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Operator: Good morning, everyone, and welcome to the Abeona Therapeutics Inc. full-year 2025 results conference call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please press 0 on your phone keypad. Please note this conference is being recorded. During this call, we will refer to the press release issued this morning announcing the financial results, which is available on our corporate website at www.abeonatherapeutics.com. We anticipate making projections and forward-looking statements during today's call, which are made pursuant to the safe harbor provisions of the federal securities law. These forward-looking statements are based on current expectations and are subject to change. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors including, but not limited to, those outlined in our Form 10-K and periodic reports filed with the Securities and Exchange Commission. These documents are available on our website at www.abeonatherapeutics.com. Joining us on today's call with prepared remarks are Dr. Vishwas Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer; Joseph Walter Vazzano, Chief Financial Officer; and Brian Kevany, Chief Technical Officer. After the prepared remarks, we will conduct a question-and-answer session. I will now turn the call over to Vishwas Seshadri to lead us off. Vishwas, over to you. Vishwas Seshadri: Thank you, Jenny, and good morning, everyone. We continue to see growing patient demand for ZivaSkin, the first and only autologous cell-based gene therapy for the treatment of adult and pediatric patients with recessive dystrophic epidermolysis bullosa, or RDEB. As a reminder, ZivaSkin was approved in April 2025, but our launch was delayed to Q4 2025 as we optimized a sterility test that was required for product release. Treating our first commercial patient this past December was a significant milestone for Abeona Therapeutics Inc., but 2026 is where the launch execution ramps up. We are not just looking at one-off successes anymore. We are focused on building a consistent cadence of biopsies, product delivery, and treatments. Since resuming manufacturing in late January, after our annual shutdown, we have treated one patient this quarter, biopsied three additional patients with treatment scheduled over the coming weeks, and expect to perform additional biopsies this month. All patient treatments and biopsies performed to date have come from the first two of our four qualified treatment centers, Lurie Children's Hospital in Chicago and Lucile Packard Children's Hospital at Stanford. As our third and fourth QTCs, which are Children's Hospital of Colorado and UTMB at Galveston, Texas, also begin to schedule their patients into upcoming biopsy slots, we anticipate a healthy cadence of patient biopsies in the coming months. This momentum provides Abeona Therapeutics Inc. an opportunity to demonstrate that the operational machine behind ZivaSkin works at scale from initial biopsy through final delivery. At the same time, we are hyper-focused on ensuring a seamless experience for every patient in the ZivaSkin treatment journey, and we are building a foundation of operational excellence that resonates with this close-knit RDEB community. We recognize that in this patient-driven market, providing a smooth journey is the most effective way to catalyze the organic demand needed to scale ZivaSkin in 2026 and beyond. To further elaborate on how our launch is gathering momentum, I will now hand the call to our Chief Commercial Officer, Dr. Madhav Vasanthavada, to review the commercial update. Madhav? Madhav Vasanthavada: Thank you, Vishwas. Hello, everyone. Demand for ZivaSkin continues to grow. We previously had reported that nearly 50 potentially eligible patients were identified across our initial qualified treatment centers and community-based physicians. Starting this year, we have deployed a field team that has been engaging with community physicians, and the number of identified eligible ZivaSkin patients has now grown to more than 100. While demand continues to grow, the speed at which identified patients receive ZivaSkin treatment has significantly varied during these initial months of launch, but the momentum is picking up. Since our launch in Q4 2025, two patients have been treated with ZivaSkin, three additional patients have been biopsied for treatment over the coming weeks, and we expect to biopsy additional patients this month. Currently, we also know of at least 10 more patients who are advancing through the administrative process and targeting the second quarter 2026 biopsy. As Vishwas mentioned, the patient treatments and biopsies until now have all come from the first two QTCs that were activated in the middle of last year. While it has taken a long time to move the very first patients through the funnel to treatment, we have not seen patient attrition during this process, and no payers so far have denied insurance coverage for ZivaSkin, reflecting the strong value ZivaSkin offers to this patient community. As QTCs and payers treat more patients and gain experience with the overall process, we expect the speed of patient treatment to go faster. Additionally, as the remaining two QTCs treat patients, we anticipate that the number of ZivaSkin treatments will grow in the coming quarters. Now, regarding activating additional QTCs for ZivaSkin, becoming a QTC is a multistep process. It starts with a dermatologist who is an EB specialist championing ZivaSkin at their institution and requires buy-in and sign-off from various functions and committees all the way to the level of CEO or CFO of that institution. Once the decision is made to become a QTC, several moving parts, including a master service agreement, trade policy, clinical training for biopsy and treatment, and registry protocols with IRB approvals must be put into place. That makes QTC onboarding a several-month process. Once the site is activated, it may then begin patient consultations for ZivaSkin, work with insurers to secure clinical authorizations and financial commitment for that individual patient, and then schedule patients for biopsy. As mentioned earlier, we have four QTCs activated, two have started treating patients, and the other two have patients that are moving through the administrative process to schedule a biopsy. In addition to the four current QTCs, we are actively working toward onboarding five additional centers and are in various stages of the site onboarding process. To ensure a geographically expansive footprint, our goal is to have at least seven QTCs active by 2026. Lastly, on the market access front, I would like to reiterate that all major commercial payers, including UnitedHealthcare, Cigna, Aetna, Anthem, and most Blue Cross Blue Shield plans, have published coverage policies for ZivaSkin, representing roughly 80% of commercially covered lives. ZivaSkin also has baseline coverage across all Medicaid programs for all 50 states. In addition, CMS has established a permanent HCPCS J-code for ZivaSkin effective 01/01/2026. We expect a J-code to be an important enabler for streamlined billing and reimbursement for QTCs. Ultimately, every step forward—every biopsy, every treatment, every positive patient story—strengthens our confidence in the impact ZivaSkin can have. We are energized by the early momentum and remain committed to delivering a seamless ZivaSkin experience. I will now pass the call to our Chief Financial Officer, Joseph Walter Vazzano, to discuss our financial results. Joe? Joseph Walter Vazzano: Thanks, Madhav. I would like to remind everyone that you can find additional details on our financial results for the year ended 12/31/2025 in our most recent Form 10-Ks. Starting with the statements of operations, total revenue for the year ending 12/31/2025 was $5,800,000. Total revenue includes $3,400,000 in license and other revenues and $2,400,000 in net product revenue. License and other revenues were primarily driven by a clinical milestone of $3,000,000 achieved in 2025 under our sublicense agreement for Rett syndrome with Taysha Gene Therapy. Net product revenue reflects the patient treatment in December. The patient treated was a Medicaid patient. We expect our average net revenues to normalize over time as the payer mix expands to include commercially insured patients. We received payment for this treatment in 2026. Cost of sales for 2025 was $1,500,000, primarily driven by the first commercial ZivaSkin treatment in December. Cost of sales also includes the costs from the August production batch that was not released due to technical challenges related to an FDA-mandated rapid sterility lot release assay. As more patients are treated, we expect our gross margins to increase significantly with better economies of scale related to production costs. Total research and development (R&D) spending for 2025 decreased $7,600,000 to $26,800,000 compared to $34,400,000 in 2024. This reduction was primarily driven by the April 2025 FDA approval of ZivaSkin, which resulted in certain production costs being capitalized into inventory, and engineering runs that are no longer classified as R&D expense. Selling, general, and administrative (SG&A) expenses for 2025 were $65,000,000, an increase of $35,100,000 over 2024. This increase primarily reflects Abeona Therapeutics Inc.’s commercial transition following the April 2025 FDA approval of ZivaSkin, including $18,600,000 in personnel and stock-based compensation and $2,300,000 in direct commercialization costs. Additionally, certain engineering and training expenses previously classified as R&D were transitioned to SG&A post approval. In May 2025, we sold our rare pediatric disease priority review voucher awarded following the FDA approval of ZivaSkin. The company recorded a $1,524,000,000 gain on sale from this transaction after receiving payment in June 2025. Net income was $71,200,000 for the year ended 12/31/2025, or $1.034 per basic and $1.10 per diluted common share. Net loss in 2024 was $63,700,000, or $1.55 loss per basic and diluted common share. As of 12/31/2025, cash, cash equivalents, and short-term investments totaled $191,400,000. With that, I will pass the call back to Vishwas for additional remarks before opening the call for Q&A. Vishwas Seshadri: Thank you, Joe. In closing, I want to reiterate that while 2025 gave us our first commercial proof of concept, 2026 is about solidifying our commercial blueprint. I am incredibly proud of the entire Abeona Therapeutics