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Operator: Thank you for standing by, and welcome to the Regis Resources quarterly briefing. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Jim Beyer, Managing Director and CEO, to begin the conference. Jim, over to you. Jim Beyer: Thanks, Paul. Good morning, everyone, and thank you all for joining us for the Regis Resources December quarter FY '26 results. Joining me on the call today is our CFO, Anthony Rechichi, also our COO, Michael Holmes and Head of Investor Relations, Jeff Sansom. We'll refer at times to figures -- some figures and tables in the quarterly report that we released earlier today. So you may find it useful to have that document at hand when we refer to them. All right. So look, I'll start with safety. During the quarter, our operations continued to perform strongly from a safety perspective. The 12-month average lost time injury frequency rate finished the quarter at about -- at 0.34, which remains well below the Western Australian gold industry average. Our objective remains unchanged in this area to provide a workplace free from serious injury. We continue to focus on leadership, discipline and continuous improvement to support safe and reliable operations across the business. Turning now to our production performance. Over the quarter and in fact, across the last several quarters, the team has continued to deliver the plan. The message we have consistently communicated to the market has not changed. Regis operates quality assets with strong leverage to the gold price. And when combined with the rolling life extension potential of our underground mines that we continue to see, this positions the business extremely well to deliver consistent ounces and cash flows well into the future. Operationally, the quarter group gold production for the period was 96,600 ounces at an all-in sustaining cost of $2,839 an ounce. And that, by the way, includes $179 an ounce of noncash stockpile inventory movement unit cost. This consistent delivery across both Duketon and Tropicana again demonstrates the reliability of our operating base and the strength of our margins. The performance translated directly into strong financial outcomes and further balance sheet strength. During the quarter, we generated $419 million of operating cash flow and increased our cash and bullion by $255 million, leaving us with an end of December balance of $930 million in gold -- in cash and gold. Also during the quarter, after taking into account our strong balance sheet and great outlook, we resumed dividend payments, declaring and paying a fully franked dividend of $0.05 a share, returning $38 million to our shareholders. Now this was underpinned by strong financial performance delivered in FY '25. This brings the total amount of dividends paid by Regis to $580 million since 2013. It reflects -- the restart of dividends, reflects our confidence in the sustainability of our cash flows and the strong position the business is now in and also in our fundamental understanding the value growth and returns to our shareholders are a fundamental objective of our business. To that end, Regis is unhedged and continues to be. We continue to invest in underground growth and exploration. And thanks to the strong operational performance, now has the capacity to balance this disciplined reinvestment with returns to shareholders. And with that, I'll now hand over to Michael and then Anthony, who will provide more detail on operations and financial performance. Thanks, Michael. Michael Harvy Holmes: Thanks, Jim, and good morning, everyone. Operationally, the December quarter was in line with expectations, both across Duketon and Tropicana, and the teams to continue to deliver its plan and the consistency of execution across the business remains a key strength for Regis. At Duketon, open pit on underground operations produced 57,600 ounces. Open pit mining continued at King of Creation, Gloster and Ben Hur, delivering 13,600 ounces at an average grade of 0.82 gram per tonne. Mining conditions were stable and performance was in line with plan. Our underground operations at Garden Well and Rosemont continue to perform reliably producing 32,000 ounces at 1.8 grams per tonne. Development rates across both undergrounds were pleasing and supported steady ore delivery through the quarter. Total underground development at Duketon was 3,896 meters with approximately 40% classified as capital development, reflecting the ongoing investment in Garden Well Main and Rosemont Stage 3. Both projects continue to schedule and are progressing as planned towards commercial production. The Duketon Mills performed to expectations and throughput was supported by planned stockpile feed. During the quarter, we also progressed activities associated with the BuckWell open pit at Duketon North. Following the reserve upgrade announced during the quarter -- during the period, early establishment and pre-strip works commenced to position the operation for first ore later in FY '26. BuckWell is a capital-efficient near-term opportunity that leverages existing infrastructure, approvals and available mill capacity at Moolart Well. From an operational perspective, it provides a flexible source of ore to support the Moolart Well once low-grade stockpile processing concludes while fitting well within the broader Duketon mining sequence. Turning now to Tropicana. At Tropicana, Regis' attributable production for the quarter was 39,000 ounces, representing another solid quarter of delivery. Open pit operations delivered 18,800 ounces at an average grade of 1.96 grams per tonne, with performance in line with expectations. Underground operations delivered 17,400 ounces at 3.14 gram per tonne, again, consistent with plan. Overall, both Duketon and Tropicana continued to perform reliably during the quarter, delivering consistent production while progressing key underground and near-term growth projects. With that, I'll now hand over to Anthony to take you through the financials. Anthony Rechichi: Thanks, Michael. Good morning, everybody. As Jim outlined earlier, the December quarter again demonstrated the strength of Regis' financial position with consistent operational delivery translating directly into strong margins and cash generation. Gold sales for the quarter were for just under 100,000 ounces for an average realized price of $6,436 an ounce, generating $641 million in revenue. Operating cash flow for the quarter was $419 million, with $231 million generated at Duketon and $188 million coming from Tropicana. Also in cash and bullion and referring to Figure 2 in this morning's ASX release, the coppers increased by $255 million during the quarter, taking the total balance to $930 million as at 31 December. Importantly, this increase was achieved after the payment of a fully franked dividend of $0.05 per share which totaled $38 million, while continuing to invest across the business and at McPhillamys. On the capital expenditure front, we spent $115 million in the quarter. At Duketon, this included underground development, preproduction mining activities and waste removal as well as investment in plant and equipment. A significant portion of this spend related to the continued advancement of Garden Well Main, Rosemont Stage 3 and early works at BuckWell. At Tropicana, expenditure related to underground development at Boston Shaker and Tropicana underground, preproduction costs at the Havana Underground and sustaining capital across the operation. Exploration expenditure during the quarter was $19 million, reflecting the strong level of activity across both Duketon and Tropicana and $5 million were spent during the quarter on McPhillamys. As previously outlined, following the Section 10 declaration, all McPhillamys expenditure is expensed through the profit and loss account. To close out and to also remind everybody, because of what has been strong profitability for a while now, Regis will return to a cash tax payment position, starting with the FY '25 tax payable of approximately $100 million, which will be paid in March next month. Well, month after, I guess. Going forward, we expect to make monthly corporate tax installment payments since the long period of tax loss benefits that we've enjoyed has come to a close. Overall, the December quarter highlights the magnificent cash generating capacity of the business with strong operating margins and disciplined capital allocation supporting balance sheet strength and shareholder returns. With that, I'll hand back to Jim. Jim Beyer: Thanks, Anthony. Look, now I want to talk through some of the broader corporate areas, and I'll start or return back to capital allocation. I'll repeat myself earlier that during the quarter, we resumed the dividend payments and a $0.05 fully franked share, returning $38 million to shareholders. The resumption of dividends is not expected to be a one-off decision. It reflects a clear shift in how we now view our business and the outlook of gold price, which then leads to the question of capital management. We are generating strong reliable cash flows. We have a robust balance sheet, and we're able to invest in the business while maintaining financial flexibility, a great position. Now in relation to looking ahead, we're in the process of finalizing a formal capital allocation policy as our Chairman mentioned at the last year's Annual General Meeting 2025, which we expect to release in February with the half year results. So that's discussing the ultimate outcome of our business, i.e., returns to shareholders. I'd now like to go right back up to the front of the business and talk about exploration. During the quarter, we released our biannual exploration update, which highlighted several very exciting opportunities that are popping up across both our underground and our open pits. Now as a result of these pleasing results and the resulting confidence to continue, we've actually increased our forecast spend on exploration this year. So we're continuing with our budgeted drilling program plans that we already have laid out for the rest of the year. But we're also adding to the program by basically maintaining the range at one of the -- at the projects that we drilled earlier in the year that have proved successful and warrant continuing. This increased our FY '26 exploration forecast and hence our guidance by about $20 million to result in the new guidance range for exploration of $70 million to $80 million. At Tropicana, the good news keeps on coming as drilling consistently delivers extensions to our known mineralization, increased confidence in underground growth opportunities and identify new targets to continue to build the underground pipeline. So our increase in exploration spend this year is deliberate, disciplined and pleasingly driven by results. It reflects the quality of the opportunities we're seeing and our confidence in converting exploration success into future production and ultimately, cash flow, particularly where it leverages off our existing infrastructure. On McPhillamys, as previously flagged, the judicial review for the Section 10 was heard in the federal court in Sydney last month in December, and the judge has reserved this decision and we sit and wait for the outcome. Now as we've mentioned before, in parallel, we continue to progress work on alternative pathways to return McPhillamys to an approvable position, and that includes ongoing assessment of an integrated waste landform solution for the tails. This work is progressing methodically and over a longer-term time frame, it takes time for us to work on these alternatives. Now finally, I'd like to touch on the Buckingham Wellington pits was -- and Michael has talked on these before and as we call them now, BuckWell. BuckWell is a capital-efficient near-term opportunity that, as Michael said, leverages existing infrastructure approvals and our available milling capacity. It is a cracker of incremental value. We're going to get 221,000 ounces out of it at an average all-in sustaining cost of $3,524 an ounce. And this is all in the release we put out last quarter. Now at consensus average price of 5,387 an ounce, it has a pretax NPV of $270 million and an internal rate of return of 127%. Now that's a 5,387 spot today. I don't know what it is right this very minute, but earlier this morning, it was 7,125. If we run that through it, the math is pretty simple. Pretax NPV would be more than double. This is a great project, and it's a great example of the work that our team is doing. With a bit of a fresh look at our old assets, sometimes a little bit of extra drilling. And in this case, we've been able to add significant annual production to Duketon by now being able to keep the Duketon North operation in production until early FY '32. That's 5 or so more years delivering a total of 221,000 ounces recovered. What a great project. And the great part about it is that it's a -- the stage nature of the development provides flexibility in sequencing and timing. It enables us to adjust the pace and the extent of the mining to reflect the prevailing gold price. This is not a commitment to start mining now and get ounces in 2 or 3 years' time, hoping that the gold price is where it is, not that it's going to draw, but it gives us flexibility in the unlikely circumstances that the gold price did go down. This allows the company to advance profitable ounces in a higher gold price environment while retaining discretion to defer later stages, if required. The plan is consistent with our disciplined capital management approach and demonstrates the ability to respond decisively to favorable market movements. So wrapping up, to summarize, the team delivered another quarter of consistent operational performance. This performance translated into strong cash generation and further balance sheet strength. We resumed the dividend payment and are progressing a formal capital allocation framework to guide future shareholder returns. We're increasing exploration investment supported by a strong track record of success and reflected by our increase -- as is reflected in this increased expenditure and really driven by successful early-stage outcomes. At McPhillamys, we continue to pursue all available pathways while awaiting the outcome of the court process. The addition of BuckWell pit to our production outlook means Duketon North will now be in operation to produce gold through to the end at least FY '31. The Regis team has delivered a strong result over the quarter, and we believe the business is well positioned to continue delivering long-term value for shareholders. Thank you. And I'll now hand back the call to you, Paul. Operator: [Operator Instructions] Your first question comes from the line of Levi Spry of UBS. Levi Spry: Happy New Year. Very good one for you. I guess, two questions, please. Firstly, on the exploration front, so nice to see that increase in the budget there. Can you just give us a bit of context around the activities that are involved there. So how many rigs you got running, sort of roughly where they are, what sort of meters that converts to and I guess, how that sits with your internal capacity in terms of your going full tilt at that? Or could you spend some more? Jim Beyer: Look, I can't -- I haven't got the exact details of the additional meters close at hand. What I can say is in addition to what we had already planned. So there will be additional activity that will need to be -- well, it's actually already underway to where we were either decommissioning rigs to move on to somewhere else. We've now kept them and brought in other rigs to go to the previously planned locations elsewhere. So there's quite a bit of activity on that. I mean we've got Beamish. Beamish South is an area that we've seen some particularly interesting results that are keeping us there. But also there's some very early indications in -- across our greenfields exploration areas that we want to put some more money in. But certainly, a key 1 is Beamish, which we're getting quite excited about. And -- but the basic answer to your question is, are we sort of shifting gear around? Or are we mobilizing more equipment we'll be mobilizing more equipment. We'll certainly be running more equipment, more people than we were planning to do in the second half. NCX for $20 million. Levi Spry: Yes. I guess sort of partly where I'm going. Are they easy to get? What -- how is the capacity in the WA drilling industry? And are they charging more? Like everyone's drilling lot meters. Just trying to understand. Yes. Talk a little bit about the [indiscernible]. Jim Beyer: Yes, I don't think there's any issues for us in sourcing that extra gear in equipment. So haven't seen that, I mean our commitments. The team believes that they can get the work done, the additional work done that we have planned. So we're not seeing that. And in terms of access, access is always the usual issue nothing expanded. Nothing has got worse, I should say. Levi Spry: Got it. Okay. And then going back to shareholders' returns sort of pace with the result, can you just flesh out the competing interest there a little bit and that balance sheet, $930 million, what is potentially a comfortable sort of number? What other competing interest do you have? So you've got that tax piece? Do we expect CapEx to be similar to this year plus the BuckWell, sort of CapEx and exploration sort of running at those sort of levels? Is that -- are they some of the goalposts that you're working to? Can you just sort of flesh out some of those parameters? Jim Beyer: Yes. Look, the capital that we've got laid out in front of us is definitely -- it's -- we're not expecting any major jumps or leaks of where -- from where we are at the moment. Quite frankly, we've got a pretty good problem that we're sitting at and sitting on, which is we've got a good, clear and reasonable capital expenditure program sitting in front of us. Nothing unexpected. And therefore, we're in a good position to be able to be comfortable with what our dividend policy should be. I'm sort of -- it's a pretty general question that you're asking, Levi. I mean, we have big leaks of capital, probably the biggest leak of capital that we've got sitting in front of us clearly is McPhillamys, but that's at least a couple of years away, and we've got nothing else of material scale at the moment sitting in our internal or organic options. So I think it's pretty -- it's -- our ability to pay a dividend was pretty clear and our ability to potentially continue to pay that is quite clear as well. Sorry, Levi. I mean if you if your question is where else are we -- what else could impact on our ability to continue to pay a dividend? We've got -- we're making excellent margin. We don't have anything significant coming up on our capital demand. So the ability is there, of course, notwithstanding gold price, but we're confident -- I think everybody is pretty confident. We understand how the gold price is going to perform certainly in the near to medium future. So I don't see any other significant demands on our capital for now. Levi Spry: Yes, quite the contrary. I'm trying to work out how big it might be. Jim Beyer: Yes, that's what we're working our way through, and it really ties in with the policy. And as I mentioned in the release, and I think I said earlier on that we will -- our plan is to provide a policy on capital return with the first half profit results, which will be around about this time in a month's time. Operator: Your next question is from the line of Adam Baker of Macquarie. Adam Baker: Jim, just firstly on the Duketon open pit. I did notice the grades have fallen a little bit quarter-on-quarter and compared to the second half of last year, your mining grades are around 0.82 grams per tonne. What should be expecting the grades moving forward, expecting normalized levels around this? Or are you going to continue to bring forward the low-grade tonnes in regards to Buckingham and Wellington? Is that going to see a bit of an uplift in grade from those levels? Or just trying to get a feel for how you're thinking there with open pit volumes. Michael Harvy Holmes: Yes, Adam, it's Michael here. The grades have fallen a bit. I mean it's a function of the mine sequence of where we are in the different pits. And so as we're working down there into the better grade generally at the depth of the pits and also it's a function of the stockpile fee. We have been feeding the better grade stockpiles. And as we sort of move forward, we're sort of moving into the lower grade stockpiles to supplement the feed through the mill. So expecting that sort of similar grade, but it will fluctuate depending on where we are with the fresh material. But no great fluctuations. Just the usual variation really. Adam Baker: What was the kind of reserve grades for BuckWell, you may have already pre-disclosed this, but is that kind of in the low 1s or where are you sitting at for that project? Michael Harvy Holmes: I don't have the number off the top of my head. Jim Beyer: What was the question? BuckWell? Michael Harvy Holmes: The grade of BuckWell. Yes, it's around about -- yes, just under 1, around about 0.9. Adam Baker: Yes, makes sense. And just in addition to the capital management framework policy, you touched on dividends, but it seems that you're also considering share buybacks as you say in the announcement and/or how do you weigh that up just versus the dividend payout versus considering some buybacks like some of the peers have done over the last 12 months as well. Jim Beyer: Yes. Look, I mean, it's a -- that is how do we weigh it up? Well, we wait and we try and work out what's going to give the best value to our shareholders. There's a number of share buyback initiatives that are in play with some of our peers. Just how much is being done is sort of one thing that we look at, what's announced and what's executed. Obviously, you got to have a view on what your share price is. But there are a number of different ways that we can return -- give returns to shareholders. There can be regular dividends that are tied to our profit and our announcement, there can be special dividends or there can be buybacks. And they are the things that we're looking at, right? We sort of got to trade them off. We've got to figure out which ones provide real benefit? Where is our share price trading? Are we -- is our value right? Are we under or over? And there's multiple things there, Adam, that we're looking at. And ultimately, we will work out and let the market know what our final view on that is. But it's pretty clear that the idea and the capacity for returns are there. So that is quite clear the form of it is probably takes a little bit of finalization, but fully franked dividends are a great way of returning our profits to shareholders. Operator: Your next question is from the line of Hugo Nicolaci of Goldman Sachs. Hugo Nicolaci: Jim and Anthony, congrats on another strong quarter of cash build. Just first one on McPhillamys. I appreciate the timing there is a little bit out of your control, but sort of any indications to the timing there or sort of getting outcome this quarter, that time line might have changed? Jim Beyer: Yes. Good question, Hugo. No, not really. I mean there's no statutory time line for any judicial person to come back. We think that -- yes, I would like to think that we're going to hear something by the end of this quarter, but there's no certainty on that. I mean, in fact, by the time we take into account holiday and Christmas, it's probably not unreasonable to expect we won't hear anything until what is it the June quarter sometime. And even then, there's no -- as I said, there's no fixed time line on when -- how long a judge takes to come back with their decision. Hugo Nicolaci: Fair enough. Just to double check there. And then just one more on capital returns and only because it's a nice enviable position to be in that you do have so much capital accrued. But in terms of that you'll come out with in February. I mean, is there anything that we should consider that might guide why the policy would be sort of materially different to some of your peers in that sort of 20% to 30% of operational free cash flow being paid out? Jim Beyer: Hugo, what I can tell you is that we're working on our dividend and return policy, and we will be informing the market of what that is when we release our half year results later on in February. Hugo Nicolaci: Fair enough. I thought I'd try that question one more way. But now, we look forward to that update in February. On the operations, then maybe just Duketon North, can you maybe just confirm what that produced this quarter? And then just give us a bit of color there on the time line through this half to ramping up the extension? Jim Beyer: Sorry, what were -- what was the question? Hugo Nicolaci: Sorry, Duketon North. Michael Harvy Holmes: The question related to -- Hugo was the direction -- sorry. Keep going. Jim Beyer: Keep going, Hugo. Hugo Nicolaci: So I was going to say, yes, the question was just for Duketon North, so how the production from the stockpiles is tracking at the moment? And then just a bit more color on the time line through 2026 in terms of wrapping up for the extension. Jim Beyer: Yes. So it's sort of minor. We get sort of minor improvements through the Duketon North of the stockpile. So it's sort of nothing sort of material there about ran to that 1,500 to 2,500 tonnes, depending on the ounces, depending on the grade. BuckWell sort of is not really producing grade this year and financial year and that will be ramping up next financial year. Hugo Nicolaci: Yes. Got it. And then just lastly, on Tropicana, just looking at some of the cost components there. It looks like milling costs sort of tracking up about sort of $26, $27 a ton last couple of quarters. Is that sort of the right rate to think about going forward from here? Or are there pieces like labor cost inflation or sort of power and contracts there on the gas piece that might push those costs a little bit further or be a benefit going into next year? Jim Beyer: I don't think there's any reason to think that those numbers should be viewed any differently going forward. Operator: [Operator Instructions] Your next question is from the line of David Coates of Bell Potter Securities. David Coates: Jim and team, congratulations on a strong quarter. And look, just a bit following on from the question on cost. More of just around like underlying unit costs across the board. I was sort of hearing different reports that cost inflation across the industry in general is easing or in some cases, maybe not. But just wondering what you guys are seeing in terms of your underlying unit costs and input costs. Jim Beyer: Well, I mean, at a high level, I would say that you can see where our costs are coming in on our AISC guidance and there's nothing that we're seeing or experiencing that's going to drive that higher. But on an individual basis in specific areas, I'd sort of pass over to Anthony or Michael to make a comment on that. Anthony Rechichi: Yes. Look, David, it's Anthony here. Look, my comment on that is except for -- so on the AISC front, as we've sort of already talked about there or in the public, we've been talking about we're purposely pursuing some of the higher cost ounces. Now that's -- they're grade related. So that's what you're seeing in AISC. In actual input costs, though, like what is things costing down at the ground for getting per gold produced unit. Look, besides general CPI increases, and they are still there, nothing standing out. What we're not seeing is in your earlier comment, yes, maybe some people are seeing it go down. We don't see that. But we're seeing, yes, just typical CPI, not necessarily more than that and not less. David Coates: Not cool. I was seeing people saying stable, but I haven't seen going down yet. But yes, so it is unwinding. Anthony Rechichi: Yes. I guess stable is the right way to say it. If we say stable in line with CPI, I guess, it's kind of stable, yes, if you say it that way. Operator: And there are no further questions at this time. I would like to turn the call back over to Jim for closing remarks. Jim Beyer: All right. Thanks, everybody. Appreciate you joining on what is another busy day and also appreciate the questions. As usual, if there's anything to -- anything you want to follow up, give us a call. Also I'd just take the opportunity now to thank for those who aren't aware, Jeff's leaving at the end of this month and heading off to Alicanto. So good luck with the new role, Jeff. Thanks for everything. And we'll let you know who Jeff's replacement is in due course. All right. Thanks, everybody. Have a good day. Operator: This concludes today's conference call. Thank you all for joining us. You may now disconnect.
Unknown Executive: Good morning, everyone. This is [ Jane Brampton ], Investor Relations at Hillgrove Resources. Welcome, and thank you for joining the Hillgrove Resources December 2025 Quarterly Update. [Operator Instructions] I will now hand over to Mr. Bob Fulker, CEO and Managing Director at Hillgrove Resources. Robert Fulker: Thank you, Jane, and good morning, everyone. Thanks for joining the Hillgrove Resources 2025 December Quarterly Results Webinar. I'm joined on the call today by Luke Anderson, our CFO. And for those who have been on previous calls, we're on a new platform today, and this is part of our investor engagement improvement program, which includes easy access to up-to-date information and releases. 2025 year of disciplined delivery -- was a year of disciplined delivery. The copper production of 11,315 tonnes landed within our production guidance range of 11,000 to 11,500 tonnes. All-in costs for the year came in at USD 4.29 per pound, positioned at the lower end of our 2025 cost guidance range. Operating mine cash flow for the December quarter was back up to $12.7 million, with a full year operating cash flow at AUD 35.8 million. During 2025, we invested $21 million in major capital and $20.5 million in sustaining capital to increase the Kanmantoo's mining footprint through the early development of Nugent decline and increasing the Kavanagh decline advance rates. These are the first steps to increase our mining rate up to the 1.8 million tonnes per year during 2026. More importantly, it gives us the ability to increase our copper production up to our new guidance, which has a top end range of 14,000 tonnes of copper plus gold, delivering real growth for Hillgrove shareholders. For 2025 full year, when compared to 2024, we delivered a 38% improvement in development meters, a 57% improvement in mine tonnes, and a 26% improvement in copper tonnes. Whilst we do not require the same percentage improvement in delivery as last year to deliver our 2026 guidance, it is still a year where we are growing copper production throughout the year. The second half is a larger delivery half than the first half. We are seeing daily instantaneous mining rates at those required to deliver the 1.8 million tonne rate, but we remain vigilant to not outmine our development rate. Operationally, the December quarter delivered a number of highlights. Over 700 meters development advanced per jumbo for the quarter. We are starting to build inventory. 402,000 tonnes of ore mined since we started the underground and 410,000 tonnes processed. Delivery of just shy of 3,000 tonnes of copper produced for the quarter. As mentioned last quarter, we are looking -- we are working our way through the Kavanagh pinch zone, and we expect to see improved grades over the coming quarters. In 2026, you'll start to hear us referencing a copper equivalent number more frequently. This number has become more relevant as Nugent stoping has commenced. During 2025, gold and silver production has been increasing. And when added to the 2025 copper production, this would equate to something between 12,500 and 13,000 tonnes of copper equivalent tonnes. More importantly, going forward, the total copper announced in our guidance today will significantly be supplemented by Nugent gold production during 2026. During the December quarter, we delivered 753 ounces of gold with a full year production of 2,249 ounces of gold. The Emily Star incline progressed 23 meters during the December quarter. This will progress over Q1 in 2026, and we'll start diamond drilling Emily Star during the first half of this year. There were 2 major milestones delivered during the December quarter at Nugent. Firstly, Nugent Stope ore produced -- production commenced on the 15th of October, ahead of schedule. And secondly, the Nugent Decline broke through on the 19th of December, connecting the Nugent and Kavanagh mining areas as planned. Nugent mine provides a second ore source, positions the operation to deliver a mining rate of 1.7 million to 1.8 million tonnes per annum during the first half of '26. And this uplift in mining rate is expected to reduce our all-in sustaining cost unit rates during the second half of 2026. In the December quarter, we released our second annual underground resource and reserve estimate update. The 2025 mineral resource and ore reserve delivered a 43% increase in ore reserve tonnes and a 14% increase in resource tonnes compared to 2024. The updated ore reserve now stands at 4 million tonnes with 34,000 tonnes of copper and 29,000 ounces of gold. The mineral resource increased to 22 million tonnes, containing 160,000 tonnes of copper and 120,000 ounces of gold. The updated mineral resource includes a maiden underground mineral resource estimate for the Valentines area. Importantly to note, of the 69,000 meters of underground diamond drilling completed during 2025, only 29,000 meters were incorporated in the 2025 mineral resource and reserve update. The remaining 40,000 meters will be incorporated in the planned December 2026 update. Kavanagh drilling continues to return significant intercepts, 25 meters at 1.82% copper and 14 meters at 2.44% copper. We are still waiting gold assays for these results. These intercepts do demonstrate a material expansion of the East Kavanagh zone. Subsequent to the quarter, we received assay results for the final 2 drill holes at Emily Star. Significant intercepts included a 7.25 meter at 1.6% copper, 0.07 grams gold and 6.3 meters at 1.34% copper, 0.08 grams per tonne gold. These results further confirm the presence of high-grade mineralization at Emily Star and reaffirm our decision to commence the Emily Star exploration drilling drive. Advancing Emily Star is a potential third ore source and will be a key priority through 2026. On the 2026 guidance, copper production is forecast to increase to 12,750 tonnes to 14,000 tonnes of copper, reflecting the benefits of the Nugent operation there in production. Costs are forecast to ease in the second half with all-in sustaining costs set between AUD 5.75 and AUD 6.25 per pound of copper sold, noting the all-in sustaining cost range is quoted in Australian dollars. Major capital in 2026 will continue at a modest range of AUD 8 million to AUD 10 million, and this will predominantly be to install the Emily Star and the North Kavanagh exploration inclines and complete the underground drilling for Emily Star and the surface drilling for the Kavanagh depth extension. An investment decision to enter Stage 2 development of Emily Star will be made after drilling results are analyzed and an economic assessment is completed, and I expect this during the second half of 2026. To close, 2025 was a year of strengthening the underground operation, building the stability and capacity required to accelerate growth in 2026. I'll now hand it over to Luke, who will talk through our financials. Luke Anderson: Thanks, Bob, and good morning, everyone. I will now walk you through the financial performance for the December quarter. All amounts I refer to are in Australian dollars, unless otherwise stated, and all unit cost metrics are calculated on copper payable pounds sold. The December quarter capped off a year of strong operational progress. The headline items were the highest quarterly copper production of 2,962 tonnes was achieved at an all-in sustaining cost of USD 4.03 per pound or AUD 6.30. 3,121 tonnes of payable copper was sold at an average realized price of AUD 14,754 per tonne. 2025 all-in costs of USD 4.29 per pound were at the lower end of the guidance range of USD 4.20 to USD 4.45 per pound. And operational cash flow of $12.7 million was generated during the quarter for a cash balance of $20.6 million at quarter end. Now moving to the detail. All-in sustaining costs for the quarter decreased slightly to USD 4.03 per pound compared to the September quarter. On an absolute cost basis, our all-in sustaining costs increased quarter-on-quarter due to a number of factors: an increase in mining rates, a drawdown in stockpiles during the quarter, which reduced the inventory credit relative to September; and finally, a number of one-off costs, including stock write-offs and unplanned plant maintenance. Our all-in costs, excluding Nugent acceleration, were USD 4.44 per pound for the December quarter, bringing 2025 overall all-in costs to USD 4.29 per pound, which was within FY '25 guidance. The average realized price for copper sold during the quarter was AUD 14,754 per tonne, which included delivery into a number of lower-priced hedges. The quarter-on-quarter increase in copper payable tonnes sold from 2,422 tonnes to 3,121 tonnes reflected our highest copper production for the quarter of 2,962 tonnes and a decrease in concentrate inventory. Copper prices strengthened throughout the period, reflecting a combination of tightening supply conditions and resilient demand. On the supply side, disruptions in key producing regions and reduced output from several major mines contributed to a tighter concentrate market. At the same time, demand remained firm, supported by ongoing investment in electrification, grid infrastructure and the rapid build-out of data centers, which has emerged as a meaningful new source of copper consumption going forward. Now the company's liquidity, which is made up of cash receivables and unsold concentrate was $30.8 million at 31 December. The cash balance was $20.6 million with an additional $4.1 million received in the first week of January from the concentrate sale on the last day of the quarter. Operational cash flow of $12.7 million for the quarter took the total year to $35.8 million. The company invested $10.5 million in capital expenditure during the quarter with $4.3 million in major growth capital, which included $4 million on Nugent development and $200,000 on the early stages of Emily Star. The total Nugent project expenditure ended up at $21 million, in line with project budget. The company completed an equity capital raise for $28 million on the 30th of September 2025, with the funds received during the quarter of $26.2 million net of costs. Moving to hedging. The company maintains a prudent hedging policy covering roughly 1/3 of our forecast production to protect the proportion of fixed costs against deterioration in copper price. The company currently has 3,560 tonnes of copper hedges outstanding at a weighted average price of AUD 14,459 per tonne, scheduled for delivery from January through to September 2026. No new hedges were entered into during the quarter. Now to summarize. Copper produced for the year was 11,315 tonnes, was within guidance of 11,000 to 11,500 tonnes. All-in costs, excluding the Nugent acceleration project for the year of USD 4.29 per pound was within guidance of USD 4.20 to USD 4.45 per pound. The company maintains a strong cash balance of $20.6 million at year-end to fund the continued growth of the company. On 2026 guidance, copper production is forecast to increase to 12,750 to 14,000 tonnes with Nugent now in production. Costs are forecast to ease in the second half of 2026, reflecting the increase in mining rates. All-in sustaining costs are set to be between AUD 5.75 and AUD 6.25 per pound of payable copper sold, with additional major capital forecast at AUD 8 million to AUD 10 million. I'll now hand back to Jane for questions. Unknown Executive: [Operator Instructions] Robert Fulker: So we've just got a question from Sam Catalano on our cost guidance. I won't try to repeat what Sam says, how he says it, but he's asking why the range is where it is, and it looks a little bit conservative. Luke, do you want to take that one? Luke Anderson: Look, I think the main thing about cost going forward is that we're certainly seeing, as we head into 2026, an increase in mining rates activity. We are going to see more moving between -- towards sustaining capital rather than major capital, which we saw compared to 2025. So that will have an impact on all-in sustaining costs. There were some -- also some one-off costs in December quarter for 2025 in relation to some stock write-offs and some unplanned maintenance in the plant. So look, we'll certainly be working hard to reduce those costs in the second half of next year as the mining rate increases and production increases. Unknown Executive: Thank you, Luke. We've got online Chris Drew from MST. Chris has submitted 2 questions. First one, how much gold production on top of copper? What grade and recovery should we be thinking there? Robert Fulker: Thanks, Chris. Gold this year, as I mentioned in my speaking notes, was just over 2,000 ounces for the year. Next year, I expect that the gold grade in the first half of the year will be almost the same as this year, but the tonnes will be going up. But the second half of the year, we expect to see nearly doubling of the gold grade in our production purely because of the Nugent tonnes coming through. So we do expect to see a significant rise in the gold produced this year, and it will be well above that 2,000-odd ounces that we produced this year. From -- what was the second half, sorry? Unknown Executive: Yes. The second half is what rate and recovery should we be thinking there? Robert Fulker: So the recovery, at the moment, we're still planning for 55% recovery of gold. But we're working in the plant on a couple of things to try and lift that, but we haven't baked that into any of our forecast or any of our numbers yet. So the 14,000 tonnes of copper top end of our guidance is with 0 gold credits into the actual copper as a copper equivalent. And I do expect that if we were to use a copper equivalent, that would be quite a bit higher than the 14,000. Unknown Executive: Thank you, Bob. Chris has a follow-on question. Related to that, how have you factored in the impact from the pinch and swell zone? Presumably, you've learned a bit from this year around what you expect there now. Robert Fulker: Once again, thanks, Chris. The geological interpretation as we've got it in the model is actually fairly accurate. It's plus or minus 5% overall. The pinch zone, what we've done going forward is we've started to model a 0 modifying factor on anything that's within a zone of tightening of the ore body. So we've actually taken any modifier out of those grades, and we're just using the straight model now. And we've also started to predict where the next swell and pinch zone is. As we go through these zones, they repeat fairly -- the frequency is fairly consistent. So in Kavanagh, it ranges around about 180 to 200 meters of swell and then we go into the next zone. And this is now, we're going into the fourth experience of this. So we're starting to be able to model it better every time we experience it. So I think to answer your question, Chris, going forward, we've actually got this modeled into our plan for this year. We've got the Kavanagh fairly well modeled, Nugent. We think we understand where the first one and the second one is, but we're drilling that now. So we'll be able to include that. And we'll take the concept across Emily Star when we start drilling that as well. Unknown Executive: Thank you, Bob. So following on a question from Chris again. What copper grade should we be thinking for 2026? And how will that evolve through the year? Robert Fulker: So copper will range in the first half around about the 0.8% to 0.85%, then we have the gold on top of it. In the second half, it will lift a little bit to around about the 0.85% mark consistently through the second half of the year with a higher gold grade as well. But the tonnes are significantly back-end weighted in the year. The first half of the year, we are building to a 1.8 million tonne run rate, and then we'll do a 1.8 million tonne run rate for the second half of the year. So it will be significantly back-end weighted. Unknown Executive: Thank you, Bob. [Operator Instructions] There are no further questions at this time from analysts. I will now hand back to Mr. Fulker for closing remarks. Robert Fulker: Thanks, Jane. 2025 was a year of growth and stabilization. The focus moving into 2026 is clear: strengthen our safety performance, maintain our cost discipline, ramp up our production profile, advance Emily Star as a potential third ore source following encouraging early drill results, and invest our capital prudently. The exploration program is set and will feed into the third annual resource and reserve update once again during the December quarter, and we will continue to target replacement of depletion, resource growth and resource conversion. That concludes our conference today. Thank you for participating. And can everyone please now disconnect. Thank you, everyone.
Operator: Good morning, everyone. And welcome to the FNB Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Lisa Hajdu, Manager of Investor Relations. Ma'am, please go ahead. Lisa Hajdu: Good morning, and welcome to our earnings call. This conference call of FNB Corporation and the reports as filed with the Securities and Exchange Commission often contain forward-looking statements and non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP. Reconciliations of GAAP to non-GAAP operating measures to the most directly comparable GAAP financial measures are included in our presentation materials and in our earnings release. Please refer to these non-GAAP and forward-looking statement disclosures contained in our related materials, reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until Wednesday, January 28, and the webcast link will be posted to the About Us, Investor Relations section of our corporate website. I will now turn the call over to Vince Delie, Chairman, President and CEO. Vincent J. Delie: Thank you, and welcome to our fourth quarter earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. FNB reported fourth quarter operating net income available to common shareholders of $182 million or $0.50 per diluted common share. Full year 2025's operating performance reflected several records, including revenue of $1.8 billion, operating net income available to common shareholders of $577 million and operating earnings per diluted common share of $1.59. Full year operating EPS grew 14% year-over-year, driven by the 9% growth in net interest income, significant margin expansion and record noninterest income. We delivered strong profitability and capital metrics with return on average tangible common equity equaling 16% and tangible book value per share of $11.87, an increase of 13% from the year ago quarter. Throughout 2025, we focused on resetting the balance sheet to best position FNB for continued future success, including managing loan concentrations as well as improving the loan-to-deposit ratio to 89.7%. In December, we transferred approximately $200 million of performing residual mortgage loans to held for sale in anticipation of a loan sale to close in the first quarter of 2026. Additionally, as I mentioned on the earnings call a year ago, we have strategically decreased our CRE concentration organically to 197% over the past few years. We are generating enough capital to support growth across our loan portfolio, including CRE and have ample capacity to achieve historical growth rates. Since launching our Clicks-to-Bricks strategy 10 years ago, FNB has introduced innovative solutions, including the eStore and common application that provide an enhanced client experience to deepen relationships and achieve customer primacy. Our comprehensive digital strategy, including our early adoption of AI, remains a driving force behind client acquisition, engagement and convenience. This quarter, we introduced payment switch, which enables customers to easily switch preauthorized payments to their primary checking to FNB through our mobile app. With direct deposit switch and payment switch, we've eliminated 2 of the most common barriers for customers to move their primary banking relationship to FNB. This is another great example of how FNB is leading the industry with our eStore Clicks-to-Bricks strategy and comprehensive digital capabilities. We are planning on introducing additional unique features over the coming quarters that will benefit our customers and further differentiate us in the marketplace. Concurrently, FNB continues to expand to AI and data analytics usage to drive efficiency and accelerate revenue growth. Through our disciplined expense management culture, FNB has achieved annual cost savings of $10 million to $20 million per year since 2019. Leveraging our investments in technology, AI and data analytics, we expect even higher levels of cost savings in 2026 through increased automation and process improvements. This provides FNB the ability to continue to invest in our revenue-generating businesses and differentiated omnichannel customer experience while continuing to produce meaningful positive operating leverage. With that, I would like to turn the call over to Gary to discuss the strong credit results for the quarter. Gary? Gary L. Guerrieri: Thank you, Vince. Good morning, everyone. We ended the quarter and year-end with our asset quality metrics remaining at very strong levels. Total delinquency ended the quarter at 71 basis points, up 6 bps from the prior quarter with NPLs and OREO down 6 bps, ending at a multiyear low of 31 basis points. Net charge-offs totaled 19 basis points and 20 basis points for the year, showing continued strong performance throughout an uncertain economic environment. We experienced a further decline of $147 million or 10.2% in criticized loans on a linked quarter basis, driven by payoff activity with decreases again observed throughout all of the commercial segments. Once again, we were pleased with the improvements we saw during the quarter and throughout 2025. Total funded provision expense for the quarter stood at $18.7 million, supporting the C&I loan growth and charge-offs. Our ending fund reserve stands at $440 million, an increase of $2.3 million, ending at 1.26%, up 1 basis point from the prior quarter. When including acquired unamortized loan discounts, our reserve stands at 1.32%, and our NPL coverage position remained strong at 438%, inclusive of the discounts. Regarding tariffs, we continue to monitor line utilization and industry concentrations, especially customers with a higher potential impact over the longer-term. Since Q1, we have not seen any material impacts on the loan portfolio and have continued to experience positive credit migration since then. Furthermore, this quarter marked our strongest C&I loan production activity for the year, enabling us to achieve positive net C&I loan growth in the quarter and year-over-year which offset another decrease in line utilization. Regarding the nonowner CRE portfolio, all credit metrics improved quarter-over-quarter and year-over-year with delinquency and NPLs at 34 and 31 basis points, respectively. We have successfully managed the CRE risk and exposure to end the year within our desired range as a percentage of our capital base. We started to see some high-quality opportunities during the quarter However, exits through ongoing secondary market activity resulted in a reduction in exposure. We continue to enhance our concentration risk and allowance for credit loss frameworks and our proprietary credit management tool that provides a comprehensive view of our customer base. Not standing periodic uncertainty in the economic environment our core credit philosophy and strong credit risk management practices position us to successfully navigate any potential volatility across the various economic cycles. In summary, we continue to be very pleased with the performance of our loan portfolio and our team's attention to managing risk, which has positioned us well for growth in the year ahead. Building on the strong momentum we saw in the quarter, we continue to focus on core C&I and equipment finance growth with our building pipelines. Additionally, with potential for increases in line utilization, our growth expectations for high-quality CRE and our well-positioned retail franchise, we look forward to achieving our desired levels of balance sheet growth in the year ahead. I will now turn the call over to Vince Calabrese, our Chief Financial Officer, for his remarks. Vincent J. Calabrese: Thanks, Gary, and good morning. Today, I will focus on the fourth quarter's financial results and walk through our guidance for the first quarter and full year of 2026. Fourth quarter operating net income totaled a record $181.8 million or $0.50 per share when excluding a discretionary $20 million charitable contribution to the FNB Foundation partially offset by a reduction in the estimated FDIC special assessment. Record total revenues of nearly $458 million, grew a very strong 12.4% on an operating basis and operating pre-provision net revenue grew 21.5% from the year ago quarter. The fourth quarter's performance also includes investment tax credits of $37.2 million from a renewable energy financing transaction, partially offset by related noncredit valuation impairment of $4.4 million pretax on the financing receivable, which is included in other noninterest expense. FNB's Equipment Finance business originates renewable energy financing transactions is a core element of their business strategy. While we continue to have an active pipeline in the renewable energy sector, certain types of projects are limited by changes in the tax laws. Total assets at year-end 2025 exceeded $50 billion for the first time in company history. Fourth quarter average loans and leases of $35 billion, increased $169 million from last quarter or 1.9% annualized. Average consumer loans grew $223 million, primarily due to higher residential mortgage and consumer line of credit balances. Average commercial loans and leases slightly decreased $54 million linked quarter driven by higher attrition from secondary market activity, lower line utilization and further scheduled reductions in CRE balances. Average commercial and industrial loans increased $81 million and commercial leases increased $26 million, while average commercial real estate loans declined $158 million. CRE exposure has reached our desired concentration range and combined with record capital levels and a sub-90% loan-to-deposit ratio provides FNB a meaningful opportunity to participate in an economic environment with more favorable loan growth prospects. As part of our ongoing balance sheet management strategies, approximately $200 million of performing residential mortgage loans were transferred to held for sale late in the fourth quarter with the actual loan sale expected to close in the first quarter. Residential mortgage loans are expected to roughly approximate the growth in the overall loan portfolio in 2026. Fourth quarter average deposits totaled $38.6 billion, an increase of $740 million or 7.7% linked quarter annualized driven by organic growth in new and existing customer relationships. Average interest-bearing demand balances grew strongly, particularly interest-bearing checking and money market balances. Average noninterest-bearing deposits exceeded $10 billion and were up 4.5% linked quarter annualized. The mix of noninterest-bearing deposits to total deposits on a spot basis remained at 26%. Success of our ongoing balance sheet management strategies and deposit gathering initiatives brought our loan-to-deposit ratio below 90%, a more than 170 basis point improvement from year-end 2024. Fourth quarter net interest income totaled a record $365.4 million, up 1.7% linked quarter and 13.4% above the fourth quarter of 2024. Average earning assets were up $310 million sequentially on higher loan and investment securities balances. The yield on earning assets declined 11 basis points sequentially as variable rate loans were impacted by the 75 basis points of Federal Reserve interest rate cuts since September of 2025, while the yield on the investment securities portfolio only declined slightly. Interest-bearing deposit costs decreased 13 basis points linked quarter to 2.53% and borrowing costs declined 30 basis points to 4.35%. The resulting fourth quarter net interest margin was 3.28%, up 3 basis points linked quarter and up 24 basis points year-over-year. Our total cumulative spot deposit beta. Since the Fed interest rate cuts began in September of 2024, ended the year at 25%. We continue to strategically lower deposit pricing in step with the downward trend in the Fed funds rate and we expect a relatively stable net interest margin in the first quarter of 2026. Operating noninterest income was $92.3 million, up 8.8% from the year ago period. Wealth Management revenues grew 15% from 2024 levels, driven by securities commissions and fees and growth across the geographic footprint. Service charges increased 4.1% from last year reflecting increased contributions from treasury management activities. Increases in SBA sold loan premiums and other miscellaneous gains drove the strong increase in other income and BOLI income was boosted by higher life insurance claims. Capital markets income included higher swap fees and increased international banking revenue. Despite higher gain on sale and net positive fair value adjustments from hedging activity, mortgage banking income declined on higher MSR amortization and a net MSR fair value recovery in the fourth quarter of 2024. Operating noninterest expense totaled $256.5 million and $8.3 million or 3.4% increase from the year ago quarter. Salaries and employee benefits expenses were up 4.5% from the year ago quarter, primarily reflecting strategic hiring and higher performance and production-related compensation. Output Services increased 15.3% from last year due to higher volume-related technology and third-party costs and occupancy and equipment increased 7.3% primarily due to technology-related investments and higher occupancy costs. Other operating noninterest expense decreased $3.3 million and included a financing receivable noncredit impairment of $4.4 million from the tax credit transaction mentioned earlier, which was approximately $6 million lower than the impairment recognized for the fourth quarter 2024 tax credit transaction. The efficiency ratio remained solid at 53.8% for the fourth quarter, 307 basis points better than the fourth quarter of 2024. We continue to manage our expense base in a disciplined manner which is expected to generate significant positive operating leverage in 2026. FNB's capital levels remained at record levels with a CET1 ratio at 11.4% and tangible common equity ratio at 8.9%, providing flexibility to optimally deploy capital to increase shareholder value. On a year-over-year basis, tangible book value per common share increased $1.38 or 13.2% to $11.87, demonstrating our strong profitability levels and commitment to peer-leading internal capital generation. Share repurchases totaled nearly $50 million for the full year of 2025, the highest level since the program originated in 2020. Let's now look at the guidance for the first quarter and full year 2026 starting with the balance sheet. For full year 2026, period-end loans and deposits are expected to grow mid-single digits versus year-end 2025 as we continue to increase our market share across our diverse geographic footprint. Full year 2026 net interest income is expected to be between $1.495 billion and $1.535 billion with first quarter net interest income expected between $355 million and $365 million. Our guidance assumes 225 basis point rate cuts in April and October. Noninterest income for the year is expected to be between $370 million and $390 million, with the first quarter expected between $90 million and $95 million. Full year guidance for noninterest expense is expected to be between $1 billion and $1.02 billion, representing a 1.5% increase at the midpoint compared with 2025 operating expenses. First quarter noninterest expenses are expected in a range of $255 million to $260 million as compensation expense is seasonally higher in the first quarter due to the timing of normal long-term stock compensation and higher payroll taxes. The 2026 provision expense is expected to be between $85 million and $105 million, dependent on net loan growth and charge-off activity. Lastly, the full year effective tax rate should be between 21% and 22%, which does not include any investment tax credit activity that may occur. With that, I will turn the call back to Vince. Vincent J. Delie: As you've heard in our prepared remarks, we are very pleased with our financial results and achieved a number of records for 2025 including revenue, noninterest income and EPS. Our balance sheet surpassed $50 billion in assets, and we are well positioned to benefit from technology investment and expected growth opportunities. Our performance reflects steadfast execution of our multipronged strategy, diversifying revenue streams, optimizing our balance sheet, deploying capital thoughtfully and serving as the primary bank for our clients, enabled by our tech investments in eStore and omnichannel capabilities. Successful execution of FNB's strategy has led to enhance profitability and capital accretion, all while achieving some of the highest returns in the industry. Looking ahead to 2026, we are confident in our ability to deliver meaningful loan and deposit growth, margin expansion and further diversification of fee income. Our improved capital levels and double-digit tangible book value growth year-over-year provide strong capital flexibility and position FNB to continue to deliver sustainable long-term value benefiting our customers, employees, communities and shareholders. Operator: [Operator Instructions] Our first question today comes from Daniel Tamayo from Raymond James. Daniel Tamayo: Maybe we start on the fee income side. Obviously, at the Investor Day last quarter, you talked a lot about growth that has been expected -- sorry, investments that have been made into the fee income businesses and kind of long-term growth pathways. Just curious, as you look at the guidance range for '26, what do you think might get you towards the upper end of the guide and how likely that could be in your mind? Vincent J. Delie: Yes. I mean, I don't -- do you want to answer, Vince. Vincent J. Calabrese: Sure. I can jump in and you can add. I think just a couple of things on fee income, right? It again highlights the importance of diversification. So we had all-time highs for 7 of our fee-based businesses for the full year and 4 of them in the fourth quarter alone. When you look at the kind of moving parts that were there, the growth in service charges, insurance and securities commissions and BOLI offset mortgage banking and capital markets being lower than the prior quarter. So the benefit of the diversification comes through. When you look ahead to '26, we're projecting continued solid growth there. The newer businesses that we've talked about starting to contribute at higher levels is definitely baked into the guidance. I think there might be some upside to that. And then strong performance from our kind of core fee-based businesses, wealth, treasury management, capital markets and mortgage. I think there's an opportunity for them to have another strong year as we did in 2025. Vincent J. Delie: The only thing I was going to add, Vince, is that the macroeconomic environment, as we mentioned, when we were all together, Danny, plays in our favor. So the interest rate environment is positive for the mortgage banking business. We sell servicing release gain on sale from the sale of mortgage loans. So that's reflected in the fee income number. More activity in treasury management moving into next year because of what Vince said, with market share gains, expect... Vincent J. Calabrese: New initiatives there. Vincent J. Delie: And new initiatives there and the build-out of our TM platform. We expect that to continue to grow with contributions from merchant and other areas that relate to treasury management. Derivatives, we would expect, given the interest rate environment from a derivatives perspective to play out in our favor. And then we built out the public finance division in the process of building it out. We're very optimistic about contributions from that business and the debt capital markets arena. So that should play out for us. And then the M&A advisory business is they're seeing a lot of opportunities that we're expecting to translate that into fee income in '26. So there are quite a few drivers that's why we're fairly confident that we're going to be able to achieve what we've laid out in the guide. Vincent J. Calabrese: And we did move the first quarter guidance up a bit, Danny, too. The implied guide for the fourth quarter was [ 88% to 93% ] we moved it up to [ 90% to 95% ] In a seasonally slower quarter. So I think that's an indication too. Daniel Tamayo: Great, Vince. Maybe a bigger picture question on operating leverage. Just your thoughts around operating leverage in 2026 and what might be potential issues in not getting there or levers to achieve it? Vincent J. Calabrese: Yes, I would just -- a couple of things. So if you look at the PPNR was lower in the fourth quarter versus the third quarter, all very explainable. We had about $12 million of not -- what I would call discrete nonrun rate expenses that came through in the fourth quarter. We had the solar tax impairment that we mentioned in the remarks. We had some higher medical claims that occur in the fourth quarter every year, our mortgage down payment program was a little over $3 million. And then year-end performance-based accruals and 401(k) contributions based on the strong overall financial performance. So -- and then in the third quarter, we had that $5.4 million recovery. So there was a lot of noise kind of moving from third to fourth quarter. I mean as we go forward next year, our guidance includes a meaningful increase in PPNR and in the operating leverage. And I think as we talked about at Investor Day, expenses growing in the low single digits, while we're continuing to invest in the new initiatives, some of the ones that Vince mentioned. So I think we feel pretty good about our ability to meaningfully increase the operating leverage in 2026. Vincent J. Delie: We also don't have the expense related to heightened standards, building