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Operator: Good morning, and welcome to Bausch + Lomb's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead. George Gadkowski: Thank you. Good morning, everyone, and welcome to our fourth quarter 2025 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders; Chief Financial Officer, Mr. Sam Eldessouky; and President of Global Pharmaceuticals and International Consumer, Mr. Andrew Stewart. In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide 1 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent. Brenton L. Saunders: Thank you, George, and good morning. I'm going to start by highlighting Q4 and full year results, which show we don't just talk about strategy, we execute it. Sam will put more context around our performance and provide 2026 guidance, and Andrew will cover opportunities to expand our leadership in dry eye. I'll close with a look at why we continue to be so excited about 2026 and beyond. When you hear me talk about execution today, this is exactly what I mean. In the fourth quarter, we didn't just grow. We grew smarter and faster than the market. When you see 7% constant currency revenue growth and 27% adjusted EBITDA growth, that's real operating leverage and a clear sign of our commitment to financial excellence. The discipline we built into the organization is paying off. This isn't a onetime exercise. It's the direct result of teams making better decisions, a fundamental shift in our cost structure and executing consistently across our businesses. We plan to harness that momentum to deliver on our 3-year plan. Results don't come from slides or strategy decks. They come from people who believe in what they're doing, take ownership and execute every day. That mindset across our company is what made our record performance in the fourth quarter possible, and it's a privilege to lead a global team committed to winning together. I highlighted fourth quarter growth on the previous slide, but would note that both $1.4 billion in revenue and $330 million adjusted EBITDA are a high watermark for our company that's been around for quite some time. While it's important to remember that there is seasonality to our business, which is especially true as our Pharmaceutical segment becomes more prominent, we did what we said we would do in the quarter. Our ongoing focus on selling excellence is best illustrated by our continuously expanding dry eye portfolio with Miebo generating $112 million in the fourth quarter revenue. We continue to be impressed by Miebo's trajectory and turn towards profitability as we exit the launch phase. The latest demonstration of our commitment to operational excellence and staying nimble to drive sustained, profitable growth comes from our Surgical business, where we made several strategic fourth quarter moves to position us for margin improvement. Finally, as I shared at Investor Day, our pipeline isn't theatrical. It's active in delivering. From the imminent launches to active recruitment for forthcoming trials, we're translating R&D into revenue and impact. That's what builds confidence in future growth. If there are any skeptics of our 3-year plan coming out of Investor Day, this slide is for you. We didn't overpromise in 2025, we executed, and the outcomes speak for themselves, 6% constant currency revenue growth, excluding the enVista recall, was faster than the market and at the midpoint of our planned CAGR through 2028. Adjusted EBITDA margin came in at 17.5%, with an impressive 23.5% in the fourth quarter. Importantly, margin expansion steadily increased throughout the year, putting us on a path to achieve margin targets in 2026 and beyond. You've heard me and Sam reference say-do mentality before. Here it is on paper. Financial discipline is no longer a onetime effort or a cost savings program. We've built the muscle around planning, prioritization and accountability, which puts us in a much stronger position to drive sustained margin improvement over time. People hear pipeline and think long term. What they should think is momentum because something meaningful is happening across our portfolio at all times. PreserVision AREDS3 started to ship on February 2, and Blink Triple Care preservative-free is expected to ship on March 1. CE mark submission for seeLYRA, our next-generation femtosecond laser is expected to take place next week with anticipated approval in the second half of the year. All trial recruitment is on schedule, and we recently received top line data from our first external study for our new bioactive contact lens material. We're pleased to report the study met our expectations and heightens our probability of success. Our in-house R&D team has started its analysis, which will allow us to make improvements to the lens, and we remain on track for our second external study and plan 2028 launch. When it comes to our pipeline, the future isn't waiting, it's already underway. This 2025 performance summary highlights the breadth of our offerings and shows why diversification is a competitive advantage. We've built a company that covers eye health end-to-end, and today, every part of the business is contributing. That's what durable growth looks like. The spotlight products drive that point home. They can be found behind the pharmacy counter, in the operating room or a few clicks away. Some, like Artelac, have demonstrated strong growth in important markets outside the U.S., as we implement our strategy to focus on core formulations. Others, like LUMIFY, are prime for additional exposure and opportunity as next-generation offerings are introduced. I'll now turn it over to Sam for a deeper dive on Q4 and full year financial metrics including cash flow figures that I know he is particularly proud of. He'll also provide 2026 guidance, which is aligned with our 3-year growth plan. Sam? Osama Eldessouky: Thank you, Brent, and good morning, everyone. Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all of my references to adjusted EBITDA will exclude acquired IPR&D. As Brent mentioned, Q4 was a record quarter. We delivered the highest revenue and the highest adjusted EBITDA in the history of Bausch + Lomb. We also delivered an adjusted EBITDA margin of 23.5%, which is the highest level we have achieved as a stand-alone company since our IPO. In the quarter, we drove meaningful operating leverage with adjusted EBITDA growth of 27% on a year-over-year basis. Building on our strong third quarter performance, in Q4, we continued to deliver on the commitments we outlined at Investor Day and showed how our relentless execution will set us up to achieve the 3-year targets we outlined in November. Turning now to our financial results on Slides 9 and 10. Total company revenue for the quarter was $1.405 billion, up 7%. Full year revenue was $5.101 billion, up 5% and up 6% excluding the enVista recall. We saw revenue growth across all our segments, both in the quarter and the full year. Currency was a tailwind to revenue of approximately $37 million in the fourth quarter and approximately $58 million for the full year. Now, let's dive into each of our segments in more detail. Vision Care fourth quarter revenue of $778 million increased by 5%, driven by growth in both consumer and contact lenses. Full year Vision Care revenue was $2.923 billion, up 6%. Let me go over a few highlights. Following double-digit growth in Q4 in the prior year, the Consumer business delivered 3% growth in the quarter. For the full year, the Consumer business grew 5%. LUMIFY generated $63 million of revenue, up 24% in Q4, and $221 million of revenue for the full year, up 16%. The Consumer dry eye portfolio delivered $116 million of revenue in the fourth quarter, up 6%. The growth was led by Blink, which grew 33%. Full year Consumer dry eye revenue was $436 million, up 14%. Eye vitamins, PreserVision and Ocuvite grew by 2% in the fourth quarter and 2% for the full year. Contact Lens revenue growth was 8% in the fourth quarter and 7% for the full year. The growth was again led by DD SiHy, which was up 17% in the fourth quarter and 28% for the full year. Additionally, Ultra was up 16% in the fourth quarter and 9% for the full year. In Q4, our Contact Lens business saw growth in both the U.S. and international markets. The U.S. was up 11% and international was up 6% in the quarter. For the full year, the U.S. was up 9%, and international was up 5%. In China, Contact Lenses continued to perform well and grew by 7% in the quarter and 8% for the full year. Moving now to the Surgical segment. Fourth quarter revenue was $249 million, an increase of 3%. Excluding the impact of the enVista recall, Q4 revenue growth was 6%. For the full year, Surgical revenue was $894 million, up 4% and up 10% excluding the recall. In Q4, Implantables were up 5% and 24% sequentially. For the full year, Implantables were up 4%. Premium IOLs were up 20% for Q4 and 26% for the full year. Consumables were up 4% in the fourth quarter and 5% for the full year. Finally, Equipment was up 2% in Q4 and 3% for the full year. Revenue in the Pharma segment was $378 million in Q4, which is an increase of 14%. For the full year, Pharma revenue was $1.284 billion, up 6%. Our U.S. Branded Rx business was up 21% in the quarter and 13% for the full year. Strong Miebo execution once again led the growth. Miebo delivered $112 million of revenue in Q4, an increase of 111% year-over-year and 33% sequentially. For the full year, Miebo revenue was $316 million, which represents impressive growth of 84%. Xiidra continues to track in line with our expectations, and our team is executing our strategy. In the quarter, Xiidra revenue was $95 million and $331 million for the full year. Our International Pharma business was up 5% in the quarter and 6% for the full year. Finally, we are seeing meaningful progress in our U.S. Generics business, where we saw growth sequentially and on a year-over-year basis. In the fourth quarter, U.S. Generics was up 4% on a year-over-year basis and 24% sequentially. Now, let me walk through some of the key non-GAAP line items on Slides 11 and 12. Adjusted gross margin for the fourth quarter was 62.1%. This absorbs an impact of approximately 80 basis points related to tariffs. For the full year, adjusted gross margin was 61%. In Q4, we invested $94 million in adjusted R&D, in line with Q4 2024. Full year adjusted R&D was $371 million, up 8%. Fourth quarter adjusted EBITDA was $330 million, up 27% on a reported basis. The adjusted EBITDA margin was 23.5% in Q4, which represents year-over-year expansion of 330 basis points. As I previewed at Investor Day, we are continuing to focus on efficiencies in SG&A, and we are seeing the benefits in operating leverage. Full year adjusted EBITDA was $891 million. We are pleased with the work we've done on cash flow optimization. Adjusted cash flow from operations was $152 million in the quarter and $381 million for the full year. Adjusted free cash flow for the quarter was approximately $76 million and $32 million for the full year. CapEx for the full year was $349 million, which includes approximately $30 million of capitalized interest. Net interest expense was $95 million for the quarter and $376 million for the full year excluding a $33 million charge related to refinancing fees. The full year 2025 adjusted tax rate was 10%, which is lower than our previous guidance of approximately 15%. The lower tax rate was mainly driven by the impact of the enVista recall and other onetime adjustments. Adjusted EPS, excluding Acquired IPR&D was $0.32 for the quarter and $0.51 for the full year. Adjusted EPS in Q4 includes a onetime noncash charge of $0.08 related to a revaluation of stock-based compensation to reflect our strong performance and favorable long-term outlook for the company. Excluding this charge, EPS for the quarter was $0.40 and $0.59 for the full year. Now, turning to our 2026 guidance on Slide 16. For 2026, we expect to build on the results we have delivered in 2025 and to continue to execute to achieve our 3-year financial targets outlined at Investor Day. The fundamentals of our business and the eye care market remains strong. We expect our revenue to once again grow faster than the market, and we expect each of our segments to deliver growth in 2026. We expect full year revenue to be in the range of $5.375 billion to $5.475 billion, which represents constant currency growth of 5% to 7%. Based on current exchange rates, for the full year 2026, we estimate currency tailwinds of approximately $30 million to revenue. We expect to continue to execute our margin expansion strategy. We are setting our adjusted EBITDA guidance in the range of $1 billion to $1.050 billion. This reflects a margin of approximately 19% at the midpoint of the guidance range and adjusted EBITDA growth of approximately 15% on a year-over-year basis. We expect to drive meaningful operating leverage in 2026, with adjusted EBITDA growing at a rate of nearly 3x that of revenue. In terms of the other key assumptions underlying our guidance, we expect adjusted gross margin to be approximately 62%, and we expect investments in R&D to be in the range of 7.5% to 8% of revenue. Throughout 2025, we've taken steps to address our debt maturities and cost of debt. We expect interest expense to be approximately $365 million. We expect our adjusted tax rate to be approximately 19%, and we expect our full year CapEx to be approximately $285 million. In terms of our quarterly phasing, we continue to expect the natural seasonality of our business with the first quarter being the lowest and the fourth quarter being the highest. This seasonality is expected to become more pronounced as the dry eye franchise continues to grow. To conclude, we have laid the foundation for revenue growth and margin expansion. We started seeing early results in Q3 2025 and delivered a record quarter in Q4. This gives us a clear signal that the strategy is working. The business is proving to be on a solid path to delivering our long-term targets, and our focus for 2026 will remain on execution. And now, I'll turn the call back to Brent. Brenton L. Saunders: Thanks, Sam. I'm now going to turn it over to Andrew Stewart for a look at Miebo and Xiidra performance and an overview of the immense opportunity in dry eye. Andrew Stewart: Thanks, Brent. Miebo performance in 2025 was exceptional, with 113% year-over-year prescription growth that generated $316 million in revenue. We hit a significant milestone on January 2, crossing the 2 million prescription mark. Going forward, we expect a steady increase in prescription growth and profitability as more patients experience the therapeutic benefit of Miebo and our level of investment stabilizes. With broad market access and natural progression in the medication's life cycle, we anticipate normal seasonality from Miebo prescriptions, similar to what we see for Xiidra and other branded medications in the category. We previously shared that Miebo peak sales could reach $500 million. Based on its success, less than 3 years since launch, we now believe peak sales could exceed $600 million. I'm going to pick up on Brent's theme around execution. When describing Xiidra's 2025 performance, we said we would drive prescription growth, and that's exactly what we did. Total prescriptions grew 6% year-over-year in the fourth quarter, marking the highest quarterly total since launch. In 2026, we anticipate revenue growth and higher profitability, as we evolve our market access strategy. Xiidra and Miebo continue to have best-in-class commercial and Medicare coverage with 4 out of 5 patients covered. Ultimately, we expect both of our flagship dry eye medications to be even bigger contributors to the bottom line in 2026. Dry eye disease is one of the largest and most underpenetrated categories in eye health. Today, approximately 1 in 10 patients are actively treated with prescription therapy, leaving substantial runway for increased adoption. The global market is expected to nearly double in the next 4 years, and much of the recent prescription growth can be attributed to Miebo. For the past 2 years, eye care professionals have been able to more effectively treat patients with the first therapeutic product that can manage evaporative dry eye. This has helped lead to a 5x increase in year-over-year average weekly dry eye prescribers. The overall dry eye market continues to expand due to several factors, most notably an aging population, environmental factors and a dramatic increase in screen time. From over-the-counter products that provide symptomatic relief, prescription therapies that treat both signs and symptoms and diagnostic tools that help eye care professionals better serve their patients, our comprehensive portfolio of dry eye products is second to none and positions Bausch + Lomb to be the biggest beneficiary as more consumers and patients seek treatment. We're not just participating in dry eye, we're leading it. We have the broadest portfolio, the deepest expertise and the strongest presence in the category and in one of the fastest-growing areas of eye health. That's exactly where you want to be. Brenton L. Saunders: Thanks, Andrew. Earlier, I mentioned 2 imminent consumer launches, which tell very different but equally powerful stories. One is about evolution, taking a proven product and unlocking a much larger opportunity. The other is about acceleration, a brand we brought back to life that's now growing faster than ever. Two distinct paths, both driving meaningful upside. Let's start with PreserVision, the #1 eye vitamin brand. We partnered with the National Eye Institute for decades to help reduce the risk of progression in moderate-to-advanced AMD, which has led to continuous evolution of the product. The latest and most advanced iteration is AREDS3, which incorporates B vitamin Science. This new formulation allows us to engage patients earlier when the population is significantly larger and the opportunity is greatest. It transforms our role from treating progression to supporting the full continuum of care. Blink is a great example of what focused execution can do. We revitalized the franchise and built real momentum with 38% constant currency revenue growth in 2025, but we're not standing still. We're building on that success with an advanced preservative-free lipid-based formulation of Triple Care to reach even more consumers as demand continues to rise. These launches show how we create growth from strength, science and momentum. Our Contact Lens business has outperformed the global market for 2 straight years with 9% average constant currency revenue growth over 2024 and 2025 compared to mid-single-digit growth for the industry. Where others have faced significant headwinds, the impact for Bausch + Lomb has been less pronounced. China is a prime example. While there is some consumer softness, our lens business there grew 7% on a constant currency basis in the fourth quarter. Our consistency comes from disciplined execution and a steady, deliberate global rollout of innovation. Activity in the first half of this year drives that point home. In January alone, we launched Daily SiHy multifocal lenses in several European countries with an anticipated April launch in France. The same offering launched in Korea and New Zealand this month. In Surgical, I'm happy to report that this will be the last time we proactively referenced the voluntary enVista recall at earnings, and here's why. When we returned to market in late April, we said our plan was to reach Q1 2025 levels by Q1 2026. We met that goal in the fourth quarter, well ahead of schedule, and the strong uptake we're seeing is the result of great execution, trust and offering a product surgeons genuinely prefer. What did that mean for our Premium IOL portfolio last quarter? It helped drive 20% constant currency revenue growth, contributing to 5% constant currency revenue growth in our Implantables business. The fact that Implantables grew despite the recall is particularly noteworthy and speaks to the potential in this category. We expect to build on that momentum in 2026 and beyond as our existing premium offerings become further entrenched and new options are introduced around the world. As made clear by fourth quarter and full year 2025 results, we're not just talking about execution, we're proving it. We said what we were going to do, and then, we went out and did it product by product, milestone by milestone, business by business. The results are real and measurable. We view our progress to date as a foundation, not a finish line. The most important chapters of this story are yet to be written, but our commitment to execution makes us confident in what comes next. Our pipeline is the envy of the industry and puts Bausch + Lomb firmly on the path to sustained growth and long-term success. Let's take your questions. Operator? Operator: [Operator Instructions] Your first question for today is from Patrick Wood with Morgan Stanley. Patrick Wood: Perfect. I guess the first one, just big picture, when we're looking forward into '26 and the growth guide that we have, how are you guys thinking about the composition of that? Brent, from your perspective, what are the key areas to execute on to make that happen? And should we look at the strong momentum as we exited '25 by product line as a good inference for like where we should be hitting in terms of growth by category for '26? Brenton L. Saunders: Yes. Thanks, Patrick. Look, you heard me in the presentation using the word execution. You heard me probably mention the word execution at least a dozen times throughout the prepared remarks. And let me just try to take a step back and then come at your question. Look, as you just heard, in Q4 '25, we delivered 7% growth and the highest revenue and highest EBITDA in the history of our company, right, 172-plus years. More importantly, we delivered 27% EBITDA growth and 23.5% EBITDA margin. Yes, Q4 is seasonally our strongest quarter, but seasonality alone, right, doesn't produce that level of operating leverage. What you're actually seeing is real structural improvement in the P&L. The quarter reflects the impact of Vision 27, our program that we put in place at the beginning of the year, and we're shifting mix towards higher-margin products, improving pricing discipline, driving productivity across the organization and operating with a more fixed cost infrastructure. That means growth now drops through at a higher rate. So when we grow, we see it in the bottom line. Remember, we're only 1 year into the 3-year program that -- of Vision 27. So what Q4 shows is what disciplined execution can do. It's not a one-off result. It really is evidence of the foundational change we now have in how we run this company. Execution really isn't a slogan. It's really about the daily work of aligning the organization around clear priorities, making trade-offs and following through. It's focusing on the few things that matter and doing them consistently well. And over time, that builds consistency, and it builds credibility, both internally and externally, with all you and our shareholders. Look, I get it, trust is earned quarter-by-quarter. When we say we'll improve margins, we're going to improve margins. When we commit to advancing the R&D pipeline, we hit those milestones. And so that steady drumbeat of delivery is how we change perceptions, and most importantly, create long-term value. So as we continue to progress the pipeline, where we're making strong scientific and clinical progress, really the financial model becomes more compelling if you take a step back and think about it. We now have a platform in Bausch + Lomb that can absorb the innovation and scale it efficiently. So I think, Patrick, when you look at it, Q4 really demonstrates what strong, good execution looks like, and it shows our culture is changing, our model is improving and our leverage in the P&L is real. And most importantly, we're really early in the journey. I really do believe our best days are ahead because of the foundation we have built is stronger than it's ever been. And so look, as I think about '26, Q4 showed a lot of momentum, and we're going to ride that momentum into this year. Patrick Wood: Super clear. And then just as a quick follow-up. Miebo, now potentially $600 million, everyone was bullish about this when it first came into the market. But I would guess it's come in quite a bit ahead of certainly where we expected, probably where you guys expected, too. Are there any like key lessons for that when you're thinking about your pipeline going forward, the surprise of how well Miebo has done? What do you put that down to? And what are the kind of lessons associated with that, that you then can use for the rest of the pipeline? Brenton L. Saunders: Yes. I'll take a shot at it, and then, maybe Andrew wants to add a few thoughts as well since we have him on the call for the first time. Look, when I arrived, Miebo was finishing its what was being filed and waiting approval. And you're right, the organization had good plans for it, but nothing -- its peak sales were lower than current sales are today, right? And what we did is we upgraded the team, right? Talent matters across the whole organization, including the field force, most importantly. . We made some big investments, which some investors were skeptical of, right, because it did impact the P&L. But we said, look, we have a really good medicine here. We have a great category that's untapped. And we think that we can do something special with this Miebo because of its benefit-risk profile is so positive. And we made very strategic smart, thoughtful investment. And now, it's time to harness that. And keep in mind, Patrick, the $600 million is not $600 million. It exceeds $600 million, right? We're not satisfied at $600 million, right? That's just our latest, I guess, elevation of peak sales. But I think this thing can keep going from there. And so we have what we need. The table is set, right? We have our fixed -- as I mentioned in the previous answer, we have a fixed cost infrastructure. It's now getting leverage through that. And so don't take away from this that we're not investing in Miebo. What we are is we're holding our investments steady, so the benefit of all the growth flows through the P&L to the bottom line. But Andrew, anything else you'd add? Andrew Stewart: Yes. Look, 2 things, Brent. I think, one, when you take a great medicine, as you mentioned, something that has a phenomenal safety profile with an extremely fast, rapid onset in terms of efficacy for patients and you marry that to great execution, best-in-class field force execution and a marketing approach that I think has been second to none in the dry eye space, you put those 2 ingredients together and you have great success. And I think when we look at our pipeline for the future, taking those types of execution successes forward will be a key to how we move forward with the company. Operator: Your next question is from Young Li with Jefferies. Young Li: I guess, first one, maybe a follow-up on Miebo, really strong results and you upped the peak rev. It sounded like you're sort of holding the investment on that side relatively steady. Can you maybe comment a little bit more about the -- how that impacts the growth trajectory of Miebo? Hard to comment on steady growth, but would love to hear a little bit more about that. Brenton L. Saunders: Yes. So I mean, I think what you're going to see is continued strong growth of Miebo. I would -- Sam and I both said in the prepared remarks, I think as you think about particularly modeling 2026 or any -- frankly, any year on a go-forward basis, you have to think about the seasonality, right? Just the way copays and deductibles work in the prescription market make Q1 the softest and Q4 the strongest. And so where in the past, when you're in launch mode, you see kind of quarter-by-quarter continuous improvement, you're going to see more seasonality on a go-forward basis there. But if you look at Miebo for the year, we have big expectations for growth in Miebo and profitability. I don't know, Sam or Andrew, if you want to add anything? Osama Eldessouky: Yes. That's exactly right. And I think Young, one of the key things we talked about at Investor Day, and hopefully, you guys have seen it in our results in Q3, and then, also you've seen in Q4 is that we said we're going to be focused with more targeted investments. We built the infrastructure around the dry eye franchise and really shifting from what we refer to as the launch phase to the growth phase, which is really continuing to invest behind the franchise as a whole and making sure we're targeted with this investment to continue to drive the top line growth. Andrew Stewart: Look, I think another key theme for 2026 is as we think about our access and affordability strategy. We're coming to a point of steady state. We're comfortable with the access that we have. We're nearly 4 out of 5 patients for both commercial and Medicare have access to Miebo. And so that puts us in a great position to continuing to support patients and physicians, as they get more experience with the product and add more patients to Miebo's as we go through the year. Brenton L. Saunders: Young, did you have a second question? Young Li: Yes. That was very helpful. Yes, it would be great if I can ask a second one. I wanted to get your thoughts on sort of the state of the market as well as the competitive dynamics. Your portfolio right now has improved significantly since the IPO. You've got a really robust pipeline of products. But for this year, there's players that's coming with more supply on the contact lens side. There's new entrants on U.S. IOLs, recent launches that's ramping for Premium IOLs, capital, dry eye drugs. So just wanted to hear your thoughts on how that can impact '26? And maybe which segment faces the toughest competitive challenges? Brenton L. Saunders: Yes. So look, I think we take all competition seriously. I think if we break it down into kind of 3 -- the 3 markets you just discussed, I think pharma, while we have a real competitor there from a very strong company, I think we feel very good about our position, right? We have the #1 and #2 brand. Andrew mentioned we have very strong access for patients, and we have a lot of momentum. And we have frankly, for evaporative, inflammatory dry eye, which are the largest 2 components of the market, we have the best medicines for patients. And so I think we're established very well there in competition. If you take contact lens second, I think when you look at the state of the market in '25, the market probably grew -- data is not perfect in contact lens. It's a little harder to put together, but our numbers suggest that the market grew somewhere around 4% in 2025. For the full year, we grew 7% and 8% in the fourth quarter. So fourth quarter almost doubled market growth. A lot of that is based off of 2 things. It's our Daily SiHy putting up incredible growth, right, 17% in the quarter, 28% for the year, I believe, in the numbers. And that's driven by continued launch of modalities. And in the prepared remarks, I mentioned we're still -- the only market that has the 3 main modalities is the U.S. The rest of the world is still in launch mode. And so you're going to see a continuous speed over the next year or 2 of launching those modalities and driving growth. But Ultra was still up in the fourth quarter, 16%. So we're not creating a leaky bucket. We're doing what we need to do. And where the industry saw some weakness in Asia and China, as an example, we grew lens 7% in China in Q4 and 8% for the year. So our DTC model, we're direct with a fully integrated direct-to-consumer model in China, gives us a lot of flexibility to meet the consumer where they need to be and where they're purchasing. Southeast Asia still remains a little flat. But I suspect the market is going to grow a little better and improve overall in '26, maybe 4.5% or better. And so I think we're in a strong position. And then, of course, we're moving full steam ahead with new product launches in 2028 that we're pretty excited about. So I think our cycle of growth and in the competitive state in the lens -- contact lens market is -- I think we're in a strong position. Surgical, probably the most competitive market of the 3. But again, I look at our execution and the quality of the products we have. I mean, 4% implantable growth in 2025 is pretty damn impressive when you consider we had a significant recall of our entire enVista platform in the year, right? And so I'm not excluding anything to get the 4%. That is the actual growth. And when you look at what happened in the quarter, you have 20% premium IOL growth and 26% full year premium growth. And so that -- what I mentioned in the prepared remarks, this move to higher-margin mix products is happening in surgical. We know that surgeons do like the enVista platform and really do like our trifocal Envy. We're also launching Lux products outside the U.S., premium brands. And of course, enVista Beyond is completing its clinical trial. So we have a steady cycle of new launches and continued execution there. And I feel pretty good we can grow faster than market in all 3 businesses. And that's why we're putting up top line numbers that are faster than the market. Operator: Your next question for today is from Joanne Wuensch with Citibank. Joanne Wuensch: You gave us a little, I think they're called, Easter eggs, but I'm going to call it a nugget as that would be early, like that I'm seasonally moving forward. About the clinical data that you saw for the new material for the contact lenses, could you expand on that a little bit? And what did you see that increased your confidence? Brenton L. Saunders: Yes, Joanne, thank you. I'm going to turn it over to Yehia in a second, but I'm going to steal that Easter egg thing that, that I feel like I'm playing a video game. So that's awesome. No, look, we got the top line. The team just got it right before earlier, I think late last week or thereabout. So we're still going through the data. It's quite an immense amount of data, but we're pleased. And I'll just say this, and then, turn it over to Yehia, getting the way you develop contact lenses are different than a lot of other products. And I think we told you at Investor Day, we plan to do one external clinical study to get data to iterate. We'll do a second external study, and then, we'll do the registration and claim studies for a 2028 launch. So we're exactly where we need to be. But every time you pass one of these thresholds, your confidence about the fact you have a real product that can make a difference increases. And that's why I'm so excited about where we are right now. But let me turn it over to Yehia. Yehia Hashad: Yes. Thank you, Brent, and good morning, Joanne. Yes, we are really pleased to share the early highlights from the first clinical evaluation of our Halo daily disposable contact lens. Actually, this study was designed to assess the overall clinical performance, safety and tolerability in a controlled setting. The study enrolled about 130 participants, all of whom have completed the study. And importantly, there were no adverse events or device deficiencies have been reported. But the most important thing, this is the first time we actually apply our optical system to this, and all participants, the majority -- the vast majority of them experienced very good visual acuity. Based on the investigators even, they agreed that the lens has delivered a clear vision in almost 98.5% of subjects. So currently, we are -- as Brent mentioned, we are -- actually just got the results, and it's even ahead of schedule. And we are digging deeper doing deeper analysis to inform further optimization and also the lens design for the next external study. As Brent mentioned, we remain on track with our development timeline and targeting 2028 launch, and actually, this study increased our confidence in the platform as we are moving forward. Brenton L. Saunders: Yes. I think, Joanne, our probability of success that this is real and a real product is significantly higher than it was at Investor Day, which is why we're excited. Joanne Wuensch: Excellent. I'll ask my second question, which is you're making progress on pulling the financial levers for EBITDA expansion? As you look throughout 2026, and we think about setting up our models, is there anything we should think about the progression throughout the 4 quarters? Brenton L. Saunders: Yes, absolutely. I'll turn it over to Sam. But I said it in the prepared remarks, I think as you look at phasing, right, we've always had seasonality as long as I've been here since the IPO of Q1 being the weakest, Q4 being the highest. But I think you're going to see that be more pronounced now as a lot of that seasonality is driven by the prescription dry eye business. And as we continue to have great success with Miebo and Xiidra, they become a bigger part of our overall sales and profitability. And so that will have a larger impact on seasonality than we've seen in years past. But Sam, why don't you? Osama Eldessouky: Yes. Thank you, Brent. And Joanne, I -- let me give you a little bit more details on the phasing. But it's just important to highlight the point that Brent made, which is the whole aspect of Q1 being the lowest, Q4 as being the highest, that's the natural business. And again, as we see the progress that we're making in dry eye franchise, that's going to be even more pronounced as we go forward. So that's a very important framework as we think about phasing. But what's important here with all the work that we've done in the second -- especially in the second half of 2025, setting up our, I'll call it, building blocks for our leverage, operating leverage as we go forward, both in Q3 and Q4, and we're seeing that work. We expect that sort of to carry forward with us in 2026. So when you think about from a revenue perspective, we usually start our first quarter achievement on revenue roughly about 22% of the midpoint of the guidance. That probably remains a good starting point for 2026. On EBITDA, we -- if you look at last year achievement, midpoint was about 14%. We expect this year with all the work that will be about 18% achievement of the midpoint of the guide. So we're seeing a nice improvement because when you step back and reflect on the guidance, we're growing our -- the guidance that we provided this morning, midpoint of that is about 6% of the top line, but it's about 15% growth on EBITDA at the midpoint. So we're seeing that really leverage pull through throughout the next 2026, especially in the first half of the year. Brenton L. Saunders: Yes. I mean, I think one of the things I'm most proud about what we're starting to do is that leverage in the first slide in the deck, right -- in the quarter, right, 7% top line and 27% bottom line; guidance, midpoint of 16% -- 6% on the top line and 15% on the bottom, right? So you're seeing like 3x leverage or better in the P&L. And that's financial excellence in action, right? And so we said we're going to focus on financial excellence, and now, we're going to deliver it. Operator: Your next question is from Larry Biegelsen with Wells Fargo. Lei Huang: This is Lei calling in for Larry. Can you hear me okay? Brenton L. Saunders: Yes, we hear you, Lei. Yes. Lei Huang: My first question is on Xiidra. It looks like 2025 played out as you expected. There was some volume growth, but you had headwinds like IRA and such. How should we think about Xiidra performance in '26? You had the recent payer change at the start of the year, can we think about maybe -- but you also expect net price to be better in '26, so can we think something along the lines of maybe mid-single-digit sales growth? Is price improvement offset by volume decline? And then, I have a follow-up. Brenton L. Saunders: Yes. So, Lei, I think I'll ask Andrew to make a comment here, too. But I think you're exactly right. 2025 for Xiidra was setting a new base between a onetime payment for managed care in the IRA, right? We kind of set that new base. And now, it's important to grow off that base. And I think we will. I think that mid-single digit is exactly how we're thinking about it. But Andrew, do you want to add some comments on Xiidra '26? Andrew Stewart: Yes. Look, Brent, I think you covered the operational aspects of '25 versus what our expectations are in '26 exactly right. When we think about the totality of coverage, we're very happy there with the rates that we're able to achieve across all of our different commercial and Medicare stakeholders. Look, when you think about CVS, specifically when we're talking about coverage, they're a really important customer. We'll continue to find ways to partner with them as we do in our Consumer portfolio, as they manage a large number of Medicare lives today. And when it comes to the commercial book of business, we're eager to find ways that we can continue to work together. And right now, we have to always balance the affordability of the asset versus our ability to invest long term for the stakeholders of B&L. Brenton L. Saunders: But I think it's fair to say you'll see slower TRx growth as a result of that, but higher revenue growth. Andrew Stewart: That's correct. Brenton L. Saunders: Yes. Osama Eldessouky: And, Lei, maybe just I'll add a couple of data points to what Andrew and Brent said and just to help you as you think about your modeling and how you guys think about Xiidra. So as a starting point, it did play out exactly as we expected in 2025. But what's more important is we knew that as we start jumping into 2026, the net revenue for Xiidra will grow. So we're expecting that growth -- to see that growth. How that growth will come through is, as Brent said, it will be an element where we see a slower TRxs, but we'll see a much better net pricing. We usually talk about our, call it, gross to net roughly about the mid-70s. We start seeing that to step down to closer to the low 70s. So that net benefit you'll start seeing into how Xiidra will play out between '25 and '26. Lei Huang: That's very helpful. And then just 1 follow-up is your -- is on EBITDA margin. So at Investor Day, you talked about roughly 600 basis points of EBITDA margin through '28 to get to roughly 23% margin. That's roughly 200 basis points a year. So you guided to roughly 19% for this year. Can you just talk about your confidence for -- through 2028 on the margin? And how we think about maybe just the next couple of years, if we should think about fairly equal steps of margin improvement? Brenton L. Saunders: Yes. So I think we feel very confident about what we presented the 3-year plan at Investor Day. In fact, I would say sitting here almost, what, 8 weeks later, I feel more confident than I did. And the reason being is you saw execution improvement in the fourth quarter. Now, there's some seasonality, as I mentioned, but still you're seeing that foundational change in the P&L and the leverage that it can drive as we continue. So I think that's right. We've got a running start, right? We thought we'd end the year at around 17%. We got to 17.5%. And so we're going into the year with a running start. And there's nothing better than momentum. But I would say this. When I think about my 13,000 colleagues in Bausch + Lomb around the world, they all know our goal on this one, and everyone is focused on it. We have very disciplined project teams, many of them, lots of people working on margin improvement from commercial teams to supply chain. This is a full court press with a lot of focus inside the company. We are going to do everything we can to make sure we not only meet but potentially exceed those margin goals. Operator: [Operator Instructions] Your next question for today is from Matt Miksic with Barclays. Matthew Miksic: Congrats on a strong quarter here. I had 1 question on IOLs. So bounced back pretty nicely from the recall. It seems like 20% growth in AT-IOLs, and the feedback we get from clinicians is positive on the enVista line. Maybe if you could talk about any puts and takes that you're still kind of working through with respect to the recall? And what we should expect in terms of folks kind of getting back on board with that launch that had pretty strong momentum into the end of '24 and early '25, but kind of obviously got stopped there for several months in the middle of last year? Brenton L. Saunders: Yes, a great question. So if you really dig into it and look at what happened as a result of the recall. And as I said in the prepared remarks, hopefully, this is the last time we talk about the voluntary recall. The fact that we got back to the market the way we did, the way we communicated with customers and surgeons so openly and transparently, I think really created a bond of trust with our customers. But the reality of the market is those patients were implanted with different IOLs during the period we were out of the market, right? You don't get those patients back. You have to earn each implant back one by one, doctor by doctor. And so what happens in this market, as you may know, is for the premium IOLs, you have a much more instant sales cycle, right? A lot of surgeons can buy whatever premium IOL they want. But for monofocal, they tend to contract. And so the bounce back came faster for Envy and Aspire to some degree. But for the base monofocal lens, we still have some work to do because when we were out a lot of ASCs and practices signed contracts for monofocals that we have to wait until they expire to get that business back. And so there is still a little bit of a hangover in the monofocal portion of the market, but we'll earn that back this year. And so I think we feel very confident that it's clearly in the rearview mirror, and now, it's back on our front foot and winning trust with doctors and patients day by day. Operator: Your next question is from David Roman with Goldman Sachs. David Roman: I want to just actually maybe to focus a little bit on the consumer business. If you kind of look across the different product families there, we do see kind of a divergence in trends across a number of the different categories. Can you maybe help us think about just the direction of travel in the consumer franchise? And what we should -- how we should expect some of these different LUMIFY driving growth? Or how we should think about some of the different factors in '26 in that franchise? Brenton L. Saunders: Yes. So for the full year, we grew about 5%. There was probably about 100 basis points of destocking, remember, throughout the year. It started with -- as a kind of impact of tariffs, right, as retailers made room for -- in their warehouses for products that were tariff impacted. They destocked roughly about 2 weeks across the board and virtually across all customer classes. And so we absorbed that in the year. And so consumption in '25 was higher than sales, which is obviously a sign of destocking. I think when you look at the hero brands, LUMIFY, obviously, up 16% for the year. We launched preservative-free. And of course, we're getting ready to file LUMIFY Lux for a launch next year. So we have a nice continuous innovation stream there. Blink, a brand that we brought back to life, was up about 14% for the year, right? I think that's the number, Sam, right? So really good growth. We're launching the preservative-free for Triple Care in the second quarter or late this quarter. So again, innovation helps drive growth. But I think the area where we saw kind of a little bit more flatness is in our largest product line, PreserVision or vitamins, which were only up 2% in the quarter and in the year. And to be fair, when you think about PreserVision, right, it's a very large category. We have roughly 90-plus percent market share, so we kind of are the category. There's been no innovation there for 13 years. And the way to get growth back into that category, and I hope, significant growth over time, is through innovation. So AREDS3, which started to ship to retailers within the last week or 2, and you'll start to see really launching throughout this quarter and next, is really going to revive that market and bring it back to growth again. And I think you'll see that really play out in the back half of the year, as we build the foundation with ECPs first and then turn on consumer. And the fact that we're expanding the market, almost tripling the size of the market of who should be recommended PreserVision, I think, gives us a lot of optimism that, that category can grow again, meaningfully. Operator: Our final question is coming from Robbie Marcus with JPMorgan. Lilia-Celine Lozada: This is Lily on for Robbie. I want to circle back to the EBITDA guidance. Can you help give a bit more color and bridge us to the 19% EBITDA margin this year and walk through some of the pieces on operating expenses, especially that get you there? When I look at the fourth quarter, gross margin was a bit softer than what we were thinking. You have R&D increasing as a percentage of sales this year. And so what's driving all that SG&A leverage this year? And what gives you the confidence and visibility in that improvement? Brenton L. Saunders: Yes. Well, I think Sam is probably best to answer this. Sam? Osama Eldessouky: Sure. So, Lily, when you think about the components of how we think about the leverage and expansion in the EBITDA margin, it's really the building blocks for this is a couple of areas. One is we talked about the SG&A and the leverage that we talked in terms around -- the efficiency around our fixed cost structure and how we're bringing the fixed cost structure down. And we saw that play out very nice for us in Q4. Starting Q2, we saw that in Q4. That will continue with us as we think about '26. We also talked about the operating leverage within sort of shifting from the growth -- from the launch to the growth mode, and you're seeing that with the targeted investments that we're doing around selling in A&P. So as you think about where -- as we end 2025, just keep in mind, we -- you mentioned gross margin is soft. It does absorb roughly about 80 basis points of tariffs that we're seeing. So when you look at that on a comparable basis to '24, you have to factor that in. But now, pivoting and looking forward to 2026, we're projecting roughly about 200 basis points improvement coming -- 100 basis points coming from the gross margin moving from about 61% to 62%. Also, the SG&A will probably yield another 100 basis points of improvement. Offsetting that would be about 50 basis points of increasing our R&D investment, moving up from about 7% to roughly more towards the 7.5%. So you'll see that movement in sort of taking and that gives you the -- really the 150 basis points that we'll see jumping from our 17.5% EBITDA in 2025 to about 19% EBITDA in 2026 margin. Brenton L. Saunders: The other thing I would say, Lily, is as you think about the fourth quarter, delivering 7% top line and 27% EBITDA growth, what -- if you really peel that onion one more step, what makes me so proud that we could deliver those results as we did it with about 500 fewer colleagues than we had in the same quarter of the year before. And so you're really seeing a change in the foundational structure of our company being more efficient and really focusing on driving that leverage in the P&L to get that margin improvement. Lilia-Celine Lozada: Great. That's helpful. And then, just as a quick follow-up, can you talk about how you're thinking about reported free cash flow this year on a reported basis in 2025? I think that was about $66 million. So how should we be thinking about that trending in 2026? And what are some of the puts and takes we should be keeping in mind? Osama Eldessouky: Yes. So we're very pleased with the work that we've done throughout '25 on the cash flow in general. And I'll tell you, when we -- how we think about sort of cash flow where we ended the year roughly about 42% conversion. And you keep in mind that the business has been growing throughout 2025. And with that growth that we've seen in the business, we've taken roughly about 12 days out of working capital in terms of operationally throughout 2025. So that's really helped us with driving both on the cash flow from operation that I referenced in my prepared remarks, $152 million in the quarter, that's $381 million for the full year, and also being a positive from a free cash flow this year. So as we look forward to 2026, that progress will continue. So I expect we're going to be progressing towards the -- about 45% or so of conversion. Keep in mind, we targeted 50-plus conversion by 2028. So we're really making nice strides and nice progress towards that target. And more importantly, our CapEx is also stepping down as we communicated at Investor Day. So roughly -- in '25, our CapEx was roughly about anywhere between 6% to 7% of revenue. As we look into 2026, we expected that to be about 5% to 6%. So you're seeing that step down in CapEx spend, which provides even more support around the free cash flow. So it's really a lot of great work that's been done by the team here, and we're very proud of it, and it's a nice progress in the right direction. Brenton L. Saunders: One more question, operator. Operator: Your final question for today is from Douglas Miehm with RBC. Douglas Miehm: Brent, this is a question that has more to do -- I believe that you're going to have a strong 3 years ahead of you. Margins are going to continue to increase, et cetera, et cetera. But as we think about valuation and the multiple that should be assigned to this company over time, especially given the strength in the operations, the various businesses, your execution, et cetera, et cetera, 1 thing that's going to likely hold the company back in terms of that multiple expansion is the float. And is there anything that you can speak to us today about how you're hoping to resolve that situation? Because it looks like you're going to have a lot of good news on the operational front. But I'm just thinking from a market perspective, how you'd like to guide us. Brenton L. Saunders: Yes. So look, I agree with you. And I think one point I'll make, and then, I'll answer the question. As I said in the -- I think it was in the first question from Patrick, what's really exciting about the R&D pipeline that really starts to kick in meaningfully in '28 and beyond is that we actually have the structure or platform that allows us to absorb that innovation and scale, right, and flow through to the bottom line much more rapidly than it would have otherwise, right? The pipeline was built to enhance our existing markets and selling infrastructure. And so that really is strategically important for us as we think about launching those products in the future. But you're right, I think obviously, we hear from investors about the float. I fully agree with you. It's something that has to be resolved in time. Unfortunately, as I've mentioned many times, it's not within our control. It's a BHC issue. But if you listen to their commentary at JPMorgan earlier in January, they do plan to sell shares in time. I just don't have a timeline to provide and maybe you want to get on their call tomorrow or today end of day -- end of day today. It feels like that's a day away. But at the end of the day today and ask them as well because it's really their decision. But I do expect it to happen. I just can't give a timeline. All right. So operator, I'll just make a quick closing remark, thank everyone for joining us. Most importantly, I'd like to thank my colleagues from Bausch & Lomb around the world for their great execution in 2025, and we look forward to watching them execute and build our company in 2026. But look, as I mentioned at the beginning, I think Q4 really is another proof point in what good execution looks like. And it shows that we are immensely focused on execution. It is really part of our culture now. And we have all the building blocks we need in our bag today to deliver on our 3-year plan, and we are immensely focused on getting it right and delivering. So we look forward to keeping you updated, and we will obviously always be available to answer any questions if you need us. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the JELD-WEN's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to James Armstrong, Vice President of Investor Relations. James, please go ahead. James Armstrong: Thank you, and good morning. We issued our fourth quarter and full year 2025 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors.jeld-wen.com. We will be referencing this presentation during our call. Today, I am joined by Bill Christensen, Chief Executive Officer; and Samantha Stoddard, Chief Financial Officer. Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SEC. JELD-WEN does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation. With that, I would like to now turn the call over to Bill. William Christensen: Thank you, James, and good morning, everyone. Before turning to results, I want to thank the teams across JELD-WEN. The fourth quarter remains challenging and the progress we made required sustained effort in an environment that continued to put volume pressure on the business. Our employees stayed focused on customers, operated with discipline and worked through the realities of the market. I'm grateful for their commitment and their work continues to strengthen the foundation of the company as we move forward. The macro environment remained very soft during the fourth quarter, consistent with what we expected coming into the period. End markets did not improve meaningfully and demand across both new construction and repair and remodel continue to be under pressure. Despite those market challenges, we delivered results at the high end of our expectations. That outcome reflects disciplined execution and sustained effort across the organization to manage through a difficult environment. As seen on Slide 4, we delivered the high end of the sales and adjusted EBITDA range we forecasted through a combination of top line performance and cost actions. Sales came in stronger than we expected, driven by the hard work of our sales team, combined with improving operational execution, including continued progress with on-time in full delivery. At the same time, we took deliberate labor and cost actions to better align the business with market conditions, consistent with what we outlined in November, including reducing full-time positions by approximately 14% or about 2,300 people in full year 2025. These actions were structural and reflected our view that demand is unlikely to improve meaningfully in the near term. While cost actions played an important role, we remain focused on serving customers and securing the long-term health of the business. Adjusted EBITDA also came in better than we expected. The quarter included a few million dollars of in-period items that were timing related and are not expected to recur. However, excluding those items, underlying adjusted EBITDA would have been above our guidance range. Cash performance followed that improvement. Free cash flow came in approximately $20 million ahead of our expectations, even with higher capital spending due to carryover projects, reflecting tighter working capital management and the benefits of the cost actions we have taken. Additionally, we completed the sale leaseback of our Coral Springs, Florida facility in the fourth quarter, giving us net proceeds of roughly $38 million, increasing our liquidity position. However, as the macro environment remains soft, volumes and margins continue to face pressure. And while operational performance is improving, there is more work to be done. For the full year, we delivered sales of $3.2 billion and adjusted EBITDA of $120 million. While that result was at the high end of the guidance we provided after the third quarter, it is well below where we expected to finish the year when we began. The macro environment remained difficult throughout the year, particularly in retail and lower-priced new housing and demand did not recover as we had originally anticipated. At the same time, we experienced more disruption from service challenges earlier in the year than we expected as we work to rightsize the business, reposition our operations and implement more standard ways of working across our manufacturing landscape. That said, the business exits the year in a more stable position than it entered it. Over the second half of the year, we made meaningful progress improving service levels as production transitions from consolidations were completed both in North America and Europe, backlogs worked down and operations stabilized. Our on-time and full performance has improved as equipment ramped and processes have become more consistent, particularly late in the third quarter and into the fourth. We are also implementing a common manufacturing operating system across the North American network, which is allowing us to identify issues faster and balance operations more effectively than we could earlier in the year. While we still have a lot of work to do, service performance is moving in the right direction. As we look ahead, our focus remains on controlling what we can control. Customers continue to tell us that service matters most and where service has improved, we are seeing opportunities to regain volume. We have taken structural actions to align costs with current market realities while being careful not to undermine service. Market conditions remain soft, and we are not counting on a near-term recovery, but we are improving execution and putting in place operating practices that position the business to perform better when demand eventually improves. In addition, we continue to work through the strategic review of our European business. While the process is ongoing and we have nothing to announce at this time, we believe this review or other potential actions could provide meaningful liquidity and help further strengthen the balance sheet. We are evaluating alternatives thoughtfully and deliberately with a focus on improving financial flexibility while preserving long-term value. In addition to the European review, we continue to evaluate other actions, including smaller noncore assets and selective sale-leaseback opportunities as seen with the Coral Springs transaction. Our liquidity position remains strong. At the end of the year, we had approximately $136 million of cash and about $350 million of availability on our revolver. We have no debt maturities until December of 2027. And while those maturities are not imminent, we expect to address them before they become current. Importantly, our only relevant covenant requires a minimum of approximately $40 million in total liquidity, which is well below our current position. Over the past year, we have increasingly focused the business on execution and decisions within our control. We have taken meaningful steps to improve service, simplify operations, align cost with demand and secure our financial position. These actions are beginning to show up in more stable performance and better control of the business. As market conditions eventually improve, we believe JELD-WEN will be operating from a stronger position with better service, greater discipline and a more resilient foundation. With that, I'll hand it over to Samantha to review our financial results in greater detail. Samantha Stoddard: Thank you, Bill. Turning to the financial results on Slide 6. Fourth quarter net revenue was $802 million, down 10% year-over-year from $896 million in the prior year. Core revenue declined 8%, driven primarily by lower volume. Mix was stable year-over-year following the shift towards lower-cost products we saw in 2024, and pricing was a slight positive. Overall, the revenue performance reflects continued pressure from soft end markets rather than changes in customer mix or pricing discipline. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million or 4.5% of sales in the fourth quarter of last year. The decline was driven primarily by lower volumes, resulting in unfavorable operating leverage as well as ongoing price and cost pressure. These headwinds were partially offset by continued productivity improvements and lower SG&A costs. The fourth quarter is also seasonally weaker from a margin perspective and adjusted EBITDA was also impacted by approximately $7 million of timing-related items that are not expected to recur. Excluding those items, underlying adjusted EBITDA performance would have been higher. From a cash flow perspective, we were roughly free cash flow neutral in the quarter. Operating cash flow was largely offset by capital spending, and we benefited from a $55 million reduction in net working capital, driven primarily by lower accounts receivable and inventory levels, consistent with normal fourth quarter seasonality. As Bill mentioned, we also completed a sale leaseback of our Coral Springs facility during the quarter, generating approximately $38 million in net proceeds. Overall, our focus during the quarter was on disciplined cash usage and managing liquidity carefully in a very challenging macro environment. As a result of lower EBITDA, net debt leverage increased to 8.6x at year-end. Importantly, this increase was driven by earnings pressure rather than incremental borrowing. We did not add debt or draw on our revolver during the fourth quarter. Reducing leverage remains a priority, and we continue to manage the business with a disciplined focus on cash, cost and balance sheet flexibility. Turning to Slide 7. The year-over-year change in revenue was driven primarily by lower volumes. Fourth quarter sales were $802 million compared to $896 million in the prior year. Core revenue declined 8%, reflecting a $77 million headwind from volume mix, with the impact overwhelmingly volume related. Pricing contributed a modest $2 million benefit in the quarter. The year-over-year comparison also reflects a $41 million reduction related to the court order divestiture of the Towanda operation. Foreign exchange provided a $22 million tailwind driven by the weaker U.S. dollar. Taken together, these factors explain the revenue decline in the quarter and are consistent with the market conditions and operational dynamics we discussed earlier. Turning to Slide 8. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million in the prior year. The year-over-year decline reflects a combination of volume-related pressure and ongoing price/cost headwinds, partially offset by productivity improvements and lower SG&A. Lower volumes were a meaningful headwind, reducing adjusted EBITDA by approximately $21 million. In addition, price/cost dynamics contributed to an additional $21 million headwind as cost inflation, particularly due to tariffs, glass and metals continued to outpace pricing recovery. The year-over-year comparison also includes a $7 million reduction related to the court order divestiture of the Towanda operation. These headwinds were partially offset by improved execution across the business. Productivity contributed a $12 million benefit in the quarter, reflecting continued operational improvements, although that benefit was muted by lower production volumes. SG&A was also $12 million lower year-over-year, driven by the cost actions we have taken throughout the year and into the fourth quarter to better align the organization with current market conditions. Turning to Slide 9 and our segment results. In North America, fourth quarter revenue was $522 million compared to $640 million in the prior year. The year-over-year decline was driven primarily by lower volumes, along with the impact of the court order divestiture of the Towanda operation. Adjusted EBITDA for North America was $14 million compared to $42 million last year, with adjusted EBITDA margin declining to 2.6% from 6.6%. The reduction in profitability reflects volume-related pressure and continued price/cost headwinds, partially offset by productivity actions taken during the year. In Europe, revenue was $280 million, up from $256 million in the prior year, primarily reflecting the benefit of a weaker U.S. dollar. On a constant currency basis, volumes and mix were lower year-over-year, consistent with continued soft demand across key markets. FX translation accounted for all of the 900 basis point year-over-year improvement in sales. Adjusted EBITDA for Europe was $12 million compared to $17 million last year, with adjusted EBITDA margin of 4.1% versus 6.5% in the prior year. Productivity was slightly positive, but those benefits were more than offset by lower volume mix, along with higher SG&A costs. With that, I'll turn it back over to Bill to discuss our updated market outlook and how we're positioning JELD-WEN for the path ahead. William Christensen: Thanks, Samantha. Turning to Slide 11. I want to provide our market outlook for 2026 and the assumptions that underpin our guidance. We continue to see a challenging and uncertain environment, and our outlook reflects disciplined actions rather than any expectation of a meaningful near-term recovery. In North America, we expect the overall market for windows and doors to be down low to mid-single digits. Within that, we anticipate new single-family construction to be down low single digits with repair and remodel activity down mid-single digits. Multifamily activity in the U.S. is expected to be relatively stable, while Canada remains under pressure. We continue to expect high single-digit declines in the Canadian market, reflecting the ongoing economic slowdown and weaker housing activity. In Europe, we are seeing signs of stabilization. We expect volumes to be broadly flat year-over-year with no material improvements, but also no further deterioration from current levels. Demand remains subdued, but year-over-year conditions appear to be more stable than what we have experienced earlier in the current cycle. Importantly, our company volume expectations are more conservative than the underlying market. As we move through the last year, we have taken pricing actions to cover cost inflation. As a result, we do expect to lose some volume and are prioritizing pricing discipline. That share pressure is intentional and reflected in our guidance. While we are seeing improving service levels and have actions in place to regain share over time, we are not assuming any benefit from service-driven volume recovery in our outlook. Taken together, this framework reflects a cautious view of the market and a disciplined approach as to how we are managing the business. Our guidance is built on our view of current demand levels with pricing actions largely already implemented and a focus on protecting margins while improving execution rather than relying on external market volume improvement. Turning to Slide 12. I'll walk through our full year 2026 guidance. Our outlook reflects continued uncertainty in the market and disciplined assumptions around demand, pricing and execution. For the year, we expect net revenue in the range of $2.95 billion to $3.1 billion. Core revenue is expected to decline between 5% and 10%, driven by a combination of macroeconomic pressure and a continued competitive market as we work towards a more neutral price/cost position. While pricing remains slightly negative relative to cost inflation, much of our pricing action has already been implemented and our guidance assumes continued pricing discipline, consistent with how we have managed the business historically. We expect adjusted EBITDA to be in the range of $100 million to $150 million. The range is driven primarily by volume uncertainty rather than execution risk. Our outlook reflects current demand levels and does not assume a material improvement in the market over the course of the year. On cash flow, we expect operating cash flow of approximately $40 million and capital expenditures of approximately $100 million, resulting in a free cash flow use of approximately $60 million for the year. Capital spending at this level is largely maintenance in nature. Cash usage is expected to be weighted toward the first quarter, which is typically our seasonally highest period for working capital. Restructuring cash outflows are not likely to be of similar magnitude compared to prior year, and we would expect working capital to improve as the year progresses. Our guidance assumes no portfolio changes and reflects Europe continuing to operate as part of the company. At the same time, we continue to evaluate a range of strategic options, including our ongoing review of the European business, as well as additional actions to improve liquidity, such as selective sale-leaseback opportunities and reviews of other select parts of the portfolio. Finally, we expect to use our revolver during the first quarter due to normal seasonal working capital needs and would expect to pay down much of that usage by year-end. Overall, our guidance reflects a cautious view of the market, disciplined pricing and cost management and a continued focus on executing through uncertainty. Turning to Slide 13. This chart bridges our 2025 adjusted EBITDA of $120 million to the midpoint of our 2026 guidance of $125 million. Moving from left to right, the first headwind reflects market volume and mix, which we expect to reduce EBITDA by approximately $25 million, consistent with the continued pressure we see across our end markets. We also expect a $60 million headwind from share loss driven by a combination of pricing discipline and the lingering impact of prior service challenges. As we discussed earlier, we have taken pricing actions to address ongoing cost inflation. And at the same time, we are continuing to work through the residual effects of poor service performance earlier in the cycle. This share impact is assumed to persist through the year and is reflected in our guidance. Price and costs represent an additional $10 million headwind as cost inflation, particularly in tariffs, glass and metals continues to modestly outpace pricing. Much of our pricing action has already been implemented, and this assumption reflects a more normalized price/cost relationship than we have seen in recent years. These headwinds are more than offset by actions within our control. We expect approximately $75 million of benefits from rightsizing the business and improving base productivity, reflecting actions that are largely already executed and fully realized over the course of the year. In addition, we expect about $35 million of carryover benefit from our multiyear transformation program. This carryover reflects automation, footprint changes and system improvements and represents a transition from a discrete program to a more steady-state operating model. The remaining items include approximately $10 million of headwind from compensation and other timing-related items, reflecting a more normal incentive compensation environment and reversal adjustments from prior periods, partially offset by foreign exchange and other items. Taken together, these factors bridge us to the midpoint of our 2026 adjusted EBITDA guidance. This bridge reflects both the reality of the continued market pressure and the impact of disciplined actions we have taken to adapt the business. As we noted earlier, the range around our guidance is driven primarily by volume sensitivity rather than execution risk. Before we close, I want to step back and talk about how we are improving execution and building greater consistency into the business. In the past, we operated under what we call the JELD-WEN Excellence Model, or JEM. While that framework brought structure, it was largely a one-size-fits-all approach. It relied heavily on top-down driven metrics and did not consistently trigger structured problem solving tied to local daily management routines. As a result, issues were often identified but not always addressed with the speed, rigor and accountability required to sustain improvement. We have now moved to a more disciplined A3 operating system across our manufacturing network. This is a practical management system designed to improve how we define problems, identify root causes and execute countermeasures. Unlike the prior model, it adapts to the specific needs of each site. It uses multiple KPIs across safety, quality, delivery, cost and growth and connects hourly, daily and longer-term work streams into a single layered operating rhythm. This structure creates clearer ownership and faster escalation when performance drifts. Slide 14 shows what this looks like in practice at our Kissimmee, Florida facility, which was one of the first three plants to implement the new operating model. In 2024, our on-time in full right first-time performance at that facility was approximately 55%. Through 2025, that improved steadily. And by year-end, the plant was consistently operating above 95%. Importantly, that improvement has been sustained. The system allowed teams to identify disruptions early and correct them before they materially impacted customers. The same discipline is reflected in past due performance and inventory control. We entered 2025 with more than $5 million of past due orders at the facility. And by December, that had been reduced to approximately $200,000. Inventory accuracy and material flow have also improved, supporting more stable production and better day-to-day execution. While Kissimmee is one example, this is not isolated. We have rolled out or are in the process of rolling out this operating model across North America, and we are seeing similar improvements as it takes hold. Our customers are beginning to see the impact of service becomes more consistent and reliable. Moving to Slide 15. I want to close by stepping back and putting the quarter and the year into perspective. In the fourth quarter, we performed at the high end of our expectations even as conditions remain challenging and demand did not materially improve. That performance did not come from a change in the environment. It came from tighter execution across the business. As we look ahead, our focus is on continuing what we've already put in motion. We are sizing the business to current market realities, not to a recovery that may take time to materialize. We are managing the company with a high degree of discipline, particularly around cost and cash, recognizing the importance of preserving flexibility in a soft and uncertain macro environment. These are not short-term measures. They reflect how we intend to run the business going forward. At the same time, we are continuing to drive improvements in customer service and reliability. As you heard about the operating system example and the work underway at Kissimmee, we are deploying systems that improve consistency and allow us to respond more quickly when performance drifts. Our goal is to rebuild trust and position JELD-WEN as the door and window supplier of choice by being dependable, responsive and disciplined every day. We are encouraged by the early signs that customers are beginning to see the difference, but we know this must be proven over time. I want to briefly recognize the work of our teams across the organization. The progress we are making is the result of focused execution and a willingness to address difficult issues. There is more to do, and we are clear-eyed about that. We remain committed to running this company with consistency, accountability and discipline. The environment may remain challenging, but we are taking responsibility for the outcomes we can influence and continuing to strengthen how JELD-WEN operates. With that, I will turn the call over to James for questions. James Armstrong: Thanks, Bill. Operator, we are now ready to begin Q&A. Operator: [Operator Instructions] Your first question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is around that price versus volume dynamic that you spoke to in your prepared remarks. Can you talk a bit more about how we should think of the amount that price may decelerate as we move through the year? And how much of that you're willing to give up in relation to volume as you continue to face some of those cost headwinds that you mentioned? William Christensen: Yes. Thanks for the question, Susan. So as we signaled in the prepared remarks, our pricing actions are more or less into the market. So there was a lot of negotiation and work with our customers through the last number of months to get ourselves ready for 2026. So as you can see on the bridge and where we're showing the look forward in 2026, we still expect headwind from a price/cost standpoint, mainly due to some tail inflation and some of the input cost increases that we're seeing on glass. But we believe that, that brings us back into a reasonable pocket, which clearly we have not been in through the last few years. So we feel fairly good headed into this year about where we are and the partnerships with our customers to drive performance and make sure we're delivering what we need to for our customers. Samantha Stoddard: So, just on that, Susan, from a phasing standpoint on price. So with price being implemented and being put in already, we're expecting that to be fully into our financials in Q2. So we do expect Q1 to be down year-over-year with slightly positive EBITDA, and that's really because of the price dynamic that I just spoke about, which you'll see that pick back up in Q2. In addition, the year-over-year headwinds from Towanda being included in the majority of January 2025 and not in '26 and then some of the winter storms. So I just wanted to give you kind of that pricing phasing as well. Susan Maklari: Yes. No, that's very helpful, Samantha. My second question is moving to the slide that you walked us through outlining the efforts at the Kissimmee facility. It sounds as if there's been some very basic blocking and tackling that's happened across your operations. And can you talk a bit about where you are in terms of implementing this across the business? And how we think about that freeing you up to then tackle some of the larger productivity and efficiency projects that are sitting out there and also that ability to eventually regain share? William Christensen: Yes. So thanks for the question. That's exactly why we wanted to share this progression, Susan, to make it very clear that we are making progress. And of course, in a down market environment, it's challenging because, obviously, the volume reductions have eroded a lot of the efforts that we are making behind the scenes. So the first message is we have a system that is working and is being implemented. I'd probably say we're 85% of the way there through 2025, meaning spreading it across to all of our sites, really having the leadership and the layered audit structure and an ownership at site level on controlling their own destiny and serving the customer. So great progress there, and we're very happy with that. I think the second fact is it still remains a challenging environment, but we are controlling what we can control. And a lot of the things that we're doing here are to shop floor-based improvement activities and layered structuring of problem solving and less requiring large capital expenditures to drive scale improvement. Of course, we think we'll get there when the volume returns. But again, this is more us focused on controlling what we can control. And I think the third lever is productivity. There's also a lot of opportunity on productivity. Clearly, if the volume does recover, it's a lot easier for us to gain productivity benefit across our North American and European network. And right now, that's one of the biggest challenges that we have, the scaling up of the volume is not allowing that productivity drop through. Samantha Stoddard: So, Susan, your comment is spot on about the blocking and tackling. And I think Bill highlighting and showing some of that improvement will give color into some of the guidance bridge that you see. And that's the slide that we have in 13, it's the 2026 guidance. So the two large green bars add up to about $110 million. 50% or just more than 50% of that is structural cost actions that we executed. So that is in the bag that were done in '25, especially in Q4 that then carries over into '26. You have about 25% of it that are executed actions that need to be scaled full year. This is exactly what Bill is talking about when it comes to the operating model and scaling that from a full year standpoint. And then the remaining 25% is productivity projects that are identified and are in progress using this simple model that is really driving root cause and solving some of the challenges even despite the operating headwinds of lower volumes. Operator: And that concludes our question-and-answer session. I will now turn the conference back over to James Armstrong for closing comments. James Armstrong: Thank you for joining our call today. If you have any follow-ups, please reach out, and I would be happy to answer any questions. This ends our call, and please have a great day. Operator: This concludes today's call. Thank you for your participation, and you may now disconnect.