Inc. team, from our manufacturing and quality groups ensuring every lot meets our highest standards, to our commercial and clinical teams supporting our treatment centers. Every person in this company is focused on ensuring that the RDEB community's experience with ZivaSkin is nothing short of excellent. We are doing the heavy lifting now to get these foundations right, and I am confident that this collective focus on execution today is what will allow us to scale aggressively and deliver meaningful value in the quarters and years to come. We look forward to providing updates on our continued progress on our first-quarter 2026 conference call. With that, I will turn the call over to Jenny to open it up for Q&A. Thanks, Jenny. Operator: Thank you very much, Vishwas. At this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. It might be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Our first question is coming from Ram Selvaraju of H.C. Wainwright. Ram, your line is live. Ram Selvaraju: Thanks so much for taking our questions, and congratulations on all the recent progress. I was wondering if you could comment on the cadence with which qualified treatment centers are likely to be stood up in the coming months and any specific factors that might influence the speed with which that occurs, if you expect that pace to increase. And if so, what might be the specific contributing factors to that? Secondly, I was wondering if you could comment on the specific drivers of R&D spending over the course of 2026 and beyond and if we should expect R&D spend to modulate somewhat over the course of the coming quarters, or if in fact you expect any noteworthy increases over the remainder of 2026. Thank you. Vishwas Seshadri: Good morning, Ram, and thank you for the questions. Regarding the cadence with the QTCs and the speed of ramp-up, I think there are a lot of factors that go in. We have some preliminary viewpoint just beginning this quarter. I will turn it over to Madhav to articulate, knowing that our projections are based on the first two sites just about ramping up. Madhav, why do you not take that one? Madhav Vasanthavada: Thanks, Ram, for the question. So with regard to QTCs, as I mentioned, we are working with five centers, one of whom is imminent, and we expect to hopefully announce it in this coming quarter. And then centers are in varying stages of their onboarding process. Our goal is to have seven in total active by the end of the year. In terms of the aspects that drive the speed with which the centers come on board, there are various ones. Some centers wanted to obviously wait for ZivaSkin approval to take place before they invested additional resources. Some started looking at their payer mix, like the individual patients that are in their treatment pool to see what kind of payer mix exists, how many are commercially insured patients, and if Medicaid, what are the out-of-state Medicaid nuances there. And they essentially were also waiting to see coverage established. But now we have covered significant ground with regard to market access, having established coverage and these payer policies also in place. So that has given great confidence for these sites to initiate their process and speed that up. And then there are other factors with regard to institutional bureaucracies that exist with every institution, people getting to understand the cell and gene therapy units, because in the dermatology space, this is the first engineered cell therapy that we are moving to the treatment space. And so that requires greater cross-functional interaction. But we have learned a lot in onboarding the previous four centers, and our teams are doing a tremendous job in helping the upcoming centers to navigate that pathway and bring them to speed. So we think we are confident about having seven total. And if additional centers move faster, then yes, of course, we will be able to help them stand up sooner. I hope that gives some flavor. Vishwas Seshadri: And just to add to that, Ram, you said at steady state, what we anticipate is sites have communicated to us that one patient a month is kind of a cadence that we can definitely do. Some sites are saying perhaps two patients a month. So I think it is just a matter of we are projecting based on what we are hearing from the sites in terms of their plans and their patient visibility. We need to see that come through. I think we will be able to give more evidence-based cadence and the speed of getting there once we start seeing that steady state. We need to see three consecutive months of delivering that consistently. I think that is really what we are looking to get to by midyear. But as we also articulated, two of our four sites are yet to reach the point where they start layering their patients because the upfront setup time is what they are taking right now. Hopefully, that comes through in the second quarter, and we are able to show with data that, okay, sites are reaching their kind of cruise-control level of speed and, therefore, this is more predictable. So I hope that helps there. Regarding your second question about R&D spending, let me open it up to Joe first to just give a little bit, because we are so focused on ZivaSkin launch right now that our R&D spend is almost insignificant. But, Joe, why do you not go ahead? Joseph Walter Vazzano: Sure. Thanks, Vishwas. Yes, Ram, I believe the question was just drivers of R&D spend for 2026 and going forward. As you may recall, we have to do the registry study that was part of the FDA approval so that they, you know, track the registry. Study costs go into R&D, and then also the pipeline development costs will go into R&D. And, again, as I mentioned in the prepared remarks, there is a shift from R&D to SG&A just with the evolution of transition to a commercial company. But those two items that I mentioned are going to be the main drivers of R&D spend for 2026 and outer years. Vishwas Seshadri: Right. And also, to add—sorry. Go ahead, Ram. Go ahead. Go ahead. No. No. Go ahead, please. I was just going to say, as you know, we do have some preclinical programs. We are not spending a lot of energy and resources on those. It is kind of running in the background. We do not see preclinical programs to stack up R&D expenses in a significant way, at least in 2026. 2027 is a different story, and I think a lot of it is going to depend on the ramp-up speed of ZivaSkin and what we can bite into. So I think that is going to be a story that will evolve through the rest of the year. Ram Selvaraju: Just with respect to the qualified centers, I was wondering if you could comment on the relative coalescing or concentration of patients around those centers, and if you expect on a go-forward basis the bulk of new patients coming in to go through the first two treatment centers to be stood up, or if you expect some of the other treatment centers to be just as significant contributors to the overall number of patients coming on to ZivaSkin. Vishwas Seshadri: Yes, that is a great question. Go ahead, Madhav. Madhav Vasanthavada: We expect them to have a good, decent pool of patients similar to the currently stood-up centers, Ram. And our strategy right now, just to expand on your question, is very clear. It is a three-pronged approach that we are taking. One is to have patients that are in these qualified treatment centers. We want to place them on ZivaSkin therapy as soon as possible. The second is to focus on the community physicians who already have indicated they have patients that are motivated and would be eligible for ZivaSkin treatment. We want those referrals to be the second tranche. And in parallel, as we look to stand up these additional centers, that is going to pancake on top of the first two-pronged approach to have their own pool of patients. Our approach is to make sure that the centers are as geographically spread as possible, because that also obviously will help with the travel, etc., for the patients and their families, let alone payer barriers that will be easier to overcome once you have more centers that are geographically spread. So we anticipate some of these centers who have the infrastructure, who have the EB centers of excellence, etc., to bring their own set of patients as they get activated. Ram Selvaraju: Thank you. Operator: Thank you very much. Our next question is coming from Maury Raycroft of Jefferies. Maury, your line is live. Maury Raycroft: Hi, thank you. Congrats on the progress, and thanks for taking my questions. I had a question on the QTCs as well. So it sounds like currently, the QTCs are able to manage about one or two patients per month. Just wanted to clarify that. And what do you expect the cruise-control state to look like? I guess, how many patients per QTC do you think you are going to be able to get at sort of a maximum capacity at these initial sites? I will start with that one. Okay. And can you also just comment on the current timeline from receipt of START form to treatment initiation? What does that timeline look like? And then could that become more efficient over time as well? Yep. That makes sense, and that is helpful. Maybe last quick question, and I will hop back in the queue. Just if you can comment on, based on the demand ramp that you are seeing, how confident are you in achieving profitability for the company this year? Madhav Vasanthavada: That is correct, Maury. One or two patients a month. We think that their ability to ramp up is really dependent on the sites. Certain institutions have demonstrated performance to be able to have a greater number—even go up to three patients a month—which will really depend on what their experience has been like with regard to their resource allocation and the nursing staff that have to care for the patient post operating procedures. But for the most part, we expect one or two patients a month in the foreseeable future. We will have to see how that ramps up as their overall process experience looks like. Vishwas Seshadri: The current timelines are very variable. It depends on various factors. But if I were to average ballpark, it is more like a four- to five-month process, of which 25 days is manufacturing time. That is very much a hard fix there. So four to five months, and that includes roughly one month of manufacturing. And we expect that to improve over time. I am glad you asked this question, Maury, because another factor here is you mentioned the START form. I would say from the point of identifying a patient to when they