciplined approach to ensure an outcome that best serves each of Peak and select strategic focuses and growth initiatives while maximizing the value for Select shareholders. While we proceed with this process, Peak continues to garner increased traction in its power solutions offering while generating ample excess free cash to support Select's core Water Infrastructure growth strategy. To conclude, I believe that Select remains extremely well positioned to meaningfully grow our adjusted EBITDA in 2026 with a unique integration of high growth, Water Infrastructure solutions alongside steady market-leading Water Services and Chemical Technologies solutions. I'm excited for the year ahead and firmly believe our current strategy will continue to drive long-term value for Select shareholders. At this point, I'll hand it over to Chris to speak to our recent financial results and the 2026 outlook in a bit more detail. Chris? Chris George: Thank you, John, and good morning, everyone. As John mentioned, 2025 was an important year for Select across many financial and operational metrics. While 2025 brought a challenging macro environment overall, I believe the business performed quite well within those conditions, generating $1.4 billion of consolidated revenue with improved consolidated margins and a record $260 million of adjusted EBITDA. I'll start by covering a few high-level market perspectives before getting into the financial performance and outlook in more detail. Looking forward, we anticipate a commodity price environment in 2026, but is fairly steady overall. With oil largely expected to stay within the $55 to $65 price range we've seen during the second half of 2025 and so far, early in 2026. Near term, we do foresee potential upside to the natural gas market outlook and are well positioned to benefit from our market-leading positions in key gas basins if incremental opportunities arise. Generally, we believe this current commodity environment supports overall activity levels holding relatively steady to the second half of 2025. Now looking at our recent segment level performance and outlook in more detail. We saw meaningful annual growth in each of our Water Infrastructure and Chemical Technology segments across 2025 and more recently, we grew both revenue and gross profit across all 3 of our segments during the fourth quarter. In the fourth quarter of 2025, the Water Infrastructure segment increased gross profit before D&A by 5%, while improving margins to 54%. As we continue our New Mexico system expansion, we work closely with our customers to support their evolving development schedules alongside our planned construction time lines. During late Q4, certain top customers requested short-term schedule changes, resulting in modestly lighter than anticipated volume growth across our fixed infrastructure. However, given the breadth of Select's integrated service offerings, including our temporary water transfer capabilities, we were readily able to support these changing development needs during the quarter, allowing key customers to achieve their adjusted production objectives while maintaining our originally planned infrastructure build-out time lines. This resulted in a 77% sequential uplift in our water transfer revenues in New Mexico during Q4. Driving a sizable outperformance in the period for our Water Services segment, more than offsetting the expected seasonal impacts for that segment and driving 7% overall revenue growth for Water Services as compared to the prior guidance of modest sequential declines. With the continued infrastructure build-out in New Mexico and new facilities coming online, we expect a growing shift in volume activity onto our fixed infrastructure network in the coming months, which should drive high-margin sequential growth for the Water Infrastructure segment during the first quarter and further throughout 2026. Accordingly, we anticipate 7% to 10% growth in Water Infrastructure's revenue and gross profit before D&A during the first quarter of 2026 as compared to the fourth quarter of '25. With several projects planned to come online during the first 3 quarters of 2026, we anticipate a continued growth trajectory for Water Infrastructure over the course of the year. Altogether, we expect very meaningful 20% to 25% year-over-year growth for the segment, while maintaining strong, steady margins throughout the year, similar to the 54% gross margin before D&A we generated in Q4. As we continue to commercialize the new facilities over the course of the year, we also believe there remains capacity utilization enhancement that can drive further upside into 2027 alongside other new potential contract wins. For Water Services, gross margin before D&A improved during the fourth quarter by approximately 2 percentage points to 20%. And when combined with the aforementioned 7% revenue gains drove strong 16% growth in gross profit before D&A for the segment during Q4. Coming off a strong fourth quarter, we anticipate steady revenue in the first quarter for Water Services. While we anticipate revenues to be down year-over-year for the segment, recent divestments account for more than 80% of this decline and we expect to maintain relatively steady revenue consistent with the recent Q4 run rate and current Q1 outlook throughout the full year 2026. Supported by our recent rationalization and operational improvement efforts, we expect to see near-term margin improvement for the segment, with gross margin before D&A of 19% to 21% for both the first quarter and full year 2026. As John mentioned, the Chemical Technologies segment had a tremendous year in 2025 with annual revenue growth of 19% and 45% growth in gross profit before D&A relative to 2024. The segment finished the year strong with record quarterly revenue generation of $87 million during the fourth quarter, a 14% sequential increase. Gross profit before D&A grew further with 16% sequential gains resulting in 20% gross margins before D&A during Q4. On the back of recent gains, we expect this segment can produce similar annual revenue in '26 to that of the prior year with upside potential while gross margins before D&A should hold steady in the 19% to 20% range. Based on current customer activity outlook for the first quarter of 2026, we anticipate Q1 revenue to return to the high 70s up to the $80 million range with margins remaining in the 19% to 20% range. While SG&A increased modestly to $43 million during the fourth quarter of '25, we are targeting a 5% to 10% year-over-year reduction in SG&A and SG&A expected to reduce back below 11% of revenue for full year '26 and potentially as early as Q1 as we recognize the benefits of ongoing cost reduction and business optimization efforts. Altogether, we generated consolidated adjusted EBITDA of $64.2 million during the fourth quarter of '25, above the high end of our adjusted EBITDA guidance of $60 million to $64 million, driven by sequential revenue and gross profit gains across all segments during the fourth quarter. For the first quarter of 2026, we expect an increase in consolidated adjusted EBITDA to $65 million to $68 million primarily attributable to increased volumes on our Northern Delaware infrastructure network with a continued upward trajectory throughout the year, setting the stage for solid year-over-year adjusted EBITDA growth. Looking below the line, we anticipate cash tax payments in 2026 to be a relatively modest $5 million to $10 million, including state taxes, and our book tax expense percentage applied to pretax operating income to likely stay in the low 20% range. Driven by the continued capital investment in our infrastructure business, I expect depreciation, amortization and accretion will continue in the $46 million to $50 million range during the first quarter, while trending up into the low 50s over the course of 2026. Interest expense should remain in the $5 million to $7 million range per quarter. With fourth quarter net CapEx of $70 million, we finished the year at $279 million in net CapEx, just slightly above our previous guidance. The continued strong customer demand for recycling centric Water Infrastructure solutions led to significant capital investment throughout '25 with numerous facility expansions and pipeline projects that are currently underway. To fund our continued water infrastructure growth, we anticipate net capital expenditures of $175 million to $225 million in 2026, after considering an expected $10 million to $15 million of ongoing asset sales. This includes approximately $50 million to $60 million of maintenance spend weighted predominantly towards the Water Services segment, consistent with the prior year. We are entering 2026 and with several projects already under construction were contracted with construction commencing soon, which should result in a heavier CapEx weighting to the first half of 2026. While this 2026 capital program includes all existing contracted projects, we do have an additional backlog of future opportunities. We are in the middle of a unique build-out window, especially for our premier infrastructure position in the Northern Delaware, and we would be excited to convert some of these opportunities into future growth throughout 2026 and into 2027. The Water Infrastructure assets we placed in service have very low maintenance capital needs, which should result in very strong discretionary cash flow for Select over time. With an 11-year average contract tenor for our current projects, we expect to deliver highly accretive long-term revenue and cash flow benefits. While the build window and growth capital associated with the projects continues at pace in the short term, we would expect capital expenditures to come down in 2027 providing ample long-term free cash flow generation. Additionally, as we have discussed before, our Water Services and Chemical Technologies segment also each provides strong cash flow conversion given their low capital intensity. Converting approximately 70% or greater of their gross profit to cash flow, helping to support the near-term build-out of our footprint while maintaining a very disciplined balance sheet. While we are very focused on executing on near-term infrastructure investment and growth strategy, we believe we are positioning the business to deliver healthy and durable free cash flows over the long term that will provide us with good optionality for future capital allocation frameworks over time, including future growth investments, diversification opportunities or enhancements to our shareholder return program. To conclude, I am very excited about the year ahead. I believe we have a clear execution path to increase shareholder value with a growing long-term contract portfolio, supporting a multiyear growth trajectory and increase through cycle stability in addition to nascent long-term diversification potential across opportunities such as our Colorado municipal and industrial project, beneficial reuse and mineral extraction. With that, I'll hand it over to the operator for any questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Scott Gruber with Citigroup. Scott Gruber: You guys have a couple of larger expansions coming online in Northern Delaware this year. But you mentioned there are some additional opportunities in the Northern Delaware. So just curious, would the additional opportunities be kind of smaller bolt-ons to your system? Or would they require larger trunkline expansion? I'm just curious after kind of what's in the queue has become operational, kind of where do you stand in the maturation of that Northern Delaware system? Michael Skarke: Yes. Thanks for the question, Scott. This is Michael. We are seeing a lot more smaller opportunities than we saw last year, the year before as the system gets built out, and it's roughly half to be built out, but we're continuing to move forward. We're really able to find some small opportunities that leverage the entire system, and they create really attractive returns because you're leveraging the full system and adding acreage. So I'd say that we're seeing a lot more of those than we've seen in the last couple of years. There still are a couple of pieces that are chunkier out there that we're still chasing that as we expand into new territories, specifically in Eddy County that are becoming available. So I'm hopeful that we can deliver on some bigger projects. But really as kind of you look past that and kind of into the back half of '26 and beyond. I think it's going to -- you're going to see more and more of the smaller opportunities that are just highly accretive because you're leveraging the full system. Scott Gruber: And just thinking longer term, after the Northern Delaware is established and as you said, you'll keep tapping into those smaller opportunities. Is there an opportunity to kind of really expand the system, whether it's into the Southern Delaware, we hadn't further east at all or other basins. Kind of what's the next leg of growth for the infrastructure business longer term? How do you think about that? Unknown Executive: Yes. So you saw us announce something in Winkler County, which is really kind of the first time that we stepped below the Texas State line out of New Mexico inside the Delaware in a meaningful way. We will continue to expand within Lea and Eddy County. I go back to those 2 counties have the most economic inventory. They're underbuilt -- there's just a tremendous opportunity there. And I think what we're building in Lea and Eddy County is really truly differentiated. There's not another asset system like that in the Permian or outside the Permian and it's certainly where you want to be. Now having that said, that system can expand into the Central Basin platform, where you're seeing the development for the Barnett and the Woodford and that's kind of what we were looking at when we moved into the Winkler. So I think you'll see us continue to grow that system beyond just Lea and Eddy County and then possibly expand kind of some of the existing systems like what we have in [ Upton ] trying to kind of meet in the middle somewhere on the platform. Operator: The next question comes from the line of Bobby Brooks with Northland Capital Markets. Robert Brooks: So first, you guys have announced 2 different lithium extraction partnerships the past few months. And it seems like a really exciting way to add another incremental high-margin revenue stream to the business along with highlighting how your infrastructure can further deleveraged the uplift financials. With that in mind, I was just curious to hear what other opportunities might you be evaluating in the similar lane as lithium extraction or just other opportunities where you see things that could be kind of similar, high revenue, low cost uplift? Michael Skarke: Bobby, this is Mike. Thanks for the question. And yes, we're really happy with our progress over basically a year of really characterizing our asset base across all of our basins and a lot of engagement with technology partners. And I think you're seeing the results yield and some exciting announcements recently, but there's more to come there. The strategic decision we did make was to participate, spend our capital on building out Water Infrastructure, large volume available at a single point, water storage and in particular, as Michael was mentioning, that Northern New Mexico system, where we're treating water anyway, that is a very unique capability that we have, and it is a big OpEx reduction for these technology partners. So we're in a position where we can provide the water with already a big chunk of that cost done for them essentially. So we're looking across the available market, picking the best-of-breed operators. And this recycling first model has really put us in a pole position and a very attractive partner for these folks. So you will see more of these lithium deals. We have something in the New Mexico area that we haven't given details on but we will also, hopefully, in the first half of this year, we're expecting also some interesting news around iodine extraction. And even some of our partners are talking strontium magnesium. So we, again, we're always very thoughtful about bringing the right technology to the right water. And I think when you got that marriage right, you can make some of that really high-margin royalty revenue that you're referring to. Robert Brooks: Got it. Super helpful color. And then just was curious to hear a little bit more of an update on kind of how you guys are looking at the Peak rental business and kind of strategic moves there. It seems like nothing has happened yet, but just curious like kind of what outcomes do you guys see as most likely? And then could you also just remind us like what type of [ genset ] equipments are -- does Peak own? John Schmitz: Yes. This is John. Yes. So we continue to engage strategically around Peak rentals and making sure that both the outcome is very positive for Peak because of the uniqueness of their opportunity that they have as well as the outcome to Select and the capital that we're deploying in the Water Infrastructure are the various areas around these networks that have been described. But Peak was built around an accommodations business that supported accommodations around drilling rigs and frac equipment. And any time you do that, you support that accommodations with power generation, communications, security, water application of both sewage as well as fresh and to support that mechanism. So our power generation were diesel-powered distributed mobile generators, and they supported everything on the drilling side and everything on the completion side. What we have inside of Peak that we think is very special is about 350 MSAs with the people that are drilling wells and completing wells, we're now taking Peak into the production phase of the well, where they're lacking power and we have both the MSAs as well as the network and the knowledge base to distribute that power properly. We also have found a very unique opportunity and Peak has now harvested it and put it out and now demonstrating the value, but putting a battery pack between that distributed power, basically our diesel power units and then the use has really shown value, both in the economics of the usage of diesel or the economics of the cycle time of those generators or really the value of the electric current going into the use system. Especially if you can take it away from smaller generations where you're putting it into trader houses with air conditioning and computers and TVs and refrigerators and start taking it into artificial lift, compression, things of that nature. So artificial lift equipment is very sensitive in their prior needs and what they do. They're already a customer, they're already in the MSA, and we've now entered that market with what we've got. We've also started to expand the distributed power business from diesel-powered natural gas -- I mean, diesel power generation to natural gas power generation. It fits really well both in movement of water, compression and artificial lift. So it's just natural. But we're being very careful, and we want to make sure that we Protect peak because it's got a very good thesis in it. At the same time, we're looking for the right capital structure both for Peak as well as the right outcome for Select. Chris George: And maybe one thing to add to that, Bobby, is what we've seen with that business and the transition to the nat gas genset capabilities, primarily on a recent basis, but we've used that to support the build-out and the pace of our own Water Infrastructure development, particularly in New Mexico, where power is short and you're talking about 3- to 5-year build windows for full power build out. So we've had the need and the opportunity to build our own integrated power capabilities through that business to support the pace of our own growth and development. So we're going to be thoughtful and diligent around the approach on how we support our own internal needs to Select, to generate cash out of the peak business to support our growth and then find the right long-term opportunity set for it. Robert Brooks: That's terrific color. I really appreciate all that detail. And then just one last one for me is in the press release and your prepared remarks kind of hinted that you guys had multiple successful benefits of reuse pilots. And I was just hoping to get a little bit more color there. Where these pilots in collaboration with the E&P is testing their own internally developed technology or maybe there was internally developed technology by Select were all the pilots focused on Permian? Or were there pilots happening in other basins? And maybe what were some -- just generally, what were some key learnings from these pilots and ultimately, like what made them successful in your... Michael Skarke: Yes. Bobby, this is Mike again, a great question. And it's interesting because you're touching on another area where because of our recycling first and large-scale treatment capabilities, this is another area that benefits directly from that. So starting from treated produced water versus raw really gives you a leg up in this area. So we've, over the years and more recently have completed several pilots of increasing scale, everything from life film evaporation to multi-effect vacuum distillation, the membrane distillation, normal [ RO ] units. The fact is we touch a lot of different colors and types of water, and we always want to be able to bring the right technology, which, again, because we're multi-basin and we touch a lot of that water, we want to be ready. More recently, in conjunction with one of our premier operators, university in the [ Price Water Consortium ]. We did one of our larger scale projects where we were able to take treated produced water, treat it fully. And actually, we're land applying it as a part of a pilot with this university, and we are growing all sorts of native and other crop plants out nearby our treatment facility and also the water is going into a greenhouse for what we would consider to be one of the largest and more technically advanced plant growing tests. So we're proving up the water quality not only by just running the standard test, but we're also proving it by looking at biological growth and soil quality. So all of that is kind of our strategy, is our contribution to prove that this is a viable way to operate in the future. We're helping inform regulatory efforts with this data. And ultimately, I think the reason we're chasing this is push the industry, but also it's transformational. It's a critical long-term solution that we need to bring to life. And so our focus now is around the techno-economics of these different solutions. And ultimately, we need to make money on this. So we are going to look very carefully and build the systems that have the right capital return and investability. And really what we're trying to solve here ultimately is what we all know is a pinch point in industry, especially in the areas where we operate in New Mexico and around the Texas border, we have to find ways to dispose barrels. So I mean, really, what we're doing is defining the future of Select to be a pioneer in the space and to really continue to create for the next 5, 10, 20 years, the way that our system that we're investing in now can live on as that portfolio shifts to perhaps a more disposal-oriented solution. So I think what you'll see from us is over the next couple few years, we will begin to announce plans, and we will begin to brand commercial scale