Operator: Good morning, and welcome to the OneSpaWorld Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Allison Malkin, Investor Relations. Please go ahead. Allison Malkin: Thank you. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call and Webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward-looking statements. These forward-looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our fourth quarter and fiscal year 2025 earnings release, which was furnished to the SEC today on Form 8-K. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman and Chief Executive Officer; and Stephen Lazarus, President, Chief Operating Officer and Chief Financial Officer. Leonard will begin with a review of our fourth quarter 2025 performance and provide an update on our key priorities for 2026. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question-and-answer portion of the call. I would now like to turn the call over to Leonard. Leonard Fluxman: Thank you, Allison. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call. It's a pleasure to speak with you all today about our record fourth quarter. The period capped a year of exceptional performance underpinned by innovation across our global operating platform and the delivery of extraordinary guest experiences and excellent results for our cruise line and destination resort partners. During the quarter, we advanced our strategic priorities, driving growth in key operating metrics and introducing 2 new ship builds. This served to further cement our market leadership and resulted in double-digit growth in total revenues and adjusted EBITDA. Our unique capabilities and the successful execution of our strategy have produced 19 consecutive quarters of year-over-year growth or fourth consecutive year of record performance of both metrics. We continue to identify ways to elevate our positioning, increase efficiency and accelerate growth. Innovation, AI and the reorganization of certain operations that year held included the strategic decision to exit land-based health and wellness centers in Asia and reorganized operations in the United Kingdom and Italy have us poised to achieve this objective. We begin 2026 even more strongly positioned to maximize our powerful standing as the preeminent operator of health and wellness centers at sea. I'm extremely proud of the team that assisted in delivering the year-end equally confident that the year ahead will represent another year of outstanding performance. At year-end, we operated health and wellness centers on 206 ships with an average ship count of 199 for the quarter. This compares with a total of 199 ships at year-end and an average ship count of 188 ships in fiscal 2024. Also at year-end, we had 4,582 cruise ship personnel on vessels compared with 4,352 cruise ship personnel on vessels at year-end in fiscal 2024. Along with our strong financial results, the quarter year -- and year included noteworthy progress towards our key strategic priorities. Let me share some of those highlights with you. First, we captured highly visible new ship growth with current cruise line partners. We continue to solidify our market leadership, introducing 2 new health and wellness centers, aboard 2 new ship builds Disney Destiny and Star Seeker during the quarter, which brought our total ship build to 8 for the year. In 2026, we'll introduce health and wellness centers on 6 new ship builds, 3 of which are expected to commence voyages in the first half of the year. Second, we continue to expand higher-value services and products. These higher-value services include Medi-Spa and Acupuncture, to name a few, increases our addressable market and help to grow some ship [ build ] revenue performance. We continue to introduce these services to more ships and expand offerings with the latest innovations and adding to our growth. In addition, we continue to elevate the innovation in our MedSpa services with the expansion of further rollout of next-generation technology with Thermage FLX CoolSculpting Elite and Acupuncture LED, which offer improved results and reduced treatment time by up to 50%. These new technologies generated between 23% and 40% revenue growth in Q4 versus last year. In addition, the adoption of LED light therapy with acupuncture remains a high conversion add-on to treatment. At year-end, Medi-Spa services were available on 153 ships, up from 147 ships at year-end of fiscal '24. We expect to have Medi-Spa offerings on 157 ships by year-end 2026. Thirdly, we focused on enhancing health and wellness center productivity. This is best reflected in the delivery of across-the-board increases in key operating metrics, including revenue per passenger per day, weekly revenue, pre-cruise revenue and revenue per staff per day. Our unique ability to identify onboard and retain staff is leading to this performance. We continue to be known as a great place to work and take pride in being a desired employer striving to create an environment that fosters retention. These and other onboard employee initiatives have led to a 4 percentage point increase in staff retention versus 2024. Importantly, experienced staff generates significantly higher revenue per day versus first stop contract. And lastly, we possess a strong and durable balance sheet, which, combined with our ongoing successful growth enabled us to advance each of our capital allocation objectives in the quarter. These are invest in our future growth, return value to our shareholders and reduce debt. During the year, we returned nearly $93 million to shareholders during the year through our stock buyback and quarterly dividend and reduced outstanding debt. Our asset-light business model delivers consistent after tax free cash flow. With this, combined with our positive long-term growth prospects, has made us poised to continue to advance our value creation objectives going forward. We remain confident in our ability to continue our strong performance in 2026. Our positive outlook is supported by the continued innovation of our product and service offerings and the unwavering commitment to service excellence by outstanding staff, further buoyed by the implementation of emerging AI technologies that enhance our unique global positioning. These growth drivers are complemented by the contribution from the annualization of new ships that entered service in 2025, 6 of which commenced voyages in the second half of the year as well as the introduction of 6 new health and wellness centers beginning voyages in 2026. In summary, we believe our highly visible revenue growth, along with the continued discipline with which we execute our asset-light business model, positions us very well to deliver strong results for our stakeholders and shareholders in the near and long term. As Stephen will share momentarily, we have reiterated our 2026 guidance and expect total revenues, excluding revenues associated with restructured operations and adjusted EBITDA to increase high single digits at the midpoint of the range. With that, I will turn the call over to Stephen, who will provide more details on our third quarter financial results and guidance. Stephen? Stephen Lazarus: Thank you, Leonard. Good morning, everyone. We ended the year on a high note, delivering record performance in total revenues and adjusted EBITDA in the fourth quarter and continued strong and predictable cash flow generation. This record performance reflects our investment in breakthrough technology applications across our business, reinforcing our market-leading strengths and deepening our cruise line and resort partnerships. At year-end, we implemented strategic actions to focus operational and capital investment on our highest growth and most profitable operations, exiting land-based health and wellness centers in Asia and reorganizing operations in the United Kingdom and Italy. In addition, our initiatives in AI will serve to accelerate our strategic growth initiatives and increase efficiency, further building our revenue and profitability growth potential. Let me provide some highlights prior to reviewing our financials and guidance. First, as it relates to revenue enhancements. As I mentioned with our Q3 results, we have implemented a machine-learning algorithmic engine to improve revenue and utilization, which is progressing well. In addition, we recently began work and allows us to implement a true dynamic price optimization model that we will start to introduce with prebooking. Today, we have over 11,500 itineraries that are open for prebooking, which makes it virtually impossible to have true dynamic pricing with only humans involved. And we're confident that adding these genetic AI tools will improve utilization and yields. By leveraging advanced recommendations and algorithmic optimization, this initiative aims to unlock additional revenue and improve utilization. Second, on the operational efficiency and scalability side, we are seeing early success with our rollout of our onboard virtual assistant. This AI assistant, helps our managers receive and respond to questions immediately and meaningfully reduce help desk hours. For example, this tool enables our managers to close voyages and start booking the next cruise faster than before. Currently, 80% of all questions are answered within seconds by the virtual assistant, which is compared to perhaps a day or more if only humans were involved. Our virtual assistance tool has now been deployed across 180 vessels, up from 40 vessels in the third quarter. Third, automation and streamlining is part of our broad efficiency initiative to continue to explore and develop solutions to reduce manual work simplify operations shoreside and improved scalability at our corporate locations. Although still in the early stages, our steering committee needs regularly to analyze different metrics such as time to implementation, cost of implementation, potential impact and difficulty, return on investment and the prioritization of where to focus next. This is very exciting work for all of us, has strong buying across our organization, and we hope will further enhance productivity, operational scalability and our key operating metrics over time. Overall, our AI initiatives demonstrate our commitment to leveraging cutting-edge technology to strengthen our market position and deliver value for our shareholders. Turning now to a review of the fourth quarter and fiscal year, starting with the quarter. Total revenue increased 11% to $242.1 million compared to $217.2 million for the fourth quarter of 2024. Growth was driven by fleet expansion from 2025 new ship builds, a 2% increase in revenue days and a 1% increase in average guest spend contributing $15.5 million, $8.7 million and $2.1 million, respectively, the increase in total revenues. Of this $2.8 million was attributable to increased guest spend from prebook services. Growth in our Maritime total revenue was offset by a $1.3 million decrease in destination resorts total revenue partially due to the closure of hotels where we had previously operated. Cost of services increased $18.5 million attributable to the $21.5 million increase in service revenues compared to the fourth quarter of 2024. Cost of product increased $3.4 million attributable to the $3.4 million increase in product revenue compared to the fourth quarter of 2024 a $0.3 million quarter-over-quarter increase in freight expense related to the timing of purchases and $0.3 million of nonrecurring inventory write-off charges in the fourth quarter of 2025 related to the exit from its -- from our land-based health and wellness centers in Asia. Admin expenses were $4.9 million compared to $5.8 million in the fourth quarter of 2024, with the decrease being primarily attributable to higher professional fees incurred in the prior year quarter, including approximately $700,000 related to incremental public company costs such as Sarbanes-Oxley compliance. Salaries, benefits and payroll taxes were $8.9 million compared to $9.3 million in the fourth quarter of 2024. This decrease was primarily attributable to lower incentive-based compensation of approximately $500,000 compared to the fourth quarter of prior year. Restructuring expenses were $2.7 million in the fourth quarter of 2025 attributable to the aforementioned reorganization of operations in the United Kingdom and Italy and the exiting of resort health and wellness operations in Asia. Long-lived asset impairment was $3 million compared to $400,000 in the fourth quarter of 2024. Due to exiting resort operations in Asia, the fourth quarter of 2025 included a $2.8 million impairment charge with respect to the value of associated long-lived assets. $2.2 million attributable to intangible assets and $600,000 attributable to property and equipment and right-of-use assets. Net income was $12.1 million or net income per diluted share of 12p as compared to net income of $14.4 million or net income per diluted share of 14p for the prior year. The decrease was primarily attributable to the recognition of these restructuring expenses and [indiscernible] asset impairments totaling $5.7 million during the current quarter partially offset by $4.4 million improvement in income from operations. Adjusted net income was $24.3 million or adjusted net income per diluted share of 24p as compared to adjusted net income of $21.4 million or adjusted net income per diluted share of 20p in the fourth quarter of prior year. And finally, adjusted EBITDA was $31.2 million compared to adjusted EBITDA of $26.7 million in the fourth quarter of 2024. For the fiscal year, total revenue of $961 million increased 7% compared to $895 million from the prior year. Adjusted net income rose 15% to $102.9 million or 99p per diluted share from adjusted net income of $89.7 million or $0.85 per diluted share in 2024. And adjusted EBITDA increased 10% to $123.3 million as compared to adjusted EBITDA of $112.1 million in fiscal 2024. Our strong balance sheet included total cash of $17.5 million at year-end, reflecting the disbursement of $17.5 million throughout the year in quarterly dividend payments, investment of $75.4 million to repurchase 3.9 million of our common shares and payment of $15 million on our term loan. In addition, we had full availability of our $50 million revolving line of credit, giving us total liquidity of $67.5 million at year-end. Total debt, net of deferred financing costs was $84 million at December 31, 2025, compared to $98.6 million at December 31, 2024. Also at quarter end, we had $37.5 million remaining on our prior $75 million share repurchase authorization. We expect the disciplined execution of our growth initiatives and strong cash flow generation driven by our asset-light business model to enable the payment of our ongoing quarterly dividend while evaluating opportunities to repurchase our shares and retire debt. We believe this positions us well to create long-term value for our shareholders. Turning now to guidance. We are reaffirming our fiscal 2026 outlook and begin the year with strong momentum and confidence to deliver another record performance. Based on our market outlook, outstanding team proven strategies and execution, scaling innovations, new ship builds and strong capitalization, we expect fiscal 2026 total revenues to exceed the $1 billion mark for the first time. Total revenues are expected in the range of $1.01 billion to $1.03 billion, representing high single-digit increases at the midpoint of our guidance range from actual 2025 results, excluding exited and reorganized operations mentioned previously. Adjusted EBITDA continues to be expected in the range of $128 million to $138 million, representing high single-digit increases at the midpoint of our guidance from actual fiscal 2025 results. And for the first quarter of 2026, we expect total revenue in the range of $241 million to $246 million, with adjusted EBITDA expected in the range of $30 million to $32 million. Please bear in mind that exited and reorganized revenue contributed $5.3 million to first quarter 2025 revenue and $23 million to fiscal 2025 revenues. And with that, we will open the calls up for questions. Gary, if you could take over, please. Operator: [Operator Instructions] Our first question today is from Steve Wieczynski from Stifel. Jackson Gibb: This is Jackson Gibb on for Steve Wieczynski. I wanted to dig in a little further on the AI integration. And with another quarter under your belt, is there any more color you can give on the potential benefits you guys could realize from this investment, whether that's on the cost side or the revenue side? And any updated thoughts on how that might impact margins? Up to this point, you guys have kind of talked about these initiatives starting to show up meaningfully in the second half of 2026. Is that cadence still accurate? And would we be correct to assume you have not factored in any of this potential impact to current full year guidance? Stephen Lazarus: Yes, Jackson. As previously mentioned and you reiterated, we did say that we will begin to talk about that after our second quarter results with more specificity. So -- we remain on track to do that. We are encouraged, obviously, by the initial results, and that is reflected in the incremental rollout of these initiatives, 2 vessels and starting of additional initiatives as well. So we remain pleased with where we're at. And to your last point, yes, our current guidance does not include potential impact from these initiatives. Jackson Gibb: Okay. Got it. And then switching gears for my follow-up. I was hoping to get a little bit more detail around how consumer trends are shaping up, specifically attachment rates and how you're going about discounting. Are you seeing any differences worth calling out in these metrics or anything that stands out as far as changes in spend patterns across different brands, geographies, ship sizes, et cetera. And then how are you thinking about your ability to take price throughout 2026 relative to price action taken in 2025? Stephen Lazarus: So I'll address the last part first. As you know, in 2025, we effectively did not take service price increases. We do always continue to evaluate that. And if there's opportunity to do so. In 2026, we will certainly address an action our comments. Again, from a guidance perspective, we are not assuming any service price increases embedded at this point in time. We'll see how things play out. With regards to the consumer, we had previously mentioned in the fourth quarter of last year, a little bit of softness in November, and we did not see that reoccur in December, which was great. So far year-to-date, we are definitely seeing overall higher prices being accepted by the consumer. So on a net basis, we are selling at a higher price. There may be slightly additional discounting. But at the end of the day, the net that's going to the customer in our facility, which remains high. And it's also therefore a reflection of, as you will have noted, our first quarter guidance, which we feel good about and is about consensus, and we think is a reflection of what we anticipate going forward with the consumer. Operator: The next question is from Gregory Miller with Truist. Gregory Miller: I'd like to ask first about the dynamic price optimization model that you spoke about in your prepared remarks. Melissa, missed it on the -- in your remarks this morning, have you discussed in terms of detail in terms of the rollout? Are there certain banners or itineraries or vessels that you're going to start this implementation first? Or is this going to be a broader rollout across the fleet. Stephen Lazarus: Specifically as it relates to that initiative, Greg, the first place we will begin with is actually on prebooking -- so effectively, it will cover 94% of the vessels that today are on that prebooking platform. I would like to say it's still relatively early stages. Obviously, we're excited about it because, as mentioned, the share volume of itineraries available on the prebooking platform, make it effectively impossible for humans to have a true dynamic pricing impact that can literally look at day-to-day even ultimately, hour to hour where we might want to adjust things. So we are excited about it when we roll it out, the phases will be #1, pre-booking once we get that working and finalized, there will be a relatively quick rollout to the remaining vessels. But realistically, we're talking here into the back half of the year. Gregory Miller: Okay. Shifting gears, I was on 1 of your ships recently. And I noticed that the spa menu appeared reformatted. It looked like the offerings were perhaps more condensed and just different stylistically than what I've seen in the past. And I'm curious if you have any intentions of a broader rollout of reformatting your spa menus in terms of the offerings that you're presenting to passengers on board. Leonard Fluxman: No. Actually, we took a very proactive approach in doing that. So I'm glad you noticed. We decided to condense and rather focus guest choice on sort of the more popular items versus a full Chinese menu of everything and anything as opposed to the top choices that everybody takes. But also a focus to moving people into specific price points and time slots. So it's a much more manageable and conversion into the higher treatment rates, particularly around face and body -- so I just think narrowing the aperture to the more popular treatments that we want to sell with a higher retail attachments is sort of the strategy and science behind a narrower menu. We have no intention of broadening it because at the -- from what we did and looked at it statistically, there was just no purpose in having an extensive menu that we did would have like 3 years ago. Operator: [Operator Instructions] Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks. Leonard Fluxman: All right. Thank you, everybody, for joining us today. As Stephen mentioned, we've got off to a great start here in the first quarter and look forward to speaking with you all on our next investor call as well as conferences that we may attend through the first quarter entering the second quarter. So thank you, and look forward to speaking to you next time. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 and Year-end 2025 Hecla Mining Company Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations. Please go ahead. Michael Parkin: Thank you, Kelvin. Good morning, and thank you all for joining us for Hecla's Fourth Quarter and Full Year 2025 Results Conference Call. I'm Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On the call today with us is Rob Krcmarov, President and Chief Executive Officer; Russell Lawlar, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; Kurt Allen, Vice President, Exploration; Matt Blattman, Vice President, Technical Services; as well as other members of our management team. At the conclusion of our prepared remarks, we will all be available to answer questions. Turning to Slide 2, cautionary statements. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slide 2 in our earnings release and in our 10-K filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I will now pass the call over to Rob. Robert Krcmarov: Thank you, Mike, and good morning, everyone. Turning to Slide 3. 2025 was a transformational year for Hecla, one marked by disciplined execution and strategic clarity. Hecla's 135-year legacy as the oldest company on the New York Stock Exchange is our foundation, but it's not our destination. What drives us forward is our clear, compelling strategy to become and be recognized as the premier silver company in North America. So let me walk you through how we're executing against this strategy. Our foundation rests on 3 critical pillars. First, legacy and longevity. 135 years old. We're the oldest mining company on the NYSE. We protect value through market cycles for over a century. Second, top jurisdictions. All of our mines and projects from Greens Creek in Alaska to Lucky Friday in Idaho to Keno Hill in the Yukon to Midas in Nevada, they operate in the best and safest mining jurisdictions in North America. This jurisdictional advantage is a competitive advantage that protects our cash flows, reduces our risk profile and safeguards our license to operate. Third, silver focused. We've made a deliberate choice to build peer-leading silver exposure in both our revenue mix and our reserve base. While we produce gold, lead, zinc and copper as important byproducts, silver is the strategic anchor of our business. Our strategy delivers 4 key outcomes: Portfolio value surfacing. So we're actively managing our portfolio, retaining and investing in our world-class silver assets while strategically divesting noncore assets. The pending sale of Casa Berardi, which we announced last month is an example of this disciplined approach to capital allocation. It was a difficult decision, but one as fundamentally as a silver company, we had to make. Operational excellence. We're relentlessly focused on core asset optimization and execution. Not at the expense of safety or sustainability, they are the foundation of everything that we do and key drivers of productivity, not a compliance exercise. Investment discipline. This is the new Hecla. We utilize strict capital discipline with target ROIC thresholds to guide us in our path forward. Every dollar we deploy is intended to generate returns for our shareholders. And finally, organic growth. Through disciplined exploration programs, we are surfacing value for shareholders. And I think our recent Nevada exploration demonstrates this approach. We're working to discover and build the next generation of production from assets that we already own. This strategy is not abstract. It's delivering tangible results, as you'll see on the next slide. So moving to Slide 4. 2025 was a transformational year for Hecla. On the financial front, we delivered records, record revenue of $1.4 billion, record profitability, net income applicable to shareholders of $321 million or $0.49 per share, record adjusted EBITDA, $670 million. But the headline number that matters most is what these records enabled, which is substantial deleveraging and balance sheet transformation. Our total debt has declined to just $276 million. Our gross debt to adjusted EBITDA ratio, 0.4x. We generated operating cash flow of $563 million, which translated to $310 million in free cash flow, with each mine generating positive free cash flow last year. On the operational front, we executed well, hit our top end of silver production guidance at 17 million ounces, exceeded our gold production guidance with 150,000 ounces produced. Lucky Friday delivered a record 5.3 million ounces of silver production, exceeding the top end of the guidance range. It was as recently as 2021 that Lucky Friday was producing 3.6 million ounces, nearly a 50% increase in just 4 years. Keno Hill achieved new record production of over 3 million ounces while achieving first year profitability and positive free cash flow under Hecla ownership. Our Lucky Friday surface cooling project is 79% complete and on track for mid-2026 completion. That's a critical investment in the health and safety of our workforce and a key milestone as we work towards making Lucky Friday a zero discharge facility. And we received our finding of no significant impact or FONSI at Aurora, which is a major permitting milestone, allowing us to kick off exploration activities this year at the historic very high-grade gold, silver producer in -- past producer in Western Nevada. Turning to Slide 5. Now I want to talk about the pending sale of Casa Berardi to Orezone Gold Corporation. This transaction represents portfolio optimization and action. Casa Berardi is a gold mine in a Tier 1 jurisdiction. It has a nice future, has had a nice run with us. Its mid-range mine plan is for a gold miner, some with a different schedule than us. So we plan to redirect capital and management focus towards our silver assets. We still have upside exposure with a 10% stake in Orezone. Why does this matter strategically? Well, there's 4 reasons. First is strategic portfolio optimization. So we're sharpening our focus. Capital that was tied up in gold would now flow towards silver assets with superior economics and longer reserve lives. Second is the enhanced market position. Upon closing, Hecla should be recognized unambiguously as the premier North American silver mining company. So silver would represent about 73% of our consolidated revenues, the highest silver revenue exposure among all our multi-asset mining peers with all our operating mines in the best jurisdictions. Third, strengthened balance sheet. We plan to use cash proceeds towards debt reduction and enhance financial flexibility. This positions us to a debt-free balance sheet with prices sustaining or better. Fourth is value maximization. We maintain exposure to Casa Berardi's upside through our OreZone shares with OreZone well positioned to extract additional value from the asset given their focus and expertise in gold. I think this is a sophisticated capital allocation. This is how we maximize shareholder returns. And so now I'll pass the call over to Russell. Russell Lawlar: Thank you, Rob. As we turn to Slide 7, let me take you through our financial scorecard because the numbers tell a compelling story of transformation. On balance sheet strength, our gross leverage ratio improved to 75% from 1.6x in 2024 to 0.4x in 2025, while our net leverage ratio improved 94% from 1.6x to 0.1x. And at current metal prices, we're positioned to achieve a debt-free balance sheet within 2026. This balance sheet transformation has set the company up for future growth with a substantial reduction to risk. On margin and return generation, our silver all-in sustaining cost per ounce margin improved from a very strong 54% in 2024 to 75% in 2025. This reflects both strong realized prices and disciplined cost management. And our free cash flow surged from $4 million last year to $310 million this year. While our return on invested capital improved 3x from 4% to 12%, we're now generating returns well above our cost of capital. These changes all sum up to cash on our balance sheet increasing ninefold from $27 million coming into the year to $242 million coming out of the year. This represents a complete transformation from a leveraged balance sheet to a position of financial strength in a single year. As we turn to Slide 8, I'll walk through some of the details from the fourth quarter because they show a sustained momentum and operational consistency. During the fourth quarter, we generated $439 million in revenue. Silver accounted for 59% of that total, but notably, excluding Casa Berardi, our silver exposure is expected to increase to approximately 73%, which would provide the highest silver exposure among our peer group, not to mention jurisdictional profile or other unique attributes. Our realized silver price in the fourth quarter was nearly $70 per ounce, beating the quarterly average by over $14 per ounce. Our all-in sustaining cost was $18.11 per ounce, putting the -- our silver margin at $51 per ounce or 74% of the realized price. This is exceptional profitability. Our adjusted EBITDA was $670 million in 2025, which coupled with gross debt deleveraging improved our net leverage ratio from 0.3x last quarter to 0.1x this quarter, demonstrating the momentum in our deleveraging trajectory. We generated almost $135 million in free cash flow on a consolidated basis during the quarter, and all our operations contributed positively. This excellent quarter and the resulting cash flow was due to better pricing, but also executing on a variety of strategic initiatives across all our assets. As we turn to Slide 9, the bar chart here illustrates our projected cash flows across a range of silver and gold price scenarios. As we discussed during our Investor Day, Hecla has among the best leverage to silver prices compared to peers, which could improve upon closing of the Casa Berardi sale. This analysis on the slide assumes the Casa sale is completed and at $75 silver and $4,500 gold, we forecast cash flows of about $600 million, but this grows to about $850 million at $100 silver and $5,500 gold. our forecast and at these metal price scenarios, we estimate nearly 70% of our revenue would be tied to silver sales, which is an industry best. Turning to Slide 10. I want to continue to emphasize our capital allocation framework because it's central to how we create shareholder value. We've shared this framework over the recent months, and it guides every decision we make at Hecla. We maintain an unwavering commitment to 6 key pillars in priority order. First, safety and environmental excellence, which is first and foremost. Second, sustaining growth capital maintains our asset base, derisking our assets and providing a solid base to build from as we provide high return organic growth. On exploration, it provides asymmetric potential returns and is critical in the long-term strategy of any mining company. As we think about deleveraging and strengthening of our balance sheet, this provides financial resilience and flexibility and ensures ability to invest when opportunities arise. If we think about strategic investments, whether internal or external, will be guided by our predetermined return on investment criteria. And we -- and lastly, as we think about shareholder returns, we'll look to return additional capital to shareholders when appropriate with a focus on maintaining strict return on investment criteria. This framework ensures disciplined decision-making aligned with long-term value creation. I'll now turn the call to Carlos. Carlos Aguiar: Thank you, Russell. Turning to Slide 12. Before we move to asset-by-asset operational results, I want to start with what matters most. Operational excellence begins with safety. Our 2025 total recordable injury frequency rate was 1.69, which is a 13% reduction year-over-year. So this single year improvement reflects a multiyear of systematically driving down our TRIFR through dedicated focus on keeping our employees and contractors safe. This is not luck. It's culture, systems and commitment, and it matters because safe mines are productive mines. In 2024, we reaffirmed our commitment to safety values to a company-wide safety day and the rollout of Safety 365: Work safe. Home Safe. In 2025, we focused intensively on the specific drivers of incidents. And in 2026, we are implementing a formal Fatality Prevention Program alongside continued improvement of all safety systems. Moving to Slide 13. Let me walk through our 3 operating silver mines, starting with Greens Creek, our flagship world-class, low-cost silver mine in Alaska that has been in production for over 35 years and is expected to continue delivering exceptional economics for many years to come. In Q4, Greens Creek produced 2 million ounces of silver with AISC of under $3 per ounce after by-product credits, generating $102 million in operating cash flow and nearly $80 million in free cash flow. For the full year 2025, Greens Creek delivered 8.7 million ounces of silver at the top end of guidance with AISC of under negative $2 per ounce after by-product credits. For 2026, we are projecting 7.5 million to 8.1 million ounces of silver and 51,000 to 55,000 ounces of gold with AISC guided to nearly 0 after by-product credits. This is a testament to the extraordinary economics of this asset. What's remarkable about Greens Creek is the longevity of the resource base. We had a 12-year reserve mine plan, but through ongoing exploration success, we see a pathway of sustained reserve replacement well beyond that time frame. That's why we are investing today in our tailings facility, building out capacity through 2045. When this mine started 35 years ago, it had a 10-year mine life. Today, 12 years of reserves ahead plus significant reserves, we are actively working to convert to reserves. Greens Creek is a mine in a Tier 1 jurisdiction with world-class economics. It is the cornerstone of our portfolio. Turning to Slide 14. Lucky Friday is our primary silver mine in Idaho, a deep underground operation with a 15-year reserve mine plan, producing consistently high-grade silver ore. I'm extremely excited about this mine. I spent 10 years working in that place. In Q4, Lucky Friday produced 1.3 million ounces of silver with AISC under $26 per ounce after by-product credits, generating $57 million in operating cash flow and over $33 million in free cash flow. For the full year 2025, the mine delivered record production of 5.3 million ounces of silver, exceeding the top end of guidance with AISC of under $22 per ounce after by-product credits. For 2026, we are guiding to 4.7 million to 5.2 million ounces of silver production with AISC of $23.50 to $26 per ounce after byproduct credits. The expected year-over-year increase in AISC reflects higher profit sharing payments to our workforce. This is a good thing. These payments are tied directly to profitability, which we expect to remain strong given the current metal prices. A key near-term project at Lucky Friday is our surface cooling project, which is 79% complete and on track for completion by mid-2026, which will significantly improve underground health and safety. Turning to Slide 15. Keno Hill's transformation story. Hecla acquired Keno Hill in 2022. And last year, the mine achieved its first full year of profitability and positive free cash flow generation. This is a significant milestone. In Q4, Keno Hill produced 597,000 ounces of silver, generating $33 million in operating cash flow and over $17 million in free cash flow. For the full year 2025, we exceeded 3 million ounces, a new production record and above the top end of guidance. For 2026, we are guiding to 2.9 million to 3.2 million ounces of silver production with capital investment of $61 million to $66 million as we continue to advance towards steady-state operations. What's exceptional about Keno Hill, it's current profitability while still on path to its nameplate capacity. As we reach the planned throughput rate of 440 tons per day, we are modeling robust positive free cash flow generation potential across a wide range of silver prices, as you can see in the bar chart on this slide. Keno Hill represents the optionality and upside within our portfolio. I will now hand it over to Kurt to discuss exploration. Kurt Allen: Thanks, Carlos. Moving to Slide 17. Our exploration strategy is straightforward: discover and develop the next generation of production from within our existing portfolio of high-quality projects. Moving to Slide 18. Our primary growth engine is the Nevada platform. At Midas, recent drilling returned outstanding results, including 6.1 feet at 0.46 ounces per ton gold and 0.93 ounces per ton silver at Sinter offset and 2.2 feet at 0.95 ounces per ton gold and 0.6 ounces per ton silver at Pogo. These confirm high-grade mineralization and support a potential near-term production restart with existing mill infrastructure on site. Aurora achieved a major milestone, receiving our FONSI from the U.S. Forest Service, clearing a path for 2026 exploration at this historic high-grade gold-silver producer. Regarding mine life extension, Greens Creek definition drilling delivered. We added 3.7 million silver ounces through model updates, replaced 9.5 million ounces depleted through mining and grew the reserves by 2.4 million ounces net. With a 12-year reserve life and 88.7 million silver ounces in measured and indicated resources, Greens Creek continues to demonstrate longevity potential. Lucky Friday nearly replaced reserves, reducing only 200,000 silver ounces during a record 5.3 million silver ounce production year and with 40.5 million ounces of measured and indicated resources beyond reserves, providing a clear runway for continued reserve replacement. Now we're investing $45 million to $55 million in 2026 exploration, heavily weighted towards Nevada and near-mine opportunities. This directly supports achieving greater than 100% reserve replacement and building the pipeline to drive us toward 20 million ounces annually. We're discovering high-grade mineralization on lands we control, in jurisdictions we understand with infrastructure often already in place, organic growth with superior economics. I'll now turn the call back to Rob. Robert Krcmarov: Thank you, Kurt. Let me now address our medium-term outlook because it shows some of the depth of optionality that's within our portfolio. Our 2026 silver production outlook calls for 15.1 million to 16.5 million ounces. But as we've shown recently at our Investor Day, we've got a credible pathway to 20 million ounces over the medium term. We've got multiple projects that could drive us towards that 20 million ounce target. So first, continued ramp-up of Keno Hill to the permitted capacity of 440 tons per day that could drive meaningful production growth from current levels. Second, the potential Midas production restart that Kurt just spoke about. Midas is an exceptional gold and silver project in Nevada that Hecla operated historically. As Kurt pointed out, we have the mill infrastructure in place. And we're currently advancing exploration at Midas with exceptional drill results that we just spoke about. And that supports greater exploration investment in the project this year. A development decision on Midas could add meaningful gold and silver production over the medium to longer term at low capital intensity, representing a potential significant value surfacing opportunity. But the upside doesn't end there. Touching on just a couple of our other projects, we see potential to optimize Lucky Friday even further from the current record production levels it's been achieving. At Greens Creek, we've identified the potential for reprocessing of historic dry stack tailings to extract value from the significant metals contained within. These are projects within our control, within our existing portfolio, projects that offer the potential for significant value creation that we don't need to execute expensive M&A to own. That's why we believe 20 million ounces of silver production over the medium term is achievable with further upside potential over the long term. So what we've presented today is a company in transformation, a company that's moved from financially leveraged and free cash flow constrained into one with a robust balance sheet, strong cash generation and the financial flexibility to invest in our project pipeline to surface value for shareholders over the long term. We're executing operationally at the highest level across our entire portfolio. We're maintaining strict capital allocation discipline across all 6 pillars of our framework. We're strategically focused on becoming the premier North American silver producer, and we have multiple near-term and medium-term growth projects within our existing asset base. 2025 was a year of multiple records. 2026 and beyond present exceptional opportunities. We're executing our strategy with precision, and we're confident in delivering sustainable shareholder value. Thank you. And with that, I'll turn it over to questions. Operator: [Operator Instructions] Your first question comes from the line of Heiko Ihle of H.C. Wainwright. Heiko Ihle: Exploration at Keno Hill, anything you've seen there that was maybe a bit unexpected, better or worse than internal plans so far this year? And building on all of that, the costs -- the ongoing costs of exploration per meter so far this year, how has pricing been? And what are you sort of modeling out for the remainder of the year, please? Kurt Allen: Yes. Our -- I guess, things that we've seen that in the exploration from 2025, I mean, we've intercepted what we think is a new high-grade ore shoot off the deep Birmingham, and it's open for expansion. And that's going to be one of our focuses this year as well as drilling around the rest of the Birmingham and the Flame & Moth. Now our budget for Keno Hill this year is $13 million. The direct drilling costs, I think, are on the order of USD 180 to USD 190. I'll have to check that number, though, Heiko, and get back to you. The exploration potential there is quite spectacular. Heiko Ihle: Fair. And then just one quick clarification before I go back in the queue. On Casa, and I went through the press release that you guys issued earlier today again. Just to be clear, you're getting all cash flows from Casa through the closing date, correct? There won't be any backdating or anything. I mean, with gold above $5,000 again as of today, obviously, there's real money to be made every single hour. Russell Lawlar: Yes. Heiko, that's right. We'll get cash flows through closing. And then obviously, then the structure of the deal will bring further cash flows. Operator: Your next question comes from the line of Cosmos Chiu of CIBC. Cosmos Chiu: Maybe my first question is an accounting question, again, on Casa Berardi. I'm just wondering about the accounting -- sort of treatment accounting impact that could come from Casa. I realized or I kind of looked at the cost for Q1, your guidance, gold cost guidance, and I saw that it's actually higher now. It's only 1 quarter's worth of Casa. So does that feed into your earnings? How does that impact earnings? And the second part is, will you be looking to book some type of gain on the transaction? I forget what the book value might be. And then overall, what's the timing of some of these accounting transactions? Russell Lawlar: Yes. So Cosmos, a couple of things here. First, in terms of the guidance, we took an estimate through the first quarter. So we expect we'll close the deal sometime in the first quarter. So we took a full first quarter versus of production estimated cost, that kind of thing. I will say, in January, there was a significant weather in the Abitibi in Eastern Canada. I think you probably saw some of that in Toronto. And as a result, January's production was a bit lower than estimated. But since we only have a quarter of a year essentially, we just didn't have the time to recoup that production. So that's why you see the cost on a per ounce basis is higher. And then as we think about the recording of the transaction, so that will flow through our financials through closing. In Q1, we would anticipate Casa Berardi would be held for sale. So that essentially kind of comes out of the core part of our financial statements. But you will still see in the net income line, the impact of Casa's operations through closing. It just separated, right? And I'm trying to think -- there's a few other things in there. As we think about the value of the transaction, we -- obviously, there's a portion of that, which is deferred and contingent. So we have to go through a fair value process to book the kind of estimated fair value of that, and then we'll compare that to the carrying value. I would actually expect we'll see some type of a loss on the transaction versus a gain just because the carrying value is likely going to be a bit higher than that, but we're working through that process now. So I won't speculate or try to tell you what that might be. And tell me if I marked off all your questions. I may have missed one. Cosmos Chiu: Okay. Great. And so likely, it's going to be a Q1 sort of -- if it closes in Q1, it will be a sort of Q1 accounting transaction, and I'm sure you'll give us some kind of guidance ahead of it. Russell Lawlar: Yes, that's right. And obviously, we guided production and costs such that you all have the information needed to kind of see what the ongoing cash flows and that type of thing you'd expect to see from Casa. Cosmos Chiu: Great. And then maybe my second question is on strategy. And Rob, it's good to hear that you're going to be silver focused, looking to be the premier silver company and looking to redeploy some of those proceeds coming from Casa into growing your silver sort of portfolio. But again, I guess my question is, if I look at your exploration budget, a big chunk of it is heading to Nevada, which is more gold-rich. You do have some longer-term exploration assets, including in the Silver Valley, also San Juan Silver, but that's, again, longer dated. So I guess my question is, if you can walk us through your thinking behind how you can continue to grow your silver production, your silver focus? And do you need to look externally, and I think you answered that question, but I'll ask you anyways, do you need to look externally to really unlock the full silver potential of Hecla? Robert Krcmarov: Yes. Thanks for the question, Cosmos. It's very much on my mind that we need to continue to grow our silver portfolio. Now one of the things is while we've been focused on divesting a few assets and potentially farming out some more to come, we need to bring new projects in the pipeline. And so I've tasked Kurt with establishing a project generation and a new business -- let's call it, a new business group, which is what I had when I was at my previous company. And their task is to get us into some new silver districts early on, monitor competitor intelligence, particularly in the new -- in the junior space, where we can potentially spot some emerging new discoveries and try and partner up with those. On M&A, it's obviously something that we'll continue to consider going forward. But obviously, there's a scarcity of silver-producing assets. And I've spoken about our criteria at our Investor Day, what's going to drive some of that. So yes, I'm very aware that we need to replenish the pipeline and Kurt has recruited someone just recently actually with a lot of experience. Kurt Allen: Yes, yes. We've got a recruit in. He's quite experienced. So it will be good with the program going forward. Yes. Cosmos Chiu: Great, Kurt, you've got quite a task. Operator: Your next question comes from the line of Alex Terentiew of National Bank. Alexander Terentiew: Just a couple of questions from me. First, on Lucky Friday. Your cooling -- surface cooling project should be done as you're seeing here midyear. I'm just wondering kind of longer term, with this project being completed, opportunities to reduce costs here. How does this kind of factor into the long-term plan? I mean, Rob, you made a comment about optimizing Lucky Friday as another venue of potential upside longer term. So just kind of wondering how this project factors into the longer-term potential of the mine. Robert Krcmarov: Yes. Thanks for the question, Alex. So the surface cooling project should be done by about midyear. It's primarily driven for, I guess, health and safety reasons or the well-being of our workers. We're obviously deep at Lucky Friday. It's a hot mine. And so as we go into successively deeper values, bearing in mind that we have a long, long mine life here, we still have many levels to develop ahead of us, so this is really setting the foundation for the future. But the other thing I'd ask you to consider is that, obviously, when workers are comfortable, they're generally more productive. And so that could have an impact. The other thing I spoke about on our Investor Day is that even though we broke successive records in throughput at Lucky Friday, our GM there, Chris Neville, he still believes that he might be able to wring some more out of that. Anything you want to add, Carlos, on that? Carlos Aguiar: Yes. And it's part of the optimization plan, right? We have different steps where we have continuous improvement and the hoisting capacity and securing the areas in the deep underground, this is the cooling system. So it's -- we say it in New York, right, the best decade of Lucky Friday is still ahead of us because we have plenty of opportunities going up an order proportion of production. Alexander Terentiew: Yes, makes sense. Okay. Another question just on Midas. Obviously, the stuff you guys have going on there in Nevada is pretty exciting. I mean you've got the good infrastructure, some really high-grade intercepts. I know this is a -- I wouldn't call it long term, but a longer-term plan anyways. Can you just kind of remind me or refresh me over the next 1 to 2 years, what can we expect to see there in terms of your guys' plans to move that forward? Robert Krcmarov: So a lot of it hinges on building up a critical mass of high-grade resources to get it back into construction. Again, just to recap, we've got the mill, we've got the tailings dam. We have some new discoveries. Out where one of the new discoveries is there's a resource that was discovered roughly 4 years ago, I guess, it's somewhere around 180,000 to 200,000 ounces at well above the historic Midas production grade. So that's the head start that we have. Now 4 years ago, when that was discovered, the drilling came up against the fault. Across the other side of the fault, there was no mineralization. And so the groundwork that was laid over the last couple of years has basically identified where the offset has gone. And now we've picked up the scent again and starting to drill mineralization. And I guess the starting resource, we're not talking about 1 million ounces to get this thing going. We're talking about 300,000, 400,000 ounces. So we're already a significant portion of the way there. And really, the focus on this year is going to be on exploration. At the same time, we'll do some studies. Matt, maybe you can talk about that. Matt Blattman: Yes. I mean this is out in -- the discoveries are out in an area that has no or very little historic mining. So we have -- we've got to collect data on the geotechnical side, the metallurgical performance and hydrogeologic, everything in mining is about water ultimately. So we need to collect that information. So in order to fast track this, we're going to be collecting that data and doing studies in parallel with that exploration. So as soon as we have a resource model, we can start doing more technical feasibility work. Robert Krcmarov: And at some point, we'll appoint a dedicated project manager to that. We're planning on success. Operator: The next question comes from the line of John Tumazos of John Tumazos Very Independent Research. John Tumazos: Could you refresh us on the capacity tons per day of the Midas mill, what you think the initial throughput would be, whether you can fill it up and whether the grades would compare to back in the heyday, something like 10 grams gold, 10 ounces of silver per ton? Robert Krcmarov: It was -- I think it was 1,200 tons per day is the permitted capacity of the Midas mill. Matt Blattman: That's right. The permit is 450,000 tons a year, which works out to about 1,200 tons a day. Robert Krcmarov: Yes. And sorry, what was the second part of your question, John? John Tumazos: How many tons per day do you think you're going to put through it? And what might the grades be? In the old days, it was something like 10 grams gold, 10 ounces silver. Robert Krcmarov: I think it's too early to say, John. I mean we're in the early discovery stages. We need to pin down a more robust resource. The historic grades, you're right, it was 0.4 ounces per ton, so roughly 12, 13 grams per ton and significant silver as well, actually. Operator: There are no further questions at this time. And with that, I will now turn the call over to Rob Krcmarov, CEO, for closing remarks. Please go ahead. Robert Krcmarov: Well, thank you all for your thoughtful questions and your continued interest and support of Hecla. 2025 was a genuine year of transformation financially, operationally and strategically. And so we enter this year with a stronger balance sheet, a sharper focus and what we believe is the most compelling silver portfolio in North America. We've got a lot of work ahead of us. We know that, and we're looking forward to it, and we'll talk again at Q1. So thank you, everyone. Have a great day. Operator: Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.