receive treatment, because the START form is something that we are seeing has a lot of variation in when a site puts that form to us. Some sites do it soon after an identified patient is either referred or they have had a consult, and some sites wait until the entire payer process takes place and then put the START form. So it is a very variable input as to what point in the patient's journey we receive that. What Madhav is describing here as approximately five months is when there is a consult that happens and the patient intends to get ZivaSkin and that conversation has happened. The first few patients took about five months all the way to get to the treatment, whereas we are seeing that process is going to shorten over time because the administrative part of this is getting more efficient as a given site has been through two or three patients. We believe that we have a pretty good chance of achieving profitability. If you define it as an entire company-level profitability, there are numerous factors that you already know. We have mentioned that anything north of three patients a month takes us to the profitable zone, which is, you know, $100,000,000, give or take, about the company burn in a given year. So if you use your gross-to-net calculations, 3.5 or more per month is taking us to the profitable zone. I think this is a very achievable target. There are some uncertain factors as to how the third and the fourth sites are going to achieve their speed and reach cruise control, and also how quickly we are bringing additional sites on board and then up and running. So I think these are a couple of variables, but we feel this is a pretty reasonable goal. Maury Raycroft: Got it. Okay. Thanks for taking my questions. Operator: Thank you very much. Our next question is coming from Steven Willey of Stifel. Steven, your line is live. Steven Willey: Good morning. Thanks for taking the questions, and congrats on the progress. Has the target number of QTCs that you want to bring online over the longer term increased at all? I know you have some early experience on the referral front. I am just curious if you are finding that it might be logistically easier to activate more of these centers as opposed to trying to increase the band of referrals. Okay. So when you say—oh, go ahead. Sorry. Just one clarification: when you say you are actively onboarding five additional centers, that does not include the two that have recently signed up, Colorado Children's and UTMB. Understood. Then is there just anything you can talk about on the reimbursement side specifically as it pertains to preauthorization? And just curious if payers are pegging themselves to inclusion/exclusion criteria from the Phase 3. Is it pegged to the label? Just any color there would be helpful. Okay. And then just lastly, I think you mentioned that there is, I believe, another 10 patients or so that are targeting biopsies for next quarter. Can you just speak to how those patients are distributed against the two QTCs that are already treating patients versus Colorado and UTMB that you will be activating here shortly? Vishwas Seshadri: Our target QTC number, Steven, has been five to seven, and we do think that seven this year is a realistic goal. That does help with certainly the bandwidth within the qualified treatment centers as well as just increasing the footprint overall. We think we will have more outlets for patients to get treated. We are going to be working towards bringing these centers on board. But in the meantime, of course, as the various community physicians have patients, we want that healthy awareness and healthy enthusiasm from all of the other physicians also, so that in the longer term, that is really where we will rely on these community physicians to funnel their patients into the qualified centers. So that is really our approach. Our target centers right now are seven. And as I said, we have more centers that are working with us and would like to be activated. So if we have more treatment centers, then certainly that only adds more to the process and even the logistics. As Madhav explained, the QTC onboarding process itself can take several months. So while we talked about five additional centers beyond the four that we are working with, which are already activated, giving you a bigger number, we anticipate that some of those may spill over to even next year because it is a lengthy process. But we are definitely looking to have seven activated sites this year. Correct. Madhav Vasanthavada: We are seeing a mix—definitely to inclusion/exclusion criteria—given the high-cost nature of the product. They want to make sure that their initial set of patients are guided to the inclusion/exclusion. But then we also have major plans like UnitedHealthcare and many of the Medicaid states also looking to have coverage that are favorable to the label criteria. So it really depends on the plans. But regardless of the criteria, what we are seeing is with letters of medical necessity, physicians have been able to overturn the requirements. For instance, if there is an age—age is one major that you are seeing in the sense that six years and above was our inclusion criteria—but for patients that are less than six, physicians have been able to overturn that. Also, with regard to squamous cell carcinoma and their presence in the body location, that is also one of the factors that physicians have been able to overturn and get the patients onto the product. So as more patients go through the process, in terms of the overall timing, that is also improving because letters of medical necessity and the templates that are required—those templates are getting populated. For future and subsequent patients, for processes that are unique to ZivaSkin, we are seeing that time also improve at the QTCs that are already treating patients. So that is really the reimbursement process. These inclusion/exclusion criteria do not prevent a patient from getting reimbursed eventually with all these additional steps that we are taking. So even if the plan has that kind of restriction, we are able to work through that and get patients reimbursed. It is across all of the four QTCs. Steven Willey: All right. Thanks for taking the questions. Operator: Thank you very much. Our next question is coming from Kristen Kluska of Cantor Fitzgerald. Kristen, your line is live. Kristen Brianne Kluska: Hi. Good morning, everybody, and thanks for all of this specific color this morning. I wanted to ask about the dialogue or the relationship between the QTCs themselves. It sounds like Stanford and Chicago, being the first two, are kind of paving the way here, having a little bit of additional time to get things on board. Are they working with the additional two QTCs just to be a sounding board and help as everybody familiarizes themselves with this process? Okay. And then, as we think about the fact that some additional biopsies are already scheduled, and we have two weeks left in Q1, should we be conservatively modeling that these are more likely to come in Q2 versus the current quarter? And then it sounds like we will get one more QTC pretty quickly and another two maybe before the end of the year. How are you thinking about dispersing throughout geography in the country, and how has that played an impact so far about getting patients on board and the ability to travel to these sites, etc.? Madhav Vasanthavada: They are not that we are directly aware of. We certainly know it is a tight-knit physician community, so they do talk to each other in terms of sharing best practices as well as administrative steps. Plus, our teams are also actively working with them and helping them cross-pollinate the best practices. Vishwas Seshadri: We expect one for this month, Kristen. But, of course, until the biopsy is done, we do not know. We do not see a reason why there should be any attrition or a drop-off, but it is for this month that we expect additional biopsies. Our goal is to have a geographically dispersed footprint. Clearly, you can see that the Eastern Seaboard is an important area for us. So if we have a center in that region, I think that will certainly help with patient access. These patients, for other reasons with their other comorbidities, do travel significant distances to get therapies. We do not really think that even five or seven is going to impede their ability to travel for ZivaSkin. But, of course, as more centers come on board, that is definitely going to be a positive thing. Also, the flexibility that it offers—right now, certain patients, and I am not saying this is true for every patient, crossing state borders have extra paperwork to go through Medicaid. There are more bureaucratic steps. Those things will also be streamlined a little bit by offering more choice and flexibility on where they can get treated. So that is really what we are also excited about. Operator: Thank you very much. Our next question is coming from Jeff Jones of Oppenheimer. Jeff, your line is live. Jeffrey Michael Jones: Good morning, guys, and thanks for taking the question. Maybe the first one on manufacturing. How comfortable are you at this point that the sterility testing is well behind you now? And just a reminder, if you would, on current production capacity and then the expansion plan of that capacity through the year. And then the second one, maybe on patient and physician feedback now that you have treated patients in the commercial setting. What is the feedback you have been getting from physicians and patients on the overall experience? Vishwas Seshadri: Thank you, Jeff. So your first question is about manufacturing, the sterility test—whether that is behind us and how we are ramping up capacity. We do have our CTO, Dr. Brian Kevany, on the call. Brian, can you take that one, please? Brian Kevany: Thanks, Vishwas. As a reminder, we had a very healthy dialogue with the agency around the sterility assay issue. That was a very productive conversation with the agency, and we do feel that the resolution that came out of that is the solution going forward. We will continue to always look to ways to improve our manufacturing and testing process, but we do feel very confident that the resolution that came out of those discussions is going to support us going forward. As it relates to production capacity, currently, we are running at a cadence of six patients per month within the facility and continue to develop the space to be capable of reaching that 10-patient-per-month capacity that we have