facilities online. Robert Brooks: Congrats on a good quarter. Operator: The next question comes from the line of Derrick Whitfield with Texas Capital. Unknown Analyst: Congrats on a strong quarter and update as well. Unknown Executive: Thank you, Derrick. Unknown Analyst: I wanted to start with the macro environment for Water Infrastructure. With all macro being a bit murky at present, a, how are you guys thinking about growth opportunities in the second half on the upstream side? And b, when do you see a potential inflection in capital for municipal growth opportunities? Chris George: Good questions, Derrick. So from a back half of the year kind of near-term macro outlook perspective, as we define from a capital program, we're going to be heavily weighted towards the first half of the year on the current capital outlay based on contracts in hand, but we do have some strong backlog opportunities and continued excitement around the ability to layer on some incremental capital opportunities beyond the current program, and we'll be excited to win some of those, as Michael outlined. . Looking at the back half of the year in '27, we do anticipate a maturation phase, as Michael outlined in New Mexico, and we do think that you're going to see a transition towards some of the incremental growth opportunities around the diversification set and some of the things that Mike mentioned around beneficial res as well. So we would anticipate that the larger kind of remaining committed portion of our municipal project up in Colorado sees its large investment cycle in 2027 to the extent that aligns with the time line of getting contracts in hand as we previously outlined. So we think that we'll start to see a maturity phase out of the New Mexico footprint over the course of '26 and into early '27, and there continues to be an exciting opportunity set. But we do think that you'll start to continue to see excess free cash flow generation and more capital allocation, discretionary choice availability for us. Unknown Analyst: Great. And for my follow-up, I wanted to focus on your prepared comments on the chemicals segment. We're hearing from the upstream sector, increasing levels of interest in integrating surfactants in both completion and workover activities. I guess, are you guys seeing that demand out in the field? And if you are, how much of that are you baking into your revenue guidance? Unknown Executive: We are seeing that demand out in the field. I mean we're seeing -- we're getting inbounds. We've seen the statements made by some of the largest operators around the benefits of surfactants. Thankfully, we have extensive experience appliance, surfactants, both in completions and [ EUR ] technology. Also surfactants are -- they're really customized. I mean they're highly specific to the rock which fits us well because our chemistry value prop is custom chemistry to enhance oil recovery. We saw a pickup in surfactants in Q4 and we think that will continue to benefit us in '26. There certainly is opportunity beyond kind of what we have in place. We're investing right now in our technical team and really making sure we understand what surfactant to chemical packages work well with which rock, which ones are fairly neutral and which ones are actually eroding the performance. And so as we couple that with our in-basin manufacturing and surfactants there in Midland, Texas, we think we're very well positioned to capitalize on what should be continued expansion of that chemical offering. Chris George: And one final point I might add is, as we continue to also see the growth and the demand of -- we're reusing produced water and treated produced water, it creates an even more complex set of circumstances for matching the right full suite of chemistry with the right outcome you're looking for. So as Michael talked about, those specialized and customized solutions based on the geology, having the overlap with our water recycling and treatment capabilities provides us a unique advantage to also look at that application of the advanced chemistry side as well. Operator: The next question comes from the line of Derek Podhaizer with Piper Sandler. Derek Podhaizer: I wanted to, I guess, stick on the Chemical Technology segment and maybe just -- can you talk to us a little bit about your market share here? I mean, the friction reducers and the surfactant sound pretty exciting from a growth angle perspective. Just looking at the model and you're at this $300 million run rate for top line revenue. Where could this potentially go? And then secondarily, do you have the capacity to grow revenue well beyond the $300 million? Or would we expect to see some capital meaning to start being fed into this to really start growing this more significantly as we get this uptake of friction reducers and particularly surfactants. Michael Skarke: Yes, Derek, just to kind of start we're very excited about the market share increase we've seen. We're excited about the prospect of surfactants given our history and our technology team. And again, we saw some of that in Q4, but the majority of Q4 was our friction reducers and the chemistry that we've been providing. We do really well when you need a stronger, more durable chemistry. So it's more -- you see more produced water. We have higher market share in produced water jobs than we have in [ Brian ] fresh water jobs. We have higher market share on longer laterals than we do on shorter laterals. We have higher market share on [ simul ] fracs than we do on simul fracs. We have higher market share on [ signals ] than we do on [ zippers ]. So the more complex the solution, that's really where we shine. So we think we're skating to where the puck is in terms of providing complex technical chemistry. And I think the team has done a really good job of coming up with solutions and that's why you've seen us grow market share really pretty ratably over 2025. Chris George: And to your point on capacity and capital needs, Derek, we do have, as Michael said, our in-basin manufacturing plant in Midland, we've got another sizable plant in East Texas. And as it currently sits today, we've got continued opportunity for expansion. The business generates great free cash flow out of its core profitability. And so to the extent there's opportunities to add efficiency or add new line scale. I mean, we can do that in a meaningful way out of the current plant footprint and do it in a manner that's going to continue to allow us to generate in excess of something like 70% of free cash flow on the profitability of the business. Derek Podhaizer: Got it. That's helpful. And then maybe kind of piggybacking off your last point there. I mean kind of I'm reading this correctly, that would get into more of a steady state as far as the capital needs for the overall business? I mean, how should we really start thinking about free cash flow generation maybe out of EBITDA, I mean, obviously, like we've ranged from negative to 25%, 30%. I mean what's the -- where do you see this going? Could we get kind of in that 40% range, 50% range? Just looking longer term as we recalibrate the CapEx here and you flip more to free cash flow generation for the overall business? Chris George: Certainly, a good question. We are in a pretty unique build-out phase for the business, particularly in that Mexico footprint. So this year, we do did guide to a lower capital program than we undertook in '25. But certainly, to the extent we can continue to build a backlog of opportunities beyond that, we're going to be excited to do that and look to capitalize on that in the next 12, 18 months. But looking out further, we think that the free cash flow generating capabilities of the business, Derek certainly could replicate something or beyond what you've outlined there. The core legacy services and chemicals businesses, as we've outlined before, generating strong free cash flow to fund our growth in excess of 70%. Infrastructure is largely consuming it's capital or it's cash flow today for capital growth, but it's even, I would say, more maintenance-light application of operations than the rest of the business. So as we get to a through-cycle maturity phase here over the next 24 months, it will be making further choices around incremental growth, diversification, acquisitions or shareholder return enhancement. So we're pretty excited about what that can look like over the next 24 months as we get into '27 and beyond. But the maintenance needs of the business at $50 million to $60 million today are very modest and will continue to be so. Operator: The next question comes from the line of Conor Jensen with Raymond James. Unknown Analyst: You noted a little project timing slippage in Water Infrastructure from the fourth quarter into '26. Just maybe a little color on what happened there and some puts and takes on how that could impact the 20% to 25% growth in 2026 on either side of the calendar there? Michael Skarke: Yes, thank you, Conor. So the project slippage, we just had some, I think, fairly minor delays when we're building something of this size and magnitude and it's all linear, a few things can set you back. This one specifically around right of way. We had some delays in getting some of the right of way that we needed, which pushed it back a little bit. But it's all things that we've secured now. We're moving forward. And I think we're in a good position to kind of execute across the front half of this year. Unknown Analyst: Got it. That makes sense. And then for Water Services, I was wondering if anything changed there to drive a little bit stronger outlook, a little bit stronger run rate than we thought previously. Is any of that water transfer outperformance expected to continue going forward? Chris George: Yes, good question. So as we outlined, we definitely saw some strong uplift in New Mexico in tandem with the build-out time lines we talked about on the Water Infrastructure side. We were able to supplement that with the temporary water logistics in the fourth quarter, which drove a 70-plus percent growth in that New Mexico last mile logistics business, which was a great outcome. We talked about previously some of the opportunity we had to integrate water transfer into our long-term infrastructure contracts with sizable dedications that incorporated that water transfer. So we continue to be excited about the opportunity to see further stability and growth out of that part of the business within services over time, particularly in the Delaware Basin region. So it was a great outcome for our ability to support our customers with changing schedules, both on their side and on our side in the fourth quarter. And as we continue to get the infrastructure up and running, we've got a good view into an ability to continue to see some stability and growth out of that segment or that region, and we think that will provide kind of a steady state for the business over time here. Obviously, we had the rationalization and the divestment activities in 2025 that were the right choices for the business. And so on the backside of that, the second half of '25, we think, provides a pretty good run rate for the business and you should see that through all the way for '26. Operator: The next question comes from the line of Jeff Robertson with Water Tower Research. Jeffrey Robertson: Michael or Chris, would you anticipate that any of the efforts to increase utilization in the Northern Delaware Basin could have a positive impact on Water Infrastructure margins in 2027 versus what you think in 2026? Chris George: Good question, Jeff. So obviously, every incremental barrel you can push through a piece of infrastructure is generally an accretive barrel. So we do think over time, as we grow the utilization, we bring on commercial volumes beyond our core anchor tenants on the new assets that we'll continue to see opportunity to enhance the margins over time. So I think that, that's something we'll continue to be focused on. There is some exposure on the commodity side of oil sales through the asset base across both the disposal and recycling footprint that we'll be cognizant of as we think through margin profile as well. But generally speaking, Jeff, you're right, there's definitely opportunity to continue to see the enhancement to the margin profile. We'll continue to be active and under taking new build-out and contract opportunities, and we'd be happy to underwrite those anywhere in that 50% to 60% margin profile as we've historically done. But we'll be focused on what that looks like to continue to improve. Jeffrey Robertson: With respect to your gas exposure, particularly in the Haynesville, would increased utilization have an impact on infrastructure margins that would be noticeable and/or Michael, what kind of opportunities are there to -- or need is there for Select to expand its footprint there? Michael Skarke: Yes. No, thanks for the question. We're seeing good strength in the natural gas basins I mean, we're very fortunate that we have the leading disposal position in both the Haynesville and in the [ Marcellus ]. And we're having conversations regularly with customers about expansion opportunities or contracts. And those were conversations that really weren't being had 12 or 18 months ago, and that's just as a result of the gas price and the activity there. So I do expect that we will -- we're going to continue evaluating solutions in both basins, and I think you'll see us make some expansions outside of the Permian in 2026. Now having that said, again, most of the opportunity is around the Permian and most of it's in Lea and Eddy County as we've mentioned. Chris George: And one maybe final point to add back to your first question as well, Jeff, as we think about the margin profile long term, as we outlined earlier and Mike talked through the continued ability to add on some of these incremental royalty streams to the business. We're talking low to no cost type of revenue dollars that are benefiting from the existing capital investments we've already made. So to the extent we start to see those projects come online in late '26, early '27 and ramp over time. Those will continue to provide meaningful margin accretion opportunity as well. Jeffrey Robertson: And lastly, Mike, with respect to some of the beneficial reuse pilots, is it fair to think that if you can tie benefits our reuse into your Northern Delaware system, for example, that, that would attract more customers to the system because it would enhance your Select's water balancing capabilities in that area? Michael Lyons: Yes, Jeff, absolutely. I think, in particular, in New Mexico, we need to continue to support the state and the legislation to get to a, I would say, environmentally responsible, but industrial-friendly outcome. So I think that will help as we think about either land application or water discharge. There are other technologies that we're evaluating as well that will get incremental disposal like nontraditional disposal, let's say, onto the system as well. And that's absolutely a part of what we consider to be the end-to-end full life cycle of the barrel solution. So -- and again, yes, you're right. It is part of something that we can offer because of the large infrastructure footprint that we already have, which includes treatment, which reduces cost and increases the viability techno economically of all these solutions. So we do believe we're in a very unique position to support our customers that way. Operator: The next question comes from the line of Sean Mitchell with Daniel Energy Partners. Unknown Analyst: You guys mentioned earlier in the Q&A, simul-frac I'm just curious if you guys have an estimate or any color around simul-frac growth today versus maybe 2 years ago? I mean, obviously, there's a lot more sand and water going down hole with this completion design. Where is that today relative to maybe where it was 3 years ago? And where do you think the industry is at large on simul frac? Are we 25% of the industry, 30% of the industry using it? And where can that go potentially? Do you have any comments around that, that would be helpful. John Schmitz: Yes. This is John. First of all, I think I'd start the answer by percentage-wise of where that is today and where it's going. We would say that it's definitely increasing. But the way that we see it and primarily water and chemistry is the intensity in the space, whether it's simul-frac or [ tribal ] frac or longer laterals or how much you can do in a 24-hour period, that intensity is real, and it also is very engineered. So what this company is seeing right now is the effects of all intensity, all complexity of multiple water sources in recycling application and delivering mechanisms for massive water throughout long periods because of movement into simul-frac for [indiscernible] frac or longer laterals or what it is. So probably can't answer your position as a percentage, but we'll tell you that this company sees a heavy-weighted engineered intensity. Operator: This concludes the question-and-answer session, and I'd like to turn the call back over to John Schmitz for closing remarks. John Schmitz: Yes. Thanks, everyone, for joining the call and for your interest in learning more about Select Water Solutions, and we look forward to speaking to you again next quarter. Thanks. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Leszek Iwaszko: Good morning. Thank you for standing by. Let me welcome you to Orange Polska conference call in which we will summarize our achievements in 2025. My name is Leszek Iwaszko, and I'm in charge of Investor Relations. The format of the call will be a presentation made by the management team, followed by a Q&A session. Speakers for today will be our CEO, Liudmila Climoc; and CFO, Jacek Kunicki. So I'm passing the floor to Liudmila to begin the presentation. Liudmila Climoc: Thank you. Thank you, Leszek. Good morning. Happy to welcome you at our conference summarizing last year results, and let's start. In March last year, we have presented to you our new 4-year strategy, Lead the Future. And today, I'm very pleased to say that 2025 was a strong start. We have progressed in all key pillars of our strategy and prepared a solid ground for next years. First on the line is our commercial performance that was excellent in both retail and wholesale. In retail, we uplifted both customer base and ARPO. In wholesale, we started to benefit from new important business development streams. And commercial growth is an essential pillar for value creation in our plan. Second, to mention is network. In order to win customers, we are committed to bringing first-class connectivity at home, at work, on the move. And in 2025, we significantly progressed in 5G coverage, already 85% of Polish population can enjoy 5G with better quality, higher speed, better latency. Orange Fiber is now reaching almost 10 million homes. It's 2/3 of households in Poland, and we have added 1 million last year. And the third important contributor to our results was transformation, transformation and efficiency. One of the main pillars of Lead the Future. We increased our efficiency by better cost and by better CapEx management, increasing profit margins and improving cash conversion as a result. We have initiated a new transformation program last year that brought the first results, but we expect more to come in next years. Lead the Future is focused at value creation for our shareholders. And in 2025, we clearly demonstrated it by growing our financials. I'm very proud that we delivered 47% in total shareholder return through growth of our share price and paid dividend. Speaking about the financials, let's have a look on how we have performed versus guidance. So here, you see the slide illustrating it. We did very well. Growth rates on revenue and EBITDAaL was overachieved. We promised the range of low single digits. In both cases, we achieved mid-single. We overachieved on revenues, thanks to positive dynamic in IT&IS and in wholesale, but the main engine of revenue growth is our core telco services with strong 6.5% growth. EBITDAaL benefited from strong profitability of core telco and wholesale, but also combined with cost efficiencies in. For eCapEx guidance, it is met at the low end of the range, despite lower-than-expected sales of real estate, we managed to -- we managed our investments very efficiently. As you see, our growth story is developing faster than originally expected. And let's see what were the main commercial performance drivers for this. So looking on the commercial parts, 2025 is very strong. We attracted new customers and simultaneously, we grew ARPO in all key services in a very balanced way. In convergence, both customer base and ARPO increased by a solid 4%. For fiber, customer base increased by 10% and ARPO by almost 5% and I'm very pleased with this performance in convergence and fiber as competition here continues to be the most intense. We estimate -- so that we further improved our market share in high-speed broadband. So Orange is the [ synonym ] of fiber. Mobile performance in 2025 was exemplary, almost 350,000 customers joined us with mobile postpaid offer. It's almost 4% growth. The highest number in a few years. And both segments were contributing consumer and business and also all brands were contributing to this performance. ARPO increased by less than 1%, and it is explained by a strong contribution of more than 5% growth of ARPO for main brand, which is diluted by an increasing share of the B brand in our total customer base. Pace of growth in all services is in line with what we said for us as an ambition in Lead the Future, and it is demonstrating that we have the right strategy and we are navigating well in the competitive environment in Poland. So to zoom on our commercial tools, let's move to the next slide. Our focus in Lead the Future is on building new relationships, reaching new families with our services and further using it as a pull for further growth with additional services and with conversions. In 2025, we achieved it by pursuing a bold marketing plan. We visibly improved our marketing communication, refreshing the main brand in order to reach younger segment, changed the visual identity of our prepaid products and our B brand, Nju also received a new format. We put together -- we put also higher focus on stand-alone offers. Our new multi-SIM family offer proved to be a very successful in second part of the year. We boosted content proposition for our fiber and TV offer, making it significantly more attractive. And these elements combined with AI-enabled tailored offers contributed to customer loyalty for the existing base and allowed us also to attract new customers. On the value side, we further pursued our more for more strategy. ARPO benefited from good demand for higher data plan in mobile and also higher speeds for fiber offer. Customers with higher speed options in fiber already account for almost half of our customer base. As a result, the number of Orange households where we are present with, our services was growing, reversing a multiyear trend. And this represents fundamental change for us that is also offering very promising prospects for future. This was about retail. Let's now look at wholesale on Slide 8. Last year was particularly strong for our wholesale line of business, both our own and also in our core -- FiberCo Swiatlowód Inwestycje. As you see on the slide, we have recorded a solid 13% of wholesale revenue growth, excluding legacy services, much better dynamic versus previous years. And I will mention 3 drivers that were contributing to it. First is a new fiber backhaul contract, which was bringing results in the last 4 months of 2025. In 2026, this year, it will help us to fill the gap left by national roaming contract that has expired in 2025. Second is the accelerated growth of revenues from access to our fiber network to other operators. And accordingly, growing monetization of our infrastructure. We reported an impressive 36% growth of wholesale customers on our network, a result of opening of our network for wholesale, which took place in the second part of 2024. And the third pillar driver is services, which we rendered to our FiberCo Swiatlowód Inwestycje, like lease of infrastructure delivery of services, network maintenance, they are growing in line with growing scale of FiberCo. Speaking about our 50% co-owned FiberCo. 