as rapidly because we've completed many of the initiatives that we needed to complete from a personnel perspective and from a consulting and systems perspective. So -- we don't expect that to be a headwind anymore. We've also completed -- we fulfilled our obligation to fund grants for low income mortgage loans. So that was a pretty significant expense in '25. So that will be behind us as well. So we're fairly confident that we're going to be able to achieve the results that we reflected in our guide. In addition, we've had a number of expense initiatives that Vince has mentioned in the past. And this year, we believe we can achieve even better cost takeouts on a run rate basis than we have historically. We've been focused on it. So efficiency is a focus moving into next year. And we're also leveraging some of the digital investment changes that we're making from a process perspective by utilizing AI and data analytics to make our operations more efficient. And the deployment of the common app in the retail delivery channel also provides a great deal of efficiency from a back office perspective because a lot of that processing is digitized. So that should all play well for us as we move into next year with elevated volumes in the consumer set. Vincent J. Calabrese: Yes, some of the initiatives baked into from a CapEx standpoint is investing in our data science platform, AI and machine learning data platform with the new leaders that we have on board, investing more to get even more benefit out of those functions there. And that's part of why we were confident with the higher cost savings goal that we have for '26. And if you baked into our guidance has the efficiency ratio kind of getting down into the low 50s by the end of the year or second half of the year, I would say. Operator: Our next question comes from Russell Gunther from Stephens. Russell Elliott Gunther: I wanted to ask on the -- the loan growth outlook for '26 of mid-single digits. First, Vince, I want to make sure I caught you that your expectations for the resi portfolio would be around that sort of mid-single-digit level. And then second, as you discussed at the Investor Day, C&I and CRE are expected to be the loan growth leaders going forward. So if we are thinking about resi in that mid-single digits, is it safe to assume C&I and CRE would outpunch that and maybe just some comments around the drivers of the magnitude within commercial. Vincent J. Delie: Sure. I mean if you strip out the large payoffs that we had, particularly in the CRE space, we had a very strong production quarter. I know it's not reflected in the spot balance because of those payouts, acceleration in payoffs, particularly in multifamily with some larger C&I credits that went the way of capital markets versus bank debt. So I think the production -- the underlying production was very strong. The C&I production was extraordinarily good, I would say, for the fourth quarter of the year. So we're moving into next year with some good momentum. We do have a lot of capacity. We talked a little bit in the prepared remarks about resetting the balance sheet. So we used '25 to kind of position our company to grow CRE loans and to grow C&I loans more rapidly. If you look at our loan-to-deposit ratio, we've had great success generating deposits. As I said earlier in the year, my hope was we would be closer to 88%. We're at 89.7%. So we're close. That gives us a lot of capacity to fund loan growth moving into '26 and to manage our margin from a deposit cost perspective. So those are positives. If you look at the capital generation that this company has been able to produce historically, we generate sufficient capital levels to sustain mid- to high single-digit loan growth with relative ease. If you look at capacity from a CRE perspective, we're one of the few banks in our peer group that has a concentration as low as we do. And we've specifically managed that down. We mentioned we wanted to be under 200%. We finished just under 200%... Gary L. Guerrieri: 197%. Vincent J. Delie: 197% capital. So this is a reset and that should give you great confidence because now we can move into '26 and be much more aggressive in the CRE space and in the C&I lending space. And we have a much stronger platform from a fee income perspective to support leading those credits. So I think all of that is why we're very optimistic about achieving the guide that we put out there. The other thing I will note, if you look at the H8 data and you exclude some of the payoffs that we've had, we've actually performed significantly better than the banks in total in the last quarter. So again, not looking at the full year because we were being very measured and we were reducing exposures in a bunch of areas that we wanted to reduce exposures in to prepare for '26. But if you strip out some of the payoffs, we were many times greater than the other banks in the industry. So we're optimistic about it. We haven't pulled back in terms of our pursuit of good C&I opportunities. We're not an NBFI. We're not a commercial finance driven C&I shop. So this is core C&I across our markets. where we're taking market share. Vincent J. Calabrese: The line utilization is very low. Vincent J. Delie: The line utilization remains low. So there's upside there as well. So all in, I think we're in a fairly strong position moving into '26 to continue to drive growth in our loan categories. In mortgage, I would -- we're -- there's a sale of performing mortgage loans. We decided there were some single household mortgage loans that we felt we should move off the balance sheet to give capacity for other things to provide higher returns, and that's the decision driving that. So I would expect growth in the mortgage business to be more tempered moving into '26 and with the change in rates probably an opportunity to get better gain on sale margin as we move into '26 to help fee income. So more moving off the balance sheet in '26. I hope that helps. Russell Elliott Gunther: Okay. Great. And then my second question would be capital related. CET1 11.4% not too long ago, that target was 10% than 10.5%. It would be helpful to get a sense for where you would plan to manage that in 2026. And as you grow that CRE where are you willing to flex that concentration level to? Vincent J. Calabrese: Yes, I would say a few things on that topic, right? Like you mentioned, the 11.4%. It wasn't that long ago that we had a goal of 10% and then 10% was the floor and now we're at 11.4%. Dividend payout for the full year, then you combine that with our expectation for strong internal capital generation based on the guidance that we have. So we're in the best position we've ever been to deploy capital to optimize shareholder value. The organic growth is the first use of that, of course. But like Vince said, we're generating enough capital to really support high single-digit loan growth. So I think that Vince... Vincent J. Delie: To stop you right there because you asked a question about our ability to maintain the concentration levels. We did look at that -- we do generate a lot of capital, as you mentioned, our strong internal capital generation. We could -- basically, based on that in our guide, we could originate nearly $1 billion in CRE loans and not change the concentration level at this point in time. I think that's an important point, and I'm sorry to interrupt you. I thought given your speech on our capital. Vincent J. Calabrese: Yes. Gary L. Guerrieri: So there's -- I mean there's significant capacity to do business as usual there. And we're going to pick the transactions that we want to bank. But we've got plenty of capacity with the capital generation that the company is achieving. Vincent J. Delie: But if we move slightly above 200%, that's not going to kill us. We're still well below others that we compete against in the marketplace. But our goal is to stay there if we can. Go ahead. Vincent J. Calabrese: So beyond supporting that balance sheet growth, we still think buybacks are attractive. I mean we did $50 million for the full year. We did $18 million in the fourth quarter. Even at these valuation levels, we still think it's attractive. And for 2026, I would expect we'd be at the same level or higher as far as buyback activity. And then the dividend, we've been having conversations. I mean it's something we discussed regularly, and we'll be discussing with our Board. In the past, we had that elevated payout ratio for such a long period of time. And we like the flexibility of the buybacks. So that will be a component of capital management. But our payout ratio in the 25% level at least creates the ability to increase the dividend at some point if we decide to do that. So it's definitely something that's on the table for us to discuss. There hasn't been a decision or anything, that's a Board decision, but it's something we'll take a hard look at this year. This is a strategic planning cycle for us. So it would be kind of part of our capital management planning as we look ahead. Vincent J. Delie: And the Board is going to look at it through the lens of our shareholders. They want to do what's absolutely best from a capital deployment perspective. That has always been their stated mission. They want to drive returns at the company, drive higher stock price performance. So they're going to look at all of that and look at our relative valuation with buybacks in mind when they make those decisions. So deployment of capital is a focus of the Board will continue to be. . Vincent J. Calabrese: Yes. The last point I would make, too, is just when you look at our financial performance, Alfred always says and it's a good point. We have a 16.3% return on tangible common equity on a TCE ratio that's 8.9%. So that TCE ratio has built significantly from the 4.5%. It was when the 3 of us started in our roles, it's 8.9%. So I think that's important, too. So even with the higher levels of capital, we're generating a top quartile for sure, return on tangible common equity and managing that capital will be key to our performance as we move forward. Operator: Our next question comes from Casey Haire. Casey Haire: I want to touch on the margin. So the -- just wondering the interest-bearing deposit beta, where does that trend throughout '26 versus that 25% cycle to date? Vincent J. Calabrese: Yes. I would say we've still talked and still feel that kind of mid-30s on a terminal beta makes sense to us. By the end of the year, our guidance probably get to about 30% or so, up from the '25. I think our team has done an excellent job managing the deposit rates through this cycle, being very thoughtful and strategic in how we're adjusting rates and which tranches we're adjusting rates at. So there's still opportunity for us from end of the year reference point forward to continue to bring down deposit rates and big slugs of the deposit base. So I would say 30% or so by the end of the year, Casey, and still kind of a mid-30s once this cycle finishes. Casey Haire: Okay. Excellent. And then just a credit question. Vincent J. Calabrese: Total, too. sorry, I should comment. Casey Haire: So that's not IBD. That's total deposit. Vincent J. Calabrese: That's total. Yes, I'm sorry. You're asking interest. That's total. Casey Haire: Okay. Got you. Okay. All right. And then on the credit side, so the provision guide, does that assume -- like that assumes that the ACL ratio. The reserve ratio kind of holds this level supports mid-single-digit growth, and then the charge-off outlook, I'm assuming that presumes that we kind of hang out at this 20 bps level. Gary L. Guerrieri: Yes. I think you're spot on, Casey, with your assessment of that, all sounds pretty close to what we're expecting there with the guide. . Casey Haire: Okay. Great. And just last one for me and one more on the capital front. So you guys clearly have a very nice capital generation. It's not inconceivable that you're above 12% CET1 in a year from now. So I guess, kind of the other way, is there -- I know you're well above your floor, are you looking at -- is there a level of capital that's too much? Or are you happy to just let capital stockpile for I mean you have more room to be more aggressive and take the payout ratio higher. I'm just wondering what's preventing you. Vincent J. Calabrese: Nothing is really preventing us. I mean, as I commented on, the dividend will be a discussion with our Board this year as far as potentially increasing the dividend, having buybacks at or higher than the level that we did last year is kind of part of what's baked into our plan. The capital ratio, if you do the math and run it forward, you get around 12% by the end of the year. So some of that at some point, the loan growth activity picks up to get to the high single digits, right? And you want to have the ability to do that. But we're looking at all the pieces of it between funding loan growth as well as the dividend and the buyback. Vincent J. Delie: Yes. We don't want to sit here and keep accumulating capital, Casey. We're focusing on a bunch of avenues to deploy capital to move some returns too. I mean we -- if we can invest capital in high-returning opportunities, then we're going to have a much higher return on tangible common equity on a slightly lower capital base. But it has to be sustainable. It can't just be a onetime deal, where we bought back shares, and then everything rolls back. And we're looking forward and making sure that we're deploying that capital in the most productive ways on a go-forward basis, so we can drive returns. Vincent J. Calabrese: Yes. And the industry has been moving higher, too. The peers generally have been shifting upwards. So kind of keep one eye on that and then the rest of our eyes on kind of what we're doing. Vincent J. Delie: Yes. I mean the -- it's kind of tough when you look at the AOCI impairment that occurred a few years ago, and there's accretion going on, Casey. So some of the TBV build is just a reversal of impairments that occurred and we didn't have that. So when you look at these big outsized numbers and TBV growth, you have to take that into consideration. Ours is core earnings and retained earnings. That's a big difference. So when you're evaluating all these banks, you should be taking that into consideration, I hope. I think you are... Vincent J. Calabrese: And we've returned with $2.2 billion capital since 2009. So I mean it's been an active part of our overall shareholder positioning. Operator: [Operator Instructions] Our next question comes from Kelly Motta from KBW. Kelly Motta: So not to beat a dead horse with capital, but just kind of building off of the last couple of questions there. It sounds like you believe your stock is still attractive here. Can you, one, remind us any price sensitivity that you have regarding the buyback, if there's any sort of guiding principles there. And then two, I'd be remiss if not to ask about any updated thoughts on M&A here. Vincent J. Calabrese: Yes. I would just say valuation, we think our stock is worth a lot more than where it's trading. If you look at where it was trading sake in the last year or 2, I mean, it had been trading at a discount on a P basis to our peers, which didn't make sense to us. And now it's kind of equal to the peers, and we think it should be higher than it appears. So we still think it's a good investment for us to make even at these higher valuation levels. And there's not a bright line, Kelly, I guess I would say, where we would stop. I mean, we look at our relative positioning and what's happening with the market and what's happening with the economy. So -- but definitely room for us to continue to be active. Vincent J. Delie: Yes, we're -- from an M&A perspective, we're 9 years past our last M&A -- large M&A transaction. We did 2 small bank deals, very small. We've said repeatedly, we're focused on internal capital generation. We're focused -- we've said this back going back 5, 6 years ago. We're going to continue to look at the mechanisms that we have to drive returns through organic growth. So that's our priority. We've been able to do that very successfully. We've been able to invest in tech and outperform some of the largest banks in the country in certain aspects of our tech offering. So we're going to keep doing that. And if something comes up opportunistically, it really has to be a good fit. And I think it would have to provide us with -- it can't dilute what we built. So 26% noninterest-bearing deposits and the deposit mix is pretty strong still even after it declined post the effect of stimulus. And I think our goal is to continue to drive that mix in a favorable manner. We don't want to dilute that. We don't want to dilute capital tangible book value materially because we've spent a lot of talking focusing on it and driving TPV growth. So we have good momentum there. If something provides us with an opportunity to drive organic growth at a faster clip, sure we would look at it. But we've got tremendous markets. We're spread across a pretty broad geography. We -- as I've said before, we've grown market share in 75% of the MSAs that we compete in. So we are proving that we can compete effectively at our scale and size and our efficiency ratio is very strong. So I don't place that as a high priority anymore. I know that seems surprising to people, but because we've been here for so long. I mean, I've been in this seat for almost 15 years. So we did a lot of M&A transactions to get to where we are, but we needed to get to this level. Vincent J. Calabrese: And then leveraging the investments we made that are really early stages of contributing. Vincent J. Delie: Yes. So I guess the answer is we're going to do whatever we think makes the most sense for the shareholders, and we're going to be very cautious as we move forward, just like we have been over the last in 5, 6, 7 years. And if something presents itself that checks all the boxes, sure, we'll look at it. But we're going to continue to stay focused on organic growth, driving organic growth, building out our platform leveraging our retail bank, which is, I think, the 19th, if you look at locations, it's the 19th largest retail bank in the country, right, Alfred, and one of the most efficient if we looked at metrics relative to the largest banks in the country, and we run a very efficient retail bank. So the consumer business for us is a good business. Anyway, that's our take on it. And I appreciate the question. Kelly Motta: Got it. I appreciate all the color makes total sense. Maybe 1 follow-up for me just asking the operating leverage kind of in a different way. Clearly, you've set the stage very well for 2026 to drive positive operating leverage ahead. And you noted you anticipate the efficiency ratio getting into the low 50s kind of by the second half of the year. Looking back, you were more a mid- to high 50s efficiency ratio type bank. You've obviously made a lot of investments in tech that you're able to really leverage now. Just wondering, as you kind of think about the longer-term efficiency ratio of the bank, given these significant investments you have made in technology, do you think that low 50s is that lower run rate is sustainable? Any kind of thoughts in either direction here, particularly as de novo expansion remains a focus here? Vincent J. Delie: Yes. I think there's 2 things. One, there's the efficiency that's being produced through automation and digitization of the banking industry. We've talked about this where we built out the data hub. We're using that data to drive efficiency in the delivery of products and services. I think we've only scratched the surface on taking cost out, right, over time. With looking at how we process transactions across the entire bank and thinking about the impact of AI and automation on driving efficiency and what that means over time, I think, is pretty positive for the industry. That should be viewed as positive. I also think from a revenue generation perspective, which is the other side of this, our ability to analyze data, present information to prospects, clients for our own internal people extremely fast, so that they're able to react to it and produce better revenue results per engagement with a customer is going to drive that efficiency ratio as well. So revenue growth through automation and efficiency are still -- we're still looking down the road for that. We've started to experience some of it, but there's quite a bit to come. So I'm very optimistic about that. I don't know, Vince, if you want to add anything to the question? Vincent J. Calabrese: No, I would just say sustaining around that low 50s to 50% level feels very achievable as we move forward, given all the things Vince just described. That's all I would say. Vincent J. Delie: And I also think when you look at us relative to the other banks our size, we have a disproportionately large retail bank. So the efficiency ratio in the retail business is not what it is in the commercial business. So if we were a pure commercial bank, yes, we would be below 50%, well below. But Alfred gives us all these branches. We've got a good note, you're laughing. But the truth is, we've got this big machine that we have to run, and it's a good business for us. And as I've said, we were able to do it very efficiently, which is remarkable given our size and scale. I mean, in fairness to the retail business, we do run an incredibly efficient retail delivery channel. It compares very favorably to the largest banks in the country. And if you look at the efficiency ratio broadly speaking, there are probably going to be some puts and takes to it. We're going to continue to drive efficiency in the areas that we can through automation. But as Vince mentioned earlier, we have plan to grow fee income, which tends to be a higher efficiency ratio business in and of itself. And the idea is that all these investments that will continue to drive the efficiency ratio plus the investments in growing additional fee income. I think net-net results in a top quartile ROE that compares pretty favorably to our peers. Vincent J. Calabrese: And you saw Kelly, you were here, you saw what we've already done with the digitization of the retail delivery channel. We've already embedded the eStore into the ITM. So that somebody remotely can engage a customer fully digitally in a branch and provide them with the ability to transact, cash checks down to the penny, make loan payments. And also, it buys them on what they have in the shopping cart, help them proceed to check out right there. So that in and of itself reduces the need for personnel in the branches over time. So that helps us gain efficiency as well, and we've already built it. It hasn't been deployed fully, but it's built. So that's coming as well. Anyway, that -- that's all. I don't know what else to add. Yes. I think we're in a pretty good spot, and we're very optimistic about efficiency. Unknown Executive: So it seems like there is a break with our operator. But Manuel, I think that you're on the line, if you have a question, please go ahead and ask it. Unknown Analyst: Okay. Great. I hear you guys on the lending capacity from your end and kind of strong production. Can you discuss lending sentiment in your markets? And how -- does that drive kind of expectations for growth to be more back half of the year loaded? And are you already seeing headwinds from payoffs and secondary market improvement slowing already? Vincent J. Delie: Yes. I'd say we -- I think you're right. We tend -- typically in this business, we tend to see the loan growth come in the C&I side anyway. Real estate is kind of all over the board depending on when the project was launched, but from a C&I perspective, you tend to see it build towards the second half of the year because companies are completing their financial statements, they're turning them over to the bank. They're planning from a CapEx perspective now. So then they're coming back right about now and they're starting to reach out to the bankers and start to make plans for capital expenditures and working capital needs. So that's happening, like discussions are happening. I would expect growth to be more back-ended this year. I also think bonus depreciation in some of the comments I read, we get comments back from every region before we do this call. So we all read them. They do a pretty nice job. I thought this was the best they've ever done, giving me commentary. I spent last night reading 38 pages of commentary. But I think when you look at the Southeast, you look at Charlotte and Raleigh and Greensboro, there's a lot of competition. You've got branches being built out across that footprint. But our people continue to see opportunities. We're entrenched in those markets. We have been building out our delivery channel as well and introducing digital strategy and building out our treasury management capabilities. So those markets have performed extraordinarily well, and I would expect them to continue to perform well. If you pivot to Pittsburgh, Cleveland, Baltimore, the more mature markets that we're in, they've had some pretty significant payoffs in those markets, not because we lost customers to other banks, but because we tend to play upmarket. So we have a lot of clients drives that debt capital markets business where we get fee income on bonds as well. Unfortunately, the flip side of that is the company has access to capital markets and they paid down the facility. So we had a lot of that going on last year. I think that's pretty much over unless you see a significant decline in interest rates from here, short-term rates from here, which would be positive for us from a margin perspective, but negative from a capital markets access standpoint, but it also reduces the cost of capital from a bank loan perspective for clients. So I would suspect that next year should be a pretty good year for everyone, assuming that those markets remain calm. We don't have some big turbulent event. But the sentiment around the table is people are starting to have serious talks about capital investment. So that bodes well for loan growth. That's what we're seeing. That's what I've read across the board. I will also pivot to the depository side. We have a lot of large deposit prospects that are coming in. So I see that being positive, too, for next year. Unknown Analyst: Yes, in the past, you've talked about the treasury management pipelines being solid. It's showing on the fee side. Do they remain -- they're remaining robust as well on the commercial treasury management deposits? Vincent J. Delie: Yes. We're seeing lots of opportunities across the footprint from a depository perspective, from a treasury management perspective. So... Vincent J. Calabrese: We still have a large pipeline close to $1 billion of deposit prospects we're going after. Vincent J. Delie: Yes. Gary L. Guerrieri: The other thing I would add, Manuel, is we are starting to see increased levels of opportunities around some high-quality CRE. Discussions were pretty active over the last 60 to 90 days here, and we're seeing some really nice opportunities there. . Unknown Analyst: All right. That's good to hear. Anything -- any more details on the mortgage sale? And I hear you that you're just opening up capacity. Were they specific to any region? Just any more color on kind of this sale that's coming up in the first quarter? Vincent J. Delie: Yes, they were predominantly -- they were out of market predominantly, not out of market -- not out of our operating area, but out of our immediate area, so around branches. So we looked at them from a practical perspective and said our probability of cross-selling additional services to this pool is limited. So there's nothing wrong from a credit perspective, they're good credits, but we just don't see an opportunity to be able to deploy cross-sell engagement. So we decided to return the capital and reuse it for something we can become the primary client, right? And that's what drove that. That plus it helps us manage the -- my expectation is as we move into next year, we're going to see prepayment speeds elevate anyway. So we're going to see attrition in that book anyway. And I think we're going to be able to move more off the balance sheet because there's more activity in the conforming space moving into next year, particularly in a lower rate environment. So I would expect us to drive fee income, manage the exposure and be able to still grow the other categories because we have the capital to do that, the other higher returning categories. But those loans, in particular, we just viewed as a drag on capital. Vincent J. Calabrese: Yes. We were -- the other thing I would add too is just from a concentration management standpoint, mortgages as a percent of total loans, around 25%. You can see that in the slide deck. So kind of managing that level of concentration, we decided to take $200 million off. I mean we're very strategic in how we take actions. Remember, during the year, we had pricing strategies to generate more saleable production, just to again manage the total mortgages on the balance sheet. And I think as we go forward in '26, that creates capacity for the commercial growth that you heard us talk about. And as far as the sales too, we expect sales to be basically at par when it settles this quarter. Vincent J. Delie: Right. Operator: And our next question comes from Brian Martin from Janney Montgomery. Brian Martin: Just your last comment, maybe Gary made a comment about the loan growth, but -- and I joined late. So from a commentary standpoint, it sounds like the loan growth outlook is mid-single digits, back-end loaded. Did you talk about kind of the current pipeline? And then also just maybe your comment about Vince, the mortgage being coming down around 25%. When you think about big picture about the loan concentration levels, where they are today, where do you see opportunity to maybe make some additional changes throughout the year as we get to the end of '26, is there a target in terms of where that mortgage number might be, where other buckets may be that you can kind of talk a little bit about in terms of how the positioning looks? Vincent J. Delie: I'll do a high level, and then I'll turn it back over to these guys. Our goal would be to shrink the mortgage book and redeploy over time, right? If you see prepayment speeds accelerated in a different interest rate environment, you're going to see that portfolio basically stay the same in size, right, or grow very small as a percentage of the total. But our goal would be to redeploy that capital into C&I and CRE lending. And I said earlier, I don't know if you missed it, but earlier I talked about our internal capital generation, Brian, and the ability for us now that our CRE concentration is at 197%. It's below 200%. There's capacity there to lend. So keeping that concentration at the same level, given the internal capital generation, we could still originate and fund... Gary L. Guerrieri: About $1 billion. Vincent J. Delie: $1 billion in CRE loans. So we don't have to keep it at 197%. There's some way to move up and down. That was just our internal goal, right, from a concentration perspective. It puts us in a much better position than many of the peers. So there's a lot of capacity to lend there. We can be very selective. On the C&I side, I think we have a great opportunity to deploy capital there and grow over the next 12 months because we think that, that business will start to accelerate for us and we can move in. Again, we're not doing the consumer finance stuff, NDFI, all the other stuff that is baked into the H8 data for C&I growth that really is mass consumer growth. But we're doing true middle market transactions across our footprint and growing that business. And I think we've done a pretty good job and the pipelines have actually built over time? And go ahead, Gary, you're going to... Gary L. Guerrieri: Just going to add, Brian, the equipment finance business for us has been extremely strong. And you would expect that with the bonus depreciation that group had an exceptional year, and that just continues to build. They had a very strong fourth quarter, and we expect to have a really, really solid 2026 across that group through the quarters and even building more, as Vince mentioned, towards the latter part of the year with where we sit economically at the moment. So really, really excited about that piece of the business and the C&I opportunities ahead of us. Vincent J. Calabrese: Yes. Brian, I would just mortgage point, just to close it out. I mean we're looking for production levels to still be very strong. So it's not that we're trying to lessen the activity in that business, the amount of originations. It's just what ends up on the balance sheet. And just for reference, I was looking back, Last year, it was 23% of total loans at the end of '23, it was 20%, just as kind of reference points. Today, it's 25%. So just managing that concentration -- the commercial activity that Gary and Vince have talked about. Brian Martin: Got you. And Gary, that equipment finance, how big a piece of the loan book is that today? Gary L. Guerrieri: That portfolio today sits at right about $1.5 billion. Brian Martin: $1.5 billion. Okay. Perfect. And then maybe just 1 or 2 last ones. Just on the loan pricing, maybe -- I don't know if you talked about this earlier, but we've heard that some of the pricing has been a bit rational of late. So just wondering how that -- how you're viewing on the loan pricing and just how that plays into the trajectory on your outlook for the margin for the year and kind of what's embedded in your guidance on that as you kind of look into 2026. Vincent J. Delie: I don't think loan pricing in the C&I book or across the board? What are you referencing specifically? Brian Martin: I guess the commentary we've heard is that people are really looking to be aggressive on pricing just because they haven't had the ability to grow. So I guess I haven't heard that it's whether it's on CRE or C&I specifically. So just kind of wondering... Vincent J. Delie: I wouldn't say -- yes, the CRE pricing has been a little -- it's been more firm. The C&I pricing is more aggressive, but it has been. I mean I -- you sound like some of the people that run the regions that we have, they talk about how competitive it is. It's always been competitive. For the 40 years I've been in banking, I've never sat there and said, well, it's not -- it's so uncompetitive. I just -- I can do anything I want. It's always competitive. But there's always a threshold for returns, right? Everybody is running the same models. So we try to achieve a certain return risk-adjusted return on capital. And I would say that kind of governs it. So it tends to fluctuate. Let's say, C&I is good, solid C&I credit, not risky stuff because that could be all over the board. But your traditional middle market transaction that's on solid footing, good fixed charge coverage, lots of capital. You're looking at 25 basis point variance between extraordinarily competitive and not as competitive. So it's never that wide of a margin right? It gets skinny from time to time. But I think you've got to be able to overcome that with products and services that produce returns. And you look at the broader relationship and bring in deposits, compensating balances to support treasury management fees, provide capital markets fees with derivatives and debt capital markets opportunities that's what gives the return. We kind of look at those returns holistically, and we look for returns that are north of sticking 15%, 16%, 17% all in some cases higher. So that kind of drives the whole marketplace essentially. Gary L. Guerrieri: Yes. And I think we've done a good job driving that cross-sell activity across all of those fee income products that we have. We talked about the diversification of those income streams earlier. The group is very focused on it. And I can tell you, the leadership there is really driving that through the banking teams. Vincent J. Calabrese: And Brian, I would just add 1 point. So top of the house, the new loans that we made during the fourth quarter came on at 5.92%, which up 24 basis points above the portfolio rate. So it's still additive to the overall return. Vincent J. Delie: Vince is always bringing you facts. I'm giving anecdote. He layers into the stuff you really want to hear. Vincent J. Calabrese: It all works together. Brian Martin: Exactly. Cool. And then how about just -- did you guys -- any commentary on kind of what's embedded in the NII outlook in terms of margin, just kind of trajectory of margin kind of as you kind of go through the year, given your outlook for rate cuts here and just kind of the better environment? Vincent J. Calabrese: Yes. I would just say what's baked into our guidance is 2 rate cuts, 1 in April, 1 in September. I mean, April and October. If we don't get to next one, I think last I saw the market was saying in July. I mean it's -- if you don't get it, it's like a couple of million dollars' worth of benefit to a quarter. So just kind of as a reference point, baked into our guidance, has the margin moving up modestly, a few basis points a quarter, say, between the 3.28% and the end of the year is kind of what's baked into our guidance if you do the math. Brian Martin: Okay. I think I'm good. And Vince, just the question on M&A, I guess, just in terms of big picture, if we do see something, if there's a great opportunity out there, does it feel like it's a smaller opportunity given you don't want to kind of take momentum away from what you have, all you've talked about today? Or is that the wrong way to think about it because the right opportunity could be something bigger. It just feels like it might be something smaller and less disruptive if there was an opportunity out there. But I guess maybe I'm reading into that. Vincent J. Delie: No, I think we're pretty focused internally on organic growth. And what we're doing is, we're looking at capital deployment constantly. We've talked about this before somebody else asked a similar question. I don't know if not. But we're going to do whatever we think makes the most sense for the shareholders from a return and capital deployment perspective. We're not out trying to find things. I think given where we are right now and the success we're having and how valuations line up, it's more unlikely that we do a large M&A transaction, right? And if you look back over the last I said 9 years going back to the large -- last large deal we did. We've only done 2 deals. Since then, they were relatively small, and they were -- they basically were additive to the overall strategy. So both deals have really high demand deposit mix it as set. And they provided lots of customers, it was like granularity in the customer base, and it could be plugged into the consumer bank and we could drive on the cross-sell strategies and drive fee income. And that's that made sense to us, but those are more opportunistic than plotted. Brian Martin: Yes. Okay. Yes, that answers it. Congrats on the quarter and the momentum you guys have going into '26. Vincent J. Delie: Yes. Thank you very much. I appreciate it. Thanks, Brian. Thank you, everybody. I think that concludes the questions. And I want to thank our employees for a tremendous year. I know there was a lot of hard work that went into this year, and I want you to know the executive leadership team. I appreciate it. And thank you to our shareholders for continuing to believe in us and support us. Thank you. Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
Aishwarya Sitharam: Good day, everyone, and welcome to the Quarter 3 FY '26 Earnings Call of Dr. Reddy's Laboratories Limited. We appreciate your continued interest in our company. I'm Aishwarya Sitharam, Head of Investor Relations at Dr. Reddy's. Joining us today are members of the leadership team. Mr. Erez Israeli, our Chief Executive Officer; and Mr. M.V. Narasimham, MVN, our Chief Financial Officer. Our quarterly financial results have been published earlier today and are available on our website for your reference. We will start today's call with MVN providing an overview of our financial performance for the quarter. Following that, Erez will share his insights on key business highlights as well as the company's strategic outlook. We will then open the floor for questions. All commentary and analysis during this call are based on our IFRS consolidated financial statements. Please note that certain non-GAAP financial measures may also be discussed. Reconciliations to the corresponding GAAP measures are included in our press release. I would like to remind everyone that the safe harbor provisions outlined in our press release today apply to all forward-looking statements made during this call. Before we proceed, I would like to call out a few housekeeping points. [Operator Instructions]. This session is being recorded, and both the audio and transcript will be made available on our website. Please note that this call is the proprietary material of Dr. Reddy's Laboratories Limited and may not be rebroadcasted or quoted in any media or public forum without prior written permission from the company. With that, let me hand the call over to MVN to present the financial highlights for the quarter. Over to you, MVN. Mannam Venkatanarasimham: Thank you, Aishwarya. A warm welcome to all. Thank you for joining us on our Q3 FY '26 earnings call. It is my pleasure to take you through our financial performance for the quarter. The business delivered a resilient performance in Q3 FY '26, reporting a 4.4% revenue growth and steady profitability despite product-specific headwinds. The performance reported this quarter was largely attributable to the double-digit growth delivered by our underlying base businesses, excluding Lenalidomide aided by favorable Forex. Reported EBITDA margin, which stood at 23.5% included a onetime provision related to impact of changes in the implied benefit obligations under the new labor law codes in India. Adjusting for this onetime provision, the EBITDA margin was 24.8%. All financial figures in this section are translated into U.S. dollars using convenience translation rate of INR 89.84, the exchange rate prevailing as of December 31, 2025. Consolidated revenues for the quarter stood at INR 8,727 crores, which is USD 971 million, a growth of 4.4% year-over-year and a decline of 0.9% on a sequential basis. Strong performance across our branded businesses, namely India, emerging markets and the acquired consumer health care business in Nicotine Replacement Therapy. Further supported by favorable currency exchange rate movements was partially offset by lower Lenalidomide sales and continued pricing pressure in the U.S. and Europe Generics. Consolidated gross profit margin for the quarter was at 53.6%, a decrease of 505 basis points year-over-year and 104 basis points sequentially. The decline in margins during the quarter was largely on account of lower Lenalidomide sales, price erosion in our unbranded generic businesses, adverse product mix in PSA and the onetime provision related to new labor law codes mentioned earlier. Adjusting for this one-off, the margin was at 54.1%. The reported gross margin was 57.4% for global generics and 17.3% for PSA. The SG&A spend for the quarter was INR 2,692 crores, which is USD 300 million, an increase of 12% on year-over-year and 2% on Q-o-Q. The year-over-year increase was primarily on account of ongoing targeted investment to support long-term growth of our branded franchises, namely the acquired NRT Consumer Healthcare business and branded generics. Adverse Forex impact as well as the onetime provision related to the new labor law codes. SG&A spend accounted for around 31% of the revenue during the quarter was higher by 199 basis points year-over-year and 82 basis points on a sequential basis. Excluding the one-off provision, SG&A spend as a percentage to the revenue was around 30% in Q3 FY '26. The R&D spend for the quarter was INR 615 crores, which is USD 68 million, a decline of 8% year-over-year and largely flat sequentially. The decrease reflected lower development spends in biosimilars given that large part of investment related to abatacept have been completed, the spend this quarter also included onetime new labor law codes related to the provision. The R&D spend was 7% of revenues for Q3 FY '26, lower by 92 basis points on year-over-year and the same level as the previous quarter. Excluding the on-off R&D spend was at 6.8% of Q3 revenues. Other operating income for the quarter was INR 77 crores as against INR 44 crores in the corresponding quarter last year. EBITDA for the quarter, including other income stood INR 2,049 crores, which is USD 228 million, a decline of 11% on year-over-year basis and 13% sequentially. The EBITDA margin stood at 23.5%, lower by 401 basis points on year-over-year and 322 basis points Q-o-Q. Adjusting for onetime new labor law codes related to the provision, the underlying EBITDA margin was at 24.8%. The net finance income for the quarter was higher at INR 117 crores as compared to net finance expenses of INR 2 crores during the same quarter last year. The increased net finance was primarily on account of higher foreign exchange gain this quarter in comparison to foreign exchange loss reported in the corresponding quarter last year. As a result, profit before tax for the quarter stood at INR 1,543 crores, that is USD 172 million. PBT as a percentage of revenue was at 17.7%. Excluding the onetime new labor law code-related provision, the PBT margin was at 19%. Effective tax rate for the quarter was at 22.9% compared to 25.1% in the corresponding period last year. The ETR for Q3 FY '26 was lower primarily due to favorable durational mix for the quarter in comparison to the same period in the previous year. Profit after tax attributable to equity holders of the period for the quarter stood at INR 1,210 crores, which is USD 135 million, a decline of 14% year-over-year and 16% on Q-o-Q. This is at 13.9% of revenue before adjusting the one-off provision related to a new labor law codes. The diluted EPS for the quarter is INR 14.52. Operating working capital as of 31st December 2025 was INR 14,142 crores, which is a USD 1.57 billion, an increase of INR 811 crores, which is USD 90 million over 30th September 2025. CapEx cash outflow for the quarter stood at INR 669 crores, which is $75 million. Free cash flow generated during the quarter was INR 374 crores, which is $42 million. As of December 31, 2025, we have a net cash surplus of INR 3,069 crores which is equivalent to USD 342 million. Foreign currency cash flow hedges executed through derivative instrument during the period are as follows: USD 481 million hedged using a combination of forwards and structured derivative contracts scheduled to mature through March 2027. The contracts are hedged at the rate of USD 89.1 to USD 90.3. RUB 2.93 billion hedge at a fixed rate of RUB 1.06 with a maturity falling within next 3 months. With this, I now request Erez to take us through the key business highlights. Erez Israeli: Thank you so much, MVN. Good day, everyone, and thank you for joining us today. We really appreciate your continued engagement and interest in our company. Thank you all for joining our meeting. Our overall performance in Q3 FY '26 remain consistent with our strategy. And we continue to deliver on our strategic priorities during the quarter, namely growing the base business, driving gross efficiencies across operations, advancing our key pipeline programs, semaglutide and abatacept as well as pursuing selective business development video opportunities to augment our organic growth efforts. In line with our stated aspirations, our underlying base business delivered overall a double-digit growth this quarter. The company EBITDA margin was about 25%. And this is adjusted for onetime provision related to the new labor codes in India. Let me now walk you through some of the key highlights of the quarter. Revenue grew by 4.4% year-on-year despite lower contribution from Lenalidomide. Our base business, excluding Lenalidomide, delivered double-digit growth. The overall growth for the quarter was also aided by favorable Forex. EBITDA margin stood at 23.5%, which included a onetime provision related to the new labor codes mentioned earlier, excluding this onetime provision, EBITDA margin is at 24.8%, like I mentioned, about 25%. Annualized ROCE was at 20.4%. Net cash surplus at the end of the quarter was $342 million. In alignment with our strategic focus to deliver a first-in-class and innovative therapies in India and emerging market, we entered into a strategic collaboration with Immutep for commercialization of a novel immunotherapy oncology drug, Eftilagimod Alfa, a key global market outside of North America, Europe and Japan and Greater China with an upfront of $20 million potential regulatory and commercial milestones of up to $350 million as well as royalties. Further, we recently launched Hevaxin, a novel, recombinant vaccine for the prevention of Hepatitis-E virus infection in India. We are pleased that the integration of the acquired Nicotine Replacement Therapy business is progressing as per plan. 85% of the business by value is now under operational controls. The next phase of integration will include selected countries, Asia Pacific, Middle East and Latin America. We expect integration largely to be completed by the end of this fiscal. We continue to make progress on our key pipeline products. During the quarter, we received a marketing authorization for semaglutide injection in India from DCGI following the recommendation of subject to expert committee in the SEC under Central Drug Standard Control Organization. Further, necessary local manufacturing license have been secured. We have also started filing in various emerging markets through the COPP route. In October 2025, we received a notice of noncompliance from the Canadian pharmaceutical drug directorate for our semaglutide injection, which outlined a request for additional information and clarification on the specific aspect of the submission. We promptly submitted our response by mid-November 2025, well within the stipulated time and now we are awaiting a response from the regulatory agency in Canada. On the biologics front, we have completed the filing of the biologics license application, the BLA, for the IV presentation of abatacept biosimilar candidate in December 2025 as per the schedule. Following the positive opinion for CHMP, we received European Commission approval for denosumab biosimilar in Q3 FY '26. Likewise, we have received the approval from MHRA in the U.K. Our in-house commercial team has launched the product in Germany in December and launched a preparation are underway for the U.K. and other European countries. We received a complete response letter from the USFDA for denosumab biosimilar BLA, which is -- was developed by our partner, Alvotech. The CRL refers to the observation from a pre-license inspection of Alvotech, Reykjavík manufacturing facility. On the regulatory front, in November 2025, the USFDA conducted GMP inspection of our API facility CTO-SEZ in Srikakulam, Andhra Pradesh with 0 observations. In December 2025, the USFDA completed a GMP and a preapproval inspection of our facility FTO-SEZ PU-01 in Srikakulam, Andhra Pradesh and issued Form 483 with 5 observations. We have responded already to the agencies within the stipulated times. Recently, the USFDA issued a post application action letter in relation to the response submitted to the observation received post the PI conducted at our Bachupally biologics facility in September 2025 for our rituximab biosimilars. We are actively working to resolve the outstanding observations. Our CDMO business, Aurigene Pharmaceutical Services Limited served as an exclusive API manufacturer for 2 of the 46 novel drug approved by the USFDA in 2025. Further, APSL delivered 3 discovery programs through its in-house AI-assisted discovery platform called Aurigene.Ai. We continued progress on our industry-leading sustainability practices. During the quarter, we announced a science-based net zero climate target, making us the only Indian pharmaceutical company to commit to such a target by FY '24 -- FY2045. We are in the leadership position in CDP Water Security & Climate Change categories for 2025. Let me take you to the key business highlights for the quarter. Please note that all financial figures mentioned are reported in the respective local currencies. Our North America Generics business generated revenues of $338 million for the quarter, a decline of 16% year-on-year and 9% sequentially. The decline was primarily on the account of level in Lenalidomide sales and price erosion in certain key products. During the quarter, we continued to launch momentum, adding 6 new products to our portfolio. Our European generic business reported revenue of $140 million for the quarter, a growth of 4% on a year-to-year basis as well as sequentially. The acquired Nicotine Replacement Therapy portfolio, which is now also in the base has been performing well. Further, new product launches helped offset the impact of price erosion in generics. During the quarter, we launched 10 new generics products across markets, further strengthening our product portfolio. Our emerging market business delivered revenue of INR 1,896 crores in Q3 FY '26, reflecting a robust growth of 32% year-on-year and 15% sequentially. Growth was primarily driven by new product launches across various markets and favorable Forex. During the quarter, we introduced 30 new products across countries in line with our commitment to improving access and further deepening our market presence. Within this segment, our Russia business delivered growth of 21% year-on-year and 16% sequentially in constant currency terms amid continued adverse macroeconomic conditions. Our India business reported revenue of INR 1,603 crores in Q3 FY '26, delivering a healthy double-digit year-on-year growth of 19% and 2% increase sequentially. This performance was attributable to revenues from our innovation franchise, new brand launches price increases and higher volumes as well as contribution from recently acquired Stugeron portfolio. According to IQVIA, we continue to outperform the Indian pharmaceutical market, IPM, with a moving quarterly total mass quarterly, MQT, growth of 12.3% compared to the IPM growth of 11.8% and moving annual total, MAT, growth of 9.7% compared to IPM of 8.9% growth. Our IPM rank is 10 for the quarter and 9 for the month of December 2025. During the quarter, we launched 2 new brands as we continue to enhance our domestic market presence. Our PSAI business reported revenue of $92 million in Q3 FY '26, resulting in a decline of 5% year-on-year and 15% sequentially. During the quarter, we filed 31 Drug Master Files globally. In line with our strategic priorities, we remain committed to investing in differentiated R&D programs, especially peptides and biosimilars that offer meaningful commercial opportunities. In addition to our enhanced development efforts, we also -- we will also continue to strategically collaborate to build our innovation portfolio for India and emerging markets. During the quarter, we completed 28 global generic filings. As we look forward, our focus remains on effective execution to deliver on our strategic priorities improving base business both advancing differentiated pipeline products like semaglutide, abatacept, driving operational efficiencies and pursuing value-accretive acquisition and partnership aimed at creating long-term value for our stakeholders. Before we move to the Q&A session, I would like to announce that Aishwarya Sitharam has recently taken over as the Head of Investor Relationship from Richa Periwal. I wish both Aishwarya and Richa, Richa is staying with our organization success in their respective new promoted roles. With that, I welcome your thoughts and questions as we move into the Q&A sessions. Aishwarya Sitharam: Thank you very much, Erez. [Operator Instructions] The first question is from the line of Neha Manpuria from Bank of America. Neha Manpuria: I have 2 questions from me. First, on the India business growth. The 19% growth, how should I think about organic growth for the India business because we did have the Stugeron acquisition in this quarter. Was that a meaningful contributor to this 19% growth? If I were to strip that out, would that growth still be, let's say, north of 15%? Would that be a fair assumption? Erez Israeli: So it's somewhere between 17% and 18%, if I calculate, I'm not sure exactly where it is. But let's say, it's more than 17% organic without acquisitions. Mannam Venkatanarasimham: That's right, Erez. Neha Manpuria: And what is driving this strong growth? It is because we've been doing -- I know we've been moving in the double-digit category for a few quarters now, but to step up to 17%, 18%, does seem very large in a quarter's time. What's changed in this quarter? And how sustainable is this growth trajectory, particularly this, let's say, mid-teens sort of growth trajectory as we look through the next few quarters? Erez Israeli: So it's primarily the performance of the innovative product. So normally, and there are actually very good products that are being really appreciated by the market. So normally, when you produce a brand that is not known, there is a period of time in which you have a cycle of physicians that recognize this product and then recommend it. So there is a certain gross pattern like introduction of any brand. And I think what happens to us is actually the strategy is working. We are in some of these brands in the third year since launch and some of them in the second year. And you will start to see the move of that. So the -- in addition to the brand didn't perform in a similar manner, meaning that we are increasing the prices, we have the support of those, but it's primarily the -- what we called at the time of Horizon 2 introducing of innovation to India, this is the primary move that it's actually working. Neha Manpuria: Understood. Sorry, one last question on India. The innovative portfolio would be what portion of our sales roughly today if you were to quantify it? Aishwarya Sitharam: 15% to 20%... Erez Israeli: No, it should be less. Mannam Venkatanarasimham: It should be less. Erez Israeli: If I need to, it's somewhere between 10% to 15%, but I'm not sure, Neha. Neha Manpuria: All right. No problem. And my second question is on sema. I think you mentioned that we have submitted the response, and we are waiting -- sorry, we are awaiting response from the agency. So have we not got a follow-up goal date as well? And according to you, what would be the next time line that we should look at for sema approval in Canada? Erez Israeli: Yes. So we do have a goal date because it's come automatically 6 months from the response time. So it takes us to May. But it doesn't mean that we need to get approval by that date, it can be any time between now and May, and hopefully, in May, no additional question. So I'm -- I don't know when we will get a response. We are preparing for a launch even in Q4 and there is scenarios like that. And if not, it will be in Q1. But let's say, any time between end of February to May, we should expect to launch in Canada. Aishwarya Sitharam: The next question is from the line of Damayanti Kerai from HSBC. Damayanti Kerai: My question is again on India business. So you mentioned the innovation -- innovative products, et cetera, is helping you to achieve such strong number. So 2 things. Again, I think what is the sustainability of these numbers -- growth numbers in India? And also if you can clarify if the December quarter has some spillover benefit from the prior quarter where we had seen the GST disruption? Erez Israeli: So it's absolutely sustainable. I don't know if it's 90%, which could be also 15%. So it's absolutely sustainable in this range. And I don't think that we had a major spillover. Mannam Venkatanarasimham: There are no spill like on account of GST implementation. This is a clear quarter. Damayanti Kerai: Got it. My second question is on semaglutide. Again, I guess we are awaiting for Health Canada to revert. But meanwhile, what are your expectations in terms of pricing compared to, say, a few months back, given now most of the companies are, I guess, gearing up for these opportunities? And what's your broader expectation on the pricing and competition in the key markets where you are looking to launch semaglutide. Erez Israeli: So expectations did not change much from our recent discussions. We know that eventually, there will be a competition in Canada. We also know that Novo Nordisk announced that they want also to participate, and they even started to offer certain organization in Canada, their -- what they call their own generic brands, if you wish, in Canada as well. We have made some arrangements like that. I still believe that if we will get the approval, we have a good chance to be alone or even with a low level of numbers of players that will compete. And over time, they will accumulate the opportunity to my opinion, is still there. Damayanti Kerai: Sure. And earlier, I guess, your expectation for pricing across different markets where some were say $20 to $70 per unit. So are you still expecting the similar range in terms of pricing in different markets? Erez Israeli: Yes, yes. The -- most of the markets will be on the lower end of the spectrum. But yes, the spectrum is still there. We did not get yet indications that it will be lower. So over time, when people will get approval, we are expecting to be very competitive markets. There will be a short period of time that can be from weeks to months. It depends on the market, in which we can have healthier prices. But then we are preparing ourselves for another very competitive markets. Damayanti Kerai: So somewhere closer to the lower end of the range, right? That's the expectation. Erez Israeli: Yes, yes, yes. I think this is a fair assumption for your analysis. Aishwarya Sitharam: The next question is from the line of Dr. Bino Pathiparampil from Elara Capital. Bino Pathiparampil: A couple of questions. One, how much has generic Lenalidomide still contributed to the EBITDA margins in the quarter? And now that we have a visibility of our expense levels, et cetera. What shall we look forward to in terms of EBITDA margins in Q4 and FY '27? Erez Israeli: Four years, I did not answer this question. And this is the last quarter that I need to answer this question. So I will not be able to tell you the amount, and this is because of the confidentiality agreement that we have with the innovator. It's not because I don't want. But what we can say that the decline that you see in America is primarily Lena. And actually, without Lena, we didn't grew. So you can take it from there. Bino Pathiparampil: Got it. When you say decline in the U.S., it's Y-o-Y or Q-o-Q? Erez Israeli: Both. Bino Pathiparampil: And second, can I also understand the time lines now, latest time lines for denosumab and rituximab in the U.S.? Erez Israeli: Yes. So the denosumab, Alvotech needs to answer the deficiency letter. And then, of course, it depends on how the USFDA will address the response. So the answer is I don't know, but it is likely that will be in the second quarter of -- and maybe even after, of FY '27. So I'm not expecting it. The normal time that they evaluate the efficiency letter, a new goal date, likely that will take us to this time frame. But I really don't know because it's -- in biologics, you don't always end up with 1 deficiency letter. So we need to see. Answer to denosumab -- on rituximab, I think you asked for both unless I... Bino Pathiparampil: Yes. Yes, correct. Erez Israeli: On rituximab, we have 1 -- out of the 2 comments that they gave, which is repeated to our response, it is primarily related to one of the lines of the fill and finish. And on that, we will answer in the next 2 weeks, give or take. And then the expectation that they will come to visit us again and reinspect us. So the approval likely. It's not official, but I'll give you my best assessment that likely that we'll get reinspection on that specific line. And I'm ready preempting one of the next question. There is no impact on abatacept because abatacept is not on the same lines. But this is the task of rituximab. So right now, it will be a response, then they will decide when they want to come to visit, and it will come for there. So unlikely, let's say, in the next 6 months and maybe more than that. Aishwarya Sitharam: The next question is from the line of Abdulkader Puranwala from ICICI Securities. Abdulkader Puranwala: So just firstly, on semaglutide, so I heard your comments about Canada entry in Feb to May where you expect. I mean, how about the other countries in which the patent expires in March, including India? And in terms of -- we previously talked about having a capacity of 12 million cartridges. So I mean, is there any increase to that? And by when we should see a meaningful traction coming from this product? Erez Israeli: So the starting point is India, we will launch on time. The date is March 21. It happened to be my birthday for everybody. So this is one. In Canada, like I mentioned, it can be any time from now until the goal date of May, that's what I answered Neha. I don't know exactly in what -- in that spectrum, when exactly it's going to be. But the expectation is that we have an approvable product and we will launch at this time frame. In addition to that, we are using our COPP that we got already for media to register in other markets. Altogether like I mentioned in the past, it's much more than 80 markets. I think it's 87 or 80-something markets altogether. But the most meaningful will be Brazil, somewhere around July, as well as Turkey, give or take the same time frame. In addition to that, we have partners both in India as well as outside of India that wants the right for our semaglutide for their market. And we are obtaining also licensing fee for these kind of activities, not just for this product but also for other products. So that's overall. So the 12 million pens remains the same for that period of time. For the period after, we can have more than that. Right now, as you know, we are using primarily the fill and finish from Stelis. But as time will go by, we have additional capacity and we continue to use our partner as well as our internal facilities. Abdulkader Puranwala: Got it. And just to follow up on the biosimilars as well. So what we're having now a CRL for denosumab and rituximab, so internally, how is that impacting our estimates for your entire biosimilar time lines -- launch time lines? And secondly, with abata, is there any time line for launch we are planning internally? Erez Israeli: Sure. So on rituximab, the main the launch -- delay of the launch is to our partner Fresenius. As you recall, rituximab was a product we primarily used to qualify Bachupally. It's actually