previously discussed throughout the rest of this year. All of those activities are on track to meet that goal, and it is actually lining up very well with onboarding the additional QTCs to maintain a steady level of supply for those sites as they come on board. Vishwas Seshadri: And I just wanted to also add on the sterility topic, Jeff, which is we have done a lot of work trying to minimize the probability that that problem occurs again. Whether we can go, say, 40 runs or 50 runs and never see this problem happen again—that is only going to be empirically proven. But all our feasibility studies point out that the probability is significantly reduced by at least a log order or more. That is what gives us the strength. But we are not stopping at that. Whatever we have implemented as an improvement to reduce those false positives, we are not stopping at that. We are also doing the next-generation rapid cellular redevelopment alongside this so that we can get to an even better level. When you say R&D, we are always thinking about pipeline. There is a lot of lifecycle management R&D that goes into optimizing ZivaSkin. That is really where some of our teams in the quality function are focused on. And as Brian said, we are already operating at six manufacturing runs a month cadence. With the current demand, it is keeping up, and that is going to be ramped up to about 10 a month by the second half of the year. The second question that you asked was about the patient and HCP feedback on the current treatment. I will just preface this by saying that there are only two patients that have been treated, and there is not enough time that has passed along, because you remember even our endpoints and assessments happen at six months. This is a therapy with a durability play. I do not know if we have enough feedback, but I will open it up to Madhav to see what he has on that. Madhav Vasanthavada: Nothing more to add, Vishwas, to what you have said at this point. Vishwas Seshadri: Overall, when we talk to doctors and they say, “Oh, that patient is doing well,” what does that really mean? Are you talking about wound healing, or are you talking about general health of the patient? These are things that we do not really know. So it is too premature to comment on that. Jeffrey Michael Jones: Alright. Appreciate it, guys. Thank you. Operator: Thank you very much. Our next question is coming from David Bautz of Zacks Small-Cap Research. David, your line is live. David Bautz: Hey. Good morning, everyone. Thanks for the update this morning. So I have a couple of questions about the patients that you have already treated. First off, are you aware if they were also simultaneously being treated with VYJUVEK, say, maybe for their smaller wounds, if they had any? Do you anticipate the need to retreat either of those patients later in 2026? And then are you aware if there are any exclusions for retreatment, say, if any of the payers have restrictions on the ability to get retreated? Vishwas Seshadri: Go ahead, Madhav. Madhav Vasanthavada: We do not know the wound-by-wound related question. What we do know is that these patients were not simultaneously on VYJUVEK. That is the information we have. With regard to their prior history of VYJUVEK, we think that most of these patients have received VYJUVEK at some point in their journey. Your second question with regard to retreatment: based on the physician feedback, these patients have significantly large wound areas, and physicians have said that, yes, these patients would require a second round of the ZivaSkin treatment. We do not know if that is going to be this year or if this is going to be next year or at some other point, because these initial set of patients and the foreseeable future—these patients have large areas of their body that require several areas to be treated. The third one with regard to exclusion: no, we do not see exclusion criteria with regard to a retreatment of a patient, which is really something we are very pleased to see—that payers are not blocking ZivaSkin for once in their lifetime. That is encouraging. If we do have a patient that requires a retreatment of a previously treated ZivaSkin area, then it really depends on what the payer policies there would look like. But we are not seeing any kind of a blockade based on the policies that have been published. David Bautz: Okay. Great. Appreciate you taking the questions. Operator: Thank you very much. We have now reached the end of our question-and-answer session. I will now turn the call back over to Vishwas for his closing remarks. Vishwas Seshadri: Thank you, Jenny, and thank you, everyone, for joining us today for the earnings call. We will talk to you again soon. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Operator: Good morning, and welcome to Corporación América Airports S.A. Fourth Quarter 2025 Conference Call. A slide presentation accompanies today's webcast and is available in the Investors section of the company's website. As a reminder, all participants are in a listen-only mode. There will be an opportunity to ask questions at the end of the presentation. At this time, I would like to turn the call over to Patricio Inaki Esnaola, Head of Investor Relations. Patricio, you may go ahead. Patricio Inaki Esnaola: Thank you. Good morning, everyone, and thank you for joining us today. Speaking during today's call will be Martin Eurnekian, our Chief Executive Officer, and Jorge Arruda, our Chief Financial Officer. Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Please note that for this call, all references to revenues, costs, adjusted EBITDA, and margins refer to figures excluding IFRIC 12. Also, all comparisons discussed are year-over-year unless otherwise noted. I will now turn the call over to our CEO, Martin Eurnekian. Martin Eurnekian: Thank you, Yaki, and good morning to everyone joining us today. We finished 2025 with a very solid performance. Across the business, we saw continued revenue momentum, strong profitability, and important progress on the strategic front. Passenger traffic remained robust in the fourth quarter, rising just over 9% year over year and reaching new heights for both the quarter and the full year, with Argentina, Armenia, Italy, and Uruguay setting annual traffic records. Equally important, this performance was broad-based with positive trends across our main markets, in particular strong international growth in Argentina. Revenue growth once again outpaced traffic, supported by solid performance in both our aeronautical and commercial businesses, along with further improvement in revenue per passenger. Commercial revenues remained especially strong, with good contributions from cargo, fuel, and passenger-related services across the portfolio. This positive momentum also translated into strong profitability. We delivered strong adjusted EBITDA growth in the quarter together with meaningful margin expansion, as operating leverage and commercial execution continued to support results. At the same time, we ended the year with a healthy balance sheet, low leverage, and strong liquidity, providing significant financial capability. We also made meaningful strategic progress. In Armenia, we secured a 35-year extension of the concession, and in Galapagos, we obtained a six-year extension, both of which enhance the long-term visibility of our portfolio. We also have received concession awards and been declared with service on two new airport concessions, which I will discuss shortly. Moving on to passenger traffic on slide four, we ended the year with another quarter of solid growth across our operations. Total passenger traffic reached a record 22,300,000, supported by both domestic and international travel, with particularly strong momentum in the international segment. International traffic grew 12% with every country in our portfolio posting year-over-year growth. Argentina was once again the main contributor, accounting for more than half of the total increase in traffic during the quarter, with solid contributions from Italy, Brazil, and Armenia. Domestic traffic increased nearly 7%, mainly driven by Argentina and Brazil, with Ecuador also contributing positively. Let me briefly go through the main markets. In Argentina, passenger traffic increased nearly 9%, a record for both the quarter and the full year. Domestic traffic was up 6%, supported by a strong load factor and additional capacity across several routes. International traffic was up 15%, reflecting continued route reactivations and frequency increases. During the quarter, we saw positive contributions from airlines such as LATAM, Air Canada, Emirates, Delta, China Eastern, and ITA Airways, among others, which continue to strengthen connectivity and support demand. This strong performance continued into January and February, with passenger traffic growing 7.9% and 5.8% year over year, respectively. In Italy, traffic grew 8%, also reaching new heights for both the quarter and the full year. Growth was mainly driven by the international segment, which increased 11%, with solid performance across both Florence and Pisa. Domestic traffic declined modestly during the quarter, mainly reflecting some operational disruptions at certain airlines. This positive trend continued into January and February, with passenger traffic increasing 47.4% year over year, respectively. Brazil posted a strong quarter with total traffic up 12%. Domestic traffic remained solid, while international traffic also grew at a healthy pace. The improvement reflects a better environment among the main airlines operating in the country, and stronger activity during the summer season, including additional frequencies on routes to the United States. This then extended into January and February when overall traffic increased by 168.2% year over year, respectively. Uruguay returned to growth in the quarter, with traffic up 5% and reaching new heights for both the quarter and the full year. This performance reflects a recovery from the temporary disruption we saw in the third quarter related to a planned runway closure. Traffic also benefited from stronger seasonal operations, new routes, and added frequencies, particularly ahead of the summer season. Traffic in the first two months of the year performed well, with year-over-year increases of 12.4% in January and February, respectively. In Armenia, we saw a pickup in passenger traffic, up nearly 14%, breaking another record for both the quarter and the full year. Growth was supported by sustained