2025 was a very important milestone here. It marked completion of the initial investment program, which was set in 2021, in line with our plan, FiberCo network reached 2.4 million households. In 2026, new program has started with fully secured financing, and we are very pleased with operational and with financial dynamics. Despite the fact that FiberCo is still at a very early stage of development, significantly investing into the network expansion. Swiatlowód Inwestycje EBITDA of last year exceeded PLN 140 million with a margin of 35%. We expect this to increase along the growing network acceleration. And obviously, we plan to strengthen it further by Nexera deal of course, subject to regulatory approval, which we are awaiting now. This acquisition is expected to be highly synergetic. Now switching to connectivity on Slide 9. In 2025, we reinforced our commitment to provide the fastest, the most reliable and trusted connectivity in Poland. And I want to start from mobile. We made big progress in 2025. Major projects of radio access modernization, which we have started several years ago is now almost finished. It is making our network more energy efficient and will enable usage of new spectrum for -- new spectrum bands for 5G. For 5G, it was the second year of rollout on C-band spectrum. We are covering now already 60% of population in Poland, meaning that we are very much advanced on the market. Rollout on 700 megahertz spectrum, aiming wide coverage has started just 6 months ago, and we are already at 64% population coverage. These both spectrum bands, we boosted 5G coverage to 85% by end of last year from below 40% a year ago. And we -- as well, we have completed the commissioning of obsolete 3G, allocating frequencies to 4G and enabling us to increase network capacity and improve the quality of services, which we are providing. In fiber, we are investing both in the reach and the coverage of the network, but also in service quality. Orange Fiber from a quality perspective was again validated by independent benchmarks where our fiber network is ranked again #1 in 2025. Fiber reach continues to grow fast. We have added another 1 million households to the coverage, reaching 10 million homes in total. It was mostly delivered by Swiatlowód Inwestycje and also by access to other third parties, FiberCo's networks. Our own build is targeting wide zones with projects supported by EU subsidies. Rollout as well accelerated in 2025, as we have invested almost PLN 90 million in this project, and it will be completed this year in 2026 with investment effort of over PLN 100 million -- PLN 120 million. Let's zoom now on transformation. With Lead the Future, we have initiated a new wave of transformation. You remember the ambition of our Transform and Innovate pillar to boost efficiency, which will be leading to improved profit margins. We will achieve it through automation, through process reengineering and opportunities which are arising from integrating AI in our operations. Firstly, in sales and customer care operations. Here, digital channels are progressing, and we see them being much more efficient and much better responding to customer expectations to be served online fast with seamless experience. And as a result, we are approaching 30% in share of digital sales with ambition to reach 35% by 2028. My Orange app is our key asset here contributing to this target. We are constantly improving it, adding new functionalities and using AI for personalization. In customer care, we are making another step change with AI agents. For instance, in 2025, we launched an agent, which helps our advisors to provide optimal remedy for technical problem solving. This reduced number of contacts and improving customer experience. We are working on more agentic solutions to be implemented in this year 2026 for better quality and better productivity. Secondly, in network operations, we improved cost efficiency last year, and we are aiming to do more. To reduce cost of service delivery and network maintenance, we use more remote tools, self-installation, boxless solutions for content and TV, and AI supported dispatching of technicians. We have started progressive decommissioning of legacy copper network targeting first areas with less customers, less usage and accordingly less profitable. And recent deregulation decision will allow us to do it at a much better speed. And finally, we are reducing costs across all our functions, making ourselves leaner and more agile. In recent months, we have made several organizational changes aiming to streamline our operations. And as a part of this process, we signed a new social plan with our social partner under which number of employees will be reduced by 12% over the next 2 years. And finally, I want to stop at the moment at our sustainability agenda and achievements. I'm convinced that growth and responsibility go together. And our actions bring a real difference and contribute to the development of Polish society and economy. And we are very proud of our progress in 2025. In today's fast-changing world, there is a growing need for education on responsible and safe use of technology. And here, we concentrate our energy, the number of beneficiaries of various digital programs was growing and exceeded 200,000 last year. And as well last year, our Orange Foundation has celebrated 20 years anniversary, a proof of our long-term commitment for society and for digital inclusion. On environmental area, in 2025, we significantly reduced CO2 emissions. Actually, we almost reached our goal, which we set for 2028. This was possible as all the electricity we consumed came from non-emission sources. And finally, in 2025, we reinforced our efforts in the area of circular economy, thanks to newly launched platform, we significantly improved the collection of used handsets. And also, we significantly increased the share of refurbished fixed devices that we distribute. It brings a positive impact on the environment, but also is improving our cost base. So this being said, I want to pass the floor to Jacek to give more deep dive on our financials. Jacek Kunicki: Thank you, Liudmila. Good morning, everyone. Let's start with the financial summary. Our financial results last year were strong and they came above expectations. We have increased both revenues and EBITDA by over 4% year-over-year and expanding operating activity is the main driver of our value creation. What is important is that this growth is built on a solid sustainable foundations. We've executed a disciplined investment plan, allocating capital to growth areas and decreasing CapEx intensity. We are confident to further optimize capital allocation going forward. As a result, we have converted the EBITDA growth to cash flows, reaching PLN 1 billion of organic cash flows in 2025. These achievements have also built solid foundations for further growth of shareholder value in the future. Let's now look at details of our performance, starting with revenues. Q4 revenues have increased by a strong 4.6% year-on-year. Please note that all key products have contributed to this achievement. Let me comment on two of them with the highest impact. First, core telecom services, which are key for our growth, value creation and margins. We're pleased with the sustainable strong performance stemming from a simultaneous growth of the number of customers in the key product areas and of their respective ARPOs. Core telecom revenues were up 5.5%, so at the high end of our midterm guidance. This was achieved versus a high comparable base of Q4 2024, when we implemented price increases for the customer base of prepaid. The second item is wholesale. It was an exceptional quarter for wholesale with 27% year-on-year revenue expansion. Q4 included the full impact of the fiber backhaul contract signed in the prior quarter in Q3. And also, it was the last quarter with revenues from national roaming. We expect to further grow the value of our wholesale business going forward. To sum up on the top line, first, we're happy with the pace of revenue growth and the key drivers of our margin. Second, revenue growth is supported by all major product lines. This includes IT&IS revenues, which have returned to a double-digit growth of sales in 2025, a dynamic that will continue this year. Let's now switch to profitability. We're pleased with a strong 6% growth of the EBITDA after lease in the fourth quarter. This was driven by a 5% increase of the direct margin. It reflected consistent margin expansion from core telco services coupled with them discussed significant contribution from wholesale. Indirect costs have increased year-over-year, but mostly because of a PLN 30 million impact coming from 2024 when we recorded a catch-up of the fiber rollout margin in the last quarter of 2024. This item apart indirect expenses grew by less than 1% year-over-year as cost pressures were contained by the savings program. Our cost transformation is accelerating. It delivered savings in workforce, network operations and G&A, and we plan to increase the savings run rate that will be visible in 2026. To recap on EBITDA. First, we delivered a strong 4% growth in the full year of 2025 with an acceleration in the second half of the year. Second, the growth is built on sustainable drivers as the increasing revenues and margins are converted to EBITDA via our high operating leverage. Let's now turn to net income on the next slide. We achieved PLN 760 million of net income last year. This included PLN 150 million provision for a 1,000 employee headcount restructuring to be done in 2026 and 2027. It is important to our transformation and it will increase our efficiency going forward. Excluding this provision, net income was on a comparable level to 2024. On the one hand, it was driven up by growing EBITDA, a factor that will consistently boost our net results going forward. On the other hand, it was brought down by 2 elements that we don't expect to repeat in the future. First, depreciation, which was driven up by purchase of the 5G license, changing asset mix and one-offs with opposite impacts in both 2024 and 2025. Here, we judge depreciation to have reached its peak in 2025. Second item is finance costs, which increased as a consequence of higher debt due to the purchase of the 5G license and higher interest on the PLN 1.2 billion refinancing, which we had made back in the middle of 2024. We expect significant growth of net income this year in 2026. As the EBITDA growth is its fundamental underlying driver while the negative impacts visible in 2025 are largely nonrecurrent. Let's now switch to capital expenses on the next page. Our economic CapEx amounted to PLN 1.8 billion. So it was at the very low end of our guidance. CapEx intensity measured as a percentage of revenues, has decreased to 13.8% in 2025, in line with our midterm ambitions. We allocated 40% of CapEx to fiber and mobile networks. In fixed, this included fiber rollout in white zones and connections dedicated to the B2B. In mobile, we have significantly progressed with 5G deployment as discussed by Liudmila a few minutes ago. Please note that this year, in 2026, we will finalize the EU subsidized fiber build, and we will reach the peak of the run rate of 5G rollout. This latter program should be nearly finished by the turn of 2028 and 2029 and both of these present us with an obvious opportunity to further decrease CapEx intensity after 2028. Let's now look at cash flow on page -- on the next slide. We generated PLN 1 billion of organic cash flows last year. This good result was achieved thanks to growing operating cash flows, and these were coming from the EBITDA, so a sustainable underlying positive driver. It was offset by less cash from the sale of real estate and 2025 was challenging in this area, and some key transactions were delayed through 2026. As a result, we expect higher inflows from this activity this year. Obviously, the free cash flow was influenced by the acquisition of the 5G license. But now we have the last of the new spectrum acquisitions for 5G behind us. So the cash flow prospects going forward are much more predictable. On the balance sheet side, the balance sheet remains very strong, and we have already secured the refinancing of the PLN 3.7 billion debt that is due next year. For the conclusion, I wanted to reflect on our value creation model shown on the next slide, which we have presented alongside with the Lead the Future strategy. Our 2025 achievements confirm that it is working well. It increased the key drivers of shareholder value creation and their underlying dynamics inspire confidence about the good prospects for the future. That is all from me, and I hand the floor back to Liudmila for the outlook and conclusions. Liudmila Climoc: Thank you, Jacek. So now coming to our priorities for 2026. We have 4 main areas and all 4 are rooted in our strategy in Lead the Future and it starts with profitable commercial growth. On consumer market, we aim to deliver a solid growth of core telco services, and we are going to achieve it through our balanced volume and value strategy in mobile, in fiber and in convergence. Secondly, we aim to achieve profitable growth in B2B. For small businesses, we will differentiate by complementing telco products with digital services, such as KlikAI web creator that we have just launched in subscription model. For large businesses, we bring new operating model that will group all our IT&IS competencies under one roof in order to unlock more potential. So commercial growth will be accompanied by high-intensity transformation to improve our profitability. As we discussed today, we have high ambitions in this area. Our commercial ambitions require a reliable and high-quality connectivity in order to answer to customer demand and accordingly investments in innovative solutions and tools that bring value for customers and for our operations. And this is the -- reflecting the way how we will prioritize on our investments, of course, keeping an eye on return. And now let's turn the page to see how this translates into financial targets for 2026. We aim to create significant value for shareholders this year. 47% in total shareholder return in 2025 is impressive, and we will make every fourth to sustain this positive momentum. We plan to grow revenues at low single-digit rate, noting that it is essential to maintain a solid dynamic of core telco. We expect another year of solid EBITDAaL growth in the range of 3% to 5%. It will be achieved through a combination of profitable commercial growth and cost transformation. Higher revenues and high EBITDA will be achieved with similar level of investments like in 2025, meaning a decrease in CapEx intensity obviously, roll out of 5G and completion of fiber project and white zones will be key for 2026. In line with the midterm objectives, we provide guidance for organic cash flow. It reflects our internal focus on these key return metrics. And we are very happy to achieve PLN 1 billion in organic cash flow in 2025, and we are aiming to generate at least PLN 1.1 billion in cash in 2026, a double-digit percentage growth as our objective speaks for itself. And looking at the midterm guidance on the next slide. As you have seen, 2025 results were good. And we also expect strong outputs in 2026. We are confident regarding our ability to reach this ambition. And as a consequence, we are more optimistic regarding the greater value in the future. And as such, we are upgrading our midterm guidance. For EBITDAaL, we are maintaining guidance of CAGR at low to mid-single digit. However, we clearly see that the current trends make high end of this range more probable. Regarding eCapEx, we are making our commitment more concrete. This -- we will spend PLN 1.8 billion per year. This means growth in revenues and EBITDA with a stable level of investments, so improving our CapEx efficiency. The combination of solid EBITDAaL growth and flat eCapEx enabled us to be more bullish regarding cash generation. We are now expect to generate at least PLN 1.4 billion of organic cash flow in 2028. This implies at least 40% growth versus 2025 level and a double-digit CAGR. This guidance clearly illustrate better prospects for future, for value creation, for our shareholders, dividend is also very important in this regard. So let's have a look on it on next slide. As presented today, we delivered our objectives for 2025, and we enjoy more optimistic future prospects. As a consequence, we recommend a cash dividend of PLN 0.61 per share from 2025 profits. This is a 15% increase versus last year. The level of PLN 0.61 per share now becomes a floor for the remaining years of Lead the Future plan. A year ago, you remember, we told you that we are working to create conditions to enable us to grow dividend, and we are very glad to be able to deliver on that, and we will continue with these efforts going forward. This concludes our presentation. And in just a moment, we will be ready to take your questions. Leszek Iwaszko: Yes. Please give us a moment. We will return for Q&A. Leszek Iwaszko: Welcome back. For Q&A session, we are joined by 4 more board members. Jolanta Dudek, Deputy CEO, in charge of Consumer Market; Bozena Lesniewska, Deputy CEO, in charge of Business Market; Witold Drozdz, in charge of Corporate Affairs; and Maciej Nowohonski, Board member in charge of wholesale market. [Operator Instructions] We have a first question coming from the line of Dominik Niszcz from Trigon. Dominik Niszcz: I have two questions, one on CapEx and the second on mobile B2B. So I would like to ask for a comment on CapEx in the context of rising prices of certain network components, you actually are not increasing your CapEx guidance in the long term, but lowering it from around 14% of revenues to at 13%. So should we understand that despite rising equipment prices, you believe there is no need for such high investment volumes as you previously assumed? And what is the price growth component in 2026? Jacek Kunicki: Thank you, Dominik. I would reiterate, yes, our CapEx guidance well, is an all-in guidance. It's not excluding any price increases or price decreases because you have some elements increasing in prices indeed and the memory chip crisis, it is resulting in some prices that might be temporarily or permanently increased. It also includes the fact that while eCapEx in '25, '24 was heavily supported by the sale of real estate, the proceeds from sale of real estate, this stream of both cash flows and CapEx support will inevitably be disappearing by the end of the plan. And it does involve a lot of effort on our side to make sure that we invest today in platforms and in systems that allow us to be more efficient tomorrow. This goes for IT expenses. And you will see by comparing the structure of our CapEx today to the structure of our assets or even to the structure of the CapEx 6 or 7 years ago that proportionately, we're investing more, and this is linked with IT transformation. It allows us to be more efficient on the side of the OpEx, but it also gives us future CapEx benefits as we will have less labor-intensive and also capital works. So yes, you will have both elements increasing our CapEx or pushing it upwards and the memory chip prices are a part of this. You will also have elements that will be relieving some of the pressure and giving us a potential to decrease CapEx. The fiber projects are near completion this year and starting from next year, this means roughly PLN 100 million less of CapEx dedicated to these type of programs. We will have the CapEx peak for the 5G rollout for 2 or 3 years and then CapEx for 5G rollout will be going down. The CapEx structure is obviously changing in according with the needs. But looking at the different projects that we have in the pipe, looking at the stage of advancement, looking at the fact that we have just finalized the renewal of the radio access network, we feel confident to be able to grow the EBITDA and revenues based on the same absolute level of CapEx. Dominik Niszcz: Okay. And second question, mobile B2C, what is the share of B2B segment in your stand-alone mobile revenues? And what is behind the current weakness in this market in your view? So is it more related to the condition and number of small businesses in Poland or rather to competitive pressure from other operators? Liudmila Climoc: Thank you for the question. I understand it's more for B2B. Yes. So from the perspective of last year, mobile was growing slightly less than in the previous year. As I will remind that in the previous year for a few years, consequently, we work on the price hikes and the growth of both ARPO and the overall revenue was for a few years at the level between 4% to 6%. Now we noticed the slowdown on the market. We are in the market. This growth, especially for the small companies is a little above the 1% for the overall '25, the situation differs segment by segment. In higher segments, we have the severe price fight between operators about the big customers, big deals. And here, we treated very selectively always having in mind that we create the value and the margin for the company and some deals are not tackled by us or even we are not going below the certain threshold that still allow us to generate the margin. So all in all, the difference between segments is very huge. We see the slowdown of the overall market according to the comparison of the results of the -- all operators, which we have till at the end of Q3 because the Q4 is not released yet fully, we see it was around the slowdown to around 1%, 1% a little plus, and we are accordingly in this market, keeping our very high market share above 32% since plenty of years. Leszek Iwaszko: Next question will be coming from the line of Marcin Nowak from IPOPEMA. Marcin Nowak: I have two questions. The first question would be about your optimism because it has been mentioned a few times during the presentation that your outlook is quite optimistic going forward. So my question is if still your guidance is more on the cautious side or more optimistic side going forward? And the second question is regarding the recent fine from the anti-monopoly office. Is it already fully covered in -- it was already fully covered in the second quarter under -- in an item below EBITDA or maybe there we should expect some more provisions related to that? Jacek Kunicki: Thank you, Marcin. Very relevant questions. I guess what we try to do is when we give a guidance, we try to give a range in which you would find the borders of our optimism or pessimism. And likewise, when we guide for EBITDA, it's 3% to 5%. So if we would be -- if we are on a cautious side, we will be closer to 3%. If we are on the optimistic