Kenny Green: Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's Results Zoom Webinar. My name is Kenny Green, and I'm part of the Investor Relations team at Camtek. [Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, CEO; Mr. Moshe Eisenberg, CFO; and Mr. Ramy Langer, COO. Rafi has a cold and has lost his voice. So Ramy will be providing the opening remarks followed by Moshe, who will then summarize the financial results of the quarter. Following that, we will open the call for the question-and-answer session. Before we begin, I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes, risks and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact Camtek's results, please review Camtek's earnings release and SEC filings and specifically the forward-looking statements and risk factors identified in the results press release issued earlier today and such other factors discussed in Camtek's most recent annual report on SEC Form 20-F. Camtek does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of the financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release. And now I'd like to hand the call over to Mr. Ramy Langer, Camtek's COO. Ramy, please go ahead. Ramy Langer: Thanks, Kenny. Hello, everyone. Camtek concluded the fourth quarter and full year with record results. Fourth quarter revenues reached a quarterly record of $128 million, representing an increase of 9% year-over-year. Gross margin was 51% and operating margin was 29%. For the full year, I'm excited with our revenues, which totaled $496 million, reflecting 16% year-over-year growth. Gross margin was 51.6% and operating margin reached 30%. These results bring us to our milestone of $0.5 billion in revenues. In terms of revenue mix for the full year, approximately 50% was driven by AI-related products, 20% came from the other advanced packaging applications. The remaining revenue was distributed across CMOS image sensors, compound semiconductors, front-end and general 2D applications. Regarding our outlook for the first quarter of 2026. In our previous meeting, we indicated that we expect our revenues to be more second half weighted following a somewhat slower start to the year and that we expect 2026 to be a growth year compared to 2025. In line with this, our revenue guidance for the first quarter is to be around $120 million. At the same time, I am pleased to share that the months passed since our previous guidance significantly reinforced our confidence in our forecast regarding the strength of the second half and in our ability to achieve a full year growth in 2026. Moreover, at this point of time, we expect 2026 to be another double-digit growth year for Camtek. This confidence is derived from our pipeline of order and backlog as well as ongoing interaction with our customers. As you are aware, key customer of ours have made public announcements regarding their investment plans for the coming year, and are discussing with us about their plans for the latter part of the year in this respect. Customers have been verifying with us ability to ship and install a double-digit number of systems within a relatively short time frame. Certain customers are finalizing development of their next-generation devices and want clarity on which of our system models best fit their requirements. The primary growth engine of the semiconductor industry continues to be high-performance computing components designed for AI applications. As I said, the growth curve expected in 2026 is largely linked to the pace of which device manufacturers, particularly memory suppliers plan to expand their production capacity. As an example, last week, we announced a $25 million order received from an IDM customer for multiple Hawk systems. This order is in addition to previous orders placed in recent months by this customer, bringing the total to approximately $45 million. The customer continues to expand its manufacturing capacity by building new fabs to meet growing demand for components produced for AI applications, and we expect additional orders from this customer. We expect additional major customers of ours to expand their production capacity after this year to meet rising demand for their products. Another major factor supporting our outlook is the proven exceptional performance of our systems, particularly the Hawk and the Eagle Gen 5, both models were launched about a year ago, and we have already installed dozens of systems of each over the past year. Moreover, since this introduction, we have continued to invest efforts in our R&D and completed the development of new capabilities to meet the requirements of our customers' next-generation products. We have already demonstrated these new capabilities to several customers and received strong validation and interest. The transition to HBM4 is already in process, and represents a major opportunity for us. We are the tool of reference for 3D metrology at all major players. We have a significant market share in 2D inspection, which we expect to expand in 2026. We, therefore, expect to not only maintain our market share in AI-related applications, but to increase it meaningfully. Moreover, as our products introduce to the market superior new capabilities, we expect them to enable us to penetrate additional production steps and expand our total available market. To summarize, 2 major developments coincided during the last several months. We have experienced a significantly increased orders flow and pipeline, thus improving our visibility. In parallel, we have completed the development of new capabilities to meet the requirements of our customers' next-generation products, which we expect to enable us to increase our market share in our total available market. We are excited with what we can achieve in 2026. And now Moshe will review the financial results. Moshe Eisenberg: Thank you, Ramy. Revenue for the fourth quarter came in at a record $128.1 million, an increase of 9% compared with the fourth quarter of 2024. For the full year, revenues came in at $496.9 million, an increase of 16% compared with 2024. The geographic revenue split for the quarter was as follows: Asia was 89%, and the rest of the world accounted for the remainder 11%. Gross profit for the quarter was $65.4 million. The gross margin for the quarter was 51.1%, similar to the previous quarter and slightly better than the 50.6% reported in the fourth quarter of last year. Operating expenses in the quarter were $28.7 million compared to $23.1 million in the fourth quarter of last year and $27.2 million in the previous quarter. Operating profit in the quarter was $36.7 million compared to the $36.3 million reported in the fourth quarter of last year, and $37.6 million in the third quarter. Operating margin was 28.6% compared to 30.9% and 29.9%, respectively. For the year, operating margin was 30%, similar to 2024. Financial income for the quarter was $8.2 million compared to $6.2 million reported last year and $6.5 million in the previous quarter. Within that, interest income increased due to the increased cash balance from the strong cash generation and the convertible notes issued towards the end of the third quarter. Net income for the fourth quarter of 2025 was $40.7 million or $0.81 per diluted share. This is compared to a net income of $37.7 million or $0.77 per share in the fourth quarter of last year. Total diluted number of shares as of the end of the fourth quarter was 51.3 million. Turning to some high-level balance sheet and cash flow metrics. Cash and cash equivalents, including short- and long-term deposits and marketable securities as of December 31, 2025, were $851.1 million. This compared with $794 million at the end of the third quarter. The fourth quarter was characterized by a very strong cash generation of $61.2 million from operations. This is a result of a strong collection and reduction in accounts receivables as well as optimization in our inventory levels. Accounts receivables were down by $22 million to $90.8 million compared to $112.5 million in the previous quarter. Our days sales outstanding decreased to 65 days from 81 days last quarter. Inventory level is down by $50 million. Having increased our inventory level in the last few quarters to support the launch of the Hawk and the Eagle Gen 5, it is now back to the right level to support the expected revenues in the coming quarters. As for guidance, as Ramy said before, we expect revenues of around $120 million in the first quarter, with growth expected in the second quarter and more significant growth in the second half of 2026. And with that, Ramy and I will be open to take your questions. Kenny? Kenny Green: [Operator Instructions] First question will be from Brian Chin of Stifel. Brian Chin: Can you hear me? Kenny Green: Yes. Brian Chin: Maybe firstly, just to reference the big accelerating increase in demand that you referenced. Where is that more prevalent? Is it more concentrated on HBM or on the chiplet logic side? And at this time, is the larger step-up occurring in Q3 or Q4? Ramy Langer: Well, Brian, so first of all, I would say it's the -- what we call high-performance computing or the AI-related products that are all ramping up. And I would say that I can't go at this stage to the resolution, whether it's Q3 or Q4, this is really customer-dependent. I can say that it's in the second half, you will -- we will see the step. Brian Chin: Got it. Can you still hear me? Ramy Langer: Yes. Kenny Green: Yes, yes. Brian Chin: Maybe for a follow-up, I think in the past, you've noted that you expected 50% plus of your system shipments this year to be either one of the newer platforms, Hawk or Eagle Gen 5. Is that still the case? Or is there an update to that? And this year, we'll have HBM4 sort of coexist alongside HBM3E. Can you maybe outline sort of that decision point that some of your customers are having either moving to Hawk or potentially sticking with the latest Eagle? And also, are you seeing any reuse of existing systems? Is that any factor why shipments are lower in first half? Ramy Langer: So let me start to talk about the Eagle versus the Hawk. I think the Hawk is going primarily to people that want very high throughputs and long-term capability. The Hawk can reach accuracies, performance that is much higher than the Eagle, the G5. The G5 is a fantastic machine, very high flexibility, very popular in the OSATs world. So therefore, there is room for both of them. But definitely, when you go to very high volumes, these customers will gradually move to the Hawk. Now the Hawk and the G5 accounted to about 30% of our revenues this year. We expect it to be at least 50% in 2026. Did I answer your question clear, Brian? Brian Chin: Yes. That was helpful. And is there any reuse that you're seeing as sort of HBM4 and 3E both coexist? Or just the fact that 3E is still pretty strong and prevalent limiting the amount of reuse your customers can have? Ramy Langer: Well, it's very hard for us to really know the 3E versus the HBM4. But I think gradually, the industry will go to HBM4, and this will be the product that most people will be using. And definitely, the move to HBM4 is a very important opportunity for us. As we've discussed in previous calls, there is a lot more dense structures. The requirements there are much higher. It is more metrology and inspection intensive. So all in all, this move is very positive for us. Kenny Green: Our next question will be from Charles Shi of Needham. Yu Shi: Maybe the first one, I want to dig a little bit deeper into the Hawk versus G5, the question here, Eagle G5. I remember, Hawk was more positioned for high-end logic type of applications and Eagle G5. You also mentioned it's a high -- it's a good productivity, good cost of ownership. And I thought that you probably more positioned the G5 as maybe more for the memory for high-bandwidth memory, but of course, for the OSAT market. Is some of that changing right now? Because I'm getting the sense maybe Hawk is seeing more of the adoption or maybe a faster adoption by your customers, maybe also including the memories? Ramy Langer: No, no, this is not the case. What we are seeing, and this is -- the Hawk is targeted for those applications that are high-end applications. If you go to a very large number of bumps, let's say, 150 million and more, people and with low structures with the bumps comparatively shallow, these applications will definitely go to the Hawk. The accuracies that are required there and definitely the throughputs that are required there are very high. So we will see these kind of applications go towards the Hawk. The second applications that will go to Hawk in general will be to those application people that are looking to go to 100 nanometers. So when we look at applications that are more related to front end, related to hybrid bonding, those people that will want down the road to use the machine for hybrid bonding, those people will naturally adopt the Hawk. And the G5, obviously, it is -- we've got thousands of machines in the market. So you would see some customers using the Eagle platform adopt the G5 because they know it, they feel more comfortable with it. But I think the strength of the G5 is very, very, I would say, high flexibility, very good accuracy, very good ROI. So all in all, it will continue to be a very popular machine. But definitely, on the other hand, when you go to the high-bandwidth memory, the higher ones, the 4 and the 5, definitely, those customers will, to a certain extent, use the Hawk. Yu Shi: Okay. So is it fair to say for memory market, especially for HBM market, we still should consider G5 as the workhorse and Hawk is more deployed more selectively at this point? Ramy Langer: The way you should look at it, we have hundreds of Eagles, many hundreds of Eagles already doing these applications. But I think some of the future capacity that will be built will be more tended towards the Hawk. Yu Shi: That was very clear. I want to -- checking with you guys, what's the expectation for China this year, if there's any number you can give to us, maybe a percentage of total revenue expected or year-on-year growth? What's the China expectation for this year? Ramy Langer: Well, first of all, the China expectation this year is all in all positive. We do not see any signs of weakness, and we expect to see the revenues in China, they're going to be, I would say, stable. And keep in mind that most of the sales to China are OSATs. And -- which are engaged in a lot of applications. So it's a primarily stable market. I think there is growth in OSATs in general, in China. So I don't see any changes compared to previous years. Kenny Green: Our next question will be from Jim Schneider of Goldman Sachs. James Schneider: Relative to the double-digit growth outlook you talked about for the year and some of your competitors who have cited 15% to 20% WFE growth for 2026. Can you maybe frame for us where you expect your overall revenue to fall this year relative to some of those broader WFE forecast? Would you expect the inspection market to sort of undergrow the broader WFE envelope this year? And if not, would you expect this is more of a timing issue where you have a little bit weaker first half of the year and then you sort of catch up in terms of revenue growth in 2027? Ramy Langer: So first of all, we said in the prepared notes, that we are going to achieve double digits this year in 2026. Now it's too early to quantify at this time, but looking at our results, in the last few years, we always did better than the WFE because we are focused on the fastest-growing segments. But if I want to give you a little bit more color on what we are seeing this year. So compared to what we discussed here a quarter ago, we are seeing a much better visibility, and this is resulting from the new orders that we have received, a much better pipeline following our discussions with customers and understanding the forecast much better. We understand today the timing of the expected orders. So the full visibility and our confidence in 2026 and specifically in the second half is very high. James Schneider: Okay. And then can you maybe just talk about how we should expect your gross margin trajectory to go throughout the year? I think you've previously cited that the improving ASPs on Hawk, et cetera, would drive gross margin expansion. Is this something you can expect that the gross margins to continue to increase throughout the year as you build volume? Moshe Eisenberg: Yes, absolutely. We are looking into an improved gross margin throughout the year. And as we expect to grow the revenue in the second half of the year, we expect to improve the margins. We did take certain measures to improve the bill of materials. We took other measures in terms of supply chain, and we believe that we are positioned well to benefit from this and improve the gross margin later in the year. Kenny Green: Our next question is from Shane Brett of Morgan Stanley. Shane Brett: I have a question on the competitive dynamics. Just has there been any change to the competitive dynamics for HBM sockets? Just how should we think about your share at these memory customers? Ramy Langer: So thank you for the question. So I want to make it very clear. We have not lost any market share to competitors. We also estimate that we will be able to increase our market share this year. I talked in the prepared notes about our efforts in the R&D that yielded exceptional solutions and capabilities. And these capabilities will enable us to increase our market share by penetrating into more inspection and metrology steps. Shane Brett: Great. That's very encouraging to hear. And for my follow-up, so some OSATs have mentioned pretty monstrous CapEx numbers throughout this earnings period. Just can you talk about your business with these customers? And just how a broadening of advanced packaging beyond the leading foundries benefits Camtek? Ramy Langer: So definitely, we see what is called the CoWoS technology, moving to OSAT. Some of it, call it CoWoS, some of it call it CoWoS like technologies. All in all, I would say that the OSAT, this is our home ground. This is where we are very strong. We dominate this market. We have hundreds of machines in this area. It's about 50% of our business. So definitely, the move to these technologies are very important in the OSAT. This will definitely benefit Camtek. And I would say one more thing that, of course, the OSATs are very important to our business. But on the other side, we have a very strong position at all the big players. When we talk about the HBM, when we talk about the CoWoS, we talk about TSMC. All of these are our customers, and we are very -- and we have a very good market position, and we plan to continue and grow with them. Kenny Green: Our next question will be from Craig Ellis of B. Riley. Craig Ellis: I wanted to start stitching together a couple of earlier answers and implications for the year's growth. So it sounds like what you're saying, guys, with the real strong uptake you're getting across OSATs, IDMs and foundry for Hawk and Eagle that this year, there should be real strong IDM growth since that's where you've got your HBM exposure, good growth in OSAT and I suspect good growth in foundry with 2.5D. Is that a fair characterization of how we should look at growth across your different customer classes? Ramy Langer: I think it's an excellent view, and I totally agree with your comment. This is how we see the market. As you said, they are the big customers, the HBM, the foundries that definitely are going to be very dominant this year, and we expect growth there. But the OSATs, which is, give or take, 50% of our business are continuing to invest on one side in advanced packaging applications, but moreover, are starting to adapt the CoWoS of the AI technologies, and this is for real. I mean this is real. I mean, I think they are talking about it openly, and they are also talking about significant growth this year, and we have really -- in this respect, we already have POs on hand. We have in the backlog. And definitely, the focus is very positive. Craig Ellis: That's helpful. And then the follow-up is related to one of Jim's questions, but also tying in some further color on gross margin. So can you just identify, guys, if we were to see demand go from double-digits, low end, 10% towards something that was more WFE like? Do you feel like you have the materials, the production capacity, the shift flexibility to meet that degree of upside through the year? And then Moshe, are there any things we should be aware of on gross margin, if you were to be chasing demand that was near WFE like? And can you just clarify what we should expect with gross margin in the first quarter, given the decline in volume? Are we going to stay at 51% plus? Or do we go down to 50%? And then what about the OpEx contour through the year? Ramy Langer: Before you answer, so I just want to answer regarding the operational aspects. So we are ready to respond to any demand that will come from the market. So whether it will be very high teens or mid-teens or whatever the number will end up from the operational point of view, we are ready. Moshe Eisenberg: Yes. I mean we do have -- just to complete, we do have the capacity, we have the inventory and all the supply chain ready for the growth. So from an operational perspective, we are all aligned. In terms of gross margin, as I said, we do expect an improvement in the second half of the year. The first half of the year will still be around the same level between 50.5% to 51.5%. That's the current level of gross margin in the business. With respect to OpEx, we do expect to see some increase in the first half of the year as a result of R&D investments. We see a lot of opportunities ahead of us. I think we've made it very clear that we are expecting a strong second half. And as a result, we plan to invest in R&D in the first half of the year in order to capture these opportunities, and we will see some increase in operating expenses as a result of that. Kenny Green: Our next question will be from Edward Yang of Oppenheimer. Edward Yang: Ramy, you talked about maintaining market share and expanding it. Are you watching any specific time frames or decision points? Do you have any systems under qualification? Just wondering if there are any specific catalysts you have in mind. Ramy Langer: So in general, I cannot disclose exactly the time frame and the decision times. What I can tell you that there are several steps, different customers that we already confirmed and we're already shipping machines to those steps or will ship as we move into the year. And we are in a very good position at other places to capture additional steps and these are based on work that has been done already and being confirmed by the customer. And we are more going into the validation process. So definitely, we are very confident that not only we will maintain our market share, we will be able to increase it and go to additional steps in 2026 as the year progresses. Edward Yang: Got it. And just for my follow-up, you also mentioned you do -- you always do better than WFE. We've heard some diverging views on WFE growth for 2026. A couple of larger depth and edge players are pointing to above 20% growth. One of your process control peers are looking for something more like low double-digits growth. Just curious where you mean? Ramy Langer: I said before in one of the previous questions that from our point of view, it's too early to quantify the number. We will start with the year, and we'll see how things progress, and then we will meet every quarter. And I think we will be far more knowledgeable as we go ahead. But definitely, it's too early to quantify. Kenny Green: Our next question will be from Gus Richard of Northland. Auguste Richard: When I look at test and probe, those companies expect to be up sequentially in Q1. You're down sequentially in Q1. I know they're different applications. I know they're different things, but they tend to move together. And could you sort of help explain why there's this divergence in the current quarter? Ramy Langer: Gus, a slow start of 2026 is primarily driven by the timing of the orders of our customers. And big part of their capacity expansion and especially the big ones is planned for the second half. And this is the reason for the slow start. Auguste Richard: Okay. Sort of looking at KLA's results, they talked about their packaging-related revenue being up 70% in last year. And I'm wondering, are they -- and I don't believe your packaging revenue in advanced packaging was that strong. Are they addressing different markets? What's the disconnect between their growth rate and yours? Ramy Langer: So first of all, I don't know for which baseline they're counting. So I don't want to make a mistake here. But I suspect that we are not talking here apples to apples, but we are comparing here some different steps and some areas that we do not play in with. From our point of view and what we see in the segments and what we call, in our markets, in our applications and the customers that we serve everybody, we have not lost any market share. On the contrary, we expect to gain, and we expect even to increase our total available market. So from that point of view, we feel comfortable. I think we discussed in previous calls how we see the competition with KLA. We understand the strength of KLA. But definitely, we have a lot of advantages in the fact that we are well entrenched in the market that we're playing in. We have an inherent advantage by offering on our tools, the 3D metrology and the 2D inspection, which is very important to the advanced packaging. And I think in general, the unique combination of technology, scale and flexibility is a key reason why we are performing so well in this market, and I don't expect this to change. Kenny Green: Our next question will be from Michael Mani of Bank of America. Michael Mani: I wanted to ask on the chiplet business. So first off, and I know you don't really segment this out anymore, but just in general, for last year, how much of the growth, especially in AI came from the chiplet side of the house? And then as you look out to this year, especially as it pertains to your lead customer in the chiplet business, how do you feel about your share position there? I think you said you felt good about your position, but if you could just elaborate on that, like what applications are you potentially gaining share in, especially on the 2D side of the business? Could that -- is that part of the reason you're seeing more strength in the second half? Just any kind of clarity there would be great. Ramy Langer: So Michael -- so first of all, we did not -- in the past, and I cannot break down whether it's chiplets on HBM, we refer to the business as a high-performance computing, which is about 50% of the business. But of course, you know and I think it is well known, and I think TSMC made a note -- made a comment in one of the previous announcements that Camtek is a significant vendor to them. So it's not a secret. Yes, we are there. We have a share of the chiplet business. We are doing a few steps there. And this is where further on, obviously, I cannot comment on exactly which of the steps, but it's not only one step, it's multiple steps. I expect this business is a healthy business. And as I said in my comments before and also in the prepared notes, we did not lose any market share. We expect to gain market share. And this is the case also related to chiplets. We don't see it differently. And so we are very optimistic about, obviously, the HBM market, but the chiplet or the high-performance computing as a whole. Michael Mani: Great. And for my follow-up, I was hoping you could provide a finer point on your capacity. I know you talked about this in response to a previous question. But in the past, you've talked about, I think, up to $650 million in capacity potential from a revenue perspective. As you look out over the next couple of years, what is definitely a materially -- significantly stronger demand environment, it seems. Do you feel like that's still the right size of the footprint to address all that demand? And if you were in a position where you needed to add capacity, how quickly from a lead time perspective, would you be able to build that out? Or given your strong cash position, would you seek to acquire that from some other vendors? Ramy Langer: Yes. So Michael, let me answer your question. So first of all, at this stage, we don't have limitation on our current capacity. We've made some changes internally. We changed the process. We are -- as we go on and we are becoming far more efficient from year-to-year, we are doing things better and more efficiently. So we've increased the capacity that we have on hand today. I think it is well over $700 million in capacity. So I don't foresee any issues. In parallel, we started already to expand our capacity. I cannot give comments at this stage, but we will have additional capacity in Europe. I believe it will happen late '26, and we will start to be able to use this capacity. So all in all, we are in a good position from the capacity and the all, I would say, operational organization, it is well organized. The performance is very well. We have enough buffers in place in case that the business will be even better than we think. So from that point of view, I feel very comfortable. Kenny Green: Our next question will be from Vedvati Shrotre of Evercore. Vedvati Shrotre: So I kind of wanted to understand how far your visibility is going now. We all understand it's a strong demand environment. Your backlog is growing. You're seeing the orders come in. So do you have visibility going beyond like 4Q '26 now? Ramy Langer: Vedvati, so thank you for the question. So I alluded more in my discussion previously to '26. But I think we're starting to see also signs of '27. And I would say it's obviously not the backlog, but it's definitely customers are talking to us about shipping machines in the first and second quarter of '27. So yes, the industry is ramping up, and it's starting to think not just '26, '27. And so I would say I haven't gone into the numbers very thoroughly. But definitely, we are seeing signs of '27, people thinking about '27 and putting some numbers, some initial numbers. So it's a positive answer. Vedvati Shrotre: Understood. And for my follow-up, so I know this was asked a couple of times on the call back -- on the call, and so I've tried again. But the advanced packaging growth by some of the depth and edge players is in the 40% levels. And then if you listen to your bigger peer on process control, they think it's like high teens kind of level. So there's a big disparity on how the advanced packaging market would look. And since you guys, I think, have the highest exposure, like could you give us a sense of where that lands for you and what you're seeing? Ramy Langer: So I think the main applications today, when you talk about advanced packaging, I think the leading applications is Fan-Out. There is a lot of Fan-Out. And there are many variations on it. From high-resolution Fan-Out, regular Fan-Out. But definitely, this is a big market. And of course, what's called the regular bump inspection in the OSATs, everything today is advanced packaging. And the growth of this market, it's definitely double digits. How far in the double digits? It's -- I can't pull this number from my sleeve now. But -- and it's too soon to quantify how it will be in '26, but definitely, it's a good growth number. Kenny Green: So that will end the Q&A session. Before I hand over to Rafi for his closing statements, in the coming hours, we will upload the recording of the conference call to the IR section of Camtek's website at www.camtek.com. I'd also like to thank everybody for joining this call. And Ramy, please go ahead with the closing statements. Ramy Langer: I want to express my gratitude to all our investors for your ongoing interest and support in our business. Special thanks goes to our employees all over the world and management teams for their outstanding performance. I want to mention the Chinese New Year that's celebrated by many of our customers and many of our employees around the world. I would like to extend our best wishes for them and for a successful and prosperous year of the Fire Horse. I look forward to our next conversation in the upcoming quarter. Thank you, and goodbye.
Operator: Good morning, everyone, and welcome to the La-Z-Boy Fiscal 2026 Third Quarter Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Becks, Director of Investor Relations and Corporate Development at La-Z-Boy. Mark, the floor is yours. Mark Becks: Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2026 third quarter. Joining me on today's call are Melinda Whittington, La-Z-Boy Incorporated's Board Chair, President and Chief Executive Officer; and Taylor Luebke, SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for 1 year. And a telephone replay of the call will be available for 1 week beginning this afternoon. I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors, as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website and includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda. Melinda Whittington: Thanks, Mark. Good morning, everyone. Yesterday, following the close of market, we reported our strong January-ended third quarter results. These results are proof that we continue to strengthen our enterprise and increase the agility of our business. Highlights for our third quarter included total delivered sales of $542 million, up 4% versus prior year. In our Retail segment, both written and delivered sales increased 11% versus prior year. And we opened 4 new company-owned stores during the quarter, bringing us to 16 new company-owned stores in the last 12 months and 4 closed. In our Wholesale segment, delivered sales grew 1% versus prior year. And we made continued progress on our distribution and home delivery transformation project with the completion of our Western U.S. phase of the network. Our GAAP operating margin was 5.5% and adjusted operating margin was 6.1%, coming in toward the high end of our guidance range. And we again generated strong operating cash flow of $89 million for the quarter, increasing 57% versus last year's comparable period. Amid the ongoing challenging consumer environment, we continue to create our own momentum, led by retail expansion. As I noted, total written sales for our company-owned Retail segment increased 11% versus last year's third quarter, driven by new and acquired stores. Written same-store sales, which exclude the benefit of new and acquired stores, decreased 4% for the quarter. Continued challenging traffic, consistent with our industry, was partially offset by strong in-store execution, including higher conversion rates, average ticket and design sales. Within the quarter, same-store sales trends were strongest in January, turning positive versus a year ago until widespread adverse weather slowed traffic in late January and continuing into early February across much of the United States. While we don't believe these weather events will impact overall furniture demand, we do expect some timing effects carrying into our fourth quarter deliveries as consumers reengage on planned purchases. Separately, for Joybird, total written sales for our third quarter decreased 13% compared to a year ago as this consumer segment continues to be particularly volatile against the current macroeconomic backdrop. During the quarter, we also progressed our strategic initiatives. We successfully integrated our 15-store acquisition in the Southeast region of the United States. We formally announced the planned closure of our U.K. manufacturing facility, where production will cease by the end of the fiscal year. We completed the sale of our Kincaid upholstery business just after the close of our third quarter. And we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid, targeted to be complete by the fiscal year-end. Stepping back, I'd like to spend a few more minutes highlighting some of the structural improvements our team has achieved through these current initiatives and highlight the progress made as we advance our Century Vision strategy for our next 100 years. We are pleased to have successfully integrated our acquisition of the 15-store network in the Southeast region. This transaction was our largest single retail acquisition in the company's history, adding $80 million in annualized retail sales and $40 million net to the total enterprise. The seamless integration into our company-owned network reflects the collective efforts of many internal stakeholders, and the stores are performing well. Independent store acquisitions are an important part of our Century Vision strategy as they are immediately sales and profit accretive and provide ownership of a new market with potential white space opportunities. We will continue to pursue these types of acquisitions as they become available. Opening new La-Z-Boy stores is also a key lever to growing our Retail business and expanding our brand reach. In addition to completing our largest ever acquisition this quarter, we also are achieving the most significant period of new store expansion in our company's history. We opened 4 new company-owned stores in the quarter. And in the last 12 months, we opened 16 new stores, while closing 4. In total, we've added 29 net company-owned stores over the past year. Our total network of stores, including independently owned, has expanded to 374. And our current proportion of company-owned stores is now at an all-time high of 60% of the total network. We see opportunity to grow the La-Z-Boy store network to over 400 stores as we broaden our brand reach and delight and inspire even more consumers. We expect to open 16 new stores in total for this fiscal and continue at a pace of opening roughly 10 stores a year for the next several years. Momentum in our Wholesale segment also remained solid as we delivered our seventh consecutive quarter of sales growth in our core North American La-Z-Boy wholesale business, and we continue to grow our strategic compatible distribution with key partners like Slumberland and Rooms To Go. Wholesale customers value the strength of the La-Z-Boy brand, the enduring quality and the differentiated product functionality offered by our North American manufacturing capabilities. Our vertically integrated model with approximately 90% of upholstered products produced in the United States remains a key competitive advantage as we navigate the current challenging macroeconomic environment and has served as our foundation throughout our 99-year history. We're making meaningful progress on building an even more agile supply chain through our multiyear distribution and home delivery transformation project. During the third quarter, we completed the Western U.S. 1/3 of this project, serviced by our new Arizona centralized hub. And we recently broke ground on our new Dayton, Tennessee centralized hub, which will serve our Eastern region. This transformation will improve an already strong consumer experience, ensure faster speed of delivery and enable an expanded delivery reach. And in aggregate, we expect this project to deliver between 50 to 75 basis points of Wholesale margin improvement, up to 50 basis points to the entire enterprise once completed. As part of our strategic road map to expand brand reach, leveraging our iconic brand, we are creating integrated strategies for our retail and marketing teams. These strategies have enabled more cohesive and focused plans for our store network, improving execution and reducing redundancy. As a result, we are better positioned to capture consumer demand, improve responsiveness and navigate the volatile environment with greater discipline and agility. Our new brand identity continues to receive positive media attention. In December, La-Z-Boy was cited by Ad Age as one of the top 5 rebrands of 2025. The mention went on to say, La-Z-Boy's brand refresh felt like a full-bodied exhale, designed to make comfort feel as intentional as its famously cushy chairs. We plan to continue building off this success and expanding brand relevance with new and innovative ways to delight and inspire our consumers. Lastly, during our third quarter, we drove further progress in optimizing our portfolio and enabling focus on our core vertically integrated North American upholstery business. We formally announced the planned closure of our U.K. manufacturing facility, where we expect production will cease by the end of our fiscal '26. And we have solidified alternative sourcing for this business, leveraging our global supply chain network to ensure we are well positioned to grow with our new customer base. We also completed the sale of our Kincaid upholstery business just subsequent to our fiscal third quarter-end. We were pleased to transition this business in full to its new owners who are former employees of the company. And finally, we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid. Importantly, these changes will not impact our ability to offer casegoods as part of beautiful whole home solutions for consumers in our La-Z-Boy stores, Comfort Studios and branded spaces. In fact, these changes will enhance our offerings in the future, opening up broader sourcing and driving efficiency in the process. We expect these final casegoods initiatives to be substantially complete by our fiscal year-end in April. And now, let me turn the call over to Taylor to review the financial results in more detail. Taylor? Taylor Luebke: Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis. We believe the adjusted presentation better reflects underlying operating trends and performance of the business. Adjusted results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2026 third quarter sales increased 4% from prior year to $542 million as growth in our Retail and Wholesale business were partially offset by lower delivered volume in our Joybird business. Consolidated GAAP operating income was $30 million and adjusted operating income was $33 million. Consolidated GAAP operating margin was 5.5% and adjusted operating margin was 6.1%. The change was largely driven by investments in our distribution and home delivery transformation project. Diluted earnings per share totaled $0.52 on a GAAP basis, and adjusted diluted EPS was $0.61. As I move to the segment discussion, my comments from here will focus on our adjusted reporting unless specifically stated otherwise. Starting with the Retail segment. For the third quarter, delivered sales increased 11% to $252 million, driven by acquired and new stores. Retail adjusted operating margin was flat versus a year ago at 10.7% as accretion from acquisitions was offset by investment in new stores and fixed cost deleverage from lower delivered same-store sales. For our Wholesale segment, delivered sales increased 1% to $367 million versus last year, driven by modest growth across the majority of our businesses, including our core North America La-Z-Boy wholesale business. Adjusted operating margin for the Wholesale segment was 6% in the third quarter versus 6.5% last year, driven primarily by investments in our distribution and home delivery transformation project and unfavorable foreign exchange rates. For Joybird, reported in Corporate and Other, delivered sales were $36 million, down 3% on lower delivered sales volume. Joybird operating loss increased versus the prior year, primarily due to fixed cost deleverage on lower Joybird delivered sales. Moving on to our consolidated adjusted gross margin and SG&A performance for fiscal 2026 third quarter. Consolidated adjusted gross margin for the entire company increased 10 basis points versus the prior year third quarter. The increase in gross margin was primarily driven by the shift in consolidated mix towards our Retail segment, which has a higher gross margin rate than our Wholesale segment, partially offset by investments in our distribution and home delivery transformation project. Adjusted SG&A as a percent of sales for the quarter increased by 80 basis points compared with last year, also due to the shift in consolidated mix towards our Retail segment, which carries a higher fixed cost structure relative to Wholesale, as well as fixed cost deleverage on lower delivered same-store sales. Our effective tax rate on a GAAP basis for the third quarter was 31.3% versus 25.1% in the third quarter of fiscal 2025. The year-over-year increase was primarily due to nondeductible operating losses and onetime charges related to our supply chain optimization actions in our U.K. business. We expect our tax rate to normalize in fiscal 2027. Turning to liquidity. We ended the quarter with $306 million in cash and no externally funded debt. Our balance sheet remains strong, supported by the consistent cash generation of our operating model even as we absorbed a significant acquisition in the quarter. We generated a strong $89 million in cash from operating activities in the third quarter, increasing 57% versus last year's comparable period, with improved working capital and an increase in customer deposits. We invested $18 million in capital expenditures during the quarter, primarily related to investment in new La-Z-Boy stores, as well as remodels, manufacturing-related investments, and spending related to our distribution and home delivery transformation. We also completed our 15-store acquisition in the Southeast region at the beginning of the quarter for a total of $86 million. We continue to believe that the best use of our cash and the highest return on investment is prudently reinvesting back into the business. As such, we remain committed to disciplined investments in new stores, acquisitions, and our distribution and home delivery transformation project to profitably grow our core business. Regarding cash return to shareholders, year-to-date, we returned $55 million to shareholders through dividends and share repurchases, including $28 million paid in dividends and $27 million in share repurchases. Also, in the quarter, we resumed more normalized share buybacks of $14 million, which leaves 3 million shares available under our existing share repurchase authorization. We expect consistent share repurchases ongoing, assuming ordinary business and economic conditions. We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. Capital allocation in fiscal 2026 is tilted more towards the business through investments in the recent 15-store acquisition and our distribution and home delivery transformation project. Longer term, our capital allocation target remains consistent to reinvest 50% of operating cash flow back into the business and return 50% to shareholders in share repurchases and dividends. Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our fourth quarter. We expect fiscal fourth quarter sales to be in the range of $560 million to $580 million and adjusted operating margin to be in the range of 7.5% to 9%, reflecting a continued cautious view on the macroeconomic backdrop, as well as the short-term impact of recent adverse weather events. We expect to open 5 new company-owned stores in the fourth quarter, bringing us to 16 for our full fiscal year. We expect capital expenditures to be in the range of $80 million to $90 million. This includes investments for new stores and remodels, our distribution and home delivery transformation project, and continued manufacturing-related investments. And as a reminder, we expect the financial benefits of our strategic initiatives to have an annualized impact of approximately a $30 million net sales decrease and an adjusted operating margin improvement of 75 to 100 basis points to the entire enterprise. This represents the combined impacts of our 15-store acquisition, our casegoods exit, our planned closure of the U.K. plant and our management reorganization. We expect the benefit of all of these initiatives when they are substantially completed by the end of this fiscal year. And these impacts do not include the additional long-term margin improvement we expect from our distribution and home delivery transformation project. And note, at this time, we do not expect these strategic initiatives to have a material onetime gain or loss to the enterprise. Lastly, we expect our tax rate for the full year to be in the range of 27% to 29%. And with that, I will turn the call back to Melinda. Melinda Whittington: Thanks, Taylor. The furniture industry and broader macroeconomic environment continue to be challenging. What has not changed is our iconic brand and the ability to delight and inspire millions of consumers. As a testament to our enduring impact and cultural relevance, La-Z-Boy Incorporated has been recognized by Time Magazine as one of America's most iconic companies for 2026. This unsolicited award reflects the lasting connection generations of families have built with our beloved brand over our 99-year history. As we look ahead, we'll continue to honor our heritage of comfort, customization and quality, while evolving to succeed in any environment. We will continue to leverage our vertically integrated model with approximately 90% of upholstered products produced in the United States, create our own momentum and position ourselves to disproportionately benefit when the industry does rebound. This, combined with our mission of delivering the transformational power of comfort, will enable us to drive value for all stakeholders. I'd like to thank our dedicated employees for their continued commitment to bringing our beloved products into more homes. And I wish everyone the best in the year ahead. Now, I'll turn the call back to Mark. Mark Becks: Thank you, Melinda. We will begin the question-and-answer period now. Jenny, please review the instructions for getting into the queue to ask questions. Operator: [Operator Instructions] Our first question is coming from Bobby Griffin of Raymond James. Robert Griffin: I guess, Taylor or Melinda, I wanted to dive in kind of on some of the strategic kind of actions you guys have taken so far. And congrats on the speed of getting a lot of those underway. Taylor, can you maybe level set us that margin improvement that you're referencing, what base year should we use? Because when you look back in fiscal year '25, we were about a 7.6% EBIT margin. Then it starts to slide, given you start to do some of the distribution changes. So like level set us on where we should think about the improvement off of what base. And then, I got some follow-up questions on that. Taylor Luebke: Yes, Bobby. So when we announced these strategic initiatives, and you're right, we're really pleased with the progress we've made over a very short period of time with selling our upholstery business, as well as solidifying our plan for the U.K. supply. The 75 to 100 basis points that we put out there was based on, call it, the trailing 12 months of the enterprise results at the point of quarter 2. So you can think of that as the right basis on which we expect to deliver that. Robert Griffin: Okay. And is there any -- like when we think about completing that by the end of FY '26, and then we can do the simple math on adding that to the trailing 12, is there any offsets that would keep all that savings from flowing through? Like is there an investment piece that you would need to use for advertising or anything like that? Or is that really going to be dropped down to, call it, the bottom line? Taylor Luebke: Bobby, we put it out there because we expect to realize it, again, against a pretty -- a generally consistent kind of macro consumer backdrop is how we look ahead. So our intent is it flows through, all else being equal. Robert Griffin: Very good. Okay. That's helpful. And then Melinda, I want to maybe dive in on the comments you made about developing more agile business post some of these changes. What do you think that gives La-Z-Boy as you think about kind of navigating the next 3 to 5 years in today's kind of consumer environment? Is it quicker product development? You can move faster on stores? Like just anything there to kind of help us think about how that could change the business and how you go to market? Melinda Whittington: Yes. Thanks for the question, Bobby. I guess, at a couple of levels -- I'll start with some of like the transformation work on our supply chain. 99 years of building product in the United States for the North American consumer, we're quite good at it. But the consumer preferences change, the -- where it makes the most sense to position your supply chain, the way that people want to be compensated and are motivated, those are all things that we constantly look at and have evolved over time. And so, I think the distribution transformation project is just one of those examples where we had a fairly organic network to support our stores. But as the stores footprint has changed so dramatically, we had a huge opportunity to just rethink that process. And in the end, not only is that going to deliver bottom line savings to the company and to the shareholder, but it's going to be an even more enhanced consumer experience. Broader delivery ranges is one example, and a better employee experience as well, because it will be efficient. On the consumer side, as I think about our store network and then our in-home consumer insights, we are constantly evaluating how to have the right product, the right messaging and the right shopping experience for the consumer. All things must begin with the consumer. And our broader retail ownership and omnichannel experience give us more control of that. So it's staying in touch with kind of where the puck is heading, making sure we're predicting that and then being responsive to that. So I guess, I'd say, kind of building the machine to constantly evolve over the future. Operator: Our next question is coming from Taylor Zick of KeyBanc Capital. Taylor Zick: Melinda, maybe just to start here, I kind of wanted to ask about the cadence of trends during the quarter. You provided some good commentary already, but just kind of knowing that there was improved trends in the prior year post election and then you noted some January impacts as well. But any color you can kind of provide on maybe what the underlying trends were in your third quarter versus your second quarter? Melinda Whittington: Yes. I would start by saying the consumer remains choppy, right? So we've talked about that for a while that the consumers are broadly -- we have a bifurcated consumer that we have some that are really -- it's aspirational to step into our brand and invest in quality, and so we sharpened price points. At the same time, we still have a very strong consumer interested in whole room solutions and upgrades and really investing in their home with us. So with that said, if I look back over Q3, to your point, over 2 years, Q3 was actually positive. And looking across the 3 months in our quarter, January was our strongest, actually turned positive on a same-store sales basis until -- and then was impacted by weather right here at the very end. I'll step into sort of the President's Day that began our fourth quarter. We're actually quite pleased with how President's Day came out. Our results -- our trends were positive versus a year ago. So I think that speaks well. But at the same time, we continue to manage prudently, just knowing that -- and we believe the consumer is still pinched and probably will be for a while, and ultimately, the product is discretionary. So we feel good about the momentum we're making, but we continue to be prudent in how we go forward. Taylor Zick: Great. That's super helpful. And you answered my second question already. Maybe, Taylor, I can squeeze one in for you. Maybe on the 4Q guidance here, your 7.5% to 9% operating margin puts margins down a little over 100 basis points despite a higher mix of retail and some of your strategic actions within the portfolio. Can you kind of just help us understand the puts and takes there? I know some of the pressures from the short-term headwinds from the distribution and home delivery redesign coming through. But is there anything else we should keep in mind for fourth quarter? Taylor Luebke: Taylor, thanks for the question. No, actually, we still feel really good about the growth potential, as well as margin potential, of the business. And as Melinda had mentioned in prepared remarks and otherwise, we continue to manage through the near-term challenges and the choppy consumer, but also build for the future with our retail expansion, our distribution projects, as well as our, call it, strategic initiatives. Overall, on margin, we've had good momentum on our Wholesale. Retail continues to hold at a strong double digit, which incredibly pleased about. There is just the near-term headwinds of traffic continues to be challenged, which adds deleveraging impacts on our larger fixed cost basis. So we continue to hone our operations and manage in the near term, but also deliver some of these bigger transformative things for the long term and deliver margin improvements ongoing behind the likes of the strategic initiatives we mentioned to Bobby [indiscernible], the 75 to 100 basis points, as we enter into our fiscal '27, as well as the 50 basis points to the enterprise, which is the longer-term benefit of our distribution and home transformation project. Operator: [Operator Instructions] Our next question is coming from Anthony Lebiedzinski of Sidoti & Company. Anthony Lebiedzinski: So Melinda and Taylor, you both mentioned that the consumer environment is choppy, certainly nothing terribly new there. But as we look at the guidance for 4Q, can you perhaps try to separate how much of the guidance is tied to weather issues versus the macro environment? Melinda Whittington: Anthony, I think how I'd broadly look at it is, we don't -- we're not expecting any big change in sort of the consumer environment in Q4 relative to what we've seen throughout most of this fiscal year. And the only piece of a little bit of conservatism in there versus just a continued trend on the consumer is just this weather impact that hit sort of right at the end of our Q3 and into our Q4, and you saw that in -- impacts in the written. And so, by the time that consumer reengages -- again, we saw some of that with strong President's Day. But by the time that consumer reengages both in our stores and then with our wholesale customers, and that turns into orders and restocks and deliveries, I think that puts a little bit more pressure on Q4 than we otherwise would have. Taylor Luebke: Net of it, if I could just chime in, Anthony, we don't believe we've lost -- us or the industry lost furniture sales other than it's a timing impact on -- some may phase out into quarter 1, based on when that consumer decides to reengage in their shopping journey. We're ready to meet demand and delight and inspire them when they come in our store. Anthony Lebiedzinski: Got it. Thanks for that great color. So, on the Wholesale side, you guys highlighted Slumberland and Rooms To Go. As you look forward here, I mean, do you see further opportunities to expand your brand reach on the Wholesale side? Would love to get your thoughts on that, and how you're thinking about the opportunities there? Melinda Whittington: Yes. Strategic partnerships are a very important part of our business and our growth plan going forward as well. While we certainly disproportionately focus on our own retail because we can own that entire consumer experience and obviously own more of the financial benefits as well, we also recognize that strategic partners are a way of reaching consumers that we otherwise are never going to reach in a very fragmented market. We happened to call out Slumberland and Rooms To Go just because they are great examples of -- Slumberland, we've done business with for decades and continue to partner and grow with them in strategic ways that are good for our brand and compatible distribution across multiple outlets. And similarly, Rooms To Go is a vibrant growing operation that reaches a lot of consumers, particularly in the Southeast, and is a newer partner that we've added just over the last couple of years. If I look at -- in even just, call it, the last 12 months, we have continued to add some big strategic partners. I think we've called out Farmers down in the Southeast, which reaches a consumer that's not serviced today by our Furniture Galleries, and that was -- these are hundreds of store kind of networks. We opened up Living Spaces, which is a very sophisticated retailer out West. So we have seen those opportunities. And so, I think there are still opportunity. That said, I think our bigger growth potential in the next several years is to continue expanding with those strategic partners as opposed to adding a ton of strategic partners. It's important to us to work with folks that are really going to appreciate the brand and not create too much conflict out there that just doesn't end up making sense. Instead, we want to make sure we're reaching consumers where they want to shop and continuing to expand our brand. Anthony Lebiedzinski: That's very helpful. And my last question is with regards to Joybird. So the sales there have continued to trend below the rest of the business. How are you guys thinking about Joybird, not just for the next couple of quarters, but maybe longer term? Any updated thoughts on Joybird that you may have? Melinda Whittington: Yes. Joybird is tough. We really -- we've done the work to believe in it. It resonates with the consumer. It fits well into our portfolio as a -- and our aspiration to be a vertically integrated branded retailer. It's a good strategic green shoot. While it's small, it's mighty. But we are continuing to see a particularly volatile consumer there. That consumer is younger, more urban-focused and just disproportionately impacted by some of the macroeconomic challenges. So we continue to take actions towards getting that business rightsized to grow profitably, and we'll continue to work through and monitor that. Operator: And we have another question in from Bobby Griffin of Raymond James. Robert Griffin: Melinda, I just wanted to maybe circle back on the U.K. You called out you have an alternate source of product there lined up. Just maybe, like, now with kind of the changes there, do you still look at the opportunity there the same that was historically as when it was the prior kind of a pretty big single customer for you guys? And I understand there's been some retail transition there, but the new retail partner is actually larger. So how does that setup look going forward? And what is ultimately the potential there? Could that get back to the same level as before and with maybe even better margins, given the new setup or structure? Melinda Whittington: Yes. Thanks for that question, Bobby. You're right. It's been, gosh, a little over 2 years ago now, where [ FCS ], which was a publicly traded company and our biggest customer globally, which is kind of crazy given the relative size of our international business, but was actually bought out by a private company that chose not to work with brands anymore. And so, we pretty quickly pivoted. We had long-time discussions with DFS, which as you astutely noted, is 3x, 4x bigger than FCS and probably a better fit for our brand and our customer base. But between FCS and DFS, they'd always required exclusivity. So we are well underway with DFS. They continue to be super pleased. We've had some introductions where they've called out that we've been one of their fastest-growing, if not the fastest-growing introduction they've had. But at the same time, it just -- it's taking a while. It's taking longer, frankly, than we probably forecasted to just get up to the kind of run rates of where we were with FCS, particularly given that U.K. economy and the macroeconomic environment is also quite challenged. So we are super pleased with DFS. They are pleased with us. We are continuing to grow that business, and we want to serve that consumer. That said, at the kind of volume levels that we're seeing through this multiyear transition, it just didn't make sense to have a fully dedicated plant there in the U.K. So, as we leverage our overall global network, we think we're getting that rightsized. We think we get that cost structure right as well, so it makes sense for us, it makes sense for DFS and it makes sense for the consumer to grow that business. And we actually think, to your point, it will accelerate it -- accelerate that growth. And then, historically, our U.K. business margins were fairly consistent with other wholesale that we would see like in our core North America, and we anticipate being able to get back to those kind of ranges over time. Robert Griffin: Very good. And then, does the new setup from the manufacturing side of things or the sourcing side, does that allow other international type growth opportunities any different than before? Just anything there? Melinda Whittington: No change. Yes, no change. We still have -- yes, we still have the opportunity there. Again, international expansion, less of a focus area for us right now just because that core North America business has so much opportunity. But no, we're not losing any optionality more broadly. Operator: We have now reached the end of our question-and-answer session. I will now hand back over to Mark for any closing comments. Mark Becks: Thanks, Jenny. We'll be in our offices for the rest of the day to handle any follow-up calls. Thanks, and have a great day. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.
Operator: Good day, and thank you for standing by. Welcome to the Constellium Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jason Hershiser, Director of Investor Relations at Constellium. Jason Hershiser: Thank you, Josh. I would like to welcome everyone to our fourth quarter and full year 2025 earnings call. On the call today, we have our Chief Executive Officer, Ingrid Joerg; and our Chief Financial Officer, Jack Guo. After the presentation, we will have a Q&A session. A copy of the slide presentation for today's call is available on our website at constellium.com, and today's call is being recorded. Before we begin, I'd like to encourage everyone to visit the company's website and take a look at our recent filings. Today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the company's anticipated financial and operating performance, future events and expectations and may involve known and unknown risks and uncertainties. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the factors presented under the heading Risk Factors in our annual report on Form 10-K. All information in this presentation is as of the date of the presentation. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. In addition, today's presentation includes information regarding certain non-GAAP financial measures. Please see the reconciliations of non-GAAP financial measures attached in today's slide presentation, which supplement our GAAP disclosures. And with that, I would now like to hand the call over to Ingrid. Ingrid Joerg: Thank you, Jason. Good morning, good afternoon, everyone, and thank you for your interest in Constellium. Let's begin on Slide #5. I want to start with safety, our #1 priority. In 2025, we achieved a recordable case rate of 1.9, an improvement compared to 2024 and much better than the industry average. While we did not meet our ambitious target of 1.5, this progress reinforces our commitment to safety and reminds us that reaching our goal will require continued strong efforts across the organization. Our safety journey is never complete, and we all need to remain committed to this critical priority every day. Now let's turn to Slide #6 and discuss the highlights from our fourth quarter performance. Shipments were 365,000 tons were up 11% compared to the fourth quarter of 2024 due to higher shipments in each of our operating segments. Revenue of $2.2 billion increased 28% compared to the fourth quarter of 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Remember, while our revenues are affected by changes in metal prices, we operate a pass-through business model, which minimizes our exposure to metal price risk. Our net income of $113 million in the quarter compares to a net loss of $47 million in the fourth quarter last year. The main driver of the increase was higher gross profit in the quarter versus last year. Compared to the fourth quarter last year, adjusted EBITDA increased 124% to $280 million in the fourth quarter this year. So this includes a positive noncash impact from metal price lag of $67 million. If we exclude the impact of price lag, which, as you know, is the way we view the real economic performance of the business, we achieved an adjusted EBITDA of $213 million in the quarter. This is a new fourth quarter record for us and is up 113% versus the $100 million in the fourth quarter last year. Our free cash flow in the quarter was strong at $110 million. And during the quarter, we returned $40 million to shareholders through the repurchase of 2.4 million shares. Now please turn to Slide #7 for our full year 2025 highlights. For the full year, shipments were 1.5 million tons were up 4% compared to 2024. Revenue of $8.4 billion increased 15% compared to 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Our net income of $275 million compares to a net income of $60 million in 2024. The main driver of the increase was higher gross profit versus the prior year. Adjusted EBITDA increased 36% to $846 million in 2025, though this includes a positive noncash impact from metal price lag of $126 million. Again, if we exclude the impact of metal price lag, the real economic performance of the business reflects adjusted EBITDA of $720 million for the year compared to $575 million we achieved in 2024 and represents our second best year ever. Moving now to free cash flow. Our free cash flow for the year was $178 million in 2025. During the year, we returned $115 million to shareholders through the repurchase of 8.9 million shares. We reduced our leverage by the end of 2025 to 2.5x, which is at the upper end of our target range. Constellium achieved strong results in 2025 that were ahead of our own expectations coming into the year and despite the uncertain macroeconomic and end market environment. I want to thank each of our 11,500 employees for their commitment and relentless focus on safety and serving our customers. We delivered strong execution and demonstrated our ability to control costs throughout the year in 2025, and we believe we are well positioned heading into 2026 to capitalize on market opportunities as they arise. With that, I will now hand the call over to Jack for further details on the financial performance. Jack? Jack Guo: Thank you, Ingrid, and thank you, everyone, for joining the call today. Please turn now to Slide 9, and let's discuss our A&T segment performance. Adjusted EBITDA of $83 million increased 43% compared to the fourth quarter last year. Volume was a tailwind of $31 million due to higher TID shipments. TID shipments were up 41% versus last year. First, as we continue to see increased demand from onshoring in the U.S. And secondly, we also benefited from higher shipments in Valais following recovery from the flood last year. Aerospace shipments were stable in the quarter versus last year as commercial OEMs continue to work through excess aluminum inventory in the supply chain. Demand in space and military aircraft remained generally healthy. Price and mix was a headwind of $28 million due to unfavorable mix in the quarter, partially offset by improved contractual and spot pricing in Aerospace and TID. Costs were a tailwind of $18 million, primarily as a result of lower operating costs. FX and other was also a tailwind of $4 million in the quarter due to the weaker U.S. dollar. For the full year 2025, A&T generated adjusted EBITDA of $339 million, an increase of 16% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except volume was a headwind of $1 million for the full year. Now turn to Slide 10, and let's focus on our PARP segment performance. Adjusted EBITDA of $136 million increased 143% compared to the fourth quarter last year and is a new quarterly record for PARP. Volume was a tailwind of $19 million in the quarter. Packaging shipments increased 15% in the quarter versus last year as demand remained healthy in both North America and Europe. In North America, we also benefited at Muscle Shoals from continued improvement of operational performance in the quarter. Automotive shipments were relatively stable in the quarter overall, though we did benefit in both regions from the current supply shortages in North America of aluminum automotive body sheet. Price and mix was a tailwind of $15 million, mainly as a result of improved pricing and favorable mix in the quarter. Costs were a tailwind of $40 million, primarily as a result of favorable metal costs given improved scrap spreads and higher metal pricing environment in North America and increased consumption of scrap given the Muscle Shoals improvement, which is partially offset by higher operating costs. FX and other was a tailwind of $6 million in the quarter. For the full year 2025, PARP generated adjusted EBITDA of $353 million, an increase of 46% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, though we benefited more in the fourth quarter from favorable metal costs compared to the full year. Now turn to Slide 11, and let's focus on the AS&I segment. Adjusted EBITDA of $5 million increased by $1 million compared to the fourth quarter of last year. Volume was a $4 million tailwind as a result of higher shipments in industry-touted products, partially offset by lower shipments in automotive. Industry shipments were up 33% in the quarter versus last year as we had higher shipments in Valais following recovery from the flood last year. The industrial markets in Europe appear to have bottomed, although they remain at depressed levels. Automotive shipments were down 10% in the quarter with weakness in both North America and Europe. Even though the broad automotive market in North America are relatively stable, our automotive structures business was negatively affected by the current supply shortages of aluminum automotive body sheet and its impact on production of certain platforms in the region, which automotive structures business supply to. Price and mix was a $6 million headwind in the quarter. Costs were a tailwind of $1 million, primarily due to lower operating costs, partially offset by the impact of tariffs. FX and other was a tailwind of $2 million in the quarter. For the full year 2025, AS&I generated adjusted EBITDA of $72 million, a decrease of 3% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except that volume was stable for the full year. And in the third quarter, we received net customer compensation for the underperformance of an automotive program. It is not on the slide here, but our holdings and corporate expense for the full year 2025 was $44 million, up $11 million compared to the prior year. The increase is primarily due to higher labor costs and costs associated with corporate transformation projects. We currently expect holdings and corporate expense to run at approximately $50 million in 2026. Now please turn to Slide 12. It is not on the slide here, but I wanted to summarize the current cost environment we're facing. As you know, we operate a pass-through business model, so we're not materially exposed to changes in the market price of primary aluminum, our largest cost input. On other metal costs, following the U.S. tariff announcements in 2025, market aluminum prices in the U.S., which includes the LME aluminum price plus the Midwest premium have risen sharply to historical levels. Spot scrap spreads for aluminum, mainly used beverage cans or UBCs have also improved from historically tight levels experienced in the second half of 2024 and into 2025. Both of these dynamics unfolded as we moved through the year in 2025. Given that a portion of our scrap purchases were negotiated previously, we did not benefit much from this dynamic in 2025 until the fourth quarter and the favorable impact was augmented through strong performance at Muscle Shoals in the quarter. As we look at 2026, we expect to benefit from these trends, especially in the first half. Moving on to inflation. Inflationary pressures continue today across operating cost categories, including labor, energy, maintenance and supplies, albeit at more normal levels. Regarding tariffs, we have made some progress on pass-throughs and other actions to mitigate a portion of our gross tariff exposure, and we believe at this stage, our direct tariff exposure remains manageable and the current tariff and trade policies are net positive for us. In terms of the overall cost management, we have demonstrated strong cost performance in the past, and we're confident in our ability to maintain a right-sized cost structure in any environment. On that front, we're pleased today to announce our next group-wide excellence program, which we're calling Vision 2028. This program will target both operational efficiencies and cost reduction across our businesses and is one of the building blocks in our road map to our 2028 targets. We look forward to updating you on our progress going forward. Now let's turn to Slide 13 and discuss our free cash flow. We generated $178 million of free cash flow in 2025, well ahead of a very challenged 2024. The increase in free cash flow in 2025 was primarily a result of higher segment adjusted EBITDA and lower capital expenditures, partially offset by higher cash interest. Looking at 2026, we expect to generate free cash flow in excess of $200 million for the full year. We expect CapEx to be approximately $115 million, which includes approximately $100 million of return-seeking CapEx, primarily related to key aerospace and recycling and casting projects we announced previously at Issoire, Muscle Shoals and Ravenswood. We expect cash interest of approximately $125 million and cash taxes of approximately $70 million, and we expect working capital and other to be a use of cash for the full year. As Ingrid mentioned previously, we continued our share buyback activities in the quarter. During the quarter, we repurchased 2.4 million shares for $40 million, bringing our 2025 total to 8.9 million shares for $115 million. We have approximately $106 million remaining on our existing share repurchase program, which we intend to complete by using our free cash flow generated this year. Now let's turn to Slide 14 and discuss our balance sheet and liquidity position. At the end of the fourth quarter, our net debt of $1.8 billion was up approximately $50 million compared to the end of 2024, with the largest driver being the translation impact from the weaker U.S. dollar at the end of the year. We reduced our leverage to 2.5x at the end of 2025, which is at the upper end of our target range. We expect leverage to trend lower in 2026 and to maintain our target leverage range of 1.5 to 2.5x over time. As you can see in our debt summary, we have no bond maturities until 2028. And as of the end of 2025, we had no outstanding borrowings under the Pan-U.S. ABL facility. Our liquidity increased by around $140 million from the end of 2024 and remains very strong at $866 million as of the end of 2025. With that, I'll now hand the call over to Ingrid. Ingrid Joerg: Thank you, Jack. Let's turn to Slide 16 and discuss our current end market outlook. The majority of our portfolio today is serving end markets benefiting from durable and attractive secular growth trends in which aluminum, a light and infinitely recyclable material plays a critical role. Turning first to the aerospace market. Commercial aircraft backlogs are at record levels today and continue to grow. Major aerospace OEMs remain focused on increasing build rates for both narrow-body and wide-body aircraft as evidenced by higher plane deliveries year-over-year and rising delivery ambitions in the near term. Although supply chain challenges have continued to slow deliveries below what OEMs were expecting for several years in a row now, demand is steady for the most part and aluminum destocking in the supply chain appears to be easing. Demand for high value-add products, which is one of our core focus areas remains strong. We remain confident that the long-term fundamentals driving commercial aerospace demand remain intact, including growing passenger traffic and greater demand for new, more fuel-efficient aircraft. In addition, demand remains stable in the business and regional jet market, whereas demand for space and military aircraft is strengthening. We believe we are a leading provider of proprietary aluminum solutions for those customers in the space and military aviation markets today. As you know, we are investing in additional capacities and capabilities such as our third Airware casthouse in Issoire, which we expect to start up by the end of this year to further strengthen our position in the future. Looking across our entire commercial and military aviation and space businesses, we believe our product portfolio is unmatched in the industry, and we have industry-leading R&D capabilities for aluminum aerospace solutions. Given the visibility over the next several years, we are raising our adjusted EBITDA per ton target for our A&T business to $1,300, which is up from $1,100 that we provided last year. Turning now to packaging. Demand remains healthy in both North America and Europe. The long-term outlook for packaging continues to be favorable as evidenced by the growing consumer preference for the sustainable aluminum beverage can, capacity growth plans from the can makers in both regions and the greenfield investments ongoing here in the U.S. We continue to see aluminum gain share against other substrates in the beverage market and the majority of new beverage products are launched in aluminum cans today due to its sustainable attributes. Aluminum cans are highly recyclable, and we are well positioned to capitalize on the benefits from recycling packaging materials at our facilities in Muscle Shoals and Neuf-Brisach. Packaging markets are relatively stable and recession resilient as we have seen many times in the past. Longer term, we continue to expect packaging markets to grow low to mid-single digits in both North America and Europe, providing a strong baseload for our operations in both regions. Now let's turn to automotive, which continues to be a bit of a different story in North America versus Europe. In North America, demand is relatively stable, though the tariff environment is creating some uncertainties. Last year, one of our competitors' U.S.-based facilities was impacted by fire, a very unfortunate event and which has created an interruption in the aluminum rolled product supply chain in North America. The entire industry continues to mobilize to ensure we limit the impact on our customers. In the fourth quarter, we started to benefit on the rolled product side as we were able to help our customers during this outage. On the automotive structures side, we were negatively impacted as some OEMs were forced to reduce production on certain platforms impacted by the disruption on the rolled product side. The overall impact in 2025 was a net positive on our results, which we expect to continue into the first half of 2026. Automotive demand in Europe remains weak, particularly in the premium vehicle segment where we have greater exposure. European markets are seeing increased Chinese competition and have lowered their battery electric vehicle ambitions. Automotive production in Europe is also feeling the impact of the current Section 232 auto tariffs given the number of vehicles Europe exports to the U.S. Longer term, we believe electric and hybrid vehicles will continue to grow, but at a lower rate than previously expected. Secular trends such as lightweighting, fuel efficiency and safety will continue to drive the demand for aluminum products. As a result, we remain positive on this market over the longer term in both regions despite the weakness we are seeing today. As you can see on the page, these 3 core end markets represent over 80% of our last 12 months revenue. Turning lastly to other specialties. These markets are typically dependent upon the health of the industrial economies in each region, including drivers like the interest rate environment, industrial production levels and consumer spending patterns. Industrial market conditions in North America and Europe became more stable in the second half of 2025, and we believe the markets, particularly in Europe, have bottomed after 3 years of market downturn. Nevertheless, we expect the specialties markets in Europe to remain relatively weak in the near term. We do believe TID markets in North America provide us with some opportunities today given the current tariffs make imports less competitive compared to domestic production. We also believe there are some opportunities in land-based defense and semiconductor markets given current market dynamics. In most industrial markets, we are focused on niche high value-added applications. To conclude on the end markets, we like the fundamentals in each of the markets we serve, and we strongly believe that the diversification of our end markets is an asset for the company in any environment. Turning lastly now to Slide 17. We detail our key messages and financial guidance. Our team delivered strong execution and results in 2025 that were well ahead of our expectations coming into the year. Excluding metal price lag, our adjusted EBITDA in 2025 was our second best year ever. We returned $115 million to shareholders in the year with the repurchase of 8.9 million shares, and we reduced our leverage to 2.5x by year-end. We remain focused on strong cost control, free cash flow generation and commercial and capital discipline. Based on our current outlook, for 2026, we are targeting adjusted EBITDA, excluding the noncash impact of metal price lag in the range of $780 million to $820 million and free cash flow in excess of $200 million. Our guidance assumes the recent demand trends in our end markets that I described earlier will continue into at least the early part of 2026 and the overall macroeconomic environment to remain relatively stable. Looking into the future, we also want to reiterate our targets of adjusted EBITDA, excluding the noncash impact of metal price lag of $900 million and free cash flow of $300 million by 2028. To conclude, we are extremely well positioned for the long-term success and remain focused on executing our strategy and shareholder value creation. With that, operator, we will now open the Q&A session. Operator: [Operator Instructions] And our first question comes from Katja Jancic with BMO Capital Markets. Katja Jancic: Maybe starting on the '26 guide. Can you let us know how much of a benefit for scrap spreads is embedded in this guide? Jack Guo: Katja, so I think it's -- thank you for the question. Regarding the scrap benefits for 2026, and here, I'm going to go on for a little bit. Obviously, it's -- we believe it's a tailwind for us in 2026. Our expectation is given our scrap consumption needs are fully contracted in the first quarter, we should see similar type of benefits as we've seen in the fourth quarter of 2025. And if you were to kind of look at the bridge for Q4 2025 for PARP business unit, you'll see that -- and we called this out, right, the metal benefits in the system, so it includes the European plants as well as Muscle Shoals more than offset a little bit of higher operating costs, if you will. So the net impact is $40 million, which gives you an idea on the amount of benefits we had in the fourth quarter of 2025, and we believe that should continue to carry into at least the first quarter of 2026. Now, obviously, there is quite a bit of interest on this topic. So I think it is -- we think it's important to have some context. Number one, as we mentioned and discussed previously, the recycling economics is quite complex. There are really a lot of elements at work. Here, we're talking about the market, the aluminum price levels. We're talking about scrap spreads. We're talking about scrap consumption levels, productivity, melt loss type of scrap we procure and it's not just UVCs. We also consume other types of scrap. And even within UVCs, you have different grades. So it gets really, really complicated. And if you just -- even if you just take 3 of the many elements there, it becomes a 3-dimensional matrix. So it's very complicated as they can work in sync or they can work against one another. I think another important point to understand is recycling economics have averaged out over time. And that was the case when markets were much more stable and call it, the pre-2024 time periods where we have mentioned previously that the annual swings could vary between sort of the $20 million to $30 million range. But they have averaged out over time. And that is also the case in times which are more volatile like between 2024 to today. And if you just rewind a little bit, in '24, we saw a sharp contraction in scrap spreads, and we had challenges at Muscle Shoals. So we experienced actually $15 million to $20 million worth of quarterly headwind, if you will. And then you kind of multiply that by 4, you'll get the full year headwind. So it's quite substantial. And then we saw a similar type of headwind in the first half of 2025, which was more pronounced in the first quarter to a lesser extent in the second quarter as spot spreads tightened, but Muscle Shoals was doing better and the Midwest saw a sharp rise -- sharp increase due to the tariffs. But overall, if you look at '24 to the first half of 2025, that was an extremely challenging 18 months for us from a metal profit perspective. Now Q3 2025 was stable. And then in the fourth quarter, as I mentioned, we benefited from favorable environment and quite strong performance at Muscle Shoals, which have allowed us to recoup the losses we had in the first half of 2025, plus a bit more. So now looking at 2026, I've already covered the first quarter. And looking at the future quarters, we do have some open volumes, and we're working very hard to lock in those additional open volumes beyond the first quarter. But the incremental benefits based on the current expectation is that they should gradually taper off as we move through the year. But overall, we should -- our expectation is that we should be able to recoup the losses we had from 2024. So that's a long answer, but it gives you a lot of kind of color around the scrap topic. And I think the takeaway is, one, it's a very complicated topic. Number two, it does average out over time. And number three, recycling, it requires a lot of investments, which we have made. It requires a lot of know-how. We've been operating it for decades. It is one of the cylinders in our engine as we mentioned previously. And when the market conditions are more favorable like it is today, you can count on us to make the best out of the opportunity. Katja Jancic: Okay. And I understand that it's complicated. But let's say if these scraps stay at the current level. And then looking more to your '28 target of $900 million, it seems that, that target might be conservative. Can you just remind us how we get there? Or what are some of the moving parts there? Ingrid Joerg: Katja, thank you for this follow-up question. I'll let Jack come in later. But maybe with respect to 2028, I think when we talked the first time a year ago about our bridge, we said we were going to take more conservative assumptions on the metal side. So what you are seeing today is that we are ahead due to metal benefits versus our 2028 target. But obviously, this is a very dynamic market environment and things can change very, very quickly. So Midwest premium can change very quickly and the percentages of spreads can change very quickly, which is why we have taken a conservative assumption in the first place. We don't know if the current situation that we experienced in 2026 are going to last and for how long they are going to last, which is why we have preferred to remain at a more prudent stance and assumption in our 2028 targets. Operator: Our next question comes from Bill Peterson with JPMorgan. William Peterson: Maybe outside of the scrap spread, I'm trying to get a sense for some other factors within the 2026 guidance. For example, what is your latest thoughts on the aerospace recovery? How much can be attributed to Vision 2028? Any sort of assumptions related to one of the peers in the space with their rolling mill ramping for the automotive space? Trying to get a sense for some other puts and takes within the full year guidance. Ingrid Joerg: Thank you very much for the question, Bill. I start and let Jack complete. Let me start on the market side, maybe. I think we believe that packaging is going to remain a good driver of growth for us going into next year. We see both regions, U.S. and Europe with solid performance. And we have been having quite a good turnaround in our Muscle Shoals operations. And so we have been growing on the packaging side, and we expect to continue to grow. On the automotive side, I think we have a very mixed picture between the U.S. and Europe. The U.S. seems to be rather stable. But remember, we do -- we only have one continuous annealing line in the U.S. So our capacity on the rolled product side is limited to this one line. We have seen nice benefits in Q4 from this unfortunate event that happened in the U.S. supply chain. And we've also had benefits in Europe, which we expect to last until the first half of 2026. As you know, the European automotive market has remained weak, and we have not seen any change. It seems that the market has bottomed out, but it's very hard to predict at this point in time. On the aerospace side, we see the business as steady. We see quite a good and strong mix on the aerospace products today in 2026. We have a little bit more visibility today than we had during our last call on '26 and maybe also 2027. We feel that military jets and space is going to continue to grow and be positive for us. Just as a reminder, we are also going to get our new Airware casthouse that will ramp up towards the end of this year. So most of the benefit you should expect coming in -- starting to come in 2027 and not this year, but we are fully on track with the expansion of our Airware capacities and capabilities. I think on the more negative side is maybe that industrial markets and specialty markets in Europe remain weak. We also feel they have bottomed out, but we do not see a recovery coming in Europe as of yet. So I think there's a good mixture of positives and also some uncertainties in the market that we see for 2026. On the recycling side, we continue to expand our recycling with the investments we've made in the past and the strong operating performance that we also had in Q4. So it was not just because of scrap spreads, but also strong operating performance, and we expect that to continue in 2026. As Jack already explained, the second half scrap spreads may be less favorable. So this is something that we will update as we go along. Important also to note that inflationary pressures are continuing. That's why we are very focused on cost control and controlling what we can control in this fluid environment, market environment that we're experiencing. And with our Vision 2028 program, we want to underpin our road map to 2028 in terms of operating efficiencies, which is something that we need to focus on every year. William Peterson: Okay. Great. Maybe it's a little bit early days, but there's been some news here about some potential tariff relief on downstream or derivative products. Trying to get a sense of maybe if there's any overlap with your own product suite that you sell into the U.S. What are you hearing on the ground? And I guess, specifically, is there any risk if there's relief on derivative products that, that could have some impact on your business? Any sort of thoughts would be helpful. Ingrid Joerg: I think the situation remains very fluid as it comes to tariffs. So with the information we are having today, we do not see any impact on us. And we continue to believe that tariffs are a net positive for us given that we will have stronger demand within the North American market. Operator: Our next question comes from Mike McNulty with Deutsche Bank. Corinne Blanchard: This is Corinne. Can you hear me? Jack Guo: Yes, Corinne. Corinne Blanchard: So maybe a few questions. And first of all, congratulations. I mean, this is an amazing quarter and a pretty good outlook what you're giving us here. Can you talk maybe about the cadence that we can expect in terms of EBITDA and free cash flow? And then the second question, Ingrid, if you can go back on the Vision 2028. I think we know that you're probably going to focus quite a lot on cost control, but I'm interested to hear more about the operational efficiencies and especially in terms of debottlenecking, like where are the opportunity that you're seeing in which market? Jack Guo: Thank you for the question. So I'll start, Corinne, and I appreciate the comments. I'll start on the cadence question and then Ingrid can help out on the Vision '28. So in terms of '26 cadence for EBITDA, I think as you know, Q1 and first half, typically, there's seasonality in our business. So from a seasonality perspective, they tend to be stronger than the second half. That's normal course. Now for '26, I've mentioned about the incremental benefits we expect to see in the first quarter from favorable recycling economics, right, recycling profits. So that should come in the first quarter. And on top of it, we expect to see a full quarter of benefits related to the automotive supply due to the unfortunate fire that happened at one of our competitors' plants last year. So we should see a full quarter benefit. So Q1 is set up nicely, and it should be stronger than Q4 of 2025 based on the current expectation. And then from a free cash flow perspective, typically, we build working capital in the first quarter and then into the first half of the year, and then we would release working capital. So that gives you an idea on the cadence for free cash flow. Ingrid Joerg: Thanks, Corinne. So in terms of Vision 2028, this is a program that is really going to support our 2028 target. We have net productivity assumed in our bridge, and this program is there to support achieving those numbers. So in terms of major pillars, we're certainly targeting asset reliability. You see when Muscle Shoals is running well that it's a very important driver of profitability for us. So asset reliability remains an opportunity across our system, which will support the throughput maximization. And it goes along with the portfolio optimization of the products that we make today. Given that some markets are rather weak and others have continued growth ahead of us, we want to better optimize how we are using our assets, and this project is going to help us work more on cross qualification so that we optimize our overall footprint and not just optimize one site. So asset reliability throughput and optimized load, we have debottlenecking activities that are part of our bridge to 2028 with some limited investment that is embedded in our numbers. And then on top of it, I think we also have still opportunity to improve recycling and metal cost reduction. These are really going to be the focus areas of this program. In terms of which markets additional capacity should be going to, I think it's clear from what we see in the market, it's on the packaging side. So can sheet, we would continue to like to grow with the market in both regions. And then obviously, on the aerospace side, as this is our highest margin product. And with the new casthouse coming in on the aero side, we would like to continue to grow this business for space, military, but also commercial aviation. And we have invested in some finishing capability in our sites that will allow us to support the ramp of the aerospace that is expected to come somewhere around '27. Operator: [Operator Instructions] Our next question comes from [indiscernible] with Wells Fargo. Timna Tanners: I think I'm the only person from Wells Fargo. This is Timna. I hope you all are doing well. I wanted to dig down back to Katja's question, if I could. Just if you look at the second half cadence and annualize it, that's above where the midpoint is on your guidance. So just trying to really understand what takes a step down, maybe more in the second half. Can you help elaborate on that and please give us the assumptions on the Midwest premium and scrap spread that's baked into your guidance? Jack Guo: So I'll start. So the way to think about it is Q4 '25, we've seen a fairly substantial amount of metal benefits, as I mentioned previously, right? But then the first half is quite challenged. Then from a relative comparison perspective as we go through the year, Q1 of '25 was extremely weak. Q2 was also weak. So the incremental benefits on the metal side, you would expect it to kind of to be more significant in the first half of 2026. I think that's one point. Then the other piece of it is we have more certainty, more visibility. Obviously, as we stand here today in February, looking at Q1 and into the first half of the year and some of the markets, the visibility there is not as certain into the second half. Timna Tanners: Okay. So does that mean that you have assumption of the Midwest premium and scrap spreads stronger in the first half than the second half? I was hoping for quantification, but even if we just know that, that's the way to think about it would be helpful. Jack Guo: I think there is more volume consumption -- volume that's locked in the first quarter relative to the future quarters. So we have more exposure. Timna Tanners: Got you. And then if I could, we're hearing a bit about demand destruction, a little bit of switching to steel away from aluminum in some auto and tractor trailer applications, but also opportunities for aluminum to take share from copper. So I was hoping you could comment on that. And along those same lines, would be great to get any thoughts on the CBAM impact as there were some public quotes from Constellium on that topic recently. Ingrid Joerg: Okay. Let me start, Timna. So I think with respect to aluminum substitution in automotive, we really do not see any evidence of that and particularly nothing related to the outage that has happened in North America. You know that these design decisions, I mean, it takes a long time to change design is very, very costly, and we develop a lot of platform-specific products. And usually, once you're on the program, it doesn't really -- or on the platform, it really doesn't happen that you get substituted. So we haven't seen any impact or any talk from our customers with respect to substitution with steel. The trailer bills are low right now, and that's more related, I think, also to the general economic situation. But clearly, we haven't seen it, and we do not expect it because the trend to lightweight, the trend -- the better safety needs and the fuel economy, this is just going to stay. So we are not worried that on the automotive or transportation market, anything like this could happen. And then with respect to copper, I have to say I have -- I'm not aware of this. In terms of substitution of materials, we have been able to substitute some materials in the past with our more high-performing alloys on the aerospace side, for example, but not particularly related to the copper. Now going to your question on CBAM, we are -- even though CBAM has been adjusted a little bit, we still think it's negative for the industry in Europe. We need to really create a level playing field with people importing into Europe, we need much more than what is on the table right now. We think the CBAM is going to be reflected in the regional premium in Europe. And so it's for people who are exporting a lot from Europe, it's not going to be good to pay higher metal prices in Europe for exports. We produce mostly local for local, so we are not really directly impacted by this. But clearly, the CBAM design as it is today, is flawed and will not prevent carbon leakage, and it could potentially lead to resource reshuffling, material coming into Europe based on recycled content that is very, very difficult to prove. So overall, we continue as an industry to oppose to its current design, and we're working with industry associations like European aluminum to work on changing it and adjusting it to the needs that the industry has. Operator: I would now like to turn the call back over to Ingrid Joerg, CEO of Constellium, for any closing remarks. Ingrid Joerg: Well, thank you, everybody, for your interest in Constellium. As you see, we have delivered strong results in 2025. And today, we provided a strong outlook for 2026. We are very happy with the steps that we are making towards our 2028 targets, and we look forward to updating you on our progress in April. Thank you very much, everyone. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.