international demand and expanded connectivity. During the quarter, WIETER established a new base at Varnas and launched 10 new routes to Europe, which further strengthens the airport's position as an important regional hub. This strong performance continued into January and February with passenger traffic increasing by 10% and 11.6% year over year, respectively. Finally, Ecuador returned to growth with traffic up 1%. While the environment remains challenging, performance improved versus the prior quarter, supported by a recovery following the runway works completed earlier in the year and modest growth in both domestic and international traffic. Traffic in the first two months of the year performed well with year-over-year increases of 58.6% in January and February, respectively. Overall, the fourth quarter contributed to a very strong year for passenger traffic, with healthy momentum across the portfolio and record levels in several of our key markets. Turning to cargo on slide five, we also delivered a strong quarter, with cargo revenues up 22% year over year, supported by solid contributions from Argentina, Uruguay, and Brazil. On the volume side, results were mixed across the portfolio. Total cargo volume was slightly below last year, with growth in Argentina and Uruguay offset by softer trends in Brazil, Italy, Armenia, and Ecuador. Even so, the strong overall revenue performance highlights our ability to capture value from the cargo business. Looking ahead, we remain focused on strengthening our cargo platform, improving our commercial capabilities, and contributing to cargo growth opportunities across the network. I will now turn the call to Jorge, who will review our financial results. Please go ahead. Jorge Arruda: Thank you, Martin, and good day, everyone. Let's begin with our top line on slide six. Total revenues ex IFRIC 12 increased 17%, nearly doubling passenger traffic growth of 9%. This strong performance was driven by double-digit growth in both aeronautical and commercial revenues, supported by positive contributions across all countries of operation, with all countries but Ecuador delivering double-digit revenue growth. Revenue per passenger was up nearly 8%, reaching $20.8 compared to $19.4 in the same quarter last year. Aeronautical revenues increased 17%, mainly driven by strong results in Argentina and further supported by broad-based growth across the portfolio. Argentina remained the main contributor, with aeronautical revenues up 21%, largely reflecting a 15% increase in international traffic volumes. Strong momentum continued in Brazil, Armenia, and Italy, each delivering double-digit growth, all in line with passenger traffic trends. Commercial revenues were up 60%, well above the 9% increase in traffic. This was supported by higher contributions from cargo and fuel revenues and solid growth across VIP lounges, parking facilities, and duty free. Overall performance was consistent across the portfolio, with all countries except Ecuador achieving double-digit growth. Turning to slide seven, total cost and expenses excluding IFRIC 12 increased nearly 11%, broadly in line with higher operating activity and well below revenue growth of 17%, resulting in positive operating leverage during the quarter. Cost of services were up 11%, largely due to higher concession fees in line with revenue growth as well as higher fuel costs in Armenia, consistent with the expansion in fuel revenues, and higher D&A expenses. SG&A expenses increased 6%, mainly reflecting higher maintenance and payroll expenses, particularly in Argentina. In Argentina, total cost and expenses increased just over 7% year over year, well below revenue growth of 18%, reflecting strong operating leverage, continued cost discipline, and favorable currency fluctuation. Moving on to profitability on slide eight, adjusted EBITDA ex IFRIC 12 was up nearly 40% to $211,000,000, reflecting strong performance in Argentina and Armenia, as well as a $32,500,000 positive impact on EBITDA related to the arbitration award payment received from the government of Peru. Argentina delivered another outstanding quarter, with adjusted EBITDA up 43% with margin expansion of 7.5 percentage points, supported by strong passenger trends, continued momentum in our commercial activities, as well as effective cost controls. Armenia also performed very well with adjusted EBITDA up 15%, driven by record passenger levels. Margin contraction during the quarter primarily reflected higher operating expenses and a greater contribution from the fueling business, which structurally carries lower margin than the core airport operations. At Brazil Airport, adjusted EBITDA year-on-year comparisons were impacted by the $110,000,000 COVID-related economic hit breakeven received in fourth quarter 2024. Excluding this item, adjusted EBITDA increased 44% year on year with a margin expansion of 6.4 percentage points, reflecting healthy traffic growth and strong performance across VIP lounges and other passenger-related revenues. Italy posted an 11% decrease, or a 4% increase when excluding construction services at Toscana Aeroporti Costruzioni. In Uruguay, adjusted EBITDA was slightly down 2%, reflecting higher salaries and maintenance expenses, along with year-on-year appreciation of the Uruguayan peso, which also impacted margins. Finally, in Ecuador, adjusted EBITDA declined 12%, mainly due to the higher maintenance expenses concentrated in the fourth quarter 2025. Overall, excluding the $110,000,000 COVID-related economic breakeven in Brazil in the fourth quarter 2024 and the $32,500,000 arbitration award recognized in 2025, adjusted EBITDA ex IFRIC 12 increased 33.3% year over year to $178,000,000, with a margin expansion of 4.6 percentage points to 38.3%. Now turning to slide nine, we closed the quarter with total liquidity of $750,000,000, representing a 36% increase versus the $526,000,000 reported at year-end 2024. Notably, each of our operating subsidiaries delivered positive full-year operating cash flow, highlighting the resilience and diversification of our cash generation profile across geographies. Cash used in financing activities mainly reflected debt repayment in Argentina as well as dividends paid to noncontrolling interests in Corporación América Airports S.A. subsidiaries. Moving on to the debt and maturity profile on slide 10, total debt at year end was $1,100,000,000, while our net debt decreased further down to $502,000,000 from $780,000,000 in December 2024. As a result of lower net debt and continued strong financial performance, our net leverage ratio continued to improve, reaching 0.7x at year end. To wrap up, our results reflect the great momentum for our portfolio and the quality of our management team. We closed the year with the strongest balance sheet in our history, giving us financial flexibility to advance our growth strategy through both organic initiatives and inorganic opportunities. I will now hand the call back to Martin, who will provide closing remarks and discuss our view for the year. Martin Eurnekian: Thank you, Jorge. Turning now to slide 12, I will briefly summarize the key takeaways from the last quarter and from 2025. 2025 was a record year for Corporación América Airports S.A. We delivered record passenger traffic, strong revenue growth, meaningful EBITDA margin expansion, and closed the year with a very solid balance sheet. These results reflect the resilience and quality of our portfolio, the disciplined execution of our teams, and the benefits of our diversified geographic footprint. Beyond the strong operating and financial performance, we also made important progress in centering long-term visibility of our portfolio and advancing our expansion pipeline. In Armenia, we secured a 35-year extension of the concession through 2067, which includes a $425,000,000 investment program and the significant of our infrastructure. In Ecuador, we achieved a six-year extension of the Galapagos concession. On the inorganic growth front, we have received concession awards and have been selected as preferred leaders for both Baghdad in Iraq and Luanda in Angola, while continuing to evaluate additional bidding processes and M&A opportunities across multiple regions. While these projects remain subject to the execution of the definitive concession agreements, both opportunities offer attractive long-term growth potential. At the same time, we remain disciplined in our capital allocation. This disciplined approach remains central to how we allocate capital and expand our portfolio. Our operating performance was also matched by strong industry recognition. During the year, Aeropuertos Argentina was named best airport operator in South America, Brasilia was ranked number two worldwide in punctuality among medium airports, Carrasco was recognized as best airport in Latin America and the Caribbean in its category, and Varna was named best airport in Europe and most dedicated staff in the segment. These recognitions reflect our continuous focus on operational excellence and customer experience. Looking ahead, we remain focused on execution and value creation. We expect continued positive momentum in passenger traffic across our key markets, supported in particular by strong international traffic trends in Argentina. At the same time, we will continue to prioritize commercial optimization and revenue per passenger growth across the portfolio. We are also closely monitoring the evolving geopolitical situation in the Middle East and remain attentive to any potential implications for international travel. I will now turn the call over for questions. Thank you. Operator: Ladies and gentlemen, if you do have any questions, please press star followed by 1. Should you wish to withdraw from the polling process, please press star followed by 2. If you are using a speakerphone, you will need to lift the handset first before pressing any keys. Out of consideration to other callers on the line today, we ask that you please limit yourself to one question and one follow-up, and requeue should you have additional. Thank you. Your first question will be from Alejandro Demichelis at Jefferies. Please go ahead. Alejandro Demichelis: Good morning, gentlemen. Thank you very much for taking my questions. Martin, you mentioned the strong traffic growth that you expect for the rest of the year. We have seen an increase in profitability across the business, so should we assume that what we have seen in terms of margins and profitability is the new base for