side, we will be closer to 5%. I guess what -- and where we try to give you a little bit of flavor is we did not change the guidance for the midterm, and this is EBITDA -- low to mid-single-digit growth. But the optimism that we see right now, and it's not groundless, it's based on very solid trends in the B2C market is based on good positive business development in wholesale, and it's based on an accelerating pace of transformation that we're observing. That allowed us to, first, deliver the good results for '25, deliver a guidance, which is closer to mid than too low for the '26. And we do see that current trends would be with some degree of optimism point us towards the mid rather than low single-digit increase of EBITDA CAGR for the midterm. As for the cash flow, we did not change our stance. The cash flow guidance was and is at least -- it was at least PLN 1.2 billion. Now we expect to have at least PLN 1.4 billion. It means we will be working to try and make sure that we can deliver more cash, if possible. On the fine -- on the second question, Marcin, on the fine, we will not comment on an ongoing proceeding. So no comments regarding any items below EBITDA, no comments on the provision side, everything relating to risks, claims and litigations is appropriately described in the notes to the balance sheet, which you will find us publishing roughly mid-March. Leszek Iwaszko: Next question will be coming from the line of Ali Naqvi from HSBC. Ali Naqvi: You mentioned that you'll be seeing some reduction in capital intensity after your 2028, 2029 period. Could you give any kind of quantification of what that could go down to? And then your leverage is lower versus peers and the low end of the below market telcos. I appreciate you may be restricted in doing buybacks, but to keep the balance sheet more efficient, have you considered doing special cash returns, especially considering you're quite confident of the organic free cash flow you're going to generate to 2028? Jacek Kunicki: Okay. So on the capital intensity, First, we will be progressing with capital intensity reduction even before we are going to pass the peak of the 5G rollout. If you imagine us keeping CapEx at PLN 1.8 billion and growing the EBITDA by -- let's be optimistic, mid-single-digit CAGR, then it is clearly decreasing CapEx intensity. CapEx intensity means that CapEx as a percentage of revenues will be trending towards 13% by the end of the plan. And so that is step one. And then well, I think we will not guide for the CapEx in the period after the strategy. But clearly, the 5G rollout represents a few hundred million that we are spending each year. And this is something that will first decrease towards the end of the plan. And at some point in time, when we will have the 5G rollout completed. Of course, we will have other business priorities back then. But definitely, completing a rollout of 5G that is today consuming a few hundred million yearly, it does present us with an opportunity to decide do we increase investments in other areas that could be value accretive, productive? Or do we further decrease the CapEx going forward, knowing that already by that time, we will be trending towards 13% of revenues. So it's 2 phases, okay? One is relative to revenues to decrease CapEx by 2028. And then after we will have the 5G completed, we will have a decision to make, do we see other sources of good projects to invest this capital or do we further reduce capital intensity. On the shareholder remuneration, today, we are happy with a very strong balance sheet. I think it does give us ample balance sheet flexibility going forward. As far as shareholder remuneration is concerned, we haven't considered buybacks because of the limitations that you're aware of. And for the dividends, we have the policy that today's recommendation once voted by shareholders on the AGM will become the floor for the dividend going forward within the period of the strategy. And obviously, I will repeat the same message that I said 1 year ago. We will be working to create conditions that will enable us to be in a possibility to further increase shareholder remuneration in form of a dividend going forward. Leszek Iwaszko: Thank you. We do not have any more voice questions. So maybe I will read the instructions. [Operator Instructions] But there is one more question that came to us online. In the meantime, we have more voice questions, but we take those later. But the question on -- that came to us via text is, in the commentary through the Q4 results, the CEO pointed out that we are poised to generate substantial profits in the coming years from fiber backhaul business concluded in the second half of '25. Could you please say a few words about this agreement? Maciej Nowohonski: So good morning, everyone. Thank you very much for the question. And excuse me for my voice -- which definitely has seen better days, but this is in contrast to what we actually achieved on the wholesale line of business, the performance there is really satisfactory to us. I will not get down into the details of the commercial terms and conditions of the contracts that we are signing. But to give you color of what is happening on the holding market, I think, first of all, you are looking at the different markets in Europe and all across the globe, and you can compare or differentiate conditions on these markets, in Poland, particularly what strikes you probably is still the fragmentation of the market, and on this fragmented market, Orange Polska stands out in terms of the infrastructure. And we actually enjoying the basically, the success, which is purely generated from that, that we are strong in infrastructure, the market on which operators buy from other operators is large and is growing. The wholesale fiber, which normally, I would say, is connected with the wholesale activity is only a part of this market. And there is plenty of operators, which are actually interested to buy infrastructure and capacity for the transport network. And we basically respond to that constructing within the last 5 years, very strong activity and competence on that market. We are truly a partner to other operators on wholesale activity. And the result of that is visible in the contracts that we are winning on that front. So we will enjoy that particular contract for the coming years. Obviously, there is plenty of things to execute, but we are confident that we are able to do that with success. Leszek Iwaszko: Next voice question is coming from the line of Nora Nagy from Erste Group. Nora Nagy: Congratulations on the solid results. Two questions from my side, please. Firstly, on the tariff indexation, if you plan to implement it in 2026? And then if so, on which services? Jolanta Dudek: Hello, everyone. Thank you for these questions. In B2C, this year, we have implemented 2 price hikes for tariffs, first in Jan for mobile and in Feb for fixed broadband. In the meantime, we informed our customers about CPE clauses price hike for customers with indefinite contracts. So simple answer, we -- this year, we continue what has been done last year, and we have just implemented those 2 price hikes. Jacek Kunicki: And I think just to complement, I think on the price hikes that Jola mentioned were for the customer [ x ], so for the acquisitions and retentions, mobile and broadband. And the indexation obviously applies to the customer base that had eligible -- was eligible because they had the clauses in the contracts, and they were out of loyalty. Nora Nagy: Yes. And then secondly, how do you see the mobile phone services of Revolut in Poland? Shall we expect the company to focus more on the low-cost segment following the Revolut market entry? Jolanta Dudek: So as far as Revolut offer concerns, we expect that this offer will be dedicated mainly for the niche segments. And why, first of all, we do not see the impact on mobile number portability to Revolut. The second, this is the offer only limited to e-SIM. Third point, this offer has roaming packages on top and it's limited only to mobile, while home market is going to -- is focused on packages. So for the time being, we do not see the important impact on our base and on our market. Leszek Iwaszko: Another voice question is coming from line of Dawid Górzynski from PKO BP. Dawid Gorzynski: Actually, I have three questions. So maybe I will address them one by one. First one is on your assumptions behind over PLN 1.1 billion organic cash flow for this year. I wonder like what do you assume for the value of assets sold? And regarding cash CapEx, what maybe other differences between eCapEx and cash CapEx this year, if cash CapEx may be like higher than eCapEx because of some reasons. Jacek Kunicki: So for this -- thank you for your question. The PLN 1.1 billion organic cash flow. the base is what we achieved this year. The main growth driver is the growing EBITDA because we do expect to have 3% to 5% EBITDA growth, and we do expect for this EBITDA growth to convert to cash. We did not make bold, unorthodox assumptions on working capital. And we have assumed eCapEx to be flat at around PLN 1.8 billion. And eCapEx includes both the CapEx spending and also the inflows from sale of real estate. As I mentioned, last year, real estate sales were a bit below our expectations due to a challenging market and due to some key transactions being delayed even from late December. So on the one hand, the delay of the transactions gives us some boost and potential to do more this year from real estate sales than we did last year. But then on the other hand, it's not a recurring business. We really need to be prudent on our assumptions for real estate sales and for how much we are able to sell because this is a transaction by transaction and a buyer-by-buyer market. So I will go back. It's the EBITDA that is driving the better prospects for cash flow, not some wild assumptions on neither working cap nor on the real estate sales. We will obviously do our best to maximize real estate sales, minimize working cap. But the underlying driver is the EBITDA growth. Dawid Gorzynski: Second question on the Cybersecurity bill that is awaiting the sign from the President in Poland. Do you assume any impact of that bill on like potential requirement on replacing high-risk infrastructure? And perfectly, if you can quantify that impact for next year? Witold Drozdz: Obviously, we monitor closely this legislation. The deadline for signing is tomorrow. So we will see if it is signed or not. However, as it introduces some regulations that are that -- or will not introduce, but anyway, it refers to some fields of regulation that we are aware of, and it is also fully in line with the policy that we pursue for years, then we do not expect any substantial impact from the perspective of our business and results. Maybe Jacek... Leszek Iwaszko: Your third question, Dawid. Dawid Gorzynski: And yes, last question on Nexera deal and that chance or the requirement if -- do you think that the debt in Nexera will need to be repaid or it may be stood in the company? Jacek Kunicki: Thank you very much. So here, for Nexera, we are after having signed the SPA, we have not yet had the closing of this transaction. So obviously, this means that the process is really preliminary. Our intent is to keep the debt on the balance sheet of Nexera. We think that this asset will be performing much better than -- this transaction gives much better prospects for Nexera going forward. Orange Polska and APG are highly reputable buyers. We have substantial synergies of this transaction with Swiatlowód Inwestycje, we clearly have an intent to bring Nexera under the umbrella of Swiatlowód Inwestycje. So this also means that these better prospects mean better financial prospects for the company, and we will be discussing this with the financing banks. The intent clearly is to keep the debt and as much as we can of the debt on the balance sheet of Nexera. We are not in a position today to share with you exactly where we are in this process also because of an early stage. We are just after signing the SPA, we will be keeping you updated on what we have finally achieved. But definitely, the intent, the goal is to keep the debt on the balance sheet of Nexera. Leszek Iwaszko: We have one more text question. I will read it. It comes from Piotr Raciborski from Wood & Co. What impact of changes in working capital on organic cash flow? Do you expect in 2026, I guess you're -- unless you want to add the asset, but I think it was answered just a moment ago. Jacek Kunicki: Yes. I mean we will see how the business evolves. We will see how the inventory levels, the receivables will evolve over time. We will need to monitor this as we go forward. I would prefer not to disclose extremely specific assumptions, but it's -- the growth of the organic cash flow is not built on an assumption -- explicit assumption of a significant improvement or a significant decrease -- increase of working cap. It is based on the growth of EBITDA and the growth of EBITDA is coming from -- predominantly from core telecom services. So that does not imply huge requirements for working cap. And it's coming from cost transformation. And again, this is not something -- it's not sale of handsets in installments. It's not something that is requiring us to freeze up large amounts of working capital as a result of this. So this is what makes us confident going forward, is that the progression of cash flows is based on solid, sustainable, repetitive growth patterns coming from the core business. And this is what makes this growth very healthy. And this is why we think we can sustain it, not only for 2026, but we can sustain the good progress all the way up to 2028, hence, the improving prospects for the midterm guidance. Leszek Iwaszko: Thank you. We have no more questions. So thank you very much for listening, watching us, asking questions in case you wanted to meet us, please give us a note on that. Otherwise, we will come back in April with Q1 results. Thank you very much. Jacek Kunicki: Thank you very much. Liudmila Climoc: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Rush Enterprises, Inc. reports fourth quarter and year-end earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, we will open up for questions. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11. Please be advised that today’s call is being recorded. I would now like to hand it over to your speaker today, W. Marvin Rush, CEO, President and Chairman of the Board. Please go ahead. W. Marvin Rush: Good morning, and welcome to Rush Enterprises, Inc.’s fourth quarter and full year 2025 earnings conference call. With me on the call today are Jason Wilder, Chief Operating Officer; Steven L. Keller, Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, Steve will provide some forward-looking statements disclaimer. Steven L. Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended 12/31/2024, and in our other filings with the Securities and Exchange Commission. W. Marvin Rush: Thanks, Steve. As we reported in our earnings release for 2025, we generated revenues of $7.4 billion and net income of $263.8 million, or $3.27 per diluted share. In the 2025, revenues were $1.8 billion and net income was $64.3 million, or $0.81 per diluted share. I am also pleased to announce that our Board of Directors approved a cash dividend of $0.19 per share. 2025 was another challenging year for the commercial vehicle industry. Freight rates remained under pressure. Excess capacity continued to be a factor, and customers faced uncertainty around trade policy and emissions regulation. All these factors negatively impacted demand, particularly for new trucks in the over-the-road segment, and also created a more difficult aftermarket environment. Despite these conditions, I am proud of how our team performed. We remained disciplined, generated strong cash flow, managed expenses effectively, and continued investing in the long-term growth of our business. Toward the end of the fourth quarter, we began to see improvement in new Class 8 truck demand. Quoting activity and order intake both increased, and that momentum has carried into the first quarter. We believe a key driver of this improvement has been increased clarity, particularly around tariffs and the EPA’s anticipated confirmation of the 2027 NOx standard. With some of that uncertainty behind them, fleets are beginning to plan for future vehicle replacement cycles again. We also continued to expand our network in 2025. We acquired IC Bus dealerships in Ontario, Canada, with an area of responsibility that includes the provinces of Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. In addition, we added a full-service Peterbilt dealership in Tennessee with Trucks Plug Centers Nashville Central. These strategic additions strengthen our footprint and enhance our ability to support customers over the long term. During the year, aftermarket parts and service and collision center revenues totaled $2.5 billion, essentially flat compared to 2024, and our annual absorption ratio was 130.7% compared to 132.2% in 2024. In the fourth quarter, aftermarket revenues were $625.2 million, up from $606.3 million in 2024. Absorption was 129.3% compared to 133% in the prior-year period. While aftermarket conditions were challenging in 2025, we continued to see strength in key customer segments such as the public sector and medium-duty leasing. Our focus on operational efficiency, reducing dwell time, improving parts delivery, and strengthening service execution also supported our performance. Demand remained soft in January, but we are beginning to see signs of improvement. As fleet utilization increases and customers address deferred maintenance and aging equipment, we expect parts and service demand to strengthen. Looking at vehicle sales, we sold 12,432 new Class 8 trucks in 2025, representing 5.8% of the U.S. market. In Canada, we sold 338 new Class 8 trucks, representing 1.4% of the Canadian market. As I mentioned earlier, demand was soft for much of the year, particularly among over-the-road fleets. However, demand from our vocational and public sector customers remained relatively stable, helping offset some of the weakness in the over-the-road segment and highlighting the benefit of our diversified customer base. ACT is forecasting new U.S. Class 8 retail sales of 111,300 units in 2026. We believe the first quarter will represent the trough for Class 8 retail sales, and we are encouraged by recent improvement in order intake. Fleet ages remain elevated by historical standards, and we expect replacement demand to increase as the year progresses. With respect to medium-duty commercial vehicles, new U.S. Class 4 through 7 retail sales totaled 217,412 units in 2025, down 15.6% compared to 2024. Despite that decline, we sold 12,285 new Class 4 through 7 commercial vehicles in the U.S., down 8.5%, significantly outperforming the market and increasing our market share to 5.7%. In Canada, we sold 993 new Class 5 through 7 commercial vehicles, representing 6.3% of the Canadian market. We continue to be pleased with our medium-duty performance. We believe our diverse customer mix and Ready to Roll strategy continue to differentiate us from our competitors. ACT is forecasting U.S. Class 4 through 7 retail sales of 218,225 units in 2026, up slightly compared to 2025. While we remain cautious given weak order intake over the past several months and broader economic uncertainty, we are beginning to see improved quoting activity. We are well positioned to fulfill orders as customers move forward with purchasing decisions. We sold 6,977 used trucks in 2025, down 1.9% compared to 2024. As freight rates improve and prebuy activity builds ahead of future emissions regulations, we expect used truck demand to improve in 2026. Our leasing and rental business delivered another solid year. Leasing and rental revenues totaled $369.6 million in 2025, an increase of 4.1% compared to 2024. In the fourth quarter, lease and rental revenue increased 3.6% year over year. This business continues to benefit from the strength of our full-service leasing operations, supported by strong customer demand and a younger fleet. From a capital allocation perspective, we remain disciplined and continue to return capital to shareholders. During 2025, we repurchased $193.5 million of our common stock. We also announced a new stock repurchase program authorizing the company to repurchase up to $150 million of common stock through 12/31/2026. In addition, we returned $58 million to shareholders through our quarterly dividend program, a 5.6% increase compared to 2024. These actions reflect the strength of our balance sheet and our confidence in the long-term outlook for our business. Looking ahead to 2026, we expect market conditions to remain challenging in the first quarter, but we are optimistic about the remainder of the year. With fleet ages elevated and maintenance needs increasing, we expect both commercial vehicle sales and aftermarket conditions to improve as we move into the second quarter. While we cannot control the pace of the market recovery, we can control our execution. We believe we are well positioned to respond quickly and effectively to our customers’ needs as conditions improve. Historically, when the cycle turns, demand for both new commercial vehicles and aftermarket parts and service rebounds quickly, and we believe the strategic investments we have made over the past several years will help us serve customers better and gain market share. Finally, I want to thank our employees for their hard work and commitment through 2025. This was a very demanding year, and their focus and execution were critical to our performance. With that, we will open it up for questions. Operator: Thank you. And as a reminder, to ask a question, you need to press 11 on your telephone and wait for a name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Brady Lierz from Stephens. Your line is open. W. Marvin Rush: Hey, great. Thanks. Good morning, Rusty. Thanks for taking our questions. I want to maybe start, unsurprisingly, on Class 8. Brady Lierz: As you mentioned in your prepared remarks, we have seen an improvement in orders late in 2025 and here early in 2026. Can you just talk about what you are hearing from your customers? Are you expecting this to be a pretty meaningful prebuy here in 2026 ahead of the 2027 regulations? Just any clarity there would be helpful. Thank you. W. Marvin Rush: Be happy to. The answer would be cautiously, but maybe not even cautiously, but optimistic that yes, there will be a prebuy before we get into the 2027 emissions regulations. You know, based upon not just the regulations, right, but you can incorporate regulations all you want. I was around—well, you were probably still in high school back in 2010—when we went to SCR. We were supposed to have this big, you know, buy and buy. Obviously, it was the worst year in forty years. Right? We had a little economic problem going on, which—so what I am reflecting on is not just the fact that the 2027 emissions, but the fact that their business is improving. And I am not going to get ahead of myself and say it is, like, accelerating or ramping up rapidly, but it is improving, especially over the last ninety days. I do not have to tell you. You know, spot rates have been up. Five to six months ago, most people would have thought going into their contract rates were probably going to be flat. Now people are hoping to get contract rates up, you know, mid-singles. Right? That line between