Operator: Good morning, ladies and gentlemen, and welcome to the ICL Fourth Quarter 2025 Earnings International Conference Call. [Operator Instructions] I would now like to turn the conference call over to Peggy Reilly Tharp, Vice President of Global Investor Relations. Please go ahead. Peggy Tharp: Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations for ICL Group. And I'd like to welcome you, and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl-group.com and there will be a replay available a few hours after the live call and a transcript will be available shortly thereafter. Earlier today, we filed our presentation with the securities authorities and the stock exchanges in both Israel and the United States. Those reports as well as the press release and our presentation are also available on our website. Please be sure to review the disclaimer on Slide 2 of the presentation. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Elad Aharonson, followed by Mr. Aviram Lahav, our CFO. After the presentation, we'll open the line for a Q&A session. I would now like to turn the call over to Elad. Elad Aharonson: Thank you, Peggy, and welcome, everyone, to review our fourth quarter 2025 earnings. We delivered a solid finish to the year and achieved our annual guidance target with $1 billion of specialty-driven EBITDA. In the fourth quarter, we also made significant progress towards our new strategic principles, which you can see on Slide 3. This includes the acquisition of Bartek Ingredients, the global leader in food-grade malic and fumaric acids. Bartek serves hundreds of customers and distributors in the food, beverages and other end markets and distributes its products to more than 40 countries worldwide. This acquisition allows us to expand our portfolio deeper into specialty food solutions. It also helps to position us for further growth as we leverage our existing global food presence to expand into other food ingredient segments. It further advances our recently refined strategy, which focuses on the significant growth engines of specialty crop nutrition and specialty food solutions, 2 areas where we already have deep experience and broad exposure. We will continue to seek additional nonorganic growth opportunities in these 2 markets driven by a commitment to creating long-term value and sustainable growth for our shareholders. At the same time, we will stay focused on our mission to maximize our core business segments, and this includes our potash resources. As you know, we signed an MOU with the State of Israel regarding the Dead Sea concession assets in November of last year. In January of this year, we signed a binding agreement based on the principles agreed upon in the MOU. We secured compensation for our assets at the Dead Sea and established certainty on the timing of this payment. It also included the insurance of bromine supply through at least 2035. Additionally, as part of our strategic efforts, we have been conducting a review of our capital allocation priorities and reevaluating less synergetic and low potential activities. As a result, in the fourth quarter, we made several adjustments with the majority related to advancing our new strategic principles. These were essential in moving ICL forward and designed to help fund our 2 profitable growth engines. These shifts in our priorities will help us to redirect our resources to where better aligned opportunities. Adjustments included the discontinuation of ICL's LFP battery material projects in St. Louis and in Spain, the closure of a minor R&D facility in Israel and the initiation of a sale process for our operations in the U.K. We expect to share updates on our strategic efforts throughout 2026 and look forward to strengthening and growing ICL for the long term. Now if you will please turn to Slide 4 for a brief overview of the quarter. Sales were $1.701 billion, up 6% year-over-year with all 4 segments delivering sales growth. For our Industrial Products, Phosphate Solutions and Growing Solutions segment, sales of $1.281 billion were up 4%. We remain committed to growing our leadership position in these 3 segments. Consolidated adjusted EBITDA was $380 million in the fourth quarter, and this amount improved 10% year-over-year. For the quarter, EBITDA for our Industrial Products, Phosphate Solutions and Growing Solutions segments was $249 million. In the fourth quarter, adjusted diluted earnings per share were $0.09 and up 13% versus last year. Operating cash flow of $340 million, improved 2% on a sequential basis. In general, the quarter was in line with expectations with year-over-year growth in key adjusted financial metrics. Prices continued to increase for bromine, potash and phosphate fertilizers in the fourth quarter. And similar to the previous 3 quarters, overall performance remained varied across the wide array of end markets and regions we serve. Turning to Slide 5 and the review of annual results. Consolidated sales for 2025 were $7.153 billion and up 5% versus 2024. Sales for Industrial Products, Phosphate Solutions and growing Solutions were $5.650 billion in 2025, also up 5%. Full year EBITDA of $1.488 billion was up slightly, while EBITDA for Industrial Products, Phosphate Solutions and Growing Solutions came in at $1.021 billion. Adjusted diluted EPS was $0.36 for 2025, and we delivered operating cash flow of $1.056 billion. During the course of 2025, we faced shifting macro forces and industry issues while simultaneously achieving our goals. From an ICL perspective, we gained significant clarity regarding the value of the Dead Sea assets, which I just discussed. Also, as previously mentioned, we completed a comprehensive review of the company and identified 2 strategic growth engines, specialty crop nutrition and specialty food solutions. We intend to expand in these 2 areas while continuing to benefit from our distinctive global presence and regionally diversified operations. Now let's review our divisions and begin with our Industrial Products business on Slide 6. For the full year, sales of $1.254 billion were up slightly year-over-year with EBITDA of $280 million. For the fourth quarter, sales of $296 million were up 6% with EBITDA of $68 million, so a solid end to a good year. In the fourth quarter, bromine prices maintained their upward trajectory even as some end markets such as building and construction remained soft. For flame retardants, sales of both our brominated and phosphorus-based solutions were flat versus the prior year. For bromine-based products, higher prices were offset by lower volumes due to continued soft demand. For sales of phosphorus-based products, higher volumes and prices in the U.S. were unable to fully offset lower volumes in other regions, mainly in Europe. Sales of clear brine fluids, which are used by the oil and gas industry during well completion remained solid and were driven by increased demand in South America and Europe. Specialty minerals sales increased on strong pre-season demand for magnesium chloride after an early snowfall in the fourth quarter in the U.S. This was followed by a massive winter storm in North America in January. Turning to our Potash division on Slide 7. For the full year, sales of $1.714 billion were up 4% with EBITDA of $552 million, up 12%. In the fourth quarter, Potash sales of $473 million were also up 12% year-over-year, while EBITDA of $150 million increased 15%. Our average potash price for the fourth quarter was $348 CIF per tonne. This amount was up more than 20% year-over-year. Potash sales volume of 1.2 million metric tons in the fourth quarter were up roughly 15% on an annual basis. This marks a strong finish to 2025 as we successfully addressed operational issues in the Dead Sea related to the war. For our Spanish operations, our focus on debottlenecking and optimizing helped us to improve reliability and advance our production goals. These efforts also helped us to deliver a quarterly production record in Spain in the fourth quarter. In the fourth quarter, we also signed a contract with our Chinese customers for supply at $348 per metric ton, which is in line with other recent industry contract settlements. Finally, potash affordability remained attractive in the fourth quarter, and we continue to maximize the profitability of our potash resources. Whenever possible, we prioritize potash supply to the best global markets. Now turning to a review of the Phosphate Solutions division on Slide 8. For 2025, sales of $2.333 billion were up 5%. However, EBITDA of $528 million was impacted by higher sulfur costs. In the fourth quarter, sales increased 2% to $518 million, while EBITDA came in at $121 million. Food specialties sales increased slightly in the fourth quarter versus the previous year and reflected growing volumes in North America and Asia as we leverage our regional expansion strategy. In the fourth quarter, our overall food business gained additional sales and also expanded its new product pipeline for dairy in the U.S. and EMEA. We also saw an increase in global processed meat sales across the U.S. and EU. In China, our food sales increased 15% in the fourth quarter, our best quarter of the year. For 2025, sales were up 12% as our business expansion in this region has been successful since its debut. In total, we expanded our food project pipeline with nearly 40 new solutions since mid-2025. While we are committed to growing this business organically, you can also expect us to continue to evaluate M&A opportunities. As I mentioned earlier, in January, we completed our acquisition of approximately 50% of Bartek Ingredients. And for 2026, we are targeting a wide array of growth options. This includes expansion into emulsifiers along with other R&D efforts such as the development of a high-protein drink stabilization system for GLP-1 users. We expect additional growth to come from portfolio expansion in seafood and soy protein and as the segment looks to deliver more localized food solutions to emerging markets. In China, our YPH joint venture benefited from both higher prices and volumes and an increase in demand for battery materials in the fourth quarter. We also celebrated the 10th anniversary of our Chinese partnership in January of this year. Overall, Phosphate specialties performance continued into the fourth quarter as expected with most regions remaining stable. However, market softness was maintained in Europe, a trend that lingered as anticipated. Higher cost of raw materials and specialty sulfur persisted in the fourth quarter and show no signs of abating in 2026. This brings us to our Growing Solutions business division on Slide 9. Sales for 2025 were $2.063 billion and improved 6% year-over-year, while EBITDA of $213 million increased 5%. This growth was due to our continued strategic focus on global specialty solutions, which have been customized for our customers on a regional basis. For the fourth quarter, Growing Solutions sales increased 6% to $467 million, while EBITDA of $60 million was up 18% versus the prior year. In the fourth quarter, we saw profit improvement in both North America and Europe. In North America, higher prices helped drive an increase in profit. In Europe, we continue to benefit from our successful product mix strategy, which is focused on our higher-margin products. Sales in Asia also improved in the fourth quarter, but rising raw material costs impacted profits as expected. In Brazil, the overall market remained under pressure as farmers faced affordability issues and distributors shift their buying behavior. Although this did impact our profitability, sales performance remained solid, and we were able to expand our specialty market share. I would ask you to now turn to Slide 10 and some key takeaways. We have already made progress in advancing our strategic principles, which we announced in the third quarter. We added Bartek Ingredients to our specialty food solutions portfolio, and you can expect to see more acquisitions in the coming year. We also took a comprehensive look at our existing portfolio and elected to discontinue our downstream LFP battery materials expansion, which we announced in the third quarter. In the fourth quarter, we initiated a sale process for our Boulby operations in the U.K. in the hope of getting this facility into the best hands for the future. During 2025, we also worked diligently to provide clarity around the 2030 Dead Sea concession process, which I discussed earlier. We continue to believe that ICL is the most suitable candidate to be awarded the future concession. We currently intend to participate in this process once it begins, assuming, of course, that the terms are economically viable, and we will ensure stable regulatory environment. I would now like to look outside of ICL towards the markets where we operate. Across our minerals, which include potash, phosphate and bromine, we see prices are stable to improving, and these trends are expected to continue into the first quarter of 2026. For our specialty phosphate, we are seeing pressure related to both competitive forces and higher raw material costs, and we are actively monitoring and reacting to these dynamics. While some cost inputs are rising, the sulfur market is experiencing exceptional volatility on a global basis. Prices have surged to multiyear highs, driven by supply and geopolitical issues. These increases are causing issues across several of our businesses and significantly impacting other agriculture and chemical manufacturers. At ICL, we are actively working to mitigate higher costs, including sulfur, and we will keep you up to date on our efforts as the year progresses. We are also experiencing pressure as the shekel continues to strengthen versus the U.S. dollar. This makes it more costly for us to do business in Israel as a dollar-denominated company. However, we are using hedging techniques to help eliminate some but not all of this exposure. Now before turning the call to Aviram, I would ask you to turn to Slide 11 and a review of our guidance for 2026. For this year, we expect consolidated EBITDA comprising all 4 of our business segments to be between $1.4 billion to $1.6 billion. As the price of potash has stabilized over the past few years, we believe providing consolidated guidance is now more relevant. For potash sales volumes, we expect this amount to be between 4.5 million and 4.7 million metric tons as we continue to benefit from the operational improvements made at the Dead Sea and in Spain in 2025. Finally, we expect our annual adjusted tax rate to be approximately 30% in 2026. And with that, I would like to turn the call over to Aviram for a brief financial overview. Aviram Lahav: Thank you, Elad, and to all of you for joining us today. Let us get started on Slide 13 with a quick look at quarterly changes in key market metrics. On a macro basis, average global inflation rate improved versus the prior quarter with the exception of the U.S., which was flat and China, which swung positive. Interest rates were a bit more mixed. While rates in most regions were relatively stable, rates in the U.S. improved by nearly 40 basis points. For Brazil, while the Central Bank held its target rate unchanged at 15%, rates remain elevated on a year-over-year basis. Looking to exchange rates, the shekel has strengthened versus the U.S. dollar when compared to long-term historical rates. Wrapping up our macro metrics, you can see that U.S. housing starts trended up slightly by the end of the fourth quarter. For fertilizers metrics, the picture was more mixed. The grain price index declined on a quarterly basis with rice showing a significant reduction. On the positive side, corn and soybeans both improved in the quarter and on an annual basis with soy showing solid mid- to high single-digit growth for both periods. While farmer sentiment improved by the end of the fourth quarter, those gains were reversed in January. When asked specifically about soybeans, 21% of U.S. producers said they expect soybean exports to abate over the next 5 years with increasing competition from Brazil weighing on their minds. In the fourth quarter, potash prices moderated slightly, mainly due to sentiment and seasonality, while P2O5 prices trended higher in 2025. This is not expected to continue in perpetuity. Over the same time frame, there was a significant reduction in ocean freight rates of nearly 25%. Beyond agricultural indicators, we also track other indicators relevant to our Phosphate Solutions and Industrial Product segments. Our Phosphate Specialty Solutions are an important part of the food and beverage end markets. This is an area we are targeting for growth, both organically and via M&A. In the U.S., retail trade and food services improved both through November and year-over-year. For our Industrial Products segment, the price of bromine in China is an important metric, and these prices continue to improve in the fourth quarter. Durable goods are another indicator for Industrial Products, and they picked up slightly through November. For remodeling activity, which is a good metric for both Industrial Products and Phosphate Solutions, growth was up approximately 1% on a sequential basis and 2% year-over-year. If you now turn to Slide 14 for a look at our fourth quarter sales bridges, on a year-over-year basis, sales were up $100 million or 6% with all 4 segments demonstrating growth. Turning to the right side of the slide, you can see a $98 million benefit from higher prices this quarter, which was partially offset by a reduction in volumes. Exchange rates also had a positive impact. On Slide 15, you can see our fourth quarter adjusted EBITDA, which improved approximately 10% versus the prior year. Similar to sales, we saw higher prices and reduced volumes. There was also an impact from exchange rate fluctuations, and you should expect to see this continue in 2026 if the shekel continues to strengthen versus the dollar. We also saw a significant increase in raw material costs, especially sulfur. This trend is continued into 2026, and it is becoming more difficult to pass this increase along. Additionally, as we shared publicly last December, the Israeli Supreme Court ruled that ICL is obligated to pay fees for water extracted from wells in the Dead Sea concession area. This equaled $14 million for 2025, and this entire amount was recorded in the fourth quarter. As Elad mentioned earlier, we had a number of adjustments this quarter, so I want to spend just a few moments on Slide 16. Here, you can see a representation for these items. I would like to point out that the majority of these items are related to advancing our new strategy. These adjustments are essential in moving ICL forward as we look to fund our profitable growth engines, specialty crop nutrition and specialty food solutions and as we focus on extracting value from our core businesses. These changes will help us redirect our resources towards better aligned opportunities. First, as you know, we announced the discontinuation of our LFP battery material project in St. Louis and in Spain on our third quarter call. And in the fourth quarter, we took an adjustment of approximately $61 million. In the fourth quarter, we also closed a minor R&D facility in Israel, and this adjustment was approximately $6 million. As Elad mentioned, we also recorded an impairment of our Boulby assets in the U.K. related to our shifting strategy, and this amount is approximately $50 million. We also recently initiated a sale process for these operations. Additionally, we made a $19 million provision for early retirement programs at several other sites. Turning to the ruling related to fees for water extracted from wells in the Dead Sea concession area. While this ruling was the opposite of the legal opinion issued by the Israeli Ministry of Justice, we, nonetheless, recognized approximately $80 million in the fourth quarter of this year for prior periods. Now if you will turn to Slide 17 for a quick review of our full year sales bridges for 2025. All 4 of our segments contributed to the 5% year-over-year growth we delivered. While we experienced a reduction in volumes, we benefited from generally improving prices across our businesses. On Slide 18, you can see a breakout of our adjusted EBITDA, both by segment and inputs. Once again, we benefited from higher pricings. However, a reduction in volumes, exchange rate fluctuation and higher raw material and energy costs tempered our EBITDA growth. Before I turn the call back to the operator, I would like to quickly share a few fourth quarter financial highlights on Slide 19. Our balance sheet remains strong with available resources of $1.6 billion. Our net debt to adjusted EBITDA rate is at a stable 1.3x. And we delivered operating cash flow of $314 million. Once again, we are distributing 50% of adjusted net income to our shareholders. This translates to a total dividend of $224 million in 2025 and results in a trailing 12-month dividend yield of 3.1%. And with that, I would like to turn the call back over to the operator for the Q&A. Operator: [Operator Instructions] Your first question is from Ben Theurer from Barclays. Benjamin Theurer: Two quick ones. So first of all, thanks for the guidance. And obviously, it kind of like at the midpoint looks more or less like a similar year 2026 than what was 2025. Maybe can you help us frame the upside risks to the higher end and the downside risks to the lower end as you look into 2026 across the different segments? Like what are the drivers to get it to the upper end? And what would be issues that you may face that could drive you more towards the lower end? That would be my first question. Elad Aharonson: Okay. Thank you, Ben. So I think for the upside, I think we'll see higher potash quantities for production and sales. And maybe there will be an upside on the price per tonne of the potash. Also on the bromine, we see increase in bromine prices. We'll see what happen after the Chinese New Year. China is the biggest market for bromine and there could be upside there as well. Also, we need to see the demand. So that's about upside. And on downside, so the 2 headwinds that we have right now, one is the cost of sulfur, which went up from around $140, $150 1.5 years ago to more than $500. And the sulfur is the most dominant raw material for the phosphate portfolio. So this is a headache for us. So we mitigate it, but still it's an issue. And the second one is the exchange rate of shekel versus dollar. Our functional currency is dollar, while we have expenses in shekel here in Israel. And as the shekel continues to strengthen versus the dollar, that would be a challenge for us. Aviram Lahav: Ben, I would add one thing specifically. It applies to basically most things that Elad described, but the cost of sulfur specifically, it's also the timing in the year when it will happen. I mean basically, we are not sitting on significant inventories of sulfur, which means that when it goes up, we pretty much quickly absorb it in the cost of manufacturing. But when it will eventually go down, then we will be rid of expensive sulfur pretty quickly. Now the guidance is for the year. We are giving it in February. So basically, everybody can do the math. It depends not only the extent to which it will happen, but the timing when it will happen. I think that's quite important to mention that. Elad Aharonson: And also maybe it's worth mentioning the Brazilian market. The last season in Brazil in general, not only for ICL, was a difficult one for the agri business. I think we performed better than the average, but still it wasn't a great year in the agri business in Brazil. If next year or this year, 2026 will be a normal one or even higher than normal, then there could be an upside related to that. Benjamin Theurer: Yes. Actually, I wanted to follow up on the Growing Solutions side and what you're seeing. I mean, obviously, this is -- there's a lot of like different pieces. And you talked about the market share gains in specialty, but with the farmer affordability issues, so probably is what you wanted to comment on. So what are you seeing like on the ground in terms of like demand within the Brazilian farmers, because given that the interest rate environment is still high, we've talked about this over the last couple of quarters as that being an issue? But it feels like it could potentially get better into 2026 with maybe rates coming down, it's an election year. So there's a lot of potential. So I wanted to understand how you feel about ICL's position in Brazil, in particular, within Growing Solutions. Elad Aharonson: So I'll say the following. All in all, I'm encouraged by the progress that we are making on Growing Solutions, and you can see the nice development on EBITDA for Q4 for Growing Solutions. Having said that, Brazil, which is give or take 1/3 of Growing Solutions business, it was a difficult year in Brazil because of the reasons that you mentioned, interest and so on. We like to believe that the interest rate will go down. I don't think it will go dramatically down, but it will go a bit down. And then we'll see what happen in the next elections. We adapted our cost structure in Brazil. And I do believe that next year -- or this year, 2026, will be better for us. Talking about Growing Solutions in general, we are changing our mix of product portfolio in Europe. Europe is also around 1/3 of the business for Growing solutions and our portfolio there has to be adapted, and we started doing it in 2025. I believe we'll see the results in 2026 and onwards. Still, we'll see what happen in general in Europe. And the last comment is about the Far East, China and the region where we see a nice progress. Here, the issue is more about the cost of raw materials, and that comes back to the comment about sulfur and some other raw materials. Do you want to add, Aviram? Aviram Lahav: Yes. Maybe to say something further. Thank you, Elad. Say something further about Brazil, I think it will resonate with you guys. It's -- credit is tricky. There's the rate of credit, there is the availability of credit. So what's happening on the ground in Brazil that, Ben, you're totally correct, the rate is extremely high. The real rate is probably around 10%, if not more than that. The nominal is about 15%, inflation is scaled at below 5%. That's exactly, by the way, why the Brazilian Central Bank is keeping rates so high. But that's only part of the story. Second thing is that commercial banks are not giving credit to -- not fully, of course, to the industry, which means that the farmers and the agriculture industry is using the suppliers as banks. And therefore, the issue of availability of credit is something that we obviously have to take into account, reckon with and decide how much exposure are we willing to take. Now notoriously, companies that have given too much credit in the Brazilian market have been beaten. It happens time after time, and we are very careful with our location, which means that we'll keep an open eye. Notwithstanding that, we can very well have a better year in '26, but this remains to be seen. So -- and by the way, during this process, you can see the pressure that exists and what's happening in the distribution companies. Distribution companies in Brazil are basically squashed between the suppliers and the -- actually the farmers. And that's a place that you really do not want to be. Okay. That's about that and that's continue. Operator: Your next question is from Joel Jackson from BMO Capital Markets. Joel Jackson: I'm going to follow up a little bit on some of this. I'm sort of surprised about the -- like, I think you've laid out the opportunities and challenges in '26. But I'm trying to figure out which businesses are up and down in '26 in your guidance. So potash volume higher, that's clear. Prices are higher, like if you just compare '25 versus '26 expectations, so potash should be up. And does that mean that you've got the other businesses like Growing Solutions and IP growing a little bit and phosphates down to get to a flattish midpoint? Aviram Lahav: No. I think the following. First of all, potash, indeed, as you said, quantities should be in a better place. Prices should be in a better place. But there is a but, the shekel is in a worse place, which means that all the -- and this is one particular division with heavy, heavy expenses. Obviously, on the shekel side, you can imagine by the size of the facilities in Israel. All of them obviously being paid for in shekel, which means that if we look at '26 and we benchmark it to '25, it should be better, but less so that was -- that it could have been if the shekel would have been at a better place. That's about the potash side. When you look at the bromine side, I would tend to say that we should be pretty much around the same ballpark that we were this year. When you look at the Phosphate Solutions side, then to an extent on the EBITDA, it makes sense that it will come somewhat lower, and this is due to the sulfur price with the caveat that we previously discussed. We don't know for how long this will prevail. And the last but not least is the Growing Solutions. It's one division that actually is not -- is actually gaining a little bit even from the currencies because it is less dependent on the shekel side, and it obviously sells around the world than most currencies vis-a-vis the dollar. The phenomenon of the weak dollar is not only vis-a-vis the shekel, it is vis-a-vis the euro, vis-a-vis the pound, et cetera, et cetera. I guess you all know that. And actually, we can find ourselves in a somewhat better position in Growing Solutions than in '26 versus '25. And all in, when you bake it all in and you look at what we are seeing for next year, we should see a very similar picture. Again, some gaining a bit, like all in, as I said about the potash, some remaining the same and some weakening to a degree. But these are not that dramatic. So if I had to take a guess, I would say that all in it's very near with a little bit going more toward the potash, a little bit less vis-a-vis the phosphate. I hope that answers your question, Joel. Joel Jackson: Very helpful. Could you remind us your sensitivity to the shekel how in U.S.? Aviram Lahav: Yes, yes, yes. Well, generally, we are above $1 billion short shekel. Obviously, it fluctuates, but you can make the math. So basically, every 1 percentage point is about $10 million. That is -- we are not actually when we -- our financials are driven by the hedged shekel. It's not the naked shekel that is the representative rate every day. So basically, we have got quite a significant amount of our exposure hedged. And therefore, our -- when rates go -- when the shekel strengthens against the dollar, it effectively strengthens less against our hedges. However, in the longer term, obviously, it takes an effect. So if this continues for a very long, and again, we do not know, the shekel at this stage is quite abnormally high for many reasons, nothing to do with our industry. The question is how long it will prevail. But generally, the yardstick every about 1%, it was about $10 million. Joel Jackson: Okay. Finally, just following up on that. What is your -- in your guidance for this year '26, what is your U.S. dollar shekel assumption? And how much of that is hedged right now? Aviram Lahav: Yes. So the naked, absolute naked, we would have taken somewhat around $310 million. But hedged, it is over $320 million, that's our assumption. It will be -- and it -- by the way, I saw quite a lot of guidance coming from companies, Israeli exporters in different fields. And I would say that anywhere from $315 million to $320 million plus is -- would be a common yardstick for where we see the market going. However, it can be... Joel Jackson: I'm sorry, how much of the billion are you hedged? I'm sorry. Aviram Lahav: Sorry, how much percentage do we hedge? Joel Jackson: How much of the billion are you hedged right now? Aviram Lahav: Yes. Around 50% at that time. Normally, we hedge around 60%, but when the rates go down, our analysis says that we can allow us to be a little bit more exposed because there's a limit to how much it can go down. Operator: [Operator Instructions] And your next question is from Laurence Alexander from Jefferies. Daniel Rizzo: This is Dan Rizzo on for Laurence. If we could just go back to Brazil for half a sec. Have we seen this before? And how long has it lasted with suppliers basically acting as the main creditors for their customers in Brazil? What happened last -- I mean and again, how long does it last? Aviram Lahav: Yes, Dan, it's -- I've been following and working in the Brazilian market about 15 years now, probably going on 20 and it waves. It is -- it has a lot of waves. I mean, basically, you're able to cope with it. If you work in a smart way -- I mean, the Brazilian market in agriculture is the #1 agricultural market in the world. If you're not in Brazil, you're actually not playing in agriculture, end of story. I mean we are active, by the way, in Brazil and other divisions as well. But predominantly, I would say, it's in agriculture. Now the Brazilian agricultural economy is obviously very, very important, especially around soy. You know the story there. And if you play it carefully, you can get very good results. Now you have to be aware at certain points of time, again, I'm trying to recollect from my past -- by the way, you can see it reflected in the currency. I've seen the real at 4. I've seen it at 160. I've seen it at 6. And now it is at 520 or something around that. It toggles. I mean, I believe that it will prevail. They will sort it out. I think that this -- the last year has seen probably a shift to a new reality. This year should be stable. Why am I saying this? Because what happens normally when things start to get tougher, it takes time for people to acclimate. I believe they have acclimated. And I believe that what we're seeing and we're seeing it in our performance, we are doing not great, but we're doing okay. Our level of doubtful debt does not grow. We are able to collect. We could have sold much more, but it would have taken a significant amount of more risk. So we are playing the game. I think we've got the experience, the knowledge how to play the game. And I do not believe that there is any particularly, let's say, bad news that should come there. I would gather that the next stage will be somewhat better than we've seen in the past year, but it remains to be seen, of course. Does that answer your question? Daniel Rizzo: That does. No, it does, it does because it sounds like we're at the trough for... Aviram Lahav: I believe so. Yes, I believe so. Yes, yes, yes. Daniel Rizzo: Okay. And then -- so with the moves you made with your portfolio with kind of deemphasizing or stopping the big battery project, how should we think about batteries going forward? Is this a temporary pause waiting for the market? Or are you just kind of moving away from this end market is not really relevant anymore? Aviram Lahav: Yes. That's a very good question. I think that something very fundamental has happened in the market. I mean, ultimately, when you look at the horizon, electricity, electric cars, electric other systems are here to stay. There's no question about that. The question is the pace and the question is who will be the winners and losers in this industry. Now if you look at the U.S. country to what was the -- what was, let's say, the aspirations and the thoughts, 1.5 years ago, they are very different at this stage for many things. It's the infrastructure, it's the support the government gives direct and indirect. And it is a situation where it will be a much, much more rockier road. You can see this by the way that Ford are reacting. You are seeing that by the way that GM are reacting. GM are not reacting the same way, but notwithstanding that, they took a significant hit and it's probably going to take a lot longer. And for somebody in novice starting to play the game, we came to a definitive conclusion that was not our game. We should have gotten a lot of support from the government. That support is off the table. Many factors were baked in. In Europe, the question -- the issue is quite different. The result is very similar, but different, different things. First of all, in Europe, there is an issue with the level of adoption -- of theoretical adoption is higher than the state. However, the propensity to consume is hampered. The real wages in Europe are not going up, and there was always the notion that the car needs to be cheap enough in order to play in this game. And of course, the Chinese are much freer to work in Europe than they are in the U.S. And the situation came, which culminated in the announcement -- dramatic announcement that Stellantis came about 2 weeks ago. They dropped a very significant amount of their project. Share was down 25% that day. It's quite dramatic. Ford pulled out of Germany, there are many stories here. So when we look at it in the global market, we obviously have got an extremely successful operation in China supplying to the best players in the market. We continue that. But our dreams of going downstream to become a full-fledged LFP producer or, let's say, the cathode side, that has been put off. And I may say, you have the CEO of the group with me. He's the one that makes the calls, but I don't think we're going to come there anytime soon, if at all. Elad Aharonson: No, no. But the bottom line is that the industry of LFP cathode material remains in China and only in China. Aviram explained about the U.S. and Europe. And we don't have any competitive advantage in moving forward in the supply chain in the -- for the cathode material. So we will remain a supplier of raw material of MEP chemical grade to others in China, which is a great market for us. We are doing great there, but we don't have to continue with the projects in Spain and in the U.S. I think it was a very good decision, if I may. Aviram Lahav: And for us, just to finally close, we said all along, if you remember, time after time that we're investing in the qualification side, we're investing in technology. But we are not going to go to continue and to set up facilities until we have all the stars aligned. I think it was a very, very smart decision. And you can see that ultimately, when things indeed didn't turn out as we would have hoped to us is relatively minor. It could have been completely different magnitude if we've gone downstream and go to manufacturing sites. So that's, I believe, the story on that one. Operator: There are no further questions at this time. I will now hand the call back over to Elad Aharonson for the closing remarks. Elad Aharonson: Okay. So thank you, everyone, for participating today. Look, we said the strategy -- new strategy in the third quarter. And as you can see, we are moving forward by executing this strategy. So on one hand, we acquired Lavie Bio for Growing Solutions. Recently, we acquired Bartek for the food business. And you can expect some more M&As along the year. As for maximizing the core, we signed this definitive agreement with the State of Israel, which is very important for us to secure the future and we are very happy with this agreement. At the same time, we improved the production rate of the potash, both in the Dead Sea and in Spain towards the end of the year, and we will continue like that in 2026, as you can see in the guidance. And as for efficiency and optimization, so we took decision to stop the LFP project, and we just explained why. Also, we put on the shelf Boulby because we are very disciplined with the capital allocation, and we want to direct the capital of the company in those areas where we see most of the potential and which are more synergistic. And probably next week -- next quarter, sorry, we'll talk about cost transformation program as we need to take care of this as well. So we are pushing and making investment on the 3 pillars of the strategy. It's a bit like transformation phase. It will take some time, not a lot, but I guess we'll all see the results soon. Again, thank you very much, and probably we'll be in touch in different forums. Thank you. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
Operator: Good morning, ladies and gentlemen, and welcome to the Element Solutions Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Varun Gokarn, Vice President, Strategy and Interrogation. Please go ahead. Varun Gokarn: Good morning, and thank you for participating in our fourth quarter and full year 2025 earnings conference call. Joining me today are our CEO, Ben Gliklich; and our CFO, Carey Dorman. In accordance with Regulation FD, we are webcasting this conference call. A replay will be made available in the Investors section of the company's website. During today's call, we will make certain forward-looking statements that reflect our current views about the company's future performance and financial results. These statements are based on assumptions and expectations of future events, which are subject to risks and uncertainties. Please refer to the Investors section of our website for a discussion of material risk factors that could cause actual results to differ from our expectations. Today's materials include financial information that has not been prepared in accordance with U.S. GAAP. Please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures. It is now my pleasure to introduce our CEO, Ben Gliklich. Benjamin Gliklich: Thank you, Varun, and good morning, everyone. Thank you for joining. Element Solutions had another record year in 2025. We executed our model, marrying operational excellence and prudent capital allocation to deliver record results while accelerating investment in future growth. The company is benefiting from its position as a solutions partner across the electronics manufacturing supply chain and also strengthening it. Our portfolio breadth, strategic positioning in high-value growth niches and deep technical expertise have accelerated opportunities for our businesses. We see that in the results we are reporting today and the activity levels at our customers as we enter 2026. In the past year, demand from data center and high-performance computing markets drove 10% organic revenue growth in our Electronics business, a trend that accelerated in the fourth quarter. Our Electronic Solutions and our people enable the increasing performance that our markets demand as well as faster product iterations and significant advances in reliability and complexity. Customer engagement is as strong as ever, partially driven by our pipeline of new exciting products. Overall, our company achieved record adjusted EBITDA and record adjusted EPS in 2025 despite continued industrial weakness and the divestiture of the Graphics business in the first quarter. Our focus on operational excellence means we strongly believe that each of our businesses can improve every year regardless of the macro environment. We demonstrated that over the past 12 months in our newly renamed Specialty segment, where margins expanded 250 basis points, driven by higher value selling, supply chain initiatives, cost efficiencies and portfolio optimization. The businesses that comprise the Specialty segment focus on attractive niche markets with demanding customer qualification requirements and an emphasis on value-added technical service. This creates high-margin recurring revenue streams, and we've demonstrated the ability to grow our profits in these businesses even when volumes are soft. We believe we can continue to drive profit growth through share gains and productivity improvements until industrial end markets inevitably recover. We enhanced our portfolio in 2025 through prudent capital allocation. In the first quarter of last year, we divested our slower growth, relatively lower-value flexographic printing business and redeployed that capital into 2 value-enhancing transactions that expand our presence in attractive electronics-focused growth adjacencies. We announced the acquisitions of both Micromax and EFC Gases & Advanced Materials in the fourth quarter and closed them both in early 2026. We believe that within the ESI family, these businesses will have the opportunity to flourish and grow faster and more efficiently. Micromax is a global leader in advanced electronics inks and pastes as well as low-temperature ceramic materials essential for the most demanding electronics applications. The acquisition enhances our leadership position and technical bonafides in the electronic supply chain. Micromax's innovation and go-to-market capabilities align with our customer-centric approach, enabling us to deliver next-generation materials for high-growth applications such as satellites, electric vehicles and data centers. Our initial weeks together have reinforced our excitement for the product portfolio and the untapped commercial opportunities that can be unlocked in the years ahead as part of a larger electronics materials company. EFC provides high-purity specialty gases and advanced materials that are essential for certain high-value, high cost of failure applications requiring stringent purity and performance standards. The business is concentrated in fast-growing markets such as semiconductor fabrication, electrical infrastructure and satellite propulsion. It has grown at a revenue CAGR in excess of 15% since 2009, with growth accelerating recently, primarily in semiconductor applications. EFC's focus on niche, high-value products and people centricity has yielded commercial momentum and a pipeline of customer qualifications that we anticipate will translate into robust earnings growth in the coming years. And their team is a great cultural fit with ours. The business is off to a very strong start in 2026. Taken together, we had an outstanding year with demand improving sequentially throughout. That sets us up well for 2026. Carey will now take you through the fourth quarter and full year financials in more detail. Carey? Carey Dorman: Thanks, Ben, and good morning. On Slide 4, you can see a summary of our fourth quarter results. Net sales increased 10% organically, led by high-end electronics growth, primarily from AI and data center investments. Electronics segment organic growth was 13% with all 3 business verticals growing in the double digits. The Circuitry business has been a large beneficiary of AI-related investment as our market-leading pulse plating chemistry is used to support fabrication of high layer count server boards. Assembly Solutions saw similar benefits from both consumer electronics and high-performance computing applications that drove 12% organic growth in the quarter. Finally, our Semiconductor Solutions business grew 13% organically as advanced packaging applications drove demand for wafer-level plating chemistries and power electronics sales returned to growth on the back of new customer wins. Specialties organic growth was 4% with modest volume improvement in core Industrial and 9% year-over-year growth in Energy Solutions. Adjusted EBITDA for the quarter was $136 million, up 8% year-over-year on a constant currency basis when excluding the impact of divestitures. Higher pass-through metals in our Assembly business created an optical margin headwind of roughly 1% in the fourth quarter. Excluding net sales from these pass-through metals, adjusted EBITDA margin would have been 25.5%, representing a 40 basis point improvement year-on-year. The rapid increase in metal prices in the fourth quarter, particularly silver and tin also had a negative impact on adjusted EBITDA of several million dollars. This is simply a timing impact, and those earnings should be recaptured in 2026 as inventory sells through and metal prices stabilize. We would have seen stronger incremental margins without this impact. On Slide 5, we discuss full year financial results. Net sales for 2025 were $2.6 billion, growing 6% organically. Electronics net sales increased 10% organically, driven by strength in AI and data center markets, demand for advanced packaging metallization solutions and growth with new EV customers. Specialties grew 1% organically as offshore hydraulic production fluid growth remained robust. In Industrial surface treatment, strong automotive growth in Asia and new customer wins later in the year offsets overall sluggish Western industrial markets. Adjusted EBITDA for the year was $548 million, which represents 7% constant currency growth when excluding the impact of the Graphics divestiture. Excluding net sales from assembly pass-through metals, adjusted EBITDA margin would have been 26.5%, a 60 basis point increase year-over-year. Once again, this margin would have been higher if not for the earnings timing impact associated with the steep increase in metal prices during 2025 and particularly in Q4. Finally, we delivered record adjusted EPS for the year of $1.49 despite the Graphics divestiture. Next, on Slide 6, we share additional details on full year organic growth by business. Our Assembly Solutions business has a relatively diversified set of end markets with larger exposure to industrial, consumer electronics and automotive applications than our other electronics verticals. In 2025, this business grew organically at 8%, with the outperformance driven by strong consumer electronics and automotive demand in Asia, particularly in the first half of the year and increased demand for our engineered preform materials used in high-performance computing applications. Circuitry Solutions delivered robust organic growth of 10% for the year, supported by investments in high-performance computing and data center infrastructure. We have industry-leading metallization solutions for the fabrication of dense high aspect ratio circuit boards that are uniquely suited for the extreme requirements of data centers. In addition, our solutions for data storage, EV electronics and low-earth-orbit satellites provided additional growth vectors. This year, we also focused on investments intended to meaningfully strengthen our presence in Southeast Asia, a region that should see continued momentum in the years ahead as the electronics supply chain seeks to diversify its manufacturing footprint. Semiconductor Solutions grew 13% organically year-over-year, reflecting strong demand from advanced packaging metallization solutions and power electronics growth with new EV customers. This is the second consecutive year of mid-teens organic growth for this business. Demand remains robust across all our product lines and the opportunity pipeline continues to expand. Our customers are performing well with our technologies. For example, our top ViaForm copper damascene customers grew 20% on average for the year, and we expect this trend to continue in 2026. We've introduced multiple new product families that are gaining customer traction and see opportunities to grow in areas that intersect with printed circuit board metallization such as IC substrate and large format panels. Turning to the Specialty segment. Organic growth of 1% reflects softness in industrial-oriented end markets. Energy Solutions remained a bright spot, growing 7% organically as we saw continued production fluid revenue growth due to competitive wins and pricing activities. Our core Industrial surface treatment business was flat organically for the year on the top line. Underlying volume growth in Asia, automotive end markets was offset by lower European industrial activity. Net sales growth comparisons were impacted by a large customer equipment deal in the third quarter of last year, which is tied to a high-value multiyear chemistry contract. Moving to cash flow and the balance sheet on Slide 7. We generated $256 million of adjusted free cash flow in the year with $83 million of cash generated in the fourth quarter. Working capital investment in the fourth quarter was higher than we expected due to the rapid increase in tin and precious metal prices and the timing of our hedge settlements. Higher metal prices, even though they are passed through, tie up more capital, all else being equal. However, all else is not equal. Over the past several years, we have worked on optimizing our inventory on a volume basis. Consequently, we have seen solid improvement in both inventory days and overall cash conversion. When the metal prices eventually normalize, we expect to see a benefit to cash flow. We invested $61 million in net CapEx in 2025, advancing key strategic projects such as Kuprion and new advanced packaging product manufacturing, as well as our global R&D and production footprint. These investments support high-value growth opportunities and technology leadership in our Electronics segment. For 2026, we expect capital expenditures of approximately $75 million, reflecting our continued commitment to innovation, capacity expansion where necessary and new product introductions in fast-growing AI and data center markets primarily. This figure includes the expected capital requirements of our newly acquired businesses. We ended 2025 with a strong balance sheet, including $627 million in cash and a net debt to adjusted EBITDA ratio of 1.8x. When we closed our 2 acquisitions earlier in Q1 this year, we paid approximately $870 million, which was funded in part by a new $450 million term loan add-on. Overall, our debt is currently 95% fixed and our cost of debt remains roughly 4%. Today, pro forma leverage is slightly above 3x, which we expect to approach 2.5x by year-end 2026, assuming no further capital allocation. Our liquidity and financial flexibility position us well to fund organic growth, strategic M&A and capital return to shareholders as appropriate. With that, I will turn the call back to Ben to discuss our outlook. Ben? With that, I will turn the call back to Ben to discuss our outlook. Ben? Benjamin Gliklich: Thank you, Carey. Looking ahead to 2026, we expect market conditions to largely resemble late 2025 with continued strength in high-performance computing and leading-edge electronics and slower industrial markets. There will be noise on the top line driven by metals price volatility, which may also have a bearing on our adjusted EBITDA seasonality and short-term cash flow. But in the fullness of time, these are only timing differences with no impact on overall profit dollars. Our 2026 adjusted EBITDA guidance range is $650 million to $670 million, inclusive of the expected contributions from the EFC and Micromax acquisitions and assuming current FX rates and metal prices. This range includes a modest year-over-year FX tailwind and an expected $5 million headwind as we lap the 2025 stub period contribution from our Graphics business, together implying high single-digit organic adjusted EBITDA growth. This also translates to adjusted EPS growth in the mid- to high teens. Our focus in 2026 will be similar to prior years with the only adjustment relating to our recent acquisitions. The emphasis will be on operational excellence, integrating EFC and Micromax and scaling capacity for new products. We made product qualification milestone payments in the first quarter of this year for Kuprion and are in the final innings before ramping capacity at our first site in California. We have other compelling product launches underway in thermal materials, die attach and circuit board fabrication. We also retain and will build capacity for further accretive capital deployment should attractive opportunities become available. We have strong customer partnerships, a clear strategy and a growing high-performing team that is enthusiastic and incentivized to continue to execute on the momentum we have. We're a people-powered company, and I'm grateful for the extraordinary talent that is responsible for a great 2025 and focused on another record year in 2026. Operator, please open the line for questions.Operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Mike Harrison with Seaport Research Partners. Please go ahead. Michael Harrison: Congrats on a nice finish to the year. Benjamin Gliklich: Thanks, Mike. Good morning. Michael Harrison: I wanted to start with the Electronics business and just the margin performance there. If we adjust for that metal price pass-through, it was still relatively weak. It sounds like maybe the metal price spike or kind of the significant rise that you saw in metal prices were also a drag on margins. So I was hoping you could talk about that. But maybe also just if we kind of excluded that metal price impact completely, what were you seeing in terms of underlying margin performance as it related to operational efficiency, mix, your cost structure, any other factors that we would think about kind of the underlying sustainability of margin performance into next year or into '26, I should say? Benjamin Gliklich: Thanks for the question, Mike. There are a few things impacting margin in the quarter and in the year. We talked about a corporate allocation shift as subsequent to the sale of our Graphics business that had a bearing. We talked about ramping up investment primarily in Kuprion, which is just OpEx as we prepare to ramp that. And then the third variable, which was a new variable here in Q4 and really in December was this metal pricing dynamic where the spike in metal prices and the associated hedge losses that occurred in Q4 and were more acutely in December had a several million dollar hit to the P&L. Absent that, we would have been above the high end of our guidance range, and we'll recapture that value sitting here in 2026. So the incrementals would have been better than reported in Q4 and in the full year absent that. And as we roll into 2026, we expect the incremental margins to be more normal in the Electronics business and across all of Element. We've talked about a 30% to 40% incremental in normal times, and there's no reason that, that has changed. Michael Harrison: All right. And then just a second question here. There are some concerns about rising memory prices and potential shortages and the impact that could have on logic demand in areas like consumer electronics or automotive or industrial applications within Semicon. How do you see higher memory prices affecting ESI's Electronics business as we move forward in '26? Benjamin Gliklich: Yes. So we don't want to be dismissive of that risk. That's a real risk that memory prices will rise and correspondingly, consumer electronics prices will rise and that will have an impact on demand. But that's really looking at a single variable. And it's a multivariable equation, which is to say the reason that memory prices are rising is because capacity is constrained by the surge in demand from data center applications. And we're beneficiaries of that surge in demand. You see it in the P&L, and you saw the acceleration in all of our Electronics businesses here in Q4. We have more value on a high-end server board for a data center than in a PC or a smartphone. And so insofar as memory prices are rising and that's having a negative impact on consumer electronics, it should be associated with a correspondingly positive impact in the data center market, which will benefit Element. So I don't want to dismiss that as a risk. It's something we're keeping an eye on. Our underlying forecast for 2026 doesn't have strong growth assumptions for the smartphone market or consumer electronics more broadly, but it does have quite strong growth assumptions associated with the data center market, which we're seeing on the ground here today. Operator: Your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets. Aleksey Yefremov: Ben, can you just talk about the new product adoption in '26? Do you expect that process to be accelerating in '26 versus '25? And as a result, your outgrowth versus the market, would it increase in '26 versus '25? Benjamin Gliklich: Is that a question about our new products or our supply chain new products, Aleksey? Aleksey Yefremov: Your new products, Ben. Benjamin Gliklich: Yes. So historically, Element hasn't really been a blockbuster product type company, right? We have a lot of product proliferation because our solutions are very much customized to customer-specific requirements. That having been said, over the past several years, we've had real traction in a couple of areas in power electronics. We've talked about Kuprion as a compelling value proposition and a product we're ramping. And then a few other areas around die attach solutions and some new introductions around circuit board fabrication and some thermal materials. Those are responsible for some of our outgrowth relative to the market. The other thing to think about is just that our technology skews towards higher-end applications, and those are outgrowing relative to the market. And both of those things will be true in 2026 as they were in 2025. Our Circuitry business skews towards the highest end, highest value circuit boards, which are growing well in excess of the market. Our power Electronics business is gaining share in excess of the automotive market as an example, and growing much faster than your semi assembly market. We have seen real traction with Argomax in proliferating our customer base, and that's a business where outside of our original core customer, we're seeing 20-plus percent growth in the back half of 2025. We expect that to continue, and on and on. Kuprion also contributes to that where we should see a ramp in sales over the course of 2026, which would be idiosyncratic to the overall market. So I'd say there are multiple factors that support the -- our ability to outgrow end market indicators in the medium and long term. And we've got high confidence, I would say, growing confidence in our ability to continue that coming out of 2025. Aleksey Yefremov: And a bit of a crystal ball question. You grew organically 13% in Electronics in Q4. You're guiding to high single digit in 2026. Is something in the low teens in terms of growth for this segment within reach, within the range of outcomes in your view if we were thinking about bull case scenarios? Benjamin Gliklich: Ultimately, we're in a units-driven business that's short cycle. And so what we target is to outperform our end markets by 2 or 3 points through the cycle. And so the cycle is going to be the driver -- underlying unit demand is going to be the driver. And if we see a continuation of what we're seeing in the data center market, if we see a modestly better smartphone market than expected, yes, you could see a continuation of double-digit organic growth on the top line for our Electronics business. But as you know us, we tend to -- given the visibility in this business, not guide towards the bull case, guide towards sort of shared down the fairway market expectations -- end market expectations. Operator: Your next question comes from the line of Chris Parkinson with Wolfe Research. Christopher Parkinson: Ben, you hit on this as it related to the Circuitry a couple of questions ago. But can you just hit on Assembly and Semi, just given your portfolio has been constantly evolving in many ways away from just baseline consumer electronics as well as handsets. But across the Electronics segment, how should we think about the relative growth rates embedded in your guidance, for instance, like HPC, data center and advanced packaging versus some of the more legacy end markets? And do you feel the buy side fully appreciates that evolution? Benjamin Gliklich: Yes. Thanks for the question, Chris. Historically, the Semi business and the semi market was assumed to grow faster than the printed circuit board market and the Printed Circuit Board business. But for the past 3 years, we've seen PCB square meters exceed -- or growth exceed MSI growth. And so our Printed Circuit Board business has seen a real acceleration. And looking ahead into 2026, the market or industry experts expect the PCB market to outgrow MSI once again, which is a good arbinger for our Circuitry business. And we've been outgrowing MSI by a greater delta than we have PCB square meters, right? So PCB square meters were high single-digit growers, and we were 10% in Circuitry this year and MSI was mid-single digit and our Semi business grew in the low teens. So as we look to 2026, we would expect similar degrees of outperformance relative to underlying growth. The industry is expecting 6-ish percent PCB growth in 2026, which would be a bit of a deceleration. And so we see potential room for upside there, but our guide doesn't contemplate that. The semi market is expecting similar year-on-year growth, and we believe we can outperform by a similar delta in 2026, driven by what we see in power electronics and some of the other new product introductions we have. The more surprising growth vector has been our Assembly business, which we historically would have thought would grow roughly in line with or the market driver would be electronic systems growth, which was a low to mid-single-digit grower and has really accelerated here in 2025. And our business has substantially outperformed that, growing in the high single digits. And that's because we've introduced some new products, higher reliability solders, finer solder pastes, preforms, which are used in high-end server boards to keep the chips flat on -- because the chips have gotten so big. So we've got some really interesting engineered materials that keep chips flat on the highest-end server boards going into data centers. So our overall electronics business is benefiting from advances in technology and accelerating. And so yes, we do believe the portfolio has improved from a quality perspective and will continue to. Christopher Parkinson: Got it. And just shifting back to Kuprion. I understand '26 is still very, very early, and there's still some growth investments. But can you just comment based on what you're hearing from customers and the potential demand pull from both of your facilities, can you just remind us on kind of where you stand in that process as well as what you perceive to be the current customer receptiveness to that product portfolio? Benjamin Gliklich: Yes. Thanks for the question, Chris. So Kuprion is really exciting, and we're in the crucible here as we're beginning to ramp production at our first significant site in California. And at the moment, the pipeline of demand exceeds our production capacity based on this first site. Now we need to ramp that. We need to convert that pipeline into high-volume manufacturing at the customer level. But we're progressing on planning the second site already on the back of the robustness of the demand for this capability. So we are in the crucible customer receptivity, customer pull remains exceptionally strong, and we're still deep in getting the supply chain set up to meet that demand. Operator: Your next question comes from the line of Josh Spector with UBS. Joshua Spector: I wanted to ask just on your 1Q guidance. Your range is wider than what you typically give. Can you talk about why that is and what drives the upper versus lower end? Benjamin Gliklich: Yes. Thanks for the question, Josh. The range is wider than typical because of metal price impacts. So we saw a significant increase in metal prices, tin and silver in January. And so that same impact we talked about in Q4 may recur in Q1, but it may also unwind in Q1 if metal prices stabilize. And so that creates a little bit of variability, as I said in the prepared remarks, around seasonality of the business. That's the biggest needle mover. The second is acquisitions and how they feather in from a seasonal perspective, right? This is our first quarter owning Micromax and EFC. And so we gave ourselves a little bit of a wider birth around the seasonality in those businesses. Operator: Your next question comes from the line of Bhavesh Lodaya with BMO Capital Markets. Bhavesh Lodaya: Could you share some thoughts on why the Specialty segment was the right place for EFC? And then do you expect the overall segment to grow at your mid-single digits guidance for this year? Benjamin Gliklich: Yes. EFC is a great niche business with highly technical, highly qualified products in a wide range of industries. And it could have fit within both segments. The way we're running it as an autonomous unit and the breadth of end markets it's supplying is why it landed in our Specialty segment. It accelerates the growth of the Specialty segment. It also improves the margins of the Specialty segment. So as we look out to 2026, it's value enhancing to the Specialty segment and quality enhancing. So you'll see that feather in as well. When we look into 2026 for that segment, we talked about end market conditions being similar to 2025, which is uninspiring end market growth in the industrial vertical, but an opportunity to make that business better and grow profits. The offshore business continues to be robust and the EFC business is growing very, very nicely. And so from an EBITDA growth perspective, we could repeat the mid-single-digit growth we delivered in 2025. Bhavesh Lodaya: Got it. And then maybe on your acquisitions, Micromax, EFC, how did they perform in '25? Does your guide include them as still at $70 million EBITDA? And maybe also, I think in your prepared remarks, you mentioned some untapped commercial opportunities, is that something we see in '26? Benjamin Gliklich: Yes. So when we announced Micromax, we said it was roughly $40 million of EBITDA in '25 and EFC, we said it was roughly $30 million. We expected roughly $30 million in '26, right? And so that's the roughly $70 million of contribution in '26 is adding those 2 with some modest growth and a little bit of conservatism as we navigate integrations. The Micromax business outgrew our expectations in 2025, organic revenue growth was north of 10% for Micromax. So there were some questions about its ability to grow and I think it just proved them in their early days in 2025, and we're seeing a really robust start to the year for that business here in 2026. Also for EFC, a month doesn't make a trend, but both of them are outperforming our initial expectations. And the integrations are going really well. The folks at Micromax are incredibly excited to be a part of an electronics-oriented company. And we have, just in the first days of integration, identified several areas where collaboration and relationships -- discrete relationships their organization has and our organization has will yield, what we believe, will be better commercial outcomes for both businesses. So that's what we're referring to the untapped commercial opportunities. We see our ability to make these businesses better as part of Element as quite compelling over and above the high-quality businesses they were independently. Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Matthew DeYoe: Ben, so I think you had shared this with me, right? So the Taiwan Printed Circuit Board Association, right, calling for the PCB market to be up 14% in 2026. I mean, is it reasonable to assume this is like a base case for your associated volumes? Obviously, you can make maybe your own assumptions on the end markets. But like presumably, you would also expect to outgrow this? And how do you factor in an outlook like that into how you perceive your own business performance? Benjamin Gliklich: So we use Prismark data as our baseline, and Prismark is talking about a 6% year in 2026, a 9% CAGR from '24 to '29. And so that's what we benchmark ourselves against. It's important to look at meter squared versus dollar value. So a lot of the PCBs that are being produced today, a lot of where the growth is coming from is really high-value complex boards. Now that's good for us because that's higher-margin sales, but we're not driven by the dollar value of the circuit board. We're driven by the volume of circuit boards being produced. And so that might be the reconciling figure. There's a bull case in the circuit board market right now given the acceleration of investment in data center capacity. And we were in Asia in early January and the level of activity was unbelievable and super exciting. But as we look to 2026, we're looking at that 6% number, that's what we're building off of. Matthew DeYoe: All right. I appreciate that. And I think in the call, I heard 7% organic growth in Energy Solutions. So I made the comment, seemed maybe to be a decent amount price driven. Can you break down price volume in here? And should we kind of assume this price annualizes in '26? Is this -- I know this is a pretty solid business for you. Is this kind of price in excess of raws? Or is there some obscure raw material that I don't know of that's up materially? Just trying to chart the course for next year. Benjamin Gliklich: Yes. The Offshore business is a wonderful business. And I would say of the 7%, it's about half and half price volume growth. And this is one of those businesses where there is a bit more of a pricing lever available to us and it's one where we're building that muscle as appropriate. Entering 2026, we were a little cautious, I would say, about volumes there. Energy price had been a little low. We saw some projects potentially shifting out to the right. But it should be a mid-single-digit grower between price and volume next year again. Operator: Your next question comes from the line of John Roberts with Mizuho. John Ezekiel Roberts: Nice results. Is Kuprion used in copackage optics where they're using glass as a substrate? Benjamin Gliklich: So today, Kuprion isn't used in high-volume manufacturing anywhere. It has applications in Through-Glass Vias which are the core layers for some of the highest-end printed circuit boards, and it solves a major customer pain point there. That's just one of many potential markets for it. Matthew DeYoe: Okay. And how do we think about wafer level packaging, like what are your key products that would be used in that application? Benjamin Gliklich: So we have wafer plating products that are -- that go on to the backside of wafers for packaging applications. We have advanced interconnect products that are used for copper pillars and barrier layers. We have printed circuit board chemistries for the highest-end printed circuit boards that are used in packages. So wafer-level packaging, advanced packaging, that is right at the sort of center of the Venn diagram of our capabilities and our solution sets for foundries and OSATs and the associated... Matthew DeYoe: Is there a way to scope the size of that opportunity? Benjamin Gliklich: So we have a specific business we call wafer-level packaging, which is about $150 million of revenue, actually bumping up against $200 million now that we've seen some precious metal price increases, and there are some precious metals in there that are not reported as pass-through. And then we've got ancillary products that go into advanced packaging applications in the -- which would bring our advanced packaging revenue to the multiple hundreds of millions. But again, these are generic terms. And so it's hard to be too precise. Operator: Your next question comes from the line of Duffy Fischer with Goldman Sachs. Patrick Fischer: Just wanted to follow up. I think Carey in the prepared remarks talked about a large customer contract. And I wasn't clear, it seemed like there was some distortion from that either currently or in the future. But could you just walk through what that is, the size and kind of how that impacts the P&L? Benjamin Gliklich: Yes. So in Q3 of 2024, we sold a large equipment line to a customer that was building manufacturing capacity in the industrial business in Mexico. And so that was large revenue, it was lower margin on the equipment. And we didn't make the equipment, by the way. We purchased it on their behalf in exchange for a multiyear high-margin contract. It's a big market share win for us and a short payback period. So when you look at the year-over-year in Q3 and on a full year basis, there was a revenue contribution at lower margin in '24, which was replaced by higher-margin chemistry sales in '25. Patrick Fischer: Okay. Great. And then can you remind us on Kuprion, if the plant runs as you expect, how long will it take, do you think to sell the first plant out? And then roughly, what's the contribution from the first plant when it's at full operating rates? Benjamin Gliklich: There are a lot of assumptions embedded in that. And so we don't want to be too precise. What I would say is we have a pipeline today for volumes in excess of that plant. The ramp of that plant, we should be ramped to full production in the second half of this year. And it will come at pretty compelling incremental margins. What we've guided to is multiple millions of dollars of revenue in '26 and a material contribution to EBITDA from this in '27. Operator: Your next question comes from the line of Pete Osterland with Truist Securities. Peter Osterland: I just wanted to follow up on some of your comments around Specialties. What are your expectations around segment margins in 2026, excluding the impact of the EFC acquisition? I guess, it's stable to slightly higher a reasonable expectation given what sounds like continued growth in offshore? Are there any other major puts and takes to call out for margin performance in that business this year? Benjamin Gliklich: No, I think that we would expect that business to be expanding margins if we're going to deliver mid-single-digit growth given the end market outlook for the segment overall ex EFC. Peter Osterland: Okay. And then just given some of the dynamics you've called out with working capital and the higher CapEx you're guiding for 2026, what are you targeting for free cash flow generation in 2026? Do you have a target in terms of EBITDA conversion you can share? Carey Dorman: Yes. I think consistent with prior years, we target roughly a 50% conversion of EBITDA to free cash flow. To your point, the dynamics around metal pricing put some seasonality questions in that. But ultimately, on a full year basis, I would expect right around 50%, maybe just a tick lower. Operator: And your final question comes from the line of Frank Mitsch with Fermium Research. Frank Mitsch: Obviously, a very busy start to the year with the acquisitions, and you offered some very constructive comments on how they're trending so far. I was wondering if you could expand upon your thoughts on top line synergies for both as we progress through this year and into next year. How should we think about the longer-term implications for the top line synergies between Micromax, EFC and Element? Benjamin Gliklich: Yes. Thanks for the question, Frank. It's really hard to underwrite to revenue synergies because they're sort of hard to prove out. And we're in businesses that have long sales cycles, especially when you think about EFC and Micromax, it's highly qualified products. And so it's hard to say in 2026, we're going to see material revenue synergies. But what we've said repeatedly is that these businesses are better inside of Element than outside. And so in both cases, there's not a huge amount of cost synergy we're driving from this. It's being a part of a larger electronics organization and the resources and relationships that we can bring to bear to support those businesses. And we're already starting to see that in the collaboration and joint customer visits is just beginning. And so we believe that the Micromax business will grow faster than it would have independently. EFC doesn't need any help growing faster, but we do believe that the relationships we have and frankly, some of the relationships they have will help accelerate growth in both businesses. And so we do expect to see an acceleration overall from what you might call revenue synergies, but it's hard to quantify that and put time bounds on it. Frank Mitsch: Okay. Got you. So at this point, the trend is positive, customer -- joint customer visits, et cetera, but you're too early to try and throw some numbers to it. And then just lastly, I mean, I believe you said before that the capital intensity of Micromax was similar to Element Solutions. I assume that, that's similar for EFC as well? Benjamin Gliklich: I wish. Just going back to that question, I wish I could say that 1 or 2 months into 2026 post closing, we're responsible for the strength in the businesses we're seeing, but that's just the quality of the businesses and the end markets they're participating in. With regard to capital intensity, Micromax is similar to ESI overall. EFC is modestly more capital intensive, but it's a smaller business. And again, we're guiding to $75 million of CapEx this year, which should comfortably cover it. Carey Dorman: Yes. And I would just add that the returns on capital in that business, EFC in particular, are as high, if not higher, just given the profitability. Operator: I will now turn the call back over to Ben Gliklich for closing remarks. Benjamin Gliklich: Well, thank you, Rebecca, and thank you, everybody, for joining. Have a great day. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Hello, everyone, and thank you for joining the Centerspace Q4 2025 Earnings Call. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions]. I will now hand over to your host, Josh Klaetsch. Please go ahead. Joshua Klaetsch: Thank you, and good morning, everyone. Centerspace's Form 10-K for the year ended December 31, 2025, was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted to our website at centerspacehomes.com and filed on Form 8-K. It's important to note that today's remarks will include statements about our business outlook and other forward-looking statements that are based on management's current views and assumptions. These statements are subject to risks and uncertainties discussed in our filings under the section titled Risk Factors and in our other filings with the SEC. We cannot guarantee that any forward-looking statements will materialize, and you're cautioned not to place undue reliance on these forward-looking statements. Please refer to our earnings release for reconciliations of any non-GAAP information, which may be discussed on today's call. I'll now turn it over to Centerspace's President and CEO, Anne Olson for the company's prepared remarks. Anne Olson: Thank you, Josh, and good morning, everyone. I'm here with our SVP of Investments and Capital Markets, Grant Campbell; and our CFO, Bhairav Patel. We're coming today live from our annual leadership conference, where our operating team is together to celebrate our 2025 wins and prepare to meet our 2026 goals. I'll start by addressing our strategic review. In November, we shared that our Board of Trustees is overseeing a formal evaluation of strategic alternatives to maximize shareholder value. This process was initiated from a position of strength, having transformed Centerspace into a pure-play multifamily REIT while improving profitability, operating scale and our balance sheet. Our strategic review underscores our commitment to acting in the best interest of our shareholders, and this evaluation remains ongoing. As we said when we announced this evaluation, there can be no assurance that this process will result in Centerspace pursuing a transaction or any other strategic outcome, and we do not intend to provide further details on the process in connection with the discussion of our fourth quarter earnings results today. We sincerely appreciate the thoughtful conversations we've had with shareholders thus far, and thank you for your understanding today as we keep our comments focused on our results and outlook. Centerspace's fourth quarter capped a year of progress for the company and demonstrated the health and resilience of our markets. Importantly, our results for the year showed that our portfolio and approach yields results with our same-store NOI growth of 3.5% outpacing peers on the back of steady occupancy and expense discipline. Rent growth was strong, reflecting the durability of our resident base and our exceptional focus on resident experience and optimization of revenue. Operationally, our portfolio benefits from Midwest exposure. Blended leasing spreads in the quarter were up 10 basis points. While new lease spreads were down 4.8%, renewal spreads show their highest growth of the year at 3.9% and retention of 55.2% moved the blended rate into positive territory. Retention for the full year was 58.2%, demonstrating relative affordability for our residents. Favorable absorption in Minneapolis, our largest market, led to positive blended increases of 1.1%, while in our other markets, North Dakota once again led the portfolio with blended increases of 4.5% in the quarter. In Denver, supply continues to put downward pressure on rents with Q4 blended rent trade-outs down 4.3%. Absorption in the market has continued at rates above historical norms with 2025 the second highest year of absorption in the post-pandemic era. Additionally, new construction starts in the market have plummeted, tapering deliveries, and we expect Denver fundamentals to normalize as we progress through 2026 and into 2027. Before I turn it over to Grant to comment on the state of the transaction market and review our 2025 transactions, I'd like to offer a special thanks to many of you for your well wishes for Minneapolis and our communities there and also to thank our Minneapolis team and all of our teams for their dedicated service to their communities and community members. Grant? Grant Campbell: Thanks, Anne, and good morning, everyone. In 2025, Centerspace executed a strategic transaction program that continued reshaping our portfolio while maintaining balance sheet strength. We executed $493 million of transaction activity, which included entering the Salt Lake City market, expanding our presence in Fort Collins, exiting the St. Cloud, Minnesota market and pruning our holdings in the city of Minneapolis. Over time, we have undertaken initiatives to improve our portfolio, and these 2025 transactions continue that, resulting in further diversification of our cash flow and improvements to our portfolio's average monthly rent per home, homes per community, age and operating margin. Alongside these property transactions, Centerspace demonstrated disciplined balance sheet and shareholder capital management. The company expanded its unsecured credit facility by $150 million, and we assumed $76 million of attractively priced long-term debt in conjunction with our Fort Collins acquisition, enhancing our liquidity and improving our debt profile. At the same time, we repurchased 3.5 million of common shares, reinforcing our belief in the value of our stock and willingness to explore multiple avenues to unlock value. Looking ahead to 2026, we expect momentum in many of our markets, driven by measured supply profiles, resident financial strength and strong local economies. In Minneapolis, on-the-ground fundamentals are positioned well, compared favorably to most markets in the country, and we anticipate this year to be a year of stability and growth. In Denver, solid absorption is outweighed by the volume of new deliveries from late 2024 through 2025. These supply dynamics, coupled with slow job growth and recent regulatory changes, has generally put Denver's transaction market in a wait-and-see environment. Premium assets and locations are still commanding strong pricing, including recent trades at sub-5% in-place cap rates, though the divide between premium profile and the rest of the market has widened. We believe this theme will continue until growth indicators translate into hard data, providing investors more conviction in underwriting strengthening fundamentals. I'll now turn it over to Bhairav to discuss our financial results and guidance. Bhairav Patel: Thanks, Grant, and hello, everyone. Last night, we reported fourth quarter core FFO of $1.25 per diluted share, driven by a 4.8% year-over-year increase in Q4 same-store NOI. Revenues from same-store communities increased by 1% compared to the same quarter in 2024, driven by a 1.5% increase in average monthly revenue per occupied home, which offset a 40 basis point decline in occupancy. On the same-store expense side, Q4 numbers were down 5.1% year-over-year with favorability in both controllable and noncontrollable expenses. On the controllable side, decreases in repairs and maintenance as well as administrative and marketing costs were both drivers of the improvement. For noncontrollable expenses, favorable tax assessments drove much of the improvement. Turning to 2026. We introduced our expectations for the year in last night's press release. We expect core FFO per diluted share to remain stable year-over-year with an expectation of full year core FFO per share of $4.93 at the midpoint. Guidance assumes that at their midpoint, same-store NOI increases by 75 basis points, same-store revenues increased 88 basis points and same-store expenses increased 150 basis points. Revenue growth assumes blended leasing spreads of approximately 2% with occupancy in the mid-95% range and retention of about 52%. We expect blended spreads will again be highest in our North Dakota communities, followed by Minneapolis and Omaha. That strength will bolster our Denver portfolio, where we expect spreads to be down for the year, though improving as the year progresses. Regulatory changes are expected to temper revenue growth in our Colorado portfolio with expense recoveries expected to be down nearly $1 million. Within expenses, controllables are expected to increase by 1%, while noncontrollables increased by 2%, both at their midpoints. I also want to highlight our expectation for the amortization of assumed debt, which we expect to be $1.5 million for the year. This amount will be higher in the first half of the year and then trail off in the second half upon the maturity of one of our mortgages in June. On CapEx, we expect value-add expenditures of $2.5 million to $12.5 million with recurring CapEx per home of $1,300 at the midpoint. Our guidance does not include any acquisitions or dispositions. Turning to our balance sheet. Following the Minneapolis disposition we completed in November, our leverage profile improved in the quarter to 7.5x net debt to EBITDA. We have a well-laddered debt maturity schedule with a weighted average rate of 3.6% and weighted average maturity of 6.9 years. Our liquidity remains strong with nearly $268 million of cash and line of credit availability compared to $99.2 million of debt maturing over the next 2 years. To conclude, this was a successful year for Centerspace with our results demonstrating our commitments to both operational excellence and financial discipline and positioning us well for 2026. Operator, please open the line for questions. Operator: [Operator Instructions]. Our first question is from Jamie Feldman from Wells Fargo. Unknown Analyst: This is Connor on with Jamie. Can you talk us through some of your assumptions within the 2026 revenue guide? It'd be helpful to understand your blended lease rate growth outlook and how that breaks out between new and renewals and any contribution from other income. Bhairav Patel: Sure. Yes. So let's start with the building blocks for 2026. We had an earn-in of about 80 basis points at the end of the year. So that will be the first piece that goes into revenue. We expect blended rent growth to be in the mid-1% range, resulting in about half of that showing up in revenue for 2026. And that will be offset by about a 40 basis points year-over-year decline in RUBS or about $1 million due to the change in regulations in Colorado. And then our base case occupancy is a little bit lower than it was in 2025. So that contributes about 30 basis points. So that gives you about 90 basis points of year-over-year revenue growth. From a market perspective, we expect our Midwest markets to deliver growth that is in line with what we saw in 2025 with Denver obviously remaining pressured as the absorption of units delivered in 2024 and 2025 continues. We expect renewals to once again lead the way with renewal trade-outs in the high 2% range. And we do expect new lease trade-outs to come better than 2025 in most of the Midwest markets, markets like North Dakota, Omaha and other Mountain West are not really expected to be any supply and the demand there remains robust. Even in markets like Rochester that saw some pressure in the second half of the year, we seem to be coming out on the other side, and we expect a strong showing in 2026 from that market. Minneapolis has shown like pretty solid absorption in 2025 and is expected to improve in 2026, given that the deliveries will go down significantly. So that's really what's underpinning our revenue guidance. Unknown Analyst: And maybe if we could talk a little bit more about what you're seeing in Denver. How do you see that market playing out in 2026? And any thoughts on when we could see an inflection, particularly in new lease rate growth? Bhairav Patel: Yes. So I'll start off and maybe Anne can chime in. But with respect to our base case, we expect some concessionary pressure to continue. In the first half of 2026, we are seeing on average about 2 to 4 weeks of concessions on a per move-in basis, which we do expect will continue at least for the first half of the year, and that's really going to pressure year-over-year revenue growth. Another note on concessions is any concessions we gave out in the second half also get amortized over the lease term. So we'll see some of that pressure in 2026 as well. But overall, we do expect things to improve as we go through the year and work through some of the supply there. The deliveries are supposed to be the lowest since we've -- in the last few years, but I'll hand it off to Grant to comment a little bit on that in detail. Grant Campbell: Yes. Thanks, Bhairav. Regarding supply dynamics, about 16,000 units were delivered in 2025, an additional 9,000 units will be coming online or delivered in '26. So some continued lease-up activity that, that market will need to work through. When you look at forecasted supply pipeline, new construction starts, 2027 data really falling off in terms of new deliveries. So we do think that will provide tailwinds to the market. When you look at foot traffic in downtown Denver based on a couple of different measurements, we are seeing increases at year-end 2025 foot traffic levels that are comparable to 2019 data. So that gives us some positivity that things are turning. There's also been some significant investments in bond funding without a property tax increase that has been passed for a whole host of projects across the city, parks, bike lanes, expansions to libraries, et cetera. So we do feel like the wheel is incrementally turning and looking to '27 for true tailwinds. Operator: Our next question is from Brad Heffern from RBC Capital Markets. Brad Heffern: No we're not supposed to ask about the strategic review. This is kind of strategic review adjacent. I'm wondering, is the underlying plan for the company sort of continuing in the background? Obviously, the past few years, you've sold out of tertiary markets to build Denver and Salt Lake. Is that continuing on in the background while you're looking at the broader strategic plan? Or is kind of the strategy of the company just on hold until this is completed? Anne Olson: Yes. We feel great about what we executed on strategically in 2025. We highlighted some of those in our prepared remarks. So we feel great about that. The part of the strategic review really is reviewing what we want to do with every dollar of capital. And so a little early in the year to tell and it's still ongoing with that. So no further comments on what that might mean for us as we move through 2026. Brad Heffern: Okay. And then do you have any like January or quarter-to-date leasing stats that you can give? Bhairav Patel: Yes. I can give you some details. Overall, blends were flat to slightly negative. This is not uncommon for this time of the year. Renewals remained pretty strong in the mid-3% range. So that's a positive. And we clawed back some occupancy. So there's weakness on the new lease trade-out side, which we expect, led by Denver. Anne Olson: Really small sample size in January. We have very few leases expiring this month. Brad Heffern: Yes. Okay. Okay. Got it. And then just one clarification. I feel like in the prepared remarks, you said that blends for '26 were 2%. But then, Bhairav, I think you said 1.5% later on. Maybe I heard it wrong, but just want to clarify what that number is? Bhairav Patel: Yes, I would say mid-1% range in our base case. In certain markets, it can be in the 2s. But overall, for the portfolio, we expect it to be in the mid-1% range. Operator: Our next question is from Alexander Goldfarb from Piper Sandler. Alexander Goldfarb: Anne, always good to hear North Dakota leading. We like that. Two questions here. First, I guess, going to the strategic review. Are you allowed or can you buy back stock while that process is going on? You highlighted the stock buybacks that you had performed. But are you able to go into the market or you have to complete the process before you can resume buying back stock? Anne Olson: Yes. At this point, we need to complete the process, just given the rules about what kind of information that the company has available. We do have a current authorization for buyback. At where we're trading today, I think that isn't the most attractive use of our capital. Our 2025 buybacks were executed more in the $54 range. Alexander Goldfarb: Okay. And second question is rent control regulations, legal costs, it's been a big growing topic. You outlined Denver, the situation of the contrast between St. Paul and Mini has been well documented. As you're assessing other markets, how has the experience in those 2 markets affected? Are you seeing other markets slowly roll out, whether it's overt rent control or utility restrictions or other restrictions that mean markets that formally were on your radar or existing markets where you were looking to expand, you want to dial back given the local politics or those 2 markets that I cited are really the standouts and the other markets that you either are currently in or thinking about expanding to really don't have that political risk? Anne Olson: Yes, this is a great question, certainly a hot topic. I would say across the nation, we're seeing either municipalities or states really start looking at everything, fee income, regulatory requirements, not just straight rent control. So while we're happy with the markets that we're in, we have great operations and good operating scale in both Denver and Minneapolis so that we can really absorb and do a great job of handling those regulatory changes. I would say when we're looking at new markets, business friendliness is one of our key categories that we're looking forward at. And that includes things like do they have a heavy regulatory environment? What's the taxation, both property taxes and income taxes. How are they attracting new businesses, subsidies, things like that. So when we're thinking about new markets, it's definitely, I'd say, one of the key categories that we're considering, but we're happy with the status in our current markets. We haven't seen any movement in markets like -- or in states like Nebraska, North Dakota, South Dakota, Montana to enhance any of their regulatory requirements. And we have seen some pullback on the federal level, particularly around environmental regulation. Operator: Our next question is from Ami Probandt from UBS. Ami Probandt: So far, tax refunds are trending much higher this year. So understanding that the post-COVID period is different from what we're currently having, I'm wondering if there are any parallels that you can draw to 2026 in terms of tax refunds compared to 2021 and 2022 when refunds were also elevated. Do you think that this could lead to an increase in demand or pricing power? Or is it sort of a onetime boost that doesn't really have a big impact? Anne Olson: The taxation is more about the valuation cycle coming into 2021 -- and there's a lag between when taxes go up. Sorry. Ami Probandt: I was going to say in terms of individual tax refunds, not the property... Anne Olson: Yes. This is -- that's an interesting question. I don't know that we're -- we think that it's going to impact demand. It's going to be more of a onetime item. And our bad debt looks great, and we feel good about the resident health. So we hope when we see those tax refunds that maybe we'll see a little bit more consumer demand or better consumer credit overall. I think we're going to see that disposable income on the consumer spending side, not necessarily creating any demand on the multifamily side. Ami Probandt: Got it. And my second question... Anne Olson: Usually, we're talking about property tax.... Ami Probandt: Yes. So second question, it's been a while since growth in monthly revenue per unit has been below growth in monthly rent per unit. So in the fourth quarter, rent growth was ahead of revenue growth. Did the changes in Colorado rebilling impact that? What other dynamics could be driving that shift? Bhairav Patel: Yes. In the fourth quarter, we saw some occupancy pressures. That's contributing to it a little bit, Ami. The Colorado regulations really kicked off in Jan. So we expect the impact from that to be in 2026, not really in 2025. But we did see some occupancy pressure in a couple of our markets. I mentioned Rochester as one, but I think we've turned the corner there, and we are -- we've kind of regained some of the occupancy back in Jan. So that's really what was driving the difference there. Operator: [Operator Instructions]. Our next question is from Mason Guell from Baird. Mason P. Guell: It looks like your retention rate was down both sequentially and year-over-year, and you're forecasting it to be lower in 2026. Is this due to focusing more on rates instead of occupancy? Or what is driving the lower retention rate? Bhairav Patel: Yes. We've seen it come down a little bit. Overall, from a base case perspective for 2026, we're just being measured in what we expect from a retention standpoint. We expected the same level for 2025. We outperformed a little bit. We saw a little bit of a downtick in Q4. So we're just kind of building in a little bit of, I would say, we're just being measured about retention being a little conservative to start of the year because we want to see what happens in the first couple of quarters before we adjust our assumptions there. Mason P. Guell: Great. And then your outlook for value add, it seems like it's a wider range than you previously had in your outlook and the midpoint is expected to be lower than 2025. I guess why the wider range and what's driving the lower expected value add? Bhairav Patel: Sure, yes. So from a value-add perspective, we're kind of holding back projects for a couple of reasons. I mean, one, just being extremely selective in the projects we greenlight due to the higher cost of capital and execution risk. We want to see some improvement in the marketplace before we do that. And secondly, we're holding back approvals due to the ongoing process of evaluating strategic alternatives. We would hate to begin a project that we cannot complete as a result of any decision that comes out of that review. So that's really driving the range there. On the low end, we have about $2.5 million, which is really completion of projects we've started in prior years. So at the very least, we will be starting to put capital out later this year than we typically do. That would drive the range lower. That's what you're seeing in that range. Operator: [Operator Instructions]. We have a follow-up question from Ami Probandt from UBS. Ami Probandt: So a quick one on the consumer. You mentioned no changes in bad debt. But for some of the markets where you've had consistent CPI plus renewal growth. Is there any concern about affordability? Anne Olson: We're seeing great affordability. I think our rent to income has held steady, if not lowered slightly over the course of the year. Really, that's been driven by incomes increasing faster than we're seeing rent increases. So even in those markets like North Dakota, where we're getting really great renewal spreads and seeing positive new leasing, the incomes there are growing faster than the rent amount. So we've seen really strong income growth, wage growth across our markets. Operator: Our next question is a follow-up question from Alexander Goldfarb from Piper Sandler. Alexander Goldfarb: Just quickly, a number of your markets, you guys always talk about the lack of labor, tight markets, heavy -- tough getting people to work on site. And yet I saw that your on-site comp was basically flat for the year. In fact, it was a little down in the fourth quarter. But I'm just curious what's going on there, just given, again, you guys have spoken about the tight labor markets in a number of the places that you operate. Anne Olson: I think just like we've seen, Alex, in our company, most of our vendors have also experienced less turnover. And so across our markets, there -- it is very strong employment -- very low unemployment. There's opposite of that. And -- but what we've seen is a lot less turnover, more steadiness in that employment. And so in the past, when we've had vendors and they lose someone, it's very hard for them to replace it, but people are staying in the jobs longer. We saw that in our company as well. Tenure is up and turnover is lower. So I think that really helped us in 2025, and we saw that trend throughout the year. Bhairav Patel: Yes. And specifically in Q4, Alex, there was a health reserve adjustment that came through in the last quarter when we kind of adjust our health reserves based on the projections for actual expenses. So that also contributed to that comparison on a year-over-year basis. Alexander Goldfarb: Okay. And you expect that the low turnover and to continue in '26? Anne Olson: We are expecting low turnover for us, and I think that we've seen that extrapolated out with our vendors, just more consistency in who's coming on site and their ability to service our needs from a vendor perspective. Operator: Our next question is a follow-up question from Brad Heffern from RBC Capital Markets. Brad Heffern: On Minneapolis, you mentioned in the comments, of course, been the headlines, a lot of turmoil unrest over the past few months. Did leasing activity look any different as a result? I know it's not a heavy leasing time of year, but I'm curious if you saw an impact? And then do you -- are you expecting like any sort of longer-term impact? Or did your forecast for Minneapolis for this year change versus maybe what it would have been a few months ago? Anne Olson: Yes. We -- not that we've seen any real change. I think in late 2025, we kind of assessed the state of the immigration enforcement actions. What we saw in January was -- had started a few months before. So we have seen very little activity at our communities. We do monitor. We have a system where that's reported. And it's really limited to just a couple of communities where we've seen some interruption and that interruption would be from leasing all the way to resident skips. But so far, it's been really a minimal impact. And I think the key thing, as you noted, is that there's very low turnover lease expirations in January and not a lot of people looking in January anyway. So hard to tell if there's any real impact. We would see that more once we have leasing season underway. One of the things that you may have seen about Minnesota is that for the first time, we turned the corner where we actually had good migration into the state. I think we finally cracked that U-Haul list #14 of people moving here. And so that really did offset this year. Our population growth was offset by kind of the net of lack of immigrant migration in. So we think demand is going to hold up in Minneapolis. And as Grant and Bhairav have noted, very little supply there and good projected growth across the board. So not much impact that we can see right now. And we're monitoring closely things like whether or not there'll be any moratoriums or on evictions or things like that. I think it's settled down, and it's a little bit of a wait and see on that front. Operator: We currently have no further questions. So I will hand back to Anne for closing remarks. Anne Olson: Thank you. Well, thanks, everyone, for joining us today, and thank you again to our team for our tireless pursuit of better every day. We're going to have a great time at our leadership conference here in Vegas, and we look forward to talking with you all very soon. Have a great day. Operator: This concludes today's Centerspace Q4 2025 Earnings Call. Thank you for joining. You may now disconnect your lines.
Operator: Good morning, everyone, and welcome to the Gibson Energy Fourth Quarter and Full Year 2025 Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Beth Pollock, Vice President, Capital Markets and Corporate Development. Ms. Pollock, please go ahead. Beth Pollock: Thank you, [ Towanda ], and good morning. Thank you for joining us to discuss Gibson Energy's Fourth Quarter and Full Year 2025 results. Joining me on the call today are Curtis Philippon, President and Chief Executive Officer; and Riley Hicks, Senior Vice President and Chief Financial Officer. Additional members of our senior management team are also present to assist with the question-and-answer portion of the call. Listeners are reminded that today's call will reference non-GAAP financial measures and forward-looking information, which are subject to certain assumptions and risks. Descriptions and reconciliations of these measures as well as related disclosures are available in our investor presentation and continuous disclosure documents on SEDAR+ and on our website. I will now turn the call over to Curtis. Curtis Philippon: Thank you, Beth, and good morning, everyone. I'm pleased to discuss Gibson's fourth quarter and full year 2025 results. I'll begin with a few highlights and then turn it over to Riley to walk through our financial results and balance sheet before I conclude the call with some closing remarks. At the outset of 2025, we established 5 strategic priorities: safety, gateway execution, growth, high-performance teams and cost discipline. Over the course of 2025, we delivered on our key objectives across each of these areas, exiting the year delivering Infrastructure segment growth and a clear line of sight to the next phase of our growth as outlined at our December Investor Day. From a safety perspective, we surpassed 10 million hours without a lost time injury and safely completed 2 major turnarounds at our Moose Jaw Facility and the Hardisty Diluent Recovery Unit. Most notably, we are proud to finish 2025 as the top-performing midstream company in North America on the key metric of total recordable injury frequency. At Gateway, we successfully executed both the dredging project and the Cactus II pipeline connection, increasing throughput to a new high watermark of 815,000 barrels per day in January of 2026 and delivering on our 15% to 20% run rate EBITDA growth objective in the fourth quarter that was established when we acquired the asset in 2023. During the fourth quarter, we sanctioned the $50 million Wink-to-Gateway integration project, which will enhance supply optionality and increase throughput capacity. The project is expected to enter service in the third quarter. The cost focus campaign was a success. In 2025, we generated more than $25 million of recurring and nonrecurring cost savings, increasing DCF per share by 8%. This efficient and cost competitive focus sets us up well for continued success. Finally, on the people front, we've built a strong team that delivered on our goals this year. This group is passionate about supporting our customers exceptionally well and is well positioned to lead us into a successful 2026. Turning to the financials. Our 2025 results reflect the successful execution of our crude oil infrastructure strategy. We delivered record infrastructure adjusted EBITDA of $622 million for the full year, including a new quarterly high watermark in the fourth quarter. Infrastructure throughput across our core terminals increased approximately 13% or 95 million barrels year-over-year. This performance was driven primarily by higher volumes at Gateway and Edmonton as well as the completion of the dredging, Cactus II and Baytex Infrastructure Capital Projects during the year. The strength and quality of our cash flows improved as we renewed several major long-term contracts all between 10 and 20 years in duration across our Edmonton and Hardisty terminals. These take-or-pay extensions increased our contract backlog by approximately $500 million. The renewals supported by high-quality counterparties included senior integrated energy companies and a multinational refiner, reinforce the strength and sustainability of our cash flows. Complementing our infrastructure growth, last week, we announced that we had entered into an agreement to acquire Teine Energy's Chauvin crude oil infrastructure assets for $400 million. This acquisition is expected to close in the second quarter of 2026, subject to regulatory approvals. The Chauvin pipeline will strengthen our Hardisty platform by extending our connectivity into the prolific Mannville Stack, adding long-term contracted cash flows and providing near-term expansion opportunities, including the Gibson Hardisty Connection Project, which was announced and conditionally sanctioned subject to regulatory approvals. The transaction was executed at a mid-7x multiple with a clear path to less than 7x as we execute on identified growth and optimization opportunities. We expect the transaction to be mid-single-digit accretive to distributable cash flow per share with the proceeds of the $215 million equity financing that closed yesterday. The acquisition will be leverage neutral with our investment-grade credit ratings confirmed by both DBRS and S&P. At Investor Day, we outlined a clear road map to deliver over 7% annual infrastructure EBITDA growth over the next 5 years. The progress achieved in 2025, combined with our recent Chauvin acquisition and its associated growth projects positions us well to execute on this plan. I'll now turn the call over to Riley. Riley Hicks: Thank you, Curtis. 2025 was a strong year for Gibson, and I'll walk through our fourth quarter and full year financial results, followed by an update on our financial position and capital allocation priorities. Our focus remains unchanged: disciplined financial management, maintaining a strong balance sheet and adhering to our financial principles. These principles helped lead us to a strong fourth quarter and a record year from an infrastructure standpoint, reflecting the quality and resilience of our crown jewel asset base. In the fourth quarter, Infrastructure delivered record adjusted EBITDA of approximately $160 million, driven by contributions from recently completed capital projects, continued strong performance across our terminal network and the full quarter benefit of the Gateway dredging work completed earlier in 2025. Touching quickly on our Marketing segment. The business continued to operate in a challenging environment during the quarter. Tight heavy oil differentials, limited crude storage opportunities and seasonal asphalt storage reduced available arbitrage during the quarter. As a result, marketing adjusted EBITDA was approximately $1 million. While this is at the low end of our previously communicated guidance range, it represents a $6 million improvement over the fourth quarter of last year. As we think about our business holistically, marketing now represents a smaller portion of consolidated EBITDA, underscoring the increasing stability and contracted nature of our cash flow profile. Looking ahead, we are reiterating our previously communicated marketing guidance range of $0 million to $10 million per quarter. Market conditions in Canada remain efficient, and we have not seen a structural shift away from crude backwardation. On a consolidated basis, Gibson generated adjusted EBITDA of approximately $145 million in the fourth quarter, reflecting strong infrastructure performance and an increase of $15 million compared to the prior year. Distributable cash flow for the quarter was approximately $79 million, representing an increase of $8 million compared to the fourth quarter of 2024. Turning to our full year results. 2025 was a great year for Gibson. Infrastructure adjusted EBITDA totaled $622 million, up from $601 million last year, driven mainly by higher volumes at Gateway and Edmonton, the success of our cost savings initiative and contributions from key capital projects coming online. Marketing adjusted EBITDA totaled approximately $15 million for the year, reflecting a challenging environment for both crude marketing and our refined products business. As a result, consolidated adjusted EBITDA was $581 million and distributable cash flow was approximately $337 million. Looking at our current financial position, we remain aligned with our financial principles, maintaining a strong balance sheet and meaningful capital flexibility. We remain prudent capital allocators focused on maximizing long-term shareholder value through investing in high-quality infrastructure projects as shown by our strategic acquisition of the Chauvin infrastructure assets. Following the announcement of this acquisition, alongside 2 actionable growth projects, we have now adjusted our 2026 growth capital outlook to reflect $100 million of organic growth capital. This includes capital related to our previously sanctioned Wink-to-Gateway integration project. The change in outlook reflects our continued focus on disciplined customer-backed infrastructure growth while ensuring we preserve our balance sheet strength. At year-end, net debt to adjusted EBITDA was approximately 3.9x, reflecting the timing of capital deployment and lower marketing contributions in 2025. With full year EBITDA contributions from recently completed projects and a reduction in growth capital to $100 million in 2026, we expect leverage to trend down lower over the course of the year. On an infrastructure adjusted basis, leverage was approximately 4x, which is consistent with our commitment to maintain infrastructure leverage at or below that level. Importantly, as part of our recent transaction, both S&P and DBRS have reaffirmed our stable investment-grade credit ratings. Our dividend payout ratio was approximately 84% on a trailing 12-month basis. Over the long term, we continue to target a sustainable payout range of 70% to 80% of distributable cash flow. On an infrastructure-only basis, the payout was 78%, which is comfortably below our target of less than 100%. As our Infrastructure segment continues to grow and become a larger proportion of our earnings, we expect our consolidated payout ratios to migrate towards our long-term range. The continued growth of our high-quality infrastructure cash flows during the year supports our seventh consecutive annual dividend increase, bringing the quarterly dividend to $0.45 per share, an increase of 5% year-over-year. We remain focused on delivering long-term value for our shareholders as we enter 2026 from a position of strength. I will now pass the call back to Curtis for his closing remarks. Curtis Philippon: In closing, we made meaningful progress in 2025 as we executed on our 5 key priorities: safety, Gateway execution, growth, high-performance teams and cost discipline. We also delivered record infrastructure results marked by a new high watermark in Q4. As we start 2026, we are once again focused on 5 strategic priorities: maintaining our industry-leading safety performance, increasing the utilization of our assets, growing our infrastructure business, advancing technology and AI-driven initiatives to drive efficiency and further enhancing the high-performance ownership culture. We also look forward to integrating the Chauvin Pipeline into our portfolio, subject to regulatory approvals. With continued discipline and focus, we are confident Gibson is well positioned for its next phase of infrastructure-led growth and to deliver on the Investor Day strategy from a position of strength. With that, I'll turn the call back to the operator to open the line for questions. Operator: [Operator Instructions] our first question comes from the line of Aaron MacNeil with TD Cowen. Aaron MacNeil: Curtis, presumably, you looked at a lot of opportunities prior to pursuing the Teine acquisition. How should we think about M&A for Gibson going forward? Would you describe this as a bit of a unique opportunity? Or was there a bit more depth to the M&A opportunity set? Curtis Philippon: We definitely look at a lot of different things. I'd say a year ago, we were very focused on Gateway execution. And it was important for us to be delivering on that significant acquisition we did back in 2023. And so a year ago, although we were looking at a lot of things, we were cautious on that. We want to make sure we delivered well on Gateway. But over the last year, we proved that we could deliver well on Gateway. I think that ability to go deliver on that project, combined with at a macro level, we look at the opportunity set out there, we see some interesting opportunities for M&A. That got us more active over the last 6 months looking at a wide range of different opportunities. In particular, we are looking for things that are crude focused, connected to our current platform and ideally just continue to drive that same contract profile, customer quality profile that we're looking for. So I think there's a few things out there we looked hard at. Chauvin is just a perfect fit. Hardisty is our backyard. That's where we've been for 70 years. It is the core crown jewel of the Gibson asset base. And so when the opportunity came up to add Chauvin to the story and help extend the reach of that Hardisty platform, that was the most attractive one that we want to act on. Aaron MacNeil: Makes sense. Switching gears and fully appreciating that you've reiterated the $0 to $10 million marketing guidance, but we're starting to observe some positive signals for this business, including higher apportionment levels on Enbridge Mainline storage levels ticking up, wider heavy oil differentials, although maybe not for the same reasons you've seen in the past. But appreciating that this is all early days, what would you sort of guide us to in terms of looking for market signals or variables that we should be looking at as we think about the outlook for the segment? Curtis Philippon: I think it's fair to say we're encouraged by some slightly wider dips and a few positive indicators out there. I would completely agree with your assessment, though this is early days. If you look at our track record over the last year, we've been firmly in that $0 million to $10 million a quarter range. I expect that's where we're going to be in 2026 as well. There's still very low levels of storage out there right now. And so each of these volatility events that happened that in the past maybe drove higher marketing earnings have a much more muted effect in an environment where you have very low crude inventories. And so I think that will persist through the year is what my expectations are. And so I think you'll see a fairly muted year for marketing. The big thing you would look for is we're still a very backwardated market. And so I think that would be the one thing to maybe watch for. If you get into a contango market, that's a significant shift. And we've been in this backwardated market for quite a long period of time. In time, that will change, and there will be contango opportunities that provide a great opportunity for Gibson to use its assets well to capitalize on that. But until you see that, I think you'll still be in that $0 million to $10 million range. Operator: Our next question comes from the line of Jeremy Tonet with JPMorgan Securities. Unknown Analyst: This is [ Eli ] on for Jeremy. Just wanted to start on the expansion opportunities at Chauvin. Can you just provide some incremental color on the timing and return profile here and how these stack up against other opportunities across the portfolio and also get you to the kind of that 5 to 7 acquisition multiple that you highlighted? Curtis Philippon: Thanks, [ Eli ]. As -- we messaged that right out of the gate, we see a number of interesting growth projects that come with Chauvin. It's one of the really attractive things about Chauvin is it really gives us a nice runway of growth projects over the next few years. But immediately out of the gates, once we're closed, there's 2 projects that we see acting on. One is the Hardisty Connection project to connect the Chauvin pipeline into our Hardisty Gibson Facility. And so that is one that we will sanction immediately after regulatory closing. We expect that is roughly a 12-month process from that period from when we officially sanction it. And then the second one is the expansion project. And the expansion project is exciting. It's -- the pipeline is currently operating at near full at sort of 30,000 barrels a day capacity. And we see an opportunity to expand that to 45,000 barrels a day and have some pretty, I think, an interesting opportunity with that. So the timing on that is realistically anywhere from 18 to 24 months from the closing of the transaction for all of the work involved with the preparation and the execution of that expansion. Overall, we've messaged that we did this acquisition at a mid-7x multiple. Those 2 projects are strong, and those 2 projects will immediately drive this acquisition into a sub-7x multiple range. Unknown Analyst: Awesome. And then I know the transaction was leverage neutral, and you have added some kind of attractive growth CapEx that you can continue to chip away at. But can you just kind of post transaction close, reframe the overall capital allocation waterfall and how you kind of see growth CapEx shaping up versus other competing priorities and maybe just whether buybacks remain part of the story longer term? Riley Hicks: Yes. Thanks, [ Eli ]. It's Riley. When we think about capital allocation, our priorities, they really haven't changed. So we think about funding our business first, which means maintaining a strong balance sheet, investing in infrastructure growth and funding our dividend. And so as we sit today, buybacks are certainly a great tool that we can have in our toolkit. But as we look at our balance sheet today, we'll need to see that kind of get back into our 3 to 3.5x range before we would start to consider those buybacks. And then they would have to compete for capital allocation with the great infrastructure projects that we see ahead of us. So we're going to continue to be prudent and disciplined and invest in our business. Operator: Our next question comes from the line of Sam Burwell with Jefferies. George Burwell: Just another one on the Chauvin acquisition. Just curious like what attributes of the asset make you most confident in being able to sanction the expansion? Is it just the amount of volumes that are currently trucked or the production growth profile or anything else? And then sort of piggybacking on to that, is there an opportunity to meaningfully take up the take-or-pay portion of the capacity on the pipeline? Curtis Philippon: Sam. What gets us excited is this is our backyard. So we know it quite well. We know the customers quite well in that area, and we know the geology in that area is driving a lot of great activity there. So the pipe is already running at near capacity. We see a very actionable path that you can expand that capacity and achieve some very good utilization even on the expanded pipe. So we feel very confident on that. As far as shifting it to a take-or-pay structure on the expanded capacity, absolutely, that's part of our strategy. We're still very early days. The transaction is not even closed yet. But I think with a midstreamer now owning the pipe, I think you see a slightly different strategy coming in now for us to be able to partner with our customers to perhaps look at different take-or-pay structures. And I would point that specifically, we see a lot of really interesting opportunities to extend the reach of the pipe and that there's a number of our customers that are currently needing to truck the last leg into the Chauvin pipe to get access to it. And we think there's a really interesting opportunity for us to help them find a netback win by extending the pipe reach and tie that in perhaps to some take-or-pay structure on the contract as well. George Burwell: Okay. That certainly makes sense. And the next one sort of touches on Venezuela. And obviously, it's still very, very early, but I was curious for your view on whether you think that more Venezuelan barrels hitting PADD III coming on to the Gulf Coast and presumably taking the PADD III slate heavier might offer you greater opportunities around more exports from Gateway of light crudes and possibly making expansion projects down there more viable. Curtis Philippon: Yes. Interesting. I think Venezuela, obviously, we're watching Venezuela closely. I think it's interesting. One, I think as everybody is saying, I think there's still a lot of question marks around what exactly plays out in Venezuela, and there's still a lot of work to do to actually see a sustained increase in production that and a sustained shift in where those volumes are going to have a meaningful impact on that. I'd say Gibson is in a unique position to see upside around that, though, both in -- if there is an impact on dips, potentially, there's an impact for Gibson's marketing business that you perhaps see from Venezuela crude coming into there. Perhaps you could make the leap to increasing activity around Gateway. One of the interesting observations some of our customers have made around Gateway is that just the -- perhaps some of the change in flows and the fact that the U.S. has a greater influence on those flows of crude coming out of Venezuela just increases the amount of ship traffic in the area that's sort of controlled by customers and sort of the entities that are out of the U.S. And that's helpful for our gateway customers for getting ease of access to ships to have efficient shipping out of Gateway. And it's a bit of a unique unexpected upside that we're hearing from our customers of perhaps some sort of shipping efficiency increasing with the Venezuela changes. Operator: Our next question comes from the line of Robert Hope with Scotiabank. Robert Hope: So I want to go back to M&A. So Teine was a nice tuck-in. How does the M&A pipeline look for further tuck-ins? Are you seeing nice deal flow? Or do you want to take a little time to integrate that asset before getting back on the hunt? Curtis Philippon: We're going to keep -- we'll keep looking at it. I think at a macro level, Rob, what I think is super interesting is that there's been such a rush towards gas assets in the overall market that I think that creates an interesting opportunity for Gibson that has a crude-focused strategy that there are some excellent crude assets out there that are potentially not the top focus for some companies that are perhaps shifting a bit more towards some gas-focused assets. And we love those crude assets. We think those crude assets with the right attributes in the right location are going to be things that are going to be great assets for the rest of our lifetime, and we'll be active in looking at those, both in Canada and in the U.S. In saying all that, we're a pretty disciplined operator. And so Chauvin was a big deal for us. We're going to be focused in 2026 on executing well on integrating that in and making sure we deliver on everything around that. And so -- we'll keep looking, but I would caution that if you look at our pace, our last big deal back in 2023, we did this one this year. I wouldn't look for us to dramatically increase the pace of M&A activity. We'll be active and look at it. It really does take 2 people to get a deal done, though. So we'll see on what actually transpires. Robert Hope: All right. Appreciate that. Switching gears. At the December Investor Day, you spoke about 7% plus infrastructure growth out to 2030. How does the Teine acquisition and the associated accretion change your thinking there? Do you view this growth outlook as significantly derisked? Or are you looking at potentially upside versus the prior outlook? Curtis Philippon: When we talked about those numbers back in December, obviously, Chauvin was fairly well advanced at that time. And so we looked at the Chauvin asset or similar type assets as part of the story of how you got to this confidence around an over 7% infrastructure EBITDA per share growth rate. And so I would say that this nicely supports and derisks and is sort of perfectly aligned with the strategy we laid out at the Investor Day, but it doesn't sort of dramatically increase that rate. We still have that same confidence that sort of above 7% is what you should be expecting. Operator: [Operator Instructions] Our next question comes from the line of Maurice Choy with RBC Capital Markets. Maurice Choy: Just wanted to come back to the philosophy of transactions. You mentioned earlier that strategically and from a risk perspective, crude focus connected to current platforms and having similar contract and counterparty profiles were important to you. Can you also speak philosophically to the financial and funding priorities when you look at some of these wide range of opportunities? Riley Hicks: Yes. Sure, Maurice. It's Riley here. So when we think about funding, obviously, we go back to kind of our financial positioning and maintaining our flexibility. And so when we looked at this one specifically, given where our leverage was, we felt it was most prudent to do a leverage-neutral transaction. To the extent our balance sheet was in a different position and we were a little bit less levered, we would have maybe thought about not doing equity and doing it fully from the balance sheet. But everything is going to be done in the context of maintaining or improving our investment-grade credit ratings. And so that's really the critical factor. That's massively important to our strategy. And so we think about funding in that context. Maurice Choy: Understood. And then maybe along the same vein here on the leverage for the year, I recall that pre-transaction around midyear this year, you would have reached your 3 to 3.5x debt-to-EBITDA target range. And I recognize that the Chauvin transaction is leverage neutral. I just wanted to know what your outlook is for this metric. Any steps you consider to be in that range, especially if marketing does stay flat this year? Riley Hicks: Yes. I think we're seeing marketing remain muted. And so likely getting back to that 3.5% range is kind of as we go through 2026 now. I will say, though, given where our infrastructure leverage is, we're quite confident with our balance sheet and where we're positioned today. Marketing is in a trough, and we still remain well below our kind of our infrastructure leverage targets. And importantly, we did discuss with both S&P and DBRS on the back of this transaction, our profile, and they're quite comfortable with where we are and reaffirmed our rating. So we will see us delever through the year, but it's likely through 2026 and not fully done in the first half now. Operator: Our next question comes from the line of Benjamin Pham with BMO. Benjamin Pham: I just go back to the Chauvin transaction and the multiple that you highlighted, the mid-7x. I'm curious, my question is more when we look at transactions in North America and even looking at acquisitions versus organic growth. We don't typically see multiples being similar in that vein. Can you share context on maybe just your observations of acquisitions and the multiples? And any specific characteristics that resulted in a quite attractive multiple for Chauvin? Curtis Philippon: On the multiple side, I think it's a fair -- it was a fair price for both ourselves and Teine. And I think from -- I don't want to comment too much on Teine's perspective, but I think I think it was important for both of us to recognize that this is a long-term agreement that we're entering into a 15-year agreement with partnering with Teine, and they were doing the same thing. And it was important -- the purchase price is one thing, but the overall relationship and having a great commercial relationship to go grow that business over the next 15 years was also very critical. And so we spent probably more time on that aspect of the transaction and talking about how we grow this business together was a key factor. And I think when you look at all that together, where we got to on price was a fair swap for both sides. Benjamin Pham: And maybe to tack on to that, I mean your overall observations, you've looked at a lot of acquisitions. I mean, is the valuations between M&A and organic growth, is that narrowing over time? Or is this nature of [indiscernible] is a very unique situation that popped up for you? Curtis Philippon: I think it will depend on the particular asset and its characteristics. This one is -- this was sort of right up the fairway directly tied into Hardisty had some unique attributes that made it made sense and with some immediately actionable growth projects that allowed us to be directly in that 5 to 7 build multiple that lines up with our organic capital. That's a great story. I think as you look forward at other M&A opportunities, it will depend on their characteristics. There will be situations where you'd consider going above that range for the right type of crown jewel assets with the right type of contract profile, but it really is on a case-by-case basis. We obviously are very focused on that 5% to 7% range is how we think about it. And we have some great use of organic growth capital that we're quite comfortable staying focused on as well if the right M&A opportunity isn't available. Benjamin Pham: Understood. And continue to Maurice's question on the balance sheet and where things were going. How do you think about perhaps balancing over equitizing this deal and delevering earlier and setting yourself up for the next wave of organic growth for M&A versus maybe just being more what you did the leverage neutral and maintaining that 5% accretion on the deal? Riley Hicks: Yes, it's a great question, Ben. And so I think when we looked at over-equitizing, what we found on a deal of this size is it really just didn't move the needle enough to make it make sense. So you're just trying to balance the accretion levels versus your balance sheet. And for this one, we could have overequitized, but it really wouldn't have moved the needle enough on leverage to make it make sense to give up that accretion. So that's kind of how we landed where it was. On maybe a bit of a bigger deal, it might have made more sense to over-equitize and delever quicker. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Beth for closing remarks. Beth Pollock: Thanks, [ Towanda ], and thank you for joining us today. Supplemental materials are available on our website at gibsonenergy.com. If you have any additional questions, please contact our Investor Relations team. Have a great day. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Welcome to Community Healthcare Trust 2025 Fourth Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2025 fourth quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be opened for a question-and-answer session. The company's earnings release was distributed last evening and has also been posted on its website www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, February 18, 2026 and may contain forward-looking statements that involve risks and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings. The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website. Call participants are advised that this conference call is being recorded for playback purpose. An archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission. Now I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust. Please go ahead, sir. David Dupuy: Great. Thanks so much, Nick. Good morning, everybody, and thank you for joining us today for our 2025 fourth quarter conference call. On the call with me today is Bill Monroe, our Chief Financial Officer. Leigh Ann Stack, our Chief Accounting Officer; and Mark Kearns, our Senior Vice President of Asset Management. Our earnings announcement and supplemental data report were released last night and furnished on Form 8-K, along with our annual report on Form 10-K. In addition, an updated investor presentation was posted to our website last night. During the fourth quarter, the geriatric behavioral hospital operator, a tenant in 6 of the company's properties, paid rent of $200,000, consistent with last quarter. On July 17, 2025, this tenant signed a letter of intent for the sale of the operations of all 6 of its hospitals to an experienced behavioral health care operator and is under exclusivity with that buyer. Among other terms and conditions of the sale, the buyer would sign new or amended leases for the 6 geriatric hospitals owned by CHCT. We continue to maintain frequent productive communication with the buyer's team to advance the closing process. The buyer is finalizing legal and business due diligence. And while the transaction is progressing, we can't provide specific timing or certainty that it will close. We will share more information as we move through the process. As it relates to our core business, we had a busy fourth quarter from an operations perspective and capital recycling perspective and continue to be selective from an acquisition standpoint. Our occupancy increased from 90.1% to 90.6% during the quarter, and our leasing team is very busy with renewals and new leasing activity. Our weighted average lease term increased from 6.7 to 7 years. We have 3 properties that are undergoing redevelopment or significant renovations with long-term tenants in place when the renovations or redevelopment are complete. We expect the largest of these projects to be completed in the second quarter of 2026, with rent expected to commence in the third quarter after the tenant obtains the appropriate provider license. As previously disclosed, during the fourth quarter, we sold an inpatient rehab facility at an approximate 7.9% cap rate, resulting in a gain on the sale of approximately $11.5 million with net proceeds reinvested through a 1031 like-kind exchange into a new inpatient rehab facility for a purchase price of $28.5 million. We entered into a new lease with a lease expiration in 2040 and an anticipated annual return of approximately 9.3%. I will note an additional benefit of the transaction was the reduction of our largest tenant concentration, further enhancing our overall portfolio diversification. For the year, we acquired 3 properties with a total of 113,000 square feet for an aggregate purchase price of $64.5 million, which were 100% leased with leases running through 2040 and anticipated annual returns of 9.3% to 9.5%. As it relates to other capital recycling activity, we had 2 additional dispositions closed in the fourth quarter and 1 disposition closed in the first quarter, resulting in net proceeds of approximately $7.7 million. We have other properties both in market and under review as part of our capital recycling program. And when appropriate, we would anticipate using a similar 1031 like-kind exchange to accretively reinvest proceeds to fund our pipeline. Also, we have signed definitive purchase and sale agreements for 5 properties to be acquired after completion and occupancy for an aggregate expected investment of $122.5 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on one of these properties in the first quarter with 2 properties expected to close in the second half of 2026 and the remaining 2 closing in the second half of 2027. We did not issue any shares under our ATM last quarter. However, we anticipate having sufficient capital from selected asset sales, coupled with our revolver capacity to fund near-term acquisitions. Going forward, we will evaluate the best uses of our capital, all while maintaining modest leverage levels. To finish up, we declared our dividend for the fourth quarter and raised it to $0.4775 per common share. This equates to an annualized dividend of $1.91 per share, and we are proud to have raised our dividend every quarter since our IPO. That takes care of the items I wanted to cover. So I will hand things off to Bill to discuss the numbers. William Monroe: Thank you, Dave. I will now provide more details on our fourth quarter financial performance. I am pleased to report total revenue grew from $29.3 million in the fourth quarter of 2024 to $30.9 million in the fourth quarter of 2025, representing 5.6% annual growth over the same period last year. On a quarter-over-quarter basis, the capital recycling and asset disposition progress in the fourth quarter that Dave discussed led to relatively flat quarterly performance across many line items on our income statement as I will review. The $30.9 million of fourth quarter total revenue was a slight decrease of $140,000 quarter-over-quarter versus the $31.1 million in the third quarter of 2025, impacted by the capital recycling and asset disposition activity. Moving to expenses. Property operating expense increased by less than $100,000 quarter-over-quarter to $6 million for the fourth quarter of 2025. Total general and administrative expense was $4.8 million in the fourth quarter of 2025, which was nearly flat both quarter-over-quarter from the $4.7 million in the third quarter of 2025 and year-over-year from the $4.8 million in the fourth quarter of 2024. Interest expense decreased slightly by approximately $100,000 quarter-over-quarter to $7 million in the fourth quarter of 2025 due primarily to recent FOMC interest rate cuts and the resulting lower floating rates on our revolving credit facility. Moving to funds from operations. FFO in the fourth quarter of 2025 was $13.3 million, a 4.6% increase year-over-year compared to the $12.7 million of FFO in the fourth quarter of 2024. On a diluted common share basis, FFO increased from $0.48 in the fourth quarter of 2024 to $0.49 in the fourth quarter of 2025, although this was $0.01 less quarter-over-quarter from the $0.50 of FFO in the third quarter of 2025 as a result of the net impacts to revenue and expenses described earlier. Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $14.9 million in the fourth quarter of 2025, a 2.1% increase year-over-year compared to the $14.6 million of AFFO in the fourth quarter of 2024. AFFO on a diluted common share basis was $0.55 in the fourth quarter of 2025, even with the $0.55 of AFFO in the fourth quarter of 2024, although this was $0.01 less quarter-over-quarter from the $0.56 of AFFO in the third quarter of 2025, again, as a result of the net impacts to revenue and expenses described earlier. And finally, while it did not impact FFO or AFFO, we did have net gains on sale of $12.1 million from the capital recycling and asset disposition activity during the fourth quarter of 2025 that increased net income. That concludes our prepared remarks. Nick, we are now ready to begin the question-and-answer session. Operator: [Operator Instructions]. And the first question will come from Connor Mitchell with Piper Sandler. Connor Mitchell: I guess just focusing first on the geriatric behavioral hospital operator that signed the transaction last summer. Just want to get -- I know you guys can't speak too much about the timing or some details, but just trying to get a little better understanding. Is the transaction on your part essentially supposed to all take place in one bite at the same time? Or is there any chance that the new operator that would come in and sign leases on the properties could do it on a property-by-property time line or even a state-by-state time line instead of kind of all at once? William Monroe: Connor, thanks for the question. Yes, as it relates to the transaction itself, there was not as much progress as we would have hoped been made in the fourth quarter. And I think a lot of that is the buyer had to confirm various liabilities and was related -- was dependent on the government to get through some of those issues. I think we're seeing significantly more activity in this first quarter as far as the progress made from a due diligence standpoint and site visits and really working on getting the documentation squared away. What I would say about your question specifically the buyer is still very interested in all 6 hospitals and the goal is for this transaction to happen all at one time. And that's our expectation, that's the buyer's expectation. So there would be no plans to have any sort of a staged closing. I think it just makes it more challenging that way and a little bit messier. And so everybody is moving forward with the acquisition of the operations of all 6 hospitals in the 3 states. And so there would not be a stage closing based on our expectations or the buyers' expectations. Connor Mitchell: Okay. I appreciate the color. And then turning towards transactions. The pipeline seems pretty stable compared to prior quarters as well. Just curious kind of how you balance the level of transactions, the timing of closing those transactions along with the time needed to find the right dispositions to fund the acquisitions or if you are considering maybe increasing the debt levels or leverage if there's a scale you have there when you see the optimal acquisitions and the time line needs to be sped up, so you can't really wait for the offsetting dispositions? William Monroe: Our goal is really to execute and sequence the dispositions just like we did in the fourth quarter, where we sold the inpatient rehab facility. There was a little bit of a gap between selling that facility and acquiring the new facility, which had some small impact on our financials. But overall, it worked very, very well. And as I mentioned in the prepared remarks, we're working right now on a handful of other acquisitions so that we could similarly sequence in the same way when we acquire these facilities that we expect, these inpatient rehab facilities that we expect to close sometime in the third quarter. So the goal is obviously to do it and sequence it in a way that we can do a 1031 like-kind exchange, if that's appropriate because we would anticipate a significant gain on some of the assets that we're looking to sell. But you're right, I mean buying and selling real estate is inherently -- sometimes those time gaps don't always sequence correctly. I think everybody should know there may be some gaps between when we close and when we sell. But the goal is to keep that leverage in sort of the ZIP code that it is today and certainly not add leverage over time. But some of that is going to be dependent on the timing of close. But we feel confident that based on what we have in progress from a capital recycling perspective will allow us to acquire assets without adding meaningful leverage to the balance sheet. Connor Mitchell: Okay. I appreciate that as well. And maybe just one more, if I could sneak it in. Can you just give an update on if there's really been any change in what you're seeing for cap rates for either acquisitions or dispositions? I know you gave some color in your opening remarks, but just maybe if there's anything you're seeing in the market right now that's really changing drastically from the recent closed transactions? William Monroe: I think -- look, the good news is I think there's a high level of demand for the assets that we're looking to selectively manage through a disposition process and our capital recycling. We received an indicative 7.9% cap rate on the sale of inpatient rehab. We would expect similar sort of pricing on other types of dispositions that we're looking at. So we feel like that, that disposition capital recycling activity is going to be accretive to us and to the business. And we do see opportunities on the buy side in that 9% to 10% cap rate range. But of course, not having -- not wanting to raise stock through the ATM at these price levels, we're being very, very selective. What I would say is, in addition to these acquisitions that are in the pipeline, as I mentioned on the prepared remarks, we have some embedded growth in our 2026 numbers because we've got a redevelopment project that we anticipate coming online in mid-2026. And then we've got another redevelopment project that should be coming online at the end of the year. And so those are essentially like acquisitions for us. And so we expect that to be a nice tailwind in the second half of the year for us. Operator: The next question will come from Michael Lewis with Truist. Michael Lewis: Dave, last quarter on the call, you said you expected the leased percentage for the portfolio to be up 50 to 100 bps in 4Q, and it was. It was up 50 bps. I was just wondering if you felt compelled to give a little bit of insight into what you might expect for occupancy either over the next quarter or 2 or for the full year? Do you expect that to continue going up this year? William Monroe: Michael, thanks for the question. I think over the next -- we have had great leasing activity in the portfolio. We've also had some -- we had some terminations toward the end of last year. And so I think Mark and his team are doing a remarkable job of taking some of those terminations, re-leasing the space. I think our view, big picture is that's going to be really good overall for the portfolio. As you know, it takes a little bit of time for those new leases to become economic. But we feel very good about the leasing activity we're seeing. But the reality of it is, it's probably -- I would say, this range of in the low 90s will continue for the next couple of quarters. I wouldn't suspect that it goes up meaningfully or down meaningfully just because some of the new leases we're getting in place. I think it's really in the second half of the year that we would expect to see some momentum as it relates to growing leased occupancy. So I would anticipate that, that leased occupancy would stay in that general ZIP code of where it is today for the next couple of quarters with it looking to increase second half of this year. Michael Lewis: Okay. And then my second question is about the investment pipeline. I remember the days when the annual target was $120 million to $150 million annually. Obviously, with COVID and some changes in the cost of capital, you've been below that in recent years. Is the goal now you have these developments that you'll be taking down? Is that kind of the pipeline? Or if you were going to do $120 million to $150 million annually and you had the cost of capital, is there still that volume of opportunity out there? Or has something changed since the pandemic and maybe there's not as many opportunities in your neck? William Monroe: Yes. The opportunity is still there, Michael. We're chomping at the bit and see a lot of great opportunities. We're constantly in touch with sort of that core group of brokers that we've worked with routinely over the last 10 years with the company. We've got great relationships. And we're seeing the activity in that 9% to 10% range. And what I would tell you is, if our stock was in a different spot, and we were doing what we have done prior to the last 1.5 years, we would be looking to make those acquisitions. We've always, as you will recall, because you've covered the company for a long time, there's always been sort of half of our business has been client business that we've -- programmatic that we've done, so call it, $50 million to $60 million a year. And then the other half has been that brokered business with some redevelopment projects mixed in. And I think what you've seen and what we've acted on over the last couple of years with our stock price where it was is we've been focused more on supporting our clients. And as soon as that dynamic changes and the share price gets to a level where we can raise capital accretively, we would absolutely look to augment that client acquisition with the broker deals that we've done historically. Michael Lewis: Okay. And then lastly for me, the last few years, you've also had a note in the investor presentation about this dialysis term sheet pipeline. I didn't see that disclosure this time. Is that relationship kind of done? Or is that on the back burner and that could still become something programmatic down the line? William Monroe: It's on -- I think you nailed it. It is on the back burner. Most of that company's growth has really been buying operations, there hasn't been real estate as part of the -- their overall acquisition cadence, and that has been the case now for a while. And so -- and they have been focused on really their core business over the last couple of years now that they've done several acquisitions. So putting it in there just didn't seem like it made sense just given the fact that we haven't executed any transactions under that deal. We still have a great relationship and 4 dialysis clinics with the operator, and we'll continue to monitor their acquisition activity. But yes, I would anticipate that, that is an opportunistic and certainly not a focus or an expectation that, that would occur anytime soon. Michael Lewis: Thank you, Michael. Appreciate the questions. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Dave Dupuy for any closing remarks. William Monroe: Thanks, everybody. I appreciate everyone joining us, and feel free to reach out if you have any additional questions. Hope everyone has a good day. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Jens Brückner: Good morning, ladies and gentlemen. A very warm welcome to the full year 2025 results presentation of EFG International. As usual, we will be presenting our results with speeches from the management team. We have today with us our CEO, Giorgio Pradelli; and obviously, our CFO and Deputy CEO, Dimitris Politis. And after the presentations, we have enough time, obviously, for your questions. We will start with questions in the room first and then move to potential questions from the call. Otherwise, as usually, I point out the disclaimer in the presentation. And without holding up further, I hand over to Giorgio. Thank you. Piergiorgio Pradelli: Thank you, Jens, and good morning. Also from my side, a warm welcome to everyone who is here in the room with us in Zurich and to everyone who will follow the presentation via webcast. Today, I'm very pleased to be here with Dimitris to present to you the full year 2025 presentation. I think 2025 has been a very strong year for EFG. It has been a year of strong progress. The operating business is firing on all cylinders, and it has been basically a record year. We have been able to grow very strongly from organic growth. Today, or actually in a few days is 10 years from the acquisition of BSI, and we are very pleased that we have started a new series of acquisitions. We have done 3 acquisitions in the last 12 months, and we were able to report the highest ever level of assets under management. We were able to translate this growth in record revenues, and we were able to -- despite the fact that actually we had to mitigate declining interest rates and a weak dollar that, as you know, there have been for us, headwinds in 2025 and most probably will remain headwinds in 2026, but this record operating income was translated in record operating profitability. And also, we made a lot of progress in dealing with our legacy matters, and we delivered a record IFRS net profit, and we are in a position to propose a record dividend per share to our shareholders. Let us now move to Page 4 and just to give you some of the highlights of our results for 2025. As I said, it has been a year of strong organic growth, strong NNA complemented by M&A. The NNA has been CHF 11.3 billion. This is 6.8% growth year-on-year. And this is actually the second highest level of NNA growth, the highest since the global financial crisis. And I'm very pleased because we have had an acceleration in the fourth quarter. As I mentioned earlier, we were able to do 3 acquisitions in the last 12 months. Two acquisitions are already in the numbers. They amount to CHF 12 billion, and they basically are equivalent to 1-year NNA, if you wish. As I mentioned earlier, our strong growth in terms of organic has been complemented by M&A, has been translated in the highest level ever of assets under management, CHF 185 billion. This growth has been translated in an impressive, I would say, operating performance, it's almost CHF 500 million, CHF 493 million. This is 26% year-on-year. And as I said, this strong operating growth has allowed us to absorb also dealing with some of the legacy matters that we know we have to derisk. All in all, at the end, as you know, we had a positive element in the first half of the year was CHF 45 million due to insurance recovery from a legacy matter that we closed in 2022. In the second half, we had a provision of CHF 59 million for another litigation that dates back to 15, 20 years back. All in all, it's CHF 14 million. We had also another legacy topic is about insurance. Insurance, there is some volatility. Dimitris will go in more detail. But again, we have absorbed also this volatile topic, and we are able to deliver CHF 325 million IFRS net profit, which is the highest in record. And this will allow us to deliver or to propose the highest dividend ever, CHF 0.65 per share. What I think is remarkable is that this is the fifth consecutive increase in our dividend, and this obviously shows how strong our operating profit is. Moving to the next slide. On Slide 6, we can see that 2025 has been a very strong year, but this is also the conclusion of our last cycle, the cycle 2023 to 2025. And what is remarkable here, we already discussed at length 3 months ago in this room during our Investors Day, is that we were able to deliver a consistent, sustainable and profitable growth over the last cycle, but also you can go back to 2019, and you see that this has been a continuous improvement of the operating performance. Now with this, I would like to give the floor to Dimitris, our CFO and Deputy CEO. Dimitrios Politis: Good morning from me, and thank you for attending the full year 2025 results presentation. I would like to start with, as usual, with the view of the performance of EFG over the cycle. Here on Page 8, you see the performance on the profits starting from 2019 up to 2025. It is fair to say that we are concluding this cycle, the '23-'25 business cycle, which is the last one, with record profits. The profits are at CHF 325 million. We are also posting the highest ever EPS with CHF 1.03 per share, and our return on tangible equity is above 18%. One element to highlight, you'll see on the top right, is the fact that in this business cycle, what was really marked as very positive performance has been revenue performance. In the last 3 years, we've managed to increase our revenues by 31%. In contrast, in the previous cycle, the growth was only 8%. So our strategy of building volume, building AUM and defending or expanding the margin has been very successful through the cycle. At the same time, you will see that efficiency has improved. Back in 2019, the cost-to-income ratio was about 84% or even higher. Now we are below 70%. And clearly, this has led to the expansion of EPS. We started with CHF 0.30 per share. Now we are above CHF 1, which allows also what Giorgio mentioned, which is the fifth consecutive increase in dividend per share in the last 5 years. Now the next page is a bit more focusing simply on 2025, and these are the key highlights for this year. Clearly, our strong operating performance continues in 2025. Business development, 6.8% growth in net new assets. The revenue margin was at 98 basis points compared to 96 last year, and we hired or signed 79 CROs. I think what is very important is the figure at the bottom of the page, the AUM have now grown to CHF 185 billion, which is a very good starting point for this business cycle. In terms of profitability, revenue growth was 11% in the year, or 8% excluding the exceptionals. Cost-to-income ratio improved compared to last year. The cost-to-income that we post as a headline is 69.8%. And the bottom line profit, again, is at a record CHF 325 million, or CHF 339 million if we were to exclude the exceptionals. Finally, in terms of the soundness of the balance sheet, core Tier 1 is at 14%. We had a fantastic capital generation of over 500 basis points during the course of the year. LCR is very strong at 270%, and the dividend is at CHF 0.65 per share. Now zooming a bit even closer to the last 2 months, because we gave you a trading update in November, which included 10-month results. If you look at the chart, what we mentioned in November is the first bar, which is about CHF 320 million in the first 10 months. If you look at the performance in the last 2 months, we added more than CHF 60 million of bottom line in 2 months. The run rate of over CHF 30 million per month is the highest level in terms of run rate. So both in terms of profitability run rate and also in terms of revenue margin run rates, the figures are higher than what we communicated back in November of 2025. As Giorgio said, we also have 2 exceptionals in the year. On a net basis, they create a drag of CHF 14 million net in the P&L. So if we were to exclude the exceptionals, our bottom line number would have been CHF 339 million, which is a 6% increase year-on-year. In terms of other elements in the profitability, I would say that we also had limited contribution from life insurance, which brings me to the next page, Page 11. And this page is important because on this page, we try to strip out the noise and make sure that we give you a clear indication of how the core private banking business is evolving. So what you see here in the chart is operating profit. It's simply revenues less costs, and we have indicated separately the contribution from life insurance. What you will notice is that in 2025, the core private banking business delivered CHF 425 million of operating profit, which is an increase of 18% compared to the last year. This is the highest increase in core banking operating profit that we've seen in the last business cycle. What does that mean? That means that the investments that we made in the first part of this business cycle, and I remind you that there were investments that had to do with hiring in 2023 and 2024, also investment in technology that were made in that period. So all these investments are now paying off, and we're seeing the impact in P&L of those investments which were made 1 or 2 years ago. In terms of the metrics that you would follow in order to figure out whether these investments are going well or not, what I can report is that -- and you see it also in the figures is we've seen consistent strong business development. The last 2 years, the NNA growth has been above the 4% to 6% range that we actually communicated as our target. And also what we've been managing to do is turning this growth into increased profits. In terms of how you do that is clearly we need revenues and the revenue margin to be resilient. I'll come back to that later. And you also need cost discipline, and I'll also come back to that later with specific pages on it, because we've also seen that on the cost side, our saving targets have been exceeding the initial targets that we have communicated. Just to note that, as you know, we have concluded 2 acquisitions in 2025. These acquisitions had a small negative impact in P&L in 2025, simply because the acquisition costs were higher and they were only included in the P&L for a couple of months. Finally, life insurance, or the contribution from life insurance has been a lot more muted in 2025. This comes because we have also derisked our position. As you know, we have taken action already in previous years, but also in 2025 to reduce our exposure. And we also expect that going forward, the contribution from life insurance is going to be a lot lower than it used to be in previous years. The next 2 pages are the summary of the financials, so I'll skip those 2. I'll go to Page 14. So Page 14 is the usual set of numbers that matches our financial targets. These are the financial targets for '23 to '25. As mentioned earlier, we had a 4% to 6% growth range for NNA. We've been beating that the last couple of years. The revenue margin has been very resilient against our target of 85 basis points. The cost-to-income ratio has been consistently coming down. The target was 69%, and the return on tangible equity in the last 3 years now has been above the 15% to 18% target that we have set ourselves back in 2022. Finally, in terms of the targets, and this is probably the last time that we'll be seeing this page on this presentation. This is the conclusion of the '23 to '25. You will see that the performance against the targets has been very strong. I think one element that we also communicated was that we were targeting a 15% growth in profits on average during the period every year. The actual delivery has been 19%. So in terms of bottom line, which is clearly what we're aiming for, we have been doing better than what we have promised. Now going a bit more into the growth on Page 16. The growth in AUM is 12%. So we went from CHF 165.5 billion to CHF 185 billion in 2025. More importantly, the net new asset growth was CHF 11.3 billion with pretty much all cylinders firing at very good rates, which is on the next page. CHF 11.3 billion is the highest nominal amount of NNA that we've had at EFG since the great financial crisis. So in the last 15 years or almost 20 years now, this is the highest NNA of CHF 11.3 billion that we have published. Markets were favorable. As we all know, currencies were completely against us with the dollar weakening significantly. And we also added CHF 11.7 billion coming from 2 acquisitions, Cite Gestion and ISG. And in January 2026, we also announced a third one, the acquisition of Quilvest, which will add another CHF 4 billion once it is concluded. What really pleases me is the figures on the right. We've had a couple of periods where new CROs have been, call it, the sole almost contributors to NNA growth. In 2025, we've seen a reversal to a composition which looks more like what we've seen in previous years, so before 2023, about 65% of our NNA is coming from new CROs and about 35% of NNA is coming from existing CROs. In terms of the geographical split of the business development, this is on the next page, Page 17. You'll see that every single region is posting a growth which is above 4%. So every single region is at least within the 4% to 6%. And we have 2 with Asia Pacific and the Americas, which are above the 6% growth range. So in reality, overall, it's a very good performance. It's all the regions firing at very good levels, and this is a testament to our diversified business model in terms of how we deliver growth. We have also delivered growth by hiring CROs, and this is on the next page, on Page 18. Our total number of CROs at the end of 2025 was 763. This comes with 238 CROs in Shaw and Partners in Australia. And we also have 67 new CROs that joined through acquisitions in 2025. If you see in the middle, our hiring patterns, clearly, in 2023, the numbers were very high, and this came from a dislocation with Credit Suisse-UBS. Although we just hired about 1/4 of the people in that year from Credit Suisse. All the rest came from about 20 other banks. The numbers have gone down in '24 and '25. They are reverting pretty much to the levels that we have set out as our target gross hiring numbers of 50 to 70 CROs. So in 2025, we actually hired 51 CROs, and we also extended offers to sign to another 28 for a total of 79 CROs that have been hired or have been signed to hire. In terms of the AUM to CRO, this is on the right-hand side. Why is this important? This is important because it's a very good measure of efficiency. And the more you can have a higher AUM per CRO, the more efficient we become. As you see, we've been growing throughout the years. On a like-for-like basis, we were at CHF 363 million per CRO at the end of 2025. If you were to include the acquisitions, you are at CHF 342 million, simply because the acquisitions come with smaller-sized CROs given the nature. At the same time, one of the reasons that we've managed to increase this is that we've been effective in performance managing our CROs, and you see that both on the load and also on the number of CROs. Now moving a bit more to the P&L. As I mentioned earlier, we have a very specific strategy, which is about building scale, and it's also about defending or even expanding our margin. What does that mean? What is the result of that? That means that our top line has been growing, has been growing significantly throughout the last 3 years, but also our revenue mix is becoming of a high quality. If you look at what has happened in 2025, you'll notice that our commission income, which is our bread and butter, this is the highest quality revenue that we have, our commission income grew by 17%, and this is on the back of, firstly, AUMs expanding, but also us gaining 3 percentage points year-on-year on the commission margin. So we've been managing to expanding the margin on top of growing the volume. On the other hand, we've discussed many times that interest income or interest-related income can be a source of vulnerability, because the rates have been going down. Actually, what we see in 2025 is that in the second half of 2025, interest-related income is marginally up compared to the first half, which probably means that we have reached close to the bottom of that phase of absorbing rate drops throughout the last couple of years. At the same time, we've seen a lot of client activity in currencies and metals. Of course, this is linked to the increased volatility, both in currencies and metals in the last couple of years. And this has helped net other income. And clearly, we've had a more limited contribution from life insurance in the net other income as well. In terms of going back to our strategy of how we intend to grow going forward, clearly, we will have to defend margin. I'll come back to why we believe that our margin is resilient on the next page. But one thing to note is that in terms of the growth element, so the AUM, the starting point in 2026 is CHF 185 billion of AUM. The average AUM in 2025 were CHF 170 billion. So we have a 10% head start in nominal AUM as we start the year in 2026. Next page, Page 20. It's about resilient revenue margin. You will see that the revenue margin that we have in the second half of the year is at 93 basis points. When we had the Investor Day in November of last year, that figure was 92 basis points. So we have actually seen an expansion of the revenue margin in the last 2 months of the year. In terms of our expectations going forward, look, the 2 key topics are interest rates and also can we continue expanding commission margin. On the interest rates, you see the sensitivity that we show on the top right. The sensitivity is CHF 36 million of drop in revenues if all 4 major currencies lose 100 basis points in the rates. Clearly, that scenario is not realistic at least for 2026, given the information that we have. So our expectation is that the sensitivity to interest rates is now a lot more muted. Maybe we lose a basis point in 2026, but clearly, it is marginal compared to our overall level of 93 basis points of revenue margin, which is way ahead of the 85 basis points, which is the average for the last 10 years. At the bottom, you'll also see the fact and the efforts we have been making to expand our commission margin. Firstly, you see mandate penetration. It has reached 67% at the end of the year. This is against our target of 65% to 70% that we had for this business cycle. And also, you'll see that the breakdown between recurring commissions and nonrecurring commissions is also moving in the right direction. And we have now a 46% -- 46 basis point commission margin for the full year 2025. Moving on to costs on Page 21. You'll see that we have operating expenses up 6%. This is the nominal growth. But this growth also masks the fact that we've done 2 acquisitions. These 2 acquisitions account for about 2.5% of that growth. So if you were to strip that out, the real growth is 3.7%. What is more important is that the FTEs in comparable terms have been going down. So we closed the year 2024 with 3,114. On a like-for-like basis, the year 2025 closed at 3,037. So we are about 80 FTEs down. Clearly, we have added more because we've done 2 acquisitions. And the salary costs have been going down at the same time. There is growth in the personnel side because of variable compensation, and this is something that is expected. Actually, in my view, the only cost that I can accept going up is variable compensation, because it means that we're making probably 5x that revenue when it comes to revenues. So the operating leverage is very high. We had stable other expenses. So general and admin expenses were pretty much flat compared to last year, and we still carry some legal and litigation fees. Now moving to the next page, which is Page 22. This is a page on how we think about cost management. And several people in the room or on the phone call this self-help. We call it finding or creating room, so that we can grow our business. And you will see that because if you look at the chart in terms of the last bar of the chart where it's under cost management actions, you'll see that, again, in 2025, we've managed to reduce our cost by about 3% during the course of the year, and that created exactly the room to invest in hiring and other investments, which is the first bar in that chart. Actually, even the numbers like the investment is CHF 36 million and the cost saving is CHF 38 million. So that matches very well in terms of our strategy in cost and efficiency management. The only 2 reasons costs have gone up are variable compensation, the CHF 28 million that you see in the second bar. And in the fourth bar, it's also the costs that come from the acquisition of Cite Gestion and ISG. Furthermore, at the bottom right, you'll see that as also communicated in November, we have exceeded our efficiency and cost management targets under the Simplicity project. The initial target was CHF 40 million. That target was up to CHF 60 million and the actual conclusion is CHF 66 million. There have been a number of actions included in this program. It's about rationalization. It's about automation. It's about reviewing processes end-to-end. And we already have a new program, which is running for the '26 to '28 cycle with a scope of CHF 70 million to CHF 80 million of efficiency and cost savings. Moving on to the balance sheet. In terms of the balance sheet on the left, no big movements. We still have about CHF 18 billion or more than CHF 18 billion of very liquid assets on the balance sheet. Core capital ratio, CET1 capital ratio at 14%, total capital ratio of 17.3%. The loan-to-deposit ratio is at 58%, and both liquidity ratios are at very good levels, at where they were last year or even better. And finally, we bought 11.8 million of treasury shares throughout 2025. And there is a new action on the buyback. The Board decided that the buyback continues in '26 and '27 for a total of up to 9 million shares to be acquired until July 2027. In terms of the impact from acquisitions, the acquisitions cost 130 basis points on the core Tier 1 ratio. Now as Giorgio mentioned, clearly, our primary focus is on expanding the core business. At the same time, we need to make sure that we successfully derisk the balance sheet from the legacy positions that come from pretty much 20 years ago. On the left-hand side, you see the actions that we have taken on the life insurance space. We've been quite active in 2025. Two major actions. One was to dispose of the entire synthetic portfolio and the second one was to unload about 1/4 of our physical holdings in life insurance policies. I'm very pleased to say that the carrying value of that portfolio now is about CHF 260 million as at the end of 2025. It was CHF 360 million at the end of 2024, and it was over CHF 500 million when we started this business cycle. So there's been continuous derisking and the numbers are going down. Hence, I expect some volatility coming from it. But overall, I don't expect big numbers to be coming through the P&L going forward. On the right-hand side, we have the legacy litigation cases. Some are in the life insurance space. We've resolved 3 there. There's one more pending, probably end of 2026 or early 2027. And then you have the 2 exceptionals that also Giorgio described earlier. The positive one is the first one, which is the recovery from an insurance on an old matter. And the second one is the provision on a litigation case, which we took in December. On a combined basis, these 2 created a CHF 14 million drag on our reported P&L. In terms of capital, which is on the next page, Page 25, we had one of the strongest capital generations in the last few years. In terms of gross levels, we were over 5 percentage points of capital generation. On a net basis, after risk-weighted assets and dividends, the net capital generation was 1.6% for the 12 months. This is part of the capital-light model, and we do expect that we'll be running at very strong organic capital generation going forward. What you see after that is the buyback which, combined with the dividend, enhances the returns that we offer to our shareholder. And then quite a few one-off items. So the acquisitions cost 130 basis points. The provision for the litigation case was 100. And we have 2 currency impacts. One is, call it, the normal currency. And then the second one refers simply to the Tier 1 instrument that we hold. The reason we show it separately is that if we decide to call that instrument, that will come back. So although you see that the core Tier 1 ratio that we report at year-end is at 14%, effectively, if we were to call that instrument, it would have been 14.4% after we unwind. With 14% or 14.4%, we are clearly very comfortably within our 12% to 15% capital ratio that we communicated back in November. And with the combination of the strong capital generation, we look forward to discussing even more M&A activity if it fits the plans and conditions that we hold. Which brings me nicely to Quilvest. This is the last M&A that we announced back in January. You see some of the figures here. I will not spend too much time on it. The only thing I'd like to say is that it looks small. It's CHF 4 billion AUM. But the beauty of Quilvest is the very high quality of its clients. And given the fact that it has been a small bank for many years, we believe that we can expand dramatically the offering to these clients. So it is an acquisition where we are looking to make sure that 1 plus 1 makes 3 and make sure that we create value for all the stakeholders. And to close, and this is on Page 27. I think that we are at the juncture where we are officially closing '23 to '25, and we are officially opening '26 to '28. We are definitely closing 2025 on a very high note, record growth, record profitability, record momentum in the profitability that we are posting. So I think we have all the ingredients to feel very comfortable about the next cycle. The priorities for '26, unfortunately, in our business just remain pretty much the same. It's not that we're changing priorities. So it's going to be about business development. It's going to be about making sure that we maintain the high growth in the top line, preserve margin. And at the same time, that we maintain our cost discipline while we're doing all these things. And the last part is, clearly, we did 2 acquisitions in 2025. Now we need to make sure we put them to work. These acquisitions, as I said earlier, had a negative impact in 2025. They have already started having a positive impact in 2026. But it's a matter of making sure that we exploit our investments to the full potential to make sure that we further expand profitability in 2026 and beyond. In terms of the next cycle, these are the financial targets that you see on the right. And just to repeat, 4% to 6% growth in terms of net new assets, revenue margin in excess of 85 basis points, cost-to-income ratio of 68%, and a return on tangible equity of 20%. On that note, I'd like to thank you very much, and I pass it back to Giorgio for priorities and outlook. Thank you. Piergiorgio Pradelli: Thank you, Dimitris. And let us now focus on the outlook, what we can see for 2026 and beyond and what are our priorities for 2026 to 2028. I would like to start with this page. You have seen this page during the Investors Day. This is our strategic framework. And 3 months ago, we basically said that we want to continue to build on our strength. We want to continue to focus on our clients. When I think about clients, I always think about net new assets, because if we do a good job with our clients, we can increase the share of wallet and we can attract new clients. Obviously, we want to deliver the best possible content to our clients in order to increase the level of engagement and ultimately, the level of margin and operating income. And finally, we need to translate all this into a growing profitability via Simplicity and operating leverage. At the same time, we have identified 3 new areas for growth, opportunities of growth. And we spoke about branding and client experience. We spoke about commercial excellence, and we spoke about tech-enabled services and processes when we introduced the concept of the augmented CROs. Again, it's early days. We just started the new cycle and only 3 months past from the Investors Day, but we believe that we have done already quite good progress in all these 3 areas, and we would like to give you a quick update. First of all, about branding, we stated in November 2025 that brand is important for us, it's important for our clients, and we wanted to strengthen our brand. Our ambition was to become or is to become one of the top 3 Swiss private banking brands by 2028. And in terms of brand finance, we have a ranking among the top 250 brands globally. We are very pleased because the brand finance report will come out at the beginning of March, I think the 4th of March, but we are allowed to present a preview of our results, and we are very pleased because the brand value has increased in excess of 50% to CHF 629 million. And what is also very important, we have gained more than 50 places, 50 positions, and we are now 262 in the ranking, which is obviously very close to the 250 that was our original objective for 2028. So I think this progress reflects our investments in an enhanced client experience and a higher brand recognition across markets where we invested quite a lot in the last few years. Now the second area is about the technology and is about launching the augmented CRO. Obviously, these days, I'm very pleased that we brought this concept 3 months ago, because, as you know, these days, everybody talks about AI basically substituting asset managers. And in the U.S., there was also a debate whether AI will substitute players like Charles Schwab and others. We always said, and we said it 3 months ago, and we continue to believe that is that AI and technology and the human factor are complementary. And obviously, we believe that our client relationship officers are among the best in the industry, but we believe that we can improve further if we are able to give them not only great teams around them in the areas of investment solutions, wealth solutions, credit solutions and global markets, but also the best possible digital solutions. We have announced 3 months ago that we have started a cooperation with BlackRock for the Aladdin system. We are pleased to report now that this has been rolled out in Switzerland, which is our biggest region, and our client relationship officers are very pleased. We have also launched the CRO Atlas, which is basically a tool that allows the CRO to have clear insights about their clients, the portfolio, the businesses, and we expect an increased ability for our client relationship officer to increase the share of wallet and the client engagement. And again, we started to do our first steps regarding AI. We have rolled out Ally, which is our in-house AI platform to all the new locations, and we have seen that the adoption has been incredible, which obviously shows how people are interested in this tool. So we continue to go forward in this direction. It's a journey. But again, the progress in the first 3 months is very encouraging and the new CRO team, again, is very committed to make us one of the best firms also in this area. The third point is about commercial excellence, and we start seeing some improvements in terms of client engagement and share of wallet. Dimitris already mentioned that our existing CROs are improving in terms of gathering assets, which is obviously a function of attracting new clients, but also a function of improving the share of wallet. And as I mentioned earlier, content for us is very important. Obviously, we have great teams in our investment and wealth solutions that provide solutions to our clients. But clearly, it is also important to create an ecosystem with top players in the market, and we have announced yesterday a cooperation, a partnership with Capital Group, one of the biggest active asset manager in the world. And we have been cooperating already for a long time, but we have decided to deepen our partnership, and I think this is a mean in a way to further enhance our personalized offering and impartial advice to our clients, which ultimately will support basically our business. Now 3 months ago, at the end of November, we presented to you our operating model. Our operating model continues to deliver. In essence, we continue to focus on growth, translating both organic and via acquisition. We translate this growth in growing profitability. We use part of the profitability that we generate in investing in order to transform the bank for the better, and this generates attractive returns. As you have seen in 2025, we were able to deliver very attractive returns to our shareholders indeed. Now looking at 2026, I must say that the year started as 2025 ended. This situation where there is a lot of volatility and uncertainty driven from geopolitics to financial markets, and we can debate for hours about the situation. But this volatility, coupled with the attitude of our investors, which is actually quite risk-on, is quite constructive and positive for our clients, because we see that the level of engagement and the level of transactions that our clients are doing with our CROs and with our dealing floors is at very high level. And we expect this to continue as long as the overall attitude is risk-on. If we are going to have another risk-off situation like in April last year, then we will have to see and obviously react. But for the time being, the year started very, very well. And for us, the priorities, as Dimitris said, do not change quarter after quarter, but I would like to emphasize them again. Number one obviously is about maintaining our growth momentum. So net new assets and client engagement remains our top priority. Second, after NNA, we have now M&A. M&A is important. As mentioned already, we have done 3 acquisitions in the last 12 months. This is CHF 16 billion, not dollars. I think maybe earlier, I mentioned dollars. No, no, we continue to report in Swiss francs. And obviously, it is important that these acquisitions start basically being integrated and start delivering in terms of profit contribution starting in 2026. The third priority after NNA and M&A remains to defend our margin. Margin resilience is very, very important. And again, we have managed very well, I believe, in 2025 to mitigate the headwinds in terms of declining interest rates and a weaker U.S. dollar. As Dimitris says, I think that by now, the declining interest rate is like when you sail, the wind is becoming softer. So it's not really an issue anymore. I think we will be able to absorb the 1 basis point that Dimitris has indicated. The weaker dollar, this is a bit more complicated, because as we see these days, it's very difficult to predict the direction. I think there was, at the end of the year and beginning of this year, some wishful thinking by many market participants that we could see a rebound. We have not seen that yet. And so we will have to continue to focus on what we can control. And what we can control is, for sure, the net commission income and all the advisory activity in terms of investment solutions, wealth solutions, credit solutions and global markets. Next priority remains obviously to generate operating leverage. We discussed 3 months ago about the golden rule to try to grow revenues at a double rate of cost. Last year, depending on how you look at it, we were very, very close to that. I think we will continue this year and technology, for sure, will allow us to improve productivity and efficiency. And finally, we are obviously very committed to deliver for 2026, and we are very confident to meet the 2028 financial targets. Now we are entering a new cycle. We are closing, I think, today -- well, we have still the general assembly in a month. But after that, we will close the 2023, 2025 cycle once and for all. But again, it has been a fantastic ride, and we are starting the new cycle in a position of strength. And so all the initiatives -- just to be very clear, all the initiatives that I was mentioning before at the end of the day are geared in ensuring that we deliver a consistent performance, and we unlock the power of compounding, as you can see on the right-hand side of Slide 34. And again, our objective at the end of the day is to generate a double-digit net profit growth at around 15% and to achieve a return on tangible equity of 20%. So in closing and looking ahead, first of all, I would like to mention that our aspiration, our vision is to be the private bank of choice for generations of clients. I think that the momentum of the last years shows that we are already, for many clients, the private banking of choice for generations of clients. Obviously, we want to become for a bigger number of clients and to be really recognized for delivering fully personalized service and impartial advice. To close, I would like to say that 2025 has shown that we are closing the cycle with a strong momentum. And as I said, we were able to translate this in record profit and very attractive returns for our shareholders. We also made 3 acquisitions in our key markets in the last 12 months. And this, in my view, is important to be emphasized how we can successfully complement organic growth with strategic M&A acquisitions. So overall, our business model is not only, I would say, resilient, but is also geared towards profitable and sustainable growth. And this is the case today and will remain the case in the next cycle. Obviously, as a management team and all our teams at EFG that I thank here for the commitment and the dedication to EFG are fully focused on the execution of the budget, first of all, for 2026, and the 2028 strategic plan. And clearly, we are very confident to deliver value for all our shareholders. And with this, I thank you for your attention. I close here the formal presentation and hand over back to Jens to open the Q&A session. Jens, the floor is yours. Jens Brückner: Thank you, Giorgio. Thank you, Dimitris, for your presentations. As just said, we're starting the Q&A session in the room. So if we have a question, please let's start with Máté over there, so first question. Mate Nemes: Máté Nemes from UBS. I have a couple of questions. The first one would be on your comments that run rates in a number of areas were better versus what you expected at the time of the CMD that relates to the last 2 months of the year. Could you talk about what surprised positively? What are the areas that perhaps you are more positive about versus the November CMD? That's the first question. The next one would be on the litigation provision that you booked in December. Could you share more details around this? What led to this provision? What triggered this? And how do you see the case unfold from here? And the last question would be on capital and the FX impact specifically. Can you talk about your capital hedging approach? Does the 60 basis point negative impact mean that you're not applying FX hedges and there's a considerable mismatch between CET1 capital and RWAs? Dimitrios Politis: Let me start with the run rate. So I think there are two points on the run rate. The one is the actual bottom, bottom line, and we tried to show this on Page -- hold on a second. This is on Page 9 of the presentation, where you see that in the period between July and October 2025, we actually had CHF 100 million for those 4 months. And then that number went close to CHF 165 million for the 6 months. So clearly, the last 2 months have been very strong in terms of profit generation. So this is, for us, very positive. And as Giorgio said, we also see continued strength in the delivery of the profits also in the month of January of 2026. Now the second point is on the revenue margin, which is described on Page 19 of the presentation. For the second half of the year, we were at 93 basis points. Back in November, we reported that for the 10 months, we were -- or for the 4 months, which were the last 4 months at the time, we were at 92. So there, we also see an uptick, which makes us feel more positive. In terms of why things are better than what we're expecting, there are three reasons. One is the mandate penetration effort continues, and we see that translating into commission income and commission margin. The second one is that we had good client activity in the last 2 months and in January of 2026. And the third one is the pressure on interest-related income seems to be coming down. So a combination of all three is what helps us feel more comfortable and more confident that, okay, maybe we do not stay at 93 going forward, we -- it is certain that we'll have some erosion from the 93, but the starting point is a very solid starting point from which to work on. Piergiorgio Pradelli: And clearly, as you mentioned, the fact that our AUM is now 10% higher than the average of previous year is another element of support to our business. Dimitrios Politis: Now the second question was about the litigation and bear with me because there is -- I am somewhat limited in terms of the information I can disclose on that, as you can understand. Just to remind everybody, this is legacy litigation. It pertains to events that happened approximately 20 years ago and it was first disclosed in the financial statements back in 2019 in the contingent liability section. It is a complicated case. It is a case, which is now the trial is happening in London in the U.K. The plaintiff is PIFSS, which is the Kuwait state pension fund. And we have about 30 defendants in that case, including EFG and some other banks. Now in terms of more specifically about where we are in the case, the court proceedings, the court hearings started in March 2025, and they are still running. So we are in month 11 of court hearings. We do expect that the court hearing will last probably another couple of months. And we expect the verdict to come out in around the summer of 2026. Clearly, we continue to defend the case. We have very strong defenses, and we will continue arguing our case over the next 2 months still. But given the fact that we've gone through 11 months of trial means that we have gathered more information about the possible outcomes of the case. And we have now reached the stage where under the IFRS accounting rules, we can reliably estimate, and this is the reason why we posted -- we recorded this provision in our P&L and in our balance sheet in December 2025. Again, timing-wise, verdict is expected at the -- somewhere around summer of this year. And Máté, you had a question about capital, the capital impact and the currency. The way we work on currencies is that we try to match the composition of our equity with our composition of risk-weighted assets, which is a bit of a natural hedge, if you wish, which means that if currencies are moving one way, than I would expect -- so if you have an adverse effect in your equity, I expect that you get a positive effect in your risk-weighted assets and you try to match the two. So you're not managing the equity as a number, you're not managing risk-weighted assets as a number, you're managing core Tier 1 ratio as a number. This is how we think of it. But clearly, we disclosed the movement in the currency translation adjustment here because in 2025, it's a more significant number. And on the other element, which pertains to the Tier 1, it's a bit of a nod way that IFRS deals with it. Although the impact is only on the Tier 1 instrument, you cannot change that, the holding value of that instrument, you need to impact core Tier 1. That's the reason we're saying that if it gets called, that 40 basis points gets released. So our effective core Tier 1 ratio is now 14.4%, the way we think about it. Sorry for the detailed explanation. Jens Brückner: Great. And we have here the next question, please. Daniel Regli: This is Daniel Regli from Zürcher KB. I have two follow-up questions. One is on the gross margins and the development there, particularly, obviously, in H2, we saw kind of an uptick in the recurring commission margin. If you can just maybe reiterate a bit your explanations there and how far this is sustainable into the next years? And then secondly, obviously, again, on the net interest margin or the margin outlook on interest income. Just maybe help me understand a bit more how you exactly come to, let's say, 1 basis point pressure? What do you do? I think markets still expect some rate cuts in U.S. dollars as well. And then lastly, on the net new assets development, obviously, congratulations to the strong net new assets development, particularly Asia Pacific and Americas, but obviously also in Continental Europe. Can you maybe elaborate a bit more what drove the strong asset flows? And maybe also explain a bit what extent was driven by maybe some releveraging, particularly in Asia? Dimitrios Politis: So let me start with the margin question. I'll start with the interest margin or interest-related margin, and I'll point you to Page 19 of the presentation. So on Page 19 of the presentation, we show the sensitivity to rates. And what you see at the top right part of the page is that if we lose 100 basis points on all 4 key currencies, the net impact for us is a reduction in revenue by CHF 36 million. Clearly, the majority is coming from the dollar. Clearly, we don't expect that all 4 currencies will lose 100 basis points in 2026. By the way, CHF 36 million is 2 basis points. So we don't expect to lose on all currencies and even on the dollar, maybe the 4 cuts is a bit too aggressive. So we estimate that, roughly speaking, it's not going to be a 2 basis point hit but a 1 basis hit in terms of the interest-related margin in 2026. Now to your other question about commission margin, the 2 reasons why the commission margin has increased is mandate penetration, which you see at the bottom right, going to 67%. And the second part is client activity. And so we are -- we have an even higher target for mandate penetration for the next business cycle, so the one that we currently just started, '26 to '28. And we see client activity continuing. Now again, if client activity pulls back, then especially in the nonrecurring side, you will see a drop, while the recurring side should be a lot more resilient going forward. Giorgio, if you want to take the growth? Piergiorgio Pradelli: Yes. In terms of NNA, as you know, first of all, this has been our 14th consecutive semester of NNA growth. So basically, this is 7 consecutive years. And clearly, we have a methodology and a focus on growing our business, which goes beyond 2025 and will continue in the next cycle. As you have seen on Page 16, I think that what is remarkable is that the growth has been basically very strong across regions. If you see basically all the regions are within our targets. Even more mature markets like Switzerland and the U.K. are within our margin. It is a combination, as Dimitris was saying, between new CROs, but also existing CROs, existing CROs have improved their performance. It is correct what you say in the sense that we did not have, like in previous years, deleveraging. We have seen back leveraging coming in. Obviously, we believe that the fact that interest rates are coming down at the short end and the curve is steepening. This allows clients to play the carry trade and obviously, they engage much more in terms of Lombard lending. But -- and this is on Page 40 and 41. If you look at our dynamics, basically our total NNA has been CHF 11.3 billion. The increase in lending is CHF 1.5 billion. This is about 13% of the total AUM. And if you go to the following page, on Page 41, you see that at the level of the stock, if you can go on Page 41, please, you see that the level of the stock is 11%. So the growth in lending is clearly 13% of the total NNA and is in line with our normal lending penetration. So I would say, yes, we are pleased that the deleveraging has stopped. But our growth is not lending-led. Asia has been -- just to make the points of Asia and the Americas, obviously, Asia Pacific is in excess of our margin, 8.5%. And we have had growth also in terms of hiring CROs. They've been all very successful and they're doing extremely well. And the Americas also there has been a growth in all the areas. We have opened in Panama. We have focused on Brazil. So it has been across the region. Jens Brückner: Great. Do we have another question in the room at this stage? Nothing -- the gentleman there, please? Unknown Analyst: [indiscernible]. You see the strong negative reaction on the stock market today with minus 9% due to your litigation case in the U.K. You had 36% of growth in the net benefit in the first half year 2025. Now you announced only 1% of growth. Why the benefits slowed down so much? You spoke about the litigation case in the U.K., which cost you CHF 60 million, but combined to the other positive litigation case in Korea, it only was CHF 40 million? So are there other reasons for the slowing down of the net benefit? And why did you communicate only now and not in December about this litigation case? And second question about the U.S. dollar exposure in your assets. I think you have 60% of exposure in assets. Is there any trend at your clients that they want to reduce that U.S. dollar exposure due to geopolitical reasons? Piergiorgio Pradelli: Maybe I can start on the stock price. And it's the first time I hear how the stock is doing because we have, the 3 of us, a pact that before going to the presentation, we never look at the stock price. So I was not aware, but let me tell you that our job is to manage the operating business of the company. And we have been told very young, not to focus on the stock price. And if the operating company and the operating performance of the company works very well, then the stock price will follow. I cannot comment -- I will not comment about today's stock price. Clearly, as you said, the overall drag for the exceptional is CHF 14 million. It is unfortunate that the positive was in the first half and the negative in the second half, but these are one-offs and have no impact, as we discussed on the operating performance of the company. You want to mention about the timing? Dimitrios Politis: Well, the timing comes with the ability to reliably estimate and that ability and the full estimate came very recently. So the appropriate timing to release that was with the full year results today. Piergiorgio Pradelli: Maybe the other element why this exception was CHF 14 million and the fact that the net profit if you look -- I think that the question was about the difference between the operating profit and the net profit is also due to the volatility of life insurance that it was mentioned on Page 10, I think. Page 10. If you go to Page 10. You can see here the difference in terms of performance of the life insurance that in 2024 was quite strong at CHF 32 million. And obviously, in 2025 was positive, but much less strong. And clearly, again, here, these are legacy matters. We cannot influence them directly with management actions. So the combination of the drag due to the exceptionals and the fact that life insurance was lower than the previous year, this is one of the explanations. Otherwise, the operating profit, as we said, is at record level, almost at CHF 500 million. Jens Brückner: Second question about the U.S. dollar. Piergiorgio Pradelli: U.S. dollar. Dimitrios Politis: Question on the U.S. dollar. Look, we see some clients that are moving away from the U.S. dollar. So we see some clients that now are also considering other currencies. If you look at the composition of our AUM, which is at the back of the presentation, clearly, this has not moved substantially. I'm trying to get the page. Piergiorgio Pradelli: Page 41. Dimitrios Politis: Page 41. So like the U.S. dollar was 47% last year. It's still 47% of currency this year. So it is more anecdotal than actually us seeing a significant trend in terms of the currencies that our clients wish to use. Jens Brückner: Okay. If we have no follow-up, then we move to the question on the phone, please. Operator: The first question from the phone comes from the line of Hannah Leivdal from Citi. Hannah Leivdal: I have two, please, if I may. So the first one is on your balance sheet and capital position is strong. But equally, your annual report outlines the number of legal cases outstanding. So what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside feeding into this versus what is available for M&A and other growth initiatives? And my second question is on the... Jens Brückner: Sorry to interrupt. We have a hard time understanding you. Maybe can you move your microphone a bit? Hannah Leivdal: Is that better? Jens Brückner: No, that's worse. Hannah Leivdal: Oh, it's worse. How about now? Is this any better? Or this is worse? Jens Brückner: A bit, yes, better. Hannah Leivdal: A bit better? Jens Brückner: Yes, let's try. Hannah Leivdal: I'll try again and then interrupt me. So I was asking on the balance sheet and capital position being very strong, but equally your annual report outlines a number of legal cases outstanding. So I was wanting to ask what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside paving into this versus what is available for M&A and other growth initiatives? Dimitrios Politis: So I think I heard the question. So I'll try to answer to the best that I can. So the -- as you say, our current CET1 position is effectively 14.4%. And I guide you to Page 24 of the presentation because through the latest provision that we took, we have derisked the largest single risk item we had in our -- on our balance sheet. It was the -- it is the largest contingent liability that we actually have on the balance sheet. So in terms of risk profile, now I believe that we are a lot sounder than we were before. At 14.4% of core Tier 1, we have about CHF 260 million of excess capital from our own management floor of 12%. And even more importantly, I would guide you to the capital generation that we have every year. So this year, it was over 5 percentage points of gross and 1.6% on net capital, which is the result of a capital-light model, clearly for a private bank like us. So I think that given where we are, we are very comfortable with our capital position. We are generating capital which we can use for new acquisitions. And we do have also a capital buffer of CHF 260 million, which we can also use for other acquisition if we wish to do so. By the way, if you want to discuss acquisitions, it is not that the acquisitions are simply done in cash. There's always -- or usually, there is a share element included in the acquisitions that gives us even more firepower. Hopefully, I've answered the question because I could not hear you very, very well. Hannah Leivdal: Yes, that's very clear. I have another one, but I don't know if you can hear me. If it's any better? Dimitrios Politis: Just go ahead. Hannah Leivdal: Okay. Yes. So on the treasury swap margin, I just wanted to ask why did this increase in the second half despite narrowing spreads versus Swiss rates? And what was the swap volume in 2025, please? Dimitrios Politis: The reason that the treasury swap activities, the revenues from that increased in the second half is because the volume of our swaps increased. As you say -- as you rightly say, maybe the margin between the 2 currencies has not moved that much or even has narrowed a bit in the period, but it was through higher volumes of currency swaps that, that increased. And clearly, what also happened is that the NII element decreased because it's the other side of the same equation. Jens Brückner: Thank you for your question. I think we have another question on the phone, can we get that one, please? Operator: Next question from the phone comes from the line of Andreas Venditti from Vontobel. Andreas Venditti: I hope you can hear me better than my colleague just now. On M&A, you mentioned the negative profit... Jens Brückner: We can't understand you. That is even worse than before. Can we try to get the sound regulator or try again? Andreas Venditti: Can you hear me? Jens Brückner: No, not really. Andreas Venditti: Okay. Never mind. I'll come back to you, Jens. Jens Brückner: Now it's good. Now it's better. Andreas Venditti: It's better. Okay. I don't move, so I hope it's better. On M&A, you mentioned a negative impact on profits from the two small acquisitions. I guess it's a small number, but still to ask on this. Can you maybe quantify the negative impact, I guess, on the cost side, mainly from this on 2025 numbers? Dimitrios Politis: As you expect, Andreas, the overall contribution is a small single-digit negative number. And the reason it is negative is that we included the profits of Cite Gestion and ISG for a few months, like Cite Gestion was 2, 3 months. And we had some acquisition costs, which are the one-off part of doing M&A. And the balance of those 2 was negative. Clearly, both companies were profitable with actually profits growing significantly compared to the last year in 2025. It's just the timing of the acquisition and the amount of the M&A-related one-off costs that get us to this small negative result in 2025. Jens Brückner: Okay, does that answer the question? Do you have another one or it's good? I think we lost him. Is there another question in the room or not at this moment. Máté has another follow-up. Okay, let's take that one. Mate Nemes: Yes. Just one question. I wanted to ask you about the Lia AI platform that you rolled out in 2025. Could you talk about the capabilities and the exact use cases of that platform? Piergiorgio Pradelli: Yes, thank you. I think there are several use cases that we are using, in particular in the Investment Solutions area. Then there is the general, let's say, use cases that you have with a normal ChatGPT like chatbox. And clearly, the areas where we are trying to develop much more is everything related to compliance and risk. I've always been saying that right tech for us is more important at times than fintech. But these are the key areas where we are expanding. And the next level, but we are not there yet, will be how to improve the client experience because all the use cases I mentioned were more about efficiency on the backstage, and that will be the next area where we're going to focus on. Jens Brückner: Okay. I think there's no further questions on the phone. If there's nothing in the room, then I hand that back to Giorgio for the final remarks. Piergiorgio Pradelli: No. First of all, thank you for attending. Again, I would like to reiterate that 2025 has been a very strong year where we have achieved a record AUM, record profitability and record top line. Clearly, it's also a year where we have done progress in dealing with the legacy matters, and we closed successfully our 2023 and 2025 strategic cycle, and we are very confident starting in a position of strength, the 2026-2028 cycle. And as a management team, we are committed in executing our sustainable and profitable growth strategy as we have done in the previous period. With this, thank you very much for your attention.