Corporación América Airports S.A. going forward? That is the first question. And then the follow-up is, have you actually seen any kind of impact from the war in terms of your operations in Armenia, please? Jorge Arruda: Hi. It is Jorge here. Thank you very much for your question. Regarding margins and profitability, what we saw in the first two months of the year— you probably have seen our traffic numbers— we increased by approximately 8.7%, more precisely, overall, with international 14.5% and domestic 1.5%. So we remain constructive for the next few months, and we expect our business to continue growing according to passengers and a bit over passengers, in fact. Margins in terms of EBITDA margins are stable for the time being. In terms of your second question, approximately 10% to 15% of the traffic in Armenia has been affected by the war. The first few months of the year were very positive, around 11% growth for the first two months, and what we have observed since the war is flat— no growth, no decline— but I think it is totally tied to the war. When this war ends, the traffic would resume very quickly. It is very difficult to say at this point in time. Also, part of this traffic is connecting traffic in the Middle East that probably, at least some of it, should be going through other routes that are available in Armenia. But again, the impact that we saw in the first few days of the war is flat growth. That is very clear. Thank you. Operator: Thank you. Next question will be from Andres Cardona at Citigroup. Please go ahead. Andres Cardona: I am trying to ask. Can you hear me? Good morning. So my two questions are about any update of the Argentina concession rebalance— anything you could share in terms of timing or expectations? And second, if you have also an update of the Italy investment opportunity. I also understand it has not been approved, but what are you expecting in terms of timing? Jorge Arruda: Thank you for your questions. On Argentina, we are on the right track. However, it is very difficult for us to provide publicly a timing for the outcome of the rebalance, given the political and bureaucracy dynamics associated with a process like this one. But again, we are on the right track. We are in very frequent discussions with the government, and we will keep the market updated as we receive concrete news from the government. In connection with Italy, it is also very difficult for us to provide a timetable on when this will be finalized and we will be able to begin constructions. But we are making progress. I think the approval that we got was the environmental approval. There are a few more processes to go before we are fully approved to begin construction. But again, we are on the right track, and we will keep the market posted as we receive concrete news. Operator: Thank you. Once again, ladies and gentlemen, if you do have any questions, please press star followed by 1 on your touch-tone phone. To remove yourself, press star followed by 2. Our next question will be from Julia Orsi at JPMorgan. Please go ahead. Julia Orsi: Yes. Hello, everyone. Good morning. Thanks for taking the time. Can you comment a bit on your capital allocation strategy going forward? I know you mentioned this disciplined strategy, but can you comment a bit on what you are expecting in terms of new regions and concessions that you might be willing to invest? And second, what should we think of the commercial revenues growth going forward and the main drivers behind it? Thank you. Jorge Arruda: Thank you for your questions. In connection with capital allocation, we— as Martin has mentioned in the call— have been awarded in Iraq and Angola. We are pursuing those opportunities. Obviously, with the situation in Iran and the war, etcetera, this process we expect to be delayed. In Angola, we are in frequent discussions with the government to try to move ahead and finalize this process. Besides that, we are looking at other opportunities in the Middle East, in Central Asia, in Africa, and in the Americas. As I reported in previous conference calls, we have significantly boosted our new business team and are actively looking at various opportunities, and we believe that the best use of our liquidity is to grow the portfolio, and that is what we are working 24/7 to achieve. In connection with commercial revenues, we indeed saw a very good year in 2025, with growth across the board, particularly in VIP lounges, in parking, in fueling as well— in some markets in cargo. What we are seeing in the first few months of the year is a bit more of the same, perhaps not as intense as we saw in 2025, but the portfolio is performing very well. Julia Orsi: Perfect. Thank you. Operator: Thank you. Next question will be from Pablo Ricaldi at Itaú. Please go ahead, Pablo. Pablo Ricaldi: Hi. Good morning. Maybe thinking a follow-up on the capital allocation— are you thinking in terms of funding to do all these acquisitions outside Argentina? Are you good, man? So sorry. Jorge Arruda: I think the targets that we are currently looking at, the funding would come primarily from cash at hand, given the size of the opportunities that we are looking at. Pablo Ricaldi: Perfect. Thanks a lot. Operator: Thank you. At this time, we have no other questions registered, so I would like to turn the conference back over to Martin. Martin Eurnekian: I wanted to thank everybody for joining us today and remind you that our investor relations team is available for any further questions. Have a very good rest of your day.
Operator: Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc. fourth quarter earnings call. At this time, all participants are in listen-only mode. Operator assistance is available at any time during this conference by pressing 0#. I would now like to turn the call over to Anna Delgado. Please begin. Anna Delgado: Thank you, Luke, and good morning, everyone. Before we begin, I would like to remind you that during the course of this conference call, the company will be making forward-looking statements within the meaning of federal securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Finally, the company can give no assurance that such forward-looking statements will prove to be correct. Natural Gas Services Group, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's earnings press release and our filings with the SEC, including our Forms 10-K for the period ended 12/31/2025 and our Forms 8-K. These documents can be found in the investors section of our website located at www.ngsgi.com. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially. In addition, our discussion today will reference certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, and adjusted gross margin, among others. For a reconciliation of these non-GAAP financial measures to the most directly comparable measures under GAAP, please see yesterday's earnings release. I will now turn the call over to Justin C. Jacobs, Chief Executive Officer. Justin? Justin C. Jacobs: Thank you, Anna. Good morning, everyone. Joining me today is Ian M. Eckert, our Chief Financial Officer. To start, I want to once again thank the entire Natural Gas Services Group, Inc. team for their continued dedication and hard work. Our results this year reflect the efforts of the entire organization. I especially want to recognize our field team. Their commitment to delivering exceptional uptime and reliability for our customers continues to be a defining strength of this company. As a result of our team's strong execution, Natural Gas Services Group, Inc. delivered another great quarter and record full-year results in 2025. This performance also marks the third consecutive year in which we have taken market share in the rental compression industry. Our continued growth reinforces Natural Gas Services Group, Inc.'s position as one of the fastest-growing rental compression companies and as we enter 2026, we feel confident in our ability to drive further improvements and to continue to increase shareholder value. Moving to our operating and financial performance in the fourth quarter and full year, we reached record levels of rented horsepower and utilization in 2025. Rented horsepower increased to approximately 563,000 by year-end 2025, a 14% increase over the prior year. Fleet utilization reached 84.9%, another high watermark for the company. The fourth quarter rental revenue totaled $44.3 million, up roughly 16% year over year, reflecting continued fleet expansion and strong demand for large-horsepower compression units. Adjusted EBITDA was $21.2 million for the quarter and $81 million for the full year, both records for Natural Gas Services Group, Inc., and the full-year number was at the high end of our guidance range, and I would note that we increased guidance three times during the course of the year. We also started our return of capital program in 2025. During the second half of the year, we initiated our inaugural dividend and subsequently increased it by 10% with the fourth quarter issuance. In total, approximately $2.6 million was returned to shareholders in the second half of the year. This reflects our confidence in the durability of our cash generation and our disciplined capital allocation strategy. Overall, our strong performance continues to be driven by fleet expansion, operational execution, pricing improvements, and the continued mix shift towards large-horsepower compression units. Our strong year-over-year performance demonstrates the continued growth underway at Natural Gas Services Group, Inc. During 2025, we added approximately 70,000 horsepower, with more than half deployed in the fourth quarter. Large-horsepower electric units represented approximately 30% of those additions. Looking ahead to 2026, we expect this continued momentum. We are currently contracted to deploy 50,000 horsepower of new large-horsepower compression units distributed relatively evenly throughout the year. Electric motor drive units are again expected to represent a similar percentage of the total horsepower additions as 2025. As we have consistently communicated, our growth investments remain focused on large-horsepower and electric units, which generate higher returns and typically carry longer contract durations. At the same time, we remain committed to a capital allocation framework that combines organic growth, shareholder return of capital through dividends and share repurchases, and disciplined evaluation of strategic M&A opportunities. Importantly, Natural Gas Services Group, Inc. continues