spot and contract has moved nicely with where spot was so much lower before. So, you know, your business has to be good. And I am not going to say it is great, but you at least need to be able to see forward. Right? And that is important. We had so much uncertainty last year with regulations, with EPA regulations, with tariffs, and everything else. So now you can focus on these regulations and do it while your business is, you know, gradually getting better. It may not be reflected in all the first quarter reports, but I think most customers feel that their business is improving. When you talk about—we are talking about over-the-road customers right now because that still is the biggest segment, even though we are more diversified than most folks when it comes to vocational and over the road. But we still need that over-the-road customer to be solid. Right? It is the biggest piece of what you do still. And so combining, you know, some—most—we do not have full clarity, but we know we are not changing it. We know it is going to be 35. The government—when I am talking about NOx and stuff—so we realize that is going to be there. You know, they have not clarified everything, but you pretty much know what the cost is. And, you know, when you are doing something like this, the cost is one thing. It is, you know, a little bit new aftertreatment systems, and I watched 2010 when every particulate filter was clogged up when we came out of SCR back in ’10. I am sure there are a lot of people that still remember that. You know, you can have issues when you come out. So I am just giving you background. So you combine the EPA issue, clarity on tariffs, which has given clarity to pricing throughout this year, which we did not have last year, and their business getting better. So I am optimistic. The issue will be this. The issue will be we are going to run out of time. So, you know, it is already—we are, what, eight days away, nine days—what is it? Ten days away, excuse me, from the end of this month. I apologize. And we will be into March already. So I do expect order intake to remain what we have seen over the last couple months in that range, if not maybe even a little more because I think people are lining up. So I do believe Class 8 order intake is going to continue solid. You have to remember, we had a five or six month run last year, a six month run that was close to being less than the last two months. Five months for sure were close to being less than the last two months. So, I mean, all that—I know it is a long-winded answer, but you folks are used to my long-winded answers. I try to give you a full perspective here. Yes, the emissions piece is there. Yes, that is important. But it is also important that people can at least see a little further in their business and have clarity, which we did not have. So the combination of the two—yeah, I think we are going to get—you know, and I think you may run into a problem with supply side, problem with tier-two and tier-three suppliers. We are not there yet by any stretch because there was a lot of backlog to fill up. But it will be interesting to see where we are sixty days from now. So, I mean, a lot of customers are realizing they better—I think some go—well, I know they are—that they better get it on board now and not wait till summer, or we may run out of—it is hard to ramp up for that shorter period of time. You know, OEMs will ramp up. There is only so much you can do when you do not have clarity past, you know, January 1, really. But I do not see—just going further—I do not see ’27 to be a huge drop off either because we are going to get started. It is going to be—we are going to get started light here in Q1. Okay? There is no question. Lighter than we were last year in Q1. So you start in a hole. So, you know, the year could be similar, maybe slightly up. It is going to be, you know, packed into the back three quarters of the year, should you say? Operator: I shut up. No. That is all very helpful Brady Lierz: color. If we could just talk about parts and service for a second. You know, typically, you see a pretty nice sequential step up in the first quarter compared to the fourth quarter. But has the severe winter weather we have seen this year impacted that at all? Just want to get any thoughts there. And then, you know, if you could just talk about some of your strategic initiatives in parts and service. You know, you have mentioned in the past growing the technician headcount. Just how are those initiatives progressing? W. Marvin Rush: Yeah. Well, I do not—I am not going to say, as I mentioned earlier, January was a tough month. When you ask about the freezes—well, we were shut down for about a week in the Dallas–Fort Worth area, and some other areas, we were—you know, down in the South, they do not know how to handle ice and snow. I can tell you it is not like—you know, it is funny that, you know, cold weather is good for your parts and service business, say, in Chicago. They are used to handling it. They have got snowplows. They do not have any snowplows in Dallas. Nothing iced over five days. Okay? We were almost shut. We really were. We were running skeleton crews. It was detrimental, let me tell you, to our southern stores in some areas. So that is why January was a real tough one. We are starting to see life, a little more life. You know, as I have said all my life, if I could just get rid of November through February—but I am from—you know, we are from the South. We were raised here. We are from Texas. And if I could just get rid of November through February, I would have, except for Christmas and Thanksgiving. But, you know, we are getting to the end of it, and, you know, we are starting to see, you know—it is typical seasonality, I would tell you. It was soft in January. It was soft in November and December, but that is seasonal. That is not something we do not deal with in the past. January was probably softer than it usually was because some of our bigger areas on the Peterbilt side were down, which are further south, got frozen up a little bit. And we do not operate—some of these places do not operate well in that. But I think it is just normal. We got hurt a little bit, but we should come out of it here as the sun comes out and heats up, as we get into March and April. I see no reason we will not, and we are seeing signs in February that things are better than what they were, which is just typical. From a strategic initiative, you know, our mobile service piece is something that we are really big on, and we continue. Last year was a big year for us from a mobile investment perspective. I can tell you we took on, like, $4 million more depreciation in mobile units last year than we had in 2024. So those are investments that we make where the payback comes back over the next five or six years as you ramp all that up. You would like to think it is all immediate, but it is not always all immediate. So we continue to ramp up that piece of our business. It is a larger piece of our business than it ever has been. It was running around 30%. Now it is running, like, mid-thirties or more of our overall business. So, going forward, we continue to believe that is going to be a big piece of what we do outside of our shops. I would say that is the most important. We did go backwards a little bit in technicians in the fourth quarter. But, you know, I think we were—you know, I am not sure exactly why. I am not going to say it was dramatic, so I am not going to make any big deal of it. But, you know, we are focused on continuing to get back to adding especially higher-level skilled technicians as best we can and are doing our best to train the young ones. You would be amazed that, you know, the turnover usually comes in those first-year, second-year folks. And we continue to have programs to work our way through that. But, yes, we will continue to try to grow technicians like we have in the past while we are still doing it profitably. You have to be careful when you are doing that because you have to be able to do it profitably, not just do it for the sake of doing it. You know, we have got some great programs from a delivery perspective. We are running pilot projects. I do not want to get into all that stuff. Some of that is what I consider proprietary. But you can rest assured we are not sitting on our hands. We never have and we never will. We will be out there running out front, hopefully. These are always getting chased, so you have to have something going on. Brady Lierz: Yep. Absolutely. Well, one final one for me, and then I will pass it along. You know, you have mentioned quite a few times just throughout this challenging freight market the last couple of years, one of your priorities has been controlling your expenses—controlling the controllable. You did a nice job of that in 2025, particularly in the fourth quarter. Can you just talk about how we should think about expenses in 2026 given both your focus on wanting to maintain that cost discipline, but also considering we are expecting the market to improve here in 2026. W. Marvin Rush: Right. Well, let me say this. If we get into really—well, I believe we are not there yet—if we can get a growth where we really feel some real growth, I am not ready to declare the claim. And I am talking parts and service growth, not truck sales. Remember, truck sales are—when you go, everybody goes SG&A, SG&A. Well, we run it different. S is attached to truck sales. G&A is attached to all the other expenses. Right? Because S is a variable commission piece driven by what truck sales are. So you sort of have to look at them in two separate buckets. Right? And that is how we do it. And, you know, I would hope that we can maintain our G&A at least close to flat. Okay? That is my plan here. Would be to do that. Now, Operator: half W. Marvin Rush: of the growth—if the parts and service business ramps up, we always talk about the fact that we will spend half of the gross profit growth. Now let me back up a second. Remember this about Q1. Do not comp Q1 to any other quarter. Q1 always jumps from Q4. Okay? You have got all your payroll taxes restarting, and the majority of our equity costs go out—half the equity costs in the company run in one quarter, and that would be in Q1. So if you look at our historical record, it will always show a jump from Q4 to Q1. So do not forget that. I would just compare it to last Q1 because that is always a jump that we have. That is what I would tell you to do, not compare it to Q4. You know, a lot of different things in Q1, like your payroll tax runs down as the year goes on, etcetera. And really, more than anything, the equity costs—the majority, not majority, but half the equity cost in the company—run in one quarter, and that would be in Q1. So, again, do not compare it to Q4; compare it to last year’s Q1. But we would hope to do a good job for now staying close to that number last year. But it is possible that it will ramp up some if our gross profits in parts and service start going up. We cannot just—you know, it takes people to do what we do. People turn wrenches. People drive and deliver parts. People do all these different things. And it is not like I am loaning money here. I am handling hard assets and stuff like that. But I would love to have that problem. So, hopefully, we will continue to see growth. And if we do not, I am planning on keeping it as flat as possible. If we stay flat in parts and service, I am planning on keeping as close as I can, with as little inflation as possible, to where we were. But we are hoping to have some growth. And, like I said, after getting out of January, seeing a little uptick here in February, which started up. But I am used to the seasonality of the business, whether I like it or not. And I just have to deal with it, and, hopefully, we will pop out in the spring like always. Brady Lierz: Very helpful. Thanks for all the color, as always, Rusty. I will go ahead and pass it along. W. Marvin Rush: You got it. No worries. My pleasure. Operator: Thank you. One moment for our next question. Our next question will come from the line of Avi Jaroslawicz from UBS. Line is open. Avi Jaroslawicz: Hey. Good morning, guys. W. Marvin Rush: Yeah. Good morning, sir. Avi Jaroslawicz: So, Rusty, as of where things are standing today—and Andrew Obin: kinda discussed it a little bit already, just there—but what are your expectations for price/cost in the aftermarket business? I think it was somewhat of a tailwind last year, just as you raised prices of inventory to match the cost increases you were seeing. But then there is a lag for when those hit COGS. So how should we be thinking of what—yeah. Should that be a headwind here in 2026? And if so, roughly, what are we talking about? W. Marvin Rush: Yeah. You could have a slight headwind as inflation—you know, with inflation slowing down. Okay? But I do not look at it as it would be monumental. There will still be inflation. It may not be quite as much. You know, inflation can be a tailwind to you when you are doing it if you can maintain. So I would tell you—what, a little bit of a headwind—but when you look at it as a percentage of the whole, it is something that, if you have a growing market, you could overcome without any—without question. So while we will have inflation, I do not expect the inflation from that perspective, from a parts perspective, to be as much as last year from what we are seeing from the suppliers and the OEMs right now. But it will be there. It just will not be quite as much. Hopefully, you know, what we are talking about is the market will get better and grow. You know, the overall market was flat—not just for us, for everybody—or even down. And for some people, whether it is independents or dealer-operated stuff, some of them were negative last year. So, you know, I am hoping that we get into a more—of, you know, as our customer base gets healthier, their spend will be more normalized. You know, you have to think about it like this, the way I look at it. These guys were over three years in a freight recession. And I have been around—I hate to say how long—but I am young. Young at heart. But I have seen a lot. You know, when it gets like that, people do not necessarily spend like they would if their business was normal, when they are in a recession. You saw companies lose money that never lost money. Well, guess what? When that is going on, you are going to put off spend. You are going to add—you know what I am doing? I am adding 5,000 miles to the oil change. You know what? I am not fixing that fender. You know what? I am not doing this. So the health of a customer is the most important thing out there. And, yes, we do a lot of vocational stuff. The over-the-road market is still the biggest piece. And this—even the small—I mean, we have been off double digits from our small customer for the last—each year for the last three years. So, you know, I—and you go, that is bad. Well, that may be bad, but right now, I am going to say, I look at it as a positive. I look at it—it cannot get much worse. Right? It is only one way to go, and that is up. So, you know, I hear you about the little bit of headwind, but I think the overall market, when I look at the possibilities, a healthier freight market is going to be way better than a little bit of headwind. And it is not overwhelming headwind either, by the way. But I still think there is going to be some inflation. There is no question. But other than that, we will be able to hold our earnings. You can see, I think we ran 37% blended parts and service in Q4, which is in line—looking back—with 37.2%, 37.6%, 35.8% actually, the last ’25. So my point being, 37% is solid. And I would hope we could maintain in that same range—blended parts and service margin—regardless of inflation. But, you know, the health of our customer base, especially the largest customer base, the over-the-road carrier—and once the big carrier gets healthy, guess what? The little carrier follows along. And that is where more of your retail parts and service comes from. Not more, but a chunk of it that has been super depressed. And so, to me, I am not trying to get—it is not there yet, but I have seen these cycles before, and I do not want to get too bullish or anything, but if things go according to historical, then I think we should be in fairly good shape to capitalize on that. Andrew Obin: That makes sense. Appreciate that. And then on the medium-duty side of the business, saw a pretty sharp drop off in sales there in Q4. Still better than the industry, but a sharper deceleration than the industry in the quarter. So, you know, how are you thinking about the shape of the medium-duty demand here in 2026? Do you think it is going to be fairly similar to what we see in heavy duty? Or W. Marvin Rush: I do not know. You know, I have some concerns around it, to be honest with you, but I have not seen the acceleration in it over the last sixty, ninety days that I have seen in the heavy-duty side. But a lot of times, you know, the medium-duty business is a lot of leasing and a lot of different customer base. Right? And tied more to the general economic activity of things going on locally in a lot of ways because it is more diversified-type products. Otherwise, leasing and box trucks and stuff—there are a lot of other medium-duty segments that we play into. So we are seeing more quoting activity right now. It has not come to fulfillment as much as the heavy has, but a lot of times, you know, it will be springtime. As we get around here going up with the NTEA and some things like—it is a big conference that comes up, the convention—things like that, where some of these things happen. So I am sure that it will line up historical. You know, I cannot sit here and tell you that we are going to sell lots and lots more. I would imagine we would be maybe based on ACT calling it pretty flat, to be honest with you. We would stay in line with the percentage of the market we are at now. But, you know, I cannot tell you I have booked it all already. That is for sure. But I can also tell you I am not afraid. We have got a pretty good salesforce out there. We represent many brands, Avi Jaroslawicz: and W. Marvin Rush: you know, we feel good. It will come. It just has not really yet for us, to be honest. But the quoting activity has picked up. You have to quote before you can order, and you have to get it ordered and get it built and get it delivered. So I am confident that we will execute in the lines of where we have historically, if not grow it. You know? I have got some stuff going on that I would like to see happen. It might allow us to even grow it, but I do not want to get out and put my skis on. Avi Jaroslawicz: Alright. Appreciate that color. And thanks for the time. W. Marvin Rush: I got you. My pleasure. Operator: Thank you. One moment for our next question. Our next question will come from the line of Andrew Obin from Bank of America. Your line is open. W. Marvin Rush: Russ, this is Steve. Good morning. Well, good morning, Andrew. Steven L. Keller: Just a question. Just going back to something you said. I think you guys were fairly Andrew Obin: skeptical, and there was a big industry debate about ACT orders last month and were they one-time in nature. It sounds like you are sort of warming up to the fact that, you know, orders could actually improve faster. Could you just unpack this for us? Just what are you seeing happening with industry orders over the three to six months? How that is going to play out? Thank you. W. Marvin Rush: Sure. I may be a little repetitive here, Andrew, but I thought I tried to answer. But we believe that, you know, once we got clarity—remember, it started on November 1. Let us get that right. When they changed the tariff rules, took effect November 1. Then we got some clarity a little later after that about, well, we are going to hold on and keep the 2027 rules in place from the emissions perspective, except for we are going to loosen up a few things here. We are going to—probably, and it has not come out yet—but the feds have said we are not going to keep all the warranties. Now, it has not been officially done, but they have communicated to customers and the like that we are going to cut the warranties back. Well, that was more than half the cost. We are going to be a little flexible on credits and how you do that. And I am not the technical expert. So you had all that go down. So that gave clarity. Right? So then customers started looking out next year. They knew they really wanted—they pulled back on purchases last year in the second half. And you cannot do that for too long, or you are going to—you have to bottle that up. Your maintenance is going to go through the roof. Age—your fleet age goes up on these big fleets. So people really started talking, I would tell you, in November. And, you know, in November, I do not remember what it was. It was 18,000–20,000 units. I cannot remember. But it was picking up, and we had a big December—38,000–40,000, I think—and then it was 30,000 last month. Well, at the same time, as I said earlier, people’s businesses—they started being able to see your tender acceptance rates came down from 98% acceptance to low 90s—even in the high 80s—which started to drive, you know, your spot market up. And it is not just weather that did it here recently. And people felt better about where they were at from, you know, in contracts going forward. There has been a little bit of tightening. Right? So that gives you—and people worry, is it sustainable? Right? The first thirty days. And now I am going out on a limb. Maybe I am going to be wrong. Maybe it is not sustained. I have a feeling that after three and a half years, it has got to be somewhat sustainable, if not gradual. Right? But sustainable, whether it is not some spike but a gradual sustainable improvement in their business. You tie that in with now you have got clarity. You know where it is going to be at the end of ’27. You may have slowed down on some purchases—some companies did—in ’25. Well, you know, that is why I think you are going to see some good order intake this month. Also, I am just guessing—it is a short month—but it will be solid. I do believe it. It is a short month because we know February, but I would expect it still to be solid, from people I have talked to. So, you know, I think what is going to happen is, as the backlogs fill—and I do not know for everybody because I have heard of one OEM that has shut down weeks here in the first quarter. Not anybody I am dealing with, I do not believe, but I have heard of one OEM that has, and I do not want to get into all that. But my point being, I know for people that I am dealing with, they are filling up. Not filling up, but you are getting orders. You are building a backlog. Most of them spread over time. So I just believe—I could be wrong—it is just my gut and maybe touch with the market, that yes, it will continue because people are feeling their business is not great, but they do not feel in the dumps. Sometimes when you have been living in the swamp—in the dumps—it does not have to get a whole lot better to make you feel better. And it has been three years of prolonged freight recession, but at least now you have to believe, you know—because remember, the first thing that happened is capacity is coming out. Everybody reads about non-CDL, or noncompliant drivers—there has been taken out here and there. And they have. But that is not an add-water-and-stir thing. But as that goes on, you take—you have less intake of trucks. Remember, we