served the purpose well. Maybe even too much engagement with the authorities. It's actually served the purpose really, really well. in that respect. So the launch -- overall delay in the launch versus the regional plan is probably a year plus. In Europe, we already launched. So Europe is good, and we are progressing there. They're also about the same. We launched in Europe, and we are going to launch in additional markets. It's a very competitive market over there. Denosumab right now because of the efficiency letter, I don't know exactly when it will answer. So I don't know how is the delay, but it is at least 6 months, if not more than that, for this particular product. I don't see an impact of abatacept. The denosumab is made by a partner, Alvotech in Reykjavík, Iceland, abatacept make on different lines in Bachupally, India. Obviously, we need to get approval for abatacept in the stipulated time. We submitted it on time. So the first expectation is that we'll get somewhere towards the end of the calendar of '26, the approval for the IV product and then we can launch it. The approval for the subcu should be by January or February of 2028. We believe that we are still on time for that. Of course, we need to see that we are actually making it happen. But abatacept so far looks in the right direction, especially in the United States. Aishwarya Sitharam: The next question is from the line of Kunal Dhamesha from Macquarie. Kunal Dhamesha: Yes. Just one on the sema Canada. Is there a requirement of plant inspection from Health Canada before approval or all those things are already done from our side as well as from our partners side? Erez Israeli: So no inspections are expected or needed. We just hope for approval. Of course, Kunal, can give us additional queries like a normal regulatory process, but we are expecting approval. Kunal Dhamesha: But normal regulatory process does not do all plant inspection from Health Canada, like the USFDA has. Erez Israeli: No, no inspection. Kunal Dhamesha: Sure, sure. And secondly, no, I think in one of the media articles, the Health Canada spokesperson has kind of mentioned that the manufacturing of the API is different between generic players as well as the -- versus the innovator and hence, substitutable status whether the generics would be substitutable as kind of questionable. So if you could provide any color on this, how much confident we are that our generic would be substitutable at the pharmacy level. Erez Israeli: No, it's absolutely substitutable. And by the way, what we said is not correct, which actually also the innovator is using synthetic API for the injectables and recombinant products for the oral. And we are planning to do the same for the generics. So in that respect, I don't see a merit to that statement. I believe the product is absolutely going to be substitutable. So there is no need for a prescription or special processor branding or any branded generic activity. It's a normal retail products once we'll get approval. Kunal Dhamesha: Sure. And my second question is on the new labor code related provision that we have basically provided some INR 117 crores, so how should we think of this? Is it some bit of retrospective cost also baked into this INR 117 crores or it's just a prospective cost? And is it recurring in nature that structurally, our employee expenses would be a little higher now? How should we think about this? Mannam Venkatanarasimham: Kunal, as per the new labor law codes now, the wage definition has been revised in line with the new labor law codes, it's like whoever employees on the payroll of the company as on December 31, we have recomputed retrospectively. It is not like a prospective. So that's where this entire gratuity leave catchment proportion has been made. And going forward, in line with this may not be this extent, but that would be like my view, less than, I think, 50 basis points, would be the impact, but that's not very significant. Aishwarya Sitharam: The next question is from the line of Madhav Marda from Fidelity International. Madhav Marda: Could you talk a little bit about biosimilar abatacept launch in the European markets as well. Is that something that we are planning to target in the next couple of years? And also, if you could talk about the addressable market in Europe as well? That's my first question. Erez Israeli: So yes, sure. So yes, Europe is a very important market for abatacept. We are going to do it by ourselves as well as with partners. The -- and we have to cover all the markets because in some of the markets, we don't have the ability to go to physicians. And so we are trying to cover as much as possible. Obviously, the markets that are tender markets, we can cover easily by ourselves. Likely, that the launch is July. Mannam Venkatanarasimham: July, we have filed submitting July 2026 and expecting approval by 12 months. Erez Israeli: Yes. So July 2027, you should expect a launch in Europe. Mannam Venkatanarasimham: For both IV and the subcu. Erez Israeli: For both IV and subcu. Madhav Marda: And how large is the addressable market in Europe for abatacept today? Erez Israeli: About $2 billion, maybe a little bit more. Madhav Marda: And is this also in terms of the competitive landscape, given an abatacept seems like we're the only one who's completed Phase III, maybe 1 more person is starting off. I don't know where they are right now. But even in Europe, similar competitive landscape, like we'll probably be the first only company at launch? Erez Israeli: Yes. And by the way, the idea is to launch abatacept in every country that has a demand for this product, either by ourselves or with a partner. So the -- we are planning to launch at this time frame in Europe, in the United States, in Japan, in Canada and in every market that there is a demand for this product. Aishwarya Sitharam: The next question is from the line of Shyam Srinivasan from Goldman Sachs.. Shyam Srinivasan: Just the first one on the NRT, the disclosure you have shared around the growth there, right, is about 25% Y-o-Y. Can you split it out into like constant currency and what the growth was? I remember and we had about INR 6 billion -- INR 600 crores last year same time, and we had INR 1 billion pretax profits. So how has that evolved even for at these levels now? Mannam Venkatanarasimham: So Shyam on the constant currency is year-over-year 8% growth. Shyam Srinivasan: Okay. So the rest is all coming from currency [indiscernible]? Mannam Venkatanarasimham: Yes. Shyam Srinivasan: Okay. So how should we look at the steady-state growth for this? Is there something that has changed? Because I remember single-digit growth was what we guided to. So that continues, right, in constant currency? Erez Israeli: Yes, Shyam, firstly, yes. It can be -- right now, we have -- we see upside to the model. It's not a significant upside. But let's say, instead of -- we always said single digit. But right now, it looks like on the upper side of the single digit. And it may go to double-digit depends because we are also participating in certain tenders like Brazil, and other stuff. So if you win this tender, it gives you a chunk of sales in a particular situation. Overall, it looks good. It looks that we are exceeding the expectations that we had internally. And actually, the demand from this product is higher than what we thought. Shyam Srinivasan: Helpful. So just a subpart of the question was on the profitability as well. As we have -- I know we have done additional brand building access, but has the profitability materially changed? Mannam Venkatanarasimham: Yes. Because of like sales are also higher and then it is like here, the A&P investments overall, if you remember, like at the business case level, we said EBITDA is around 25%. But now since we are doing well, the EBITDA percentage is higher than 25% currently. Erez Israeli: Going forward, right now, it looks really well above expectations. But let's say, I think fair assumption will be that we'll stay with 25%. Mannam Venkatanarasimham: Yes. Shyam Srinivasan: Got it. And just the last question to some of the opening remarks you made, Erez, on Novo strategy in Canada. Just curious why would they want to tie up with some local organization? They didn't file -- they didn't defend their patents originally. Is there a chance that slippage happens across the border into the U.S. for the lower-priced version? Any philosophy or thought process, you're able to understand why they're doing it? Erez Israeli: It's beyond my paycheck. I'm not managing Novo Nordisk, I hardly manage to read this with a lot of difficulties. I'm assuming that they want to protect their market share. They understand what will happen when a company like us, we launched and other companies we launch. Apparently, it's important for them to keep the relationship. They also said it, so I'm kind of that. About over the border, probably, but I have no data or indications about it. We are not building on that. Let's say, we are building on selling to Canadian. And if it will be bought, it will be bought. Aishwarya Sitharam: The next question is from the line of Tushar Manudhane from Motilal Oswal. Tushar Manudhane: Thanks for the opportunity. First question on India, semaglutide opportunity. Just would like to understand the approval which we have got is for diabetes and weight management or only diabetes? Erez Israeli: We got it for the diabetic product. And we are planning to launch eventually all products in India. Also the other part of the products are in the queue to get approval. But what we will launch in March is the generic version of Ozempic, if you wish. Tushar Manudhane: Got it. And so effectively, if at all for weight management, it would not be in March, but subsequently, as and when you get the approval from the regulatory authority. Erez Israeli: The physicians will prescribe the way they believe they should. But the indication of the product launch is for diabetic... Tushar Manudhane: Because the concentration of the product would be relatively -- or the strength of the product is relatively lower for weight management, right, in that way? Erez Israeli: Also, many, many people use the Ozempic for the same. But yes, for the second, the equivalent of Wegovy will come later. In March, we will launch. But in India, we are going to have all strengths. We will have the -- both the indication as well as the oral. Tushar Manudhane: Got it. Sir, secondly, just on this rituximab, let's say, if at all that reinspection happens post your response. In your experience, has it happened like USFDA accounts only for a particular line for inspection and doesn't inspect the entire site as such? Erez Israeli: No, absolutely. It's this is what PI, pre-approval inspection is all about. So they are coming for a specific line. They can extend it if they wish. It's up to them. But it's very, very common, especially on sterile product. Tushar Manudhane: Got it. And on the same thing, what would be the tentative time line for submitting the subcutaneous version filing for USFDA? Erez Israeli: Filing time, you guys remember? The subcu for the U.S. Mannam Venkatanarasimham: U.S. it's July. Erez Israeli: July. Mannam Venkatanarasimham: July 2026. Erez Israeli: In July, we will submit, and we hope to get the approval and the patent date, which is January or February 2028. Tushar Manudhane: Got it. And just one more from my side. R&D spend guidance, if you could share? Erez Israeli: Sorry, what to share? Aishwarya Sitharam: R&D guidance. Erez Israeli: R&D guidance... Mannam Venkatanarasimham: Is in the range of, Tushar, is 7% to 8%, what we have guided earlier. That is -- remains same. Tushar Manudhane: But sir, now that major product, I guess, it was with respect to [indiscernible] largely done. So you think that we will be still on the higher side of this guidance, at least for FY '27? Mannam Venkatanarasimham: So because like pembro also, we have just started the collaboration with Alvotech. I think there's new molecules also we'll continue to introduce. That's why we are saying 7% to 8% range. Erez Israeli: When we have -- we finish a budget of products, we obviously want to develop more products. We have aspiration to launch hundreds of products in the next 15 years. So there is enough products to develop. So it's more how much we can afford in a particular time in our capacity in R&D. Aishwarya Sitharam: The next question is from the line of Vivek Agrawal from Citi. Vivek Agrawal: My question is related to SG&A spend. That continues to remain high. And this is against the company's guidance of some moderation ahead of Revlimid cliff. I just want to understand the outlook here. Are we expecting any kind of decline in SG&A spend next year in FY '27? Or is it or it can still grow Y-o-Y maybe at a lower rate. So if you can help us understand. Mannam Venkatanarasimham: Well, Vivek, if you see like at lower Lena sales for the quarter and our -- as a percentage to the sales is SG&A still is like without this labor law codes impact at 30%. And then in this 30% also the way which like ForEx has given the favorable impact on the top line, here also like where our SG&A spend also there in Russia, in Europe for the NRT, there is a -- like a ForEx impact also is the SG&A. So considering and also we are continuing to invest. I think if you look at like how our branded business as growth be it India, emerging markets, NRT, all are on the solid part of growth. And despite we have continued to invest and then a 30% of the sales, we believe I think we are in the control of the overall SG&A. Vivek Agrawal: Understood. And that makes sense. But just want to understand an absolute level, right? So in absolute terms, are we expecting any kind of moderation or decline in next year? Or it can still grow from here on? Erez Israeli: So you'll see that it will be -- it will grow less, so moderation of the growth. The reason for that, as -- and we discussed it in the past, we want -- and we obviously prepared for the post Lena era for quite some time. We knew it is coming. We are aware of the implications -- it's not -- it did not come as a surprise to us. And part of our cost containment, which is one of the key principles that I mentioned is that we want to control the cost. So also the SG&A, the idea is that, overall, the discretionary costs we are controlling very much like we discussed in the past. And the pace of the growth of the cost will be less than half of the growth of the top line. Aishwarya Sitharam: The next question is from the line of Kunal Lakhan from CLSA. Kunal Lakhan: My question was on the emerging markets, especially Russia, we saw some good growth numbers this quarter. And I do read your commentary that it's primarily driven by new product launches. Just wanted to understand how much of this growth was because of the new products and how much was the base business growth here? Erez Israeli: It is both. It is both. And then -- so we have growth in all 3 segments in Russia, meaning the retail, the hospitals and retail, both on the Rx and OTC. So it's both the old product as well as new products. Kunal Lakhan: And also in terms of pipeline of new products, if you can give some color on the -- in the coming quarters and years, how does the pipeline look like? And is there this growth is sustainable once the current high base is actually in the base? Erez Israeli: So the growth in Russia is sustainable. Not always, you'll see a 21% growth every quarter, but double digit -- healthy double digit in Russia is absolutely sustainable. Aishwarya Sitharam: The next question is from the line of Shashank Krishnakumar from Emkay Global. Shashank Krishnakumar: Just one question on our sema tablets filing in India. I think the SEC has asked for some on-site verification of our Phase III trial data. Now is it something that could -- does it typically meaningfully impact approval time lines? Or is it sort of relatively easier to address? I just wanted to understand that. Erez Israeli: I don't have any concerns on this one. Shashank Krishnakumar: Got it. That's -- and just a related question. So post-March, subject to an approval, there's no litigation overhang even for the launch of tablets, right, in India? Erez Israeli: Correct. Aishwarya Sitharam: The next question is from the line of Surya Patra from PhillipCapital. Surya Patra: Yes. My first question is on the Aurigene CDMO opportunity that in the opening remarks, you have mentioned that it has been qualified as an exclusive supplier of 2 innovative APIs. So how important this opportunity be for us? And when of that we fructifying? And how important or in terms of the revenue contribution that we should be seeing out of it? Erez Israeli: So as we speak, this is still a small business. We -- as I'm sure you all recall, we started the CDMO efforts in a more, let's say, with -- let's say, more emphasis on this activity for the last 2 years. What we try to do is to engage meaningful products and get -- initially, we started with Phase I, Phase II. And we are very happy that effort has started about 2 years ago and now started to yield. How significant it is now? It's not that significant, but we should absolutely see, I believe, $100-plus million coming to us as a growth in the next 2 to 3 years from that. From the overall scheme, it's not big for, but for the CDMO business, it is an important place because it will allow them to have sustainable capabilities over time. Surya Patra: Sure. My second question is on the Lenalidomide, so knowing the fact that we are an integrated player means having our own API also for that. So given that situation, what is the kind of tail end opportunities in the Lenalidomide that we should be seeing? Erez Israeli: We'll continue to be in the product. But given the fact that we are comparing it to the period of time which we had this agreement, I always advise the people not to give a value to it. So it will not confuse all of you. So you should assume that the old arrangements from Q4 is 0. Doesn't mean that we will not sell, but let's say, just for... Mannam Venkatanarasimham: Another generic, another molecule... Erez Israeli: As for clarity, just it will help everybody. Surya Patra: Sure, sure. Just one booking question. We have talked about the ForEx element in the couple of line items this quarter. So whether there is a kind of a net positive impact that we have seen in what are the kind of a net Forex loss or gain that we have seen in the financials for the quarter? And the same number if you can give for the corresponding previous quarter also? Mannam Venkatanarasimham: Follow-up in the Erez -- Surya, if you see that, I think for each of the sales we have called out, especially in the Europe and EM. Definitely, there's a ForEx element. At the same time, in the SG&A as well as COGS, whether we import also we ought to account at a higher price. There is a net-net if you ask and then there's a positive impact on the EBITDA margins. Surya Patra: Sure. Are we quantifying, sir? Mannam Venkatanarasimham: I think we haven't. Not that it's significant, I think, because I don't know if there were several... Erez Israeli: It is not that significant. I don't remember exactly the numbers, but it is not -- like it's not very significant for the second. It's -- I don't remember exactly the percentage, but it's not huge. Mannam Venkatanarasimham: Yes. Aishwarya Sitharam: In the interest of time, we will take one last question from Foram Parekh from Bank of Baroda Capital Markets. Foram Parekh: My question is on the India market. So with the new acquisition that we have done, we have seen growth expanding to 19%. So in FY '27, can we assume with sema launch and as the new acquisition scales up, would it be wise to assume a growth rate higher than the current growth rate of 19%? Erez Israeli: I will not -- I think you should -- we feel very, very comfortable with 15% plus. Can it be more than 19% it can, but I don't recommend to use it for now. What we can say that the 50%, 60% is very sustainable. The rest is depending on certain scenarios, but it might. Plus, we are not done with BD. So likely the things will come, but of course, we cannot guide for it. Foram Parekh: Okay. That's helpful. My second question is on the European side, ex of NRT where we have seen sales mellowing down to 15% growth even with the launch of biosimilars. So again, the question is, as these biosimilars scales up and probably with the launch of abatacept in the European market. So can European region, ex of NRT scale north of 20% or so? Erez Israeli: Again, it can, but it depends on the scenarios. So the -- I think what I can say about Europe, and this is something that we are very proud of in 2018, we had less than EUR 100 million above sales in Europe. And in the future, in the next 2 or 3 years, we will see 10x this number. So it's emphasized the importance of euro for us. Europe is not only what we do in Europe, so what we do with partners in Europe. So it's very, very important for us because we will not have capability in all the markets. So the answer is it's possible if it is possible. We are not guiding for that. What we are saying is that all markets should grow double digit besides the United States that will grow single digit, and this is without taking the impact of Lena. Like I mentioned from next quarter, this arrangement is done and that's how we should see. Foram Parekh: Sure. And last question is on the Global Generics gross margin. As REVLIMID sales have come down, we're seeing gross margins also coming down to 57%, so from next quarter onwards, with 0 REVLIMID sales, can the gross margin territory scale down further? Mannam Venkatanarasimham: So we can expect without Lenalidomide scenario from Q4 onwards. Our gross margin of both Global Generics and PSA in the range of 50% to 55% because some quarters depends upon the products and business mix, it vary, but the range is like 50% to 55% is the range. Aishwarya Sitharam: That was the last question for the call today. Thank you all for joining us. We value your time and participation on the call. If you have any further questions or need additional information, please do feel free to reach out to me. With that, we conclude today's earnings call. Thank you, everybody. Erez Israeli: Thank you. Mannam Venkatanarasimham: Thank you, guys.
Operator: Thank you for standing by, and welcome to the Northern Star December 2025 Quarterly Results Call. [Operator Instructions]. I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead. Stuart Tonkin: Good morning, and thank you for joining us today. With me on the call is the Chief Financial Officer, Ryan Gurner; and Chief Operating Officer, Simon Jessop. As previously announced in the December quarter, gold sold totaled 348,000 ounces at an all-in sustaining cost of AUD 2,937 per ounce. A number of one-off operational events across our assets resulted in this softer performance and required us to revise FY '26 production and cost guidance. With these events behind us, our team remains firmly focused on driving productivity improvements and strengthening cost discipline to deliver a stronger second half for our shareholders. Our FY '26 outlook provides revised guidance of 1.6 million to 1.7 million ounces of gold sold at an all-in sustaining cost of $2,600 to $2,800 an ounce. Today, we also provide further detail for production and AISC guidance by production center. In addition, we have updated our capital expenditure forecast across the portfolio. Operational growth capital guidance remains unchanged at $1.14 billion to $1.2 billion. KCGM's growth in capital expenditure in FY '26 consists of several projects designed to prepare the operation for commissioning of the newly expanded mill from FY '27. And 2 aspects, which I'd like to highlight are the KCGM mill expansion project FY '26 capital expenditure is now expected to be in the range of $640 million to $660 million, and this reflects targeted increases in labor to ensure the commissioning in early FY '27. Also, the KCGM tailings dam activity is ahead of schedule with FY '26 spend now expected to be to $240 million to $260 million. While FY '27 forecast spend is lighter at $100 million to $120 million, which this represents approximately 10% reduced cost for the overall tailings dam project. And at Hemi, forecast spend is $165 million to $175 million, reflecting more optimization of engineering and design works there. Northern Star continues to work closely with state and federal regulators, key stakeholders and the broader Pilbara community. With gold price now exceeding AUD 7,000 an ounce, is an outstanding time to be producing and discovering gold in stable low-risk jurisdictions of Western Australia and Alaska. Our balance sheet remains in a net cash position and as our hedge book decreases, our growing exposure to spot gold, coupled with increasing production, positions us for a very strong increase in cash flows going forward. I'd now like to hand over to Simon Jessop, our Chief Operating Officer, to discuss our operational highlights. Simon Jessop: Thank you, Stu, and good morning. The Kalgoorlie production center delivered a lower-than-expected quarter driven by 2 main issues. The first issue was the previously announced partial suspension of mining at our Kalgoorlie operation. A new escape way was mined and installed over 9 weeks. Mining at Kal [ ops ] from mid-December has returned to normal operations. The second major issue was a lower-than-expected processing outcome at KCGM. The mill underperformed all quarter on throughput volume both rate and run time with the primary crusher failing in December. Since the fifth of January, the crushing circuit has performed in line with normal expectations and we have crushed over 700,000 tonnes in 20 days versus December's full month crushing performance of 600,000 tonnes. KCGM's total mining performance was an outstanding result with 207,000 ounces mined in the quarter, a new record for the site and a Northern Star Resources ownership. Open pit total material movement was $22 million for the December quarter and $45 million for the first half at the top of the 80 million to 90 million tonne annual guidance range. The open pit for Q2 mined 163,000 ounces at 1.5 grams per tonne, with Golden Pike's contribution of 117,000 ounces at 1.7 grams per tonne. The KCGM underground operation developed 8.7 kilometers for the quarter and mined 819,000 tonnes of ore. For the first half, the underground ore mined was 1.55 million tonnes above the annualized target of 3 million tonnes per annum. Due to the processing throughput issues, KCGM finished the quarter end with 1.3 million tonnes at 1.9 grams per tonne and 81,000 ounces of high-grade ore on the ROM pad. CDO performed -- sorry, Carosue Dam performed in line with expectations for the quarter and the half. Let me close on the Kalgoorlie production center by again sharing that the KCGM mill expansion continued well over the Christmas, New Year period with a workforce of around 350 people. The project has ramped back up to 800-plus personnel and for the remaining 6 months for final ores on construction and transition into commissioning and ramp-up planning. With the project remaining on time for an early FY '27 ramp-up. Turning to our Yandal production center, both Jundee and Thunderbox experienced a challenging quarter and first half. At Jundee, the previously announced localized structural failure of the crushing circuit works have progressed well. It has taken longer than it, but it has taken longer than anticipated. The Coarse Ore Stockpile Tunnel has been excavated, rebuilt and reburried with ROM pad loaders feeding the bin again as normal. The full completion of the tunnel works is on track to be restored by mid-February. The Jundee team has actioned these works safely and professionally for an extremely large job. The Jundee Airstrip is also less than 2 weeks away from its first flight and remains on track for flight savings and less rain interruptions going forward. At Thunderbox, 2 issues prevailed for the quarter. The first one, reduced throughput due to tank issues, which also impacted recovery by 5%. Less mined ore from Aurelia and the haulage of the high-grade ore to the mill. On the processing impacts, all tanks were back in operation at the quarter end with rectifications planned for H2, which will see us cycle through the 7 tanks. Secondly, on Aurelia, the resource is not performing as modeled in mined in the high-grade areas of the ore body. We have already reduced the mining fleet from 17 trucks to 11 trucks in order to manage the required mining practice changes, improved mining and cost efficiencies. The Aurelia open pit strip ratio reduces from here on in. Aurelia has an estimated life of 21 months and will generate 215,000 ounces at 1.4 grams per tonne. Meanwhile, open pit mining at Bannockburn ramped up significantly with first ore being stockpiled ahead of milling in H2, providing another ore source close to the Thunderbox mill. Finally, turning our attention to lower gold sales was impacted by lower head grade of approximately 0.5 to 1 gram per tonne due to a combination of stock dilution and ore loss. Volume of ore was also approximately 30,000 tonnes less due to East Deeps span constraints on scheduled high-grade areas of the ore body. And we've also lost about 3 days in December due to extremely cold temperatures below 40 degrees Celsius. Early in January, we have seen an improvement in mine grades above 6 grams per tonne and an increase in stope ore volumes. Processing performance for Q2 was very good, with availability averaging 92% year-to-date. The recovery was 86% during the quarter, 5% higher than expected. Development continued to improve at Pogo with 5.2 kilometers achieved for the quarter, corresponding to a monthly average of 1,731 meters a month. The quarterly performance on Gold sold was impacted by a number of significant events across the portfolio, which has resulted in lowering our annual gold guidance between 1.6 million and 1.7 million ounces. We are in a much stronger position as we enter the second half of the year. KCGM and South Kalgoorlie operations have returned to normal. Jundee has some outstanding issues that are expected to be resolved during this quarter and Thunderbox is in improved shape and at Pogo, we are seeing the December improved head growth continue into January. I would now like to pass to Ryan, our Chief Financial Officer, to discuss the financials. Ryan Gurner: Thanks, Simon. Good morning all. As demonstrated in today's quarterly results, the company remains in a great financial position. Our balance sheet remains strong as set out in Table 4 on Page 10 with cash and bullion of $1.18 billion, and we remain in a net cash position of $293 million at 31 December. The company has recorded strong cash earnings for the first half of FY '26, which is estimated to be in the range of $1.06 billion to $1.11 billion. A reminder that our dividend policy is based on 20% to 30% of cash earnings. Although Q2 was a challenging quarter, all 3 production centers generated positive net mine cash flow with capital and exploration fully funded. Figure 8 on Page 11 sets out the company's cash and bullion movement for the quarter. The company recording $738 million of operating cash flow, which included the semiannual coupon payment on the notes of USD 18 million, approximately $30 million annual insurance premiums. Additionally, during the quarter, the company paid $370 million of income tax being the first half tax payments of $437 million, lower than the first half cash tax guidance. Major operational growth or capital investments include -- our KCGM open pit development at great Boulder and underground development at Fimiston and Mt Charlotte, which will enable us to lead production over the coming years and its Thunderbox operations open pit development at Aurelia and Bannockburn. In respect of the KCGM growth project, $180 million was invested during the quarter with major progress in structural and mechanical installation, including SAG and ball mill installation progress. Electrical and piping installation is advancing with final construction fit-outs to follow throughout the second half. The project remains on track for commissioning early FY '27. And our Hemi project, $20 million was spent advancing process plant design, securing long-lead-time items and progressing on non-processing infrastructure. On other financial matters, T-2 group all-in sustaining costs included approximately $20 million of additional costs associated with the disruption events across Jundee cooperations and KCGM during the quarter. Half 1 depreciation and amortization is at the top end of the guided range of $8.75 to $9.75 around and is expected to lower over the second half the forecast increase in production. Noncash inventory charges for the group in the December quarter are a credit of $93 million, driven by lower grade stockpile build and higher ore stocks at KCGM and stockpile build at Thunderbox. From a tax perspective, the update to second half production, we lowered our second half group cash tax forecast to $230 million to $270 million. No change to our estimate quantum or timing for landholder duty for the De Grey and Saracen transactions. And the company continues to unwind its hedging commitments with 158,000 ounces delivered during the quarter. At 31 December total commitments equaled 1.1 million ounces at an average price just over $3,300 per ounce. I'll now hand pass back to the moderator for the Q&A session. Thank you. Operator: [Operator Instructions] Your first question comes from Levi Spry from UBS. Levi Spry: Stu and team. A couple of questions, I guess, on the CapEx, KCGM and then Hemi. Just so I understand the increase in CapEx at the mill expansion. Is that about more people? Is it about better people? Or is it about paying more, just so we understand, I guess, where the industry is at? Stuart Tonkin: Yes. Thanks, Levi. Look, it's targeted and deliberate and it's to ensure we meet the commissioning timing of that FY '27. So it's more people. And it's recognizing, I guess, the productivity we've got out of the team that are there today and is not saying they're good or bad. It's just saying when everyone's working in that congested space. We haven't made the progress on some of those things. So we were targeting around 600 people throughout the build. Simon just spoke to, we retained about 350 over Christmas, which would normally be in a shutdown. And then we've also run some back shift, night shift throughout the last 6 months and also we've come up with 800 head count working on that project. So it's targeted deliberate. It's at a cost. Obviously, there's an uplift of about $110 million throughout this year, of which a large part of it is being spent in the first half. So there's a second half kind of tail out of all the electrical and cable runs. But really, it's important that we meet the schedule on time and get that commissioning and get the cash box working. Levi Spry: Yes. Got it. Thanks for the extra detail. And so could we have a little bit more, I guess, on that guard chart -- so what is actually involved between, I guess, now and what activity specifically? And then I guess, what is required to hit 23 million tonnes in 2027? Stuart Tonkin: Yes. So really, the commentary is above that. We talk about in the bullet points there, this is on Page 5 of the quarterly. Obviously, 90% of all the structural steel and 80% of all the mechanical installation is complete. So we're back to the timing in electrical cable runs and sort of testing and powering those things up. Obviously, there's an element of putting it all in place before you do any of that live testing and it's really, basically the final coupling of all the pipe work. So -- we're well through the bulk of it, and it's in the right order. Nothing, I guess, is behind, but we're recognizing the work ahead just needs that additional waiver, which we're working with the contractors to source, and we were doing just prior to Christmas. So December, we started to increase numbers. We continue with what we can call it a skeleton crew, we certainly 350 people throughout the Christmas period. But really, it gets down to that final tie-in all the pipe work, pressure testing the cables, dead testing cables until we're ready to energize things. So yes, it's -- it will be ready to power up in June. The question is whether we want the disruption. In the back half of June, typically, you won't get the extra gold sold, because it all has to come through the float circuit now through concentrates, et cetera. So we may be bringing up in parallel. But ideally, in July, the mill is running. The 23 million tonnes represents a 27 million tonne per annum plant turned on and then deliberately turned off to do retalking of balls and just visual inspections on wear rates, et cetera. That's deliberate planned downtime throughout the year, which derates from 27 million tonnes to 23 million tonnes. But when it's running, it will run at the 27 million tonnes per annum. I think that answered part of your question. Levi Spry: Yes, that's good. And just 1 more on Hemi. So what permitting is still a pretty complicated subject for us. Can you just give us a bit more detail around what stages up to now, what happens next? Stuart Tonkin: Yes. So essentially, you got approval is still going through their processes. This financial year, we're expecting there's no real way to fast track those processes with the regulators, and it's prudent that they take the time. In parallel to that, we're working on the water trials and dewatering testing and that's the engagement we're having the traditional owners and the like presently, but all those things are progressing as normal. It's very -- as you imagine, weather-wise, it's the hot season. So laying pipe and doing works is a bit of a derated activity as we used to do in the Northern Territory. Northern Pilbara gets pretty hot this time of the year. So there's some of that activity, we just sensibly laying pipe and getting the balls ready for that throughout these months. But fundamentally, we're working towards the end of this calendar year to be in a position to be putting numbers together for FID. The extra expenditure is about the optimization work, just continually testing the flow sheet and making sure we've got options and that when we put the data into the FID papers that we've thoroughly thought of all those combinations. And one of the things you just keep looking at, you keep finding options and can find better work. So they were using the time wisely in that regard. Operator: Our next question comes from Ben Lyons from Jarden Securities. Ben Lyons: Simon. I just wanted to revisit the underlying reasons behind the recent changes to production, all-in sustaining costs and I guess, also CapEx guidance for the 3 consecutive downgrades over the past couple of weeks. And maybe at the same time advocates some greater disclosure from the company as well. So one of the reasons, for example, that was given that the production downgrade was the underperformance of Thunderbox, which has now sort of pitched to the 250,000 ounce mining center rather than a 300,000 ounce mining center. And specifically, those lower grades you're seeing originate from the Aurelia open pit, so I was just waiting for the 600-page resource and reserve report. And I just can't find anywhere like a simple tonnage, grade and strip ratio outline for those key ore sources like Aurelia, like Bannockburn for, et cetera. And the same goes for like Carosue Dam, Jundee, like the actual ore sources that sit behind these mining centers. So the comments made by Simon in his introductory remarks are helpful, gives us some of the pieces, but just like to have a really basic outline of the ore sources that sit behind the actual mining centers or at the very least a detailed Investor Day, where we can do some deep dives on these assets as well. I just think that would be helpful to better assess the predictability of this business and the reliability of the forecasting that we received just a bunch of numbers from you guys at the head office level, just to go deep on these assets. So am I missing anything in that 600-page resource report that sort of helped with these sort of basic metrics? Stuart Tonkin: No, but I'll take that as a comment, not a question, Ben. Ben Lyons: Yes. Okay, cool. Okay. The question then you've got a fair bit of scrutiny on your continuous disclosure obligations. Why wasn't the crusher failure at KCGM immediately disclosed to the market. I would have thought that was a significant event in itself. To paraphrase your response to the ASX, it was basically -- we didn't get the data until the first of January. How regular are your updates from site to the head office in Subi. I would have thought that you're getting daily updates on simple metrics like production and sales, but -- is it weekly? Is it monthly? I'm sure it's not quarterly, sure, you didn't have to wait until the first of January to now you're going to downgrade? Stuart Tonkin: Ben, there's a very comprehensive response to an aware letter from AISC. A very simple one-page disclosure around production on the second of January and a very thorough response to the AISC's in regards to the query. I think that addresses it. Ben Lyons: Yes. Okay. I mean I've read it several times, but from my perspective, I don't think it's satisfactory like would have thought you get real-time data on sales at least weekly or monthly, not quarterly, but happy to go and have [indiscernible]. Thanks. Operator: Your next question comes from Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: Ryan, just one on the updated cost guidance. Look, obviously, good to see the revised cost guidance coming in line with the prior top end considering the gold price increases and royalties associated with that. But if I break that down nominally, you've effectively tightened the range and the midpoint of cost is pretty much unchanged despite highlighting earlier this month that the operational impact. So we're going to have a number of cost impacts. So I guess the question is, what operational and sustaining costs, if you'd be able to defer into next year to be able to keep that cost guidance flat? Stuart Tonkin: Yes. Thanks, Hugo. I think the key thing is that the one-offs and the events are behind us, and we know the impacts and effects of those events, they'll finite, they're complete. Obviously, we've disclosed on some of the continuing things are in the week 1 of January that are behind us now. So really, this is the reset and the view of the forecasting of where the sites are operating at and the cost base has allowed us to narrow the guidance range because we've got 6 months ahead, not 12. So that's really where that is at. It's a much stronger second half. If you really look at the what the second half will deliver a significant step up from quarter 3 in production. You're seeing our realized gold price, it's improving, but it's still a long way off spot because of the hedges, which are -- which are unwinding rapidly and then obviously delivering into a higher spot. So coupled with increasing production, the gold sales being the denominator or all-in sustaining cost the exposure to that spot by the cash generation over the next 2 quarters and the run rate exiting this financial year for another structural change of Fimiston being turned on, positions the company into a very strong position. So it is -- yes, it is future telling, it's forecasting, it's looking at what's in front of us. We would ask people to isolate quarter 3. We have provided a very detailed information around the events that were unforeseen or some are out of our control, some are, were risk balanced around maintenance events. And ultimately, they have been addressed. The team have done an absolutely fantastic job managing through that period and working on those items. And that gives us the confidence to place the forecast. On the full year, yes, there's a step-up in cost, there's a step down in production. But when you look at the second half run rate, it's a very, very strong healthy business in that regard. And then it can't undo what's happened in the first half, but ultimately, we've got a very confident outlook. Hugo Nicolaci: Obviously, taking sort of first half and the unforeseen impacts as they were, but sort of just to dig into that further, I mean, your AISC range is sort of now $4.4 billion to $4.5 billion for the year. It was $4.25 billion to $4.6 billion. You've highlighted $40 an ounce of that or roughly $64 million at the low end is from royalties. So where some of those other cost savings come from though, are sort of looking forward? And should we expect those costs to end up into FY '27? Ryan Gurner: I think it's Ryan, Hugo. I think the costs are there, obviously, in the immediate term, all costs are fixed. So you're right to do the math on the overall, I guess, checks written in the business. What we're saying is as Simon was talking to when he spoke, a lot of these disruption issues that cause production issues are behind us. We're confident in the grade outlook at Pogo, Jundee, Simon spoke about the high-grade material sitting on the ROM pad at KCGM, you've seen the grade list there. So -- and then also the throughput confidence in the second half. So they all contribute to keeping it aligned and narrowing that cost range even with those, as you say, expected royalties. We're confident that in that range, '26 to '28 land us with our lower production profile. Stuart Tonkin: Any discretionary spend will be shaft and pushed because it's not only is it dollar millions, but as far as activity and distraction, ensuring that the team have a very clear simplified sort of activity list. That's what we'll do. So does that go push away into FY '27, we'll assess it at the time. We'll assess the balance of risk around planned versus unplanned maintenance, et cetera. But there were items that were budgeted that we will just strike off the list that likely will not get spent in the second half. Hugo Nicolaci: Yes. Got it. I guess the question was what are those items and how much of that spend. But maybe I'll pick that up later. Next one, just around the upward revision of Hemi CapEx. You've called out a more detailed review of engineering design work. So why CapEx this year is $25 million higher, but studies were originally to support an FID by the end of FY '26. So is that just a bring forward of detailed engineering works that you would have otherwise had to do? Or were those not initially detailed enough for an FID timing as originally planned? And I guess, how should we consider that in the context of, I think, market expectations for Hemi CapEx now sort of $2.5 billion. And should we continue to expect maybe there's a bit of creep there? Stuart Tonkin: Look, I would say reset on the capital -- the overall CapEx number, saying if we're spending extra this year, it comes off the overall CapEx number. It's certainly work that's progressing. It would be required, and we would be doing, but I'd also consider work that may have been spent where we consider, okay, that's redundant, and we replaced a bit new study work that's got an improved operating outcome or an improved flow sheet outcome. So I think we've got to be a bit careful of saying extra money spent this year comes off the total. There are certainly items that were long lead items invested in spend forward that we'd also say perhaps we'll resell and repurpose and replace with larger simpler kits. So that's -- that's been something we've done with the time. That will all come in a final kit paper on explanations in that regard. There's not material structural changes to the overall flow sheet. What we've looked at is synergies with the rest of our operations to have common parts, common spares, which wasn't considered, when that's a stand-alone asset in a single asset company. We have looked at it through the lens of Fimiston mill expansion. Some items that could replicate, save, on the engineering because you've already done it, but we've actually got to spend for the parts to get common commonality, which will derisk us in the future running to sort of sister plants. Operator: Your next question comes from Matthew Frydman from MST Financial. Matthew Frydman: Stu and team. Happy New Year. A couple of questions from me, please. Maybe firstly, can I take the thrust of Ben Lyons' comments and maybe turn it into a question that hopefully we can actually answer on this call. In the release, you say you've reduced CapEx spend at Pogo and Kalgoorlie and increased spend at Yandal to support the regional hub strategy. Can I just ask what is the regional hub strategy at Yandal? Can you summarize it in terms of production ounces, life unit cost and how much capital needs to be spent to deliver it because I'm not really clear on any of those things, and it sounds like maybe there's other analysts that aren't clear either. So that would be appreciated. Stuart Tonkin: Okay, Matt. So there's a 3 million tonne per annum plant in the north called Jundee and there's a 6 million tonne per annum plant in the South called Thunderbox. Higher grade ore will go to Jundee, lower grade ore will go to Thunderbox. Jundee will sit at around 300,000 ounces per annum. Thunderbox will sit at around 250,000 ounces per annum. So the hub, which is called Yandal will produce at about 550,000 ounces per annum. That's different to the 600,000 ounces we have set we've articulated that 550,000 ounces is probably the happy place that, that will be at. It might oscillate, where Jundee does 250,000 ounces and Thunderbox does 300,000 ounces. But overall, that Yandal belt we're saying can operate at around 550,000 ounces. We've got the reserve statements. It's got all the trades and ore sources, [indiscernible], Aurelias, Wonder, you've got all the data that sits behind that. That's fundamentally what more than what any company is providing and giving to the materiality of what that asset provides for the group. As the key aspect of those assets, but we're not liking at the moment is the costs. So the aspect of the economies of scale from expanding Thunderbox was to materially improve the all-in sustaining costs as you see growth at Jundee was to keep the costs down. And you can see the cost we handle in the quarter and the lower ounce profile are very high. So that's in our head to say, what's the overall outlook life. We've got to improve this to ensure that its contributions as it has been for a decade in our business, foundation asset. We can provide more view and color on what those can be. But we're still building new high-grade mines, and the development rates are still contributing towards that. So pulling out a really up and talking about decimal points of grade of something that's not even providing 1/3 of the feed to Thunderbox for a number of years is immaterial. And I want to focus on that. It's immaterial in the... Matthew Frydman: I mean I didn't specify Aurelia and you've answered the question on -- in terms of ounces and life. But as you point out, I think probably the gap in understanding is really more around unit cost expectations and also I guess, the capital required to get there. So I suppose the question that probably the market has is what's the quantum of capital are you going to spend in order to get the cost to a certain point? And I guess what does that look like? And I suppose we want that out load how do you make those investment decisions, when it seems like we don't have a good visibility on what the target is around cost and total quantum of CapEx? Stuart Tonkin: So we provided production and cost guidance on an annualized basis in July. That's what we've done for a long time, and that's what we keep doing at Yandal. We put in a base plan that's getting into the higher grade at Jundee, but you'll see some of the grade restore. All the commentary that sits around this asset shows the growth of Wonder down South, giving better grade into Thunderbox as well as new Bannockburn operation you're going through the stripping at the moment, getting to primary ore. Like the question you're not going to answer on a quarterly call, let's put it that way. Matthew Frydman: No, that's fine. I guess the theme there is that I appreciate that you guys give 1 year guidance, but clearly, the impact to the market's perception of the company from arguably some of these short-term disappointments from quarter-to-quarter. Potentially that impact is exacerbated because we don't have a multiyear sort of longer-term picture for some of these elements of the business. So obviously, anything you can do over time to just shown a light on that is appreciated. But I'll move on to that line of questioning. Stuart Tonkin: Before you do that, the point is in KCGM in the half 1, it's really, really changed and it's the mill throughput has really impacted the overall ability to deliver. All the other sum of the small parts on a materiality threshold are negligible. But the actual... Matthew Frydman: I agree to you that's why I'm making the point that maybe you only give 1 year guidance is exacerbated. Stuart Tonkin: Please let me finish this answer. Everyone needs to focus on that asset KCGM and there's 82,000 ounces sitting on the ROM of high-grade ore ready to put through that plant. And the plant -- the new expanded plant will be commissioned in less than 6 months' time. So if everyone wants to weave into smaller items across all the assets, we recognize that it was a poor quarter. We understand the elements that contributed to that. There were meaning and we understand what we've done to rectify it and what the outlook is going forward. I pick up the frustration from the questions, and I'll pick up the frustration from investors or from analysts, who can't model this. Quarter 2 is behind us, and the second half outlook is strong, and we will work very hard to deliver that and where we position ourselves into FY '27 in an excellent position. So I just want to reinforce we're getting into minutia, which is behind us and doesn't matter on a materiality threshold. So think about the things that make KCGM is a key asset -- that's where the focus and effort is today. It's not on the satellite small life short things that are also generating significant cash flow that are actually contributed towards spending the capital at our long life by margin assets. Matthew Frydman: Thanks for the answer. Apologize for cutting you off to you. I mean I would say that the Yandal hub is still going to be 1/3 of your business. So I'm not sure that it's characterized as minutia, but anyway, thank you for your response. The second question is just on the KCGM new expansion, I guess, increases to the capital guidance there. You talked through in some detail around where that's going and why it's important to, I guess, the schedule -- is there a risk there that, I guess, throwing more money and people doesn't really solve the productivity issue you're having? I mean you talked about how it is a fairly condensed space there that your teams are working in, I guess, what the question is why are you confident that spending more is the right approach versus just taking longer to complete the project? Stuart Tonkin: So it doesn't solve the productivity issue. That's why you add heads. Add head count because you can't achieve with the 600 people, so you tried 800 at it. That's the answer of productivity and you're paying more to get the same thing done. That's why there's $110 million extra spend in this year to deliver that. The most important part is that to plant on getting all through it and step changing the asset's cost base and its revenue. That time is of the essence with KCGM, not capital sadly, at this point. It's not sensitive to capital. We don't likely spend $110 million, unnecessarily. We want to see this plant operating and starting to contribute. Simon Jessop: Just to add a little bit to that. So during the next -- really, the next 4 months is where we've got the peak banning. So we've ramped up, as you've said, above what was originally the plan and that sort of progression started during Q2 in terms of accelerating the work. We've got still many work fronts at the moment. So we still have that opportunity to put those people in there 3, 4 months from now, those work fronts start to wind down. And we're very, very focused on the critical path, which is Stage 1, which is first ore into the new mill. So while we still got the opportunity, we've taken that and the project team has to put the extra people in there get the work actually completed. And that's the picture right now, which gives us the ability to remain on schedule for FY '27, or like, ready to go in sort of June. So if we didn't put those extra then, the work front start to dry up, and then it genuinely will be delayed. So the project is in really good shape. It's focused on Stage 1 and that is first ore into the mill. The Stage 2 is moving Gigi back down to KCGM. That can happen in the months after we're milling ore. Operator: Your next question comes from Daniel Morgan from Barrenjoey. Daniel Morgan: So obviously, a key theme of the call has been throwing a lot more bodies at the project to keep it on schedule. I understand that makes sense given the gold price and the project you're trying to keep on schedule. But -- do you still expect that July turn on? I mean is the Gantt chart, I imagine the critical path, the turn on date, is it not shifting back? Is it not wise given recent guidance and market disclosures is not wise to maybe start to push market expectations of the schedule of the turn on back? Or is this the expectation that this extra budget will keep the schedule to July? Stuart Tonkin: It's quarter 1. My expectation is early quarter 1, sales there will be parallel running up at the plant. This isn't about market expectations. This is about our disclosures had a 3-year build on time to the budget we're saying and overrun on that expenditure because we're growing more labor at it. We're not here trying to gain this, Dan. We're here explaining, where we're at 2.5 years into a 3-year build. And as Simon has got the confidence in discussing as well, we're very, very pleased with the progress they've made. And we're working very closely the contract that it's constructing it and looking for any opportunity to get this done, not only on time, but earlier. And part of that combined solution is around adding head count. And we don't just add it, so they're standing around holding stop signs. There are people there doing productive work. That's contributing towards that deadline. So yes, that's what we're working towards. It's pretty exciting. I think the team that got around the plant at Diggers and Dealers saw a massive step change year-on-year, if you went there again today, you'd say, well, why can't you turn it on now? That's what you visually see and it's no different than you're building a house, wait for your carpets and your fly screens. All the cabling, all the tiling, all the final elements of that. It looks like it's been finished, and it looks like it's sitting there doing nothing, but it's that fine or final finishing, we're sure that when we get it turned on, the quality is met and the work is done so that we don't have to bring it down or we don't have to have those lessons that we learned out of the Thunderbox expansion. We endured 12 months of ups and downs and rectifying some of those things. We'd like to see all that addressed prior to turning and commissioning this on. So that's the way it's underway for the second half. Daniel Morgan: And I guess, obviously, there's a lot of focus on the call and obviously, concern about various aspects. But maybe pivoting and changing tack a little bit like just over the last 6 months or so, what is changing in the business that you can see that from a very positive sense, like what is something you'd rather like to invest is where there's been a change a foot or something that's getting better or be it exploration, be it a site? What is changing in the business in a positive sense that you could highlight to the market? Stuart Tonkin: Yes. I mean, I'd recognize the underperformance in share price against the peers, global majors, we acknowledge that. We acknowledge that there's reflection on short-term production misses -- cost misses, and we've been very clear on the events that have contributed to that and what we've done to rectify that. Just look at the run rate of second half in its own right, very, very strong uplift in production. Look at the reducing hedge book and realized gold price that we're growing the exposure to spot. And the step change of the business as a KCGM mill expansion turns on in FY '27 and the uplift, again, step change in production profile for the group. They are the things that are psychoses to us that the opportunity for investors now to get in and get positioned, that's the confidence in the outlook. And I see, to your point, people are focused on hearing our concerns, they're looking at relativities. That creates the opportunity to understand the long-term value creation that all the stars doing. Operator: Your next question comes from Milan Tomic from JPMorgan. Milan Tomic: Just a question on the Hemi permitting side of things. Can you provide maybe a little bit more detail as to how that process is progressing? Has there been any issues specific issues that are being flagged by the indigenous and Asian groups in that area? Or yes, just wondering, if you can give a bit more color as to any concerns that might have been raised so far? Stuart Tonkin: No, no major concerns there. Milan. It's really the dewatering trial is something we've got to commence, which will likely be at the start of quarter 4. Ideally, we would have done -- started that in quarter 2. but there was a delay in getting all that infrastructure in place through the hot season. So once that's in place, and we've got a plan that's acceptable, we'll commence that trial. It takes about 3 months, and that feedback loop goes into our [indiscernible] license for dewatering of the pits preproduction. So that's probably something that has slipped. It doesn't affect the overall state and federal EPA approval licenses, which are continuing. But ultimately, that's probably the operational part that we would have liked to have seen commenced pre-summer. And that's going to start March, April, likely we start for the modified scheme that we've negotiated. We're negotiating with traditional owners there. Milan Tomic: Yes. And just in terms of the work that you're doing on optimization, any major changes regarding mine plan sequencing, et cetera, that you could share that's kind of been different from how that project was initially envisaged to be? Stuart Tonkin: Yes, it's the scheduling. So what we're going to look at is First Gold pour and that deadline, even though if there's a delayed timing of starting to understand, okay, what impacts through to that. But the actual flow sheet generally, we've looked at lots of different scenarios and options and defaulted back to what that primary flow sheet is with the high-pressure grinding rolls at the start and to the SAG mills is still sound. Resizing some of the gear mills, et cetera, is probably something we've done, the ability to expand later on a more simplified plant. But all the auto class and late already in trying to be built and long-lead items like that are constructed. So that's all sound. Mining sequence, again, just around water management, our borrower kits and getting that prepared. That's -- we've just got options and scenarios there as opposed to the 1 plan that previous owners had -- we just got a number of scenarios there that could go different paths to get to the same results. So that's just what the team is doing, while the approvals are underway, iterating what they do best as the engineers. Milan Tomic: And maybe if I can just squeeze 1 more in on Jundee. To get it to 300,000 ounces, you have to get quite a sizable uptick in the grades compared to the last couple of quarters at least. Can you maybe just shed a bit of light at how do you -- how are you getting that increase in grades? Are you moving into a high grade part of the ore body? Or is there something else that we should be considering there? Stuart Tonkin: A mix of primarily the throughput is not Jundee. So yes, the average grade delivered to the plant needs to be there. It's been there before. We've certainly got isolated pockets that are there different grades and different mining sequences. We've just added a base plant, which allows us to go back up to the upper levels, regional high-grade areas and take those high-grade zones that were sterilized because they just open voids. There was no paste in the mine in its history, 30 years. It's never had any paste backfill, but we've got that base plant installed and starting to fill those voids. We can go back and take those high-grade pillars out of those upper levels. So there's areas like that, new Cook-Griffin mining zones contributing better grade. So all of those things contribute, but overall, it is a grade focus rather than a throughput of focus. Operator: Your next question comes from Adam Baker from Macquarie. Adam Baker: Just 1 follow-up for me. Just on Hemi. I noticed you -- you noted that in May '26, you're going to have the optimized resource and reserves. I'm just wondering is there anything that we could be saying to see a quantum change in the resources or the reserves noting changes like gold cost assumptions, et cetera. And likewise, for reserves around cutoff grade, et cetera. With your work integrating this into the Northern Star reserve and resources? Stuart Tonkin: Yes. Thanks, Adam. Look, I won't preempt things with R&R, there's still a fair bit of work to occur in the coming months leading into that, but we're basically release Hemi in a Northern Star view of [ R&R ] with the group's [ R&R ]. I would say Hemi had a high gold price assumption in what was previously released. So we'll try and align with the group overall, where we set those gold prices for resources and reserves. They're almost irrelevant in regard to where the current spot price is and watching what peers are doing in gold price assumptions around resource and reserves. But it does in turn reflect back to cutoff grades and how these overall picture valued and can you actually merge, mold our pits together, take our saddles and make a bigger or larger overall lower-grade resource economic. That's what we've got to consider. But I would just say that we've probably got a stricter more scrutinized view around what's in and what's out. So if anything, a more robust scrutinize on that resource is more likely than material growth. If you think about the drilling and the data that's occurring there, all we've really done recently is redirect some drills to do some treating. We haven't done any real growth drilling, since we're taking control of that heavy region. Operator: [Operator Instructions] Our next question comes from Mitch Ryan from Jefferies. Mitch Ryan: Stu, and team. Stu you made a couple of comments with regards to Hemi. You called it a sister plant to KCGM, and you talked about taking the opportunity to resize mills. Can you -- does that potentially mean a change in the scope of mill size relative to previously disclosed [indiscernible] numbers? Can you -- can you help us understand that? Stuart Tonkin: Correct. Ideally, things like the crusher, things like the mills ideally are identical to what we have at Fimiston and that's been currently our thinking -- there's already some mills purchased they're already sitting in a shared package stuff in or Port Hedland, literally seen them unloaded off the truck. I look at those and say they'll do the job of a 10 million tonne per annum plant to get to a 15 million tonne per annum plant, I need a third one. What I consider instead of doing that, having 2 large mills today that match Fimiston, answer is usually, yes. So be the sort of considerations we're doing to say, irrespective of earnings and hardware that's sitting there in a shared, would we start again in, say, 2 large mills that match Fimiston, plus the logic of that. In the scheme of reselling these things. There's options that are there in a scheme of redundant expenditure, you can repeat the costs because you haven't installed them and they're ready to freight. That's the type of thinking that if you're in a hurry to build the mill, they would have got built and then when you want to expand, you add a new mill. When we look at that now with the time, so well, let's just not go build something because we have to parts. Let's consider what we can do, if we had a clean sheet that's the example. One is the crushing circuit, absolutely take the replicate design from Fimiston and say, is that something you could install here that's oversized and matches parts, et cetera, as opposed to going through the -- something that's been designed specific for the throughput rate of Hemi. And we go to something that is -- this is a plant to Fimiston -- that means, if we have issues like Simon had in December at KCGM, we could be fast tracking the knowledge and the skills and the parts across the business every 3 or 4 years would happen at 1 of those large crushing units. Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks. Stuart Tonkin: All right. Thank you for joining us on the call today. And I appreciate the interest and it's been a busy day for everyone, but looking forward to a strong second half and growing from here. Appreciate it. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Greetings. Welcome to the Northpointe Bancshares, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Brad Howes, CFO. Brad, you may begin. Bradley Howes: All right. Thank you. Good morning. Welcome to Northpointe's Fourth Quarter 2025 Earnings Call. My name is Brad Howes, and I'm the Chief Financial Officer. With me today are Chuck Williams, our Chairman and CEO; and Kevin Comps, our President. Additional earnings materials, including the presentation slides that we will refer to on today's call, are available on Northpointe's Investor Relations website, ir.northpointe.com. As a reminder, during today's call, we may make forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures and encourage you to review the non-GAAP reconciliations provided in both our earnings release and presentation slides. The agenda for today's call will include prepared remarks, followed by a question-and-answer session and then closing remarks. With that, I'll turn the call over to Chuck. Charles Williams: Thank you, Brad. Good morning, everyone, and thank you for joining. As we report today's results, I can't help but reflect on an incredible journey since we went public early in 2025. Prior to the IPO, we ended 2024 with total assets at $5.2 billion. Today, I'm proud to report that we've grown to over $7 billion in total assets, driven by tremendous growth in our Mortgage Purchase Program or MPP business. For 2024, we earned $1.83 per diluted share with a return on average assets of 1.08% and a return on average tangible common equity of 13.94%. For 2025, we increased our earnings per diluted share by 15% to $2.11. We also improved our profitability metrics significantly with the return on average assets of 1.33% and a return on average tangible common equity of 14.43%. The improvement in performance drove an increase in tangible book value per share over the prior year. When you add back the impact of the dividends paid, our tangible book value per share increased by 13.9% on an annual basis. During the IPO, we laid out our vision for Northpointe with an ambitious plan to grow the bank, generate positive operating leverage and strong shareholder returns. Fast forward 1 year, I'm pleased to report that we did exactly what we said we would do, and I'm proud of how well our team has executed on Northpointe's strategic direction. We've delivered robust balance sheet growth and consistent earnings throughout 2025. This was driven by sustained momentum and strengthened results across each of our key business lines while maintaining a strong credit and compliance culture, building out key roles in our leadership team and investing in new technologies to streamline efficiencies and lay a foundation for scalable future growth. Before I turn the call over to Kevin and Brad to dive into the details, I'd like to take a moment to share a few highlights. During 2025, our loan growth was very strong. MPP balances increased by over $1.7 billion from the prior year. We also increased participations in that business, which helps drive additional fee income. Our first-lien home equity lines, which are tied seamlessly to a demand deposit sweep account, which we call All In One loans, increased by $121 million from the prior year, which is a 20% annual growth rate. We also made good progress on the funding side of the balance sheet, adding new relationships to help bolster core deposits and lower our wholesale funding ratio. Noninterest income increased by $18 million from 2024, driven by solid performance in our residential lending channel. Residential mortgage originations increased by 20% to $2.5 billion for 2025, which is above industry results. This increase was largely attributable to the success of our mortgage originating professionals, including the new lenders that we've added over the past year in our retail channel. It's also attributable to higher refinancing activity, specifically within our consumer direct channel, which occurred later in the year as mortgage rates declined slightly. I'd like to turn the call over now to Kevin to provide more details on our business lines. Kevin Comps: Thanks, Chuck, and good morning, everyone. On Slide 5, we highlight our MPP business, which is our version of mortgage warehouse lending. We utilize our proprietary state-of-the-art technology stack to offer purchase program to mortgage bankers nationwide. As Chuck highlighted, we have experienced tremendous success over the course of 2025 in that channel. Average balances increased by over $410.2 million from the prior quarter. Period ending balances increased by $60.1 million over the prior quarter, which is in line with our guidance. Keep in mind that these balances are net of any MPP balances participated out. As we've reiterated on prior calls, participations remain an important component of our overall strategy, allowing us to manage the balance sheet and expand net interest margin while driving higher fee income. At December 31, 2025, we had participated $457.0 million in MPP balances to our partner banks. That is up from $37.5 million at September 30, 2025. Let me break down our growth a bit further. First, in the fourth quarter, we increased facility size for 3 existing clients, which totaled $50 million in additional capacity, bringing total increases for 2025 to 28 clients for $1.2 billion. Second, we brought in 4 new clients during the fourth quarter, which totaled $45 million in additional capacity, bringing total new deals for 2025 to 29 clients for $1.8 billion. And third, our overall utilization of our existing clients remained strong in the fourth quarter, averaging slightly over 60%. We continue to generate strong returns on the MPP business with average yields of 6.98% during the quarter. If you include fees, these yields increase to 7.22%. Average yields were down 12 basis points from the prior quarter as about 40% of the MPP portfolio reprices immediately and the remainder reprices on the 15th of each month. Turning now to Retail Banking on Slide 6. I'd like to highlight the results of the 3 main businesses within that segment. Starting with residential lending, which includes both our traditional retail and our consumer direct channels, we continue to perform well and take our share of industry volume. We closed $762.0 million in mortgages during the fourth quarter, which is up from $636.6 million in the prior quarter. Mortgage rate lock commitments and applications both decreased slightly from the prior quarter, driven by normal seasonality in the purchase business, offset by an increase in refinance activity. During the fourth quarter, we sold $665.6 million, which represents approximately 87% of total loans closed in the quarter, in line with prior quarters. Of that saleable production, 65% was in our traditional retail channel and 35% was in consumer direct. The volume increase within the consumer direct channel was attributable to the increase in refinance activity, which started in late third quarter and continued into fourth quarter. We sold approximately 79% of the saleable mortgages servicing released in the fourth quarter, which is consistent with the prior quarter level. Additionally, 48% of our overall production was purchase business in the fourth quarter, which is down from 72% in the third quarter and reflects the increase in refinance activity, which began in September. We continue to look for opportunities to create additional efficiencies using technology and hire new talented lenders within the channel. Over the course of 2025, we hired 34 new mortgage professionals to help us continue to grow the channel. In the middle of Slide 6, we highlight our digital deposit banking channel, where we feature our direct-to-customer platform and competitive product suite. We ended the fourth quarter with $4.9 billion in total deposits, up from $4.8 billion in the third quarter. The breakout of these deposits is detailed in the appendix on Slide 12. As Chuck mentioned, during 2025, we added 2 new relationships to help bolster core deposits and fund our planned growth. The deposits from these relationships can ebb and flow a bit during the year, but in aggregate, total over $500 million in new core deposits. The majority of our deposit growth compared to the prior quarter was from a new digital deposit relationship completed during the quarter. This drove $234.2 million increase in savings and money market deposits over the prior quarter. As we've highlighted on past calls, we will continue to explore similar additional sources of non-brokered deposits going forward. On right side of Slide 6, we highlight our specialty mortgage servicing channel, where we focus on servicing first-lien home equity lines tied seamlessly to demand deposit sweep accounts, including what we commonly refer to as AIO loans. Excluding the negative adjustment on the change in fair value of the MSR, we earned $2.2 million in loan servicing fees for Q4, which is up from $2.0 million in the prior quarter. Including loans we outsource to a subservicer, we serviced 15,200 loans for others with a total UPB of $4.9 billion as of the fourth quarter 2025. During 2025, we began specialized servicing for 5 new relationships and 2 additional securitizations. Lastly, turning to asset quality on Slide 7, which remains one of the largest risks for any bank. We monitor this risk very closely and spend a great deal of time analyzing our held for investment loan portfolio. Consistent with prior quarters, we are not seeing any systemic credit quality or borrower issues in any of our portfolios. What we are seeing is the normal migration of credit trends on the seasoned loan portfolio. Residential mortgage, construction, other consumer and home equity loans make up $1.8 billion or about 30% of our loans held for investment portfolio. This will continue to decline as we are not materially adding any new loans to these categories. Of these, approximately 88% were originated in 2022 or earlier. We had net charge-offs of $1.2 million in the fourth quarter, which is up from $977,000 in the prior quarter. Fourth quarter charge-offs represent an annualized net charge-off ratio to average loans of 8 basis points, which remains well below long-term historical averages. The charge-offs we took in the fourth quarter, similar to prior quarters, came from isolated occurrences. There were a handful of larger mortgage land and construction loan charge-offs this quarter, which totaled about $1.0 million. In the vast majority of these instances where we're dealing with a nonperforming loan, there is sufficient collateral to cover the unpaid principal balance, which usually leads to little or no loss. We saw that trend continue on the majority of the loans added to nonperforming status this quarter. Let me provide some additional details on our asset quality metrics this quarter. First, total nonperforming assets increased by $7.4 million from the prior quarter. Again, this represents normal seasoning and migration of our loans held for investment portfolio. Second, early-stage delinquent loans improved this quarter with loans past due 31 to 89 days, decreasing by $1.9 million from the third quarter level. Third, at December 31, 2025, MPP represented 54% of all loans, and we've continued to experience pristine credit quality in that portfolio. Fourth, virtually all our loan portfolio is backed by residential real estate, which typically carries much lower average loss rates than other asset classes. Fifth, our residential mortgage portfolio is also high-quality, seasoned and geographically diverse. At December 31, 2025, our average FICO was 747 and our average LTV when you factor in mortgage insurance was 71%. Additionally, our average debt-to-income ratio was 35%. I'd like to now turn the call over to Brad to cover the financials. Bradley Howes: Great. Thanks, Kevin. Last quarter, I provided preliminary 2026 guidance for many of our key drivers. As I go through today's slide presentation, I will be incorporating full year 2026 guidance into my commentary. Let's start on Slide 8. As a reminder, our non-GAAP reconciliation on Slide 14 provides details of the calculations and a reconciliation to the comparable GAAP measure for all non-GAAP metrics. For the fourth quarter of 2025, we had net income to common stockholders of $18.4 million or $0.52 per diluted share. During the last quarterly call, I provided an update on our strategy to replace a significant portion of our preferred stock with subordinated debt. That was completed during the fourth quarter, which helps optimize our capital stack and realize material annual cost savings in 2026. With that, we had $3.2 million or $0.09 per share in additional expense from the unamortized deal issuance costs, which was included in the preferred stock dividend line, and there is no tax impact on the expense. Excluding this expense, earnings per diluted share would have been $0.61 for the fourth quarter of 2025 and $2.20 for the full year 2025, which is in line with our expectations during the IPO process. Net interest income increased by $3.2 million over the prior quarter. This reflected growth in average interest-earning assets of $393.2 million, along with a 4 basis point improvement in net interest margin from the prior quarter. Our yield on average interest-earning assets decreased by 11 basis points from the prior quarter, but was outpaced by a 16 basis point decrease in our cost of funds. We benefited from a steeper yield curve with MPP yields only coming down about half the level of the 2 25 basis point Fed cuts in the fourth quarter. The decrease in our cost of funds was primarily driven by a 20 basis point reduction in the cost of interest-bearing deposits from the prior quarter. Our net interest margin was 2.51% for the fourth quarter and 2.45% for the full year 2025. For full year 2026, I'm expecting a similar range of 2.45% to 2.55%. My guidance assumes continued improvement in the mix of loans within the held for investment portfolio as well as 2 additional 25 basis point Fed funds rate cuts in 2026. MPP balances increased by $60.1 million over the third quarter level, but were net of $457 million in participations. As Kevin mentioned, we utilized participations to manage the balance sheet within our existing capital framework. For 2026, I'd expect our MPP loan balances to increase between $4.1 billion and $4.3 billion by year-end. I'm also expecting an additional $300 million to $500 million on average will be participated out throughout 2026. AIO loan balances increased by $31 million over the third quarter level. For 2026, I'd expect period ending AIO balances to increase between $900 million and $1.0 billion by year-end. Excluding MPP and AIO loans, I'd expect the rest of the loan portfolio to continue to decrease to between $1.9 billion and $2.1 billion by year-end 2026. This includes loans held for sale, which tends to vary based on the timing of loan sales. Kevin provided additional details on the higher level of net charge-offs this quarter. We had a total benefit for credit losses of $608,000 in the fourth quarter of 2025. This was driven primarily by an improvement in the economic forecast used in our credit model, most notably higher forecasted home prices over the next 5 years. We continue to experience a relatively low level of charge-offs compared to long-term historical averages. Our annualized charge-off ratio was 8 basis points in the fourth quarter of 2025 and 5 basis points for the full year 2025. I'd expect total provision expense of between $3 million and $4 million for 2026 related to the replenishment of net charge-offs and growth in our MPP and AIO loans. Any additional provision expense or benefit related to credit migration trends, changes in the economic forecast or other changes to the credit models would not be part of my guidance. Noninterest income decreased by $2.4 million from the prior quarter, reflecting a decrease in gain on sale revenue, partially offset by higher MPP and loan servicing fees. On the top of Slide 13, we break out our 3 fair value assets and their associated quarterly increases or decreases. These assets tend to move up or down with interest rates and are not part of my revenue guidance each quarter. On the bottom of Slide 13 and in our earnings release tables, we provide further details on the components of net gain on sale of loans. As you can see, the fourth quarter net gain on sale of loans included a $1.7 million increase in fair value for loans held for investment and the lender risk account with the Federal Home Loan Bank. Excluding these items, net gain on the sale of loans would have been $16.6 million, which is down slightly from the third quarter level on a comparable basis. For 2026, I am forecasting total saleable mortgage originations of $2.2 billion to $2.4 billion with all-in margins of 2.75% to 3.25% on those originations. My margin guidance is a blend of margins from our retail and consumer direct channels. The consumer direct channel has lower margins with an offsetting lower variable mortgage expense. For the year, consumer direct made up 24% of total saleable volume, driven mostly by refinance volume. My guidance assumes a similar volume mix for 2026. Keep in mind that these estimates do not assume any significant decrease in mortgage rates nor do they assume any changes to the current level of mortgage originators within the bank. I expect MPP fees to continue to increase from their current run rate to between $9 million and $11 million for full year 2026 based on the expected participation balances and continued growth in loans funded. Excluding fair value decreases, loan servicing fees were $2.2 million for the quarter, up from $2.0 million in the prior quarter based on the new servicing relationships and increase in loan service Kevin highlighted. I expect that quarterly run rate to continue to increase in 2026 with full year revenue between $9 million and $11 million. Noninterest expense was down $581,000 from the prior quarter, driven primarily by lower salaries and benefits, specifically bonus and incentive compensation. For 2025, total noninterest expense was $129.2 million. For the full year 2026, I'd expect total noninterest expense to be in the range of $138 million to $142 million. This increase in noninterest expense is more than offset by the growth in total revenue based on the positive operating leverage we have been able to generate. By 2026, expense guidance assumes approximately $1.0 million in additional salaries and benefits expense from new roles in addition to the usual cost of living adjustment to base salaries. We also saw increased medical benefits expense in 2025, which we believe will somewhat abate in 2026. Turning to the balance sheet on Slide 9. Total assets increased to $7.0 billion at December 31, 2025. Kevin provided details on our funding and deposits this quarter. Our wholesale funding ratio was 64.6% at December 31, 2025, down from the prior quarter level due to the new core deposit relationship, which drove an increase in savings and money market balances. Looking forward, we'd expect to continue to fund MPP loan growth through a combination of brokered CDs, retail deposits and other sources of non-brokered deposits where possible. Our effective tax rate increased to 26.04% for the fourth quarter of 2025. This was driven by $500,000 in additional income tax expense related to the nondeductible tax rules for publicly traded companies. The effective tax rate for 2025 was 24.44%, and I would expect a similar level for 2026. Lastly, on Slide 10, we outline our regulatory capital ratios, which are estimates pending completion of regulatory reports. Looking forward, I'd expect we will continue to leverage additional capital generated through retained earnings to grow MPP and AIO balances. With that, we're now happy to take questions. Rob, please open the line for Q&A. Operator: [Operator Instructions] And our first question will be from the line of Crispin Love with Piper Sandler. Crispin Love: So just first, it's very fluid mortgage environment right now. But can you just discuss how the last several weeks impacted your guidance for 2026, if at all, mortgage rates down to their lowest level in 7 years -- several years. It seems like the administration is supportive. So curious on just how the recent landscape has impacted your 2026 view or at least near term for saleable mortgage originations and MPP loan balances? And yes, that's it for the first question. Bradley Howes: Sure. Crispin, this is Brad. I'll start and then Kevin and Chuck can certainly add to my comments. But I would say, pretty minimal impact from the last couple of weeks. When we do our forecasting, we're always looking at kind of a blend of all of the economic forecasts out there. If you look at Fannie [indiscernible] or Moody's, they do have rates coming down towards the tail end of next year to sub-6, I think. We were very encouraged, I think, to see the decline in rates, although it could be short-lived. We don't know what's going to happen in the next few weeks. Kevin highlighted kind of volume trends, we saw a nice pickup starting in September in refinance activity that helped drive some higher volume for us, and we were encouraged by that. But I'd say where we sit right now today, we need to see kind of a more sustained decline to really see a significant benefit to our P&L. Kevin Comps: Yes. I'd say just we always have the normal seasonality within our mortgage origination platform. Also, when you think about year-over-year, Q1 of '26 volume-wise, all else being equal, should be higher than Q1 2025 based on the current rate environment. Crispin Love: Got it. That makes a ton of sense. And then just for full year '26, what are you assuming for mortgage rates? Bradley Howes: Yes. So kind of coming down to -- again, this is predicated on sort of the consensus economic forecast for any of the kind of the 3 major sources we have for mortgage, but rates dipping to below 6% towards the end of the year, but sort of a slow drip over the course of the year with what would be kind of built into our base economic forecast. So really, I'd say not a ton of significant benefit from our guidance embedded in what we may see as optimism from rates. So that would be upside if we do see additional declines and it works further than we think or than our estimates are assuming, there'll be benefit or upside to our origination forecast. Crispin Love: Okay. Perfect. I appreciate that. And then just on your guide for the net interest margin, heard for '26, I believe, 2.45% to 2.55%. But can you discuss what's implied in your guide for the trajectory throughout 2026 just as you move through the year big picture, just based on the current rate outlook and your expectations? Bradley Howes: Yes. So we had a 2.51% margin in this quarter, in the fourth quarter of 2025. The guidance, I wouldn't think would be -- as you look at the trajectory, you'll see a little bit of continued improvement in margin based on the shift of mix in the loans, right, as we amortize off residential mortgages and other loans that have lower yields and we replaced those with MPP and AIO loans which carry higher average yields. So you'll see a little bit of benefit as we go out throughout the year in that. But then we have 2 rate cuts that get embedded in the middle part of the year, where we see a little bit of a decline that kind of offset some of that improvement. So net-net, I don't think there's going to be a ton of change from a trajectory standpoint as we look out to 2026. It will obviously depend on deposit betas and the rate environment and where the yield curve kind of plays out with some of the middle part of the curve. But just I think from a trajectory standpoint, it should be pretty consistent across the year. Operator: Our next questions are from the line of Damon DelMonte with KBW. Damon Del Monte: Just wanted to start off with the outlook on the provision. I think, Brad, you had said that it would be kind of in the $3 million to $4 million range for the year. And when you kind of factor in growth, it doesn't really move the reserve much. So just was wondering if you could provide a little color around your comfort with the reserve level kind of slowly declining during the course of 2025 and kind of where you feel like a good, targeted level is for you guys? Bradley Howes: Yes. Happy to start there, and Chuck and Kevin could join too. When I think about the provision guidance, that's going to be just nominal growth in MPP and AIO. So as you indicated, not a ton of extra provisions was there. But if you look at the last couple of quarters of charge-offs, we've seen a little bit of elevation, although still well below long-term historical averages. So my guidance was just based on some higher charge-offs that may or may not come through next year, but that's just for conservatism, that's kind of what we're seeing right now. What I'd say about the decline in reserve, if you look throughout the course of the year, there's a lot of different things that go into that reserve. We have a very granular allowance methodology where we're running all of our loans at a loan level, forecasting out a lot of different economic scenarios and a lot of different model assumptions that go into it. What I'd say is if you look at our reserve, if you exclude MPP, which is pristine credit quality and you take out our fair value loans, we're probably about 37 basis points of coverage to the HFI book. When you think about our book, keep in mind, as Kevin indicated, it's a very seasoned book. Most of it was originated in 2022 or earlier. We're continuing to improve the mix with growth in MPP and AIO loans, which are much stronger asset quality than the remainder of the portfolio, carry much lower loss rates. So that improves the overall mix, and it reduces the allowance as we go forward. The biggest decrease this quarter, I'd say, would be from our economic forecast. As we look out -- and this tends to change quarter-to-quarter, right, as the economic forecasts are updated in Moody's. But when you see an improvement in economic forecast, really [ HPI ] will be the big one. Our allowance can change up or down based on that. Last quarter, we had the opposite impact where home prices were expected to come down relative to the prior forecast. So that tends to ebb and flow throughout the year. I'd also say when you look at our nonperforming loans, as Kevin indicated, the majority of the loans that we see go into the nonperforming bucket, we have little or no loss because there's sufficient collateral coverage. We have a 71% average LTV on our portfolio, a decent chunk of it has MI if it's above 80% and 99% of it is backed by residential real estate collateral. So I think our actual losses even at this quarter and the last quarter have been below what the model would indicate for charge-offs. So we're not seeing any detrimental updates to loss rates or anything in our allowance model. And I think it gives us a lot of comfort with where we stand today from an allowance to loans held for investment perspective. Damon Del Monte: Great color. I appreciate that. And then with respect to the expense guide, I think you said $138 million to $142 million for the full year. Kind of drilling in here a little bit. The taxes and insurance line has kind of gone up in the back half of the year and hit like $2.6 million, I think it was here in the fourth quarter. Do you expect that to continue to rise as like that just kind of part of being a public company? Or were there some unique items here in the fourth quarter, which will kind of come out and it will go back to maybe where it was for the first half of the year? Bradley Howes: No, I'd expect the former. That would continue to go up. We expect it to increase as part of the expense guidance, right? We'll see an increase in the other taxes and insurance that's really driven by our FDIC insurance charges. And 2 items really impact that. I think the capital levels are one. As we lever capital throughout the course of '25 and we've grown our balance sheet, that capital charge goes up. And then the wholesale brokered as a percentage of your funding is another big driver of that FDIC assessment charges. And we've continued to use -- a sizable portion of our funding is wholesale brokered related. That's why it's important that we continue to hit our deposit initiatives and look for sources of non-brokered deposits to help drive that down. Damon Del Monte: Got it. Okay. And then just lastly on, can you provide any update on your strategy for adding retail hires? I think you said there was about 34 or something this year that you added. Kind of just what the prospect is to add more producers as the year progresses? Kevin Comps: Yes. So we're always continuing on the recruiting front. And we actually have a formalized recruiting strategy that we implemented in late Q4 around retail loan officers throughout the country. And so there is a pipeline we're working of new originators is the simple answer, I guess. Operator: [Operator Instructions]. The next question is from the line of Christopher Marinac with Janney Montgomery Scott. Christopher Marinac: Could you elaborate a little bit more on the digital deposit relationship that you mentioned in the press release and how many more opportunities like that are out there for this new year? Kevin Comps: Yes, this is Kevin. So we did partner with an online platform where we gather these digital deposits direct to the customer through that platform. As I said, it's a little over $230 million that we brought in, in the past quarter. We're continuing to look for opportunities like that, as we've mentioned on a couple of these calls, we've had some decent sized relationships we were able to acquire during 2025. Nothing specific additionally to add for 2026 at this point, but we continue to explore all those different sources. Christopher Marinac: Are these more attractive today just given the fact that broad interest rates have edged down? And is there any sort of risk of these leaving once you have them onboarded? Kevin Comps: So there is -- they are rate-sensitive customers like a lot of our funding are. However, we continue to stay competitive on a national scale. These are savings, money markets deposits, which we do pay competitive rates and monitor that very closely with competitors in this online space. So we can control that through rates and pricing. Christopher Marinac: Got it. And then just looking at kind of where you were 6 months ago on the custodial deposits within the specialized mortgage servicing, I mean how significant to you is it that you've built that a lot in these last 6 months? Kevin Comps: Yes. So that's an important part of our funding strategy also. A couple of different things there. So the deposits that we have, custodial funds related to the mortgage servicing rights that we own, all those custodial accounts are housed here. Also, as we've outsourced the agency subservicing to a counterparty, we retain all those deposits here as part of that relationship also. In addition to the larger custodial fund relationship outside of the MSRs that we own, we brought on during 2025 also. So we continue to explore additional custodial type relationships to bring to the bank in addition to the one we have today. They definitely will continue to add as we retain more MRSs. In the future, all those custodial funds will remain here also. Christopher Marinac: Okay. So is it fair to say that there's a scenario where you get to the upper end of the margin range primarily -- or not primarily, but just part of it is because you could get these new deposits in, impact the mix, therefore, drive a higher margin. Is that still part of this year plus the ability to do higher over time? Bradley Howes: I would say we don't have a lot of those kinds of deposits embedded in the margin guidance. So that would be upside to that. What I would say would drive the needle though is deposit betas coming in better than we thought, which if you look at the last 2 quarters, we've had almost 100% deposit betas on the ones that we can control. We do have some deposits, obviously, CDs, right, are year out and some other ones that are smaller. But for the ones that we have control over, we've been very happy with the beta. If that continues, that could be incremental benefit to keep us at the top end of that range above where our model would say our beta should be. Christopher Marinac: Okay. Great. And then just one quick question on the gain on sale. I know there's a wide range on the 2.75% to 3.25%. But could you just remind us on what could be -- or what could happen to be at the upper end of that gain on the sale range this year? Bradley Howes: Yes. I'll start, Chris. I'd say it's really going to be driven on competition, right, and just spreads. From 2025, we were able to price, I think, a little better based on the less competition than we expect for these kinds of loans, and that would be both in our conforming business and across our non-QM. So we do expect that competition to heat up a little bit there, which is why you see a little bit lower guide on the overall margins. So that's one. And then I'd say, obviously, the mix of loans impacts that, too. I mentioned in my commentary, consumer direct has a lower margin and a lower expense structure. So net-net, profitability is the same. But when you look at the all-in margin, if consumer direct comes in at a lower percentage, that will drive up the margin guidance a little bit. If it comes in at a higher percentage, that will take it down. I'd say those 2 items and... Operator: This now concludes our question-and-answer session. I'd like to turn the floor back over to Chuck Williams for closing remarks. Charles Williams: Thank you. I want to again thank everyone for joining today's call. Our success over the last year is directly attributable to a talented team who work hard every day to make Northpointe the best bank in America. I'm proud of all we've achieved in 2025, and I look forward to remaining nimble and opportunistic and further driving long-term shareholder value in 2026. We appreciate all the trust and support for Northpointe. And with that, have a great day, everyone. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines, and have a wonderful day.
Operator: Thank you for standing by, and welcome to the Northern Star December 2025 Quarterly Results Call. [Operator Instructions]. I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead. Stuart Tonkin: Good morning, and thank you for joining us today. With me on the call is the Chief Financial Officer, Ryan Gurner; and Chief Operating Officer, Simon Jessop. As previously announced in the December quarter, gold sold totaled 348,000 ounces at an all-in sustaining cost of AUD 2,937 per ounce. A number of one-off operational events across our assets resulted in this softer performance and required us to revise FY '26 production and cost guidance. With these events behind us, our team remains firmly focused on driving productivity improvements and strengthening cost discipline to deliver a stronger second half for our shareholders. Our FY '26 outlook provides revised guidance of 1.6 million to 1.7 million ounces of gold sold at an all-in sustaining cost of $2,600 to $2,800 an ounce. Today, we also provide further detail for production and AISC guidance by production center. In addition, we have updated our capital expenditure forecast across the portfolio. Operational growth capital guidance remains unchanged at $1.14 billion to $1.2 billion. KCGM's growth in capital expenditure in FY '26 consists of several projects designed to prepare the operation for commissioning of the newly expanded mill from FY '27. And 2 aspects, which I'd like to highlight are the KCGM mill expansion project FY '26 capital expenditure is now expected to be in the range of $640 million to $660 million, and this reflects targeted increases in labor to ensure the commissioning in early FY '27. Also, the KCGM tailings dam activity is ahead of schedule with FY '26 spend now expected to be to $240 million to $260 million. While FY '27 forecast spend is lighter at $100 million to $120 million, which this represents approximately 10% reduced cost for the overall tailings dam project. And at Hemi, forecast spend is $165 million to $175 million, reflecting more optimization of engineering and design works there. Northern Star continues to work closely with state and federal regulators, key stakeholders and the broader Pilbara community. With gold price now exceeding AUD 7,000 an ounce, is an outstanding time to be producing and discovering gold in stable low-risk jurisdictions of Western Australia and Alaska. Our balance sheet remains in a net cash position and as our hedge book decreases, our growing exposure to spot gold, coupled with increasing production, positions us for a very strong increase in cash flows going forward. I'd now like to hand over to Simon Jessop, our Chief Operating Officer, to discuss our operational highlights. Simon Jessop: Thank you, Stu, and good morning. The Kalgoorlie production center delivered a lower-than-expected quarter driven by 2 main issues. The first issue was the previously announced partial suspension of mining at our Kalgoorlie operation. A new escape way was mined and installed over 9 weeks. Mining at Kal [ ops ] from mid-December has returned to normal operations. The second major issue was a lower-than-expected processing outcome at KCGM. The mill underperformed all quarter on throughput volume both rate and run time with the primary crusher failing in December. Since the fifth of January, the crushing circuit has performed in line with normal expectations and we have crushed over 700,000 tonnes in 20 days versus December's full month crushing performance of 600,000 tonnes. KCGM's total mining performance was an outstanding result with 207,000 ounces mined in the quarter, a new record for the site and a Northern Star Resources ownership. Open pit total material movement was $22 million for the December quarter and $45 million for the first half at the top of the 80 million to 90 million tonne annual guidance range. The open pit for Q2 mined 163,000 ounces at 1.5 grams per tonne, with Golden Pike's contribution of 117,000 ounces at 1.7 grams per tonne. The KCGM underground operation developed 8.7 kilometers for the quarter and mined 819,000 tonnes of ore. For the first half, the underground ore mined was 1.55 million tonnes above the annualized target of 3 million tonnes per annum. Due to the processing throughput issues, KCGM finished the quarter end with 1.3 million tonnes at 1.9 grams per tonne and 81,000 ounces of high-grade ore on the ROM pad. CDO performed -- sorry, Carosue Dam performed in line with expectations for the quarter and the half. Let me close on the Kalgoorlie production center by again sharing that the KCGM mill expansion continued well over the Christmas, New Year period with a workforce of around 350 people. The project has ramped back up to 800-plus personnel and for the remaining 6 months for final ores on construction and transition into commissioning and ramp-up planning. With the project remaining on time for an early FY '27 ramp-up. Turning to our Yandal production center, both Jundee and Thunderbox experienced a challenging quarter and first half. At Jundee, the previously announced localized structural failure of the crushing circuit works have progressed well. It has taken longer than it, but it has taken longer than anticipated. The Coarse Ore Stockpile Tunnel has been excavated, rebuilt and reburried with ROM pad loaders feeding the bin again as normal. The full completion of the tunnel works is on track to be restored by mid-February. The Jundee team has actioned these works safely and professionally for an extremely large job. The Jundee Airstrip is also less than 2 weeks away from its first flight and remains on track for flight savings and less rain interruptions going forward. At Thunderbox, 2 issues prevailed for the quarter. The first one, reduced throughput due to tank issues, which also impacted recovery by 5%. Less mined ore from Aurelia and the haulage of the high-grade ore to the mill. On the processing impacts, all tanks were back in operation at the quarter end with rectifications planned for H2, which will see us cycle through the 7 tanks. Secondly, on Aurelia, the resource is not performing as modeled in mined in the high-grade areas of the ore body. We have already reduced the mining fleet from 17 trucks to 11 trucks in order to manage the required mining practice changes, improved mining and cost efficiencies. The Aurelia open pit strip ratio reduces from here on in. Aurelia has an estimated life of 21 months and will generate 215,000 ounces at 1.4 grams per tonne. Meanwhile, open pit mining at Bannockburn ramped up significantly with first ore being stockpiled ahead of milling in H2, providing another ore source close to the Thunderbox mill. Finally, turning our attention to lower gold sales was impacted by lower head grade of approximately 0.5 to 1 gram per tonne due to a combination of stock dilution and ore loss. Volume of ore was also approximately 30,000 tonnes less due to East Deeps span constraints on scheduled high-grade areas of the ore body. And we've also lost about 3 days in December due to extremely cold temperatures below 40 degrees Celsius. Early in January, we have seen an improvement in mine grades above 6 grams per tonne and an increase in stope ore volumes. Processing performance for Q2 was very good, with availability averaging 92% year-to-date. The recovery was 86% during the quarter, 5% higher than expected. Development continued to improve at Pogo with 5.2 kilometers achieved for the quarter, corresponding to a monthly average of 1,731 meters a month. The quarterly performance on Gold sold was impacted by a number of significant events across the portfolio, which has resulted in lowering our annual gold guidance between 1.6 million and 1.7 million ounces. We are in a much stronger position as we enter the second half of the year. KCGM and South Kalgoorlie operations have returned to normal. Jundee has some outstanding issues that are expected to be resolved during this quarter and Thunderbox is in improved shape and at Pogo, we are seeing the December improved head growth continue into January. I would now like to pass to Ryan, our Chief Financial Officer, to discuss the financials. Ryan Gurner: Thanks, Simon. Good morning all. As demonstrated in today's quarterly results, the company remains in a great financial position. Our balance sheet remains strong as set out in Table 4 on Page 10 with cash and bullion of $1.18 billion, and we remain in a net cash position of $293 million at 31 December. The company has recorded strong cash earnings for the first half of FY '26, which is estimated to be in the range of $1.06 billion to $1.11 billion. A reminder that our dividend policy is based on 20% to 30% of cash earnings. Although Q2 was a challenging quarter, all 3 production centers generated positive net mine cash flow with capital and exploration fully funded. Figure 8 on Page 11 sets out the company's cash and bullion movement for the quarter. The company recording $738 million of operating cash flow, which included the semiannual coupon payment on the notes of USD 18 million, approximately $30 million annual insurance premiums. Additionally, during the quarter, the company paid $370 million of income tax being the first half tax payments of $437 million, lower than the first half cash tax guidance. Major operational growth or capital investments include -- our KCGM open pit development at great Boulder and underground development at Fimiston and Mt Charlotte, which will enable us to lead production over the coming years and its Thunderbox operations open pit development at Aurelia and Bannockburn. In respect of the KCGM growth project, $180 million was invested during the quarter with major progress in structural and mechanical installation, including SAG and ball mill installation progress. Electrical and piping installation is advancing with final construction fit-outs to follow throughout the second half. The project remains on track for commissioning early FY '27. And our Hemi project, $20 million was spent advancing process plant design, securing long-lead-time items and progressing on non-processing infrastructure. On other financial matters, T-2 group all-in sustaining costs included approximately $20 million of additional costs associated with the disruption events across Jundee cooperations and KCGM during the quarter. Half 1 depreciation and amortization is at the top end of the guided range of $8.75 to $9.75 around and is expected to lower over the second half the forecast increase in production. Noncash inventory charges for the group in the December quarter are a credit of $93 million, driven by lower grade stockpile build and higher ore stocks at KCGM and stockpile build at Thunderbox. From a tax perspective, the update to second half production, we lowered our second half group cash tax forecast to $230 million to $270 million. No change to our estimate quantum or timing for landholder duty for the De Grey and Saracen transactions. And the company continues to unwind its hedging commitments with 158,000 ounces delivered during the quarter. At 31 December total commitments equaled 1.1 million ounces at an average price just over $3,300 per ounce. I'll now hand pass back to the moderator for the Q&A session. Thank you. Operator: [Operator Instructions] Your first question comes from Levi Spry from UBS. Levi Spry: Stu and team. A couple of questions, I guess, on the CapEx, KCGM and then Hemi. Just so I understand the increase in CapEx at the mill expansion. Is that about more people? Is it about better people? Or is it about paying more, just so we understand, I guess, where the industry is at? Stuart Tonkin: Yes. Thanks, Levi. Look, it's targeted and deliberate and it's to ensure we meet the commissioning timing of that FY '27. So it's more people. And it's recognizing, I guess, the productivity we've got out of the team that are there today and is not saying they're good or bad. It's just saying when everyone's working in that congested space. We haven't made the progress on some of those things. So we were targeting around 600 people throughout the build. Simon just spoke to, we retained about 350 over Christmas, which would normally be in a shutdown. And then we've also run some back shift, night shift throughout the last 6 months and also we've come up with 800 head count working on that project. So it's targeted deliberate. It's at a cost. Obviously, there's an uplift of about $110 million throughout this year, of which a large part of it is being spent in the first half. So there's a second half kind of tail out of all the electrical and cable runs. But really, it's important that we meet the schedule on time and get that commissioning and get the cash box working. Levi Spry: Yes. Got it. Thanks for the extra detail. And so could we have a little bit more, I guess, on that guard chart -- so what is actually involved between, I guess, now and what activity specifically? And then I guess, what is required to hit 23 million tonnes in 2027? Stuart Tonkin: Yes. So really, the commentary is above that. We talk about in the bullet points there, this is on Page 5 of the quarterly. Obviously, 90% of all the structural steel and 80% of all the mechanical installation is complete. So we're back to the timing in electrical cable runs and sort of testing and powering those things up. Obviously, there's an element of putting it all in place before you do any of that live testing and it's really, basically the final coupling of all the pipe work. So -- we're well through the bulk of it, and it's in the right order. Nothing, I guess, is behind, but we're recognizing the work ahead just needs that additional waiver, which we're working with the contractors to source, and we were doing just prior to Christmas. So December, we started to increase numbers. We continue with what we can call it a skeleton crew, we certainly 350 people throughout the Christmas period. But really, it gets down to that final tie-in all the pipe work, pressure testing the cables, dead testing cables until we're ready to energize things. So yes, it's -- it will be ready to power up in June. The question is whether we want the disruption. In the back half of June, typically, you won't get the extra gold sold, because it all has to come through the float circuit now through concentrates, et cetera. So we may be bringing up in parallel. But ideally, in July, the mill is running. The 23 million tonnes represents a 27 million tonne per annum plant turned on and then deliberately turned off to do retalking of balls and just visual inspections on wear rates, et cetera. That's deliberate planned downtime throughout the year, which derates from 27 million tonnes to 23 million tonnes. But when it's running, it will run at the 27 million tonnes per annum. I think that answered part of your question. Levi Spry: Yes, that's good. And just 1 more on Hemi. So what permitting is still a pretty complicated subject for us. Can you just give us a bit more detail around what stages up to now, what happens next? Stuart Tonkin: Yes. So essentially, you got approval is still going through their processes. This financial year, we're expecting there's no real way to fast track those processes with the regulators, and it's prudent that they take the time. In parallel to that, we're working on the water trials and dewatering testing and that's the engagement we're having the traditional owners and the like presently, but all those things are progressing as normal. It's very -- as you imagine, weather-wise, it's the hot season. So laying pipe and doing works is a bit of a derated activity as we used to do in the Northern Territory. Northern Pilbara gets pretty hot this time of the year. So there's some of that activity, we just sensibly laying pipe and getting the balls ready for that throughout these months. But fundamentally, we're working towards the end of this calendar year to be in a position to be putting numbers together for FID. The extra expenditure is about the optimization work, just continually testing the flow sheet and making sure we've got options and that when we put the data into the FID papers that we've thoroughly thought of all those combinations. And one of the things you just keep looking at, you keep finding options and can find better work. So they were using the time wisely in that regard. Operator: Our next question comes from Ben Lyons from Jarden Securities. Ben Lyons: Simon. I just wanted to revisit the underlying reasons behind the recent changes to production, all-in sustaining costs and I guess, also CapEx guidance for the 3 consecutive downgrades over the past couple of weeks. And maybe at the same time advocates some greater disclosure from the company as well. So one of the reasons, for example, that was given that the production downgrade was the underperformance of Thunderbox, which has now sort of pitched to the 250,000 ounce mining center rather than a 300,000 ounce mining center. And specifically, those lower grades you're seeing originate from the Aurelia open pit, so I was just waiting for the 600-page resource and reserve report. And I just can't find anywhere like a simple tonnage, grade and strip ratio outline for those key ore sources like Aurelia, like Bannockburn for, et cetera. And the same goes for like Carosue Dam, Jundee, like the actual ore sources that sit behind these mining centers. So the comments made by Simon in his introductory remarks are helpful, gives us some of the pieces, but just like to have a really basic outline of the ore sources that sit behind the actual mining centers or at the very least a detailed Investor Day, where we can do some deep dives on these assets as well. I just think that would be helpful to better assess the predictability of this business and the reliability of the forecasting that we received just a bunch of numbers from you guys at the head office level, just to go deep on these assets. So am I missing anything in that 600-page resource report that sort of helped with these sort of basic metrics? Stuart Tonkin: No, but I'll take that as a comment, not a question, Ben. Ben Lyons: Yes. Okay, cool. Okay. The question then you've got a fair bit of scrutiny on your continuous disclosure obligations. Why wasn't the crusher failure at KCGM immediately disclosed to the market. I would have thought that was a significant event in itself. To paraphrase your response to the ASX, it was basically -- we didn't get the data until the first of January. How regular are your updates from site to the head office in Subi. I would have thought that you're getting daily updates on simple metrics like production and sales, but -- is it weekly? Is it monthly? I'm sure it's not quarterly, sure, you didn't have to wait until the first of January to now you're going to downgrade? Stuart Tonkin: Ben, there's a very comprehensive response to an aware letter from AISC. A very simple one-page disclosure around production on the second of January and a very thorough response to the AISC's in regards to the query. I think that addresses it. Ben Lyons: Yes. Okay. I mean I've read it several times, but from my perspective, I don't think it's satisfactory like would have thought you get real-time data on sales at least weekly or monthly, not quarterly, but happy to go and have [indiscernible]. Thanks. Operator: Your next question comes from Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: Ryan, just one on the updated cost guidance. Look, obviously, good to see the revised cost guidance coming in line with the prior top end considering the gold price increases and royalties associated with that. But if I break that down nominally, you've effectively tightened the range and the midpoint of cost is pretty much unchanged despite highlighting earlier this month that the operational impact. So we're going to have a number of cost impacts. So I guess the question is, what operational and sustaining costs, if you'd be able to defer into next year to be able to keep that cost guidance flat? Stuart Tonkin: Yes. Thanks, Hugo. I think the key thing is that the one-offs and the events are behind us, and we know the impacts and effects of those events, they'll finite, they're complete. Obviously, we've disclosed on some of the continuing things are in the week 1 of January that are behind us now. So really, this is the reset and the view of the forecasting of where the sites are operating at and the cost base has allowed us to narrow the guidance range because we've got 6 months ahead, not 12. So that's really where that is at. It's a much stronger second half. If you really look at the what the second half will deliver a significant step up from quarter 3 in production. You're seeing our realized gold price, it's improving, but it's still a long way off spot because of the hedges, which are -- which are unwinding rapidly and then obviously delivering into a higher spot. So coupled with increasing production, the gold sales being the denominator or all-in sustaining cost the exposure to that spot by the cash generation over the next 2 quarters and the run rate exiting this financial year for another structural change of Fimiston being turned on, positions the company into a very strong position. So it is -- yes, it is future telling, it's forecasting, it's looking at what's in front of us. We would ask people to isolate quarter 3. We have provided a very detailed information around the events that were unforeseen or some are out of our control, some are, were risk balanced around maintenance events. And ultimately, they have been addressed. The team have done an absolutely fantastic job managing through that period and working on those items. And that gives us the confidence to place the forecast. On the full year, yes, there's a step-up in cost, there's a step down in production. But when you look at the second half run rate, it's a very, very strong healthy business in that regard. And then it can't undo what's happened in the first half, but ultimately, we've got a very confident outlook. Hugo Nicolaci: Obviously, taking sort of first half and the unforeseen impacts as they were, but sort of just to dig into that further, I mean, your AISC range is sort of now $4.4 billion to $4.5 billion for the year. It was $4.25 billion to $4.6 billion. You've highlighted $40 an ounce of that or roughly $64 million at the low end is from royalties. So where some of those other cost savings come from though, are sort of looking forward? And should we expect those costs to end up into FY '27? Ryan Gurner: I think it's Ryan, Hugo. I think the costs are there, obviously, in the immediate term, all costs are fixed. So you're right to do the math on the overall, I guess, checks written in the business. What we're saying is as Simon was talking to when he spoke, a lot of these disruption issues that cause production issues are behind us. We're confident in the grade outlook at Pogo, Jundee, Simon spoke about the high-grade material sitting on the ROM pad at KCGM, you've seen the grade list there. So -- and then also the throughput confidence in the second half. So they all contribute to keeping it aligned and narrowing that cost range even with those, as you say, expected royalties. We're confident that in that range, '26 to '28 land us with our lower production profile. Stuart Tonkin: Any discretionary spend will be shaft and pushed because it's not only is it dollar millions, but as far as activity and distraction, ensuring that the team have a very clear simplified sort of activity list. That's what we'll do. So does that go push away into FY '27, we'll assess it at the time. We'll assess the balance of risk around planned versus unplanned maintenance, et cetera. But there were items that were budgeted that we will just strike off the list that likely will not get spent in the second half. Hugo Nicolaci: Yes. Got it. I guess the question was what are those items and how much of that spend. But maybe I'll pick that up later. Next one, just around the upward revision of Hemi CapEx. You've called out a more detailed review of engineering design work. So why CapEx this year is $25 million higher, but studies were originally to support an FID by the end of FY '26. So is that just a bring forward of detailed engineering works that you would have otherwise had to do? Or were those not initially detailed enough for an FID timing as originally planned? And I guess, how should we consider that in the context of, I think, market expectations for Hemi CapEx now sort of $2.5 billion. And should we continue to expect maybe there's a bit of creep there? Stuart Tonkin: Look, I would say reset on the capital -- the overall CapEx number, saying if we're spending extra this year, it comes off the overall CapEx number. It's certainly work that's progressing. It would be required, and we would be doing, but I'd also consider work that may have been spent where we consider, okay, that's redundant, and we replaced a bit new study work that's got an improved operating outcome or an improved flow sheet outcome. So I think we've got to be a bit careful of saying extra money spent this year comes off the total. There are certainly items that were long lead items invested in spend forward that we'd also say perhaps we'll resell and repurpose and replace with larger simpler kits. So that's -- that's been something we've done with the time. That will all come in a final kit paper on explanations in that regard. There's not material structural changes to the overall flow sheet. What we've looked at is synergies with the rest of our operations to have common parts, common spares, which wasn't considered, when that's a stand-alone asset in a single asset company. We have looked at it through the lens of Fimiston mill expansion. Some items that could replicate, save, on the engineering because you've already done it, but we've actually got to spend for the parts to get common commonality, which will derisk us in the future running to sort of sister plants. Operator: Your next question comes from Matthew Frydman from MST Financial. Matthew Frydman: Stu and team. Happy New Year. A couple of questions from me, please. Maybe firstly, can I take the thrust of Ben Lyons' comments and maybe turn it into a question that hopefully we can actually answer on this call. In the release, you say you've reduced CapEx spend at Pogo and Kalgoorlie and increased spend at Yandal to support the regional hub strategy. Can I just ask what is the regional hub strategy at Yandal? Can you summarize it in terms of production ounces, life unit cost and how much capital needs to be spent to deliver it because I'm not really clear on any of those things, and it sounds like maybe there's other analysts that aren't clear either. So that would be appreciated. Stuart Tonkin: Okay, Matt. So there's a 3 million tonne per annum plant in the north called Jundee and there's a 6 million tonne per annum plant in the South called Thunderbox. Higher grade ore will go to Jundee, lower grade ore will go to Thunderbox. Jundee will sit at around 300,000 ounces per annum. Thunderbox will sit at around 250,000 ounces per annum. So the hub, which is called Yandal will produce at about 550,000 ounces per annum. That's different to the 600,000 ounces we have set we've articulated that 550,000 ounces is probably the happy place that, that will be at. It might oscillate, where Jundee does 250,000 ounces and Thunderbox does 300,000 ounces. But overall, that Yandal belt we're saying can operate at around 550,000 ounces. We've got the reserve statements. It's got all the trades and ore sources, [indiscernible], Aurelias, Wonder, you've got all the data that sits behind that. That's fundamentally what more than what any company is providing and giving to the materiality of what that asset provides for the group. As the key aspect of those assets, but we're not liking at the moment is the costs. So the aspect of the economies of scale from expanding Thunderbox was to materially improve the all-in sustaining costs as you see growth at Jundee was to keep the costs down. And you can see the cost we handle in the quarter and the lower ounce profile are very high. So that's in our head to say, what's the overall outlook life. We've got to improve this to ensure that its contributions as it has been for a decade in our business, foundation asset. We can provide more view and color on what those can be. But we're still building new high-grade mines, and the development rates are still contributing towards that. So pulling out a really up and talking about decimal points of grade of something that's not even providing 1/3 of the feed to Thunderbox for a number of years is immaterial. And I want to focus on that. It's immaterial in the... Matthew Frydman: I mean I didn't specify Aurelia and you've answered the question on -- in terms of ounces and life. But as you point out, I think probably the gap in understanding is really more around unit cost expectations and also I guess, the capital required to get there. So I suppose the question that probably the market has is what's the quantum of capital are you going to spend in order to get the cost to a certain point? And I guess what does that look like? And I suppose we want that out load how do you make those investment decisions, when it seems like we don't have a good visibility on what the target is around cost and total quantum of CapEx? Stuart Tonkin: So we provided production and cost guidance on an annualized basis in July. That's what we've done for a long time, and that's what we keep doing at Yandal. We put in a base plan that's getting into the higher grade at Jundee, but you'll see some of the grade restore. All the commentary that sits around this asset shows the growth of Wonder down South, giving better grade into Thunderbox as well as new Bannockburn operation you're going through the stripping at the moment, getting to primary ore. Like the question you're not going to answer on a quarterly call, let's put it that way. Matthew Frydman: No, that's fine. I guess the theme there is that I appreciate that you guys give 1 year guidance, but clearly, the impact to the market's perception