to maintain leverage on the low end of our public compression peers, which provides us the flexibility to be offensive regardless of market conditions while also returning capital to shareholders. Turning to the broader market environment, demand for natural gas compression remains very strong, primarily driven by domestic oil production, particularly in liquids-rich basins such as the Permian. Looking forward, we see the benefit of several tailwinds, including increasing LNG export capacity and growing electricity consumption from data centers and AI-related infrastructure. We expect these structural changes to drive growth for at least the next several years. We are also monitoring geopolitical developments, including evolving policy and supply dynamics in Venezuela and Iran. While the ultimate impact on global oil markets and U.S. production activity remains uncertain, we continue to evaluate these developments closely. Additionally, lead times for new large-horsepower compression equipment remain long. The lead time for certain components on certain models is stretching well beyond one year. These conditions support continued pricing strength, high utilization levels, and attractive long-term growth opportunities for compression providers. Within this environment, Natural Gas Services Group, Inc. continues to win market share due to our high-reliability equipment, industry-leading service quality, strong customer relationships, and balance sheet flexibility. I will move next to the specific growth and value drivers that continue to support the strong performance of Natural Gas Services Group, Inc. First, fleet optimization. We continue to see strong performance in rental revenue per horsepower, which increased approximately 3% in the fourth quarter compared to the prior year. This improvement reflects new unit deployments, contract renewals with increased rates, and the ongoing mix shift towards large-horsepower units. A record horsepower utilization of 84.9% demonstrates the strong demand environment for our fleet. In addition, we are investing significant time to improve the collection and use of data in all aspects of our business. For our units in particular, these investments will further improve uptime, optimize gas flow, and will support predictive maintenance across our installed base. Second, asset utilization. In the fourth quarter, we received confirmation of $12.3 million of the income tax refund and associated interest, which was received in 2026. This represents the successful monetization of another material non-operating asset. We were very pleased to finally receive the bulk of this receivable, which represents approximately $1 per share. We also continue to pursue the monetization of real estate assets, including the listing of our Midland office property. Third point is fleet expansion. 2025 represented a significant year of fleet growth, and we entered 2026 with substantial contracted deployments already in place. All new units being deployed are large-horsepower compression equipment, including electric motor drive units. Finally, we continue to evaluate strategic and accretive acquisitions. Natural Gas Services Group, Inc. remains well positioned to pursue disciplined M&A where it complements our existing operations and enhances shareholder value. With that, I will turn the call over to Ian to review our financial results and balance sheet in more detail. Ian M. Eckert: Thank you, Justin, and good morning to everyone joining us today. As Justin emphasized, the Natural Gas Services Group, Inc. team delivered a very strong year for our shareholders, reflective of significant fleet expansion and strong operational performance. To recap the full year 2025, rental revenue totaled $164.3 million, representing an increase of $20.1 million, or 14% year over year. Total revenue reached $172.3 million, increasing $15.6 million, or approximately 10%, compared to 2024. Total revenue growth was lower than rental revenue growth due to our exit from the Midland fabrication operations and our broader strategy to migrate away from non-core, low-margin fabrication activities. Adjusted rental gross margin totaled $99.6 million, an increase of $12.3 million, or 14%, year over year, reflecting continued growth of our rental fleet and improved pricing. Fourth quarter adjusted rental gross margin improved 1.6% sequentially to $25.9 million. During the fourth quarter, our adjusted rental gross margin percentage was 58.5%, which declined roughly 300 basis points compared to the third quarter and was well below our expectations. All of this decline relates to a physical inventory adjustment recorded during the fourth quarter. Importantly, it does not reflect the ongoing economics of our business. In fact, as we move into 2026, we expect continued adjusted rental gross margin percentage expansion beyond the 2025 figure of 60.6%. This is driven by new large-horsepower unit deployments, operating leverage from our growing horsepower base, and ongoing cost discipline. For the year, adjusted total gross margin was $100.5 million, representing a 14% increase year over year. Net income totaled $19.9 million, or $1.57 per diluted share, representing record performance for the company. I would like to point out a few discrete items included within our 2025 results. First, we recorded a $2.6 million non-cash impairment charge related to our Midland headquarters property as we prepared the building for sale and began transitioning to an alternative leased office space. Second, we recognized $2.4 million in interest income during the fourth quarter, a result of the IRS confirming refund and interest amounts associated with our income tax receivable. And finally, our effective tax rate for 2025 was 24.9% compared to 20.5% in 2024. This increase is primarily attributable to higher state taxes resulting from changes in state apportionment. Looking ahead to 2026, assuming our operational footprint remains generally consistent, we expect our effective tax rate to be approximately 25%. Turning to the balance sheet, our income tax receivable increased to $14.1 million during the fourth quarter reflecting the IRS confirmation of the refund and interest amounts owed to the company. Of this amount, $12.3 million was received during 2026, leaving approximately $1.8 million outstanding, which relates to the 2019 tax year. As mentioned earlier, we recorded an impairment associated with our Midland office facility. While the building remained in use at year-end, we expect it to be reclassified as assets held for sale during 2026 once the applicable accounting criteria are met. From a capital spending perspective, full-year capital expenditures totaled $121.5 million, of which approximately $109.8 million is associated with growth capital expenditures for new large-horsepower compression units. This placed our growth capital spending at the high end of our guidance range and reflects the continued expansion of our fleet to support strong customer demand. As Justin mentioned earlier, 2025 also marked the initiation of our dividend program, with $2.6 million returned to shareholders during the second half of the year. We ended the year with strong liquidity and ample borrowing capacity, and our leverage remains at the low end of our public peer group, positioning the company well to support continued fleet expansion, shareholder returns, and acquisitions. In summary, our operating performance continues to translate into growth in adjusted EBITDA, strong operating cash flows, and increasing scale across the business. At the same time, we remain disciplined in our capital allocation approach, investing in high-return fleet expansion while maintaining a strong balance sheet and returning capital to shareholders. With that, I will turn the call back to Justin for 2026 guidance and closing remarks. Justin C. Jacobs: Thank you, Ian. We enter 2026 with record fleet utilization, significant contracted horsepower deployments, and a very active quoting pipeline. Based on this visibility, we are providing adjusted EBITDA guidance for 2026 of $90.5 million to $95.5 million. We expect continued organic growth in 2026 driven by large-horsepower deployments, expanding customer relationships, and sustained industry demand for compression services. In 2026, we expect growth capital expenditures in the range of $55 million to $70 million, which represents an increase of approximately $5 million at the low end of our prior expectations. This comes on top of hitting the high end of our range for growth CapEx in 2025. The 2026 increase, combined with the 2025 actual performance, shows that we continue to win new contracts to drive organic growth. Based on the forward growth capital guidance now provided by our public peers, 2026 will mark the fourth consecutive year that Natural Gas Services Group, Inc. has captured market share organically. The streak is a testament to the strong competitive position we have in the market. Maintenance capital expenditures are expected to be in the range of $15 million to $18 million in 2026. Our 2025 maintenance capital came in at the low end of the guidance range, so we expect a little spillover in 2026, coupled with the capital requirements of a growing fleet. In closing, Natural Gas Services Group, Inc. delivered record results in 2025. We achieved record rented horsepower, record fleet utilization, and record adjusted EBITDA. Looking forward, we believe the company is well positioned for continued growth and market share expansion. Structural tailwinds for the compression industry remain strong, including LNG export growth, increasing natural gas power demand, and rising electricity consumption driven by data centers and AI infrastructure. Combined with our strong balance sheet and operational execution, these factors position Natural Gas Services Group, Inc. to continue investing in growth, increasing EBITDA and earnings, returning capital to shareholders, and pursuing strategic opportunities. Luke, we are now ready to open the call for questions. Operator: Ladies and gentlemen, at this time, we will conduct a question-and-answer session. If you would like to state a question, please go ahead and press 7 on your phone now, and you will be placed in the queue in the order received. You can press 7 again at any time to remove yourself from the queue. We are now ready to begin. Our first question comes from Jim Rollyson with Raymond James. Go ahead, please. Jim Rollyson: Hey. Good morning, guys, and nice