built a whole lot less trucks in the back half of ’25 than what we did in the first half. So you slow that spigot down. You start taking some of those noncompliant CDL drivers out, and you start squeezing the capacity piece. Then, all of a sudden, business starts getting a little better. Economically, it looks a little better. The ISM stuff looks better. I mean, there are a lot of things Andrew Obin: that W. Marvin Rush: tend to make me believe, along with emission regulations coming January ’27, we are going to have a pretty good last three quarters of the year. And I am not predicting doom and gloom after that, but it is a little far out for me to understand right now. I am just dealing with what I have got in the present over the rest of this year. We will talk about ’27 as we get halfway through or a little further through the year. But I feel good that it is sustainable and will lead to maybe even a better year. The problem is you start off—remember, the first quarter is going to be off. So you are starting in a hole to begin with. So you have to climb back out and then catch back up, which you should do for sure in the back half of the year—deliver more trucks than we did last year. For sure. Andrew Obin: Great. Rusty, and just a follow-up. I mean, it clearly seems that the improvement over the road is finally driving your optimism for the rest of 2026. You have alluded to other parts of the economy getting better. Can you just talk about off-highway, which has been such a moneymaker for you over the past year—sort of got you through the drought? But maybe, you know, if we could talk about, you know, sort of these corporate fleets, if we could talk about construction, if we can talk about waste. What are you seeing in those markets? Because those tend to be economically sensitive as well. But, as I said, it seems to us that your message is very clear on finally starting to see green shoots on over-the-road recovery. W. Marvin Rush: Yep. Very well put, Andrew. Yes. Seeing them on that side of the margin. Avi Jaroslawicz: Yes. W. Marvin Rush: You know, we love the diversity of our customer base. You know that. I would tell you the vocational pieces—I do not see the pickup that I see across, but I can see fairly flat to where we have been. Because we have been pretty solid in it. I have to be honest with you. So, as you said, it has helped us a whole lot over the last couple years. When there is an over-the-road freight recession, we have been really solid around that area. So I think that—let us say, I do not want to get into specifics. We might be a little softer in one segment, up a little in another segment. But when you look at vocational as a whole, I am going to say we are going to be probably flat with where we have been. I do not see any huge decrease or any—you know, we may—because some of them, we were still catching up from COVID the last couple of years, when you could not get trucks three years ago. So we have fulfilled maybe some of that or the pent-up demand. So now it is more like business as usual. But I do not see any big downtick. It is more back to business as usual. Some of the people we do business with were playing catch-up in ’24 and ’25 from not getting as much product in prior years, to be honest with you. So, you know, where they may be off a little, it is not off because they are off. It is off because they played a little catch-up, and we were able to capitalize on that. So when I look at those businesses, they are doing well, but they have caught back up to their normal replacement cycles. They got left out a little bit—some of those groups got left out back in ’22 and ’23—and then we picked them back up in ’24 and ’25. So just because someone may have bought 900 from me or something, and they are buying 750–800, that does not mean business is bad. It just means they have caught back up. Right? So you have to report. But I think, overall, we will be somewhat flat in the vocational pieces. Andrew Obin: Thank you, Rusty. It has been a while since you have been constructive about over the road. Good to hear. Thanks so much. W. Marvin Rush: Yeah. Well, it is nice to feel—even though it is the big piece, you know? But for us, vocational is big as well. So thank goodness. It is nice to feel that you have got an opportunity to maybe—you know, and I hope when I say over the road, I am hoping our small base comes back. I am a little Avi Jaroslawicz: a little W. Marvin Rush: optimistic there. I do not want to get overly anything. Wait till I talk to you in April, and I will have a whole lot better feel for what is going on—the sustainability of what we are seeing. And I am not trying to overwork it. But, like you said, it has been a while since we have been able to talk optimistically about the over-the-road business. And I am just looking forward—I think things are going to be better. So you add that with everything else we have got. In Q1, this is—we are just taking out—people get excited because they always say orders taken. Orders taken does not mean trucks delivered yet. We are the tail of the dog. A lot of times, we have to do a lot of upfitting and things like this to trucks when we get them. So that is why, when you hear me talk about, well, he took orders for us—well, that does not mean I am going to add water to the furnace and deliver them thirty days later. It could take three, four months to get them out there and get them delivered because of what has to be done, because we are the last guy that touches the end user. So, even though they are manufactured, we have upfitting places around the country where we make sure that we do all those things that customers need. A one-stop shop. That is where we like to be. Andrew Obin: Thank you. W. Marvin Rush: You bet. Operator: Thank you. And as a reminder, to ask a question at star 11, star 11. One moment for our next question. Our next question comes from the line of Cole Cousins from Wolfe Research. Your line is open. Andrew Obin: Hey, guys. Thanks for taking my questions. W. Marvin Rush: From a Class 8 Andrew Obin: pricing perspective, can you talk to what you are seeing across the market at this point? Are OEMs raising Andrew Obin: prices yet, or does it remain pretty competitive Andrew Obin: as OEMs look to protect or gain share, and maybe how do you see this progressing through the year with EPA ’27 on the horizon? W. Marvin Rush: Yeah. You probably did not do real well asking that question to the OEMs, did you? Okay. So you are asking me. You put me on the spot. I would tell you right now, we are still building backlogs. I would say, you know, there is no big discounting going on compared to where we were, but there are no huge raises now because that is one of the things. As we get later in the year, I would not be surprised to see—if supply and demand—if demand exceeds supply, you have been around long enough to know what that means. I will not even try to tell you. Everybody knows what that means. Okay? And so we are not there yet. Backlogs need to be built up. They have been drained down pretty good. People were building trucks in four weeks for you if you wanted it. So, you know, once backlogs get built up, we will let the OEMs decide, and we will be the poor guy in the middle trying to get deals done. But right now, I would say we are in the—OEMs are still in the process of getting their backlogs more healthy. So I am not going to say it is total cutthroat out there right now because it is not. But it is balanced at the moment. But if you start popping two or three more 35,000–40,000 months—which are not necessarily typical of these months coming up; in March and April, you are probably going to see demand obviously outpace supply, and I will let you take it from there. Andrew Obin: Okay. Yep. That makes a ton of sense. And just—I know we have asked a lot of questions about this—but to follow up on Brady and Andrew’s questions, maybe to put a finer point on it, how much of what you saw in December and January do you think was replacement CapEx versus growth CapEx versus some degree of prebuy activity? And if it was some degree of prebuy activity, can you maybe talk to the risk of potential order cancellations late in the year if things maybe are not as good as they seem and customers are trying to get in line ahead of EPA ’27 as backlogs start to build again? W. Marvin Rush: I feel very good about how solid what we took was. How about that? I see nobody out there trying to put placeholders. The business we took—it would take a recession or something for these folks not to take what they ordered. That is how solid I feel about it. It is not people putting placeholders. You have seen ramp-ups before where people put placeholders out there just so they can hold slots. That is not what is going on at the moment. I see none of that, to be honest with you. I see people being proactive, understanding what I just went through on the last question. They do not want to get caught in that demand-out-of-whack demand-supply piece. You know what that means. We already know what that means. So they are trying to be proactive, not just to the emissions, but also knowing that it is probably going to back up—whether you can get that second- or third-tier supplier. And that is what—I hate to say it, but you know what happens when demand outpaces supply—where price goes. Let us get real. So I think people are catching up. They probably did not purchase as much in the back half of last year because they did not. And, you know, the best way I can tell you is it is solid. I go back to—remember what I kept telling you—their business is better. I have said that three or four times also. It is not just emissions. Not just the emissions. You asked about price. I will answer it the same way. Their business is better. You have got emissions coming. You feel better. Like I said, you have been in the dumps so long—it is not a straight V, but it is a gradual climb up. You feel good about where you are at. You are trying to plan for your future. You know you are going to be in business for a long time, and you need to do the right thing. And you just put that together, and I think that is what you are going to see. That is what you are seeing, and I do not believe that activity level is going to Andrew Obin: to W. Marvin Rush: go away. It may not be 35,000–40,000 every month, but some people that are not participating are going to wake up here in sixty days if we have a couple, three more months of order intake like this and go, whoa. And that is what—you asked about price. That is when we are going to see how things move along then with that. So I would tell you that the folks that are on top of their game, feel well enough about what is going on, are doing the right things for their business plan and not waiting till the last minute to do that, knowing that there still is plenty of backlog out there still to be built. You better not wait till July would be my comment, or you might get caught, because ramping up production—I mean, Andrew Obin: these W. Marvin Rush: OEMs are having to make decisions right now, in the next thirty to sixty days, what they are going to do in the back half of the year. You have to remember that is more labor. That is more this. And it is the second- and third-tier supply chain that has been down in the last half of last year that you ask them to ramp up. They are going to go, well, how long for? And that is where you run into a problem. And that is what could happen. So, you know, if I am planning on being in business around a long time, and I am a smart player, then I am out working it right now. Okay? That is what I am doing. Because, you know, that could be an issue. It is not an issue now, but you better be looking out. You better not be living just in the moment. You better be looking out a little ways would be my comment to anybody. And I am not trying to play scare tactics. I am just telling you that you run into issues with that. And we will just—I think, if I am not mistaken, the engine’s build is the ’27 mark—not model year, but—one thing you have to remember: when you get towards the end of this year, it is about the engine. The engines all have to be built by the end of 2026 before you go into 2027. So it could be an interesting back half. Let us just say that. How about that? Andrew Obin: That makes—that is good color. I appreciate it, Rusty. And maybe if I could squeeze one last question in— W. Marvin Rush: Of course you can. You know I hate to talk. Andrew Obin: I heard you on the small accounts being down double digits for the past couple of years. It sounds like that has not really come back yet, but maybe there is some hope that it will through the year. But maybe can you talk to what you have seen from the national account level and, from a higher level, talk to some of the initiatives you guys are pursuing to grow national account mix going forward? W. Marvin Rush: Yeah. You bet we are. We always were. You know, national accounts—it is easier, more effective, and more controllable. It is hard to control what we call the unassigned accounts. That is still 30% of our business, roughly, and that is the little folks. Right? So we just want that to come back because that is going to be a higher margin. When you do national account business, understand they are national for a reason. They are not paying retail. So, while it can be a little hard on your margins, it is still more solid, sustainable, repetitive business, should I say. So you are looking for that foundation. The cream and the cherry on top comes when you get the small retail guy back in the game—the guy that is not listening to me on the phone right now. Those folks. They are still a part of what we do. But our national account business was up—not as much as we had been up, but it was up in some sides of the house—not so much in others—but overall, for last year. We will continue to focus on that. And we were up—not as much as we had. We were up by, like, overall blended, all OEMs were above 6%. So we will continue to grow that, understanding that you are blending revenue, you are blending margin, you are doing all that. We love that piece. We are going to continue to focus on that piece. It is the sustainable piece—more sustainable. It does not have the volatility of the small customer out there. So—but that is why I am hoping. But you have to get those guys—the national accounts—have to feel better, which they do. They will buy all the time. They just may not buy quite as much sometimes. We were up six years before—we were up double digits. Again, like I said, you are growing the revenue. Margin is not as high as the other. We work the blended margin. But I think everybody understands that. And we are fine with that. We will manage that piece. It is much more manageable for me than unassigned accounts because they are not assigned. You really do not know who they are. Small firms. But, hopefully, later this year, as the big guys get healthy, the little guys usually follow. But then they get growth. Then what happens is they get too good. They get too big, and we go back in the cycle again a couple years from now. So, right now, I would tell you, I am hoping that some capacity still comes out, which hits the small guy, but the ones left will be our healthier customers. And we will see some pickup in that later this year too. As rates go up, it helps everybody. Not just the big guy. It helps the little guy too. I know it is a long-winded answer there, but I hope I gave you some points there that you are going to grab hold of that make some sense to you. Brady Lierz: Yep. Okay. Yep. That is helpful. Good to hear from you guys. I will turn it back. Avi Jaroslawicz: Thank you. Operator: Thank you. I am not showing any further questions in the queue. I would now like to turn it back over to Rusty for any closing remarks. W. Marvin Rush: Hey. We appreciate everybody’s participation this morning. It is a short time before we talk again. We will talk in April. So, thank you. Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Operator: Greetings, and welcome to the Huntsman Corporation Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Ivan Marcuse, Vice President, Investor Relations and Corporate Development. Please go ahead, Ivan. Ivan Marcuse: Thank you, Kevin, and good morning, everyone. Welcome to Huntsman Corporation’s fourth quarter 2025 earnings call. Joining us on the call today are Peter R. Huntsman, Chairman, CEO and President, and Philip M. Lister, Executive Vice President and CFO. Yesterday, 02/17/2026, we released our earnings for the fourth quarter 2025 via press release and posted to our website, investors.huntsman.com. Also posted a set of slides and detailed commentary discussing the fourth quarter on our website. Peter R. Huntsman will provide some opening comments shortly, and we will then move into the question-and-answer session for the remainder of the call. During the call, let me remind you that we may make statements about our projections or expectations for the future. All such statements are forward-looking statements and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures such as adjusted EBITDA, adjusted net income and loss, and free cash flow. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release which has been posted to our website. I will now turn the call over to Peter R. Huntsman, our Chairman, CEO and President. Peter R. Huntsman: Ivan, thank you very much. As we review 2025 results, I think it is worth commenting on a bit on this past year and on our focus on 2026. I often end my prepared remarks with these words. We will continue to focus on what we can control and where we can create value. I do not say this to be repetitive, but rather emphasize where our focus needs to be. Our industry started this past year 2025 with optimism that North American housing was going to pick up. Chinese consumer confidence was going to recover and Europe would finally realize their follies and do something to reinvigorate their industrial competitiveness. Instead, shortly after our call, Liberation Day was announced and markets and consumer confidence was thrown into chaos. China repositioned and rechanneled their trade and stood toe to toe against the U.S. while their domestic market slowed. Europe policymakers focused on what was making them uncompetitive and decided to double down and lost a record amount of chemical production throughout the year. In North America, we saw U.S. housing and durable goods struggle to show any growth. Despite these hurdles, we continue to cut and restructure our cost basis, closing multiple facilities. We achieved growth in most of our tonnage that exceeded the general market while attempting to lead multiple price increases. And perhaps most importantly, we converted 45% of our EBITDA to free cash flow. A higher percentage than many in the industry. As we look out over 2026, we anticipate a gradual recovery in North American homebuilding and durable goods as well as an improvement in the Chinese domestic markets. We are seeing some very early signs of both improved volumes and pricing in Europe. It is too early to say these increases will fully materialize but we remain hopeful. While we do not control the outcome of these large macro changes, we will be more than ready to take advantage of any opportunities to expand margins and increase revenues should they come along and by focusing on those items we can control and conditions we can influence. On the strategic front, I believe that 2026 will continue to be another year of changing market dynamics. Even if we start to see a recovery, we will likely see further opportunities for mergers, joint ventures and industry consolidation. As always, we will be willing to engage with interested parties and push where there is an opportunity for value to be created. We will not be sitting on the sidelines waiting to see what comes along. Like 2025, we have set expectations internally to generate enough cash to cover our dividend. This requires more than just moving inventory about. And we will continue to be focused on further structural change in how and where we do business to accomplish this. With regards to pricing and growth, we will push to grow our assets at a better pace than the general industry and do this by winning business through new product development and innovation. Pushing to fill out capacities and upgrade materials through our MDI splitter in Geismar, capacity increases in high purity amines for the tech industry and catalysts, and expanding capabilities in material usage in aerospace, power and the fast evolving auto industry. We will also be selectively using AI tools if they make economic sense to further reduce our cost, simplify our processes and expand our R&D capabilities. In short, I hope that 2026 will be a year of recovery compared to 2025. The coming weeks should signal to what degree we will see demand returning to the North American construction industry and China’s moves following the Chinese New Year, the March National People’s Congress and President Trump’s visit to China in early April. The next several weeks should be anything but boring. With that, operator, we will open the call up for questions and comments. Certainly. We will now be conducting a question-and-answer session. First question is coming from David L. Begleiter from Deutsche Bank. Your line is now live. David L. Begleiter: Thank you. Good morning. Peter R. Huntsman: You mentioned some potential improvement you are seeing in Europe. Can you dive down into what is David L. Begleiter: driving that improvement? And how long and can that persist going forward in the year? Peter R. Huntsman: Yes, I think that as we look at Europe two things that we see. We see price increases that have been announced across the board. Well, most everyone have announced price increases, there might be one producer out there that is not. We are seeing a bit of a pickup in construction and as well as in auto. We also continue to see demand, not necessarily in polyurethanes, but in other divisions around the power segment, building out the infrastructure as well as aerospace. So I want to emphasize that at this very call last year, I think in my comments, I commented that everybody in North America had announced price increases as well. And all of those fell through shortly after the chaos that ensued after Liberation Day. So again, I am not trying to throw water on what we are seeing thus far into the quarter. But in Europe right now, I will take anything we can get and run with it. David L. Begleiter: Got it. And just in aerospace, how much did the business grow in 2025? And how much do you expect the business to grow in 2026? Thank you. Peter R. Huntsman: We expect the business to grow slightly better than the build rate. Again, I would just remind you, there is a difference between the delivery rate and the build rate. If you go to some of the airline aircraft manufacturers, you will see when you go to Toulouse or you go to Seattle, you will literally see scores of planes that are waiting FAA certification. So you can see where an Airbus or Boeing can show 15 deliveries, but a build rate that is much higher or much lower than that. Also, just as a reminder, we put a lot more product into wide bodies than we do narrow bodies. So when somebody says that they have got a record number of deliveries, or of production rates, we want to see more wide bodies. Just as a side note, the wide body production rate is still below this year is still below where it was in 