Operator: Good morning, and welcome to the Analog Devices First Quarter Fiscal Year 2026 Earnings Conference Call, which is being audio webcast via telephone and over the web. I'd like to now introduce your host for today's call, Mr. Jeff Ambrosi, Head of Investor Relations. Sir, the floor is yours. Jeff Ambrosi: Thank you, Danny, and good morning, everybody. Thank you for joining our first quarter fiscal 2026 conference call. Joining me today is ADI's CEO and Chair, Vincent Roche; and ADI's CFO, Richard Puccio. For anyone who missed the release, you can find it at investor.analog.com, along with related financial schedules. The information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties, as further described in our earnings release, periodic reports and other materials filed with the SEC. Actual results could differ materially from the forward-looking information as these statements reflect our expectations only as of the date of this call. We undertake no obligation to update these statements, except as required by law. References to gross margin, operating and nonoperating expenses, operating margin, tax rate, earnings per share and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release, references to earnings per share are on a fully diluted basis. And with that, I will turn the call over to ADI's CEO and Chair, Vincent Roche. Vincent Roche: Thank you, Jeff, and a very good morning to you all. Well, we extended our momentum through the first quarter with revenue, profitability and earnings per share, all coming in above the midpoint of our guidance. Year-over-year growth was broad-based across our end markets with particular strength in industrial and communications, reflecting both cyclical improvement and company-specific execution. This performance underscores the strength of ADI's diversified and resilient business model, enabling us to navigate uncertainty while continuing to capture share in the markets that matter most. As you've heard me say many times before, the wellspring of ADI's prosperity is built on a culture of relentless innovation and deep customer engagement across the life cycle of our solutions. As such, these activities are always our first call on capital. And now we're investing at record levels. At the same time, we remain committed to returning 100% of our free cash flow to shareholders over the long term. And I'm pleased to share that we just announced an 11% increase to this year's dividend extending our impressive track record of annual dividend growth and reinforcing our focus on delivering consistent shareholder returns. Looking ahead, a strong second quarter outlook and improving demand signals reinforced our belief that fiscal '26 has the potential to be a banner year for ADI barring unforeseen material changes in the macroeconomic and geopolitical backdrop. Now as mentioned in previous calls, we're aligning our strategic investments to key mega trends that we believe offer outsized long-term secular growth potential, namely autonomy, proactive health care, sustainable energy transition immersive sensory experience and AI-driven computing and connectivity. And it's in this last area that I will focus the remainder of my comments today. Over our history, we have prided ourselves on our ability to sense the early signals of emerging trends and to invest aggressively to ensure leadership as those trends proliferate. Artificial intelligence is a good case in point. Our investments targeting solutions for AI's massive performance requirements are generating substantial returns in two distinct parts of ADI our automated test equipment and data center businesses, which collectively make up close to 20% of our revenue. Now let me begin with Automated Test Equipment, or ATE, Revenue increased approximately 40% in fiscal '25 and further accelerated in the first quarter of '26, fueled by several factors. ADI's ATE portfolio sits at the heart of the most complex semiconductor production test systems for digital SoC, memory, RF and millimeter wave and power devices as well as system-level products. We deliver the integrated pin electronics, device power supplies and parametric measurement units that drive sense and precisely characterize every pin and rail on complex ICs under the most demanding real-world conditions. Our application-specific solutions are complemented by a suite of analog RF and power products, enabling complete high-density test subsystems. These solutions enable customers to increase platform channel density and throughput to validate the most advanced nodes and packaging technologies faster and more thoroughly at lower costs, with up to 30% less energy consumption per system. As a result, we enjoy industry leadership across the major test platforms and our content per tester stretches into the tens of thousands of dollars. Importantly, we've earned a durable role as the leading-edge technology partner in the fast-evolving ATE market which continues to grow with rising semiconductor complexity and the proliferation of connected intelligent devices. Now let me turn to our data center business, which grew approximately 50% in fiscal '25 and also saw accelerated growth in the most recent quarter. Several factors are driving this expansion. AI's demand for faster processing speeds and greater power density, combined with the monumental increase in data volume is creating exponentially greater complexity in data centers. This, in turn, drives the need for faster innovation cycles and new architectures. And ADI's analog and mixed signal, power and optical portfolios are critical to this evolution. I'll talk a bit now about power management, which is increasingly a system-level differentiator in AI data centers. At a high level, it breaks down into power delivery and power control. Think of power delivery as the vascular system moving energy across the data center. As customers migrate to higher-voltage architectures, safely moving larger amounts of power becomes foundational Protection is nonnegotiable as the consequences of faults rise sharply for both uptime and safety. ADI's hot swap and high-performance protection solutions which represent roughly 1/3 of our data center power revenue today, enable predictable fault isolation, fast recovery and live maintenance, allowing racks to run continuously even as power levels increase. Beyond protection, architectural change is also expanding our role in power delivery. We continue to see strong growth in point-of-load converters, micro modules and high-performance regulators, new approaches such as vertical power and higher voltage distribution, are now opening incremental SAM for ADI. We shipped our smart power stage to our first vertical power customer last quarter, and adoption of our intermediate bus converter modules is accelerating for 48- and 54-volt architectures. Now let's think of power control as the brain of the data center energy system. AI performance per watt depends on how precisely power is regulated and converted at the GPU or CPU. Roughly 1/3 of our data center power revenue comes from DC power control, including our power system management ICs and multiphase controllers. AI accelerators demand fast, highly efficient, digitally controlled power conversion from the rack down to tightly regulated core voltages. ADI's analog and mixed signal solutions abilities to enable higher compute density and better system-level performance are driving increasing demand and design wins. To sum up our AI data center power story, ADI enables customers to move power safely, regulated intelligently and scale AI infrastructure for the future. As power becomes a strategic constraint in AI data centers, our suite of high-performance technologies and system-level approach position us well for the next wave of infrastructure growth. Finally, turning to our optical connectivity portfolio. As AI continues to scale, the amount of data that must move within and between data centers is increasing exponentially, to deliver AI class bandwidth and latency, industry leaders are re-architecting their networks, increasingly replacing traditional electrical switching with Optical Circuit Switches or OCS. In this environment, performance is no longer defined solely by the optical modem system. It increasingly depends on the precision control monitoring and power solutions, the nervous system, if you will, around the laser, DSP and photodiode signal chain. By tightly integrating precision control, temperature regulation, real-time monitoring and compact high-performance power management, ADI allows optical systems to operate at higher speeds with lower power and in smaller form factors. This enables data center operators and carriers to increase front panel bandwidth density, reduce power consumption and cost per bit and accelerate time to market. As AI workloads continue to drive faster upgrade cycles and new network architectures. Our ability to help our customers manage optical complexity, performance and economics positions us well to benefit from AI-driven infrastructure investment in the future. So in closing, it's important to remember that AI is just a part of our larger growth story. Our diverse business model is enabling profitable growth across numerous trends, markets and applications. And as a result, we've never been more optimistic about our future at the intelligent edge. And with that, I'll pass it over to Rich. Richard Puccio: Thank you, Vince, and let me add my welcome to our first quarter earnings call. Revenue in the first quarter came in towards the higher end of our outlook at $3.16 billion, growing 3% sequentially and 30% year-over-year. Industrial represented 47% of our first quarter revenue, finishing up 5% sequentially and 38% year-over-year. Strength was broad-based with all segments delivering growth of 25% or more on a year-over-year basis including record quarters for ATE and aerospace and defense. Automotive represented 25% of revenue, finishing down 8% sequentially and up 8% year-over-year. We saw continued year-over-year growth for our leading connectivity and functionally safe power portfolios driven by our strong position in Level 2+ ADAS systems. Communications represented 15% of revenue, finishing up 20% sequentially and 63% year-over-year. Accelerating year-over-year growth was led by our data center business as increasing investments in AI infrastructure continue to drive robust demand for our optical and power portfolios. Wireless also recorded accelerated growth driven by cyclical improvements and has now grown double digits for 3 consecutive quarters. And lastly, consumer represented 13% of quarterly revenue, finishing up 2% sequentially and 27% year-over-year. The year-over-year growth was due to an upside across all consumer applications with notable benefits from content and share gains in the fast-growing wearables market and in premium handsets. Now on to the rest of the P&L. First quarter gross margin was 71.2%, up 140 basis points sequentially and 240 basis points year-over-year, driven by higher utilization, favorable mix and roughly 50 basis points from discrete items, which were not included in our original forecast. OpEx in the quarter was $812 million, resulting in an operating margin of 45.5%, above the high end of our guidance, up 200 basis points sequentially and 500 basis points year-over-year. Nonoperating expenses were $53 million and the tax rate for the quarter was 12.7%. All told, EPS was $2.46, up 9% sequentially and 51% year-over-year. Now I'd like to highlight a few items from our balance sheet and cash flow statements. Cash and short-term investments finished the quarter at $4 billion, and our net leverage ratio decreased to 0.8. Inventory increased $111 million sequentially with days of inventory finishing at $171. Channel inventory increased ending within our 6- to 7-week range. We are continuing to build die bank and finished good buffers to help support the upside we are seeing while balancing a strategically leaner channel position. Over the trailing 12 months, operating cash flow and CapEx were $5.1 billion and $0.5 billion, respectively. We continue to expect fiscal 2026 CapEx to be within our long-term model of 4% to 6% of revenue. Free cash flow over the trailing 12 months was $4.6 billion or 39% of revenue. As a reminder, we target 100% free cash flow return over the long term, using 40% to 60% for our dividend and the remainder for share count reduction. To that end, since the inception of our capital return program in 2004, we have returned more than $32 billion to shareholders via dividends and share repurchases. And since our Maxim acquisition in 2021, we have returned more than 100% of free cash flow to our shareholders. And as Vince mentioned, yesterday, we announced our 22nd consecutive annual dividend increase raising the quarterly amount by 11% to $1.10. Now moving on to our second quarter outlook. Revenue is expected to be $3.5 billion, plus or minus $100 million. Operating margin at the midpoint is expected to be 47.5%, plus or minus 100 basis points. Our tax rate is expected to be between 11% and 13% and based on these inputs, adjusted EPS is expected to be $2.88 plus or minus $0.15. In closing, our strong first quarter performance and favorable second quarter outlook underscores ADI's disciplined execution and the growing momentum we are seeing with customers across our end markets. While the macro backdrop remains fluid, demand indicators continue to trend favorably, and I believe we are well positioned to continue capitalizing on the opportunities ahead. With that, I'll give it back to Jeff for Q&A. Jeff Ambrosi: Thank you, Rich. Now let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up, please requeue and we will take your questions if time allows. With that, operator, we will have our first question, please. Operator: [Operator Instructions] Our first question comes from Jim Schneider with Goldman Sachs. James Schneider: Good job on the results. I'm curious as you look forward over the next quarter or 2, whether you expect to continue to see above seasonal performance in the Industrial segment in particular? And can you maybe also discuss are you seeing any kind of signs of OEM customer restocking at this stage or not yet? Unknown Executive: Sure, Jim. Thanks for the question. So obviously, Q2 was our strongest sequentially -- strongest sequential quarter, normally up in the mid-single digits, 4% or 5%, and our outlook, which embeds sell-in equal the sell-through reflects about an 11% sequential growth implying obviously significantly above seasonal growth. By end market, as we look out for Q2, what we expect to see is industrial continuing strong, up 20% sequentially and well above seasonal at 50% year-over-year, clearly being aided by the cyclical recovery and our strength in ATE and ADAS. We expect comms to be up high single digits sequentially, above seasonal and about 60% year-over-year. Again, as we talked about now, the AI surge for data center and the wireless cyclical recovery of both driving. From an auto perspective, we do expect that to be flat to down sequentially, a bit below seasonal, and this is, as we've talked about, largely due to the tariff and macro pull-in unwind that we've been talking about since the second and third quarters of last year. And then consumer in Q2, we expect to be down mid-single digits, in line with seasonality. And then obviously, we don't guide out to the third quarter, but I'll remind everybody that our third quarter is typically up low single digits. Vincent Roche: Yes. I think, Jim, one other comment you asked as well about any evidence of restocking. We don't see any evidence whatsoever of that at this point in the cycle. Operator: Thank you, SP1 Our next question comes from Stacy Rasgon with Bernstein Research. Stacy Rasgon: I was wondering if you could give us some color on gross margin and OpEx drivers embedded in the guide. I know OpEx, I presume is up on variable comp gross margin, I assume mix and utilization. And just any color you can give us on those drivers within the model would be helpful. Unknown Executive: Stacy. I'll start. I'll go through the GM question first. So obviously, as you saw in the post, Q1's gross margin was 71.2%. This was higher than expected on better mix, stronger utilization and then a few items that we did not forecast. During Q1, we've gotten closer to our optimal utilization level. So as we look out, we expect only to see modest upside from utilization. And in our Q2 outlook, we're assuming 100 bps of gross margin expansion or up essentially 150 bps versus Q1 because that excludes the discrete items that I mentioned in my prepared remarks, and again, the expected increase here is driven by favorable mix and uplift from price, which includes 50 bps that will not repeat in Q3 since it relates to the onetime effect of repricing our inventory in the channel. So you will expect us not to see that same 50 bps recur. On the operating margin side, for us, Q1 was roughly in line with expectations. The beat at the operating margin line was driven mostly by the stronger gross margin we just talked about. In Q2, I see OpEx growing in the mid-single-digit range. Obviously, we have no shutdown in the second quarter. We're continuing to hire in strategic investment areas. We've got a higher bonus factor. We've got our GTC conference, but we will see OpEx as a percent of revenue fall. And with the expected growth in gross margin, we see about 200 basis points of sequential improvement in Q2. So 47.5% at the midpoint. And for the full year, we continue to expect OpEx growth to trail revenue growth by roughly half. One of the -- sorry, Stacy, one last point. Stacy Rasgon: Just to clarify on the gross margins, on a reported basis, up 100 bps and excluding the 50 bps of onetime, it would be up $150 on a normalized basis. That's what you said? Unknown Executive: Yes, correct, Stacy. Stacy Rasgon: I just wanted to make sure I had that. Unknown Executive: Yes. The highlight is -- no, it's okay, Stacy. We obviously have been talking about seeing increased leverage this year. part which is the large reset on the variable comp headwind we spoke about last year. And obviously, we're seeing that leverage play out. Operator: Our next question comes from Harlan Sur with JPMorgan. Harlan Sur: Congratulations on the strong quarterly execution. Within your AI business connectivity, power, ATE, that was a great overview, Vince, of the differentiation in your prepared remarks. You articulated a strong portfolio of RF mixed signal, power products and performance differentiation. But the Analog team has always further differentiated on systems-level integration, software digital signal processing. So how are you leveraging your software, DSP and systems capabilities to gain further traction in this very fast-growing end market? Vincent Roche: Yes. Thanks, Harlan. Good question. Well, I'd say, first and foremost, if you look at ADI's trajectory over the last 5 to 10 years, we've been approaching our innovation activities centered around application system knowledge. And that's enabled us to capture more of the customers' complexity, boil it down, increase our ASPs. So I think what we see in certainly the power side of things is a mix of all the technologies. In the last -- up to kind of the last 3 or 4 years, most of the power business was about the analog circuits that configured the power systems. But tomorrow systems are going to be more and more digitally controlled, if you like. So that's where a lot of our digital signal processing heritage will come increasingly into play in these multiphase, very, very high-speed conversion systems where precision is critically important and being able to manage more and more rails of power. So that is a very, very good use an example of where our digital heritage comes into play with the mixed signal as well as the power technologies. In the optical sector, around the optical modem the nervous system, as we call it, again, that's a mix of a lot of digital functionality that partners with our mixed signal conversion systems as well as the power. So everything we do these days has a strong mix of analog, increasingly digital and increasingly software. And even -- you may have seen, I think on the last earnings call, we talked about a couple of product platforms that we have brought to market in the fourth quarter that had machine learning embedded in them as well. Operator: Our next question comes from Vivek Arya with Bank of America Securities. Vivek Arya: I was hoping you could quantify your data center exposure across ATE, optical and power. What's that exposure right now? How much did it grow last year? And then what is the right way to kind of model growth for that segment going forward? And part of that, power is a high-growth segment, but it tends to be very crowded. So I'm curious, Vince, what's your visibility around keeping or extending your market share in that segment? Vincent Roche: Maybe I'll start with the last piece. Yes, look, ADI thrives in an environment of incredibly hard problems. And the problems in the power system are becoming increasingly difficult in both scope and form, so that is the sweet spot for ADI. And we're able to approach the solution of these problems at the system level by virtue of the knowledge that we have in the area of thermodynamics, for example, electro-magnetics, coupled with our circuit magic and all the mixed signal and signal processing technology that will go around those things. So I think the problems are becoming more and more difficult. And in fact, there is a norm in the high-performance computing world that ultimately computing performance equals availability of power. And that power has got to be delivered with increasing efficiency, in tighter and tighter spaces. So we feel good about the possibility of differentiating for the long term there. What was the growth stuff, Rich, you want to? Richard Puccio: The breakdown between ATE data center and then within -- yes, so Vivek, if you think about our data center business, Vince commented on the call, is roughly 20% of total ADI now. It's over a $2 billion run rate and to think about the breakdown there. About 40% of that ATE the rest is data center. And then within data center, it's pretty balanced between power and optical. Vivek Arya: And historical and any forward kind of looking growth objectives, if you have them? Vincent Roche: Well, I think it's safe to say that these areas will all grow at double digits over the next several years. Operator: Our next question comes from Timothy Arcuri with UBS. Timothy Arcuri: You have been thinking that you're shipping about 10% to 12% below consumption. Where do you see that in the guidance for April? And then do you think by the end of the year, if you're sort of seasonal plus through the fiscal year, will you be shipping to consumption by the end of the year? Unknown Executive: Thanks, Tim. I'll take that one. So as we've talked about, if you look at that longer-term trend line where we've been shipping well under in '24 and '25, our sense now is customers are through that digestion phase and are essentially ordering to consumption. And we think that's broadly true across the end markets, but there's probably some differences across the diversified customer and application base. And obviously, for everybody who we don't talk always about this, when we talk about consumption, we're talking about that long-term linear trend line for shipments. But we do expect that we are nearing customers ordering at consumption across the board. And I think Vince mentioned earlier, we have not seen evidence yet that there's been restocking activity across our portfolio. Operator: Our next question comes from Joshua Buchalter with TD Cowen. . Joshua Buchalter: Congrats on another set of strong results and guidance. In response to an earlier question, you mentioned industrial is growing because of the cyclical global recovery, but I guess you've been very clear that you're not seeing evidence of restocking. Any help you can give us on where you're seeing the biggest signs of demand recovery because the outlook does seem well better than most of your peers. And how much of this is idiosyncratic growth drivers? And any help you can give us on how much industrial is growing ex ATE in the near term? Unknown Executive: All right. Thanks for that question, Josh. So I'll just do a little bit of a level set since we called the bottom industrial, obviously, our most profitable business has grown sequentially every quarter. And in Q1, actually, our book-to-bill was well above 1. And that does exclude any impact from pricing. So we feel very good about where we are landing from an orders perspective on the industrial. For 4 straight quarters, we've been an above seasonal growth with double-digit year-over-year growth, and that is driven by strength across all of the industrial segments. And I think that's part of what is indicative of the cyclical momentum we've been highlighting. Adding to that is our strength in ATE and Aerospace and Defense, which as we've talked about, is about 1/3 of our industrial, each of which are continuing to achieve new highs. And given that momentum in bookings and backlog, we don't see this trend stopping. As for the other 2/3 of industrial, we're still 20% below previous peaks. So we've got plenty of room to go as the cyclical momentum continues, evidenced by improving PMIs, positive book-to-bill across all industrial sectors and all geographies. And embedded in our outlook for Industrial is, as we said, to lead our growth sequentially up 20% plus. And we expect all of our segments to increase led by ATE, which is growing greater than 30% sequentially. And so very broad-based. And I'll highlight one other point that we've been talking about, and this is one of the pieces of evidence we look for in the cyclical piece that we continue to see growth in the broad market industrial. We're now seeing normalized ordering patterns for an up cycle in the broad-based industrial market. Operator: Our next question comes from Tom O'Malley with Barclays. Unknown Analyst: This is [ Nat Penn ] on for Tom O'Malley. Just curious if you're seeing any particular strength or weakness from a regional perspective? Unknown Executive: Yes. So geographically, we -- in Q1, we saw a broad-based strength. We had double-digit year-over-year growth in Asia, Americas and in Europe. When we look at it on a sequential basis, we saw strength in Asia and Europe, while Americas were down from typical buying -- customer buying behavior in consumer and the weaker auto demand. Operator: Our next question comes from Joe Moore with Morgan Stanley. Joseph Moore: You talked about the reasons for auto remaining a little bit softer. Any signs there of stabilization or potential growth as you move past this subsidy environment? Unknown Executive: Sure. I'll give a little bit of context in what we think we're seeing and what we've got baked into our guide. Obviously, this has been a really strong growth market for us. We've been growing double digits through the cycle. Particularly as we've gained content and share particularly in our connectivity and power for the ADAS systems. And as we've talked about in the past, we've had a notable share gain in China, which is taking largely taking light vehicle share from other regions. So it drove a record 25%. So now you look near term, you said in the prior call that we were approaching Q1 with some caution, as we had flagged some unusual behavior related to tariffs, where we thought we saw some order acceleration. We suspected it will be a headwind in Q1 and feel that it's probably what happened here. While we managed to grow 8% year-over-year, Q1 was well below seasonal and our book-to-bill did end under one. So given the softer bookings we saw and the fact that we now have greater exposure to China than ever, which is typically light in Q2 due to the Chinese New Year, our expectation is that auto will be below seasonal in Q2 or flat versus our typical seasonality of plus mid-single digits. Now what's important to note is nothing has changed with respect to our strong share position and underlying content growth. Therefore, we're pretty confident that once we get past the headwinds in the first half, our second half will be stronger and I actually believe that auto will grow in fiscal '26 versus what was a record fiscal '25. Operator: Our next question comes from Ross Seymore with Deutsche Bank. Ross Seymore: I just wanted to dive back into the industrial side. guiding up 20%, I can't remember you guys ever unless it was a Maxim or linear quarter, guiding that business up. So how much of that is ASPs? And how much of it is secular and how much is cyclical? Any sort of breakdown on that would be helpful. Unknown Executive: Yes, maybe I'll kind of break down the growth. So 20% plus, obviously, a very strong sequential growth, Ross. We're not going to break out price by end market, but as we commented on, there is some lift there from price. But importantly, I think what Rich said was if you exclude any pricing impact, our book-to-bill in Industrial was well above 1, and that included strength across regions and across applications. So everything is driving growth for us really in our industrial market. And then as far as what's cyclical and what secular if you just take our ATE and Aerospace and Defense business, that's roughly 1/3 of industrial. And as Rich talked about, that those are continuing to drive new highs, pretty clear end demand drivers in those markets. And then while there's probably more secular tailwinds in the other parts of industrial. But right now, kind of where those are relative to their past peaks. You can kind of call that cyclical, but there's certainly content gains elsewhere if you think about automation and energy and health care, there's definitely secular trends there as well. Vincent Roche: I think it's worth noting that none of this has happened by accident. Industrial has always really been when we think about the sectors within ATE, aerospace and defense, health care and so on, instrumentation. These are very, very core parts of the identity of ADI, and we've been investing. We've been bringing new strands of innovation to that business now for several years, and we're seeing the benefit of that, particularly right now in the ATE as well as the aerospace and defense area. So -- but as Jeff and Rich have unpacked the story for you, price resiliency is also very, very strong in this business. The life cycles are long. So overall, we've got stability with some very, very good tailwinds driving the industrial business ahead. Jeff Ambrosi: Thank you. We'll move to our last caller, please. Operator: Our final question comes from Chris Caso with Wolfe Research. Christopher Caso: I just wanted to ask a bit more on your comments on pricing and understand that some of that pricing benefit is onetime because of what's going on in the channel. But perhaps you could speak more broadly on what you're seeing with pricing where you'd expect your blended pricing to be for the year? And what -- how much of this is coming down to what the customers are actually paying? Vincent Roche: Yes. Well, Chris, thank you for the question. The first thing I'll say is that really not much has changed in our approach to pricing. As a company, we've always been dynamically adjusting the prices of the portfolio really to reflect the value of the solutions that we deliver over the life cycle, the entire life cycle of our products. So I think our ability and our track record of delivering the highest level of system performance in the analog space. And ultimately, the total cost of ownership benefits to our customers has always enabled ADI to attract a premium, an innovation premium. And that premium actually is extending. And over the last few years, as you know, we've committed quite a bit of capital to augment the supply side of our value proposition, the support side and giving our customers greater optionality from a regional and geographic perspective, but at the same time, we have, like everybody else, we've been facing persistent inflation. And what we've done in terms of this latest tranche of price increase, was really just a practical response to the inflationary environment. So I think that's the way to think about it. We -- there is a dynamic ongoing element to what we do and a response to the current economic environment. Rich, do you want to say anything else on this or Jeff? Richard Puccio: Yes. So obviously, you've heard us talk about the pricing adjustments that we made with our channel partners that went into effect at the start of Q2, I would add a couple of things. We are also largely through our annual negotiation with our direct customers. So our Q2 results should reflect the full scope of our recent pricing actions. And the way to think about it, just to help you guys out here, the overall impact of the pricing actions on our 2Q outlook is about 1/3 of the quarter-over-quarter revenue increase at the midpoint is related to price. Excluding the pricing uplift, our sequential growth outlook is more like 7% versus the 11% I mentioned before, still nicely above our 4% to 5% seasonality. And importantly, as I mentioned, roughly half of the price lift relates to repricing of channel inventory, which will not repeat in Q3. The other thing I would just to help you out as you think going forward, I think that we would expect about 50 bps of incremental growth in each of Q3 and Q4 related to price. So it's -- over the full period, it's not a huge number, but that's the right kind of sizing, right? Jeff Ambrosi: All right. Thanks, everyone, for joining us today. A copy of this transcript will be available on our website and all available reconciliations and additional information can also be found in the Quarterly Results section of our Investor Relations website, investor.analog.com. And thank you for your continued interest in Analog Devices. Operator: This concludes today's Analog Devices conference call. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the TAV Airports Investor Day live webcast to present and discuss the 2025 full year financial results. [Operator Instructions] The conference is being recorded. At this time, I would like to turn the conference over to Mr. Serkan Kaptan, CEO; and Mr. Karim Ben Salem, CFO. Mr. Kaptan, you may now proceed. Vehbi Kaptan: Thank you, Maria. Hello, and welcome to all. Thank you for joining our 2025 full year webcast presentation. I would like to start by giving you the highlights of the year's traffic first. The year was unfortunately marked by many geopolitical developments. These, of course, have affected especially the Middle Eastern traffic negatively. We have lost about 3% of our international traffic due to the geopolitical developments during the year. Strong lira was also a headwind during the year because it makes the Turkish holiday more expensive in euros or dollars. Bodrum, especially Bodrum, felt these affects the most during the year. Antalya, however, is more dominated by all-inclusive package tourism, coupled with competitive ticket prices, this makes the destination more affordable. A shorter and milder winter season also supported the traffic in Antalya. So the international traffic still managed to grow slightly at 1%. You may recall that at the beginning of the year, we have a shifted season where we had cold spring days and were suffering from a decreased traffic. And in summertime, due to the unexpected Iran-Israel clash, we suffered some traffic, but because of the milder winter season and late winter season, we managed to increase the traffic in September, October and till mid-November and managed to grow slightly around 1% for Antalya. In Izmir, which has mostly outbound Turkish traffic or visiting diaspora traffic, we see a strong lira working in our favor. The same goes for Ankara. Ankara is also being supported by the growth of AJet, which has recently based 2 new aircraft in Ankara, where we will realize strong growth in Ankara for 2026. Ajet is growing in Ankara as part of its hubbing strategy. As you know, they are based in Sabiha Gokcen in Istanbul, the secondary airport, but established their second base in Ankara, connecting almost all central Anatolian traffic via Ankara to international destinations. This strategy is working well. We have seen the output last year in 2025 with 14% international growth. And this year, we see that this growth continues very robust. The fleet growth of the other two low-cost carriers, the Turkish low-cost carriers such as Pegasus and SunExpress is also supporting both Ankara and Izmir. SunExpress mainly grows in Izmir and Pegasus continue growing in Ankara. Almaty international traffic also grew by 7%. This is because of the grounded A321neos in the airport. They continued suffering the Pratt & Whitney engine failure for the A321 and growth was limited to 7%. Normally, we would expect it to grow much more than the 7%. This is because of the high GDP per capita of the country compared to the size of the aviation sector. This year, we believe that we will realize much higher percentages on international growth in Almaty. Georgia, Georgia is also very popular with Turkish, Israeli and Russian tourists and their traffic has increased a lot this year. In 2025, in Georgia, we had a growth of 16%, and we believe that this robust growth will continue in 2026 as well. We see a boom in Georgia, both in terms of tourism and also becoming a regional gateway to other destinations. We have high single-digit growth for the rest of the portfolio, which is a great performance compared to the peer airports as well. So when we look at the January results of 2026, we see that the traffic came in very strong in most of our assets. All international assets grew very high percentages. We see the effects we talked for 2025 in the Turkish airports. The strong Turkish lira is affecting Antalya and Bodrum negatively and Izmir and Ankara positively. We have a strong winter, I would say, for Antalya. That's why the demand was low in January, but we hope the recovery to be very quick soon. And the growth of low-cost airlines is also affecting Izmir and Ankara in a positive way. Almaty made a strong start to the year with domestic aircraft diverted to international routes. The 15% international growth is closer to the real potential of the airport. Because of, again, the engine problems of A320 in Almaty, Air Astana and the other local carriers diverted their flights more to international. You will see a decreasing trend in domestic, whereas we have an increasing traffic trend in international. That's how we made the 15% growth in January. There is also a very strong travel demand between China and Almaty, which doubled when we compare the traffic to the last year and became the largest source market for the airport in January. So Chinese traffic is coming. Georgia's spectacular growth continued in January, too. In Georgia, in January, we had a growth of 19%. We believe that we will have this continued trend as well. We had 31% growth in Macedonia because as we reported last year, we were missing almost half of Wizz Air's fleet due to the neo engines. And now we have new 320 -- 321s based in the airport as of November, which has a 30% higher seat capacity because the 320s are replaced by 321neos, which brings this 30% higher seat capacity. All in all, 12% international growth was for January is a strong start for the year. But of course, January is a low month. It's a low season. These are off-season numbers and do not carry a lot of weight when we compare the 12 months. We have a more conservative passenger guidance than the numbers on this table, which we'll talk about on our guidance slide as well. So when we looked at the growth of source market slide, it shows how our passenger mix has shifted over time, especially since the pandemic. One big difference is the drop in visitors coming from Russia and Ukraine. With the sanctions in place, Russians have to fly in Russian aircraft to Turkey. Earlier, you may recall that mostly Western aircrafts were used for Russian aircraft flying to Turkey. But due to their lack of aircraft, they also started -- they decreased their flights to Turkiye, and we have lost 3.7 million Russian passengers due to the sanction. On the Ukrainian side, we had 2.7 million passengers before the tragic war, but because of the war, there is no civil aviation in Ukraine presently. We don't have any flights between Ukraine and Turkiye, but we have, of course, some Ukrainian passengers flying via Poland. We believe that we have made up for some of the loss in Ukrainian traffic with Polish traffic, which has increased significantly. You can see the growth of Poland on the chart, which also includes Ukrainian travelers flying through Poland, as I stated before. Russians used to be the #1 source market for our airports. So if the sanctions are lifted, Russians could again become #1. Bear in mind that in our forecast, in our guidance, we didn't include any sanction to be lifted. It is the status quo continuing on as per our disclosures. Compared to the last year, the best performing markets were Turkiye and North Cyprus due mostly to the strong lira. UAE, Netherlands and Kazakhstan underperformed the most, unfortunately, again, mostly due to the same reason and due to the geopolitical development. With that, I will now hand over the presentation to Karim to go over our financials. Karim Salem: Thank you, Serkan. Coming to the financials in euros and starting with revenue. It continued to be above traffic growth for the full year, and it is the continuation of the trend in previous quarters. One of the reasons for that is that, as you may know, we do not consolidate Antalya. The consequence of it is that it is in our passenger numbers. And actually, it pulls traffic growth downwards, but it is not in our reported consolidated revenue. We only consolidate the net income after purchase price amortization. So when it comes to commenting the main highlights by category and starting with catering, we had significant growth in catering revenue this year related to BTA new Antalya operations. So BTA Antalya operations also boosted the area allocation revenue, which contributed to revenue growth being above passenger. Coming to ground handling, where 73% roughly of our revenue is in Turkish lira. Our OpEx continues to increase with TL inflation. And thanks to the great management team that we have at Havas, we have been able to reflect this cost to our prices. Ground handling as a segment was also strong in our foreign airports. So ground handling was overall another factor in revenue surpassing the passenger growth. The new concession in Ankara was also strong with an additional EUR 19 million in terms of year-over-year revenue growth. In 2025, we have 2 quarters of Ankara operations under the new concession terms, but we will operate the full year 2026 under the new concession, which brings an even better perspective for 2026 regarding Ankara, sorry. The nonfuel aviation revenue growth was in low teens. The jet fuel business is also in aviation revenue that was affected by fuel market volatility and a weak U.S. dollar. Lounges continue to grow, especially in the U.S. and in Kazakhstan. And despite the closure of some unprofitable Spanish lounges, which we discussed earlier this year, we had strong growth there as well. Looking at the like-for-like duty-free spend per pax, excluding Antalya and Almaty, it is up 9% from last year. Almaty kicked off right before Q3 last year. So we are feeling the full year impact kicking in for 2025. And all in all, our duty-free revenue went up by a solid 17% for year 2025. Finally, we have car park revenue that didn't grow this year because we shut down the Oman parking operations. And one last point regarding Havas related to bus operations, Havas closed down the Adana station this year, which is the reason why you are seeing a small dip in the bus services revenue. Coming to OpEx, if we look into the operating expenses before EBITDA, these expenses continue to stay below revenue, and we continued to expand our EBITDA margin. We had a drop in jet fuel costs and a flat cost of services renders. Maintenance and utility expense growth was muted, and we had flat other operating expenses. Operationally, BTA's New Antalya operations and the new Ankara concession supported margin expansion. And just as in the third quarter, in the fourth quarter, too, a lot of assets delivered strong operating leverage. If we adjust for the impairment expenses made in the last quarter of 2024, we had higher depreciation expenses compared to last year which was due to the first full year of the new terminal in Almaty, sorry, and the end of the old concession in Ankara as well as Ankara's rent expenses for the new concession, BTA Antalya's rent expenses and TAV Operation Services lounge rent expenses in New York. In equity accounted investments, the cash picture is much better than what the numbers in equity accounted investments suggests. From Antalya One, we got a dividend of EUR 72 million this year versus a dividend of EUR 68 million last year. So in terms of free cash flow, the performance is actually better than last year. The combined EBITDA of Antalya One and new Antalya is EUR 135 million this year. It has to be compared to an EBITDA of EUR 127 million last year. Nevertheless, due to the amortization of the purchase price in Antalya One, higher deferred taxes in both and higher depreciation and finance expenses in New Antalya due to the opening of the new terminal, we were not able to show it this year under the equity accounted investment line. Coming to ATU, it had higher EBITDA this year, mostly because of Antalya, but it made a lot of investments, so its finance expenses increased. And for TGS, we see the effect of less third-party sales and the end of the pandemic compensation that we already evoked in the past. Getting down the P&L and reaching the net income line at the end, we continue to have overall strong EBITDA growth with margin expansion in the fourth quarter as well. So we had higher D&A, which we discussed earlier. Equity accounted investments had EUR 54 million more deferred tax losses compared to last year and EUR 12 million more of purchase price amortization in Antalya. The operations in Antalya, as we discussed, they are actually very strong. We have EUR 36 million more FX losses this year, which are mostly due to the appreciation of the euro and which are noncash. And with the canceling of inflation accounting in tax accounts, we accrued deferred tax losses due to the appreciation of euro versus Turkish lira. Most of this effect was actually in New Antalya and in Ankara due to the new investments made in these 2 assets. The canceling of inflation accounting increased the tax loss carryforward of these 2 assets, which had a somewhat neutralizing positive effect on deferred tax. And we used the legal revaluation right in Ankara, which was a benefit of EUR 11 million. So pretty sophisticated technical topics. But all in all, for the year, we had EUR 119 million of total noncash effect on the bottom line. If you adjust for the increase in negative noncash one-offs, the net income for 2025 becomes even EUR 170 million, which is only 7% below last year. We can see this large clearly in our free cash flow, which is standing at EUR 223 million for 2025 with a strong 44% growth over 2024. There are many moving parts in our financials, but definitely, free cash flow is the number which shows the clearest picture. We are generating a significant amount of cash for the year 2025. Coming to debt. You know that this has been an indicator that we have definitely been following over the past couple of years and especially in 2025 in connection with our guidances. With very strong cash generation throughout the year, we reached our long-term net debt-to-EBITDA guidance with an amount that finally comes out at 2.89x EBITDA for year 2025. In the fourth quarter, we had the currency-protected deposits mature and turn into cash. We had working capital improvements in many assets and the revaluation of the Almaty put, which was before standing at EUR 54 million and which is now coming out at EUR 91 million. All in all, our consolidated net debt dropped versus both last year and the last quarter. Normally, the fourth quarter is and should be seasonally weak. So the net debt drop over the previous quarter is quite a strong performance from our side. Coming to the next page. On dividend, the main highlight there is that as we have guided the market in 2025, we are restarting the distribution of dividends this year. We are planning to distribute TRY 1.3 billion, which corresponds to 50% of our IFRS net income converted to Turkish lira amount as of yesterday's exchange rate. We have invested heavily this year, and we will continue to invest at the service of our growth and our development next year as well. Against this backdrop, the decreasing of net debt and the resumption of dividend shows the strength of our balance sheet and our high capacity for cash generation. So I switch to Page #10. As many of you have followed, we were able to extend our Tbilisi concession until the end of 2031 in January. We pay fees to the state. We eliminate this and we pay a flat 30% of our passenger fees as the new lease for that 5 years period. The airport grew with a passenger CAGR of 13% during the last 20 years and EBITDA CAGR was 21%. It's a very high-growth market and a very robust operation. We are very happy to continue to serve Georgia with Tbilisi Airport for another 5 years beyond 2027. So if I go to Slide 11, Ankara Esenboga Airport. We were always guiding you that Ankara's profitability will jump with the new concession and its EBITDA would reach to EUR 45 million. On 24th of May 2025, last year, this -- the new concession of Ankara started, where we have enriched passenger fees and no cap in the collection of the international passenger fees. This is the first year of the new concession, and we have reached EUR 45 million of EBITDA with a 67% growth over the last year. This made with only a 14% year-on-year international passenger growth due to the new concession, which is much more profitable compared to the first concession. We have only seen the half year effect this year because of the new concession. As I said, it started as of 24th of May 2025. In 2026, we will see the full year effect. In the beginning of the call, I also talked about AJet's two new aircraft to be based in Ankara, which grew January traffic by 30%. So everything is looking good for Ankara for 2026. On the next slide, this is related to ATU. ATU is in Antalya now. Antalya, as you know, is a 40 million passenger airport involved with 32 million international passengers. You see the effects of ATU's Antalya operations. ATU operation also started end of April. The full operation with all terminals started mid-September. So we don't have the full year effect of ATU. It started end of first quarter. There is very high revenue growth versus next year, which is mostly due to Antalya. Year-over-year EBITDA growth was also very strong in the third quarter. EBITDA growth was not as strong in the fourth quarter because of some start-up costs and continued ramp-up. As I said, we took over late September, the existing facility, and we didn't have the chance to furnish and redo the shops or change the look or bring in new merchandise for the stores. But this year in 2026, it will be a full year effect. You will see this. Opening of the new stores and the refurbishment of existing spaces will continue until the summer. It started, but it takes time. So next year's offering, 2026 offering, both in terms of area and the number of products offered will be better than 2025. The spend per passenger in Antalya increased from EUR 6.5 per passenger to EUR 7.9 throughout the year as we continue to open more and more shops throughout 2025, and this will continue in 2026 as well. On the chart to the right, you see the spend per passenger over there. Almaty's first full year of operations and addition Antalya decreased our overall spend per pax. For Antalya, you see that per pax spending increased. But when we add up Almaty full year effect and so, if you look at the overall one, the spend per pax seems to decrease because in Almaty, we have departures and arrivals, duty-free, but at arrivals, we have limited sales that tracks the overall spend per pax to a lower amount. But if we had not added these new operations to the calculation, the like-for-like SPP would actually be EUR 10.3. So we can say that the duty-free spend per pax of the existing operations grew by 13% in 2025. You can see this growth also in our consolidated duty-free commission revenues, which grew by 17% in '25. So I would like to talk about the guidance, the realization of 2025 guidance and the expectation for the guidance. Karim discussed already about our financial results in detail. Here, you can see the results against the guidance that we had provided in the beginning of 2025. I won't go over the items one by one, but we can say that in all items, except for the CapEx, we were able to achieve our guidance targets. In CapEx items, we are slightly below our guidance, which is good, which resulted in less cash outflow from the company. In Almaty, due to the harsh winter conditions, we were behind schedule in terms of investments, in terms of CapEx. for the second phase. And due to the market conditions, we postponed some investments of Havas to '26 and '27. So it again makes us very happy to have achieved our targets for another year. For 2026, in this table, you also see our new guidance. We are looking for another great year. Growth will continue. Our base case is for the passenger traffic to be in between 116 million to 123 million passengers, whereas we expect international traffic to be between 78 million to 83 million passengers. So revenue in accordance with the traffic numbers should be between 180 to -- sorry, EUR 1.888 billion to EUR 1.988 billion. EBITDA should be between EUR 590 million to EUR 650 million. And in 2026, we will be the second year of Almaty second phase investment and the first year of Georgia expansion investment. Due to the heavy CapEx, the second phase of Almaty and the new investment for Georgia, we estimate that the CapEx to be spent will be maximum of EUR 330 million or less for 2026. I think that's all for the presentation. Operator: [Operator Instructions] Karim Salem: So I will start with the first questions received, and I'm starting with questions received from [ Melis Pojarr ] from Oyak Securities. The question being, first question being regarding guidance 2026 CapEx, could you please briefly quantify on an airport basis? Well, on that question, if the question is about, let's say, breakdown of CapEx by activity airports, what I can say is that we can say that roughly 30% of the CapEx is allotted for the second phase of investments in Almaty. Then you have another 20% to 25%, let's say, of the CapEx, which should correspond to the investments in Georgia and as part of the extension of the concession as was evoked, presented, I mean, in mid-January and reevoked a couple of minutes ago by Serkan. And then for the rest of the CapEx, we are planning solar panel investments for Ankara. We should have growth CapEx for BTA, but also for other service companies, and the rest should be maintenance CapEx. I have another question, still from [ Melis Pojarr ]. What is the reason behind 25% year-on-year decline in cost of services rendered in Q4 2025? And for that question related to the specific line of cost of services rendered, I can say that the decline is related to, I would say, several topics. Main one is corresponding to TAV IT projects. Actually, they classify some of their costs here in the cost of services renders and it has decreased. We also have an effect of the closing of Spanish lounges here as well, and it was already there earlier in the year. And we also have decreases in other companies, too, with different reasons for each company. I mean we have -- I mean, apart from TAV IT projects and Spanish lounges, we have many reasons, actually, it's very split. Vehbi Kaptan: So again, a question from [ Melis Pojarr ], Oyak Securities. What are the tenders in your radar right now? Will you attend alone? And what are the airports current and targeted KPIs? We are always looking for growth opportunities in our core geography, as we always say. Our main criteria are growth prospects and sound legal infrastructure when selecting the opportunities. You know that we were prequalified for Montenegrin airports, but we did not bid in the tender, although it was a project that we looked at extensively. The preferred bidders in the tender were announced, but the results were contested. So we are following further developments there. Egypt has started its privatization. And the first project on the privatization pipeline is Hurghada touristic Airport. in the range of 10 million passengers. And this project started with prequalification process. We are submitting our prequalification. And naturally, we are evaluating the pros and cons of this project as well. Of course, there are many other projects that we are evaluating, but the business development pipeline in our business sometimes takes years. So it's best not to put too much weight on possible new tenders unless we officially disclose that we are participating in a certain tender. Karim Salem: I'm moving with a question from Julius Nickelsen from Bank of America. Thank you, Julius. The question is the following. Could you please provide any indication on where net income should go in 2026? And should we assume that the EUR 120 million of noncash one-offs to reverse during 2026? Well, that is, I mean, one of the most important questions, of course, for 2026, and we cannot provide net income guidance because, I mean, first of all, this is the very bottom line of the P&L, and therefore, it includes, let's say, the most important level of volatility. It includes every flows, everything that flows in our P&L. And on top of this, there are many moving parts, generally speaking, below EBITDA. And I can also add that the legislative framework also shifts very quickly, especially in connection with our Turkish activities. Having said that, I think that I can quickly elaborate on the fundamentals of this movement would be useful, but I'll be very quick about two fundamentals that could make things move on one side or the other in 2026 regarding our net income. First one is inflation accounting measures and second one is FX variations. Inflation accounting measure related to the fact of taking into account, let's say, Turkish lira inflation in the way our balance sheet is revaluated and FX variation related to the way we operate in various currencies and mainly in euro, USD and TL versus the way we report, so in euros. So for these two fundamentals, we are definitely lacking long-term visibility, but just like many institutions, I would say, and for 2026 as well, even though I would say that the situation is improving, especially from the outlooks in terms of inflation for the full year of 2026. But it is still hard to give, let's say, guidance on this topic for 2026. Then another question from Julius. Any reason why EBITDA from Almaty was down 35% in Q4 2025? Is there any impact from the investments? Well, this topic has been addressed in a way during the presentation. One of the main reasons actually why it was down was the movement in FX, in euro-USD FX because you know that the main currency in which Almaty operates is USD, and it went up 10% year-on-year, meaning that when you are comparing Q4 2025 to Q4 2024, there was an appreciation of euro by 10%. And the other reason is volatility, generally speaking, in the fuel market, again, on a year-on-year basis, Q4 2025 compared to Q4 2024, and it led to lower volumes. We identified the matter Q4 2025. But I mean, going beyond this topic, we had disclosed previously that we will be shifting the revenue and EBITDA mix of the Almaty airport from fuel to aviation through tariff increases over the next couple of years. And this process is going as planned. And of course, I mean, this downward trend, we have followed it again. But the most important is that we are having a path forward with moving from a fuel-centric airport to an aviation-centric airport. Vehbi Kaptan: Thank you. So another question from Julius Nickelsen, Bank of America. How should we think about the relatively wide range of your guidance? What scenario represents the lower end of the guide on traffic and EBITDA? What needs to happen for the upper end of the guidance? So we are located in a fast-growing region, but this growth unfortunately comes with risks as well. The main of these risks being geopolitical developments. As everybody has followed, there were numerous geopolitical events throughout the year, and we lost 3% of our international passengers at 2025 due to these developments. We are still being affected by the grounded A321s with the Pratt & Whitney engines, especially in Almaty. The guidance were provided -- we provided balances our base case for strong uninterrupted growth with these kind of numerous exogenous risks in the region. And I switch to the questions of Cenk Orcan from HSBC. The traffic outlook within your 75 to 83 international passenger guidance, 4% to 11% year-on-year growth. How do you expect your Turkish airports and Antalya in particular, to perform? What is your Turkish tourism, the foreign visitors outlook this year? We talked about these a bit during the presentation. Last year, we had several factors affecting traffic, one of which was the real value of the Turkish lira. This especially affected Bodrum and Gazipasa the most and Antalya, the less. Strong TL and the growth of low-cost carriers had positive effect on Izmir and Ankara, and Ankara was especially strong with the growth of AJet. Most of these trends have not changed in 2026, but we hear of some renewed low-cost interest in Bodrum. So Bodrum could have a better 2026 compared to 2025. The foreign airports would probably continue to outperform Turkish airports in 2026 as well. And North Macedonia could be outperformer because there are new A321s base with 30% higher capacity versus the previous A320s. The second question is also about the traffic outlook. 2025 was strong domestic passenger growth at key airports in Turkey and your traffic guidance implies 0 to 5% growth in 2026. Any specific factors for normalization this year? For the domestic passenger figures, they improved due to higher ticket price caps implemented in 2025 and the increase appeared substantial because of the base year effect and the cost increase in 2026, the price cap loses its attraction for the airlines. For this reason, our base case is for domestic traffic not to be as strong as last year in 2026. Of course, material increase in price caps could change that picture. What we try to mean is that in Turkiye, as you know, we have a price cap for domestic fares. When it is low, the airline's tendency is to utilize the aircraft more in international routes or lease the aircraft outside. If the price cap is favorable to the airline, if it's higher, they rather use it in domestic routes because there is a demand, and we have an immediate effect in the growth of the domestic passengers. Karim Salem: One more question about Almaty tariffs. So the question is the following. 2025 presentation shows a lower blended average international pax fee than the 2024 presentation, $10.7 versus $13.8 for non-Kazakh airlines. Is that because $10.7 for 2025 now includes local airlines? Well, this question connects to previous presentations, and we only have provided back then the tariff for non-Kazakh airlines. And indeed, it was $13.8, as you correctly noted. However, now starting from 2025 to make a more comprehensive picture, let's say, we have now included local airlines in the calculation, thereby presenting a blended passenger fee for both Kazakh and non-Kazakh carriers. And this is the number that can be used with the departing international passenger numbers. So it's a much more useful number for everybody actually. As you can see, it increased from [ $10.3 ] in 9 months to $10.7 in full year. So it's getting along with the tariff increases that we are getting. We also got security fees, which are $5.41 for non-Kazakh and KZT 2.815 for Kazakh international passengers as part of our tariff increase process, which is, as I said previously, continuing. So now I have a question from Ashish Khetan from Citi. It relates to Ankara, sorry. Ankara EBITDA has increased significantly in 2025. Do we expect further improvement in 2026 or the full benefit of increased fee and end of guarantee structure has been materialized in 2025? Well, the answer is yes. We only have the effect of the new concession for 2 quarters in 2025. So definitely in 2026, we will have it for the full year, what we call the full year effect, and this will definitely be a boost to our profitability, the profitability of the Ankara Airport. Another point is that the AJet airline, formerly AnadoluJet is continuing to grow in the airport and providing a very important traffic growth driver at international level, especially. So all in all, we have -- we feel very good tailwinds at Ankara level, and it should continue for the full year of 2026. Other question from Ashish regarding personnel costs. How do you see personnel costs increasing in 2026 with inflation easing out? Well, I guess the question mainly relates to Turkish staff costs for 2026 since we are talking about inflation. For staff costs in Turkiye, the main moving parts will definitely be in 2026. First of all, the Turkish minimum wage rate increased rates. And then we will have a second factor, which is the average number of employees. Vehbi Kaptan: Okay. Question from Gorkem Goker, Yapi Kredi Yatirim. In what ways and how any potential end of Russia-Ukraine war would impact your operations on aggregate in light of last couple of years' realizations? Due to the sanctions imposed on Russia and the ongoing war in Ukraine, our airports are experiencing a loss of 27% of Russian traffic and 100% of Ukrainian traffic compared to 2019. Any potential resolution in this situation, coupled with the lifting of the sanctions would be beneficial for passenger numbers across all our airports, particularly in Antalya. If Ukrainian civil aviation comes back, that would also be a positive, but that could take more time. In Antalya, the proportion of Russian passengers is a key driver of overall spend per passenger as Russians are among the highest standards within the non-Turkish passenger mix. Additionally, our ground handling company, Havas, used to serve a higher number of Russian charter flights, which carry higher service charges compared to the scheduled flights by nature. The absence of these charter flights has affected Hava's EBITDA margin. Therefore, any potential end to the Russian-Ukrainian war would also positively impact Havas margins. I think that concludes our Q&A session, too. Thank you for joining us. Thank you all for our webcast, and we hope to see you in events or in Istanbul physically soon. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening.