of the company from arguably some of these short-term disappointments from quarter-to-quarter. Potentially that impact is exacerbated because we don't have a multiyear sort of longer-term picture for some of these elements of the business. So obviously, anything you can do over time to just shown a light on that is appreciated. But I'll move on to that line of questioning. Stuart Tonkin: Before you do that, the point is in KCGM in the half 1, it's really, really changed and it's the mill throughput has really impacted the overall ability to deliver. All the other sum of the small parts on a materiality threshold are negligible. But the actual... Matthew Frydman: I agree to you that's why I'm making the point that maybe you only give 1 year guidance is exacerbated. Stuart Tonkin: Please let me finish this answer. Everyone needs to focus on that asset KCGM and there's 82,000 ounces sitting on the ROM of high-grade ore ready to put through that plant. And the plant -- the new expanded plant will be commissioned in less than 6 months' time. So if everyone wants to weave into smaller items across all the assets, we recognize that it was a poor quarter. We understand the elements that contributed to that. There were meaning and we understand what we've done to rectify it and what the outlook is going forward. I pick up the frustration from the questions, and I'll pick up the frustration from investors or from analysts, who can't model this. Quarter 2 is behind us, and the second half outlook is strong, and we will work very hard to deliver that and where we position ourselves into FY '27 in an excellent position. So I just want to reinforce we're getting into minutia, which is behind us and doesn't matter on a materiality threshold. So think about the things that make KCGM is a key asset -- that's where the focus and effort is today. It's not on the satellite small life short things that are also generating significant cash flow that are actually contributed towards spending the capital at our long life by margin assets. Matthew Frydman: Thanks for the answer. Apologize for cutting you off to you. I mean I would say that the Yandal hub is still going to be 1/3 of your business. So I'm not sure that it's characterized as minutia, but anyway, thank you for your response. The second question is just on the KCGM new expansion, I guess, increases to the capital guidance there. You talked through in some detail around where that's going and why it's important to, I guess, the schedule -- is there a risk there that, I guess, throwing more money and people doesn't really solve the productivity issue you're having? I mean you talked about how it is a fairly condensed space there that your teams are working in, I guess, what the question is why are you confident that spending more is the right approach versus just taking longer to complete the project? Stuart Tonkin: So it doesn't solve the productivity issue. That's why you add heads. Add head count because you can't achieve with the 600 people, so you tried 800 at it. That's the answer of productivity and you're paying more to get the same thing done. That's why there's $110 million extra spend in this year to deliver that. The most important part is that to plant on getting all through it and step changing the asset's cost base and its revenue. That time is of the essence with KCGM, not capital sadly, at this point. It's not sensitive to capital. We don't likely spend $110 million, unnecessarily. We want to see this plant operating and starting to contribute. Simon Jessop: Just to add a little bit to that. So during the next -- really, the next 4 months is where we've got the peak banning. So we've ramped up, as you've said, above what was originally the plan and that sort of progression started during Q2 in terms of accelerating the work. We've got still many work fronts at the moment. So we still have that opportunity to put those people in there 3, 4 months from now, those work fronts start to wind down. And we're very, very focused on the critical path, which is Stage 1, which is first ore into the new mill. So while we still got the opportunity, we've taken that and the project team has to put the extra people in there get the work actually completed. And that's the picture right now, which gives us the ability to remain on schedule for FY '27, or like, ready to go in sort of June. So if we didn't put those extra then, the work front start to dry up, and then it genuinely will be delayed. So the project is in really good shape. It's focused on Stage 1 and that is first ore into the mill. The Stage 2 is moving Gigi back down to KCGM. That can happen in the months after we're milling ore. Operator: Your next question comes from Daniel Morgan from Barrenjoey. Daniel Morgan: So obviously, a key theme of the call has been throwing a lot more bodies at the project to keep it on schedule. I understand that makes sense given the gold price and the project you're trying to keep on schedule. But -- do you still expect that July turn on? I mean is the Gantt chart, I imagine the critical path, the turn on date, is it not shifting back? Is it not wise given recent guidance and market disclosures is not wise to maybe start to push market expectations of the schedule of the turn on back? Or is this the expectation that this extra budget will keep the schedule to July? Stuart Tonkin: It's quarter 1. My expectation is early quarter 1, sales there will be parallel running up at the plant. This isn't about market expectations. This is about our disclosures had a 3-year build on time to the budget we're saying and overrun on that expenditure because we're growing more labor at it. We're not here trying to gain this, Dan. We're here explaining, where we're at 2.5 years into a 3-year build. And as Simon has got the confidence in discussing as well, we're very, very pleased with the progress they've made. And we're working very closely the contract that it's constructing it and looking for any opportunity to get this done, not only on time, but earlier. And part of that combined solution is around adding head count. And we don't just add it, so they're standing around holding stop signs. There are people there doing productive work. That's contributing towards that deadline. So yes, that's what we're working towards. It's pretty exciting. I think the team that got around the plant at Diggers and Dealers saw a massive step change year-on-year, if you went there again today, you'd say, well, why can't you turn it on now? That's what you visually see and it's no different than you're building a house, wait for your carpets and your fly screens. All the cabling, all the tiling, all the final elements of that. It looks like it's been finished, and it looks like it's sitting there doing nothing, but it's that fine or final finishing, we're sure that when we get it turned on, the quality is met and the work is done so that we don't have to bring it down or we don't have to have those lessons that we learned out of the Thunderbox expansion. We endured 12 months of ups and downs and rectifying some of those things. We'd like to see all that addressed prior to turning and commissioning this on. So that's the way it's underway for the second half. Daniel Morgan: And I guess, obviously, there's a lot of focus on the call and obviously, concern about various aspects. But maybe pivoting and changing tack a little bit like just over the last 6 months or so, what is changing in the business that you can see that from a very positive sense, like what is something you'd rather like to invest is where there's been a change a foot or something that's getting better or be it exploration, be it a site? What is changing in the business in a positive sense that you could highlight to the market? Stuart Tonkin: Yes. I mean, I'd recognize the underperformance in share price against the peers, global majors, we acknowledge that. We acknowledge that there's reflection on short-term production misses -- cost misses, and we've been very clear on the events that have contributed to that and what we've done to rectify that. Just look at the run rate of second half in its own right, very, very strong uplift in production. Look at the reducing hedge book and realized gold price that we're growing the exposure to spot. And the step change of the business as a KCGM mill expansion turns on in FY '27 and the uplift, again, step change in production profile for the group. They are the things that are psychoses to us that the opportunity for investors now to get in and get positioned, that's the confidence in the outlook. And I see, to your point, people are focused on hearing our concerns, they're looking at relativities. That creates the opportunity to understand the long-term value creation that all the stars doing. Operator: Your next question comes from Milan Tomic from JPMorgan. Milan Tomic: Just a question on the Hemi permitting side of things. Can you provide maybe a little bit more detail as to how that process is progressing? Has there been any issues specific issues that are being flagged by the indigenous and Asian groups in that area? Or yes, just wondering, if you can give a bit more color as to any concerns that might have been raised so far? Stuart Tonkin: No, no major concerns there. Milan. It's really the dewatering trial is something we've got to commence, which will likely be at the start of quarter 4. Ideally, we would have done -- started that in quarter 2. but there was a delay in getting all that infrastructure in place through the hot season. So once that's in place, and we've got a plan that's acceptable, we'll commence that trial. It takes about 3 months, and that feedback loop goes into our [indiscernible] license for dewatering of the pits preproduction. So that's probably something that has slipped. It doesn't affect the overall state and federal EPA approval licenses, which are continuing. But ultimately, that's probably the operational part that we would have liked to have seen commenced pre-summer. And that's going to start March, April, likely we start for the modified scheme that we've negotiated. We're negotiating with traditional owners there. Milan Tomic: Yes. And just in terms of the work that you're doing on optimization, any major changes regarding mine plan sequencing, et cetera, that you could share that's kind of been different from how that project was initially envisaged to be? Stuart Tonkin: Yes, it's the scheduling. So what we're going to look at is First Gold pour and that deadline, even though if there's a delayed timing of starting to understand, okay, what impacts through to that. But the actual flow sheet generally, we've looked at lots of different scenarios and options and defaulted back to what that primary flow sheet is with the high-pressure grinding rolls at the start and to the SAG mills is still sound. Resizing some of the gear mills, et cetera, is probably something we've done, the ability to expand later on a more simplified plant. But all the auto class and late already in trying to be built and long-lead items like that are constructed. So that's all sound. Mining sequence, again, just around water management, our borrower kits and getting that prepared. That's -- we've just got options and scenarios there as opposed to the 1 plan that previous owners had -- we just got a number of scenarios there that could go different paths to get to the same results. So that's just what the team is doing, while the approvals are underway, iterating what they do best as the engineers. Milan Tomic: And maybe if I can just squeeze 1 more in on Jundee. To get it to 300,000 ounces, you have to get quite a sizable uptick in the grades compared to the last couple of quarters at least. Can you maybe just shed a bit of light at how do you -- how are you getting that increase in grades? Are you moving into a high grade part of the ore body? Or is there something else that we should be considering there? Stuart Tonkin: A mix of primarily the throughput is not Jundee. So yes, the average grade delivered to the plant needs to be there. It's been there before. We've certainly got isolated pockets that are there different grades and different mining sequences. We've just added a base plant, which allows us to go back up to the upper levels, regional high-grade areas and take those high-grade zones that were sterilized because they just open voids. There was no paste in the mine in its history, 30 years. It's never had any paste backfill, but we've got that base plant installed and starting to fill those voids. We can go back and take those high-grade pillars out of those upper levels. So there's areas like that, new Cook-Griffin mining zones contributing better grade. So all of those things contribute, but overall, it is a grade focus rather than a throughput of focus. Operator: Your next question comes from Adam Baker from Macquarie. Adam Baker: Just 1 follow-up for me. Just on Hemi. I noticed you -- you noted that in May '26, you're going to have the optimized resource and reserves. I'm just wondering is there anything that we could be saying to see a quantum change in the resources or the reserves noting changes like gold cost assumptions, et cetera. And likewise, for reserves around cutoff grade, et cetera. With your work integrating this into the Northern Star reserve and resources? Stuart Tonkin: Yes. Thanks, Adam. Look, I won't preempt things with R&R, there's still a fair bit of work to occur in the coming months leading into that, but we're basically release Hemi in a Northern Star view of [ R&R ] with the group's [ R&R ]. I would say Hemi had a high gold price assumption in what was previously released. So we'll try and align with the group overall, where we set those gold prices for resources and reserves. They're almost irrelevant in regard to where the current spot price is and watching what peers are doing in gold price assumptions around resource and reserves. But it does in turn reflect back to cutoff grades and how these overall picture valued and can you actually merge, mold our pits together, take our saddles and make a bigger or larger overall lower-grade resource economic. That's what we've got to consider. But I would just say that we've probably got a stricter more scrutinized view around what's in and what's out. So if anything, a more robust scrutinize on that resource is more likely than material growth. If you think about the drilling and the data that's occurring there, all we've really done recently is redirect some drills to do some treating. We haven't done any real growth drilling, since we're taking control of that heavy region. Operator: [Operator Instructions] Our next question comes from Mitch Ryan from Jefferies. Mitch Ryan: Stu, and team. Stu you made a couple of comments with regards to Hemi. You called it a sister plant to KCGM, and you talked about taking the opportunity to resize mills. Can you -- does that potentially mean a change in the scope of mill size relative to previously disclosed [indiscernible] numbers? Can you -- can you help us understand that? Stuart Tonkin: Correct. Ideally, things like the crusher, things like the mills ideally are identical to what we have at Fimiston and that's been currently our thinking -- there's already some mills purchased they're already sitting in a shared package stuff in or Port Hedland, literally seen them unloaded off the truck. I look at those and say they'll do the job of a 10 million tonne per annum plant to get to a 15 million tonne per annum plant, I need a third one. What I consider instead of doing that, having 2 large mills today that match Fimiston, answer is usually, yes. So be the sort of considerations we're doing to say, irrespective of earnings and hardware that's sitting there in a shared, would we start again in, say, 2 large mills that match Fimiston, plus the logic of that. In the scheme of reselling these things. There's options that are there in a scheme of redundant expenditure, you can repeat the costs because you haven't installed them and they're ready to freight. That's the type of thinking that if you're in a hurry to build the mill, they would have got built and then when you want to expand, you add a new mill. When we look at that now with the time, so well, let's just not go build something because we have to parts. Let's consider what we can do, if we had a clean sheet that's the example. One is the crushing circuit, absolutely take the replicate design from Fimiston and say, is that something you could install here that's oversized and matches parts, et cetera, as opposed to going through the -- something that's been designed specific for the throughput rate of Hemi. And we go to something that is -- this is a plant to Fimiston -- that means, if we have issues like Simon had in December at KCGM, we could be fast tracking the knowledge and the skills and the parts across the business every 3 or 4 years would happen at 1 of those large crushing units. Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks. Stuart Tonkin: All right. Thank you for joining us on the call today. And I appreciate the interest and it's been a busy day for everyone, but looking forward to a strong second half and growing from here. Appreciate it. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Aishwarya Sitharam: Good day, everyone, and welcome to the Quarter 3 FY '26 Earnings Call of Dr. Reddy's Laboratories Limited. We appreciate your continued interest in our company. I'm Aishwarya Sitharam, Head of Investor Relations at Dr. Reddy's. Joining us today are members of the leadership team. Mr. Erez Israeli, our Chief Executive Officer; and Mr. M.V. Narasimham, MVN, our Chief Financial Officer. Our quarterly financial results have been published earlier today and are available on our website for your reference. We will start today's call with MVN providing an overview of our financial performance for the quarter. Following that, Erez will share his insights on key business highlights as well as the company's strategic outlook. We will then open the floor for questions. All commentary and analysis during this call are based on our IFRS consolidated financial statements. Please note that certain non-GAAP financial measures may also be discussed. Reconciliations to the corresponding GAAP measures are included in our press release. I would like to remind everyone that the safe harbor provisions outlined in our press release today apply to all forward-looking statements made during this call. Before we proceed, I would like to call out a few housekeeping points. [Operator Instructions]. This session is being recorded, and both the audio and transcript will be made available on our website. Please note that this call is the proprietary material of Dr. Reddy's Laboratories Limited and may not be rebroadcasted or quoted in any media or public forum without prior written permission from the company. With that, let me hand the call over to MVN to present the financial highlights for the quarter. Over to you, MVN. Mannam Venkatanarasimham: Thank you, Aishwarya. A warm welcome to all. Thank you for joining us on our Q3 FY '26 earnings call. It is my pleasure to take you through our financial performance for the quarter. The business delivered a resilient performance in Q3 FY '26, reporting a 4.4% revenue growth and steady profitability despite product-specific headwinds. The performance reported this quarter was largely attributable to the double-digit growth delivered by our underlying base businesses, excluding Lenalidomide aided by favorable Forex. Reported EBITDA margin, which stood at 23.5% included a onetime provision related to impact of changes in the implied benefit obligations under the new labor law codes in India. Adjusting for this onetime provision, the EBITDA margin was 24.8%. All financial figures in this section are translated into U.S. dollars using convenience translation rate of INR 89.84, the exchange rate prevailing as of December 31, 2025. Consolidated revenues for the quarter stood at INR 8,727 crores, which is USD 971 million, a growth of 4.4% year-over-year and a decline of 0.9% on a sequential basis. Strong performance across our branded businesses, namely India, emerging markets and the acquired consumer health care business in Nicotine Replacement Therapy. Further supported by favorable currency exchange rate movements was partially offset by lower Lenalidomide sales and continued pricing pressure in the U.S. and Europe Generics. Consolidated gross profit margin for the quarter was at 53.6%, a decrease of 505 basis points year-over-year and 104 basis points sequentially. The decline in margins during the quarter was largely on account of lower Lenalidomide sales, price erosion in our unbranded generic businesses, adverse product mix in PSA and the onetime provision related to new labor law codes mentioned earlier. Adjusting for this one-off, the margin was at 54.1%. The reported gross margin was 57.4% for global generics and 17.3% for PSA. The SG&A spend for the quarter was INR 2,692 crores, which is USD 300 million, an increase of 12% on year-over-year and 2% on Q-o-Q. The year-over-year increase was primarily on account of ongoing targeted investment to support long-term growth of our branded franchises, namely the acquired NRT Consumer Healthcare business and branded generics. Adverse Forex impact as well as the onetime provision related to the new labor law codes. SG&A spend accounted for around 31% of the revenue during the quarter was higher by 199 basis points year-over-year and 82 basis points on a sequential basis. Excluding the one-off provision, SG&A spend as a percentage to the revenue was around 30% in Q3 FY '26. The R&D spend for the quarter was INR 615 crores, which is USD 68 million, a decline of 8% year-over-year and largely flat sequentially. The decrease reflected lower development spends in biosimilars given that large part of investment related to abatacept have been completed, the spend this quarter also included onetime new labor law codes related to the provision. The R&D spend was 7% of revenues for Q3 FY '26, lower by 92 basis points on year-over-year and the same level as the previous quarter. Excluding the on-off R&D spend was at 6.8% of Q3 revenues. Other operating income for the quarter was INR 77 crores as against INR 44 crores in the corresponding quarter last year. EBITDA for the quarter, including other income stood INR 2,049 crores, which is USD 228 million, a decline of 11% on year-over-year basis and 13% sequentially. The EBITDA margin stood at 23.5%, lower by 401 basis points on year-over-year and 322 basis points Q-o-Q. Adjusting for onetime new labor law codes related to the provision, the underlying EBITDA margin was at 24.8%. The net finance income for the quarter was higher at INR 117 crores as compared to net finance expenses of INR 2 crores during the same quarter last year. The increased net finance was primarily on account of higher foreign exchange gain this quarter in comparison to foreign exchange loss reported in the corresponding quarter last year. As a result, profit before tax for the quarter stood at INR 1,543 crores, that is USD 172 million. PBT as a percentage of revenue was at 17.7%. Excluding the onetime new labor law code-related provision, the PBT margin was at 19%. Effective tax rate for the quarter was at 22.9% compared to 25.1% in the corresponding period last year. The ETR for Q3 FY '26 was lower primarily due to favorable durational mix for the quarter in comparison to the same period in the previous year. Profit after tax attributable to equity holders of the period for the quarter stood at INR 1,210 crores, which is USD 135 million, a decline of 14% year-over-year and 16% on Q-o-Q. This is at 13.9% of revenue before adjusting the one-off provision related to a new labor law codes. The diluted EPS for the quarter is INR 14.52. Operating working capital as of 31st December 2025 was INR 14,142 crores, which is a USD 1.57 billion, an increase of INR 811 crores, which is USD 90 million over 30th September 2025. CapEx cash outflow for the quarter stood at INR 669 crores, which is $75 million. Free cash flow generated during the quarter was INR 374 crores, which is $42 million. As of December 31, 2025, we have a net cash surplus of INR 3,069 crores which is equivalent to USD 342 million. Foreign currency cash flow hedges executed through derivative instrument during the period are as follows: USD 481 million hedged using a combination of forwards and structured derivative contracts scheduled to mature through March 2027. The contracts are hedged at the rate of USD 89.1 to USD 90.3. RUB 2.93 billion hedge at a fixed rate of RUB 1.06 with a maturity falling within next 3 months. With this, I now request Erez to take us through the key business highlights. Erez Israeli: Thank you so much, MVN. Good day, everyone, and thank you for joining us today. We really appreciate your continued engagement and interest in our company. Thank you all for joining our meeting. Our overall performance in Q3 FY '26 remain consistent with our strategy. And we continue to deliver on our strategic priorities during the quarter, namely growing the base business, driving gross efficiencies across operations, advancing our key pipeline programs, semaglutide and abatacept as well as pursuing selective business development video opportunities to augment our organic growth efforts. In line with our stated aspirations, our underlying base business delivered overall a double-digit growth this quarter. The company EBITDA margin was about 25%. And this is adjusted for onetime provision related to the new labor codes in India. Let me now walk you through some of the key highlights of the quarter. Revenue grew by 4.4% year-on-year despite lower contribution from Lenalidomide. Our base business, excluding Lenalidomide, delivered double-digit growth. The overall growth for the quarter was also aided by favorable Forex. EBITDA margin stood at 23.5%, which included a onetime provision related to the new labor codes mentioned earlier, excluding this onetime provision, EBITDA margin is at 24.8%, like I mentioned, about 25%. Annualized ROCE was at 20.4%. Net cash surplus at the end of the quarter was $342 million. In alignment with our strategic focus to deliver a first-in-class and innovative therapies in India and emerging market, we entered into a strategic collaboration with Immutep for commercialization of a novel immunotherapy oncology drug, Eftilagimod Alfa, a key global market outside of North America, Europe and Japan and Greater China with an upfront of $20 million potential regulatory and commercial milestones of up to $350 million as well as royalties. Further, we recently launched Hevaxin, a novel, recombinant vaccine for the prevention of Hepatitis-E virus infection in India. We are pleased that the integration of the acquired Nicotine Replacement Therapy business is progressing as per plan. 85% of the business by value is now under operational controls. The next phase of integration will include selected countries, Asia Pacific, Middle East and Latin America. We expect integration largely to be completed by the end of this fiscal. We continue to make progress on our key pipeline products. During the quarter, we received a marketing authorization for semaglutide injection in India from DCGI following the recommendation of subject to expert committee in the SEC under Central Drug Standard Control Organization. Further, necessary local manufacturing license have been secured. We have also started filing in various emerging markets through the COPP route. In October 2025, we received a notice of noncompliance from the Canadian pharmaceutical drug directorate for our semaglutide injection, which outlined a request for additional information and clarification on the specific aspect of the submission. We promptly submitted our response by mid-November 2025, well within the stipulated time and now we are awaiting a response from the regulatory agency in Canada. On the biologics front, we have completed the filing of the biologics license application, the BLA, for the IV presentation of abatacept biosimilar candidate in December 2025 as per the schedule. Following the positive opinion for CHMP, we received European Commission approval for denosumab biosimilar in Q3 FY '26. Likewise, we have received the approval from MHRA in the U.K. Our in-house commercial team has launched the product in Germany in December and launched a preparation are underway for the U.K. and other European countries. We received a complete response letter from the USFDA for denosumab biosimilar BLA, which is -- was developed by our partner, Alvotech. The CRL refers to the observation from a pre-license inspection of Alvotech, Reykjavík manufacturing facility. On the regulatory front, in November 2025, the USFDA conducted GMP inspection of our API facility CTO-SEZ in Srikakulam, Andhra Pradesh with 0 observations. In December 2025, the USFDA completed a GMP and a preapproval inspection of our facility FTO-SEZ PU-01 in Srikakulam, Andhra Pradesh and issued Form 483 with 5 observations. We have responded already to the agencies within the stipulated times. Recently, the USFDA issued a post application action letter in relation to the response submitted to the observation received post the PI conducted at our Bachupally biologics facility in September 2025 for our rituximab biosimilars. We are actively working to resolve the outstanding observations. Our CDMO business, Aurigene Pharmaceutical Services Limited served as an exclusive API manufacturer for 2 of the 46 novel drug approved by the USFDA in 2025. Further, APSL delivered 3 discovery programs through its in-house AI-assisted discovery platform called Aurigene.Ai. We continued progress on our industry-leading sustainability practices. During the quarter, we announced a science-based net zero climate target, making us the only Indian pharmaceutical company to commit to such a target by FY '24 -- FY2045. We are in the leadership position in CDP Water Security & Climate Change categories for 2025. Let me take you to the key business highlights for the quarter. Please note that all financial figures mentioned are reported in the respective local currencies. Our North America Generics business generated revenues of $338 million for the quarter, a decline of 16% year-on-year and 9% sequentially. The decline was primarily on the account of level in Lenalidomide sales and price erosion in certain key products. During the quarter, we continued to launch momentum, adding 6 new products to our portfolio. Our European generic business reported revenue of $140 million for the quarter, a growth of 4% on a year-to-year basis as well as sequentially. The acquired Nicotine Replacement Therapy portfolio, which is now also in the base has been performing well. Further, new product launches helped offset the impact of price erosion in generics. During the quarter, we launched 10 new generics products across markets, further strengthening our product portfolio. Our emerging market business delivered revenue of INR 1,896 crores in Q3 FY '26, reflecting a robust growth of 32% year-on-year and 15% sequentially. Growth was primarily driven by new product launches across various markets and favorable Forex. During the quarter, we introduced 30 new products across countries in line with our commitment to improving access and further deepening our market presence. Within this segment, our Russia business delivered growth of 21% year-on-year and 16% sequentially in constant currency terms amid continued adverse macroeconomic conditions. Our India business reported revenue of INR 1,603 crores in Q3 FY '26, delivering a healthy double-digit year-on-year growth of 19% and 2% increase sequentially. This performance was attributable to revenues from our innovation franchise, new brand launches price increases and higher volumes as well as contribution from recently acquired Stugeron portfolio. According to IQVIA, we continue to outperform the Indian pharmaceutical market, IPM, with a moving quarterly total mass quarterly, MQT, growth of 12.3% compared to the IPM growth of 11.8% and moving annual total, MAT, growth of 9.7% compared to IPM of 8.9% growth. Our IPM rank is 10 for the quarter and 9 for the month of December 2025. During the quarter, we launched 2 new brands as we continue to enhance our domestic market presence. Our PSAI business reported revenue of $92 million in Q3 FY '26, resulting in a decline of 5% year-on-year and 15% sequentially. During the quarter, we filed 31 Drug Master Files globally. In line with our strategic priorities, we remain committed to investing in differentiated R&D programs, especially peptides and biosimilars that offer meaningful commercial opportunities. In addition to our enhanced development efforts, we also -- we will also continue to strategically collaborate to build our innovation portfolio for India and emerging markets. During the quarter, we completed 28 global generic filings. As we look forward, our focus remains on effective execution to deliver on our strategic priorities improving base business both advancing differentiated pipeline products like semaglutide, abatacept, driving operational efficiencies and pursuing value-accretive acquisition and partnership aimed at creating long-term value for our stakeholders. Before we move to the Q&A session, I would like to announce that Aishwarya Sitharam has recently taken over as the Head of Investor Relationship from Richa Periwal. I wish both Aishwarya and Richa, Richa is staying with our organization success in their respective new promoted roles. With that, I welcome your thoughts and questions as we move into the Q&A sessions. Aishwarya Sitharam: Thank you very much, Erez. [Operator Instructions] The first question is from the line of Neha Manpuria from Bank of America. Neha Manpuria: I have 2 questions from me. First, on the India business growth. The 19% growth, how should I think about organic growth for the India business because we did have the Stugeron acquisition in this quarter. Was that a meaningful contributor to this 19% growth? If I were to strip that out, would that growth still be, let's say, north of 15%? Would that be a fair assumption? Erez Israeli: So it's somewhere between 17% and 18%, if I calculate, I'm not sure exactly where it is. But let's say, it's more than 17% organic without acquisitions. Mannam Venkatanarasimham: That's right, Erez. Neha Manpuria: And what is driving this strong growth? It is because we've been doing -- I know we've been moving in the double-digit category for a few quarters now, but to step up to 17%, 18%, does seem very large in a quarter's time. What's changed in this quarter? And how sustainable is this growth trajectory, particularly this, let's say, mid-teens sort of growth trajectory as we look through the next few quarters? Erez Israeli: So it's primarily the performance of the innovative product. So normally, and there are actually very good products that are being really appreciated by the market. So normally, when you produce a brand that is not known, there is a period of time in which you have a cycle of physicians that recognize this product and then recommend it. So there is a certain gross pattern like introduction of any brand. And I think what happens to us is actually the strategy is working. We are in some of these brands in the third year since launch and some of them in the second year. And you will start to see the move of that. So the -- in addition to the brand didn't perform in a similar manner, meaning that we are increasing the prices, we have the support of those, but it's primarily the -- what we called at the time of Horizon 2 introducing of innovation to India, this is the primary move that it's actually working. Neha Manpuria: Understood. Sorry, one last question on India. The innovative portfolio would be what portion of our sales roughly today if you were to quantify it? Aishwarya Sitharam: 15% to 20%... Erez Israeli: No, it should be less. Mannam Venkatanarasimham: It should be less. Erez Israeli: If I need to, it's somewhere between 10% to 15%, but I'm not sure, Neha. Neha Manpuria: All right. No problem. And my second question is on sema. I think you mentioned that we have submitted the response, and we are waiting -- sorry, we are awaiting response from the agency. So have we not got a follow-up goal date as well? And according to you, what would be the next time line that we should look at for sema approval in Canada? Erez Israeli: Yes. So we do have a goal date because it's come automatically 6 months from the response time. So it takes us to May. But it doesn't mean that we need to get approval by that date, it can be any time between now and May, and hopefully, in May, no additional question. So I'm -- I don't know when we will get a response. We are preparing for a launch even in Q4 and there is scenarios like that. And if not, it will be in Q1. But let's say, any time between end of February to May, we should expect to launch in Canada. Aishwarya Sitharam: The next question is from the line of Damayanti Kerai from HSBC. Damayanti Kerai: My question is again on India business. So you mentioned the innovation -- innovative products, et cetera, is helping you to achieve such strong number. So 2 things. Again, I think what is the sustainability of these numbers -- growth numbers in India? And also if you can clarify if the December quarter has some spillover benefit from the prior quarter where we had seen the GST disruption? Erez Israeli: So it's absolutely sustainable. I don't know if it's 90%, which could be also 15%. So it's absolutely sustainable in this range. And I don't think that we had a major spillover. Mannam Venkatanarasimham: There are no spill like on account of GST implementation. This is a clear quarter. Damayanti Kerai: Got it. My second question is on semaglutide. Again, I guess we are awaiting for Health Canada to revert. But meanwhile, what are your expectations in terms of pricing compared to, say, a few months back, given now most of the companies are, I guess, gearing up for these opportunities? And what's your broader expectation on the pricing and competition in the key markets where you are looking to launch semaglutide. Erez Israeli: So expectations did not change much from our recent discussions. We know that eventually, there will be a competition in Canada. We also know that Novo Nordisk announced that they want also to participate, and they even started to offer certain organization in Canada, their -- what they call their own generic brands, if you wish, in Canada as well. We have made some arrangements like that. I still believe that if we will get the approval, we have a good chance to be alone or even with a low level of numbers of players that will compete. And over time, they will accumulate the opportunity to my opinion, is still there. Damayanti Kerai: Sure. And earlier, I guess, your expectation for pricing across different markets where some were say $20 to $70 per unit. So are you still expecting the similar range in terms of pricing in different markets? Erez Israeli: Yes, yes. The -- most of the markets will be on the lower end of the spectrum. But yes, the spectrum is still there. We did not get yet indications that it will be lower. So over time, when people will get approval, we are expecting to be very competitive markets. There will be a short period of time that can be from weeks to months. It depends on the market, in which we can have healthier prices. But then we are preparing ourselves for another very competitive markets. Damayanti Kerai: So somewhere closer to the lower end of the range, right? That's the expectation. Erez Israeli: Yes, yes, yes. I think this is a fair assumption for your analysis. Aishwarya Sitharam: The next question is from the line of Dr. Bino Pathiparampil from Elara Capital. Bino Pathiparampil: A couple of questions. One, how much has generic Lenalidomide still contributed to the EBITDA margins in the quarter? And now that we have a visibility of our expense levels, et cetera. What shall we look forward to in terms of EBITDA margins in Q4 and FY '27? Erez Israeli: Four years, I did not answer this question. And this is the last quarter that I need to answer this question. So I will not be able to tell you the amount, and this is because of the confidentiality agreement that we have with the innovator. It's not because I don't want. But what we can say that the decline that you see in America is primarily Lena. And actually, without Lena, we didn't grew. So you can take it from there. Bino Pathiparampil: Got it. When you say decline in the U.S., it's Y-o-Y or Q-o-Q? Erez Israeli: Both. Bino Pathiparampil: And second, can I also understand the time lines now, latest time lines for denosumab and rituximab in the U.S.? Erez Israeli: Yes. So the denosumab, Alvotech needs to answer the deficiency letter. And then, of course, it depends on how the USFDA will address the response. So the answer is I don't know, but it is likely that will be in the second quarter of -- and maybe even after, of FY '27. So I'm not expecting it. The normal time that they evaluate the efficiency letter, a new goal date, likely that will take us to this time frame. But I really don't know because it's -- in biologics, you don't always end up with 1 deficiency letter. So we need to see. Answer to denosumab -- on rituximab, I think you asked for both unless I... Bino Pathiparampil: Yes. Yes, correct. Erez Israeli: On rituximab, we have 1 -- out of the 2 comments that they gave, which is repeated to our response, it is primarily related to one of the lines of the fill and finish. And on that, we will answer in the next 2 weeks, give or take. And then the expectation that they will come to visit us again and reinspect us. So the approval likely. It's not official, but I'll give you my best assessment that likely that we'll get reinspection on that specific line. And I'm ready preempting one of the next question. There is no impact on abatacept because abatacept is not on the same lines. But this is the task of rituximab. So right now, it will be a response, then they will decide when they want to come to visit, and it will come for there. So unlikely, let's say, in the next 6 months and maybe more than that. Aishwarya Sitharam: The next question is from the line of Abdulkader Puranwala from ICICI Securities. Abdulkader Puranwala: So just firstly, on semaglutide, so I heard your comments about Canada entry in Feb to May where you expect. I mean, how about the other countries in which the patent expires in March, including India? And in terms of -- we previously talked about having a capacity of 12 million cartridges. So I mean, is there any increase to that? And by when we should see a meaningful traction coming from this product? Erez Israeli: So the starting point is India, we will launch on time. The date is March 21. It happened to be my birthday for everybody. So this is one. In Canada, like I mentioned, it can be any time from now until the goal date of May, that's what I answered Neha. I don't know exactly in what -- in that spectrum, when exactly it's going to be. But the expectation is that we have an approvable product and we will launch at this time frame. In addition to that, we are using our COPP that we got already for media to register in other markets. Altogether like I mentioned in the past, it's much more than 80 markets. I think it's 87 or 80-something markets altogether. But the most meaningful will be Brazil, somewhere around July, as well as Turkey, give or take the same time frame. In addition to that, we have partners both in India as well as outside of India that wants the right for our semaglutide for their market. And we are obtaining also licensing fee for these kind of activities, not just for this product but also for other products. So that's overall. So the 12 million pens remains the same for that period of time. For the period after, we can have more than that. Right now, as you know, we are using primarily the fill and finish from Stelis. But as time will go by, we have additional capacity and we continue to use our partner as well as our internal facilities. Abdulkader Puranwala: Got it. And just to follow up on the biosimilars as well. So what we're having now a CRL for denosumab and rituximab, so internally, how is that impacting our estimates for your entire biosimilar time lines -- launch time lines? And secondly, with abata, is there any time line for launch we are planning internally? Erez Israeli: Sure. So on rituximab, the main the launch -- delay of the launch is to our partner Fresenius. As you recall, rituximab was a product we primarily used to qualify Bachupally. It's actually served the purpose well. Maybe even too much engagement with the authorities. It's actually served the purpose really, really well. in that respect. So the launch -- overall delay in the launch versus the regional plan is probably a year plus. In Europe, we already launched. So Europe is good, and we are progressing there. They're also about the same. We launched in Europe, and we are going to launch in additional markets. It's a very competitive market over there. Denosumab right now because of the efficiency letter, I don't know exactly when it will answer. So I don't know how is the delay, but it is at least 6 months, if not more than that, for this particular product. I don't see an impact of abatacept. The denosumab is made by a partner, Alvotech in Reykjavík, Iceland, abatacept make on different lines in Bachupally, India. Obviously, we need to get approval for abatacept in the stipulated time. We submitted it on time. So the first expectation is that we'll get somewhere towards the end of the calendar of '26, the approval for the IV product and then we can launch it. The approval for the subcu should be by January or February of 2028. We believe that we are still on time for that. Of course, we need to see that we are actually making it happen. But abatacept so far looks in the right direction, especially in the United States. Aishwarya Sitharam: The next question is from the line of Kunal Dhamesha from Macquarie. Kunal Dhamesha: Yes. Just one on the sema Canada. Is there a requirement of plant inspection from Health Canada before approval or all those things are already done from our side as well as from our partners side? Erez Israeli: So no inspections are expected or needed. We just hope for approval. Of course, Kunal, can give us additional queries like a normal regulatory process, but we are expecting approval. Kunal Dhamesha: But normal regulatory process does not do all plant inspection from Health Canada, like the USFDA has. Erez Israeli: No, no inspection. Kunal Dhamesha: Sure, sure. And secondly, no, I think in one of the media articles, the Health Canada spokesperson has kind of mentioned that the manufacturing of the API is different between generic players as well as the -- versus the innovator and hence, substitutable status whether the generics would be substitutable as kind of questionable. So if you could provide any color on this, how much confident we are that our generic would be substitutable at the pharmacy level. Erez Israeli: No, it's absolutely substitutable. And by the way, what we said is not correct, which actually also the innovator is using synthetic API for the injectables and recombinant products for the oral. And we are planning to do the same for the generics. So in that respect, I don't see a merit to that statement. I believe the product is absolutely going to be substitutable. So there is no need for a prescription or special processor branding or any branded generic activity. It's a normal retail products once we'll get approval. Kunal Dhamesha: Sure. And my second question is on the new labor code related provision that we have basically provided some INR 117 crores, so how should we think of this? Is it some bit of retrospective cost also baked into this INR 117 crores or it's just a prospective cost? And is it recurring in nature that structurally, our employee expenses would be a little higher now? How should we think about this? Mannam Venkatanarasimham: Kunal, as per the new labor law codes now, the wage definition has been revised in line with the new labor law codes, it's like whoever employees on the payroll of the company as on December 31, we have recomputed retrospectively. It is not like a prospective. So that's where this entire gratuity leave catchment proportion has been made. And going forward, in line with this may not be this extent, but that would be like my view, less than, I think, 50 basis points, would be the impact, but that's not very significant. Aishwarya Sitharam: The next question is from the line of Madhav Marda from Fidelity International. Madhav Marda: Could you talk a little bit about biosimilar abatacept launch in the European markets as well. Is that something that we are planning to target in the next couple of years? And also, if you could talk about the addressable market in Europe as well? That's my first question. Erez Israeli: So yes, sure. So yes, Europe is a very important market for abatacept. We are going to do it by ourselves as well as with partners. The -- and we have to cover all the markets because in some of the markets, we don't have the ability to go to physicians. And so we are trying to cover as much as possible. Obviously, the markets that are tender markets, we can cover easily by ourselves. Likely, that the launch is July. Mannam Venkatanarasimham: July, we have filed submitting July 2026 and expecting approval by 12 months. Erez Israeli: Yes. So July 2027, you should expect a launch in Europe. Mannam Venkatanarasimham: For both IV and the subcu. Erez Israeli: For both IV and subcu. Madhav Marda: And how large is the addressable market in Europe for abatacept today? Erez Israeli: About $2 billion, maybe a little bit more. Madhav Marda: And is this also in terms of the competitive landscape, given an abatacept seems like we're the only one who's completed Phase III, maybe 1 more person is starting off. I don't know where they are right now. But even in Europe, similar competitive landscape, like we'll probably be the first only company at launch? Erez Israeli: Yes. And by the way, the idea is to launch abatacept in every country that has a demand for this product, either by ourselves or with a partner. So the -- we are planning to launch at this time frame in Europe, in the United States, in Japan, in Canada and in every market that there is a demand for this product. Aishwarya Sitharam: The next question is from the line of Shyam Srinivasan from Goldman Sachs.. Shyam Srinivasan: Just the first one on the NRT, the disclosure you have shared around the growth there, right, is about 25% Y-o-Y. Can you split it out into like constant currency and what the growth was? I remember and we had about INR 6 billion -- INR 600 crores last year same time, and we had INR 1 billion pretax profits. So how has that evolved even for at these levels now? Mannam Venkatanarasimham: So Shyam on the constant currency is year-over-year 8% growth. Shyam Srinivasan: Okay. So the rest is all coming from currency [indiscernible]? Mannam Venkatanarasimham: Yes. Shyam Srinivasan: Okay. So how should we look at the steady-state growth for this? Is there something that has changed? Because I remember single-digit growth was what we guided to. So that continues, right, in constant currency? Erez Israeli: Yes, Shyam, firstly, yes. It can be -- right now, we have -- we see upside to the model. It's not a significant upside. But let's say, instead of -- we always said single digit. But right now, it looks like on the upper side of the single digit. And it may go to double-digit depends because we are also participating in certain tenders like Brazil, and other stuff. So if you win this tender, it gives you a chunk of sales in a particular situation. Overall, it looks good. It looks that we are exceeding the expectations that we had internally. And actually, the demand from this product is higher than what we thought. Shyam Srinivasan: Helpful. So just a subpart of the question was on the profitability as well. As we have -- I know we have done additional brand building access, but has the profitability materially changed? Mannam Venkatanarasimham: Yes. Because of like sales are also higher and then it is like here, the A&P investments overall, if you remember, like at the business case level, we said EBITDA is around 25%. But now since we are doing well, the EBITDA percentage is higher than 25% currently. Erez Israeli: Going forward, right now, it looks really well above expectations. But let's say, I think fair assumption will be that we'll stay with 25%. Mannam Venkatanarasimham: Yes. Shyam Srinivasan: Got it. And just the last question to some of the opening remarks you made, Erez, on Novo strategy in Canada. Just curious why would they want to tie up with some local organization? They didn't file -- they didn't defend their patents originally. Is there a chance that slippage happens across the border into the U.S. for the lower-priced version? Any philosophy or thought process, you're able to understand why they're doing it? Erez Israeli: It's beyond my paycheck. I'm not managing Novo Nordisk, I hardly manage to read this with a lot of difficulties. I'm assuming that they want to protect their market share. They understand what will happen when a company like us, we launched and other companies we launch. Apparently, it's important for them to keep the relationship. They also said it, so I'm kind of that. About over the border, probably, but I have no data or indications about it. We are not building on that. Let's say, we are building on selling to Canadian. And if it will be bought, it will be bought. Aishwarya Sitharam: The next question is from the line of Tushar Manudhane from Motilal Oswal. Tushar Manudhane: Thanks for the opportunity. First question on India, semaglutide opportunity. Just would like to understand the approval which we have got is for diabetes and weight management or only diabetes? Erez Israeli: We got it for the diabetic product. And we are planning to launch eventually all products in India. Also the other part of the products are in the queue to get approval. But what we will launch in March is the generic version of Ozempic, if you wish. Tushar Manudhane: Got it. And so effectively, if at all for weight management, it would not be in March, but subsequently, as and when you get the approval from the regulatory authority. Erez Israeli: The physicians will prescribe the way they believe they should. But the indication of the product launch is for diabetic... Tushar Manudhane: Because the concentration of the product would be relatively -- or the strength of the product is relatively lower for weight management, right, in that way? Erez Israeli: Also, many, many people use the Ozempic for the same. But yes, for the second, the equivalent of Wegovy will come later. In March, we will launch. But in India, we are going to have all strengths. We will have the -- both the indication as well as the oral. Tushar Manudhane: Got it. Sir, secondly, just on this rituximab, let's say, if at all that reinspection happens post your response. In your experience, has it happened like USFDA accounts only for a particular line for inspection and doesn't inspect the entire site as such? Erez Israeli: No, absolutely. It's this is what PI, pre-approval inspection is all about. So they are coming for a specific line. They can extend it if they wish. It's up to them. But it's very, very common, especially on sterile product. Tushar Manudhane: Got it. And on the same thing, what would be the tentative time line for submitting the subcutaneous version filing for USFDA? Erez Israeli: Filing time, you guys remember? The subcu for the U.S. Mannam Venkatanarasimham: U.S. it's July. Erez Israeli: July. Mannam Venkatanarasimham: July 2026. Erez Israeli: In July, we will submit, and we hope to get the approval and the patent date, which is January or February 2028. Tushar Manudhane: Got it. And just one more from my side. R&D spend guidance, if you could share? Erez Israeli: Sorry, what to share? Aishwarya Sitharam: R&D guidance. Erez Israeli: R&D guidance... Mannam Venkatanarasimham: Is in the range of, Tushar, is 7% to 8%, what we have guided earlier. That is -- remains same. Tushar Manudhane: But sir, now that major product, I guess, it was with respect to [indiscernible] largely done. So you think that we will be still on the higher side of this guidance, at least for FY '27? Mannam Venkatanarasimham: So because like pembro also, we have just started the collaboration with Alvotech. I think there's new molecules also we'll continue to introduce. That's why we are saying 7% to 8% range. Erez Israeli: When we have -- we finish a budget of products, we obviously want to develop more products. We have aspiration to launch hundreds of products in the next 15 years. So there is enough products to develop. So it's more how much we can afford in a particular time in our capacity in R&D. Aishwarya Sitharam: The next question is from the line of Vivek Agrawal from Citi. Vivek Agrawal: My question is related to SG&A spend. That continues to remain high. And this is against the company's guidance of some moderation ahead of Revlimid cliff. I just want to understand the outlook here. Are we expecting any kind of decline in SG&A spend next year in FY '27? Or is it or it can still grow Y-o-Y maybe at a lower rate. So if you can help us understand. Mannam Venkatanarasimham: Well, Vivek, if you see like at lower Lena sales for the quarter and our -- as a percentage to the sales is SG&A still is like without this labor law codes impact at 30%. And then in this 30% also the way which like ForEx has given the favorable impact on the top line, here also like where our SG&A spend also there in Russia, in Europe for the NRT, there is a -- like a ForEx impact also is the SG&A. So considering and also we are continuing to invest. I think if you look at like how our branded business as growth be it India, emerging markets, NRT, all are on the solid part of growth. And despite we have continued to invest and then a 30% of the sales, we believe I think we are in the control of the overall SG&A. Vivek Agrawal: Understood. And that makes sense. But just want to understand an absolute level, right? So in absolute terms, are we expecting any kind of moderation or decline in next year? Or it can still grow from here on? Erez Israeli: So you'll see that it will be -- it will grow less, so moderation of the growth. The reason for that, as -- and we discussed it in the past, we want -- and we obviously prepared for the post Lena era for quite some time. We knew it is coming. We are aware of the implications -- it's not -- it did not come as a surprise to us. And part of our cost containment, which is one of the key principles that I mentioned is that we want to control the cost. So also the SG&A, the idea is that, overall, the discretionary costs we are controlling very much like we discussed in the past. And the pace of the growth of the cost will be less than half of the growth of the top line. Aishwarya Sitharam: The next question is from the line of Kunal Lakhan from CLSA. Kunal Lakhan: My question was on the emerging markets, especially Russia, we saw some good growth numbers this quarter. And I do read your commentary that it's primarily driven by new product launches. Just wanted to understand how much of this growth was because of the new products and how much was the base business growth here? Erez Israeli: It is both. It is both. And then -- so we have growth in all 3 segments in Russia, meaning the retail, the hospitals and retail, both on the Rx and OTC. So it's both the old product as well as new products. Kunal Lakhan: And also in terms of pipeline of new products, if you can give some color on the -- in the coming quarters and years, how does the pipeline look like? And is there this growth is sustainable once the current high base is actually in the base? Erez Israeli: So the growth in Russia is sustainable. Not always, you'll see a 21% growth every quarter, but double digit -- healthy double digit in Russia is absolutely sustainable. Aishwarya Sitharam: The next question is from the line of Shashank Krishnakumar from Emkay Global. Shashank Krishnakumar: Just one question on our sema tablets filing in India. I think the SEC has asked for some on-site verification of our Phase III trial data. Now is it something that could -- does it typically meaningfully impact approval time lines? Or is it sort of relatively easier to address? I just wanted to understand that. Erez Israeli: I don't have any concerns on this one. Shashank Krishnakumar: Got it. That's -- and just a related question. So post-March, subject to an approval, there's no litigation overhang even for the launch of tablets, right, in India? Erez Israeli: Correct. Aishwarya Sitharam: The next question is from the line of Surya Patra from PhillipCapital. Surya Patra: Yes. My first question is on the Aurigene CDMO opportunity that in the opening remarks, you have mentioned that it has been qualified as an exclusive supplier of 2 innovative APIs. So how important this opportunity be for us? And when of that we fructifying? And how important or in terms of the revenue contribution that we should be seeing out of it? Erez Israeli: So as we speak, this is still a small business. We -- as I'm sure you all recall, we started the CDMO efforts in a more, let's say, with -- let's say, more emphasis on this activity for the last 2 years. What we try to do is to engage meaningful products and get -- initially, we started with Phase I, Phase II. And we are very happy that effort has started about 2 years ago and now started to yield. How significant it is now? It's not that significant, but we should absolutely see, I believe, $100-plus million coming to us as a growth in the next 2 to 3 years from that. From the overall scheme, it's not big for, but for the CDMO business, it is an important place because it will allow them to have sustainable capabilities over time. Surya Patra: Sure. My second question is on the Lenalidomide, so knowing the fact that we are an integrated player means having our own API also for that. So given that situation, what is the kind of tail end opportunities in the Lenalidomide that we should be seeing? Erez Israeli: We'll continue to be in the product. But given the fact that we are comparing it to the period of time which we had this agreement, I always advise the people not to give a value to it. So it will not confuse all of you. So you should assume that the old arrangements from Q4 is 0. Doesn't mean that we will not sell, but let's say, just for... Mannam Venkatanarasimham: Another generic, another molecule... Erez Israeli: As for clarity, just it will help everybody. Surya Patra: Sure, sure. Just one booking question. We have talked about the ForEx element in the couple of line items this quarter. So whether there is a kind of a net positive impact that we have seen in what are the kind of a net Forex loss or gain that we have seen in the financials for the quarter? And the same number if you can give for the corresponding previous quarter also? Mannam Venkatanarasimham: Follow-up in the Erez -- Surya, if you see that, I think for each of the sales we have called out, especially in the Europe and EM. Definitely, there's a ForEx element. At the same time, in the SG&A as well as COGS, whether we import also we ought to account at a higher price. There is a net-net if you ask and then there's a positive impact on the EBITDA margins. Surya Patra: Sure. Are we quantifying, sir? Mannam Venkatanarasimham: I think we haven't. Not that it's significant, I think, because I don't know if there were several... Erez Israeli: It is not that significant. I don't remember exactly the numbers, but it is not -- like it's not very significant for the second. It's -- I don't remember exactly the percentage, but it's not huge. Mannam Venkatanarasimham: Yes. Aishwarya Sitharam: In the interest of time, we will take one last question from Foram Parekh from Bank of Baroda Capital Markets. Foram Parekh: My question is on the India market. So with the new acquisition that we have done, we have seen growth expanding to 19%. So in FY '27, can we assume with sema launch and as the new acquisition scales up, would it be wise to assume a growth rate higher than the current growth rate of 19%? Erez Israeli: I will not -- I think you should -- we feel very, very comfortable with 15% plus. Can it be more than 19% it can, but I don't recommend to use it for now. What we can say that the 50%, 60% is very sustainable. The rest is depending on certain scenarios, but it might. Plus, we are not done with BD. So likely the things will come, but of course, we cannot guide for it. Foram Parekh: Okay. That's helpful. My second question is on the European side, ex of NRT where we have seen sales mellowing down to 15% growth even with the launch of biosimilars. So again, the question is, as these biosimilars scales up and probably with the launch of abatacept in the European market. So can European region, ex of NRT scale north of 20% or so? Erez Israeli: Again, it can, but it depends on the scenarios. So the -- I think what I can say about Europe, and this is something that we are very proud of in 2018, we had less than EUR 100 million above sales in Europe. And in the future, in the next 2 or 3 years, we will see 10x this number. So it's emphasized the importance of euro for us. Europe is not only what we do in Europe, so what we do with partners in Europe. So it's very, very important for us because we will not have capability in all the markets. So the answer is it's possible if it is possible. We are not guiding for that. What we are saying is that all markets should grow double digit besides the United States that will grow single digit, and this is without taking the impact of Lena. Like I mentioned from next quarter, this arrangement is done and that's how we should see. Foram Parekh: Sure. And last question is on the Global Generics gross margin. As REVLIMID sales have come down, we're seeing gross margins also coming down to 57%, so from next quarter onwards, with 0 REVLIMID sales, can the gross margin territory scale down further? Mannam Venkatanarasimham: So we can expect without Lenalidomide scenario from Q4 onwards. Our gross margin of both Global Generics and PSA in the range of 50% to 55% because some quarters depends upon the products and business mix, it vary, but the range is like 50% to 55% is the range. Aishwarya Sitharam: That was the last question for the call today. Thank you all for joining us. We value your time and participation on the call. If you have any further questions or need additional information, please do feel free to reach out to me. With that, we conclude today's earnings call. Thank you, everybody. Erez Israeli: Thank you. Mannam Venkatanarasimham: Thank you, guys.