2019. And that is not through lack of demand. There is still a backlog of years and years on wide body, pushing ten years on wide body planes. It is the capability that both producers seem to have lost during the COVID era. So as we see that recovery in wide bodies, we also have announced in previous calls the penetration of our products in internal applications around adhesives and internal components. So I say that we expect to grow better than the production rate, I say that meaning that we already have under contract a lot of the fuselage, the wings and so forth that we have had for some years. But we are picking up new business on a per-plane basis that will gradually be benefiting us throughout the year as well. So aerospace for us will continue to grow slightly better than the production rates of the wide body planes in both Airbus and Boeing. Thank you. Next question is coming Kevin William McCarthy from Vertical Research Partners. Your line is now live. Kevin William McCarthy: Yes, thank you and good morning. Can you refresh us on the amount of cost savings that you expect to flow through your financials in 2026? And where those might show up on a segment basis, please? Philip M. Lister: Yeah, Kevin. We targeted $100 million of cost savings Peter R. Huntsman: overall, which was headcount reductions of approximately 500, almost 10% of the workforce, and closure of Philip M. Lister: seven facilities. By the 2025, we had actually achieved Peter R. Huntsman: that annualized run rate of $100 million. The question is very specific to the in-year saving that we would expect in 2026. Philip M. Lister: That is about $45 million of in-year savings that we would expect to achieve excluding any impact from inflation. And you should get some additional savings to come through as well in 2027. Kevin William McCarthy: Okay. Very helpful. And then Peter, I wanted to follow up on a comment that you made in your opening remarks to the effect that we may see more in the way of mergers, JVs and industry consolidation this year. Were you referring to the industry in general? Or do you see opportunities for those sorts of strategic actions in the polyurethanes arena, for example? Peter R. Huntsman: I think both. I think that if you look in general is the most direct answer I can give. But I also have to look at where there is the most payoff. That is usually where you are seeing the largest number of divestitures, closures, possible joint ventures, and so forth. I think it is something like MDI where in the U.S., you have four manufacturers. I would imagine that the cost curve between those four manufacturers is pretty steady. And it would probably be pretty tough to see a merger take place of one of those four or two of those four manufacturers coming together. So U.S. might be a rather limited area in the area of MDI. Mike Harrison: I look at some place like Europe, I think the cost curve again, this is just my opinion, but the cost curve in Europe when you look at facilities, an MDI facility that would be in Antwerp or in Rotterdam, and you compare just the integration and the scale, then you take some facilities that are far smaller where they are taking raw materials, producing it in country A, moving it to country B where they are processing it into MDI, moving it to country C where they are splitting it. Again, you have a much greater cost curve in Europe. And I would assume that you have got leaders and laggards in Europe that you do not see in Asia, you do not see that in North America. That could easily precipitate possible closures. They could precipitate possible combination of assets taking place. And so I would say that it has to do with both the chaotic nature of the manufacturing footprint, costs and so forth that are associated with that. But at the same time, look, the number of chemical companies there are today that produce polyethylene, for example, in North America are fewer than there were fifteen years ago. Polypropylene, you look at the number of companies, look at the number of companies that are just our peers that are publicly traded. There is a general consolidation that is taking place, has been taking place. And I would assume that as you look and companies have cut the cost that they have cut, I imagine most companies have taken out all of the fat that exists and probably is now maybe even carving into muscle into certain areas. The next area that you are going to see for material cost savings is going to come about through possible mergers and so forth. So again, these are just my observations, but I continue to believe that there will be opportunities as there have been in ’25 and ’26. Now does that mean they make financial sense? You have seen some very large companies that have just shut down assets, some that have sold them off at a loss, others that have sold them for almost nothing. I think we are pretty public with our German maleic anhydride facility. We tried to sell it. We got to a point where we even tried to pay people to take it, and were unsuccessful in all of that. So we finally decided to shut it down. So every company is going to vary. And just because there is a deal out there does not mean that you have got to pursue it. But it does mean that there is, I believe, continues to be opportunity for churn. Kevin William McCarthy: Great. Thank you both. Peter R. Huntsman: Thank you. Next question is coming from Josh Spector from UBS. Your line is now live. Josh Spector: Yes. Hi, good morning. I wanted to ask about Philip M. Lister: your debt covenants that were updated a week ago and your outlook. I guess if I am doing some math right, need to be above six times net debt to EBITDA. Means your EBITDA in 1Q through 3Q needs to go from about $60,000,000 to $80,000,000 to $100. I guess one is that about right? Because I recall some of your prior agreements had some adjustments and maybe added some EBITDA temporarily. And two, just your level of confidence of achieving that step up if the industry does not improve. Philip M. Lister: Yes, Josh, it is Phil. So we posted our credit agreement on the new banking group on Friday. And if you want, you can look through all 160 pages, but I will give you the synopsis of that. Good banking group, pleased with the agreement overall. And you are right, the agreement has definitions of consolidated EBITDA which are different to the adjusted EBITDA that we state publicly. In addition to that, there are certain baskets as well. I am not concerned at all in 2026 about the leverage ratios. I think that adjusted EBITDA as we publicly quote would have to drop to something well below $100,000,000 on an LTM basis for us to even have a conversation about those leverage ratios. I am not concerned and I am pleased with the agreement that we put out on Friday. Josh Spector: Okay. So just there is then some sort of adder of a sizable amount, I guess, to bridge that gap, which I guess I should read that document to find more. Can you size it now? Or is it more complicated than that? Philip M. Lister: You have various definitions to size it, but you can see in the details, but you have got more than a couple of $100,000,000 there, and I am not concerned in the least about those add backs and help bridge the ratio. Kevin Estok: Great. Peter R. Huntsman: Thank you. Next is coming from Michael Joseph Harrison from Seaport Research Partners. Your line is now live. Mike Harrison: Hi, good morning. Peter, was hoping that you could talk in a little bit more detail about how you are thinking about MDI margins playing out over the quarter or two. It sounds like in polyurethanes, you are still expecting overall margins to kind of be under pressure. But I am curious Kevin William McCarthy: where you might be, maybe a little bit more optimistic Mike Harrison: Well, I think two things when you think about margins expansion. One is how much, what is the industry doing around volumes. And obviously, the more that you sell out of a fixed asset, the better your margins are going to be even if pricing does not change. And so typically going into the March, April, May timeframe, you are usually seeing demand picking up quite substantially. I do not see anything right now, at least, that is equivalent to the liberation day we saw a year ago that kind of threw people into Kevin Estok: chaos. Mike Harrison: Interest rates are steady, if not dropping a very small percentage. Homes are becoming more affordable as builders are building smaller homes, and simpler homes, if you will. And I remain optimistic having spoken to some of our customers and having spoken to some of the banks and lenders and so forth. In this area, that recovery in volume is going to be something that we should see increasing over the next few quarters here. I would also hope that pricing initiatives that have already been set, we sent out price increase notifications yesterday in our MDI business in North America, largely to offset rising benzene and natural gas costs. That obviously needs to happen just to offset the headwinds of natural gas and benzene as similar price increases have gone into effect in Europe to offset those costs, and hopefully gain some traction there. And China will probably have to wait till after the Chinese New Year. It started yesterday, goes into the early parts of March, before we see what is happening in China where we are seeing an RMB price today of around 14 for polymeric MDI. So I anticipate that we will see both an improvement in volume demand and in pricing. Kevin Estok: All right. And then Vincent Stephen Andrews: for my follow-up, I was hoping that you could maybe give us an update on the potential for share gains in spray foam insulation in North America. And kind of where do we stand in terms of rolling out that spray foam insulation product line in Europe and in Asia? Mike Harrison: Well, Europe and Asia we are going to continue to look at opportunities there as they come, and perhaps looking at third parties and so forth. Our main focus on building solutions is going to be North America. We continue to make steady progress in gaining market share. And at the same time, we are also doing that with increasing margins and lowering our own costs, consolidating our manufacturing footprint, and providing customers with new solutions and new products, innovation. So I think that our building solutions, urethane spray foam business today is probably in as good a shape as it has been the last three or four years. So I continue to be optimistic about the direction of that business. Peter R. Huntsman: Thank you. Next question today is coming from Patrick David Cunningham from Citibank. Your line is now live. Patrick David Cunningham: Hi, good morning. Thanks for taking my questions. Mike Harrison: Peter, you have taken a lot of steps to rightsize the cost structure Patrick David Cunningham: and footprint in Europe, particularly in polyurethanes. Do you still feel there is more to go from either you or the industry? And I know in the past, you have been skeptical about things like antidumping or energy policy reform in Europe. But have any of the more recent calls to action or radical policy reshift given you any more encouragement at this point? Mike Harrison: Yes. I remain hopeful that European policymakers will eventually do the right thing. As I had an opportunity a couple of quarters ago to meet with President Ursula von der Leyen, and I told her they need to do three things. They need to restart their nuclear, refocus on nuclear production. They need to move away from this crazy green new deal that has run them into the ground. And I apologize to her for using the f word, but they need to start fracking. And so she shook her head and yeah, we need to talk. The problem is there is just too much talk and there is too little action. But I continue to be optimistic that action will come about. I believe that in Europe, look, we have got two issues there and I have already touched on the first one, of what I consider to be a very wide structural issue with the industry of small facilities that I question just how competitive they are. Again, I do not run one of those, and so I do not know what goes on in those boardrooms and so forth. But there does seem to be more capacity than needed to satisfy the industry. There is a pretty disparate cost curve in Europe. And Europe continues to struggle with high energy costs. And so I think that there needs to continue to be a consolidation or refocus on those two things. As far as our cost structure in Europe, as I look at that cost savings of $100-plus million that Phil talked about earlier, most of those 500 reductions that we have seen in the company and the seven site closures, sadly, have taken place in Europe. And do we have more that we could be doing there? I really strain to see where there is large material change that can happen there by cost cutting further. I think that we want to position the business with the realization that Europe continues to be a $20 trillion economy. As much as we struggle in certain areas of polyurethanes, we continue to do very well in Europe in aerospace, and power, and coatings and certain adhesion formulations, and our thermoplastics polyurethanes and elastomers businesses. So not all is on fire in Europe. I just think Europe is capable of doing a lot more than what they are doing. And we hope that we are able to see recovery. I would remind you that it was just four years ago our most competitive MDI produced anywhere in the world was Europe. Europe was the most profitable end of our MDI business a couple of years ago. It can be great again. And I will spare Phil Lister saying, let us make Europe great again. But so we will go on to the next question here. Patrick David Cunningham: Understood. And then maybe just on Advanced Materials, it seems to have a lot going for it entering into 2026. You have new wins, strong aero, power businesses and maybe some stabilization on some of the core coatings and infrastructure. So how should we think about growth in 2026 and any sort of latent upside or operating leverage you may have for margins and what sort of right margin levels we should think about? Mike Harrison: I think that look. Advanced Materials is going to be stable before anything else. But where we need to see the growth taking place and margin improvement taking place is the segment of the industry where I believe we have the greatest opportunity for improvement. That is The Americas. Europe continues to be a strong segment for Advanced Materials. Asia continues to be a strong area. And The Americas will continue to see recovery as we see building recovers, we see the PMI continue to recover in The Americas. And I continue to be very optimistic about that trend. Peter R. Huntsman: Thank you. Next question today is coming from Michael Joseph Sison from Wells Fargo. Your line is now live. Michael Joseph Sison: Hey, good morning. Peter, can you talk a little bit about Kevin William McCarthy: the cost curve now? You sort of mentioned that Europe used to be Michael Joseph Sison: your highest or lowest cost or highest margin area. So Josh Spector: where are we now maybe industry-wise for the regions? And then Kevin William McCarthy: you know, at some point, if things do not improve in Europe, Josh Spector: I mean, what do you do with your assets there? Does it make Kevin William McCarthy: sense to just reduce exposure and sell out the U.S. or, you know, what are the options if Michael Joseph Sison: this downturn continues? Which I hope it does not. Well, Kevin Estok: yes, I hope it does not either. Europe has got too much potential. Mike Harrison: And I think that what we are seeing right now, our biggest headwinds where I look at our MDI production in Rotterdam versus Geismar versus Caojing. We have basically the same technology. We have the largest line in Caojing. We have the most lines in Geismar. We look at our cost for benzene in the three regions as basically flat. Our cost for chlorine and so forth is essentially flat. The big drivers is energy, is natural gas and energy costs. And so that is what fundamentally needs to change in Europe. And, unfortunately, today, I think that the seeds have been sown that I am not sure that there is going to be a fast change taking place. Now that is why we have made the funding that we have made in the last couple of years in Europe, which I think will address a lot of these issues going forward. The bottom line is that Europe, if demand is not going to improve, and if they are going to leave themselves open for cheaper product to come in from Asia and from the U.S. Eventually, European policymakers have got to determine if they want to protect homegrown industry in Europe. And two macro things need to—there needs to be less production in Europe and European policymakers need to decide if they want to stop cheaper products from coming into Europe. Patrick David Cunningham: Got it. And then just a quick follow-up on Josh Spector: sort of the industry consolidation potential. Kevin William McCarthy: If Huntsman Corporation ends up being a buyer, Josh Spector: of stuff, where do you want to focus those acquisitions? And then you know, what are the potentials for Huntsman Corporation to divest stuff if things are not going to improve longer term. Mike Harrison: Well, we are going to, in my opinion, we are going to have to do both. Because we do not have the ability today, we are not going to go out today with the balance sheet that we have today, stretch that balance sheet and put it in jeopardy. So that is why I say my comments. We have got to be creative. We have got to be smart. And you have got to look at things such as joint ventures or possible, you know, mergers and or some sort of consolidation play. And I think we can continue to expand and to grow the business without necessarily going out and taking on more debt. Now if we are able to sell something or monetize something, I think we have been very consistent over the last couple of years. Our primary focus is going to be to expand our applications and the footprint that we see in Advanced Materials. And we would like to invest in those type of applications. That is not necessarily that we are going to go out and we have to invest in epoxy. But when we look at areas like aerospace and adhesions, and we look at the power systems and so forth, even look at some of the automotive areas that polyurethane is participating in around battery potting and so forth. These are going to be the sort of applications and product innovation that is going to be rewarded over the next decade. So where would we be buying? Probably first off we need to find where there is best opportunity, but it would be in that area. But, again, I want to end this by where I started it, and that is we are not going to go out today and take the balance sheet we presently have. We are going to have to do some work before we go out and just start adding on more debt or see a material change in improvement in the industry. Peter R. Huntsman: Thank you. Our next question today is coming from Aleksey V. Yefremov from KeyBanc Capital Markets. Your line is now live. Joshua David Spector: Thanks and good morning. This is Ryan on for Aleksey. Peter, I want to go back to some earlier comments I kind of found quite interesting around affordability and maybe some improving conversations with customers. I was just wondering, are you maybe seeing improved Philip M. Lister: order patterns from customers kind of ahead of maybe upcoming construction season? Or is there something else on the radar? Just any additional color there would be much appreciated. Mike Harrison: I think that it is simply too early to say, and I am not trying to obfuscate. We had a very cold East Coast, everything east of the Rockies, in January, December. I think that if anything, we are probably going to see a little bit of a delayed, probably a couple of weeks. We typically start to see construction orders start coming in about February, about now, and start building up through the month of March. And so that by April, you are seeing the full impact of what I would call a construction season. That obviously can be delayed through weather. It can be delayed in Asia because of a later Chinese New Year, which is what we are seeing this year. So I think between later-than-usual Chinese New Year and a colder-than-usual winter months that we saw in North America. Now I did say earlier, we are seeing what I would consider to be green shoots, and I want to emphasize again, very early green shoots in Europe, about a little bit better demand and pricing traction than we have had the last couple of years. So that again, I will take anything I can get at this point. And we are going to nurture that and we are going to Kevin Estok: see Mike Harrison: make the most of that. Philip M. Lister: Right. Okay. That is helpful. And I was just curious. Can you—you guys made some comments in the prepared remarks just around kind of inventory levels in the U.S. But I was wondering if you can maybe comment on where you believe MDI inventories are in both Europe and Asia? Thank you. Mike Harrison: You are talking about our inventory levels or that of customers and the industry in general? Philip M. Lister: Just the industry in general. Mike Harrison: Yeah. I would say ours are very low. And again, I cannot speak for every customer that is out there, but just anecdotally, it feels like the supply chains between us and the consumer is quite low. And, you know, all companies right now in that supply chain are trying to control cash, trying to control inventories and working capital. Building suppliers, OSB producers, auto industries that are having to write off billions of dollars on EVs and so forth. They are all focused on cash right now and inventory control. So one of the unknowns that we may well see going into ’26 is—and I say this having lived through a bunch of other sudden rebounds in the industry—this industry typically does not recover over the course of four or five quarters. It usually gets to a point where people realize products are Kevin Estok: tight. Mike Harrison: All of a sudden, we cannot restock in time for a demand upswing. And all of a sudden, you find out there are shortages. And we look back in 2018. We look back—every couple of years, this seems to happen. I would not be surprised if that were to happen in ’26 in certain regions of the world. Peter R. Huntsman: Thank you. Next question today is coming from John Roberts from Mizuho Securities. Your line is now live. Mike Harrison: Thank you. Are you seeing any significant decline in price for merchant chlorine in the U.S.? One of the major U.S. suppliers talked about significant weakness in the merchant chlorine market. No. I think it has been pretty steady. I would love to see it collapse but it has been pretty steady. Peter R. Huntsman: Okay. And then sorry, I have forgotten that Europe was actually the most profitable MDI region for you. Kevin William McCarthy: I think that it was less disadvantaged a few years ago, but I never really thought it was advantaged. What was the source of the advantage Ivan Mathew Marcuse: that Europe had over the rest of the world? Mike Harrison: We had, again I am speaking for Huntsman Corporation. I am not speaking for our competitors. We had a lot of downstream business, more downstream business in Europe five, six years ago. That went into our elastomers business, TPU. Went into our system houses. We had more system houses there than we did any other place. And we also had lower chlorine and caustic prices