Operator: Greetings. Welcome to the USANA Health Sciences Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll now turn the conference over to Andrew Masuda, Director of Investor Relations. Thank you, Andrew. You may now begin. Andrew Masuda: Thanks, Rob, and good morning, everyone. We appreciate you joining us to review our fourth quarter and fiscal year 2025 results. Today's conference call is being broadcast live via webcast and can be accessed directly from our website at ir.usana.com. Shortly following the call, a replay will be available on our website. As a reminder, during the course of this conference call, management will make forward-looking statements regarding future events or the future financial performance of our company. Those statements involve risks and uncertainties that could cause actual results to differ perhaps materially from the results projected in such forward-looking statements. Examples of these statements include those regarding our strategies and outlook for fiscal year 2026, uncertainty related to the economic and operating environment around the world and our operations and financial results. We caution you that these statements should be considered in conjunction with disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC. I'm joined by our Chairman and Chief Executive Officer, Kevin Guest; our Chief Financial Officer, Doug Hekking; our Chief Commercial Officer, Brent Neidig; our Chief Operating Officer, Walter Noot, as well as other executives. Yesterday, after the market closed, we announced our fourth quarter and fiscal year 2025 results and posted our management commentary document on the company's website. We'll now hear brief remarks from Kevin and Doug before opening the call for questions. Kevin Guest: Thank you, Andrew, and good morning, everyone. As we sharpen our strategic focus and position the company for renewed and sustainable growth, I'm honored to return as Chief Executive Officer while continuing to serve as Chairman of the Board. I appreciate the Board's confidence in my leadership and its commitment to ensuring continued stability and disciplined execution during this next phase of growth. As I reassume the role of CEO, I do so with a deep understanding of USANA's strengths and a clear view of the opportunities ahead with the fruition of our strategic plans that we will execute. Having spent more than 3 decades at this company, including 8 years as CEO, I have seen firsthand the power of our science-based products, the dedication of our employees and the resilience of our sales force across the world. These elements form the core of USANA's competitive advantage and establish a solid foundation for the long-term value creation that we intend to deliver. During my previous tenure, USANA expanded its international footprint, strengthened operational capabilities and achieved record financial results. While this external environment continues to evolve, our strategic pillars remain consistent. Scientific excellence at the center of product innovation, operational discipline and cost efficiency, a high-performing, aligned global sales force and a culture rooted in integrity, resilience and execution. Over the past several weeks, I've engaged in extensive discussions with our leadership team as well as our brand partners. These conversations reinforce that USANA remains well positioned with strong underlying fundamentals and meaningful opportunities for growth across multiple markets and channels. However, the clear message is that we must move with greater speed, focus, relevancy and precision. As we look ahead, our priorities are straightforward. First, strengthen USANA's global brand positioning by delivering science-backed nutrition through an omnichannel platform and evolving the company's identity from a legacy direct selling business to a modern science-driven nutritional products company. Second, enhance the customer and brand partner experience to drive retention, loyalty and long-term brand equity; third, reinvigorate global sales momentum through enhanced field support, market-specific strategies and strengthen leadership engagement; fourth, advance our product innovation pipeline by leveraging our world-class research and science teams to deliver differentiated offerings; fifth, improve operational efficiencies across the organization through disciplined cost management and streamlined processes; and sixth, execute with accountability at every level of the business, ensuring our actions translate into measurable, sustainable results. We are committed to delivering shareholder value by focusing on these top priorities. Importantly, our consolidated net sales outlook for fiscal 2026 is for growth of 4% at the midpoint, reflecting confidence in our strategy and our ability to execute. We will also remain focused on long-term strategic execution, not short-term optimization as we strengthen the company for its next chapter of growth. Our fiscal 2026 operating strategy entails the following: first, expand our omnichannel reach by leveraging USANA's strong nutrition foundation and diversifying distribution channels to access a larger global base of health-conscious consumers and strengthen brand relevance; second, advance product innovation through refreshed branding, alignment with modern consumer usage behaviors and robust pipeline for upgraded and new products launching globally in 2026. Third, accelerate technology modernization by adopting best in practice third-party platforms to improve customer experience, enable scalable growth and drive long-term IT and operational efficiencies. Fourth, drive Hiya's growth through continued direct-to-consumer expansion, new channel and product launches and entering into additional markets. We are also leveraging USANA's capabilities to improve margins, including transitioning to in-house manufacturing to increase speed, efficiency and reduce costs. Fifth, scale Rise Wellness performance by building on the strong recent momentum, expanding the Rise Bar footprint and accelerating Protein Pop distribution, particularly within major retailers and within club retail channels. USANA's mission, culture and people have always been at the heart of our success. As we embark on this transition, I am confident in our direction and energized by the opportunities ahead. Together with clarity, discipline and a shared vision, we will position USANA to deliver stronger performance and create enduring value for all stakeholders. With that, I'll now ask Doug to provide additional color on our fiscal 2026 outlook. G. Hekking: Thanks, Kevin, and good morning, everyone. I'd like to provide some additional color on our fiscal 2026 outlook and the key financial considerations shaping our guidance for the upcoming year. As Kevin mentioned, we're expecting net sales growth at the midpoint of about 4%. The sales growth is being driven by our venture companies, Rise Wellness and Hiya. Note that our outlook reflects a 52-week fiscal year in 2026, which includes one less week of operations when compared to fiscal 2025. As Kevin indicated in his remarks, we intend to accelerate our technology road map to fundamentally improve how customers experience our brand as well as allow for future benefits in both speed and cost efficiency. This incremental investment has not been factored into our fiscal 2026 outlook at this time. We will provide updated information once the scope, timing and capital requirements of this project are finalized. Turning to inventory. Inventories increased $35 million or 48% to $107 million at the end of fiscal '25. Approximately 80% of the year-over-year increase was driven by initiatives to support the significant growth opportunities at Rise Wellness and Hiya. Let me break this down further. For Rise Wellness, the increase reflects the inventory necessary to support the launch and growth of Protein Pop, particularly retailers like Costco. For Hiya, the inventory increase largely reflects channel expansion, including distribution into Target, international expansion into Canada and the United Kingdom and building raw materials inventory in connection with USANA to begin manufacturing Hiya products in-house. Given the growth trajectories of both Rise Wellness and Hiya, we anticipate elevated inventory levels throughout fiscal 2026. Although we will continue to focus on working capital efficiency, our intention is to continue supporting product demand as well as the expansion of distribution channels and geographies for these important brands. We expect Rise Wellness to operate at approximately breakeven in fiscal 2026, while we position the company for future growth, thoughtfully scale the business and strengthen long-term revenue and profitability profile. Let me now touch on our expected effective income tax rate. Our effective tax rate guidance for fiscal 2026 is expected to range between 55% and 60%. The primary challenge we continue to face is a geographic misalignment between revenue generated and costs incurred. This dynamic has been particularly evident in our effective tax rate during the second half of fiscal 2025 and particularly felt with the recognition of certain onetime costs during the period. Execution of our growth strategy as well as targeted cost efficiencies are expected to contribute to a lower effective tax rate in future years. With that, I'll now turn the call back to Kevin before we open the line for questions. Kevin Guest: Thanks, Doug. Let me close by saying this. We believe USANA is in a strong position, and the path ahead is both clear and compelling. Our core business has faced year-over-year sales declines, but we are seeing encouraging signs of stabilization as we take the right steps to return the business to growth. Hiya and Rise Wellness broaden our market and bring new energy to the portfolio, while our strategic investments are strengthening the foundation that will support our next phase of expansion. And with a solid financial position, including a strong cash balance and an efficient model that generates healthy cash flow, we have the flexibility to invest thoughtfully, execute with confidence and build long-term value. Put simply, we have the people, the products and the financial strength to win, and we're committed to doing exactly that. This, we believe, will deliver sustainable value creation for our shareholders. I'll now turn the call back to the operator for Q&A. Operator: [Operator Instructions] And the first question is from the line of Anthony Lebiedzinski with Sidoti & Company. Anthony Lebiedzinski: It's certainly nice to see the better-than-expected results for the fourth quarter as well as the higher-than-expected EPS guidance for '26 as well. So as we look at the guidance for both revenue and EPS, obviously, you provided revenue guidance in January. But nevertheless, they are pretty wide ranges. Can you just walk us through the different puts and takes as to what you would need to do to get to the top end of the guidance? Are you perhaps assuming a notable improvement in the macro environment? Maybe just kind of walk us through the different puts and takes for revenue and EPS guidance. G. Hekking: Yes. So I think it's easier if we break it down by some of the kind of the key brands we talked about, Anthony. And so with Rise Wellness, they're really on an emerging path. There are some of these orders we have in our back pocket and some are banking on having orders in the back half of the year. And so as we look at Rise, that's kind of the range that we provided specifically on the sales there. Hiya is just very, very newly into Canada and will soon be in the U.K. and then launching Target here in April. So there's a lot of activity on the horizon there to go back and bridge that. I think in short, when we look at the revenue kind of equation and kind of the margin profile, I think achieving the top line is going to be the main thing that will help us go back and deliver the top end of the EPS. Kevin Guest: Yes. And Walt -- we have Walter here. Walter, will you just give some color to what Doug said? Walter is on the management team that's in the trenches day-to-day on some of these things, and I thought I might bring you some added color to hear from Walter on this subject. Walter Noot: Yes. As what Doug was saying, we've got -- we've booked a lot of business on the retail side that when you look at the inventory buildup, most of that inventory buildup is already committed revenue, which is -- which we've had through these retailers. We've got Target. We're in all the Target stores in the U.S. We're in all the Costco stores now as of last week. And then we've got other major U.S. retailers that we're talking to right now. And so that's really, as we move forward, we're adding more flavors to the Protein Pop line that's going to go into Target. And then, of course, all the new retailers that are coming in. So we just see a huge upside, a huge potential for us. But again, that's why we put such a big range on the guidance. And with Hiya, we're super excited with what we've seen so far in Canada. It's been really good. We just barely launched that probably in the next couple of weeks, next 3 weeks, we're going to see the U.K. go live in April. You see Target go live on the retail side, and that's a stand up that goes into every store. So we're -- like we're pretty bullish on both these businesses and the growth of these businesses. And a lot of it is just -- because there's such a range, I mean, the reason the range is there is because you don't know exactly what you're going to do, but Hiya has been such a great brand. The company has spent so much money on marketing and creating so much awareness in the U.S. We think the retail channel is going to be really good for us. Kevin Guest: And one of the things that I'm sure of which you all are aware is that the omnichannel strategy is also a diversification of revenue strategy, meaning the more of these succeed and we're generating money, so it's not disproportionate to China and more locally based, that will help our effective tax rate where we're generating income, which is part of our also long-term strategy just to diversify where revenue is being generated because as you can see from what hit us this last quarter, it's pretty significant. And so that's a very real opportunity for us. G. Hekking: Yes. And maybe, Anthony, to kind of go full circle on this, we're still very bullish on our core nutritional business, and there are so many opportunities. I think Kevin's initiative to go back and look at technology and advance some of those road maps and really support that team. But I think we're at a time where people want health and wellness products, and we make as good as products as you can find out there. And so we really see these things as enablers moving forward. Anthony Lebiedzinski: Got you. So as we look to update our models here, is there anything that you guys can say as far -- I mean, obviously, you will have one less week of sales in the fourth quarter. So I realize that. But other than that, I mean, for -- as we look at the business quarter 1 to 2, 3 and 4, I mean, is there anything to keep in mind as far as will the revenue ramp up as the year progresses? Or do we think that it should be more kind of even throughout the year? Anything to point out to as far as the seasonality of the business? G. Hekking: Yes. So seasonality, I think, particularly in our core nutrition business has really, as we evolved and grown in China has revolved around that Lunar New Year. And it's fairly impactful. And so that market as well as many of our markets in the Asia Pacific region really set up a pretty heavy promotional cadence surrounding that to support the business as we go through there. And so the -- I would say the activity that we see quarter-to-quarter isn't perfectly equal. And so you'll see some ebbs and flows, which we can just give color as the year progresses. Kevin Guest: Yes. And I have -- we have Brent Neidig here at the table, who is our Chief Commercial Officer that also could add some color to what we're seeing from the revenue base as it relates specifically to our core nutritional business. Brent? Brent Neidig: Yes. Thanks, Kevin. Doug just highlighted, there is a certain element of seasonality in our core nutritional business, especially with our predominance within the Chinese community. We're currently in Chinese New Year right now and typically leading up to that new year in many of our Chinese markets, specifically in Mainland China, there is a heavier emphasis on promotional activity as many of our brand partners want to stock up on product to provide for gifts and other selling opportunities throughout the Chinese New Year. That's why we typically see a stronger Q1. And then that momentum starts to escalate into Q2 as well as we have different conventions and events that kick off both in our first quarter and our second quarter. As we hit Q3, summer season and a lot of our brand partners typically take time off where they go on vacation, they spend time with families, their kids are out of school. So we typically see a lull there. That's what we're expecting. That's what I'm continuing to expect. And then Q4, people start to get back into action and prepare for the following year. So that's typically the model that I see. Anthony Lebiedzinski: Got you. And then as it relates to Hiya and then Rise, any added color there that you can share? Walter Noot: This is Walter. I don't know how much color I can share. When I look at that business, of course, there's -- it's a growing trend. Protein, especially Protein Pop, there's a really strong trend there. And we basically introduced late last year, we really introduced Protein Pop retail. So it's a very new brand, and it's building. And as that brand continues to build, I think we'll continue to see it grow in the retail channel. I don't know exactly what the numbers are going to look like, but we've put some guidance in place, and we're feeling really good about where we're going. Anthony Lebiedzinski: Got you. All right. And so -- and it sounds like you also feel good about Hiya as well. So as far as the cost realignment that you guys did in the fourth quarter, can you just help us out as far as how much that lowered your headcount? And then I know you're using some of those cost savings for other things as well. But maybe just you can also touch on how to think about gross margins here for '26 as well as your SG&A? Any sort of added color there would be certainly appreciated. G. Hekking: Yes, Anthony, so the total was about 10% of the workforce that was impacted in that cost realignment. Overall, on a net basis after some of the money has been repurposed, we're probably about $10 million or so in savings, maybe $10 million plus in that range. I think a lot of the things these are being repurposed to are very important to the business and executing strategy and stabilizing. But that's -- those would primarily reside in SG&A. I wouldn't expect a whole lot in gross margin or cost of sales. The primary issue you're going to see on a few of our key line items is the mix between the different businesses, right? And so as you see Rise grow, and right now, we talked about them being breakeven this year, they're going to be at a little bit -- they'll be at a much thinner gross margin. And so that will kind of give the impression, but we'll break that out accordingly so you have some optics there as we move forward into the year as well. Anthony Lebiedzinski: Got you. Okay. And then you touched on some of the -- you mentioned technology initiatives that you're working on. I know you're not ready to share specifics. It sounds like it's still something that you're working on. But can you give us a sneak peek as to what you're thinking as far as how impactful that could be as far as some of the changes that you're looking to do on the technology side? Kevin Guest: Well, this is Kevin. From my perspective, the notion of staying relevant in today's world is so important for us and how people interact with our brand and/or brands is very critical and will determine the future growth of our company, I believe. And so I want to focus on the ability to be quick and be nimble. And our traditional approach has been where we build things in-house, and that has served us very well. Strategically, we're going to look at how can we leverage outside resources in a more robust way, both in the U.S. as well as internationally. But I think speed to market and speed to change and the relevance of how people interact will be a big part of the focus of the strategy behind our technology spend, which will allow people to interact in a much more robust way with our brand and our brands across the board. The other thing we're going to do, which we haven't really spoken much about is we're going to leverage the knowledge and expertise. For instance, Hiya, they have a great knowledge and expertise in brand awareness. And so how can we utilize some of their expertise and resources to help us leverage the USANA brand and the USANA brand awareness. And so as we move forward, that's very kind of high-level fluff and not real detail, but I just -- I am convinced that if we can leverage especially AI in a way that we see many, many really high-end brands interact and utilize AI, which we aren't to its fullest capacity right now, and it's changing literally every day. And we have to play in that space and be as good at technology and utilizing AI as we are in Nutrition is the goal. I think that's the future of a growth company in our space. One of the things I'm most excited about is, if you look at the -- I've seen numbers, a global CAGR of about anywhere from 5% to 8% growth in the health and wellness space. Well, that's where we play. We should be on those curves as a company and technology plays a key role in that growth. So that's where my head is at. Operator: The next question comes from the line of Ivan Feinseth with Tigress Financial. Ivan Feinseth: Congratulations on the ongoing success of Hiya and the new Rise Bars, which I sampled at the ICR Conference, and were really delicious and subsequently have purchased them. So I think that's really great. Going to the technology question for Kevin, what are your focus and thoughts on integrating technology into the consumer health management journey? Recently, another company launched a product that can give you a nutritional absorption reading through your finger. And when I was at the ICR Conference with Doug and Andrew and Patrick, we were talking about the monitor from [ Kolar ] and what gets measured, gets managed and the more technology that a consumer can use to give insight to their health and nutrition journey, the more they can see where they need products or creating product opportunities for your company. Kevin Guest: So Ivan, thanks for the question. That's a great question. I am highly interested in the utilization of technology and the ability to personalize how a person receives their nutrition and not have it based on a one-size-fits-all approach and moving further into the technology space. I have our Chief Science Officer here with us, Kathryn Armstrong. Kathryn, do you want to jump in on this real quick with this conversation with Ivan? Kathryn Armstrong: Ivan, it's good to talk to you again. So I think for us, we have obviously a focus on integrity and ensuring that everything we provide to our customers through all of our brands meets scientific rigor. And I know all of us have watched with eager anticipation over the past decade and more as these types of devices have been launched and then really struggle to link to clinical efficacy. And it's a lot about behavioral science versus physiological science, as you know. So are we actively looking at how to help individuals personalize and monitor their health status, of course, we' will continue to do so. And we are partnering to better understand how to advance that in a way that has scientific integrity and ensures our customers are able to apply their spend to true physiological benefit. Operator: [Operator Instructions] Thank you. At this time, this will conclude our question-and-answer session. I'll turn the floor back to Andrew Masuda for closing comments. Andrew Masuda: Thanks for your questions and participation on today's conference call. If you have any remaining questions, please feel free to contact Investor Relations at (801) 954-7210. Operator: Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.
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.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the EQT Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Cameron Horwitz, Managing Director, Investor Relations and Strategy. Cameron, please go ahead. Cameron Horwitz: Good morning, and thank you for joining our fourth quarter and year-end 2025 Earnings Results Conference Call. With me today are Toby Rice, President and Chief Executive Officer; and Jeremy Knop, Chief Financial Officer. In a moment, Toby and Jeremy will present their prepared remarks with a question-and-answer session to follow. An updated investor presentation has been posted to the Investor Relations portion of our website, and we will reference certain slides during today's discussion. A replay of today's call will be available on our website beginning this evening. I'd like to remind you that today's call may contain forward-looking statements. Actual results and future events could materially differ from these forward-looking statements because of factors described in yesterday's earnings release, in our investor presentation, the Risk Factors section of our most recent Form 10-K and in subsequent filings we make with the SEC. We do not undertake any duty to update any forward-looking statements. Today's call also contains certain non-GAAP financial measures. Please refer to our most recent earnings release and investor presentation for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Toby. Toby Rice: Thanks, Cam, and good morning, everyone. 2025 was another stellar year for EQT, one in which we were able to clearly demonstrate the power of our platform. Over the past several years, we've been intentionally building scale, vertical integration, operational excellence and financial strength. That work is showing up in measurable ways in our well performance, in our cost structure, in our free cash flow generation and in how we performed under pressure. This morning, I'll walk through 4 areas that highlight that platform strength. First, our operating performance is the foundation of our platform. In 2025, we saw continued structural improvements across operational drivers, reinforcing the durability of our maintenance capital program. Second, our financial strength brings power to the platform. In 2025, we translated operational outperformance directly into meaningful free cash flow generation, allowing us to fortify our balance sheet and increase financial flexibility, providing a strong foundation to capture value opportunistically during market dislocations. Third, winter Storm fern. Recent extreme weather events provide an opportunity for us to showcase both the operational strength of our platform and the value creation power that our scale and integration delivers for our stakeholders. I'll wrap up by discussing the future of our platform with our 2026 plan. Our budget is underpinned by a disciplined maintenance capital program while beginning to invest the first dollars of post-dividend free cash flow into selective high-return growth investments. It's a continuation of the strategy that has driven our transformation, staying laser-focused on capital efficiency and cost structure while making smart investments at the right time to maximize per share value creation. Now let me dive deeper into our operating results. Production consistently topped expectations throughout 2025, driven by compression project outperformance and robust well productivity. Compression projects executed last year generated 15% greater-than-expected base production uplift and positively impacted well productivity. In fact, third-party data shows that EQT saw the strongest improvement in well performance of any major operator in Appalachia last year. Our tactical approach to volume curtailments and marketing optimization resulted in price realization outperformance throughout 2025. The cumulative benefits of our marketing optimization resulted in more than $200 million of free cash flow uplift last year relative to guidance, highlighting the tangible benefit to shareholders from this effort. EQT's position as the second largest marketer of natural gas in the U.S. ahead of all upstream and midstream peers, coupled with persistent price volatility means our marketing optimization efforts should have recurring positive impacts on financial performance going forward. Operating costs and capital spending also beat expectations last year, which represents the return on our water infrastructure investments, midstream cost optimization and upstream efficiency gains. Our team set multiple EQT and basin-wide operational records yet again during the fourth quarter, including our fastest quarterly completion pace on record and the most lateral footage drilled in a 24- and 48-hour period. Efficiency gains resulted in our average 2025 well cost per lateral foot coming in 13% lower year-over-year and 6% below our internal forecast coming into the year. Additionally, per unit LOE was nearly 15% below our expectations last year and approximately 50% lower than the peer average. The cumulative result of our operational outperformance delivered $2.5 billion of free cash flow attributable to EQT in 2025 with NYMEX natural gas prices averaging approximately $3.40 per million Btu for the year. Our free cash flow generation significantly outperformed both consensus and internal expectations, underscoring the power of our low-cost integrated platform and our ability to consistently deliver differentiated shareholder value. Importantly, our ability to deliver wasn't just visible in our financial results. It was demonstrated operationally in one of the most challenging environments in recent times during Winter Storm fern. I want to take a moment to recognize our upstream, midstream and marketing teams for their outstanding coordination and execution during the storm. The team's effort helped keep millions of American homes heated and businesses running, while also allowing us to capture peak cash market pricing during periods of elevated demand. This is a great example of how EQT's integrated operations, resilient infrastructure and commercial alignment come together to deliver differentiated value for both our customers and our shareholders. Winter Storm Fern also provides a stark reminder for just how important natural gas infrastructure is to the reliability of the U.S. energy system. During the storm, our Mountain Valley pipeline flowed 6% above its 2 Bcf per day nameplate capacity, which effectively backstopped 14 gigawatts of power generation across the Southeast region or enough energy to heat more than 10 million homes. And yet, even with this capacity flowing full, cash prices at Transco Station 165 spiked to over $130 per million Btu, highlighting a system that remains structurally constrained. These price signals are unmistakable. The country needs more pipeline infrastructure and a permitting framework that allows the industry to get back to building critical infrastructure again. Expanding natural gas infrastructure isn't optional. It's essential to delivering reliable, affordable energy to U.S. consumers and support long-term economic growth. However, when supply is constrained due to lack of infrastructure, prices rise and affordability suffers. Luckily, the solution is simple. We need to get back to building and connecting low-cost natural gas supply to the demand centers that need it most. Simply put, if we build more, America pays less. And at EQT, we're not just advocating for infrastructure, we're investing in it. We recently elected to exercise our option to purchase additional interest in MVP Mainline and MVP Boost from an affiliate of Con Edison. The interest in MVP Mainline will be purchased by EQT's midstream joint venture with Blackstone and the interest in the MVP Boost expansion will be acquired directly by EQT. EQT is expected to fund approximately $115 million of the total consideration for the acquisition. Upon close, our ownership in MVP Mainline and MVP Boost will increase to approximately 53%. We estimate the purchase price equates to roughly 9x adjusted EBITDA and delivers a low-risk 12% IRR to EQT, inclusive of MVP Boost growth CapEx and expansion, which is highly attractive given the long-duration annuity cash flow stream underpinned by 20-year contracts. Shifting to our 2026 outlook, we are initiating a production forecast of 2.275 to 2.375 Tcfe with continued outperformance of operational efficiency and well productivity likely to drive upside bias to this range. As it relates to our investments, we have established a maintenance capital budget of $2.07 billion to $2.21 billion, which includes a full year impact from the Olympus acquisition. With our balance sheet deleveraging nearly complete and total debt rapidly approaching $5 billion, we are electing to ramp up investments in our high-return growth projects. We are allocating the first $600 million of post-dividend free cash flow to these projects in 2026, which is largely comprised of compression projects, water infrastructure, the Clarington Connector Pipeline into Ohio and strategic leasing. Our investments in these growth projects are expected to strengthen our platform, lowering future maintenance capital, reducing LOE, improving price differentials, replenishing inventory at attractive prices and setting the stage for sustainable upstream growth in the future. Not only do our growth projects generate attractive returns, but they continue to fundamentally improve the characteristics of our business and provide EQT a differentiated way to compound capital for shareholders. At recent strip pricing, we expect to generate 2026 adjusted EBITDA attributable to EQT of approximately $6.5 billion and 2026 free cash flow attributable to EQT of $3.5 billion, which includes the impact of approximately $600 million in growth investments. Prior to the investments in these elective projects, free cash flow attributable to EQT would be over $4 billion. Cumulative free cash flow attributable to EQT over the next 5 years is projected to total more than $16 billion, highlighting the tremendous value proposition embedded in EQT stock. I'll now turn the call over to Jeremy. Jeremy Knop: Thanks, Toby. Our strong execution resulted in nearly $750 million of free cash flow attributable to EQT in the fourth quarter, approximately $200 million above consensus expectations. This marks the sixth quarter in a row where we have exceeded consensus free cash flow estimates with an average beat of 40%. We outperformed across every financial metric during the fourth quarter with strong price differentials, again underscoring the recurring value created by our gas marketing capabilities. We exited the year with net debt of just under $7.7 billion, inclusive of $425 million of working capital usage during the quarter. Recent gas price strength on the back of winter Storm Fern, combined with our opportunistic approach to hedging should drive historic results for EQT in the first quarter, with the potential for free cash flow in the month of February alone to approach $1 billion after we sold approximately 98% of our production at first of month pricing, which settled at $7.22 per MMBtu for M2 and $7.46 per MMBtu for Henry Hub. We estimate January and February performance already exceeds consensus Q1 free cash flow expectations by more than 30%, setting the stage for record free cash flow generation in the first quarter and for full year 2026. As a result, we expect to exit the first quarter with less than $6 billion of net debt. This rapid deleveraging enhances our capital allocation flexibility. We are well positioned to fund high-return infrastructure growth projects, continue our track record of base dividend growth and accumulate cash to opportunistically repurchase our shares. The benefits of our opportunistic hedging strategy were on display as we came into the fourth quarter with minimal production hedged, purposely leaving significant upside optionality into winter given the likelihood of asymmetric upside if cold weather materialized. We tactically added collars and captured call option skew into sharp price rallies in the fourth quarter and over the past few weeks, including adding a company record amount of hedges in a single day in December as the market peaked. With these tactical adds, we are now nearly 40% hedged in the first quarter of 2026 with an average floor price of roughly $4.30 per MMBtu and an average ceiling of $6.30. For Q2 and Q3, we're approximately 20% hedged with $3.50 floors and nearly $5 ceilings. And we are also roughly 20% hedged for Q4 with $3.75 floors and $5.15 ceilings. This hedge position provides downside protection, ensuring we can execute on all of our capital allocation priorities while maintaining upside exposure should prices continue to strengthen in the summer. Turning to fundamentals. The natural gas market has tightened significantly over the past 6 weeks. Winter to date is 5% colder than normal, driving significant demand on top of production disruptions. This cold weather tightened inventories by 225 Bcf compared to prior expectations and reduced inventories below the 5-year average. We forecast storage exiting winter around 1.65 Tcf under normal weather conditions through March. With LNG exports continuing to grow, the U.S. gas storage situation in 2027 looks even tighter. As a result, we anticipate seeing both 2026 and 2027 prices rising further to ensure inventories remain within a comfortable range. Importantly, for EQT, cold weather this winter has been concentrated in the East. Eastern storage levels are now 13% below the 5-year average. Basis differentials later this decade continue to strengthen on the back of growing in-basin demand with 2029 basis, as an example, now trading at a $0.70 discount to Henry Hub, which is a $0.50 improvement compared to the last few years. From a global perspective, fundamentals are also improving more than consensus realizes. European storage levels are well below normal following robust winter withdrawals. Current projections point to Europe exiting winter with storage at the lowest level since 2022, and that is despite the surge in LNG supply since then. Beyond LNG, power demand is accelerating faster than previously anticipated. Natural gas turbine orders have increased meaningfully. And once units ordered since 2023 are fully commissioned, they represent roughly 13 Bcf per day of demand in the United States alone, providing clear visibility to substantial incremental gas burn moving towards startup. While not all these turbines are tied directly to data centers, meaningful portions are connected to new large load projects, including AI and cloud infrastructure. Separately, we have line of sight to approximately 45 gigawatts of data center capacity currently under construction, including 12 gigawatts in our core operating footprint. Together, turbine backlogs and data center construction activity reinforce the structural demand growth that is building across the power sector. Given the location of this load and the depth of our resource base, we believe EQT is positioned to capture an outsized share of this incremental demand. To wrap up, I want to provide additional color on the growth projects that we chose to include in our 2026 budget, which will be funded with the first dollars of post-dividend free cash flow. Starting with compression, the well outperformance we've seen since acquiring Equitrans motivated us to accelerate compression investments in 2026. The benefits of these investments show up as stronger base production and improved well productivity. Over time, these benefits compound, reducing decline rates and improving capital efficiency. On water infrastructure, our investments in 2026 will connect EQT's legacy water systems with the water network we acquired from Tug Hill. This interconnection will create an integrated water system throughout EQT's operating footprint and one of the largest water networks in the country. This expanded connectivity is projected to improve uptime, reduce reliance on trucking, lower LOE and improve frac efficiency. The Clarington Connector is a 400 million cubic feet per day pipeline that will move natural gas from Pennsylvania into Ohio, allowing more of our gas to reach data center demand and the receipt points of several interstate pipelines. We expect the Ohio dry gas Utica inventory to be largely depleted by the end of this decade. driving stronger pricing in the Ohio region. This pipeline perfectly positions EQT to begin backfilling these volumes and creates another avenue to capture premium pricing. On land acquisitions, we plan to continue expanding our leasehold position at attractive prices. Since 2020, we have leased approximately 100,000 net acres, effectively replacing 60% of our development and perpetuating our runway of core inventory. The return on these investments will show up in our financial statements through higher production, lower capital spending and LOE, higher third-party revenue and better price realizations, driving top line growth while continuing to reduce our cost structure. The financial outperformance we saw in 2025 was a direct result of similar investments we made in prior years, giving us confidence that our growth initiatives will translate to tangible free cash flow generation and differentiated shareholder value creation. In closing, 2025 was a stellar year for EQT and a clear demonstration of the power of the platform that we've strategically constructed. We delivered record operational results, drove material free cash flow outperformance and significantly strengthened our balance sheet. Winter Storm Fern demonstrated the power of EQT's integrated model in real time as our teams worked seamlessly across operations, midstream and commodities trading functions to keep natural gas flowing and provide heat for millions of Americans during one of the most challenging winter events in recent history. Our strong results are not just incremental. They compound over time to create exponential value. Every element of our business is feeding another, driving steady and significant performance gains. We are extremely proud of what our teams delivered in 2025, but we are only getting started and the momentum we've built across the organization gives us tremendous confidence in what lies ahead for EQT. With that, I'd now like to open the call to questions. Operator: [Operator Instructions] Your first question comes from Doug Leggate with Wolfe Research. Douglas George Blyth Leggate: I guess I'd like to focus to try and summarize everything you've said today to one issue, which is the trend in your portfolio breakeven and sustaining capital. Can you give us an idea where you think that sits on a levered basis for 2026? And my follow-up is the deleveraging comment you made, Toby, is about -- I think you said as we get to the end of our -- I don't want to put words in your mouth at the end of our deleveraging process. But it seems that you're potentially generating a ton of free cash flow as you've indicated for 2026. What's the priority for that free cash flow? Does that continue to grow the balance sheet as well? And by the way, I got a quick shout out to your tremendous videos over the storm. We enjoyed those. Toby Rice: All right. Thanks, Doug. Yes, on the last question, the capital allocation, the deleveraging has been rapid, and we're in a great position right now where we sit. And I think we're all the confidence the world will bust through our $5 billion long-term target. I think we're going to continue to look to pay down debt over and above that. But as we mentioned and you see with our 2026 plan, first, free cash flow is going to be going towards the sustainable growth projects that we have on the infrastructure. That will be a theme as long as we have high-quality projects to put on the schedule. We'll continue to do that. But certainly, leverage is still the priority. We'll continue to expand on that. And I think the punchline is we can start thinking about being opportunistic in the future. And that day has come a lot sooner than what people expected. Were you going to do color on the cost structure, 26? Jeremy Knop: Yes, Doug, if you want to think about breakeven cost structure, I mean, we -- just like we're doing with our capital expenses, you have the maintenance side of our CapEx and you have this growth side. I think for comparability purposes, as we think about free cash flow really compared to peers in the market and also as it relates to breakevens, we look at it really at that maintenance level. Everything beyond that is elective. So when we assess that, we're around 220 on a levered basis. That levered number is coming down rapidly this year, and you'll see us soon repay a bunch of debt we have outstanding in the market. So that levered number is falling towards the unlevered number pretty quickly. Operator: Your next question comes from the line of Neil Mehta with Goldman Sachs. Neil Mehta: Toby and Jeremy, your perspective on F was helpful. I mean maybe you could talk about quantifying the uplift associated with that. You gave us some disclosures in the release and in your comments. And then just lessons learned from Fern because I think volatility is going to be a constant on the go forward. So how are you ensuring that your marketing team is going to continue to be on the right side of these type of events? Toby Rice: Yes. So Fern really was a great example of the culture we built here at EQT and our ability to respond to stimulus, our company value evolution on full display, executing the environment we're in. It's important for people to know we started planning for winter storm fern back in the summer, and we were making preparation for winter storms. Reliability is going to be a big feature, a big attribute that people are focused on, and we're excited that the teams all stepped up and knocked it out of the park, not just operationally, but on the commercial side as well and being able to capture this opportunity that was presented to us. Just to quantify some of the uplift, I mean, we look at -- we were excited about our performance during the storm. The way we look at it, our normal routine operation uptime is 98%. That's our target. During the storm, it was 97.2% -- we got even more excited when we saw how that benchmarked versus Appalachian peers, and we saw a 2x factor outperformance on that front. So it's certainly been an area of the organization where we really wanted to dial up the intensity and this team proven that they actually delivered. Here's my takeaway on what we see. Volatility is here in natural gas. And I think people can have an attitude that they try and shy away from volatility and try and protect against it. We are trying to take advantage of volatility, and we think the results that we generated in winter storm fern are going to be future opportunities that we see going forward, and this is a sign, and this will persist until we get back to getting infrastructure built to debottleneck these markets. Until then, we're going to be able to be opportunistic and take advantage of this world-class commercial team we have here at EQT. Jeremy Knop: Yes. Neil, I would add to that, too. I mean, our commodities team is focused on 2 things primarily. First, focused on balances or really minimizing imbalances is probably the best way to put it. And that really comes down to extreme coordination with our operations teams and our control centers to make sure that we know exactly how much volume is coming into the system so we can keep our sales in balance. The second is arbitrage capture. A really good commodities team is not able to focus on things like arbitrage capture if they're constantly trying to figure out where volumes are. And during winter events like storm, when our operations teams are delivering and we have good visibility into both the midstream operations and upstream operations, they're able to dedicate their time to capturing that opportunity. But I mean, look, some of the trades that we executed during the end of January and early February were, I mean, absolutely outstanding, making sure volumes got to where they needed to be, shutting down all of our Gulf capacity and reselling it in basin when prices were $30, $45, making sure we had full deliverability through our MVP capacity, selling it at $130 MMBtu for certain days, making sure that we have confidence in the volumes that will show up in February and being able to nominate at levels like we did at 98%, which is probably an all-time high for EQT. But again, when we see the opportunity to sell gas on a month forward basis in the mid- to low 7s or to sell into Station 165 at over $11 for a month, you have to be able to depend on your operating teams to do that and capture the value presented. And that's what we're able to do uniquely at EQT through the platform we've put together. Neil Mehta: And then the follow-up is just on the gas macro. I wonder if you could address 2 parts of it. One is we've seen production surprise. I think relative to consensus expectations, Toby, something that you outlined was likely to happen at our conference in January. I think that is materializing. Has that affected the way you're thinking about the outlook for U.S. gas? And then the follow-up is around M2 basis. You guys have a differentiated point of view that M2 basis futures need to continue to tighten up, something that we are seeing some evidence of. So if you could talk about the U.S. profile for gas, but then specifically the M2 basis profile as well, that would be helpful. Toby Rice: Yes. We got a lot of questions when we said that we saw U.S. supply exiting '26 closer to that 114, 115 Bcf a day range. That's still our view. I think things we're looking at are going to be these Permian pipes when they come online and how much they'll be full on the supply side. And then obviously, people are pretty well read into what's going to happen on the demand side with LNG and the power story is going to show up. I'd say probably what's new for us on a macro perspective, the biggest catalyst that's hitting energy markets right now is the public's concern over energy prices and affordability. And we think that this narrative is only going to continue to strengthen, and that's going to create even more opportunities to get infrastructure built and with our platform that will create opportunities for EQT. Jeremy Knop: Yes. And I guess to your question on M2 basis, we've been talking about this for like a year, if you look back at our -- what we put out quarterly. And that's continued to move our direction. We came into this year with only about 35% of our local sales hedged because we have had this broader thematic view that basis should improve. Historically, we probably would have had about 90% hedged. That's something we normally don't openly disclose. But again, it's a tactical repositioning that we've intentionally executed on over the past year or so. And again, we're also leaning more on our physical curtailments in those down markets as opposed to feeling like we need to financially protect ourselves. And that just provides a better sort of all-in market solution and allows EQT to save its volumes for when the market really needs them like during the winter time. Operator: Your next question comes from the line of Arun Jayaram with JPMorgan. Arun Jayaram: Jeremy and Toby, I wanted to see if you could talk about how you see your strategic growth CapEx evolving over the next couple of years as we think about projects like MVP Boost, Southgate, the Clarington Connector. But how do you see that evolving over the next couple of years? Jeremy Knop: Yes, it's a great question. And that is Arun, why we were so intentionally trying to bifurcate maintenance capital, which I think is the true measure of year-over-year performance and just efficiency in the base business versus where we're choosing to elect to reinvest capital and create additional value. we're trying to create more and more of these opportunities, again, across our integrated platform. I think we see more than most companies do across the value chain. A year ago, I probably couldn't have told you about half of these projects that we have in our budget this year. So I have no doubt the teams will continue to originate a lot more really good deals. But right now, I think beyond what we have in the queue for this year, the focus is really on the Mountain Valley projects that we've talked about, both Southgate and Boost. Those are probably the biggest spend items as we move into 2027. There's a number of things we're working on that I think are pretty exciting, but that's all got to come to fruition. But look, our goal is when we have not a lot of debt, we're generating $3 billion, $4 billion of free cash flow before growth CapEx, say we invest the first $450 million, $500 million to a base dividend, the next $500 million of that or so, maybe more like this year, depending on the quality of the opportunity, we think it's important for that to go into some sort of organic growth project -- and importantly, and I think to differentiate against what you hear from some of our more direct upstream peers, there's a way to grow value and free cash flow that doesn't include just drilling more wells or drilling less wells. There's a lot more to it than that, and that's really what we're trying to underscore and emphasize and how we're trying to differentiate how we reinvest capital. And when you step back and think about the right way to really, in our view, step into something like upstream growth at some point down the road, there are certain prerequisites to that. In our mind, you have to be the lowest cost producer, which is box we've certainly checked. It's getting down to a very low to no leverage profile, which, again, we're very rapidly executing on. But I think most critically, it's partnering and creating real structural demand for those volumes. And that's what you see us doing through the MVP expansion through the Clarington Connector project, through the in-basin just demand opportunities that we're connecting to with our midstream platform. And once all those boxes are checked, that's when we would think about growth potentially beyond the infrastructure. But this infrastructure is really paving the road for us to get there. And at the same time, I mean, it's the type of returns that get us really excited where we're not taking your classic commodity price risk and chasing prices. Arun Jayaram: And just a follow-up is in terms of your investments in compression, it looks like this year, you're going to be investing about $180 million in terms of pressure reduction projects and gathering. Where are you in terms of the life cycle of investments kind of in compression? Toby Rice: Yes, Arun, these projects will get us pretty close to catching up and getting our systems operating at pressure that would be steady state. So future compression projects would probably show up in the maintenance CapEx portion of our budgeting. Operator: Your next question comes from the line of Betty Jiang with Barclays. Wei Jiang: I want to start with a question on your gas sales strategy. Jeremy, you mentioned that you're selling 98% of first of month. Can you just unpack like how much would be the ideal amount that you sell first of month? How much you want to sell into the cash market? I'm asking this because as you said, the volatility, gas market is only going to get more volatile, which means that you want to get more exposure to cash markets or prices where as we have seen this winter. So how does that influence your -- how you sell your gas and how much of the gas gets dedicated to first of month versus cash market? Jeremy Knop: Yes, Betty, it's a great question. So we have a fundamentals team internally. And we -- I mean, we try to always have a view. We're not never trying to pick price. What we're really trying to understand is where the asymmetry sit and the potential outcome. If you think about effectively what first-to-month pricing means coming out of bidweek, it's really the market's best estimate of what those 31 days over the next month will average out to in the cash market. Over the long term, there shouldn't really be a statistical advantage electing to one or the other, but one provides more stability when you elect most of the volume first to month. Otherwise, your traders are having to be in the market and clear a lot of volume every day. But look, when we looked at February as an example, this was a very conscious decision we made, and we assessed what was going on in the market and effectively said, fundamentally, in our view, you probably would have had to have one of the coldest Februaries in the past 100 years to justify pricing being at that level. And so we simply said, is that really a bet we're willing to make and leave that open exposure? Or are we willing to take off an amount of value that if we're producing, call it, 200 Bcf a month and we have $5 to $6 of margin baked in, do we just take the money and derisk it? I think your typical producer is selling probably 75% to 80% first a month, and the rest of it is left open as operational flexibility for downtime. I think EQT is unique in the sense that we have so much control over the value chain and visibility into operations through the vertical integration, we can dial that up to a higher level. And so when you see opportunities like this, we can take that value off the table. But just for perspective, if you look at where gas daily has settled month-to-date and where balance a month pricing is, I mean, you're averaging like it's about $390 million at Henry Hub and mid-3s at M2. So if we had not made that election, our average pricing for the month would be several dollars below where we elected it to be. So there is -- hard to overemphasize how much value there is to be able to take off the table if you can be on top of this sort of stuff and have the visibility that we do. And again, going back to what Toby said, our real goal is to be more of, I guess, more like an anti-fragile philosophy where we benefit from when there's more volatility. You saw it in Q4 in October, what we did with our curtailment strategy. We were able to really take advantage of awesome opportunities to squeeze extra margin out. And then the market got volatile on the other end of the spectrum in January, February, and we again, I think you'll see us squeeze an immense amount of value out of the market by positioning around volatility and profiting from that rather than just playing defense. Wei Jiang: Very helpful context. My follow-up is on growth. In Toby's comments, you guys talked about the midstream investments setting the stage for sustained upstream growth. And I just want to ask about your philosophy around that because we are seeing more volumes and growth from other operators growing into the local market. EQT has one of the lowest cost production basin. If you don't grow effectively, you're ceding market share to others. So how do you think about balancing growth? And I'm a bit conflicted myself on thinking about how much you should be growing in this environment, too. Toby Rice: Yes. I think philosophically, it's important to note that I think we've learned what happens when you set activity levels chasing price signals. That hasn't typically worked out too well. So philosophically, we've shifted more towards we will respond to demand. And then as far as seating market share is concerned, a lot of this demand that we're meeting, actually all of it is going to be connected through EQT infrastructure with EQT gas supply deals. So I feel like we've got a really good look at what the market needs and our ability to supply that. But the infrastructure needs to get built. These projects need to get built. That demand needs to show up, and that's probably a '27, '28 time frame for us. So we're focused on the infrastructure right now, securing the demand, and then that will be an option for us in the future. Operator: Your next question comes from the line of Kalei Akamine with Bank of America. Kaleinoheaokealaula Akamine: My first question is on MVP. Going back to Slide #10. It shows really strong performance on the main line above nameplate capacity. Just kind of curious what you guys are learning about the effect of the capacity on that system and if there are any learnings that we can extrapolate to the expansion projects. Toby Rice: Yes. As far as learning on like total flow potential, I mean, it will be dependent on weather conditions. I mean colder weather will be able to flow more volumes there. So I mean, this new record of over 2.1 Bcf a day sort of shows where that limit is. But I think more importantly is looking at the price on that chart, there's a tremendous amount of demand there needs to be more volume brought into this area, and we think Boost is going to be a great project for us to address that market need. And we anticipate these projects having pretty high utilization. Kaleinoheaokealaula Akamine: The follow-up is on Clarington Connector. That project was upsized from 300 million cubic feet per day to 400 million cubic feet per day. Just kind of curious what's behind that design decision. Is it demand pull? And then once at Clarington, can you talk about what market options you have to clear that gap? Should we think about Rex somewhere in the Midwest? And are there any opportunities for premium pricing, maybe a direct supply agreement on top of that? Jeremy Knop: Yes, Kalei, I think you're on to something. I mean it's a couple of things. And I really think the Ohio market opportunity in the next 5 to 10 years is one of the greatest ones for us. Not only is it the new demand you're talking about, you have a lot of the FT contracts on like Rover, on REX, on NEXUS rolling over in the next 5 to 10 years. And at the same time, in our view, I mean, also owning Ohio Utica gas assets, we really don't see much inventory there beyond like 2030. So we view that as a gas play that will go into structural decline. And so we're sitting there right on the doorstep to it with a huge infrastructure footprint. And I think the ability to build pipes directly into that region and allow those pipes to pull gas back from our much deeper inventory base on the Pennsylvania side will not only help us capture premium pricing, but actually set the stage for us to grow volumes and do so in a structurally like sustainable way like Toby just talked about. So I think this is part of us kind of looking ahead with a longer-term view and positioning around that longer-term opportunity. But I think there's big time ways for us to win on both pricing and also volume to drive top line growth in the coming years. Operator: Your next question comes from the line of Lloyd Byrne with Jefferies. Francis Lloyd Byrne: Congrats on capturing the volatility. I know it's been a focus for you guys. I want to circle back to Betty's comment on growth a little bit. And I know, Toby, you've talked about what a BCF means to your free cash. But if I look at consensus, there's just no growth that people have in the model. And I was just wondering like when do we start to see this growth emerge? And we're looking at almost 5 to 8 Bs of in-basin demand. I don't know if you guys feel the same way, but when do we hear more on Homer City, shipping ports, coal retirements, manufacturing plants, et cetera? Toby Rice: Yes, what was the first question on growth was what? Francis Lloyd Byrne: Yes. Just like when -- it looks like consensus just has no growth, and it's super important to your free cash and going forward. And so when do we get more details with respect to that? Is that in a year? Is that in 2 years? Is that when the infrastructure is built out? Toby Rice: Yes. Well, first thing I'd say about '26, I think our track record of beating production estimates, there is risk embedded in that production forecast. We keep that risk on. And as the year evolves and things play out, we update that accordingly. So I'd say that just look at the track record. As far as thinking about sustainable upstream growth in the future, I think that's probably a story that we start talking about maybe '27, we start thinking about it once we get a more clear picture on some of the start times, some of the projects that you mentioned like Homer City and some of the in-basin data center. We don't see the world any differently than you on what we're seeing for in-basin demand. On Slide 22, we laid out our estimates of 6 to 7 Bcf a day. What's changed a little bit, power demand for data centers has gone up. Coal retirements has been pushed back a little bit, but net-net, it's still a healthy source of in-basin demand. Francis Lloyd Byrne: Okay. And let me just follow up to be a little bit on -- given your resource depth and your breakeven. Just how much production are you comfortable with going forward? Could you add 2 Bs, could you add 3 Bs and still be comfortable? Toby Rice: Yes. I mean this is a question we've asked here. I mean, realizing the full potential of EQT when we came in here, we think about, what's the full potential of this almost 2 million acre resource base we have here. Obviously, we're super disciplined to making sure that we're pairing up with demand. But we believe that we have a productive capacity of about 12.5 Bcf a day. Think about that for -- when we think about the amount of opportunities that we could create on the midstream and infrastructure side of things and still be able to take advantage of the benefit of that integrated platform and capturing the margins on the upstream side, which is where we feel like the largest source of value capture is going to be -- is going to occur. That's sort of how we look at it. But I mean, that's aspirational for us, and this is one of the reasons why we're pushing so hard with our growth engines to capture this demand and create these infrastructure opportunities for us. Jeremy Knop: Lloyd, I'd add to that, too. I think when you look back at our industry over the last decade or 2, so much of growth comes down to companies really irresponsibly chasing price signals that are fleeting. I think as we think about growth, it comes back to those 3 prerequisites I mentioned earlier. And as we think about it, it's not something where you'll probably ever hear us come out and say like, hey, we're just going to grow for the next 12 months, right? Or hey, we think if prices are higher, we're going to add a little bit of volume. That's not how we think about it. I don't think any company gets rewarded for that. If anything, you're just introducing uncertainty and sort of gambling on price. The way we think about it is when that demand is structurally showing up, whether it's the MVP projects coming online, like Clarington data centers, whatever it might be, that is structural demand of multiple Bcf a day that we are really underpinning. And if we grow it, it probably looks more so like we grow 3% for the next 5 years on like a CAGR basis, and we have a business, a balance sheet, a cost structure and integrated platform that allows us to do that really no matter what gets thrown into the macro mix. So if you're an investor, you can capitalize that and count on it happening. as opposed to having to pull back on capital then lean in back the capital depending on the broader price environment. I think the way we think about it is at the point in time when we do that, if you do see a down cycle in the middle of that growth -- long-term structural growth profile, you'll see us buying back stock during the pullback and curtailing volumes during the weak period, but not having to change our operational cadence. It's a totally different position than I think any other company is really in that has talked about growth to date, but that's because they don't have the attributes that we've built into our business to date. So again, when we do it, we will do it very intentionally. We'll do it with a lot of discipline with a long-term focus, but you're not going to see us come out and chase price signals. Operator: Your next question comes from the line of Phillip Jungwirth with BMO Capital Markets. Phillip Jungwirth: It might be early, but can you update us on any discussions or plans this year around placing LNG offtake between Asia and Europe or securing regas and just how you think purchases are looking at Henry Hub versus oil-linked deals beyond 2030? And just because you're having discussions with counterparties, are you surprised at all by international buyer motivation to own physical Henry Hub-linked gas with recent M&A? Jeremy Knop: Yes. We've -- our team has been super active on this front. It's actually been, I mean, really educational at the same time, just building out those international relationships. I mean the demand, I think, is a lot more real than what you read about. I think that market is very opaque. I think what you learn on a firsthand basis, interacting with the marketing teams and the executives of some of these international businesses just gives you a different perspective on this. But I would say -- I'd just characterize it as I think that demand is a lot more real than people realize. I think there's a lot more demand for volumes, especially when LNG prices are not $20, they're, call it, $8 to $12. I think you're going to see a lot of that gas picked up. And it goes back a little bit to my -- what we said in our prepared remarks around just where European balances are right now, despite all the gas added in the last couple of years, you're still looking at really low inventory levels. So I think that is -- I think that's indicative of just how that gas globally is being absorbed. But look, I'd say there's been a unique level of interest in our volumes and buying from a producer. When you look at the existing LNG players in the U.S., all of them is like liquefaction facilities are set up to be like short Henry Hub and the offtakers are short Henry Hub. And when you work with EQT, you actually -- I mean, effectively like vertically integrate through the chain through that purchasing pipeline. What you're seeing with buyers coming to the U.S., it's not that, for example, Asian buyers are coming and wanting to grow a bunch of Haynesville volumes or East Texas volumes. It's just to own that physical molecule so they're not short anymore. So I wouldn't expect to see them chasing price signals either in the same way. But it is leading to just so much interest in our resource base. And I think there's been a lot of realization from both European, really like super majors all the way to buyers across Asia that the Gulf Coast, in particular, the Haynesville is just super short inventory. And if you're looking at securing physical molecules for 2030 and beyond, you just don't have it, right? And so it's like a mismatch maturity for the liability you have when you sign up for offtake. And so we're increasingly actually seeing a lot more interest in molecules coming out of Appalachia or the Permian. I think from our standpoint, that's really where long-term gas supply will come from to feed the LNG demand. It's not the Haynesville. And I think everyone is really starting to realize that internationally as well. Phillip Jungwirth: That's great. And then you guys have over 40 Bcf of gas storage, which came from Equitrans. I mean it doesn't get a lot of airtime and you're effectively managing the reservoir storage at times. But do you see value in adding storage further from the wellhead as part of a broader gas marketing strategy? And really just a quick one. Now that your own 53% of MVP with the bolt-on, are you planning to consolidate that venture? Toby Rice: Yes. Just high level on storage and how it fits into our strategy, and I'll let Jeremy expand on some of the details here. One of the biggest focuses that we see is going to be on the reliability of energy, and that simply means delivering volumes to the market when the market needs it at the level that the market needs it. So storage is going to be a big part of the focus. We're doing that right now with our strategic curtailment. That is a really big lever that we pull, and we've pulled that pretty consistently over the past couple of years. That's a really great tool for us. And we'll look for other tools out there that will enhance the reliability of the energy that we produce at EQT. Jeremy Knop: Yes. I mean, look, it all comes down to returns for us, just like these growth projects. We have storage capacity on the Gulf Coast already. in addition to the storage we have in Appalachia. Really what the market needs, though, is not necessarily storage in Appalachia, it needs salt storage along the Gulf Coast region to really help balance and buffer what I think of as like ground zero volatility over the long term with the seasonal swings and maintenance cycles of those LNG facilities just because it's so concentrated geographically. So it's something we're studying and spending more time thinking about. I do think you have to, as an operator, like as much value as I think our team has and could squeeze out of a lot of storage capacity. If I'm an investor, that's a hard thing to model and understand. I think that's the type of cash flow that's going to get a pretty low multiple on it. So we're trying to be cognizant of that at the same time and make sure however we go about expressing a view of like long volatility through storage is whether it's an operator like we are today or someone leasing capacity, which we also do, we do it in a way that actually converts to value for shareholders. So it's an area we're spending more time, but it's probably one of also the greatest opportunities for infrastructure investment in the country right now and really the world overall, just to help make sure there is a buffer in the system. Operator: Your next question comes from the line of Nitin Kumar with Mizuho. Nitin Kumar: Congrats on a great quarter. One follow-up on Arun's question around growth CapEx. I know sometimes in an integrated model, the spending on infrastructure can dilute the ROE, but your investments are very tied to your upstream portfolio. Have you -- is there a way for you to quantify what is your ROE on this growth CapEx or anticipated ROE on this growth CapEx? Toby Rice: Yes. On the infrastructure we have for '26, we can look at a free cash flow yield like holistically, some between 20% and 30% across the projects is how we think about it. So typically, when you think of infrastructure, you think of returns lower than that. And I think part of this -- while these returns are so good are just investing within our operating footprint. And so those are the type of opportunities we're looking for organically on the infrastructure side. That being said, it pales in comparison to developing upstream Marcellus with a $3.50, $4 gas price. But we've got to be very thoughtful about that and make sure the demand is set up before any upstream volumes are brought in. Jeremy Knop: Yes. Nitin, just remember, too, I mean, we're focused on returns on shareholder capital. I think a lot of just classic upstream companies get so focused on things like single well IRRs, and that's just apples and oranges versus what creates stable annuity-like cash flow streams for investors that drive things like free cash flow and free cash flow yields. So when you think about it, if you're drilling a well that gets you a 100% IRR to get a return on your enterprise value equal to your WACC, like that's generally kind of -- it's like a 10:1 sort of ratio. So if you want a 10% return, you probably need to -- on enterprise value, you probably need something like 100% well return. So companies are out there talking about like 15% like wellhead return breakeven, you're probably generating like a 1% return for shareholders relative to your WACC. That doesn't make any sense. I think it's just missed in the equation overall. When we think about it, you have to look at something like infrastructure cash flows, which are annuity-like in nature. All the capital we're putting in here is recurring cash flow that comes out of this over the long term. And if we're yielding, just call it, 10% on average on enterprise value, but we're investing in other annuity-like cash flow projects that 20%, 30% cash flow yields, that's driving real sustainable value uplift for shareholders even though that headline IRR is just -- is not the same. Just to give you another example of that, like to earn the same multiple on your investment drilling a Marcellus well versus a Haynesville well, your Haynesville well needs double the IRR to get the same multiple of invested capital, right? You're not really creating value, but that hyperbolic decline really skews that calculation. And so again, for us, like we don't really focus on the IRR so much. It's apples and oranges. For us, it's really about what drives cash flow uplift to shareholders and how to do it durably. And that's really what's going to drive value over the long term. And look, when you step back and think about all the infrastructure investments we've made, even buying Equitrans when we did -- it really comes down to that as like a foundational sort of insight we had years ago and also what kept us out of going into plays like the Haynesville. But again, like a lot of people look at our stock and say, well, you trade at a higher multiple than peers. Well, we did a couple of years ago. We've outperformed virtually every peer since then, and we still trade at a similar level, right? So I think you have to parse this apart to really understand like where is value coming from and why. Nitin Kumar: Yes. I think you certainly have proved the value of what you embarked on 2 years ago with the Equitrans acquisition. My follow-up, Jeremy, is on the balance sheet. You have some very impressive goals, which do seem achievable for balance sheet reduction. How do you think of the balance sheet beyond '26? Typically, it's seen as a buffer against volatility, but you've designed the organization to actually ride volatility a little bit better than peers. So how should we think about the balance sheet going forward? Jeremy Knop: Yes. I mean, just consistent with what we've said in the past, Nitin, $5 billion we see as our long-term max debt level. I would expect our net debt level to fall below that. I don't think you're -- again, as we've said for years now, I don't think you'll ever see us come out with a programmatic buyback. I think the way we think about it is while in theory, in a spreadsheet, your return on cash sitting on the balance sheet is very low, it's hard to overemphasize how valuable that is on just the optionality of that in a very cyclical volatile industry. You've seen that if you just look back the last 3 to 4 years, just how volatile even our equity has been. I think beyond limiting the volatility in our equity by having low debt, I think being able to step in and be an opportunistic buyer when there's big pullbacks, whether it's related to natural gas or whether it's broader in just the macro environment, that's what we're trying to set up for. So I would expect our net debt to fall. We're not afraid at all to hold several billion dollars of cash on the balance sheet opportunically. And we've really been encouraged by our top shareholders to actually do that because they understand just the nature of the cyclicality. And when those options come, they're tremendous. And it's really one of the best long-term things we can invest in, but you have to be patient. Operator: Your next question comes from the line of Neal Dingmann with William Blair. Neal Dingmann: Toby, my first question just on the '26 guide. It seems looking at that Slide 6, no question, your operational efficiencies continue to lead to production growth on less capital spend. So I'm just wondering are you seeing anything different for this year when you look at those '26 expectations? Or is the guide more just kind of being conservative given the bottle gas tape? Toby Rice: Yes. We're adding on a maintenance perspective, probably get that extra $100 million, and that's largely due to Olympus. So I mean there's some conservatism baked in here. We're taking the momentum that we've established operationally in '25 and sort of baselining that. Some of the opportunities we're going to be working on to improve that. There's a couple of small science tests that are coming out that could tweak some of our well design. I mean, as you know, we do invest in science, so there could be some opportunities on that front. On the water logistics side of things, we're going to continue to build that out. That will continue to bear fruit and give opportunities for us to streamline logistics and operational efficiencies going forward. Just for perspective, we pipe about 80% of our water right now. So that's the opportunity for us to continue to increase the logistics support on the completion side. And on the produced water side, we're only piping about 40% of our produced water. So these investment in water systems, I think, are going to be value-add for years to come. And then I'd say on the service side, we're going to be really aggressive in rebidding a lot of our services. It's -- I think there's some tools that we have from an AI perspective that will allow us to pinpoint some of those efforts. And we think there could be some opportunity for us to grind costs down, probably low single digits on the procurement side, but we're not just focused in the field. We're also focused on the procurement and the backside, too. Jeremy Knop: Neal, one thing I'd add to that Yes, just on the upstream side of things, I think it's tangible evidence to this. There is some noise in our numbers year-over-year because we were so transactional in 2024 and then also with the midyear Olympus close in '25. If you really step back and think about it and just the level of efficiencies Toby is alluding to that we also continue to expect going forward, we're producing about 6.3 Bcfe a day in 2024. We sold our non-op interest down to Equinor. That was about 600 a day. So we were at 5.7. We buy Olympus, you add about half a be back, so you're at 62 as a baseline. The production forecast we've given for this year is about 6.4 Bcfe a day. So in effect, while we don't talk about it, we, through our operational improvements and efficiency gains have actually grown about 200 million a day over the past, call it, 2 years. I think that's being missed just due to the kind of the noise year-to-year. But I do think that's important tangible evidence to just like the volumetric results of what we're doing that are easy to miss. So I'd take that into account. And again, like Toby said, I would expect that to continue. Neal Dingmann: Great. And then just very quickly, Telly, on the power projects opportunities going forward, do you anticipate those being structured any differently than Homer City now any of your previous deals, it seems you've got now more of a competitive advantage. I'm just wondering should we think about potentially further power deal structure any differently? Toby Rice: No, it will just depend on what services the specific site requires. I mean, gas supply across the board. And then the opportunity on the midstream side will be a unique factor on a case-by-case basis. Operator: We have time for one more question, and that question comes from the line of Kevin MacCurdy with Pickering Energy Partners. Kevin MacCurdy: Great. And I'll just keep it to one question. Kind of coming back to the production growth, we noticed that the 2026 turning line count is higher year-over-year. And just curious on the cadence of those turning lines throughout the year? And does that level give you some flexibility or optionality to grow in 2027? Jeremy Knop: Yes. Right now, we're not -- we haven't tried to see up growth into 2027. I mean, to some degree, I think what you're seeing is just lumpiness as you would expect from a company our size when we're pursuing combo development. But this is not setting up for 2027 growth right now if we come out and intentionally mean to grow beyond what I'd call like the accidental growth of being -- just getting so much more efficient of the $200 a day I referenced in the prior response, we'll come out and say that, but we're not ready to pursue that. We don't think the market is ready for it yet. Kevin MacCurdy: And you alluded to combo development. Can you kind of expand a little bit on that? Toby Rice: Yes. I mean, combo development has been the core operational pivot that we instituted here when we took over 6 years ago, moving -- taking full advantage of our large-scale asset base moving from drilling, call it, 1 or 2 wells off the site. They're now drilling 6 to 10 wells off of a site and doing that across 3 or 4 sites sequentially. So we're developing 20, 30 wells at a time, that's been the change in operational efficiencies and the logistics that supports that. So that's a core part of our program that we'll continue to execute going forward. Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.