Operator: Hello, everyone, and thank you for joining the SmartFinancial Fourth Quarter 2025 Earnings Release and Conference Call. My name is Claire and I will be coordinating your call today. [Operator Instructions] I will now hand over to Nate Strall, Director of Strategy and Corporate Development of SmartFinancial to begin. Please go ahead. Nathan Strall: Thanks, Claire. Good morning, everyone, and thank you for joining us for SmartFinancial's Fourth Quarter 2025 Earnings Conference Call. During today's call, we will reference the slides and press release which are available in our Investor Relations section on our website, smartbank.com Billy Carroll, our President and Chief Executive Officer, will begin our call followed by Ron Gorczynski, our Chief Financial Officer, who will provide some additional commentary. We will be available to answer your questions at the end of the call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list the factors that might cause these results to differ materially in our press release and in our SEC filings which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendices of the earnings release and investor presentation filed on January 20, 2026, with the SEC. And now I'll turn it over to Billy Carroll to open our call. Billy? William Carroll: Thanks, Nate, and good morning, everyone. Great to be with you, and thank you for joining us today and for your interest in SMBK. I'll open our call today with some commentary, then hand it over to Ron to walk through the numbers in some greater detail. After our prepared comments, we'll open it up with Ron, Nate, Rhett, Miller and myself available for Q&A. It's been another very busy quarter for us as we continue to execute on our strategy of leveraging the great foundation we've built at SmartFinancial. Our team's focus on execution has been outstanding as we wrap the best year in our company's history. The fourth quarter was yet another example of that. So let's jump right in and discuss some of the highlights. First, and in my opinion, one of the most important metrics, we continue to increase the tangible book value of our company, which is now up to $26.85 per share. That's growth of over 13% annualized quarter-over-quarter and 17% for the year. For the quarter, we posted operating earnings of $13.7 million or $0.81 per diluted share. This is our seventh consecutive quarter of positive operating leverage. And for the year, we had record earnings of over $51 million. We again had outstanding growth on both sides of the balance sheet, posting 13% annualized growth in loans and 8% annualized growth in deposits. Our history of strong credit continues with only 22 basis points of nonperforming assets. You'll see we added a little more in the allowance to cover our strong loan growth and to address a small handful of fountain equipment loans, but I'm pleased to see these nonperforming numbers continue at exceptionally low levels. On the revenue side, for the quarter, total operating revenue came in at $53.3 million, but I also want to draw your attention to our pre-provision net revenue number, PPNR has grown from $14.5 million in the fourth quarter of '24 to a record $20.9 million in the final quarter of '25 million. That's a 44% increase year-over-year. Our revenue expansion has been outstanding. And operating noninterest expenses also came in on target and flat to Q3 at $32.5 million, another great example of our expense discipline. Looking at the first few pages in our deck, you'll see a continuation of some very nice trends. We're building our return metrics and most importantly, growing total revenue, EPS and as I mentioned earlier, tangible book value. All of those charts are great graphics to illustrate our execution, and I'm looking forward to and expecting these trends to continue. So just a couple of additional high-level comments for me on growth. Our balance sheet expansion is a direct result of the focus of our sales teams. Our continued evolution of an outstanding organic growth company is one of the things I've been most proud of over the last several years. As we've hired well, we've also built an outstanding foundational process that includes aggressively going after new client relationships, growing existing ones along with a diligent prospecting process. I would argue that we were in a small top-of-class group when it comes to pure organic growth. As I stated, we grew our loan book 13% annualized quarter-over-quarter as sales momentum stayed strong and balanced across all of our regions. Our average portfolio yield, including fees and accretion held up well at 6.08% and our new loan production continues to come on to the books accretive to our total portfolio yields. Regarding deposits. Again, deposits were up 8% annualized and that's inclusive of reducing some of our brokered CD positions. It's important to recognize how we're building this bank with core relationships as we have intense focus on both sides of the balance sheet. Looking at the full year for 2025, we grew net loan balances $457 million or 12% and grew core deposit balances $626 million or 14%, excluding that brokered CD activity, just a phenomenal year from our sales and support teams. Our pipelines continue to feel very good as we start 2025, and I will discuss this a little bit more in my closing comments. But we also had some very nice highlight bullets that I want to focus on, on our earnings release this quarter. All tied to building the foundation of a bank that's on track to becoming one of the Southeast's strongest regional community banks. One key highlight in addition to the numbers is our announcement of our planned expansion into the Columbus, Georgia market. Columbus is a natural move for us as we've been doing business in that market over the last few years out of our Auburn office. The timing was excellent to open an office in the second largest city in the state of Georgia given the opportunity to bring on some outstanding Columbus bankers and the current market disruption. Over the last couple of weeks, we started the process to expand this region of our footprint. Our style of banking is going to play exceptionally well in Columbus, and we look forward to getting ramped up in 2026. So all in all, a very nice fourth quarter and a very nice way to wrap 2025. And I'm going to stop there and hand it over to Ron to dive into some of the details. Ron? Ronald Gorczynski: Thanks, Billy, and good morning, everyone. I'll start by highlighting some key deposit results. We experienced great momentum this quarter with non-broker deposits growing by $214 million, nearly 18% annualized from both new deposit production at a cost of 2.60% which was down 87 basis points from the prior quarter and from seasonal inflows. Overall, interest-bearing deposit costs declined by 19 basis points to 2.79% and were 2.74% in December. We also experienced an uptick in noninterest-bearing deposits due to some temporary balance increases at year-end. Looking ahead, we anticipate the ratio of noninterest-bearing deposits to total deposits to stabilize near 19%. Our team's ability to grow and retain core deposits continues to reduce our need for expensive wholesale funding. Accordingly, we paid down $112 million in broker deposits during the quarter with an average rate of 4.27% and we anticipate paying down an additional $44 million during Q1 with an average rate of 4.05%, leaving a remaining broker deposit balance of only $8 million. Despite these paydowns, we anticipate maintaining a strong liquidity position as demonstrated by our quarter-end loan-to-deposit ratio of 85%. During the quarter, our net interest margin increased by 13 basis points to 3.38%. This growth was primarily attributable to a 17 basis point reduction in funding costs, which outweighed the 3 basis point decrease in interest-earning asset yields. The decline in funding costs were driven by our deposit portfolio, which is approximately 45% variable, benefiting from the federal rate reductions and slight mix shift changes. The payoff of our previously issued $40 million of sub debt and the reduction in high-cost brokered funding. The lower yield on interest-earning assets stem from a 6 basis point decrease in loan yields, partially offset by a full quarter impact of securities repositioning completed at the end of the prior quarter. During the quarter, the weighted average yield on new loan production was 6.58%. Looking ahead, we are projecting our first quarter 2026 margin in the 3.4% to 3.45% range. Our provision expense totaled $4.1 million, which included an unfunded commitment provision of $408,000. Approximately $2.4 million of the provision was allocated to our fountain equipment subsidiary, with the remainder of the provision supporting the bank's strong continued growth. Despite the challenges in the small isolated segment of our overall loan portfolio, our asset quality ratios continue to remain very low with nonperforming assets comprising 0.22% of total assets and 2025 net charge-offs to average loans of only 8 basis points. At the end of the quarter, the allowance for credit losses was 0.94% of total loans. Looking forward to the first quarter, we expect this ratio to increase slightly by a few basis points as we transition to a new allowance model. This updated model will provide expanded capabilities, including loan segment specific economic forecasting and more robust qualitative factor adjustments. Implementation is scheduled for the end of the first quarter. Operating noninterest income reached $8.2 million, surpassing our expectations due to elevated mortgage banking revenue and customer swap fees generated by our Capital Markets Group. All other sources of income were in line with or modestly exceeded our expectations. Operating noninterest expenses held steady at $32.5 million. Salary and benefit costs were slightly higher driven by increased variable compensation due to stronger-than-forecasted year-end performance. Our fourth quarter operating efficiency ratio improved to 60%, down from 64% last quarter, primarily as a result of continued margin improvement and a continued company-wide commitment to expense management. For the first quarter, noninterest income is projected to be approximately $7.6 million and noninterest expense is expected to be in the range of $33.5 million to $34 million. Salary and benefit expenses are anticipated to range from $20.5 million to $21 million, slightly elevated from the prior quarter due to the seasonality of our associate merit increases, corresponding employee tax resets and some new hires. Our bank and consolidated capital ratios experienced minor quarter-over-quarter fluctuations primarily due to timing differences between the issuance of new sub debt during Q3 and the repayment of the existing issuance on October 2. Both the bank and company remain well capitalized with the company's total consolidated risk-based capital at 12.67% and tangible common equity ratio improving by 15 basis points to 7.9%. Looking ahead, we are confident that our capital levels are appropriately balanced and well positioned to support continued growth while optimizing returns on equity. With that said, I'll turn it back over to Billy. William Carroll: Thanks, Ron. As you can tell from Ron's comments, our trends continue to have a nice trajectory. And drawing your attention back to Page 8 of our deck, we are successfully executing on the leveraging phase of growth for our company. On our return metrics, we feel very confident in our ability to move through to 1% and 12% ROA and ROE targets we achieved in '25 as we look into 2026. We're building a great franchise and arguably some of the most attractive markets in the country and have put together a team that is rapidly moving us forward. We continue to be one of the Southeast's brightest stories, outstanding markets, strong experienced bankers coupled with a great operational and support team, plus very nice complementary business lines. As we put a bow on '25, we did exactly what we said we were going to do, generate more operating leverage and hit some key revenue and return metric targets. As we look into 2026, expect more of the same. Our focus will be doubling down on our current strategy and getting deeper into our markets. As I mentioned, pipelines are good, and I still think we can continue growing at this high-single-digit plus pace. On talent acquisition, this continues to be a focus. As I mentioned, we recently added a couple of great bankers to lead our Columbus, Georgia expansion and also added some great bankers in a few of our other markets during Q4. We continue to actively recruit and identify revenue producers that fit our culture in all of our regions. I believe we are included in a very small handful of banks that have built a culture where outstanding regional bankers want to work. We will continue to look for these organic growth opportunities and remain very focused on recruiting. So to summarize, as we enter 2026, we are well positioned. We are executing, growing revenue, EPS and book value while staying prudent on expense growth. We remain optimistic around our margin as new production stays strong and as we see the tailwind coming from the rate resets in our loan portfolio over the next couple of years. Credit continues to be very sound. And on goal setting, setting our $50 million revenue target for the team several quarters ago led to some great success this past year. So we've set a new internal goal challenging our team to take the next step on our financial metrics. We set a challenge goal to hit a $4 EPS run rate by the end of '26, so basically hitting $1 in earnings per share by Q4. That's not going to be easy, but I know we're up for the challenge. There's a great energy around our company, and we're excited to tackle 2026. I appreciate the work of our SmartFinancial SmartBank team and the efforts of all of our associates. I'm very proud of what we have going on here at SMB. So I'm going to stop there and Claire will open it up for questions. Operator: [Operator Instructions] Our first question comes from Russell Gunther from Stephens. Russell Elliott Gunther: I wanted to start on the loan growth side of things, another very strong double-digit organic growth year for you. It would be helpful to get a sense for whether or not you think that type of growth rate is sustainable in '26. And perhaps as a part of that question, maybe just comment on where that recruitment pipeline does stand today outside of Columbus, where else might you look to hire? William Carroll: Yes. I'll start, Russell, and then any of the other folk -- guys can jump in. As far as thoughts around growth for '26. I think I mentioned, we did -- we had a really, really nice year, double digits every quarter. And so for us, going into '26, we're not necessarily backing off, but as the balance sheet gets a little bit bigger, it's tough to keep hitting those outsized percentages. We're -- again, we're targeting, and I said it in my comments, kind of high-single-digit plus. That means there might be some quarters where we exceed 10%. But I think if we can hang in there to that 8% to 9-ish, I think that helps us get to where we want to in '26. So we're still going to kind of guide to high-singles. And then as far as recruitment pipelines, we've got a really -- we're doing a lot of work. We're talking to a lot of different bankers. Again, as we've really kind of got this thing up on plane over the last couple of years. We've just -- I do, and I said it, I think we're creating a culture where a lot of really good bankers are enjoying working. And so for us, we're just going to continue to tell our story where we look for folks that fit our culture first, that align with the vision that we have for our company but we're doing that, and there's really no market, in particular, that we're looking at. We're looking to continue to grow as we double down on getting deeper in every one of these markets. We're really looking at all of our key zones to add talent where we can find them. So pretty agnostic to the market. We're just looking for really good bankers that can help us execute our growth goals. Russell Elliott Gunther: Okay. Excellent, Billy. And then last one for me would be on the expense side of things. I appreciate the guide for the coming quarter. I think you guys have posted 7 consecutive quarters of positive operating leverage. So it would be helpful to just get a sense for how you're thinking about the overall core expense growth rate for the year as you contemplate things like franchise investment in technology or the hiring plans you just referenced. William Carroll: Ron, do you want to dive into that? I think in our comment, Russell, we're going to try to stay pretty prudent, but we want to continue to invest in people and tech where appropriate. But Ron, you've got any thoughts on kind of just overall year guidance. Ronald Gorczynski: Yes. We've been brought in the last couple of earnings calls. We're trying -- we're expecting to stay within the $34.5 million to $35 million band. So we're probably targeting around 5% overall expense growth year-over-year. Operator: Our next question comes from Catherine Mealor from KBW. Catherine Mealor: It was really nice to see the NIM expansion this quarter and then it looks like we've got more coming in the first quarter. Was just kind of thinking about it from a full year perspective and maybe how much that plays into hitting that dollar run rate in the fourth quarter of '26. Do you feel like as long as rates are stable that we can continue to see NIM expansion in the back half of the year just given where the back book loan repricing is coming from? You have a nice chart in your deck that kind of highlights that. Or are we more just kind of stable after we see this pop in the first quarter? William Carroll: Ron, do you want to take that? Yes, I get. I'll let Ron kind of dive into the details. But yes, I think for us, it's just -- I think as long as rates stay relatively stable, I think you said that, that's kind of what we're betting on. But Ron, do you want to maybe talk a little bit about kind of where you see NIM over the course of the next little bit? Ronald Gorczynski: Yes. After the first quarter, 3.40%, 3.45% range, we're probably seeing some slower incremental growth quarter-over-quarter. We're now looking probably to stay at 3.45%. I would see it probably getting to the 3.50%, plus or minus range by year-end. Catherine Mealor: Okay. Great. And then on the size of the balance sheet, you had a little bit of securities growth this quarter more than we've seen for the rest of the year. How are you thinking about the size of the bond book as we move through '26? Ronald Gorczynski: At this point, I think right now, we're really targeting staying around 11%, 12%. We don't see our bond book getting that much greater than that. We still have some liquidity that we can deploy for loan growth. But again, the investments we should stay around that 12% range of total assets.. Operator: Our next question is from Steve Moss from Piper Sandler -- apologies, from Raymond James. Stephen Moss: Maybe just -- maybe just following up on the margin here. Ron, in terms of just obviously nice expansion this quarter. I was thinking maybe your funding costs would come in a little bit more just given how many Fed cuts we've seen in the past 3, 4 months. Just kind of curious maybe any color around spot funding costs at quarter end or kind of how you're thinking about the liability side of the business? Ronald Gorczynski: I think we intend -- for Q1, we've had -- we'll obviously get the full hit of the rate cuts done in the fourth quarter. We intend to go down probably around, I'd say, 17, 18 basis points to Q1. Again, everything is market dependent on what we do here. We're getting a lot of lift from -- we did pay down some brokered deposits or some callable brokered deposits that gave you some lift. But I still think that we will see it slow down as if we don't get any rate cuts or slower as we go through the year. Stephen Moss: Got it. Okay. Appreciate that. And then in terms of just the hiring in Columbus, Billy, maybe just if you could size up the team there in terms of how big that could get, you talked about hiring. Maybe just kind of curious like where -- what that could mean for expenses -- expense growth over the course of '26? William Carroll: Yes. Yes. I think a lot of -- Andrew, probably the easiest answer, Steve, is it depends. I think it depends on continuing to find the right folks that fit us. The initial folks that we've come over to help -- that came over to help start the market, we're really excited about, and we're going to continue to dive in and recruit. When we typically do an expansion like this, we've done it traditionally is that we make sure that we kind of balance the expense growth with production. So I don't think you'll see a material impact in even as we hire, we typically try to blend that in as we continue to grab growth on the balance sheet and so from that standpoint, I don't think you'll see a material number that would impact the expense run rates going forward. I do think over the course of the next several quarters and maybe the next couple of years, we're going to continue to see some disruption in that market. I think there will be opportunities to continue to add really good team members in that market. And remember, the thing about it, Columbus, even though it's only 45 minutes from Auburn, we've really been able to build -- we've been able to build some really nice relationships in that zone. We bank a lot of folks in Columbus today out of Auburn. And so this just really gives us just a nice spot, and it allows us to get deeper in that zone, which really aligns with everything that we've been saying. And so I think we're going to be able to kind of use this that little flag planting in Columbus to just pick up some good talent over the next little bit. But I don't think you'll see it have a material impact on the expense line. Stephen Moss: Okay. Appreciate that. And maybe just following up, Billy, I mean, obviously, you've been doing a lot of organic growth here and quite successful on that side. Just curious, any updated thoughts on M&A here? William Carroll: Not really. We said it all along and it would really have to be something unique and special to get us to want to pivot. When we're growing, you saw -- I mean, we were able to grow $0.5 billion on both sides of the balance sheet last year. That's 10% of our -- almost 10% of our footing. If we continue to do that, not have to put any shares out, man, that's a home run. And that's something that as we built this thing to be able to create this engine. And it's great. It's just a testament to the sales teams, the sales leaders that we have in this company that we're really starting to generate that sort of momentum. And again, I touched on it in my comments, but we've really developed I think a great process that quite frankly, I don't think a lot of banks have been able to replicate. There's a handful that we watch that we've seen to do it really, really well. I think we're kind of getting into that class where we can be a really strong organic grower. So as long as we can continue to execute this way, I think you'll probably just see more and more of this from us. Wesley Welborn: Billy has convinced me over the last 2 years looking at how our metrics have improved over the last 2 years, we can really grow organically and improve this bank and improve the efficiency and the profitability and manage risks easier on our team to build it organically. William Carroll: What's risk. It's -- we're kind of boring, Steve. We kind of laugh. We laugh around our table. We're kind of a boring story. But... Wesley Welborn: Except our shareholders. William Carroll: Except -- but we continue to look to improve these EPS numbers and these efficiency numbers and the metrics and all of that will come. We just continue to execute. We don't have to take the risk of looking to integrate another bank or another culture. Some folks like that strategy. And we've done it. We've been successful doing it. I'm saying that we won't ever do it again, but man, it's just -- it needs to be special to have us pivot today. Operator: Our next question comes from Stephen Scouten from Piper same. Stephen Scouten: So Billy, I know you said you're kind of agnostic around potentially where to hire as you think about talent. But are there any other markets that you see similar to Columbus that could be kind of a natural extension to where you guys are doing business today, whether that's I don't know if it could be making or if it could be anywhere else kind of throughout the footprint that might make sense in the future? William Carroll: Yes. Stephen, it is. Yes, possibly. When you look at kind of where we are, I mean, obviously, we bank some of the -- we bank some of North Georgia out of Chattanooga. That would be something that's similar if you found something that might be -- you might be in that market that could help Macon again, kind of looking at some of the South Georgia, as we continue to grow maybe that's not on our plan today, but again, a market that we could grow into. The biggest things -- and we really are agnostic to the market. But we've got tons of opportunity, especially in markets like Nashville and in markets like Birmingham. So we're -- we want to lean into those markets. We added another -- we added another office, just a loan production office in the Nashville Metro area last quarter just to give us a little bit more space as we continue to add some good talent in that area. And so I think you'll see us wanting to lean into those markets, get a little bit -- get even deeper into the Birminghams and the Nashvilles. But nothing really that looks like Columbus on our Board today, but we could potentially look at a couple other of those Georgia markets down the road. Stephen Scouten: Got it. That's helpful. And I like that you noted your kind of internal challenge goal here to kind of hit this $1 a quarter, maybe EPS run rate by year-end '26. Is there anything more significant that needs to occur or any kind of segment of the earnings power of the bank that need to improve to get you there? Or is it more just a continuation of the same things you've been doing? Drive operating leverage, organic growth and the like. William Carroll: Yes. Just stay on the path, stay diligent in our process, keep grinding. It's kind of like we say around here. just keep drawing it. A lot of it is no, there's really nothing that we need to do, just continue to execute. Just a little bit more operating leverage over the course of the next several quarters, probably a little flatter with the short quarter, operating leverage is a little bit flatter probably in Q1 with a shorter quarter. But -- and we think that ramps up as you get into Q2, Q3, Q4 as we get this loan back book repriced as we get up, get some -- get the growth that we think we can get -- feel like we can get on to the balance sheet during the course of the year. We can get there. We got to stay disciplined on expenses. We've been able to do that. I don't think there's anything that's going to cause us to veer off that course. So a lot of it like I said to Steve's comment earlier, we're kind of boring. We're just going to execute. And I said I'm really bullish on the team that we've got in place to help us do that. So nothing special, just go work hard. Stephen Scouten: Yes. Makes sense. Boring is never bad in banks. So Congrats on all that continued success. Operator: [Operator Instructions] We currently have no further questions. So I'll hand back to Miller Welborn for any closing remarks. Wesley Welborn: Thank you, Claire. We appreciate everybody being on the call today. Thank you for your continued support of the bank and for all that each of you do every day. Look forward to jumping into '26. And thank you very much. Have a great day. Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.
Operator: Good morning, and welcome to United Airlines Holdings Earnings Conference Call for the Fourth Quarter and Full Year 2025. My name is Colby, and I'll be your conference facilitator today. Following the initial remarks from management, we will open the lines for questions. [Operator Instructions] This call is being recorded and is copyrighted. Please note that no portion of the call may be recorded, transcribed or rebroadcast without the company's permission. Your participation implies your consent to our recording of this call. If you do not agree with these terms, simply drop off the line. I will now turn the presentation over to your host for today's call, Kristina Edwards, Managing Director of Investor Relations. Please go ahead. Kristina Munoz: Thank you, Colby. Good morning, everyone, and welcome to United's Fourth Quarter and Full Year 2025 Earnings Conference Call. Yesterday, we issued our earnings release which is available on our website at ir.united.com. Information in yesterday's release and the remarks made during this conference call may contain forward-looking statements which represent the company's current expectations and are based upon information currently available to the company. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release, Form 10-K and 10-Q and other reports filed with the SEC by United Airlines Holdings and United Airlines for a more thorough description of these factors. Unless otherwise noted, we will be discussing our financial metrics on a non-GAAP basis on this call, and historical operational metrics will exclude pandemic years of 2020 to 2022. Please refer to the related definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of our earnings release. Joining us in Houston today to discuss our results and outlook are Chief Executive Officer, Scott Kirby; President, Brett Hart; Executive Vice President and Chief Operations Officer, Toby Enqvist; Executive Vice President and Chief Commercial Officer, Andrew Nocella; and Executive Vice President and Chief Financial Officer, Mike Leskinen. We also have other members of the executive team on the line and available for Q&A. And now I'd like to flip the call over to Scott. Scott Kirby: Thank you, Kristina, and thank you to everyone for joining us today. 2025 had more than its fair share of unusual challenges, but the people of United did a truly remarkable job of living our no-excuses culture, focusing on the customers and overcoming obstacles. Last year, was really a proof point that the strategy we've had to build a revenue-diverse, brand-loyal airline at United for the last decade is not only working, but it's remarkably resilient in tough times as well. The proof is in the numbers, and we expect to be the only U.S. airline that managed to grow EPS year-over-year despite all the headwinds. The United team truly is the best in global aviation, and I'm very proud of them. They have made today's United a remarkably different airline than it was in the past. Before turning to 2026, I want to wish all the best to a friend and an industry icon, Glen Hauenstein. My first real introduction to what has become modern successful airlines like Delta and United was at Continental in 1994 with Glen and Andrew Nocella as they were dismantling CALight and building the Newark and Houston hubs that we at United are now proud to call our own. I remember Glen once coming into the conference room where I sat and yelled at me for being too loud. Something, by the way, that my wife, Kathleen, wholeheartedly agrees with Glen on. At an airline, I think the most important and impactful job is building a great commercial strategy, and a large modern airline simply cannot succeed without a commercial superstar. Glen and Andrew are simply in a separate league from all the other commercial minds around the globe. And Glen, on a personal level, given the momentum at United, I'll just say that your retirement timing is impeccable. After a solid year in 2025, 2026 sets up as more of the same at United, but with a much better industry backdrop. Our plan has been working for the last decade and while we make minor adjustments to it every year, the core of building a great revenue-diverse, brand-loyal airline remains the same. We've had the right strategy for a long time now and the United team across the board is just better at executing than any other airline in the world. I'm proud of them and excited as we continue to build the best airline in aviation history. On to you, Brett. Brett Hart: Thank you, Scott, and good morning. While 2025 presented a challenging macro backdrop for the industry, we remain laser-focused on the customer experience and on building brand loyalty. Continued investments in the travel experience, communication and reliability helped us navigate disruption and deliver for our customers. Our strong Net Promoter Scores for the year highlight the care and consistency built into the United travel experience. Despite the operational headwinds of the year, we finished 2025 with an almost 3-point increase in our overall Net Promoter Score. And during the month of November, amid an unprecedented government shutdown and real-time flight reductions, we had the best NPS month in the company's history. This is a testament to our customer focus, decisive actions and customer-friendly policies and commitment to transparent communication especially during disruptions. Toby will share in more detail the specific actions we took to produce these customer-friendly results. We've also continued to innovate, and in the fourth quarter, we introduced new features and more personalized updates in our award-winning United app, including enhanced mobile bag tracking, virtual gate, real-time boarding updates and more detailed arrival information. These enhancements are designed to improve transparency, save customers' time and provide clearer real-time communication at key moments of the journey. With more than 85% of customers using the United app on the day of travel, another one of our competitive advantages and we are confident that these investments are meaningfully enhancing the United experience, earning customer trust at every touchpoint and winning brand-loyal customers. On labor, we are currently in active negotiations with 4 of our labor unions. We look forward to reaching industry-leading contracts with these groups, and we'll share more when able. We have a bright 2026 ahead of us, and I want to thank our employees for the important work they do every day. I am proud to say they will be receiving over $700 million in well-deserved profit sharing for 2025. Their resilience and shared commitment to our values and customers are what make United strong. I now hand it over to Toby to discuss our operation. Toby Enqvist: Thank you, Brett, and I'm happy to join you all on this morning's call. At United, we're proud of our no-excuses culture and last year it was really put to the test as the United operations team confronted a wide array of challenges outside of our control. I'm so proud of how the team responded and delivered for our customers. Capitalizing on investment in our people, new tools and other innovations allowed us to be nimble and react quickly to capacity directives from the FAA and to recover faster and stronger during other irregular operations than ever before. As a result, we had the highest seat completion factor in our history and #1 of the big 3 legacy carriers in 2025. In fact, at O'Hare in 2025, we canceled half the seat rate of our largest competitor. We flew a record 189 million passengers and ranked #1 in STAR D0 for the second year in a row. For the year, United ranked #2 in on-time departures and #2 in cancellations. Our United Express operation delivered 134 days of perfect completion. This is a remarkable performance in the face of the outside challenges that we face at Newark and staffing challenges at the ATC. Beginning in the early November, the FAA directed airlines have temporarily reduced departures at 40 major airports due to staffing and system constraints from the prolonged U.S. government shutdown. We work closely with FAA leadership to swiftly implement the reductions, and we want to thank them for their partnership. At United, we were intentional with how we made these cuts. From the start, our priority was protecting the integrity of our network. We made a clear decision not to cut long-haul international and hub-to-hub flying. Those flights are the backbone of our network and aided in retaining connectivity and flexibility for our customers. We focused on reductions where we could minimize customer impact, with the majority of cuts concentrated on regional flying and non-hub domestic routes with smaller narrowbody aircraft. In many cases, that meant trimming frequency on routes where there were multiple daily options rather than eliminating connectivity altogether. Where we could, we consolidated flights in fewer departures with larger aircraft to move the same number of customers more efficiently and reducing further disruption. Even with these changes, total cancellations were only approximately 4% of departures during peak periods and had a minimal impact to our capacity in the quarter. Operationally, I'm very proud of how our team managed the rolling schedule changes. We're no strangers to managing through irregular operation and that has contributed to the speed and flexibility in which we respond to these situations. We published cancellations several days in advance to give peace of mind to our customers and directly communicated any changes through our app and website and focused on reaccommodating customers wherever possible as quickly as able. Notably, nearly 60% of our customers, who's flights were canceled were rebooked within 4 hours of the original departure time. Any customers traveling during this period could request a refund even if their flight ultimately operated and that included nonrefundable and Basic Economy tickets. It was the right thing to do. Thank you to each United employee who helped us successfully navigate these real-time schedule changes. We closed out the year on a high note. United delivered the best operation in the industry over the holidays, ranking #1 in on-time departures and on-time arrivals. We canceled less than 1% of our flights during the holidays. And following the Caribbean airspace closure in early 2026, we added 10% more seats over a 3-day period to help customers return home, an outstanding way to close out the busy holiday season. 2025 is a year we should all be proud of, especially given the multiple headwinds United and the industry faced. Running a strong operation sets the foundation for delivering on our financial commitments and it helps attract the brand-loyal customers that we speak so much about. Thank you again to our incredible team here at United, and I look forward to building on our momentum in 2026 together. Now to you, Andrew, to speak about the revenue environment. Andrew Nocella: Thanks, Toby. United's top line revenues increased 4.8% to $15.4 billion in the quarter on a 6.5% increase in capacity year-over-year. Consolidated TRASM for the quarter was down 1.6%. Q4 was United's highest revenue quarter ever. Premium cabins outperformed main cabin once again in the quarter. Premium cabin revenue were up 12% year-over-year on a 7% more capacity. PRASM for premium cabins outperformed the main cabin by almost 10 points in Q4. Main cabin revenues were up 1% on a 6% more capacity for the quarter. For the year, premium revenues increased approximately 11%, while standard and Basic Economy revenues were down approximately 5%. We did see a nice bounce back in our international flying in Q4 after a challenging Q3. The Pacific and the Atlantic performed well with PRASM turning positive in both regions. Latin America, on the other hand, had yet another challenging quarter. Cargo revenues for 2025 were up or were $1.8 billion to -- up 2.1% year-over-year. Loyalty revenues for 2025 were up 9%. Remuneration from global co-brands was up 12% for the year and 14% for the quarter. And for the third year in a row we added over 1 million new co-brand cards. As we look to Q1 2026, we expect to see sequential improvement. The possibility that all regions have positive RASM year-over-year. Last year did start very strong from a bookings perspective but then dropped off sharply towards the back 3rd of January and for the rest of the quarter. Based on what we've seen so far this year, bookings and yields are outpacing the strong start from last year, and we're hopeful that the momentum will continue, which could admittedly cause our guidance to feel a bit conservative. We also expect the domestic capacity environment to be quite favorable for the first half of 2026 with small but meaningful amount of perennial unprofitable capacity by others leaving the market. However, in Q1, premium revenues continue to lead the way, while standard main cabin seats continue to show some weakness. This main cabin weakness is due to unprofitable capacity offered by other large spill demand U.S. carriers as ULCC capacity becomes less relevant. We also have a tailwind in Newark later this spring with operations running well. We expect Newark to give United a unique RASM tailwind versus the industry considering the events last spring. With the number of flights now limited to what the runways can accommodate, our customers can and are booking in confidence. We did make aggressive Latin capacity adjustments for Q1 to correct underperformance we saw in Q3 and Q4. However, recent geopolitical events are having a measurable negative impact on bookings in the Caribbean. Yet, we still have a chance at positive Latin RASM depending on when concern dissipates. All United hubs were once again profitable in Q4 and for all of 2025. A fully profitable hub framework allows United to invest incremental capacity on a solid foundation. We think we're only 1 of 2 large U.S. carriers that can say all their hubs are profitable in 2025, and these same 2 carriers are expected to represent the bulk of industry profits in the year. We also believe that of the 3 airline hubs located in Chicago, only United's hub was profitable in 2025, and we expect it will be profitable again once again in 2026. Today, I also wanted to talk about our commercial focus points for 2026 to drive higher RASMs and margins. Our first focus will be new seasonal capacity shaping of our long-haul schedule. Peak demand for international travel has spread from the second and third quarters to other parts of the year. As a result of this shift, we expect the fastest-growing quarter for United's international capacity to be Q1 in 2026 with minimal growth in Q3. Flattening capacity across the quarters would have not been correct in 2019, but it is today. A second focus will be enhanced merchandising of our growing product lineup. We plan to increase segmentation and customer choices with our changes, which we'll announce in early 2026. This effort includes the largest redesign of united.com in a decade. Our third focus will be enhanced connectivity. We will soon approach the connectivity goals we set in 2021 with the United Next Plan by 2027. As a result, 2025 represents United's high watermark on domestic capacity growth as we draw this very successful part of the United Next plan to an end. Our fourth focus will be MileagePlus, enhancing the growth potential in the coming years via drawing a larger distinction between true loyalty programs and reward programs offered by others. We have a legacy contract that continues with our banking partners regarding core economics, but we still have plenty of ideas to boost growth in revenue in the meantime. And premiumization is our fifth focus in 2026. We've had this premium focus for almost 8 years now. And while our lead is now being followed by a range of other U.S. carriers, it's United's 7 business-centric hubs that dictate this plan and why we expect to be more successful at it. Last spring, we announced our new Elevated interior for our widebody jets, including the new United Polaris Studio suites, Polaris suites with doors, along with countless other upgrades to the soft product. 4 Elevated 787s are now being prepared for delivery in the coming weeks, and we expect 16 more for the remainder of 2026. These aircraft, along with other new deliveries will result in our premium capacity growth accounting for more than half our growth in '26. We look forward to another innovative set of products and aircraft announcements in 2026. United is defining what premium means for all customers, no matter where they sit or what they pay. Our United Signature Interior mods and Starlink installs are now moving at pace and will be completed in 2027, creating consistent premium product we hoped for when we announced United Next in 2021. A quick but important preview for 2027 is our long-term focus on gauge. While gauge is not a focus in '26, it will be in '27 and beyond as a much higher percentage of our growth equation. Most of our commercial focus areas in '26, of course, ladder up to decommoditizing our product, providing consumers with more choices and winning a higher share of brand loyal customers. We like our plan. We remain focused on doing more of the same in the coming years. With that, I offer my thanks to the entire United team for a great but challenging 2025 and hand it off to Mike to talk about our financial results. Mike? Michael Leskinen: Thanks, Andrew. We closed out 2025 on a high note and delivered fourth quarter earnings per share of $3.10 within our guidance range of $3 to $3.50 and that's despite a $250 million impact to our pretax earnings from the government shutdown. 2025 was a challenging year for the airline industry. Between macro volatility and idiosyncratic challenges at Newark, each quarter of 2025 experienced a material event that pressured earnings and further widened the performance gap between industry leaders and laggards. Our full year 2025 EPS came in at $10.62 which was slightly up versus 2024 and despite an $0.85 headwind from our challenges at Newark. I expect we will be the only U.S. airline to grow EPS last year. This is an incredible proof point of United's ability to execute through times of elevated uncertainty when most of the industry cannot. An airline with a business anchored by brand-loyal customers isn't only more profitable, it's also more resilient. Our plan is working, and I'd like to thank the entire United team for their hard work in the face of all these challenges. I'd particularly like to thank our frontline flight attendants, pilots and customer service representatives. Through an extraordinarily difficult time during the government shutdown, you served our customers, leading to the highest Net Promoter Scores in United's history. Over the last year, we've invested $1 billion in the customer and, as a result, customers are taking note. From larger clubs to free StarLink Wi-Fi to United product offering as well as further segmentation continues to attract more and more brand-loyal customers, driving strong top line performance and more durable earnings. The investment in the customer has been enabled by our industry-leading efforts to drive cost efficiencies across the core business. In the fourth quarter, our CASM-ex year-over-year was up only 0.4%, bringing our full year 2025 CASM-ex up to 0.4% as well. We expect this performance to be industry-leading and will continue to drive efficiencies across the business in 2026. Now turning to the outlook. Looking to the first quarter, we expect earnings per share to be between $1 and $1.50, an approximately 37% earnings improvement versus the first quarter of last year at the midpoint and margin expansion year-over-year. Building off a strong quarter, for the full year 2026, we expect earnings per share to be between $12 and $14. At the midpoint, this represents over 20% growth and implies continued margin expansion as we march towards double-digit margins. Turning to the fleet. This year, we expect to take delivery of over 100 aircraft -- 100 narrowbody aircraft and approximately 20 widebody aircraft. Accordingly, we expect our capital expenditures for the year to be less than $8 billion consistent with the $7 billion to $9 billion multiyear CapEx guidance we provided back in 2024. On the balance sheet, becoming investment-grade rated is a major priority of mine, and in 2025, we made meaningful progress towards investment-grade metrics. We paid off $1.9 billion of our high-cost COVID-era debt and brought our total cost of debt down to 4.7%. Our net leverage at the end of the year was 2.2x. As a result of our deleveraging efforts, combined with our earnings power and industry bifurcation, we've received 5 upgrades to our credit ratings across Moody's, S&P and Fitch over the last 13 months. United is now just one notch below investment grade at all 3 agencies, our highest ratings in over 25 years. In 2026, we plan to delever further and target net leverage below 2x with the intention of achieving investment-grade metrics by year-end. We're hopeful to achieve investment-grade rating shortly thereafter and are committed to managing our balance sheet to achieve that goal. Free cash flow generation remains a key priority. In 2025, we generated $2.7 billion in free cash flow, and in 2026, we expect to deliver a similar level of free cash flow given higher aircraft deliveries. In the medium term, we expect free cash conversion to remain around 50%. And as we exit the decade, we continue to expect free cash conversion to expand to around 75%. On the buyback, we have $782 million left in authorization from our Board of Directors. We will continue to balance our priority of being investment grade with making opportunistic purchases of our shares when market opportunities present themselves, hopefully less frequently. 2025 proved United could effectively manage through macro volatility and company-specific challenges while also delivering resilient earnings. Our relative margins remain strong and moving forward our focus will be on continued margin expansion and achieving double-digit margins. The industry continues to transform, and competitive dynamics are evolving with United firmly in the lead. Taken together, United Airlines is positioned for another year of growth and success that will drive value to our employees, our customers and our shareholders. Now back to Kristina to kick off the Q&A. Kristina Munoz: Thank you, Mike. We will now take questions from the analyst community. Please limit yourself to one question and if needed, one brief follow-up question as we hope to get to as many of you as possible. Colby, please describe the procedure to ask a question. Operator: [Operator Instructions] Your first question comes from Conor Cunningham from Melius Research. Conor Cunningham: Just on the corporate travel comments, you've noted a lot of strength there in January so far and I actually think that's your much -- most difficult comp of the quarter. So if you could just talk about how things change throughout 1Q. I just think that you're going to be exiting at a much higher booking rate in March than you are right now. So if you could just talk about that in general. Andrew Nocella: Thanks, Conor. I think I agree with your conclusion. 2026 has gotten off to a really, I think, very strong start. But in particular, business volumes have gotten off and are just really compelling. And the way I look at it is, if you think back to early 2025, we saw actually strong business volumes at first, but those numbers quickly trailed off to be up just very low single digits in February and March. This year, for the same early January week, business revenue is up high single digits and nearly 20% year over 2. So if current business volumes simply continue, you'll see year-over-year growth for the last 2 weeks of January for business, up 12%, 13%, 14%. The further you push this math into February and March, the stronger it potentially gets. So I think I agree with your conclusion. Well, it's still early in the year, but just -- we're off to a great start from a business point of view. Conor Cunningham: Okay. Great. And then, I mean, I know you spent a lot of time diversifying away from the main cabin and with all the premium and corporate and all that stuff that you're doing, but it just feels like we've been -- I mean, you noted ongoing issues in the main cabin into 2026 so far. So if you could just talk about how that segment potentially flips to the positive and are you assuming any sort of like rate of change or that flipping positive at some point later in the year? Andrew Nocella: Well, look, I think it's inevitable. Premium cabins are really on their fourth year in a row. But I do think it's inevitable that the coach cabin, the main cabin improves. And it's a really simple equation. It's the unprofitable capacity offered by others in the marketplace that continues to fly more than you otherwise expect to fly. So we'll see how that all shakes out. I can't predict the timing, but I do think eventually businesses stop doing unprofitable things. We'll have to see when that happens. But I remain bullish that we are going to see the performance of the main cabin flip at some point in the future. And when it does, that will be enormous fuel to our margin growth and be great for the industry itself. So time will tell, but I remain optimistic that we're on the course for that at some point in the future. Operator: Your next question comes from David Vernon with Bernstein. David Vernon: So Scott, maybe I'd like to get your thoughts on how you're thinking about some of the changes that are being discussed around the credit card ecosystem and what that might mean for United as we look forward the next couple of years. If some of these changes are implemented, how do you think about what you can do to manage around it? And what are you and your partners thinking about as the most likely set of outcomes as far as whether it's a cap on interest rates or the credit card competition, what have you. Andrew Nocella: Sure, I'll take the question. I think it's a really good and relevant question, obviously. And first, we're in constant contact with Chase on the issue. Obviously, Chase is our largest co-brand partner, and we talk to them all the time on this issue. And what I'd say is while much remains uncertain, of course, United's portfolio would be impacted. But in our view, it would be impacted a lot less than just about everybody else. MileagePlus co-brand holders tend to skew towards higher FICA band ranges, often revolve at a lower rate and have low loss rates. These factors make us different than most non-airline co-brand programs and maybe even a lot different from a lot of other airline co-brand programs. We're going to let the banks sort this out. Interest rates and revolve rates are more their thing. Our focus is on providing amazing benefits via this program that our consumers love. So a lot more to come on this subject, but we feel like we're on top of it and we will be ready for whatever happens in the future. David Vernon: And then maybe just as a quick follow-up, you mentioned some additional stuff you might be able to do outside of the -- on top of the existing sort of agreements that you have with your card partners. Any more color you can give us in terms of kind of what that means in terms of specific changes or enhancements you can drive the program in the near term outside of renegotiating the contract? Andrew Nocella: Sure, I'll do my best. But first, I want to welcome Jarad Fisher to the team. Jarad's our new Head of MileagePlus. He has experience in credit cards, strong brands and airlines which make him a perfect fit to lead MileagePlus into the next chapter. Richard and Luc have just done a great job. And as you can see from our new card growth stats that I said earlier in 2025 along with our remuneration growth. I know I often talk about these changes at MileagePlus without a lot of details. But what I'll tell you is Jarad and I will have a lot more to say about this, and we're going to say something within the next 10 weeks to accelerate growth and pull levers that we can pull that are in our control. So just a few more weeks and I'll be able to, I think, answer that question sufficiently for you. Operator: Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Great quarter. Mike, maybe this first one's for you. The unit cost has been stellar across 2025 quarters even in light of the investments you guys are making around the product, the experience. And you're debunking that sort of view that there's a variable cost relationship here. So maybe can you dissect what you guys are doing right, what the opportunities are for efficiencies going forward and how that plays into 2026 growth? Michael Leskinen: Thanks, Sheila. And I'm very proud of our cost performance in 2025. I think it will prove to be industry-leading, as I said in my prepared remarks. Look, the cost efficiency in 2025, in the fourth quarter, the operation -- the strong operation form the foundation. And so a lot of credit goes to Toby and his team for driving that strong operation. Strong operation is a cost-efficient operation. But in addition to that, we are driving a real cultural efficiency here at United Airlines. And I'll give a few examples, and we can talk more about it as time goes on. But a few examples are as we continue to invest in an industry-leading app, it drives a lot of automation for quicker check-in. It's customer-pleasing. It also takes some costs out, some variable costs out of our system. We've also overhauled our global procurement organization. And I'm really happy to say that through this first year of that overhaul, we've identified and delivered on $150 million in run rate savings in the procurement organization and there's a lot, lot more to come. And then finally, we are using sophisticated technology to help model -- to model demand for our tech ops organization and that's leading to more productive technicians, fewer grounded aircraft and a more productive fleet overall. So those are few examples. I'll tell you that there's more to come. This is a culture at United to drive an efficient operation. We reinvest a lot of that in the customer, and it's helping to drive higher structural profitability for United. So thanks for the question. Scott Kirby: And I just want to add on, mostly to compliment the team, I think this is, from an investor perspective, one of the differentiating points of United versus all the other airlines in the world. We are the best airline in the world at the real core cost efficiency, something we've talked about a little in the past. And credit to Mike, Brett and Jonathan Ireland, who's sitting in this room; Toby Enqvist, our Chief Operating Officer; and Jason Birnbaum, who runs technology for us. We've culturally are great, but we've also made technology investments that I know do not exist at any other airline. And that's the foundation, the culture and the technology that drives core efficiency. We keep doing more and Mike told you a bunch of the tactical things that happened recently, but then we keep finding more. One of my favorite stories was we finished the budget last year and finished the budget, and Toby came forward and said, I think we got chances to drive another $250 million out of that operation in core efficiency. Nothing that impacts the customer, that helps the airline actually run better and saves money. And there's no other Chief Operating Officer in the world that is doing that. They're all begging for more money in their budgets. Like this is real at United, I think we're going to drive costs for years to come that outperform the rest of the industry because what we're doing is real and is not coming at the expense of employees or customers. Sheila Kahyaoglu: That's great. And maybe if I could ask one on your fleet, you talked about '25 being a high watermark for growth, but you have 100 narrowbody deliveries plus 20 787s. So that's 10% growth by the end of '26 given you only show 20 retirements, plus you have the gauge benefit that accelerates in '26. How are you thinking about the guardrails to capacity growth this year? And where in the network and the fleet plan you're keeping a buffer there? Andrew Nocella: Well, look, we're not going to give capacity guidance other than to tell you that our United Next plan has been working well and this last -- past year was the high watermark. So we'll manage capacity as appropriate for demand, but that's the guidance we're giving today. Michael Leskinen: And Sheila, regarding the 100 narrowbody deliveries, it could be a little more. I mean, Boeing and Airbus have been doing a better job of repairing the supply chain that's been damaged from the pandemic. And so production rates are improving. If we get a few more than that, we're going to welcome that on the narrowbody side. That's going to help us up-gauge more quickly and the profitability of those new aircraft is really robust versus the aircraft that we can replace. And on the widebody front, it's a similar story. We expect 20 787s in 2026. I think we'll take about that amount in future years as well. And that modernization of the widebody fleet is not just for growth, but it helps drive better profitability and better returns on capital for United going forward. So I feel really good about the CapEx profile and what it's going to do to the financials. Operator: Your next question comes from the line of Catie O'Brien with Goldman Sachs. Catherine O'Brien: Andrew, I wanted to start with you and just dig in on how you're thinking about the sequential trends by region underlying your 1Q EPS guidance. Is it fair to assume that most of the $250 million pretax hit was driven by lower domestic revenue? So just trying to understand, like should we see the most sequential improvement in domestic? Obviously, you had really strong performance in some of the international regions in the fourth quarter, so really just trying to get a sense of the relative improvement you're expecting between the 4 regions. Andrew Nocella: Yes. Clearly, in Q4, the larger hit was domestic. I wouldn't say international is 0 from the government shutdown, but it was mostly domestic. As we look into 2026, we do have this Caribbean situation which is impacting the numbers there. So I'm going to be careful what I say about the Caribbean. We still think it could be positive but it's going to be close. But we are looking for sequential improvement everywhere. Clearly, the Atlantic is leading the way, which is great to see. We're growing a lot across the Atlantic. A lot of it is Israel, but we're still growing a lot across the Atlantic. And we think we've got the capacity equation really dialed in, in that region. So we're really proud of that. Pacific, I think looks pretty darn good. South Pacific is not as good as the North Pacific. And domestically, it's going to be another improvement. And what I'd say is premium cabins are leading the way, not only domestically, but across the entire network. Catherine O'Brien: Great. And Mike, maybe one for you on the '26 cost outlook. Obviously, understand -- not asking for guidance. But you just detailed a bunch of things that you were really excited about this year, the operation, the procurement, like there are some pretty big numbers that you guys have gotten out of the system. I guess, on the '26 punch list, like what are the opportunities you're most excited about? Is it just following down some of these same paths? Like how should we think about the opportunity to cost out this year versus the great success you had in '25? Michael Leskinen: Thanks, Catie, for the question. I think a continued strong operation, number one. I mentioned global procurement. We're just getting started there, so you should see continued improvements on that front. And then we're working with our technology team led by Jason Birnbaum and there's some significant multi-hundred-million dollar opportunities there. So we'll give you more details as we deliver on those, but this is a permanent cultural shift at United to drive efficiency. Operator: Your next question comes from the line of Ravi Shanker with Morgan Stanley. Ravi Shanker: So it's pretty clear that your full year guide is quite conservative. I think you guys may have hinted at that in your comments as well. Just trying to get a sense of kind of is this as conservative as it usually is? Or do you see reasons to make it kind of even more conservative for '26? Just trying to get a sense of how many acts of God are in that full year guide for this year. Andrew Nocella: Well, look, the way I would -- obviously, Scott said something last night about this, so it helps with the answer just a little bit, I suppose. But let's think about the process. We think carefully about all these forecasts and we're pretty consistent on how we approach it. We did our forecast for 2026 more than a few weeks ago. And clearly, as we refined it coming into the new year, we focused on refining it in Q1 because that's where we're at. And we focus less on refining it in Q2 and beyond because that's how we do the process. So we'll see how it goes. I'll just start off with the year's gotten off to a really great start. The international entities are looking pretty darn good, even the Caribbean, considering the situation we're facing there. So we remain bullish, and business demand looks really pretty amazing right now and we'll see if that continues. If all of that continues, which I assure you we think it is, and Scott definitely thinks it is, our forecast will prove to be more conservative than it usually is. But that's all I'll go with at this point. Maybe Mike wants to add to that. Michael Leskinen: Ravi, I'd just say 2025 proved a year. If we talk about acts of God in this industry, we got walloped. The industry got walloped. And I'm incredibly proud of United's full year results. I'm particularly proud of the fourth quarter where we had a government shutdown. Just about every other major airline had to issue 8-Ks to update their guidance and we delivered within our original guide. That is testament to how we guide at United Airlines to make sure that we deliver on our financial commitments even in imperfect times. And 2026 will be no different. Ravi Shanker: Very helpful. And on that note, kind of obviously you guys are coming to the end of the United Next kind of original guidance range. I mean 2026 seemed like eternity away back in '21, but here we are. So what can we expect next in terms of like when do we get the next set of long-term targets from you guys? Obviously, incremental loyalty, [ disclosure ], kind of what's the timing on that? And what is the forum for that? Michael Leskinen: Ravi, I am thinking about that. And all of our quarterly calls and, frankly, when we go to conferences we talk -- I think we talk very big picture, very long term, which is serving us well. It is important that we have long-term goals that we communicate with the investor base. At this point in time, our commitment to get to double-digit margins, our commitment to get to free cash flow conversion of 75%, our commitment to get to investment grade, those are the longer-term benchmarks that we're fighting for. And so I feel like we're in a pretty good position around long-term targets at this time. Andrew Nocella: And I'll just add, we look forward to sharing what comes next. And what comes next is something that I've been thinking about, and the entire commercial team has been thinking about for years because in order to prepare for what comes next, we need to put that into place with a lot of foresight and a lot of thought. So we look forward to sharing with all of you at some point in the future. But rest assured that we have a lot of, I think really great commercial plans and opportunities for the latter part of this decade. Operator: Your next question comes from the line of Jamie Baker with JPMorgan. Jamie Baker: Scott, I'm guessing the term CALite just got a few dozen more Google searches today... Scott Kirby: Well, you remember it without searching. Jamie Baker: Yes. No, I appreciated the comments. So Andrew, sorry, I'm just getting over a cold here. Andrew, in your prepared remarks and also to Conor a few minutes ago, you mentioned that some degree of unprofitable domestic flying out there is increasingly a function of hub-and-spoke peers as opposed to the usual domestic discounter suspects. Now in the case of discounters, I think it was very reasonable to assume that a lot of that would go away just given the staggering system-wide losses. But the difference with certain hub-and-spoke competitors that you referenced, their returns are subsidized by loyalty and premium. So put differently, discounters had no choice but to back off. As Scott likes to say, it's just math. But hub-and-spoke peers do have a choice. I'm curious if you agree with that. And if you do, does it influence your confidence that ultimately some of these competitors do cull that loss-producing capacity? Andrew Nocella: Yes. I think it's a really good question. I think economic gravity is the same for all and money-losing businesses need to figure that out and do something different. And in this case, I do think money-losing routes or hubs should ultimately be closed. I have some experience in this. I've worked on closing a number of hubs in my career at different airlines, not at United, obviously. And these decisions are complicated and big. But ultimately, it was making rational capacity decisions and recognizing what makes money and what loses money kind of has led at least United to where we are today. And there's only one other airline, I think, that can say that all of their hubs make money. And so I still have a lot of confidence. I just don't know when, but I have a lot of confidence that money-losing flights will eventually exit the system, and airlines will move to what they do best, and the industry will be better off, and all the airlines will be better off. But I don't know when and it may be a while, and they do have a lot longer runway than other airlines for all the reasons you said earlier. But again, I'll go with economic gravity applies to all. Scott Kirby: And by the way, Jamie, I'm just going to, since Andrew talked about closing hubs, say one of the things just my opening remarks about Andrew and Glen being the 2 best in the world. They have each closed 3 hubs that I can count in my career. The most important thing for a successful commercial airline is know when to pull out of loss-making markets. It's emotionally hard to do. Very few people have the discipline to do it. It is the most important characteristic for somebody that's going to run a network at any airline in the world, and it's rare. Jamie Baker: I appreciate that, Scott and Andrew. And then just a quick follow-up, something, Andrew, I think you and I were discussing it in person not so long ago or maybe it was me and Patrick. But the fact that many of your recent international additions were coming in at a margin premium to their geography as opposed to a deficit that would hopefully rise over time. I'm curious if that's still the case. And if it is, how long can that continue? And should we assume that those premium margins get competed away over time? Or are they sustainable, which would imply the broader geography also gets more profitable, holding other inputs constant? Andrew Nocella: Yes. That's a very broad question. And look, I would say that there's nobody better in the world than Patrick than -- looking at these opportunities. And what we have found, which I think is contrary to normal, is that the fruit that we're picking off the tree after all these years continues to be excellent. In other words, we're able to find different opportunities because the world is getting smaller. The aircraft technology obviously with the 787 has changed. But most importantly, United is different today than it was a decade ago. And our differences in attracting the brand-loyal customers, as Scott often says, our product, everything we do, has enabled us to add these new routes that couldn't have been done years ago and add them at higher margins than the bulk of what the airline has done. So it's a remarkable journey. And I think on the international front, we're frankly just getting started. New York, San Francisco, Washington and L.A., when you combine all those together going across the Pacific and the Atlantic, there's just amazing opportunities. And I think, obviously, you know that the A321XLR is being made for us and will arrive and we're going to use that aircraft for its unique capabilities, not unlike Continental did 20-plus years ago with the 757. And I think we'll be the only airline to use the aircraft in a way that really does bring on a bunch of new markets. We're not trying to down-gauge, over-gauge widebody jets, for example. We're looking to expand our network and our scope and our depth. And there's just a lot more to come on this front. And so kudos to the whole United team. It is just an amazing achievement, and we look forward to seeing what our international network will look like a decade from now. Operator: Your next question comes from the line of Tom Fitzgerald with TD Cowen. Thomas Fitzgerald: I wonder if you could expand a little bit on the distinction between the loyalty program and rewards program. You've commented on that a few times. I'd love to hear like how investors should think about MileagePlus being differentiated. Andrew Nocella: Sure. I think the most simple way to think about it is churn of members. People join our program and stay with it just about forever and people grab and get our credit card and stay with it for a very, very long time period. So we have very little churn in our programs, and therefore we don't need to do extraordinary things to attract people to United. We already have done it with a great product, a great network and rewards that they really want, which is travel. Like people really want a first-class seat or a Polaris seat to Tahiti as a reward. And all of the other programs out there tend to use constant bonus points and other benefits and have a lot of revolve around customers going in and out, switching credit cards, so on and so forth, often to game the systems. And I just think an airline program, and particularly the United program, is different. And as we approach the future, we should harness the power of that to figure out how we can make it even stickier and grow it faster, which is what we'll talk about in the next 10 or 12 weeks. Thomas Fitzgerald: Okay, that's really helpful. And then just as a quick follow-up, it seems like an important monument that 2025 is a high watermark on domestic capacity growth. So maybe just remind investors how they should think about as you guys harvest some of the gains from achieving your United Next investments. Andrew Nocella: Sure. In 2021, we announced United Next and we announced the growth that would come from the connectivity. The growth was always the outcome of the connectivity. We weren't growing for growth's sake. I think that's really important. And remember at the time we did distinguish that not all growth is equal, which was really controversial back in 2021 because I think many thought it was, and I think we proved it was not. So as we've gone through the whole cycle of United Next, we are approaching our connectivity goals. We'll hit them in 2027, probably a year late given some of the delivery delays we experienced from Boeing, but close on time in the grand scheme of things. And as we do that, our hubs have reached this critical level, around 650 flights per day in our mid-continent hubs with a lot of connectivity, big banks and large airplanes. It's exactly what we were contemplating. So as we go forward past 2027, we're going to be a lot more focused on gauge and growing our operation that way versus more flights. We do think there is a point when hubs grow past 900 flights per day, for example, that the marginal economics become really challenging. You compete against yourself, and you drive a lot of operational complexity no matter how many runways you have available to fly from. So we really like our plan. It's based on moderate frequency levels and large aircraft. And I don't want to give too much of a preview for what comes next, but that was a good hint as to where we're going. But -- so that's -- the high watermark comment is related to all of that. And I'm glad to get back to focused on gauge in 2027 and beyond. I think it's going to be very lucrative for the business. Operator: Your next question comes from the line of Brandon Oglenski with Barclays. Brandon Oglenski: Congrats to the team on what was a pretty good year in a tough environment. But Scott, and I don't mean to kiss up too much here, but I think a lot of folks on this call really appreciate your industry commentary and a lot of your projections have been correct the last few years. Can we talk about just broader industry growth? Because if we look at revenue to GDP or even revenue growth last year was effectively flat versus GDP that was up 3% or 4% nominal or real. Do you think this signals that we're just like in a shrinking industry now? Or has Zoom taken over? Or has this really been too much low-cost capacity in the industry just can't get pricing? What's your prognosis here? Scott Kirby: It's a supply challenge -- problem. It's not a demand challenge. It's a supply problem and it's a supply problem. I'm not going to call it low-cost capacity. It's a supply problem with [ fuel ] carriers. And Andrew said it and I'll repeat it, like economic gravity ultimately wins, doesn't win overnight. Ego usually beats economic gravity in the short term, but economic gravity always wins in the end. And I feel pretty optimistic that even in this environment, well, I feel really good even in this environment how well United is doing. The brand loyal strategy I thought was going to be successful. I've been on this path with Andrew for really for 20 years. We switched airlines but we've been on this path for 20 years. I thought it would be successful. It is more successful than I thought. Like it is remarkable how much resilience we have in bad times or to competitive activities. And so that's good. But I look at some of the flying competitors, and it's going to push north of negative 20% margins this year. You can do that for a little bit of time. But when the down -- I actually have to be honest with you, I think that supply really comes out when the next downturn hits. The next downturn is going to make it extremely tense for airlines that are going into it with breakeven-ish margins in good times. And so I think that's probably what it takes for the next kind of wave of supply. So I think we'll do okay in main cabin between now and then. We'll do well in premium. I think to an earlier question we are targeting growing margins adjusted for any kind of anomalies that happen, growing margins a point a year, that means we got to make up a point from last year, by the way. And I think that takes us into the low double digits. And then I think when the next downturn hits, coming out on the other side of it and the supply comes out, we come out with mid-teens margins. So that's a long answer, but off the cuff, but that's what I think is going to happen. Operator: Your next question comes from the line of Michael Linenberg with Deutsche Bank. Michael Linenberg: Just touching back on kind of what Jamie brought up. I think the prevailing view is that domestic will be the best-performing geography in 2026, maybe domestic RASM, maybe profitability. But when I think about the fact that one of your competitors in Chicago is adding a lot of flights and I've seen reports that they're already losing, I don't know, $700 million or $800 million under their current schedule. Is that going to be a drag on your domestic to the point that maybe it's transatlantic, maybe it's another geography that comes out on top, or do you have maybe a diversified enough domestic network? I mean you have a massive domestic network that will be more than overshadowed by strength in some of your other markets, like Newark, for example, which is probably going to run very well in 2026. Scott Kirby: Well, thanks for the question, Mike. I was afraid we were going to get through the call without addressing Chicago. So I'm happy to do it. And it's probably a good follow-up to the last question that I talked about. And I wanted to start with, at United Airlines, we've been a decade-long strategy to build a brand-loyal customer airline. That was all designed to get us out of the commoditized part of the industry where all that mattered was the schedule. And that meant in both -- focusing on the product, the technology and service to get customers to choose us. That's been a really successful strategy. It didn't happen overnight. It really has been a decade in the making, but you can see the results, and we've had market share increases everywhere that we fly. In Chicago, to be specific, in 2016, American actually had higher local market share with Chicago-based customers and higher share with business customers. In 2025, even after all the growth from our competitor, United now has a 22-point lead with Chicago-based customers in Chicago and a 38-point lead with the brand-loyal business customers. Being a brand-loyal airline just really inoculates us mostly from that competitive activity. And in fact, in 2025, even with all that growth, the Chicago RASM outperformed the rest of the system by 1%, and we made a $500 million profit. By the way, I think we probably would have made $600 million. So it probably cost us about $100 million. But our competitor lost $500 million even though they didn't start that really until May, so bigger on a full year basis. As we enter 2026, there's another wave of growth coming from that competitor. Mostly that's going to wind up exactly the same as it did last year, with one difference. In 2025, American added gates. That means we watched it. We could have responded. We chose not to. They're going to win 3 gates back at our expense when the analysis comes out later this year. We knew that was going to happen. We figured we'd just let it settle into a new normal and that would all be fine. But in 2026, we're drawing a line in the sand. We are not going to allow them to win a single gate at our expense in 2026. We're not trying to win gates, but we're going to add as many flights as are required to make sure that we keep our gate count the same in Chicago. Look, we're just going to stay focused. We've had the right strategy at the whole network for a decade. We're going to keep doing it. It's a winning strategy. It's working. We're going to keep doing that in Chicago. For what it's worth, I think that we will likely grow our earnings. Certainly, we'll make at least the same $500 million, I believe. And likely, we'll still be able to grow our earnings in Chicago for the same reasons it worked last year. American, and we're pretty good at estimating this is likely to push to about $1 billion in losses in Chicago. But we're going to just stay focused on the strategy that's worked for the last decade. Our team is doing a great job taking care of customers and it's working for us. Operator: Your next question comes from the line of John Godyn with Citigroup. John Godyn: Scott, I was hoping you could revisit your thoughts on the shape of industry structure from here. We've seen M&A announced among some of the smaller carriers. There seems to be an expectation of more. I'm curious what you think equilibrium in the industry looks like. And second, obviously when I think about your history, America West-US Air, US Air-American Airlines, you're no stranger to be a leader in M&A. Is there any scenario where United gets involved in M&A considering you have what seems to be an accommodative DOJ, which isn't always the case? Scott Kirby: Well, I'm not good at resisting the bait, but I'm going to resist the M&A bait today. Bob Rivkin is nodding appreciatively at me. I'm not talking about that. But I think the structure of the industry is ultimately going to be low-cost carriers will shrink down to the niche that works for low-cost carriers. That is big leisure markets. And I don't know if they're going to liquidate, if they're going to merge, if they're just going to all shrink for sure. But they're going to shrink down to the niche that works and that'll be good for them. I think they can have solid margins, but it's a much smaller niche than where they are today. I think there's going to be 2 brand-loyal airlines. That's already the case. I gave you the numbers in Chicago. That game is over. I realize that not everyone knew the game was on. The game is over. And when we have that big of a lead with customers, like you just don't win it back because you'd have to have technology, product, services that were somehow better than United and somehow better than Delta to even start and you're a decade behind. And then I think the rest of it will be sort of finding places where you can get big in other cities, non-hubs of Delta or United and you can have a network that works and that's a little more commoditized, but you can have a network that works. And so I think that's what the structure. And it's an open question about whether consolidation helps us get to that structure. But that's where the structure is going to end with consolidation or without. Operator: Your next question comes from the line of Scott Group with Wolfe Research. Scott Group: So last quarter, I think you laid out an expectation we should get at least a point of margin improvement a year. I think, Scott, you just said it again. I guess the high end of the guidance range gets you there. The midpoint would be less than a full point. So I don't know, just at the end of the day, like help us think about price, costs this year given the momentum you've got right now, the comps that come in Q2, Q3. Like I would have thought this would have been the year where like it's a pretty clear like point of margin. Like is it just the conservatism that maybe you said a couple times? Or are there other things we should be cognizant of, I don't know, labor, what's going on in Chicago? I don't know. Just help us understand like if this is the year we should be doing the full point of margin. Michael Leskinen: Scott, I love that you did the math. And trust me, we've done the math, too. This industry got hit by multiple asteroids last year. We want to make sure that we deliver on our financial commitments. We've given you very clear targets for the longer term, and we're going to deliver on those targets. The timing of which there's some uncertainty around. But the full year guide was very deliberate. We're telling you that if current booking trends stay on this path, there's upside and you should think about that as you make your own estimates. Operator: Your next question comes from the line of Chris Wetherbee with Wells Fargo. Christian Wetherbee: Maybe, Mike, just want to -- following up on that question. As you think about unit costs as you go through '26, obviously there's labor dynamics that we have to factor in. Exclude that, take a look at 2025, how good of a benchmark or sort of range that for us to use as we think about sort of ex labor dynamics of unit costs for 2026? And then maybe zooming out a little bit, sounds like you still sort of have lots of opportunity in terms of managing cost efficiency as we move forward. So how big a story is this beyond '26? Michael Leskinen: Yes. Thanks, Chris, for the question. And look, we're not going to give PRASM guidance. We're not going to give CASM guidance. But we've been pretty clear about this is a new culture at United around cost management and discipline and driving efficiency. And let me remind you, we really have not benefited from gauge yet. That gauge benefit is still on the come. So '25 was a great year. We're going to work really hard to make '26 an equally great year from a CASM standpoint. And keep in mind, some of the tailwinds we haven't really started to even benefit from. Operator: Your next question comes from the line of Atul Maheswari with UBS. Atul Maheswari: First, just quickly, do you think there can be any meaningful tailwind from the soccer World Cup this year? And if so, is there anything that's assumed in the guide and any way to dimensionalize how large that tailwind can be? Andrew Nocella: I'll take that. Look, we're looking forward to it. I'm sure some of us will attend a few games. I think the interesting thing we see is it creates what would be normally countercyclical traffic flows. So it creates inbound into the U.S. demand in June, which is normally an outbound time period. So quite frankly, yes, I think that we do expect some upside from that. Given the broader macro trends, I'm not going to judge exactly how much that is, but we do think this particular sporting event will be a positive for United. There are other large sporting events that are not because they drive just leisure traffic and business traffic evaporates in those situations. This is not one of the situations. So we do expect some level of upside. But I want to caution you, it's still -- given the size of United, I'm not sure it's all that meaningful, but it is positive. Atul Maheswari: Got it. That's helpful. And then second question, one point of pushback that we get from longer-term investors who want to deploy capital to airlines and to United is that how can industry capacity discipline persist as Boeing and Airbus ramp up deliveries from here, like headline numbers for last year is still pretty positive with respect to capacity growth? So how can that persist? Like what can you say to give comfort to those investors that capacity discipline can, in fact, persist [ against ] ramp-up deliveries? Scott Kirby: First, we never say those words and I'm not even going to repeat them because that's not how we think, and we don't ever say those words. But what I think the limit on capacity is not about aircraft. It is engines. It is already engines. There's about 800 aircraft around the globe that are grounded with engines. We even have some -- we bought tons of spare engines in advance, but we even have some that are going to be grounded this year for engines. The engine manufacturers are not going to catch up to the combination of the need for MRO replacement engines and new aircraft deliveries, in my view, until sometime next decade. So engines are the constraint. Operator: We will now switch to the media portion of the call. [Operator Instructions] Your first question comes from the line of Leslie Josephs with CNBC. Leslie Josephs: Just wondering, can you please clarify what you meant about the Caribbean? This is an airspace closure in the beginning of the year that's impacting bookings now in Q1 and you said that it was measurable. Could you provide some more detail on that and how much that might cost? And then second, your competitor in Atlanta was hinting at some segmentation at the front of the plane. Just wondering where United might be on that. And is that -- could we see a stripped-down business class or first-class products maybe no seat assignment or something along those lines? Andrew Nocella: Leslie, it's Andrew. Look, on the Caribbean, we're a pretty big airline in the Caribbean and we're a small airline in the Caribbean. I'm just pointing out that there's been a little bit of a book away from the Caribbean. I don't think it's measurable in the grand scheme of things when it comes to United Airlines, to be blunt. But demand has been impacted by the situation in Venezuela to some extent. We expect that to dissipate over time. And in fact, the last few days have been better than the first few weeks of the year. So I think we're in good shape on that front. And look, on cabin segmentation, I'll add that that's been very good for United Airlines over the years as we invested in more premium products and larger array of products out there. So we're going to continue to do that. The only more reasonable hint I'll give you is that we have a large redesign of united.com coming as we seek to do different things on how we sell products. So we'll leave it to that, and we'll talk to you sometime in the first quarter or second quarter about our overall strategies on merchandising. Operator: Your next question comes from John Pletz with Crain's. John Pletz: Scott, any color, additional color on Chicago? Drawing a line in the sand, does that mean you're going to add flights? Scott Kirby: It does. John Pletz: Can you give me a little color on what scale you might be considering adding flights here? Scott Kirby: They will be -- the color will be they will be in the black while American is in the red. John Pletz: All right. And any idea how much, I guess, is what I'm asking? Scott Kirby: No. I'm not going to announce that today. I think we're going to have a scheduled load next week. That'll give you the answer. Operator: That concludes our question-and-answer session. I will now turn the call back over to Kristina Edwards for closing remarks. Kristina Munoz: Thanks, Colby, and thank you all for joining us as we celebrate our 100 years here at United Airlines. Contact Investor and Media Relations if you have any further questions. Bye. Operator: Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Evolution Mining Limited December 2025 Quarter Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Lawrie Conway, Managing Director and Chief Executive Officer. Please go ahead. Lawrie Conway: Thank you, Harmony, and good morning, everyone. I trust you've had a good break and wish you a very healthy and successful 2026. I'm joined on the call today by Matt O'Neill, our Chief Operating Officer; Fran Summerhayes, our Chief Financial Officer; and Peter O'Connor, our GM, Investor Relations. Today, we released our December quarterly report, which will be a reference point for the call. Fran and I will be back in a few weeks when we release our FY '26 half year financial results. Before going into our quarterly results, I want to take a moment to reflect on the tragic event that happened here at Bondi on 14 December. 15 people were murdered due to racism. No violence is accepted even more so violence linked to racism. This heartless and cowardly act of terrorism, whilst many people and families were enjoying the Bondi environment, specifically the Jewish community celebrating Hanukkah. I know this has impacted our country, including our team members at Evolution. The attack is something that should have been avoided. The lack of action by the federal government over the past 2.5 years on racism is inexcusable. The refusal to call a Royal Commission until the overwhelming majority of Australian spoke of the need for it, and then to try and condense the time frame for political reasons is disappointing. It lacks leadership. On the contrary, the leadership of the New South Wales state government with quick and strong action and support was very welcome. My biggest concern is that we learned nothing from this and do not make Australia a safer and more inclusive country. Our condolences go out to the family and friends of those who were murdered. Our thoughts and prayers go out to everyone who was impacted by the attack, and we also thank all the first responders volunteered support during this incident. Turning back to Evolution. This was another quarter and the eighth consecutive quarter where we've safely delivered to plan. We produced 191,000 ounces of gold and 18,000 tonnes of copper at a very low all-in sustaining cost of $1,275 per ounce for continuing operations. We did it safely with our TRIF remaining low at 5.8. Gold production improved by 10%, while our all-in sustaining cost improved by 26%. Importantly, the cash generation has really gained momentum as we realize the benefits of the current metal price environment. Our underlying group cash flow improved 176% to $541 million or around $2,800 per ounce when normalizing for the FY '25 annual tax payment made during the quarter. Reported cash flow was up 110% to $412 million. The cash flow was achieved at a gold price around $800 below current spot. The group cash flow was on the back of record mine cash flows with operating cash flow up 57%, just over $1 billion, while net mine cash flow doubled to $727 million, with the operations increasing their cash flows in the range of 55% to 140%. The cash flow charts on Page 1 of the report very clearly shows our cash-generating capacity. We are on track to deliver almost $4 billion of operating cash flow. This is 40% higher than when we issued our guidance in August and is anticipated to be 25% higher than what we have delivered in the first half. Our cash balance improved to $967 million after we repaid $110 million and $116 million in net dividends. We have no debt due until FY '29. Our gearing is now at 6% compared to 11% at September and 30% just 2 years ago. We are well on track to being net cash this year, providing further balance sheet flexibility, including returns to shareholders. We remain on track to deliver original group production guidance of 710,000 to 780,000 ounces of gold, and 70,000 to 80,000 tonnes of copper. Group copper production is expected to be at the low end of guidance due to the weather event at Ernest Henry. At the end of the quarter, Ernest Henry received 300 millimeters of rain in a 24-hour period, resulting in water ingress to the underground mine and temporary suspension of the operation. All personnel were safely accounted for and no injuries reported. Recovery activities are progressing well with only short-term operational impacts expected. It is anticipated that the impact at Ernest Henry is about 7,000 to 8,000 ounces of gold, and 4,000 to 5,000 tonnes of copper for FY '26. Group all-in sustaining cost guidance is updated to $1,640 to $1,760 per ounce and is a 6% improvement on our original guidance, reflecting continued cost control, the impacts of higher by-product credits, partially offset by the Ernest Henry weather event. The updated group guidance further entrenches [Audio Gap]... Matt will go through the operational performance soon. However, I do want to call out a couple of key highlights. About 2.5 years ago, some analysts were calling Cowal's best days behind it. One even saying that the cash Cowal was over. Well, this quarter, it delivered $361 million of operating cash flow at $4,500 per ounce and $284 million of net cash, which equates to more than $3 million per day even after investing in the OPC project. This level of cash flow alone is better than a number of Australian multi-asset, mid-tier companies, and the operation has at least 16 more years ahead of it. Mungari delivered record net mine cash flow of $104 million, which is a 142% improvement for the quarter and represents nearly 50% of the plant expansion project capital. At Red Lake, the operation is settling into the desired rhythm of 30,000 to 40,000 ounces per quarter and positive net cash flow. That produced 33,000 ounces and doubled their net mine cash flow to $80 million. They have now delivered over $200 million of net cash flow in the past 18 months. On the projects front, Mungari successfully moved to commercial production and the establishment of the Castle Hill mining hub is now complete, following the full sealing of the haul road during the quarter. The Cowal OPC project made solid progress this quarter and remains on plan and budget. Studies for the next key growth projects being E22 at Northparkes and Ernest Henry are complete, and we'll go to our board for assessment during the March quarter. With that, I'll now hand over to Matt to take through the operational performance. Matthew O'Neill: Thanks, Lawrie. As noted, we have successfully completed another strong quarter of safely delivering to plan, and we remain on track to meet full year guidance, allowing us to continue to benefit from the rising metal price environment. I'm pleased our safety performance remains in a healthy position with the teams at each of the operations continuing to focus heavily on this area. We did see a small increase in our total recordable injury frequency rate this quarter, which was driven by an elevated number of injuries at our Cowal and Mungari operations during the month of October. Our safety focus remains on leading indicators, and we continue to perform strongly here. On the production front, as noted, we're on track to meet full year guidance. For me, the production highlight of the December quarter was the successful ramp-up of the Mungari operation where we achieved an annualized run rate through the mill for the quarter of 4.1 million tonnes. Throughout the quarter, the team ran the new mill through a range of operational parameters, and I'm happy to say that they're very pleased with how it has performed. Similarly to the September quarter, we had minor interruptions to mining activities in the open pit at Cowal due to wet weather. Again, it was pleasing to see that the work the team have done on resilience and reliability pay off as we experienced only minor variations in the plant due to these events. As noted, works continue to progress well on the OPC project with the project ahead of schedule and in line with budget. The Red Lake and Mt Rawdon operations continued to deliver in line with their plans with minimal variations throughout the December quarter. As noted earlier in the call by Lawrie, Ernest Henry experienced a significant rain event at the back end of the quarter on the 29th of December. The Cloncurry region had its average annual rainfall of 420 millimeters fall in just a 72-hour period, 300 millimeters of which fell in just 24 hours. During this event, all personnel were evacuated safely from the mine via the shaft and the multiple dewatering systems, both in the pit and underground operated as designed to reduce the impact of the rain. We diverted water away from key infrastructure areas and into the bottom of the mine, minimizing the impact on mine infrastructure. Whilst we are dewatering and remediating the mine, we've moved forward the scheduled February plant shutdown to align with these works. The processing plant shutdown is underway now and scheduled to be completed by the end of January. Current estimates are for full year production from Ernest Henry to be lower by between 7,000 and 8,000 ounces of gold and 4,000 to 5,000 tonnes of copper. At Northparkes, we achieved a significant milestone during the December quarter, with the completion of the E26 sublevel cave after 10 years of operation and the successful ramp-up of E48 sublevel cave taking its place. In summary, we remain on track to meet the group's full year guidance and take advantage of the strong market conditions we are currently enjoying. This brings the formal part of our update to an end, and I'll now hand back to Harmony for questions. Operator: [Operator Instructions]. Your first question comes from Levi Spry from UBS. Levi Spry: Happy New Year. I mean, I guess, just firstly, on the -- moving to a net cash position sometime this half. Can you just talk a little bit around how the Board might address that in February, what the competing sort of interests are in terms of CapEx and exploration, maybe what you can bring forward potentially? And specifically, I'm thinking about your projects, but also the OPC and how you're going to optimize that going forward, Northparkes? Lawrie Conway: Thanks, Levi. Happy New Year, and I'll get Fran to add a couple of comments. Our cash flow only just has increased since the day she joined. Look, we will move to a net cash position over the remainder of this year. And it is -- highlights that if you deliver a plan essentially in an unhedged environment and do that safely, you actually get the benefits. What the Board will consider our policy is percentage of cash flow, targeting 50%. We look at it on a full year outlook basis. And at the end of each financial year, we look at the policy. So we look at the policy at the end of the year. I don't expect it to change too much, but we've got certainly flexibility around the percentage that we pay. In terms of then internally, I think our discipline around capital allocation and projects will remain key. We have seen that OPC is advancing well, and I was out there last week and it's actually a lot higher than what it was 6 months ago and 3 months ago, which is good for the project and does open up some flexibility around that project and what we do. Exploration, I think Glen is going at full tilt, but he's looking at some opportunities there. And then obviously, the Board will consider E22 and during the quarter as well. So yes, well -- as I said, we'll look to make sure we continue to reward shareholders in this environment, discipline around our capital [ allocation ], be that in projects and exploration, but a good problem for Fran to have as to what to do. Fran, anything to add? Frances Summerhayes: No, you summarized it well. Levi Spry: Yes. Okay. And then just at Ernest Henry, maybe for Matt, look, a pretty significant event, maybe lost a little bit, otherwise very good quarter. What's the current status? So you expect the plant to turn back on at the end of the month, but interesting in terms of the mine and dewatering... Lawrie Conway: Yes. I'll get Matt to do that. I mean, yes, Levi, I think it didn't impact on the December quarter, as Matt said, it was right at the end, but it is what we're going through into this quarter. And Matt outlined a little bit on the call, but maybe just, Matt, color around the mine and the plant and the surface. Matthew O'Neill: Yes. So I'll start with the surface. Things went quite well for us on the surface with that volume of water. The plant is completely fine. And so what we chose to do is instead of having that shutdown in February is that we will do it ourselves and that we would bring it forward into January, so giving us a bit of time back in that month. In terms of the mine, the infrastructure, there's some minor flooding remediation works that we need to do in areas that were sort of pockets rather than anything else as the water sort of moved through the mine, some of the pockets filled up and so that's tail end of 2 conveyors that doesn't take much to get back and then some works around a hydraulic pack that was sort of sitting in a pit in the crusher. So there's nothing material from the infrastructure side. Currently, we're dewatering into the existing dewatering system quite significantly. So we're sort of up around sort of 35 megaliters a day. The current status is that that's progressing ahead of plan. And like I said, we'll turn the plant back on at the end of January and then work our way back through that, bringing the mine back on through that month as well. Lawrie Conway: And just a thing to point out, Levi, versus what we experienced in March '23 that the pumping stations and the main power substations were not impacted like they weren't really impacted at all this time. Matthew O'Neill: No, that's right. We kept those operational throughout. We had a period where we didn't put people into the mine because we didn't want to put anyone at risk. And so we had tripped out until we got someone back in there to fix it. But outside of that, all of the infrastructure worked exactly as planned. The size of the event was probably the issue. It's almost triple the size of anything we've seen before. The [ 100 million ] a day was about the maximum from the last couple of events. And we did see that in the lead up to this event, and then we saw the 300 millimeter, so that the systems all worked as planned. The scale of that event isn't something that we've seen in that region for quite some time. And you could see around some of the neighbors in the area as well. The past has had some pretty significant impacts that they've not seen. So that was the issue for us. But managed well, infrastructure good, and we'll get back up and running in the short term. Operator: Your next question comes from Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: Lawrie, Matt, Fran, congrats on a fairly strong quarter. I just wanted to -- first question in and around sort of more strategic one. Obviously, this gold cycle has been pretty strong, if not unprecedented, with prices where they are, obviously, producer discipline has been pretty key in terms of capturing that operational leverage and not chasing low-grade ounces for the sake of volumes has been pretty -- has delivered a pretty good cash result. But looking at it from here, so the gold prices arguably more than double where a lot of these mine plans were set. I mean, is there room to start recutting how you look at these things to optimize value from here if this is the gold price going forward? Lawrie Conway: Yes. Look, I'll let Matt have a bit of talk about the plans and the mines, the open pits and the underground. But essentially, we look at the current price environment and as we're mining in certain areas, if more material becomes economic, we're taking those, we're right into our life of mine and mineral resource, ore reserve review now. But we don't just let the short-term metal price drive the wrong behaviors. Matt? Matthew O'Neill: Yes. We are taking advantage of that in the short term. But the discipline that I'll keep pushing with all of the operations is that any of the lower grade is not to displace any of the original plan or high-grade materials. So where that starts to help us is that when we can increase the capacity either through the plant or the materials handling systems, we can do that because most of the operations do have that capacity if we were to drop cutoff grades, we see some reasonable increases in some of those operations. And probably 1 of the key ones that sort of stands out in this environment, both copper and gold, is Northparkes, and you'll see that that's where a lot of the work is occurring and a lot of the focus for trying to take advantage of that is sitting. So yes, we are doing it, but I don't want us to drop back to erode the margin significantly by chasing stuff that's economically viable in this market. Hugo Nicolaci: Got it. That's helpful. And then second one, just following on from Levi's question at Cowal on the OPC. I mean, obviously, ahead of schedule there. If you've got the team on site, how do you think about bringing forward the next stage [Technical Difficulty] or just maybe the recent rainfall we've seen maybe limit your ability to do that immediately? Lawrie Conway: Yes. Look, Hugo, I think what we're doing, the northern bond as we completed in the last quarter enables us to then start works around E46 and a lot of other surface infrastructure in the northern end, which is why it was scheduled first. The water in the lake is receding and receding at a good rate. And unfortunately, when I was at Cowal, they said they would have liked some of the weather that -- or the rain that Ernest Henry got because it is fairly dry out there and at Northparkes. So when we look at it, it's anticipated that the lake would be dry by the middle of this year. And you might recall when we approved the project, the south -- the south part of the lake move was scheduled for FY '28 and scheduled to be dry. So it does provide an opportunity for us to consider bringing that 1 forward because you wouldn't want to be waiting a couple of years and find out that you got a wet lake or a full lake again. So that's something that we're working through right now. And then I think in terms of the other surface infrastructure and works that Joe and the team are looking at, I think, they will build that into the plan. It will allow us to look at the IWL, whether we build that up in preparation for having 2 and 3 open pits in the next couple of years do that earlier. Certainly, 1 thing that we'll look at is just anything else that can be done now in the environment that they're experiencing. Hugo Nicolaci: And then maybe last one, if I could, maybe 1 for Fran. Just can you remind us how the copper quotational pricing periods were just looking at the realized pricing on some of the byproducts. It looks pretty favorable versus average prices in the quarter. If you could just remind us if there's any timing or any impact there we should be considering? Lawrie Conway: Yes. Hugo, it's not simple for you on your side to be able to, I guess, model them because at Ernest Henry, you've got a quotational period that gets nominated every month. At Northparkes, you've got a quotational period that gets nominated quarterly, and you've got 2 offtake partners in terms of Sumitomo, our joint venture partner and IXM as our offtake main partner. And so they have to nominate them. And if we look at it in the -- at the end of September, we had about 8 shipments outstanding that were still open to pricing about 21,000 tonnes of copper, split sort of 3 at Ernest Henry and 5 at Northparkes. They, at the end of September were priced around $15,000 a tonne. They then move to the December pricing, and that was around $18,500 a tonne. So that's what lifted our achieved copper price for the quarter by about $3,000 a tonne. At the end of December, we've got about 4 shipments outstanding around 10,000 tonnes that will get finalized in this quarter. And then it depends on what each of the offtake partners nominate in the next 3 months for their pricing. So that's why it's a little bit difficult. Where we stand today, it's averaged about 19,200 month to date. That's what some of those shipments are going to get repriced at -- if they finalize this month. As I said, it's not easy for you. But it's really dependent on what the offtake partners or what they nominate. Operator: Your next question comes from David Radclyffe from Global Mining Research. David Radclyffe: So just a bit of a follow-up to Hugo's question. Because obviously, when you look at the quarter, it was really only Mungari that was setting a new record, and that obviously reflects the expanded capacity. But there is some late mill capacity across the group. So just trying to understand if there are any near-term opportunities you're considering to push throughput and take advantage of this environment. And if not, what is the constraint there? Is it the fact that you're not prepared to budge on the current capital budget. Just trying to understand there how you could actually push the mills a bit harder. Lawrie Conway: Thanks, Dave. I'll let Matt just give a run-through on each of them. I mean -- but I will start off by saying it is not about the capital constraint. It is about making sure that if we commit the capital, we're going to get the returns. I think when we look at it and if you see the announcement today, the land around Ernest Henry, that we've now picked up that plus the previous project that we announced a while ago, that gives us a continuous footprint all the way around the plant. That's all within trucking distance. And so we've got 1 program has already started. This 1 will be the next one. So that's giving us an opportunity because it's constrained by the mine and you obviously got berth. But we will look at all of those opportunities where we can. Matt, 9 months? Matthew O'Neill: Yes. I think Ernest Henry is the main 1 for us. We do additional milling capacity available today compared to what we bring through the mining system. So we are open to that, whether it's our own material through exploration or whether it's a toll agreement with people in the region. That's something that we're actively pursuing. Then outside of that, if I look at Northparkes and Cowal as the next 2, they are mill constrained. So we spent some money at Cowal on the mill setting it up for the next 20 years in the last financial year. And -- we also spent a bit of money there on improving the recovery. So we are working on opportunities account to increase throughput through the mill, but it's something I'm certainly not wanting to rush through there. So those do essentially mill constrained with improvements and incremental improvements possible, and we can feed them from our own sources. Mungari is a similar story. So Mungari, obviously, now ramped up. What we were wanting to do there, our strategy there is to run the Castle Hill complex, which is running very well at our baseload feed and then supplement that with our underground feed, which is where the grade from -- grade comes from and gives us the ounces. The opportunity there is to be able to postpone or defer any of the lower-grade material from Castle Hill by putting in higher-grade product through the mill. And obviously, we run the finances on that depending on what we do. So the exploration team, that's 1 of our key spend areas and where we do see an upside if we can get additional underground feed. We want it to come from our own material. That's where we make our best margin. That said, we do have opportunities where we will and can and have toll treated other people's product at a higher grade if the finances make sense for us from deferring that material. So those are your areas. Outside of that Red Lake does have mill capacity. There's not a huge opportunity there for either increasing our own material, which is still the bottleneck from the mining operations. But third parties, there's not a huge amount around there, but those are things that John and the team are looking at when they come up. I think that's the run through of most of the operations. David Radclyffe: Right. Maybe if I could just come back on Mungari there because I think on the site visit you were still ramping it up and hadn't really tested it and it looks from the commentary that you may have sort of pushed it a little bit here with third parties. So are you confident -- you're obviously confident you can get to capacity. Did the engineers sort of leave anything there in terms of conservatism? Do you think you could run Mungari a bit higher than nameplate? Matthew O'Neill: No, that's something we're investigating. At the moment, it did ramp up exactly as we wanted to. We had periods where we were above nameplate, but that was more related to the material [Technical Difficulty] or a little bit softer. So like most mills, depending on what we're putting through, it will give us a rate. But that's what I'd like us to do. At the moment, we're certainly not promising that, but that's what we're working on. Lawrie Conway: And I think if you look at it for the quarter, it annualized at a whole point [Technical Difficulty] special production. Operator: Your next question comes from Daniel Morgan from Barrenjoey. Daniel Morgan: Lawrie, just going back to the Cowal southern bund decision. Can you just maybe expand what drives the decision to execute a bit faster on the Southern bund? Is it it's easier, costly, more productive and sort of costs? Or is it revenue items are you're going to have potentially access to more or more material, better grades and can grade sequence like what goes to the decision to execute earlier if you do so? Lawrie Conway: Yes. Dan, look, I think the primary 1 becomes where the lake is sitting at with the level of -- that it's receded as you'd recall, we've always planned to do it dry, it's more cost effective. So that's -- that is the primary decision point because it's not about what can we afford the capital as long as we're staying within the $430 million, we'll be fine. Then in terms of -- the second part of it is, what does it give the site in terms of flexibility. So having put all of that infrastructure around the southern area, it gets the ability to look at E41 and when we time that. But that's coming into FY '27 and beyond. And I think that's why the secondary piece is that flexibility it provides to Matt and the Cowal team is that for a period, we'll be on low-grade stockpile material. You're going through the cutback of Stage I, so if you can open up E46 and E41, it just derisks that operation a lot more. Daniel Morgan: Right. Another question. Just there is a footnote on Page 2 regarding Northparkes, where there's been some sort of a positive adjustment relating to stream deliveries, the number there is $18 million, that was an outflow. It just seems a bit lower than what I thought. Is there any -- can you just clear up what's going on there? Lawrie Conway: Yes. So during the period, there was a reconciliation of the finalized pricing and payments for the stream with Triple Flag and as the final pricing and everything that came through on that back for a number of periods resulted in a credit back to us. So that's why the $18 million, I think last quarter was about $32 million. So there was a benefit relating to the final pricing. That is one... Daniel Morgan: That's a one-off? Or is it something that there's an annual true-up or something that we might see again in a year's time or that could be adverse or better or... Lawrie Conway: More of a one-off, Dan, is going through with Triple Flag about the whole mechanics of it, and we're obviously learning it in the first year. We've then done all the reconciliations with them, and that it's more of a one-off. Daniel Morgan: Okay. Very clear. Just shifting over to Red Lake. It looks in -- you've made a breakthrough at Cochenour, where if I read that correctly, does that mean that you are no longer going to be using ore passes and that you're going to truck down, ore down to the high-speed tram. And is there benefits in terms of grade and reconciliation that could come? Matthew O'Neill: Yes, Dan, it's Matt. Look, we will still be using ore passes, but what it does do is derisk those. We've got some duplication and contingency in that system given the issues we had earlier on. So we will still use all passes through that. The biggest benefit for us there will be ventilation as well. And also the mobility of some of our equipment. So it's more of an operational flexibility and reliability thing that it will give us. It doesn't necessarily impact grade and other bits and pieces at this stage. It does open up some other areas. And allow us to do things a little quicker, but that's really around operational flexibility that the benefit comes. Daniel Morgan: And just last question is mainly cost, I mean, obviously, there was a provisional pricing stuff that came through, but signs of cost control are evident as well. Just on Mungari specifically. There's obviously a bit going on with various third-party ore purchases. You had commercial declared partly through October. And so the AISC number is not necessarily completely clean as a go-forward guide. Just wondering if -- what's the latest view on what Mungari costs roughly are going to be on a clean basis? Lawrie Conway: Yes. Dan, I think when Matt talked about testing of the plant and everything the team took the opportunity around that ore purchase to get that type of material through the plant earlier. So those costs and ounces are excluded. So when you look at what we've reported for Mungari for the quarter, that AISC and the costs are really about just our ore. So it gives you a good reflection of -- so about $2,000 an ounce, you take it that most of October, there were commissioning costs. So you're going to be in the early low 2,000s -- going forward, when it hits the 50,000-ounce quarterly run rate is what you should expect to see. So we're at $1,980, I think, was a quarterly cost for Mungari. As I said, some commissioning in there, but it is only on our ounces and our costs. Operator: Your next question comes from Matthew Frydman from MST Financial. Matthew Frydman: Lawrie and team. Happy New Year. I guess my question is a continuation of some of the earlier discussion. I'm very interested in the outcome of the 2 studies that are currently undergoing board review, and I'm sure you'll present that [ in time ]. And I guess I hate to sound a bit like all of a twist, but wondering what's next to be considered in terms of any sort of formalized growth studies out of those options that Matt discussed conceptually the key growth projects that you're moving into that pipeline over time? And I guess the secondary question to that is just looking at your reserve on Marsden, obviously, a big low-grade reserve there in your numbers. I think it was last cut at $1,350 an ounce gold price. So we're only about $5,000 an ounce higher than that at the moment. So I guess at what point does that become a viable growth project? Or does that reserve need to be, I guess, reconsidered at all? Lawrie Conway: Matt, Happy New Year. I definitely hope that our now nonexec chair is listening because he would love to hear about [ Marsden ]. I'll start on that, well, look, I mean, for us, on Marsden, anything that we do there would have to be better than what we've got at Northparkes and Cowal. And so that's really what it's got to compete against at the moment. So it sort of sits there in the background. It certainly doesn't get the priority from Nancy and the team, but it does get looked at. It's good to see that you talked about Bert and E22 and you've moved straight on and gone, okay, what's next. I think for us, Bert is really important to Ernest Henry because of the capacity we've got in the plant. So that will be something that the Board will consider the studies are finished, and we'll take that to them this quarter. E22 really is what can unlock what we have at Northparkes in terms of increasing both mining and processing capacity. We've got such a large resource there. We've got to look at how can we expand that over time because it's not going to reduce the NPV of the asset. So that's something, I think, when we take that through to the Board this quarter, it's like, okay, what does E22 give us as a -- we looked at a block cave, the sublevel hybrids the -- sort of the best outcome is the block cave, and we've talked about that previously. Now we've got to work out where does that fit into unlocking the rest of the operation around expanded capacity. I think when you look at -- the other thing is what's next. At Cowal, we've got the OPC going. We've got E46, E41, E42 operating. We get the undergrounded capacity. And what Matt's talked about is, okay, with all of those ore sources and the work we've done on the plant, are there ways to increase the processing and production rates at Cowal. And then I think when you look at Mungari, Matt also talked about it earlier. We've got the base feed at Castle Hill, the underground is really which is getting most of the exploration dollars is what gives us an opportunity of can we get more than 20% of our material going through that plant. And can we get the plant running at greater than nameplate. Matthew Frydman: Okay. And then maybe, I guess, the follow-up to that then is then how we think about capital allocation for the business going forward. As you just described, you're pretty advanced in terms of your capital spend across the majority of the portfolio. You've got a couple of formalized, I guess, growth projects still on the pipeline in terms of Bert and E22. But overall, clearly, the business is generating a lot of cash. How should we think about any kind of revision or revisiting of the capital allocation policy, I guess, in the absence of any other sort of big scale growth investments like Marsden like we just spoke about. And how does that look in the current gold and copper price environment in terms of how attractive that capital is to spend externally to the business? Lawrie Conway: Yes. Look, Matt, it's a good situation to be in. I mean, 2 years ago, we were getting asked that how can we afford these projects and now we're getting asked how can we [Technical Difficulty] -- that discipline. I think we've outlined our capital sort of spend for the projects that are already in the pipeline. As being that $750 million to $950 million, what now with what we're seeing, the progress at Cowal and the outcomes of the studies and where the metal prices is what can we incrementally invest in, either bring projects forward, accelerate them or new projects to bring forward production growth. As long as if you look at the portfolio at the moment, the asset's average annual rate of return is sitting around that 16%. If we can generate those sorts of returns, then we would increase our capital allocation. If we were to increase that allocation by $100 million, $200 million a year, and we can generate those returns given the cash that we're generating today and where the balance sheet sits, I think that would be the best use of a part of the extra cash flow we're getting. We obviously are still remaining committed to increasing returns to shareholders through dividends, and they'll share in the increased cash flows automatically by our current policy. But if there's ways to [Technical Difficulty] -- through the second half of the year as well. Matthew Frydman: Got it. That's a sensible way to think about it, obviously. And obviously, the balance sheet has changed very quickly. So a nice position to be in. Thanks. Lawrie Conway: Thanks, Matt. Operator: Your next question comes from Adam Baker from Macquarie. Adam Baker: Just back to Mungari. I noticed the 127,000 tonnes to 9,000 ounces gold is third-party ore process in the region. Just curious if you could touch further on that. Is this a normalized rate we could expect moving forward? I know you're looking at further opportunities. And just to give us a bit of flavor, are there any companies out there knocking at your door to process the material in the region? I know, it's about 10% to 15% of your planned throughput capacity at the moment. Lawrie Conway: Yes. Look, Adam, I'd say, firstly, yes, there's people out there that would like for a brand new mill that's got capacity for them to put some ore through. I think as Matt outlined on the call, we used the opportunity to purchase that ore to really test the plant through the commissioning rather than waiting until we get our ore, both the main ore out of Castle Hill and the underground through given we've got a large campaign this second half on the underground. So that was -- I would sort of almost say that's one-off. But if we've got capacity, we will take it because we believe with our mine plan we've got 4.2 million tonnes of our ore that will go through the plant. If there is spare capacity, we would look at it. But right now that is only really around the commissioning part of the plant that we did that purchase. If we do, it's going to displace. I mean, this 1 did -- yes, it made a profit, didn't make a lot of money for us, but it allowed us to learn a lot about the plant. Adam Baker: Yes. And the reduction in cost guidance, I mean, that makes a lot of sense due to the stronger byproducts. Just trying to understand the 6% improvement at the midpoint, how much of that would roughly be driven by the stronger byproducts versus it's a better-than-expected cost control from Mungari, et cetera? Lawrie Conway: Look, Adam, it's a combination of both what the split -- it depends on how we go through the second half. But like we're achieving $2,000, $3,000 a tonne halfway through the year above what we had sort of guided at. Current price at [ $19 ] is sitting about $4,500 a tonne above. So the byproduct credits are pretty important in that regard. But if you look at our gross operating and our net operating cost spend against our budget, it's pretty well in line, a little bit lower in some areas. And then when you look at our sustaining capital, we're actually tracking well against our guidance a little bit. I'd say, a little bit of an opportunity for some of the sites to ask Matt for a little bit more money given the cash they're generating, but I do think the discipline around all of the capital has been very good across the business. Operator: Your next question comes from Mitch Ryan from Jefferies. Mitch Ryan: I just wanted to sort of pick at 1 of your answers to Matt Frydman's question with regards to accelerating Northparkes. You sort of said you're obviously looking at E22 and accelerating that, but then also that expanding capacity. I just wanted to understand, is your thinking materially impacted by the Triple Flag agreement? And is there anything you're able to do around that with expanding Northparkes? Lawrie Conway: Yes. Look, Mitch, I mean, yes, when you look at Northparkes, you've got a stream over it that we only get 40% of the gold and pay 100% of the cost. So it has an impact on what we can do in unlocking Northparkes. What I'd like is that we've engaged actively with them since we -- since we've owned the asset, they know they have a role to play, and we continue to work through what role they have in the site going forward in unlocking the value. I think because when we look at it, we've got -- it's permitted to 8.6. It's running. It can get to 7.5. We've got 600 million tonnes in resource. If you keep running at those rates, this mine is running for 75 years. So increasing processing capacity and mining capacity is the right thing to do at some point. But we've got to make sure that it's going to give us a good return, both on a pre- and post-stream basis. Mitch Ryan: Okay. And then my second question relates to Ernest Henry. Just noting that you've obviously been able to pull forward some of those works. But were there any works that will be unable to be rescheduled into the shut that was bought forward? And if so, will they be deferred or completed later in the half. Lawrie Conway: The short answer probably is no. So nothing material. There were some minor tasks in the underground that we couldn't complete just based on access. So they will be completed, but they won't drive a processing plant shutdown or a material underground shutdown in the quarter. So I'd say 95% of the tasks we've been able to pull forward or defer depending on which one it is. Operator: Your next question comes from David Coates from Bell Potter Securities. David Coates: Thanks for your time this morning and congratulations on a great quarter. Matt, it's a bit of a high-level question. There's been a lot of discussion and questions this morning about where you guys can value add. Is it dropping cutoff grades? Is it expanding plants? Is it maybe regional acquisitions. Just wondering -- and we're in this -- what's fairly unprecedented gold price environment, not just the price but still the rate that it's risen. Are there any -- out of all the sort of growth of value-adding options that you guys presumably are considering and have been discussed, what are the ones that are sort of floating to the top as the best bang for your [ buck in ] in this sort of environment as well at the moment across the portfolio? Lawrie Conway: Yes. Look, I'll get Matt to talk about what he sees as the opportunities at each of the assets. I mean, for us, if we can get more ounces or tonnes, copper tonnes out of any of our operations that basically improves our margin, that's really where we're going to focus. I mean I think we've always got to be conscious of is that in this current pricing environment, if you do approve a project and Cowal OPC as an example, and Mungari was an example, your time to bring those to production is 2, 3 years' time. So you've got to have the real confidence in terms where the metal price will be in that time versus those short-term ones around improved marginal increases in processing capacity or recoveries or those things. They're the ones that you can certainly bring on straight away. But the others, you're going to be looking 2 to 3 years at confidence that when you do bring them on, they're going to be in a good environment. And Mungari is an example, in '23, gold price was about 40% of what it was is today. And they're coming on at the right time. I've been involved in projects that gone the other way. Matt, you want to talk about some of the things that we're looking at. Matthew O'Neill: Yes. And aside from the ones that have already been spoken about of sort of [ E22 ], if I just run through the operations quickly. The area that excites me most, if I pick Cowal is -- and I'm stealing Glen's thunder, but is the exploration and the resource potential that's there. So investing the money in the drilling, investing the money in the mining, [Technical Difficulty] those 2 things, there's an opportunity to extend, which is not as exciting as growing, but there's also a pretty good opportunity there depending on where we see the long-term metal prices level out at, that you would grow Cowal again, that's pretty -- that's very exciting in terms of the results we're getting back through that, and Glen will give an update next time we talk through that. And then the other 1 there is also Mungari. In a similar vein, the margin and the value comes from the underground. So that the mill capacity is good, but if we can invest in our drilling and increase that percentage of underground through, that's where we get our growth in ounces without a material one. So they're our best bang for buck. And then the, like I said, Ernest Henry exploration, you do have that capacity there. But the cave and whatever else is reasonably sort of restricted there. So additional ore sources around the region that we would see growth from with that one as well. Operator: [Operator Instructions] Your next question comes from Zane Guo from JPMorgan. Zane Guo: Just the 1 for me today on capital management. How do you think about the dividend versus a buyback into the half? Lawrie Conway: Yes, Zane. We've talked about this previously. I mean, we -- buybacks are a part of a capital management plan that we look at -- I mean, for us, they need to be sizable. If you're looking at 10% of the value of the organization as a benchmark, that's a large commitment over. And I go back to the point of like if we've got projects that we can invest in that get a greater return for our shareholders, that will be the first priority. The second part is that the flexibility around our dividend policy, where in this rising price environment, our shareholders will receive a greater portion of cash flow than what they have in the past. And I think that really gives the best value for our shareholders. So I don't expect that buybacks would be on the table for consideration by the Board this half year. Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Conway for closing remarks. Lawrie Conway: Thanks, Harmony, and thanks, everyone, for taking the time on the call today. We've got another safe and successful quarter. The cash flow is building the projects that we're running to are on plan and on budget, and we really look forward to updating you in a few weeks' time where Fran can tell you what we are doing with the cash as we release our half year results. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the VEF Fourth Quarter 2025 Earnings Call and webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your first speaker, David Nangle, CEO. Please go ahead. David Nangle: Super. Thank you very much, and good morning, good afternoon all. I welcome you today from Manila in the Philippines, where I'm on the road, seeing companies and looking at some of our investment companies in Dubai for the last couple of days. This is -- welcome to our Q4 '25 results presentation. I do have Alexis Koumoudos, our CIO, with me on this call as per usual. And I'll spend the next -- we'll spend the next 15, 20 minutes just running through key highlights of the quarter and the year, given it is the end of year quarter and outlook for everything that we see at VEF and then happy to answer any questions that you have. Moving on to Slide 2 in the presentation. It's an evolution of what we've been saying for most of the year. Like the NAV does continue to trend higher. We're very happy. It's a reflection, obviously, of everything in our NAV, which is our portfolio of companies and their performance. Q4 in itself was up a healthy 6.9% in dollar terms and over 22% for the full year, obviously less in SEK, given the SEK strength versus the dollar. But the big driver in Q4 was Creditas, which we'll speak about and its latest fundraise, which came through quite nicely in Q4. But generally speaking, the NAV this year was a reflection of our portfolio, and it's really about a portfolio that the risk reward is much better than it was in the past. We're majority at, give or take, breakeven and growth is very much back in focus. That's been reflected in our top names like Creditas, Konfio, and Juspay, which is humming along quite nicely at a very healthy clip. The focus in the quarter, and obviously, it's a big part of our story is Creditas, and had a very big quarter in terms of, one, results, it's been coming. We talked about the transitionary period from hyper growth and burn to no growth in breakeven and now they're starting to put the foot back down on growth again, but more sustainable growth at this point in the cycle. So through the quarters this year, we've seen them get towards 20% year-on-year credit growth, which is driving the income statement. We'll talk about that. And that was key to see those results coming through quarter-on-quarter-on-quarter as we went through the year, and that's key for our value and our future. Also from the Creditas side, they had a number of standout events in the quarter. We already mentioned or touched on the latest funding round, but also they closed the Andbank. They got a bank license in Brazil, which is key for the franchise value and their funding and also made a substantial higher at top level. And then last point, the whole area of capital, capital management and capital allocation effect. We've, in 2025, very focused on strengthening the balance sheet, exits. We'll talk about that in this presentation coming in, capital coming in, to pay down some debt, buy back some shares. And as a team and as a Board, we're sitting down and strategizing as we look into 2026, how we manage our capital for the best risk reward for our shareholders, both in the short term and to manage that discount to NAV, but also for the longer term in adding new portfolio companies, that's a broader discussion point. Moving on to Slide 3. The key highlights and numbers I've touched upon, of the NAV in dollar terms, up 6.9% and 22.9% for the quarter and for the year, year-on-year. And from a SEK point of view, a healthy quarter of 4.6%, not a lot of currency diversion and up 2.8% for the year. Share price obviously been weaker, flat year-on-year at the year-end and up 3.3% in the quarter. And on Slide 5, this is a chart we show every quarter and what you're starting to see since year-end '24 is a gradual pickup in the NAV in dollar terms to now $434 million. As I say, this is -- there is a micro level of our portfolio companies, but then obviously, it feeds down from the macro level and the cycle level. Venture capital, capital is in a better place. Capital is flowing. Macro is in a better place. The companies that were invested in quality companies are starting to grow again, and that's feeding through to a growing NAV, which is key, obviously, for everything that we do here at VEF. And Alexis is going to talk [indiscernible] provide slides around the NAV dilution over the year, and I'll come back on some key points before we open up for questions. Alexis Koumoudos: Thanks, Dave. Hi, everyone. Yes, just looking at Slide 5, which highlights the valuation approach and key takeaways for the portfolio in the quarter. The main mover there is Creditas moved from mark-to-model in the previous quarter to this latest transaction priced at the $108 million Series G round that they closed in December, which resulted in a $33 million uplift to the NAV. The rest of the top 3 names like Konfio and Juspay remained at mark-to-model and latest transaction, respectively, which results in the portfolio being valued on 69% at latest transaction and the remaining 31% of the portfolio being valued on a mark-to-model basis. And of those 31%, 90% plus of those mark-to-model valuations reflect multiples further down the P&L, i.e., like below just the revenue multiple. Moving on to Slide 6. So on Slide 6, we just break down the NAV evolution in the quarter, and we show the breakdown of that and how it's attributed to different factors. So the biggest part of NAV growth in the quarter is attributable to Creditas' round and the impact of that round on the valuation of the company. In the portion of the portfolio that's mark-to-market, you can see the slight positive portfolio growth was partly offset by the market pullback in the quarter. So the holdings that are valued at mark-to-model had a relatively neutral impact in the quarter. Just on to Slide 7. So -- in Slide 7, we show an aggregation of the NAV evolution over the year and how the different parts or the attribution to that over the quarter. So overall, in 2025, we saw a strong contribution to NAV growth from portfolio performance, the market performance through comp multiples and also strengthening non-USD currencies. And importantly, we also converted $37 million of our appreciating NAV to cash, which shows up in that net $18 million positive cash position over the course of the year. So in aggregate, there was $81 million of positive NAV evolution. As Dave mentioned, that was 23% year-on-year dollar NAV strengthening. And on a per share basis, that's 26% year-on-year once you factor in the buybacks that we did over the course of the year. And then just on Slide 8, we use this slide to just reiterate our -- how we continue to feel confident in the strength of the portfolio, the fact that we have a portfolio that's growing 25% to 30% year-on-year on a self-sustaining basis. And Dave will -- a lot of that is driven by Creditas, and Dave will get into some of the details of that in the preceding slides. But we're also feeling confident that there's been a change in the environment, far more fundraising activity in our markets. It's definitely heating up, and there's been a flight to quality, which has benefited our portfolio. And we expect to see rounds like Creditas and Juspay to continue to take place and continue to benefit our portfolio and help us improve our liquidity and balance sheet. So handing back to you, Dave. David Nangle: Super. Thanks, Alexis. Look, I think from a portfolio point of view, as Alexis alluded to, what's key is that you invest in quality companies and you've got a through cycle performing portfolio. And that's what we're starting to prove out having gone through the boom years up until 2021, the VC winter of '22 and '23, where we reevaluate our portfolio and set a valuation mark lower and then the recovery and the growth that we're seeing in 2025. So you get to -- you invest in these companies, you live with them through cycle, you see them in the up and the down cycles, and that's how you build longer-term value. So we're very happy with the overall portfolio where it is. And we do have tailwinds from an ecosystem, VC capital flows, valuation point of view, all very helpful to what we do. Specific to us, obviously, is Creditas. Creditas performs. It's a big part of VEF performing, as we all know. And 12 months ago, these numbers weren't what they are and what you see today. And this is what we said the management was going to do, and they are delivering, and we expect that to continue into 2026 and beyond this year. And what you have is an improving growth profile at a very managed risk-reward basis as they manage their cash flows on a neutral basis. And in Q4, we'll get to about 20% year-on-year loan growth. Revenues are following that growth. And that's key for future value of Creditas as it looks to be, at some point in the future, a public company with real value needs to start growing again, that engine has really kicked in. As impressive or as important is the -- what they're doing from an efficiency and cost point of view, enabling AI tools across the business, and you're starting to see that efficiency gains kicking in. So you're not just getting growth, we're getting more efficient growth, which is the future of this company and the industry as a whole. Besides the numbers themselves, what is key for Creditas in Q4, all these things kind of came at the same time, but they've been work in progress for quite some time. One was obviously the announced Series G funding round, $108 million coming in, and we spoke about that in Q4. The bank license itself was approved in Q4, and that's key, lower cost of funding, more availability of funding and a franchise uplift for the overall business and its optionality going forward. And in the top team, Ricardo Forcano came in from formerly a BBVA Group, top management. It's the type of caliber of top management that the company is now attracting, not wasn't attracting, but it is on the front foot, and that's the kind of talent that comes with that. So it's kind of like an ABC trade. So I think from all aspects of Creditas, we're very excited as we look at the company where it's positioned, the tailwinds that it has, capital position, economics, et cetera, as it goes into '26 and '27. And besides Creditas, I want to talk about cash exit capital. What's key is we're always looking at our cash and capital position and our balance sheet strength, and then we're making -- looking to make logical decisions around that positioning. At the same time, we're very focused on the short term, more so in the past and now transitioning as we balance, obviously, short term is important, but start to look at the medium to long term for VEF and for all our shareholders. From a cash position point of view, we had $15.9 million of cash and liquid assets at the end of Q4. And that's -- our balance sheet is stronger than it was in the past. But what's key is we paid down half our bonds, but we still have $26.1 million of bonds outstanding. So we're in a negative net cash position, and those bonds are due at year-end '26. So any kind of decisions that we make has that in mind. And that's a kind of a cash liquidity risk management overlay to everything we do. When that capital started to come in from the exits we did last year, the initial allocation was obvious, pay down some debt, start to buy back your shares. Now that we're net negative on cash, we balance that with how we look to more cash coming in and also thinking about the future and looking at pipeline and balancing all that into a broader strategy. That's all a work in progress at this point in time. What I will say is the key to all of this and us having the tools or the ability to do more as in pay down more debt, and we do aim to go debt 0 by year-end. That's one of our inherent goals. We do have options around rolling the debt, but the plan is to buy back more shares and then put capital to work in new pipeline companies, Key to that is capital in and key to that as exits. We had a very -- off the back of promises to investors, we had a very healthy last 12 months in delivering exits, which are hard in our industry, and we delivered 3, as I said before, in India and in Brazil via IPO, via M&A and via secondary sale, the biggest and the most juicy of which was Juspay, about $37 million of gross proceeds came in, in the last 12 months. We look at the next 12 months, and we're fairly confident that we will see more exits. We're working on the number. By no means is a VEF wind-down vehicle, but we're taking our opportunities to take capital off the table at NAV plus/minus in our companies to bring that money in, and that strengthens our balance sheet, puts us in a stronger position. And with that capital in play, then we have the range of decisions to make and actions that we took like we did in 2025 around debt and -- around VEF debt and VEF equity. I think this whole ideology is just keeping the market updated on how we're thinking. We haven't set anything in stone at this stage. As I say, a lot of it is around our capital strength with more capital strength, you can make more decisions and what's the priority. There's more capital you have, you can prioritize different things for both short term and long term. But bolstering the capital position is key at VEF, bolstering our balance sheet. We want to be a strong investment company with optionality of capital. We've paid down half our debt. We would like to go debt-free by year-end. Narrowing the trade discount has not gone away as a concept. We're all shareholders. We value our shares and narrowing that discount is a key part of anything we do. We cross-reference that with our cash capital position versus our -- what money is due in the bond markets. And then we're starting to gradually overlay that with the future and the future growth of VEF because we look at our portfolio, we look at Creditas, Juspay, Konfio, we look at the past of Tinkoff, EasyGo. We know we have the muscle to invest in best-in-class fintech companies. We know those companies compounded value, and we know we can realize that value for shareholders as we've seen with Tinkoff, EasyGo and more recently with Juspay. So balancing that long term with the short term is all part of the strategy that we're doing at the moment, cross-reference with the capital position we find ourselves in today. And just to finish off, so the broader investment case, and this is very similar to last quarter. We keep on saying it's about the portfolio. Any investment company is about its portfolio. And I think we have proven through cycle that we have a quality portfolio that our investment radar is good and that names are now starting to break out then in terms of growth, profitable growth and they're raising fresh capital. So we're in a as comfortable and as positive position as we've been for a long time in terms of the quality of our portfolio. And that's the basis for value creation and growth. Then you've got exits. Exit markets are back, but it's hard work to exit. We're proving that we can exit our positions and we can exit them at the right price. There's been no fire sales, nothing forced at the door, the right exits at the right time at the right price, strengthening our balance sheet. Then you've got questions around capital allocation. And we look to win the near term as well as the long term and put that capital to work in the most value-added way. It was paying down some debt, it was buying back some shares. And now while we're in a negative net cash position, we sit back, we strategize as and when the next capital comes in, how do we allocate that. And then we're debating the short term versus the long term because it's very logical given our track record of investing versus the very short-term obvious traded discount playbook of buying back your shares. We get that. We're very cognizant of that. And within the pipeline, we are flexing that muscle again. We are seeing best-in-class EM fintech companies around the world. We are excited about names that we could potentially bring into our portfolio. We need to cross-reference that around, A, our capital position; and B, the opportunity to create value for everybody involved by our shares and obviously delevering our debt. I will stop there. And operator, very happy to open the floor to questions at this stage. Operator: [Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Linus Sigurdson, from DNB Carnegie. Linus Sigurdson: And starting off with a question on the Creditas raise. If you could just walk us through maybe some of the details and how this has affected your ownership stake in terms of dilution? David Nangle: Yes. I think last part first, from an ownership point of view, we broadly own what we did before. But there was a lot of moving parts to that in that the round itself was led and underwritten by Ann Bank, who's a key investor in Creditas. And so the capital came in. But there were a number of notes outstanding convertible notes of which we held from previous round back in '22 and '23. So they converted at a discount to the overall round price. So net-net, we still own the same -- sorry, approximately 9% of Creditas. It didn't move that much given the mechanics and the math of the round. And then from a valuation point of view, there was obviously the headline valuation, but we value Creditas at the convertible note, the discounted notes just to be conservative and in line with our most recent effective capital in. Linus Sigurdson: That's very clear. And then a question on Juspay, which you saw putting out some numbers a few months ago. And just any updates on how they're tracking along? What should we expect for 2026? Should we see some moderating momentum? Or is this going to continue to compound in the same way? David Nangle: Yes. Alexis, do you want to grab that? Alexis Koumoudos: Yes, Juspay continues to execute well. So I think in -- for the calendar year of 2025, the company grew around 40% top line. We are forecasting the company expects to grow like at a similar pace this year. I think the big variables within that are as they -- last year was about planting seeds in international markets, and this year is about seeing those seeds like really thrive and start to contribute to the top line. So I think some of the variability about them being able to deliver 40% or maybe more will come from their success internationally. And so far, we're feeling pretty strong. There are some large signed contracts, which can be quite juicy and fruitful. But yes, I'd say 40% to 50% top line growth for '26 similar to '25. David Nangle: Yes, Linus, what you have is, you've got the -- the top 3, you've got names like Creditas and Konfio that are coming back into their own and starting to compound back into that 20% plus growth zone. And they can easily go to 30% given the markets are in the TAM. But Juspay has been compounding at a healthy clip through that cycle. So -- and we do expect a healthy year again next year. Linus Sigurdson: I appreciate that. And then my final question was just double-clicking on this near-term capital allocation. How we should interpret those comments on balancing? I mean, should we think some new smaller exit before buybacks are resumed at scale? Or is this something you'll be starting in the near term? David Nangle: Yes. No, look, it's a very fair question, and we're not ignorant to the share price. And we -- what I'd say to you is we're making no firm statement today, and that's not hiding behind anything, but it's very clear that we need to manage our capital position given what we need to outlay at least on paper from a debt point of view by year-end. And that was a very cognizant management and Board decision when we stopped the buyback as in let's get the balance sheet to a more comfortable position for everybody involved. We are comfortable on line of sight of exits. We would like to see those exits coming in. Nothing is guaranteed. But as they do and the capital position strengthens and you go net cash positive, then you have the decision tree, whether you keep the capital to pay down your debt. Is that the most important thing in an ever-changing environment, that may be more important than buybacks. And then you cross-reference that with the clear IRR that you have in buying back your own shares as well as the indication to the market, which is very positive. And then you start to cross-reference that with the long-term value when you see some awesome fintech companies like the ones we've invested in the past that we could potentially add to the portfolio. Now we're trying to get all our ducks in a row. And we're being -- I think we're being maybe overly transparent and communicative with the market about how we're thinking as opposed to just finishing our thinking and putting all down on paper. But I think that we respect the market enough to share as we go. I think we've always done the right thing for long-term value for shareholders. We can't control the share price. That's very clear. But I think to your point, Linus, I think more capital in gives us more comfort to do more across all areas of capital deployment. Operator: We are now going to proceed with our next question -- and our next questions come from the line of Stefan Knutsson. Stefan Knutsson: Firstly, on geopolitical situation in South America following like the U.S. operation in Venezuela, have you seen any impact on your business or any increased risk that you foresee going forward after this development? David Nangle: Interesting. Not really in the specific context in a global context, clearly, there's a lot of moving parts geopolitically and U.S. is at the forefront of a lot of them. And these are unpredictable. We wouldn't expect anything to happen in any of our investment countries in Latin America or elsewhere similar to what happened in Venezuela. I think it was a very specific case in point. And obviously, we like the event. We like the outcome of the event, but the event itself and the nature of it was tricky, let's say the least. But no, I think from the landscape in Latin America, the markets that we look at Brazil and Mexico haven't been touched really by that. And we talk to a lot of global investors who invest in emerging markets in LatAm. And even to other markets like Colombia, Chile, et cetera, we haven't really seen any impact. I think there's a very specific excitement around the potential for Venezuela off the back of what happened. But it's a country with many possible -- lots of potential and many possible future scenarios. So I think removing bad leadership is only the start, but then the pathway, there's a lot to work on there. But no, we've seen no negative outcomes or volatility or risk to any of our countries. This is all within the domain with a very fluid, noisy global geopolitical kind of environment, much more than it was in the past. Stefan Knutsson: Yes. And then I think like most of the questions was answered by Linus question, but maybe if you can share any operational update on Konfio and how their banking license application is going. David Nangle: Yes, that's fair. It's been overweight Creditas communication in Q4. And obviously, Juspay Alexis spoke about Konfio did very similar results to what Creditas did in terms of top line growth, loan growth and top line growth in the 20% bracket, albeit it wasn't the upcurve that Creditas had quarter-on-quarter through the year. It was more sustained through the year. It is a bank that can do a lot faster growth and Creditas can be the same given the TAM that their environment in. So an easy do 30% growth plus as we look into 2026. I don't think it will start off that way. I think it will -- Q4 is generally faster than Q1, so it really picks up. Margins are holding steady and tight. They're cash flow positive, have a strong cash position. And on the bank license, we'll see. It's one where they're position that we said it before, I think as a Konfio is planning life without a bank license, albeit we know the benefits of a bank license. So very clear that it's in line to get one. Just when you're talking about regulators and timing, it's always a risk. The upside is clear. Like Creditas getting its bank license in terms of funding costs and franchise value. But we're comfortable it will get the banking license. We just wouldn't like to put a time on it because we've been there before with regulators and bank licenses and these things just take time. But the good thing in Mexico is we have seen bank licenses being handed out. So it's something that is and has happened. So it's not like it never happens. Operator: We are now going to proceed with our next question. And the questions come from the line of [Tobias Carlsson]. Unknown Analyst: And I have 2 questions. The first one is about -- that I can read in your report that you underline that you want to make new investments. And I wonder how you're going to finance them considering that you also want to reduce the debt and perhaps also buy back shares. My second question is if you intend to try to reduce the discount to net asset values as it's 50% right now. David Nangle: Tobias, thank you very much for the questions. And I think our sharing around our direction of travel has been bigger picture and broad as opposed to specific. And we didn't mean to mislead our investor base in what we're doing. We are an investment company. We are working pipeline. We are very keen to get best-in-class fintech companies around emerging markets into our portfolio. It's been part of our muscle and our job for the last 10 years. So when I say we've been building that muscle again, we've been out there looking for these best-in-class companies. And that's part of our job. At the same time, when we looked last year and the year before, it was a very clear priority around strengthening balance sheet, getting capital in, putting capital to work where it was most clearly needed, delevering, paying back the debt, and that's there still as a goal for this year. There are 25 million plus/minus to go. And clearly, to buy back shares is part of the IRR given where VEF shares currently trade. What we did was we paused effectively in Q4 of last year around the buyback and touching the debt for now because of our cash position going lower than our debt that was due at year-end. And we wanted to continue to strengthen our balance sheet. It's a general top-down statement where we are looking to transition to going -- to getting VEF back on the front foot investing. The debt still is very much there. It has to be paid. It will be paid. Our shares do trade at a deep discount to NAV. And there's many ways of delivering, closing that discount to NAV, and we have been working, focusing on communication, Investor Relations. We bought back some shares last year, transparency for our bigger companies, exiting our positions at NAV plus/minus to prove that our NAV is real. We continue to work that mandate. So there's many ways of attempting to -- we don't control the share price, but attempting to decrease that discount to NAV. And it's in our interest as much as all shareholders' interest to have that discount lower if even nonexistent. That is part of our short-term, medium-term goal. We stopped doing everything for now until we get the capital in, and we're just strategizing around these things. And there will be a priority depending on how much capital we get in, what pipeline companies we see, the IRRs in those pipeline companies versus IRR and our shares versus buying back the debt. So I think it's all just there. I think our track record last year was buying back shares and paying down debt. We're just talking about the 3 different aspects and saying we're ready to go on all. But with $15 million of cash and $25 million of debt, we just paused, took a moment, strategy discussing and we're going to -- we're really focused on the exits because with more cash, we can do more things. So it's -- that's on balance sheet. We're also looking at potentially doing off-balance sheet structures. We can use our investment muscle, our ability to find, underwrite, get allocations, best-in-class fintech, but do it off balance sheet by potentially SPVs. So it doesn't have to be A, on balance sheet. It can be B, off balance sheet, which doesn't touch VEF, but can benefit VEF in terms of fees, carry and different ways. So we're just looking at all of this. We're discussing it internally. We're positioning ourselves. Maybe we're opening too much to the market, but I'd like to share as we go. And I'd like to listen to the market and the market speaks very clearly, we take all that on board and we try and make the right decisions as we go. Operator: We have no further questions at this time. So I'll now hand back to you, David Nangle, for closing remarks. David Nangle: Yes. Thank you. Look, thank you, everybody, for following us, for the interest in our story and our stock. We have people coming in asking questions by e-mail. And otherwise, we will come back to you for sure. We're very happy with where we're at in terms of our portfolio. That's key. You can't do anything with a strong portfolio. We're very happy where we are in terms of cash generation and delivering exits. If not every investment company that's in a position like us being able to do this, it puts us in a strong position. And then we're very clear and maybe overly leaning in around our thought process around what we do on capital allocation as we look forward. Watch this space. We'll be more clear as we go forward as capital comes in, but we're listening to the market as well as trying to make the right decisions for VEF, both short term as well as long term. But thank you. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.
Operator: Thank you for standing by, and welcome to the Regis Resources quarterly briefing. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Jim Beyer, Managing Director and CEO, to begin the conference. Jim, over to you. Jim Beyer: Thanks, Paul. Good morning, everyone, and thank you all for joining us for the Regis Resources December quarter FY '26 results. Joining me on the call today is our CFO, Anthony Rechichi, also our COO, Michael Holmes and Head of Investor Relations, Jeff Sansom. We'll refer at times to figures -- some figures and tables in the quarterly report that we released earlier today. So you may find it useful to have that document at hand when we refer to them. All right. So look, I'll start with safety. During the quarter, our operations continued to perform strongly from a safety perspective. The 12-month average lost time injury frequency rate finished the quarter at about -- at 0.34, which remains well below the Western Australian gold industry average. Our objective remains unchanged in this area to provide a workplace free from serious injury. We continue to focus on leadership, discipline and continuous improvement to support safe and reliable operations across the business. Turning now to our production performance. Over the quarter and in fact, across the last several quarters, the team has continued to deliver the plan. The message we have consistently communicated to the market has not changed. Regis operates quality assets with strong leverage to the gold price. And when combined with the rolling life extension potential of our underground mines that we continue to see, this positions the business extremely well to deliver consistent ounces and cash flows well into the future. Operationally, the quarter group gold production for the period was 96,600 ounces at an all-in sustaining cost of $2,839 an ounce. And that, by the way, includes $179 an ounce of noncash stockpile inventory movement unit cost. This consistent delivery across both Duketon and Tropicana again demonstrates the reliability of our operating base and the strength of our margins. The performance translated directly into strong financial outcomes and further balance sheet strength. During the quarter, we generated $419 million of operating cash flow and increased our cash and bullion by $255 million, leaving us with an end of December balance of $930 million in gold -- in cash and gold. Also during the quarter, after taking into account our strong balance sheet and great outlook, we resumed dividend payments, declaring and paying a fully franked dividend of $0.05 a share, returning $38 million to our shareholders. Now this was underpinned by strong financial performance delivered in FY '25. This brings the total amount of dividends paid by Regis to $580 million since 2013. It reflects -- the restart of dividends, reflects our confidence in the sustainability of our cash flows and the strong position the business is now in and also in our fundamental understanding the value growth and returns to our shareholders are a fundamental objective of our business. To that end, Regis is unhedged and continues to be. We continue to invest in underground growth and exploration. And thanks to the strong operational performance, now has the capacity to balance this disciplined reinvestment with returns to shareholders. And with that, I'll now hand over to Michael and then Anthony, who will provide more detail on operations and financial performance. Thanks, Michael. Michael Harvy Holmes: Thanks, Jim, and good morning, everyone. Operationally, the December quarter was in line with expectations, both across Duketon and Tropicana, and the teams to continue to deliver its plan and the consistency of execution across the business remains a key strength for Regis. At Duketon, open pit on underground operations produced 57,600 ounces. Open pit mining continued at King of Creation, Gloster and Ben Hur, delivering 13,600 ounces at an average grade of 0.82 gram per tonne. Mining conditions were stable and performance was in line with plan. Our underground operations at Garden Well and Rosemont continue to perform reliably producing 32,000 ounces at 1.8 grams per tonne. Development rates across both undergrounds were pleasing and supported steady ore delivery through the quarter. Total underground development at Duketon was 3,896 meters with approximately 40% classified as capital development, reflecting the ongoing investment in Garden Well Main and Rosemont Stage 3. Both projects continue to schedule and are progressing as planned towards commercial production. The Duketon Mills performed to expectations and throughput was supported by planned stockpile feed. During the quarter, we also progressed activities associated with the BuckWell open pit at Duketon North. Following the reserve upgrade announced during the quarter -- during the period, early establishment and pre-strip works commenced to position the operation for first ore later in FY '26. BuckWell is a capital-efficient near-term opportunity that leverages existing infrastructure, approvals and available mill capacity at Moolart Well. From an operational perspective, it provides a flexible source of ore to support the Moolart Well once low-grade stockpile processing concludes while fitting well within the broader Duketon mining sequence. Turning now to Tropicana. At Tropicana, Regis' attributable production for the quarter was 39,000 ounces, representing another solid quarter of delivery. Open pit operations delivered 18,800 ounces at an average grade of 1.96 grams per tonne, with performance in line with expectations. Underground operations delivered 17,400 ounces at 3.14 gram per tonne, again, consistent with plan. Overall, both Duketon and Tropicana continued to perform reliably during the quarter, delivering consistent production while progressing key underground and near-term growth projects. With that, I'll now hand over to Anthony to take you through the financials. Anthony Rechichi: Thanks, Michael. Good morning, everybody. As Jim outlined earlier, the December quarter again demonstrated the strength of Regis' financial position with consistent operational delivery translating directly into strong margins and cash generation. Gold sales for the quarter were for just under 100,000 ounces for an average realized price of $6,436 an ounce, generating $641 million in revenue. Operating cash flow for the quarter was $419 million, with $231 million generated at Duketon and $188 million coming from Tropicana. Also in cash and bullion and referring to Figure 2 in this morning's ASX release, the coppers increased by $255 million during the quarter, taking the total balance to $930 million as at 31 December. Importantly, this increase was achieved after the payment of a fully franked dividend of $0.05 per share which totaled $38 million, while continuing to invest across the business and at McPhillamys. On the capital expenditure front, we spent $115 million in the quarter. At Duketon, this included underground development, preproduction mining activities and waste removal as well as investment in plant and equipment. A significant portion of this spend related to the continued advancement of Garden Well Main, Rosemont Stage 3 and early works at BuckWell. At Tropicana, expenditure related to underground development at Boston Shaker and Tropicana underground, preproduction costs at the Havana Underground and sustaining capital across the operation. Exploration expenditure during the quarter was $19 million, reflecting the strong level of activity across both Duketon and Tropicana and $5 million were spent during the quarter on McPhillamys. As previously outlined, following the Section 10 declaration, all McPhillamys expenditure is expensed through the profit and loss account. To close out and to also remind everybody, because of what has been strong profitability for a while now, Regis will return to a cash tax payment position, starting with the FY '25 tax payable of approximately $100 million, which will be paid in March next month. Well, month after, I guess. Going forward, we expect to make monthly corporate tax installment payments since the long period of tax loss benefits that we've enjoyed has come to a close. Overall, the December quarter highlights the magnificent cash generating capacity of the business with strong operating margins and disciplined capital allocation supporting balance sheet strength and shareholder returns. With that, I'll hand back to Jim. Jim Beyer: Thanks, Anthony. Look, now I want to talk through some of the broader corporate areas, and I'll start or return back to capital allocation. I'll repeat myself earlier that during the quarter, we resumed the dividend payments and a $0.05 fully franked share, returning $38 million to shareholders. The resumption of dividends is not expected to be a one-off decision. It reflects a clear shift in how we now view our business and the outlook of gold price, which then leads to the question of capital management. We are generating strong reliable cash flows. We have a robust balance sheet, and we're able to invest in the business while maintaining financial flexibility, a great position. Now in relation to looking ahead, we're in the process of finalizing a formal capital allocation policy as our Chairman mentioned at the last year's Annual General Meeting 2025, which we expect to release in February with the half year results. So that's discussing the ultimate outcome of our business, i.e., returns to shareholders. I'd now like to go right back up to the front of the business and talk about exploration. During the quarter, we released our biannual exploration update, which highlighted several very exciting opportunities that are popping up across both our underground and our open pits. Now as a result of these pleasing results and the resulting confidence to continue, we've actually increased our forecast spend on exploration this year. So we're continuing with our budgeted drilling program plans that we already have laid out for the rest of the year. But we're also adding to the program by basically maintaining the range at one of the -- at the projects that we drilled earlier in the year that have proved successful and warrant continuing. This increased our FY '26 exploration forecast and hence our guidance by about $20 million to result in the new guidance range for exploration of $70 million to $80 million. At Tropicana, the good news keeps on coming as drilling consistently delivers extensions to our known mineralization, increased confidence in underground growth opportunities and identify new targets to continue to build the underground pipeline. So our increase in exploration spend this year is deliberate, disciplined and pleasingly driven by results. It reflects the quality of the opportunities we're seeing and our confidence in converting exploration success into future production and ultimately, cash flow, particularly where it leverages off our existing infrastructure. On McPhillamys, as previously flagged, the judicial review for the Section 10 was heard in the federal court in Sydney last month in December, and the judge has reserved this decision and we sit and wait for the outcome. Now as we've mentioned before, in parallel, we continue to progress work on alternative pathways to return McPhillamys to an approvable position, and that includes ongoing assessment of an integrated waste landform solution for the tails. This work is progressing methodically and over a longer-term time frame, it takes time for us to work on these alternatives. Now finally, I'd like to touch on the Buckingham Wellington pits was -- and Michael has talked on these before and as we call them now, BuckWell. BuckWell is a capital-efficient near-term opportunity that, as Michael said, leverages existing infrastructure approvals and our available milling capacity. It is a cracker of incremental value. We're going to get 221,000 ounces out of it at an average all-in sustaining cost of $3,524 an ounce. And this is all in the release we put out last quarter. Now at consensus average price of 5,387 an ounce, it has a pretax NPV of $270 million and an internal rate of return of 127%. Now that's a 5,387 spot today. I don't know what it is right this very minute, but earlier this morning, it was 7,125. If we run that through it, the math is pretty simple. Pretax NPV would be more than double. This is a great project, and it's a great example of the work that our team is doing. With a bit of a fresh look at our old assets, sometimes a little bit of extra drilling. And in this case, we've been able to add significant annual production to Duketon by now being able to keep the Duketon North operation in production until early FY '32. That's 5 or so more years delivering a total of 221,000 ounces recovered. What a great project. And the great part about it is that it's a -- the stage nature of the development provides flexibility in sequencing and timing. It enables us to adjust the pace and the extent of the mining to reflect the prevailing gold price. This is not a commitment to start mining now and get ounces in 2 or 3 years' time, hoping that the gold price is where it is, not that it's going to draw, but it gives us flexibility in the unlikely circumstances that the gold price did go down. This allows the company to advance profitable ounces in a higher gold price environment while retaining discretion to defer later stages, if required. The plan is consistent with our disciplined capital management approach and demonstrates the ability to respond decisively to favorable market movements. So wrapping up, to summarize, the team delivered another quarter of consistent operational performance. This performance translated into strong cash generation and further balance sheet strength. We resumed the dividend payment and are progressing a formal capital allocation framework to guide future shareholder returns. We're increasing exploration investment supported by a strong track record of success and reflected by our increase -- as is reflected in this increased expenditure and really driven by successful early-stage outcomes. At McPhillamys, we continue to pursue all available pathways while awaiting the outcome of the court process. The addition of BuckWell pit to our production outlook means Duketon North will now be in operation to produce gold through to the end at least FY '31. The Regis team has delivered a strong result over the quarter, and we believe the business is well positioned to continue delivering long-term value for shareholders. Thank you. And I'll now hand back the call to you, Paul. Operator: [Operator Instructions] Your first question comes from the line of Levi Spry of UBS. Levi Spry: Happy New Year. Very good one for you. I guess, two questions, please. Firstly, on the exploration front, so nice to see that increase in the budget there. Can you just give us a bit of context around the activities that are involved there. So how many rigs you got running, sort of roughly where they are, what sort of meters that converts to and I guess, how that sits with your internal capacity in terms of your going full tilt at that? Or could you spend some more? Jim Beyer: Look, I can't -- I haven't got the exact details of the additional meters close at hand. What I can say is in addition to what we had already planned. So there will be additional activity that will need to be -- well, it's actually already underway to where we were either decommissioning rigs to move on to somewhere else. We've now kept them and brought in other rigs to go to the previously planned locations elsewhere. So there's quite a bit of activity on that. I mean we've got Beamish. Beamish South is an area that we've seen some particularly interesting results that are keeping us there. But also there's some very early indications in -- across our greenfields exploration areas that we want to put some more money in. But certainly, a key 1 is Beamish, which we're getting quite excited about. And -- but the basic answer to your question is, are we sort of shifting gear around? Or are we mobilizing more equipment we'll be mobilizing more equipment. We'll certainly be running more equipment, more people than we were planning to do in the second half. NCX for $20 million. Levi Spry: Yes. I guess sort of partly where I'm going. Are they easy to get? What -- how is the capacity in the WA drilling industry? And are they charging more? Like everyone's drilling lot meters. Just trying to understand. Yes. Talk a little bit about the [indiscernible]. Jim Beyer: Yes, I don't think there's any issues for us in sourcing that extra gear in equipment. So haven't seen that, I mean our commitments. The team believes that they can get the work done, the additional work done that we have planned. So we're not seeing that. And in terms of access, access is always the usual issue nothing expanded. Nothing has got worse, I should say. Levi Spry: Got it. Okay. And then going back to shareholders' returns sort of pace with the result, can you just flesh out the competing interest there a little bit and that balance sheet, $930 million, what is potentially a comfortable sort of number? What other competing interest do you have? So you've got that tax piece? Do we expect CapEx to be similar to this year plus the BuckWell, sort of CapEx and exploration sort of running at those sort of levels? Is that -- are they some of the goalposts that you're working to? Can you just sort of flesh out some of those parameters? Jim Beyer: Yes. Look, the capital that we've got laid out in front of us is definitely -- it's -- we're not expecting any major jumps or leaks of where -- from where we are at the moment. Quite frankly, we've got a pretty good problem that we're sitting at and sitting on, which is we've got a good, clear and reasonable capital expenditure program sitting in front of us. Nothing unexpected. And therefore, we're in a good position to be able to be comfortable with what our dividend policy should be. I'm sort of -- it's a pretty general question that you're asking, Levi. I mean, we have big leaks of capital, probably the biggest leak of capital that we've got sitting in front of us clearly is McPhillamys, but that's at least a couple of years away, and we've got nothing else of material scale at the moment sitting in our internal or organic options. So I think it's pretty -- it's -- our ability to pay a dividend was pretty clear and our ability to potentially continue to pay that is quite clear as well. Sorry, Levi. I mean if you if your question is where else are we -- what else could impact on our ability to continue to pay a dividend? We've got -- we're making excellent margin. We don't have anything significant coming up on our capital demand. So the ability is there, of course, notwithstanding gold price, but we're confident -- I think everybody is pretty confident. We understand how the gold price is going to perform certainly in the near to medium future. So I don't see any other significant demands on our capital for now. Levi Spry: Yes, quite the contrary. I'm trying to work out how big it might be. Jim Beyer: Yes, that's what we're working our way through, and it really ties in with the policy. And as I mentioned in the release, and I think I said earlier on that we will -- our plan is to provide a policy on capital return with the first half profit results, which will be around about this time in a month's time. Operator: Your next question is from the line of Adam Baker of Macquarie. Adam Baker: Jim, just firstly on the Duketon open pit. I did notice the grades have fallen a little bit quarter-on-quarter and compared to the second half of last year, your mining grades are around 0.82 grams per tonne. What should be expecting the grades moving forward, expecting normalized levels around this? Or are you going to continue to bring forward the low-grade tonnes in regards to Buckingham and Wellington? Is that going to see a bit of an uplift in grade from those levels? Or just trying to get a feel for how you're thinking there with open pit volumes. Michael Harvy Holmes: Yes, Adam, it's Michael here. The grades have fallen a bit. I mean it's a function of the mine sequence of where we are in the different pits. And so as we're working down there into the better grade generally at the depth of the pits and also it's a function of the stockpile fee. We have been feeding the better grade stockpiles. And as we sort of move forward, we're sort of moving into the lower grade stockpiles to supplement the feed through the mill. So expecting that sort of similar grade, but it will fluctuate depending on where we are with the fresh material. But no great fluctuations. Just the usual variation really. Adam Baker: What was the kind of reserve grades for BuckWell, you may have already pre-disclosed this, but is that kind of in the low 1s or where are you sitting at for that project? Michael Harvy Holmes: I don't have the number off the top of my head. Jim Beyer: What was the question? BuckWell? Michael Harvy Holmes: The grade of BuckWell. Yes, it's around about -- yes, just under 1, around about 0.9. Adam Baker: Yes, makes sense. And just in addition to the capital management framework policy, you touched on dividends, but it seems that you're also considering share buybacks as you say in the announcement and/or how do you weigh that up just versus the dividend payout versus considering some buybacks like some of the peers have done over the last 12 months as well. Jim Beyer: Yes. Look, I mean, it's a -- that is how do we weigh it up? Well, we wait and we try and work out what's going to give the best value to our shareholders. There's a number of share buyback initiatives that are in play with some of our peers. Just how much is being done is sort of one thing that we look at, what's announced and what's executed. Obviously, you got to have a view on what your share price is. But there are a number of different ways that we can return -- give returns to shareholders. There can be regular dividends that are tied to our profit and our announcement, there can be special dividends or there can be buybacks. And they are the things that we're looking at, right? We sort of got to trade them off. We've got to figure out which ones provide real benefit? Where is our share price trading? Are we -- is our value right? Are we under or over? And there's multiple things there, Adam, that we're looking at. And ultimately, we will work out and let the market know what our final view on that is. But it's pretty clear that the idea and the capacity for returns are there. So that is quite clear the form of it is probably takes a little bit of finalization, but fully franked dividends are a great way of returning our profits to shareholders. Operator: Your next question is from the line of Hugo Nicolaci of Goldman Sachs. Hugo Nicolaci: Jim and Anthony, congrats on another strong quarter of cash build. Just first one on McPhillamys. I appreciate the timing there is a little bit out of your control, but sort of any indications to the timing there or sort of getting outcome this quarter, that time line might have changed? Jim Beyer: Yes. Good question, Hugo. No, not really. I mean there's no statutory time line for any judicial person to come back. We think that -- yes, I would like to think that we're going to hear something by the end of this quarter, but there's no certainty on that. I mean, in fact, by the time we take into account holiday and Christmas, it's probably not unreasonable to expect we won't hear anything until what is it the June quarter sometime. And even then, there's no -- as I said, there's no fixed time line on when -- how long a judge takes to come back with their decision. Hugo Nicolaci: Fair enough. Just to double check there. And then just one more on capital returns and only because it's a nice enviable position to be in that you do have so much capital accrued. But in terms of that you'll come out with in February. I mean, is there anything that we should consider that might guide why the policy would be sort of materially different to some of your peers in that sort of 20% to 30% of operational free cash flow being paid out? Jim Beyer: Hugo, what I can tell you is that we're working on our dividend and return policy, and we will be informing the market of what that is when we release our half year results later on in February. Hugo Nicolaci: Fair enough. I thought I'd try that question one more way. But now, we look forward to that update in February. On the operations, then maybe just Duketon North, can you maybe just confirm what that produced this quarter? And then just give us a bit of color there on the time line through this half to ramping up the extension? Jim Beyer: Sorry, what were -- what was the question? Hugo Nicolaci: Sorry, Duketon North. Michael Harvy Holmes: The question related to -- Hugo was the direction -- sorry. Keep going. Jim Beyer: Keep going, Hugo. Hugo Nicolaci: So I was going to say, yes, the question was just for Duketon North, so how the production from the stockpiles is tracking at the moment? And then just a bit more color on the time line through 2026 in terms of wrapping up for the extension. Jim Beyer: Yes. So it's sort of minor. We get sort of minor improvements through the Duketon North of the stockpile. So it's sort of nothing sort of material there about ran to that 1,500 to 2,500 tonnes, depending on the ounces, depending on the grade. BuckWell sort of is not really producing grade this year and financial year and that will be ramping up next financial year. Hugo Nicolaci: Yes. Got it. And then just lastly, on Tropicana, just looking at some of the cost components there. It looks like milling costs sort of tracking up about sort of $26, $27 a ton last couple of quarters. Is that sort of the right rate to think about going forward from here? Or are there pieces like labor cost inflation or sort of power and contracts there on the gas piece that might push those costs a little bit further or be a benefit going into next year? Jim Beyer: I don't think there's any reason to think that those numbers should be viewed any differently going forward. Operator: [Operator Instructions] Your next question is from the line of David Coates of Bell Potter Securities. David Coates: Jim and team, congratulations on a strong quarter. And look, just a bit following on from the question on cost. More of just around like underlying unit costs across the board. I was sort of hearing different reports that cost inflation across the industry in general is easing or in some cases, maybe not. But just wondering what you guys are seeing in terms of your underlying unit costs and input costs. Jim Beyer: Well, I mean, at a high level, I would say that you can see where our costs are coming in on our AISC guidance and there's nothing that we're seeing or experiencing that's going to drive that higher. But on an individual basis in specific areas, I'd sort of pass over to Anthony or Michael to make a comment on that. Anthony Rechichi: Yes. Look, David, it's Anthony here. Look, my comment on that is except for -- so on the AISC front, as we've sort of already talked about there or in the public, we've been talking about we're purposely pursuing some of the higher cost ounces. Now that's -- they're grade related. So that's what you're seeing in AISC. In actual input costs, though, like what is things costing down at the ground for getting per gold produced unit. Look, besides general CPI increases, and they are still there, nothing standing out. What we're not seeing is in your earlier comment, yes, maybe some people are seeing it go down. We don't see that. But we're seeing, yes, just typical CPI, not necessarily more than that and not less. David Coates: Not cool. I was seeing people saying stable, but I haven't seen going down yet. But yes, so it is unwinding. Anthony Rechichi: Yes. I guess stable is the right way to say it. If we say stable in line with CPI, I guess, it's kind of stable, yes, if you say it that way. Operator: And there are no further questions at this time. I would like to turn the call back over to Jim for closing remarks. Jim Beyer: All right. Thanks, everybody. Appreciate you joining on what is another busy day and also appreciate the questions. As usual, if there's anything to -- anything you want to follow up, give us a call. Also I'd just take the opportunity now to thank for those who aren't aware, Jeff's leaving at the end of this month and heading off to Alicanto. So good luck with the new role, Jeff. Thanks for everything. And we'll let you know who Jeff's replacement is in due course. All right. Thanks, everybody. Have a good day. Operator: This concludes today's conference call. Thank you all for joining us. You may now disconnect.