and our auto business in Europe used to be one of the most profitable segments we had anywhere in the world. Today, that auto segment that is most profitable is in China. Again, I think we still have a very good auto segment in Europe and a very good one in the U.S. You know, we are seeing the same trends that a lot of other companies are seeing. Kevin Estok: Thank you. Peter R. Huntsman: Thank you. Next question is coming from Matthew Blair from TPH. Your line is now live. Mike Harrison: Great. Thank you and good morning. Could you talk about your expectations for global MDI capacity growth in 2026? And I think there are reports that one of your U.S. competitors is looking to add capacity this year. Philip M. Lister: I think that would raise global capacity by roughly 2%. Do you agree with that? Is that something you are seeing as well? Kevin William McCarthy: Do you expect any material increases in Asia MDI capacity Kevin Estok: this year? Thank you. Mike Harrison: Well, Asia—I will hit that first. Asia continues to be our most profitable MDI market and supposedly the one that is most oversupplied with MDI. There was a lot of talk earlier in 2025 that with the tariffs going up in the U.S. and a lot of that Asian material that was going into the U.S. had merely washed back into Europe and into China and flood those markets. We have not seen that take place. So as I look at capacity additions in China, I think that they may well be coming on, but I question how much impact they are going to have and we are not seeing that material necessarily leaving China any more than it has over the last couple of years. In the U.S., yes, I think we are seeing the impact of some of that incremental debottlenecking, some of that expansion that has been taking place over the last couple of years with one of our competitors here. I would remind you that typically companies go out about six to twelve months before capacity comes into the market and you start cutting deals, you start talking to people about pricing, and what you do not do is bring up a new line of 50,000 metric tons, for example, and all of a sudden tell your sales and marketing, we will go sell it now that we are producing it. And so the impact of that volume coming into the market which from what I have publicly read is sometime middle part of this year, I would say from a pricing point of view, from a supply point of view, is probably being felt in the fourth quarter of this last year and first quarter of this year. Having said that, we are talking about an expansion of about what—low to mid single digits—in North America of actual capacity that is coming in. So I am not sure that it is going to have a material adverse change to the market. Great. Thank you. And then is there any major turnaround activity we should be on the lookout for later in the year for Huntsman Corporation, like any sort of MDI downtime in Q2 or Q3 that we should be aware of? Philip M. Lister: No. Just our normal turnaround activity. We had the once-in-four-year major Rotterdam turnaround last year, but normal turnaround activity across all three regions. We do have to make sure that our plants remain reliable. So there will be periods of planned outages but nothing abnormal. Peter R. Huntsman: Thank you. Next question today is coming from Laurence Alexander from Jefferies. Your line is now live. Mike Harrison: Hi, this is Dan Rizzo on for Laurence. I have questions based upon something you mentioned before about kind of focusing on wide bodies within aerospace. I was wondering if getting to narrow bodies as a focus, how its done with the cycle is like, or if that is an opportunity in the coming year and years? Well, it will not be an opportunity until they start redesigning the 737 and the A320 Airbus. When I say redesigning, that would be a major, major overhaul by now making carbon fiber wings and fuselages and so forth. So I do not see that happening anytime in the foreseeable future. Again, I think you are going to see opportunities to have new adhesions and so forth applications going into the narrow body. And it is incrementally moving towards light weighting and so forth. So that is an area of focus that we continue to have as to how do we have greater penetration into the narrow bodies. But as far as all of a sudden they start making composite wings or fuselages, I would love to see it but that would be a major change to the design of the plane. Peter R. Huntsman: Thank you. Next question is coming from Frank Joseph Mitsch from EM Research. Your line is now live. Michael Joseph Sison: Good morning. Kevin William McCarthy: Peter, I never thought I would hear you say the word, let alone on a conference call. Mike Harrison: It was quite revealing to say it in Europe of all places too, where I think I may have been thrown in jail. Kevin William McCarthy: And for the record, if anybody dialed in late, he said fracking. So just to clarify that. Michael Joseph Sison: Hey. Speaking of clarifications, you know, let me come back to the consolidation question. Kevin William McCarthy: That was asked by a couple of other people. I mean earlier this earnings season we had Patrick David Cunningham: a company overtly Michael Joseph Sison: state that it was, you know, open for selling the company, and you obviously say, hey, look, we are willing to engage with interested party and create value where there is Kevin William McCarthy: an opportunity to do so. Is there any—should we be reading through the lines on Huntsman Corporation here in that regard? Or, you know, how would you address that? Mike Harrison: No, I would—look, the standard answer that we give on something like that is we do not comment on rumors or M&A activity. In this case, I would say that it is no. We are not in a sale process today or anything of that sort. I think that as we look at it, we just—we see and you hear a lot of companies that are talking about that they are studying the future of their division X or they are looking at consolidations or they are looking to shut down assets and so forth. And wherever you see chaos, you see—usually, you see opportunities. Kevin Estok: So Mike Harrison: I would not read more to it than that. Kevin Estok: Terrific. Thank you so much. Thank you. Next Peter R. Huntsman: question today is coming from Jeffrey John Zekauskas from JPMorgan. Your line is now live. Kevin William McCarthy: Thanks very much. In the first quarter, your Michael Joseph Sison: polyurethanes range first quarter of $25 to $40 million in EBITDA. And last year, you made $42. So is the reason why your urethanes EBITDA should be down is that prices are lower year over year, and I would expect that volumes would be higher. And why is the range so big? And, you know, what is the difference between the lower end of the range to the higher end of the range? Do you need to get prices up in the first quarter? What is the real dynamic there? Mike Harrison: Well, we do need to get prices up in the first quarter. We have got rising natural gas costs in the first quarter that right now, as I sit here, represent a $10 million headwind that we were not anticipating a couple of weeks ago in our polyurethanes business. So yeah, I do see some headwinds. I do see that coming down. I would remind you that as we look at the first quarter of last year’s $42, that was coming off of a fourth quarter—I do not want to get into too much detail here—that was coming off of a fourth quarter in 2024, $50, and leading to a $31 of this last year. So we were seeing a polyurethanes business last year that was in a nosedive, if I could put it mildly. And I look at polyurethanes this year, I certainly have more optimism in the market. We are starting it from a low basis obviously, in the fourth quarter going into the first quarter. I do hope that we are able to do better than that median range, and that adjustment, the range that we gave literally we argued about that just over the last couple of days internally because of the headwinds that we are seeing. And as we look at natural gas prices, this very week in Europe are starting to come down. Again, this is something that if we were to have this call two weeks from now, it could be maybe a few million dollars difference one way or the other. But I think directionally, we are seeing volumes coming up. We are pushing prices and I would say that the business is set certainly in a different direction in ’26 than it was in ’25. Kevin William McCarthy: Okay. And when you look at polyurethanes prices for Huntsman Corporation, did they sequentially move lower through the course of 2025? Kevin Estok: And then for Phil, Kevin William McCarthy: is your base case that working capital is a use in 2026? Mike Harrison: Yes, I will let Phil answer on the working capital. In 2025, yes, we did see pricing pressure on a downward basis in all three regions. Pricing actually came down in Europe and the U.S. about the same. Started higher in Americas. It is still higher in The Americas today, but both came down about the same amount throughout 2025. And Asia less so. Philip M. Lister: Yeah. From working capital. If we did not do anything, and you assume the economic conditions are better in 2026 than they were in ’25, therefore, you have got more revenues, more receivables. You would expect a use. We have a number of programs in each of the individual items of working capital—inventory, AR, AP—and I fully expect and target that our cash conversion cycle, which we reduced by 10% in 2025, will again be a reduction in 2026. And therefore, we would be targeting overall an inflow absent significant changes to the macroeconomic environment. Kevin Estok: Thank you. Next question is Peter R. Huntsman: coming from Hassan Ijaz Ahmed from Alembic Global. Your line is now live. Kevin Estok: Good morning, Peter. Peter, Kevin William McCarthy: quarters ago, I believe it was ’25, actually maybe it was Q2, you mentioned that sequentially in polyurethanes, Kevin Estok: you guys see 8% to 10% volume uptick. And you only saw a 3% volume uptick in Q2 last year. So, obviously, you know, Liberation Day, you know, tepid demand globally, presumably all those factors went into that. Hassan Ijaz Ahmed: But as you look at Q2 of this year, particularly keeping in mind some of the lean inventory comments you made, could we be gearing up for a pretty big sort of volume uptick within polyurethanes? Mike Harrison: It all depends on the macro issues around the construction season. And we will certainly know that by March. I would, in my opinion, it is mostly going to be around construction. And that will lead to construction demand, lead to increased—usually increased—durable goods in North America. And that is where we had our biggest miss this last year. So, again, and at the same time, remember, Hassan, we are also going to be pushing through price increases. And you have got to balance that very carefully as to how much do you want to increase prices and push for price increases and hold the line on pricing and how much do you want to go after volume. So it is a tough line to walk. Kevin Estok: And Mike Harrison: we will follow the macroeconomic indicators. Hassan Ijaz Ahmed: Very helpful. And as a follow-up, I mean, again, it seems that just from the sounds of it, you seem a little more comfortable about pricing as it pertains in polyurethanes as it pertains to North America, particularly keeping in mind this incremental capacity that is coming online. Is it fair to assume that we should see a healthy pricing trajectory in North America despite this capacity coming online, keeping in mind some of comments you made about how, you know, you sort of presell ahead of this capacity coming online. Mike Harrison: Yeah. Hassan, you have got to remember, I am my father’s son. I grew up in a household where polystyrene was considered to be the greatest petrochemical product ever produced. And so, yes, I am always going to be pushing for better prices. I am always going to be optimistic about demand and pricing and so forth. Take what I say with a grain of salt in those areas. I would say that it is simply too early to say in the North American market and largely to the Chinese market, which you well know that the pricing in China is usually going to be the two weeks or so after Chinese New Year is over, usually, you see quite a bit of volatility, hopefully, upward pressure on pricing there. North America, it is just too early to tell. Again, we have got pricing announcements that have gone out to our customers. And we are also seeing some pricing announcements and some small bits of traction in Europe on pricing as well. But I do not want to get the wagon ahead of the horses here and say that somehow I am announcing that we have been successful in getting prices through in Q1. We have made the announcements. They will likely see the impact in Q2, if anything. And we will continue to push for that. Peter R. Huntsman: Thank you. Our next question today is coming from Vincent Stephen Andrews from Morgan Stanley. Your line is now live. Michael Joseph Sison: Hi, good morning. This is Turner Enrichs on for Vincent. Kevin William McCarthy: What drove the less severe than expected seasonal drop in North American polyurethanes last quarter? Philip M. Lister: So polyurethanes overall in North America grew slightly, and that is really around some of the business wins that we have seen in the early part of the year. I do not think there was anything material that we saw in quarter four which was particularly different. What we saw in polyurethanes in Q4 was that the outage we would expect in Rotterdam to last a little bit longer actually was a little shorter and therefore that provided some upside overall. Michael Joseph Sison: In terms sequentially, you still saw seasonality in North America. What we said in the prepared remarks is December, we were maybe a little bit more aggressive in terms of how we thought it would have been a more of a seasonal decline versus last, but you still saw the normal seasonality. Thanks. Makes sense. Patrick David Cunningham: So as a follow-up, we are about a year into significant tariffs having been placed on U.S. MDI imports. And I have seen trade reports that indicate imports of Chinese-origin MDI Kevin William McCarthy: have dropped something like 80%. Could you speak to how you have seen tariffs play out in terms of Patrick David Cunningham: regional demand dynamics? Mike Harrison: Yes. We have seen those same numbers, public data on Asian imports. That does not mean that Asian players are not bringing product in from Europe, but that poses a number of questions in and of itself on the economics behind something like that. I am surprised this past year to see the amount of product that is coming in from Europe, particularly around smaller sites that I would not consider to be very competitive. But what do I know? If I mentioned earlier, again, this is just—I am not speaking on behalf of the company. It is my own thoughts. I mentioned earlier about a rebound that can suddenly happen. And as I look in the North American market, if you see a rebound in housing—and I am not talking about a historical recovery in housing—but if you see a usual, maybe a little bit better than usual, certainly better than last year, rebound in housing, with the constraints that have been put into place by tariffs and just by the macroeconomics—tariffs are not the only thing that discourage trade as well—I could see the scenario where you could see the U.S. running into supply issues before other areas of the world. Again, I want to be very clear. I am not saying that I am going to see a rebound here in Q2 or anything. I am just saying that as you look at that fundamental basis where the U.S. used to have a pretty healthy chunk of its production of supply side at least being satisfied by imports that have been cut off, U.S., in my opinion, U.S. will probably be the first to feel tightness should that occur. Peter R. Huntsman: Thank you. Our next question today is coming from Arun Shankar Viswanathan from RBC Capital Markets. Your line is now live. Hey, good morning. This is Adam on for Arun. Thanks for taking our Kevin Estok: question. Patrick David Cunningham: Maybe if we could zoom out a little bit, be a little hypothetical. So do you think mid-cycle earnings levels for Huntsman Corporation could be maybe through the end of decade because I think Michael Joseph Sison: your peak earnings was kind of in the $1,500,000,000 range, maybe mid-teens margins. This year Peter R. Huntsman: was 2.75%, closer to mid-single margins. Patrick David Cunningham: And assuming some of those normalized volumes you are talking about, Peter R. Huntsman: normalized cost inputs, do you think the business could get back to Patrick David Cunningham: an $800 or $900 million EBITDA range in that 10% margin? Or do you think some of this is structurally impaired from asset closures and Europe misbehaving? Mike Harrison: I think that we still have the production capabilities to generate those sort of EBITDA. A lot of that is going to be how does Europe land. And Europe for us used to be a third of our EBITDA, and you have got a third of our business today in polyurethanes that is struggling in comparison to the U.S. and Asia. If Europe gets back on its feet from an industrial point of view, and that does not mean that it becomes a global leader, but just kind of recovers back to where it was, yes, I would hope that we would be able to get back to those sort of numbers. We still have the same amount of tonnage of MDI that is being produced around the world. We have the same fundamental capacity to produce production in our amines and in our performance products and our advanced materials. We have taken out, obviously, a lot of costs, a lot of people. We have taken out some of the downstream system houses and so forth. But that has not necessarily eliminated our ability should we see an economic recovery in Europe and should we see the U.S. housing market go back to its normalized levels. Yeah, I would think that we have that opportunity. Patrick David Cunningham: Okay. That is great. And I know there have been several questions on the MDI pricing in Europe. Have you been able to quantify any of that? What are those price increases that you are aiming at? I know maybe not all of those will flow through. Just curious what you are going for. Mike Harrison: In Europe, I would—yeah. I think it is just too early to speculate as to what—we are in the process right now negotiating with a number of customers and so forth. I would very much like to see us at least offset our raw material increases that we are seeing. And that is going to be a tug of war through the first quarter. Peter R. Huntsman: Thank you. Next question is coming from Aaron Rosenthal from JPMorgan Chase. Your line is now live. Emily Fusco: Thank you for the time. This is Ellen for Aaron. Can you walk us through the moving pieces on the revolver quarter over quarter? Did you fund on the new RCF to repay outstanding? The outstanding amount at year end? And if so, what is the balance today? And do you have any plans to term out the balance via new debt? And finally, just curious if you would have any interest in tapping your equity to help shore up the balance sheet. Philip M. Lister: No on the final comment. New revolver, as I said, I think we are extremely pleased with the strength of the banking group. We have moved to an $800 million revolver. The way that I look at it overall is we have an $800 million revolver. We extended our maturity and also the capacity on our securitization program, which now adds up to approximately $300 million. And at year end, we had over $400 million of cash, so overall $1 billion, and we were borrowing approximately $500 million across our securitization program and our revolver. So that gives a net amount of approximately $1 billion moving forward. To your question around terming out any of the borrowing. Obviously, we have had that discussion as we have moved through the revolver process. I do not see that as necessary as we sit here today. We have managed to put in place an accordion to $400 million which we could tap into as a durable upcycle unfolds over the next eighteen to twenty-four months. And I take a look at the overall capital structure, which I think is pretty much aligned with the portfolio that we have. So I think we are comfortable with where we sit today, but we are always looking at our capital structure in light of the extended trough that has occurred in the chemical industry. Peter R. Huntsman: Thanks. Operator, why do not we take one more question? I think we are at the top Mike Harrison: of the hour. So we will take one more and then wrap it up. Peter R. Huntsman: Certainly. Our final question today is coming from Salvator Tiano from Bank of America. Your line is now live. Kevin Estok: Thank you very much. I just want to go back on the capacity additions in the U.S. that you were asked about before. Firstly, if I heard correctly, I think there was a mention that it is low to mid single digit capacity growth in North America. And I just wanted to check with your industry intelligence essentially what are you seeing in terms of the actual number because at least what we have seen from some trade publishers talks about more of a 20% or more increase in the one-point-something million ton market? And secondly, Peter, you mentioned that you saw most of the impact already in Q4. I am just trying to understand if I were to think like a buyer of MDI and inventories in the supply chain are very limited as you have said before. How would they be already benefiting from that capacity coming midyear if I cannot restock anymore and I have to wait? Would not theoretically that mean that all the pricing impact will only come when the new capacity comes online because there is no opportunity for a buyer to restock further? Mike Harrison: Well, okay. So I am not trying to avoid an answer to the—but you are asking me to kind of get into the mind of the person who is bringing on the capacity, which I have not the foggiest idea. Just because that capacity is coming on does not mean it is all going to come on in one day, and it is all going to flood the market in one day. Oftentimes, it takes quarters to be able to integrate and to be able to bring on capacity. And I know in our case, when we have brought on capacities in the past, it does take you up to a year to sell the product out. You are not going to want to bring on 100,000 tons of new product and somehow sabotage your existing 500,000 tons of product that you have got that you are already selling by cutting prices. How a certain competitor or producer will bring on capacity, when they bring it on, what impact they want to have on the market and so forth is all yet to be seen. And my comments were that earlier that I believe as we have seen in the past with this particular producer, product is bled into the market usually on an as-needed basis. They will obviously be expanding their footprint. But how they do it and how soon they choose to do it and what impact they choose to have on the market, that is kind of out of my—I just simply do not know. But again, it is very, very rare that you would all of a sudden see 100,000 tons start up on Wednesday and it floods into the market. Philip M. Lister: And you are going to be Mike Harrison: seeing that lower margins and lower price immediately. Peter R. Huntsman: Thank you. We have reached the end of our question-and-answer session. And that does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.