job and great finish to a pretty strong year here. Justin, in the press release, and I think Ian mentioned this, you mentioned large horsepower and electric motor drive assets are expected to expand rental gross margins. Maybe a little context, relative to the 60.6% number you printed in 2025, what is the kind of guidance range embedded as far as margins go? Ian M. Eckert: We have not given, historically—nor are we going to at this point—specific guidance on adjusted rental gross margin percentage or gross margins overall. As we look at that 60.6% for 2025, we do expect uplift from that. Generally, in past quarters, we have described margins in the low sixties, and that is our expectation going forward. So I would expect to see some modest uplift from that, and beyond the current mix shift, looking further out, we would like to see that number keep ticking up. Jim Rollyson: Thanks for the color. Appreciate that. And then as a follow-up, a bunch of your peers have talked about extended lead times, especially for Cat, talking 110 to 120 weeks, which is more like two years instead of one. I know you guys have—historically, at least recently on the large-horsepower side—been a big fan and customer of Waukesha. But maybe you could talk about what you are seeing in lead times with them and, generally, what is the current bottleneck across engines, compressors, fabrication, etcetera. Just kind of how that sets up for you specifically. Justin C. Jacobs: Yes. What we are seeing in the lead times is particularly at the high end of the large horsepower from our perspective of what we offer in the fleet. That is where you are seeing those 100-plus weeks. As we look in horsepower below that, but still well in large horsepower, we have not seen significant changes over the past three to six months and certainly nothing like what we have seen specifically from Caterpillar at that high end of the range of our fleet. As we look at the other major components and the fabrication space, generally, I would say there is not a lot of change since three to six months ago. It is probably creeping out a little bit. But the 100-plus week, that is tied to engines at the high end of the range. Jim Rollyson: Got it. Appreciate that. I will turn it back. Thank you. Operator: Thank you, Jim. Our next question comes from Nate Pendleton with Texas Capital. Nate Pendleton: Good morning. Congrats on the strong quarter. Can you share your thoughts on how the competitive environment evolves with the new large-horsepower units being so delayed, as you just talked about? And maybe how that can manifest for you guys as far as pricing and the potential M&A market due to that tightness? Justin C. Jacobs: Thanks for joining, Nate. It is a rapidly evolving landscape, particularly at the high end of the horsepower. If you look back to not just our call, but our competitors'—our public competitors'—calls in the third quarter, the lead times for that high end were up around half the number that it is at today. There are a number of different ways that we are able to address that. One is, as a percentage of our fleet overall, that longest lead-time item, we certainly have a good quantity of those units, but it is far from a majority of our large horsepower. And so in some of those still significant size equipment, but less than the high end, the lead times are significantly less than 100 weeks, and that provides us an ability to continue our growth and meet customer needs. In terms of the impact in M&A and other, I think it is too early to really look at that. This is a relatively recent and pretty material change in the competitive landscape. Nate Pendleton: Understood. And then, perhaps for Ian, I know you have been really involved in some of the blocking and tackling that goes on behind the scenes to deliver the improving results we have seen quarter after quarter. Can you talk about maybe some of the areas of opportunity that your team has been working on from your perspective and maybe how that might manifest in the financials going forward? Ian M. Eckert: Yes. Sure, Nate. Thanks for joining the call today. So I am going to start with that physical inventory adjustment in the fourth quarter. As part of that process, we identified a number of capability and process gaps within our warehouse operations. Importantly, we have already taken decisive actions to address those areas, and that includes targeted personnel changes and implementations of best practices across our inventory management processes. And while that is a one-time impact in the fourth quarter, I think those actions that were taken ultimately help us as we move into 2026. As those warehouse operations continue to mature, we expect to realize improved efficiencies and some degree of cost savings, which should ultimately help to support margin expansion going forward. Nate Pendleton: Got it. Thanks for taking my questions. Justin C. Jacobs: Thanks, Nate. Operator: Thank you very much. Our next question comes from Selman Akyol with Stifel. Selman Akyol: Thank you. Good morning. A couple quick ones for me. As you think about the environment and the competition, and you noted the longer lead times for the extremely high horsepower, is that giving you an opening at all to move beyond gas lift more into midstream? Are you seeing any opportunities for that? Justin C. Jacobs: Good morning, Selman. Thanks for joining. I have spoken on a number of the recent calls that when you look at our larger horsepower that is in centralized gas lift, and you look at our large horsepower overall, we do not have any material applications in the midstream at this point. That has been a targeted area for us to focus on to add to our existing business. I can say that it is still early for us, but that we are seeing at least quoting activity in that area, and that it is up to us from an execution perspective to be able to go out and win that business. So it has been a focus area not just because of recent lead times, but because we think—and have thought for a number of quarters—that is an opportunity for us because of the similarity of the equipment. Selman Akyol: Is that just a matter of pricing, or is it you need to get your first customer and then sort of prove you can do it in the reliability, and then you think more comes pretty rapidly. Does that make sense? Justin C. Jacobs: It does make sense. I think if you look at the evolution of our business, not over the last couple of quarters, but going back several years, we are reasonably new entrants into the 1,000-plus horsepower package market. Our first 35/16s are north of 30—north of 1,000 units—are kind of 2018, 2019 time frame. We first got into that business with Occidental Petroleum. Obviously, they are now our largest customer. We now have a material number of customers—Devon Energy—where we are servicing with north of 1,000-horsepower units. I think it is a similar evolution there. Midstream is a logical next place for us to have looked and to penetrate. We have not done that yet, but I think getting that first customer is going to demonstrate that our equipment from a technology perspective and the service we provide—we should have competitive advantage there as well. That is how we approach it. Selman Akyol: Got it. Okay. Thank you for that. And then next, thinking about EBITDA growth—very robust in 2026—clearly you have got some monetization going on, and your CapEx is coming down, so your free cash flow is accelerating. I know you highlighted your inaugural dividend and then you increased it once already, and you have got this strong free cash flow coming. How should we be thinking about return of capital and dividend in particular as we go through 2026 and beyond? Justin C. Jacobs: There I would repeat comments that we have made on prior calls. I think on the call after we initiated the dividend, we made clear we have a good understanding of shareholders' desire for a consistent and increasing dividend, and we were not going to provide specific guidance other than to make it clear we understood that. That is how I would think about how we—and the Board—will approach return of capital overall, but the dividend specifically in 2026. Selman Akyol: Okay. Thank you very much. Justin C. Jacobs: Thanks, Selman. Operator: Our next question comes from Tim O'Tell with Petra Company Management. Tim O'Tell: Good morning. I had a couple comments because in the wake of Steve's retirement, I wanted to just make on the way in, and wanted to just acknowledge him for a couple things. One being building a balance sheet through some very tough years, and then also seeing the growth opportunity, sort of 2019–2020, which also became interesting, obviously, signing up with Oxy and actually pivoting towards growth in large horsepower, which has obviously been a very good move. And then also, kind of later on—but not that much later than 2020—obviously working with Justin to replace himself, and that has proven so far to be a very good choice. And so I wanted to kind of congratulate him on the way out. And then one other comment that I wanted to make before I get into a couple of questions is I would still love to see some more detail around discretionary cash flow and discretionary cash flow per share and growth in that metric. A few of your competitors focus on that. I think it is appropriate. It is more indicative of economic earnings for the company, and would love to encourage more focus on that and a little bit more information around that. Justin C. Jacobs: Tim, appreciate you joining, and appreciate your comments. Just to echo on the first point for Steve, and particularly the last part you put there, I think of Steve as really a quasi founder of this business. Having worked with him through the transition, he did an outstanding job. It was absolutely amazing for me, and I think for the company, and a lot of credit is due to him there. So just wanted to echo your comments on that. Tim O'Tell: Yes. Well, thanks for that, Justin. I think Steve—hopefully he is listening from home or can go listen to it at some point—and anyway, we appreciate you. It was a very good run for a very good result. To a question that was just asked and just kind of feeling you out in terms of how you are looking at things going forward in terms of the growth space, midstream—obviously, you would be well suited to fill some of that bill. There are some competitors out there you would be aware of, and a few also that are not necessarily directly in the compression space but in related spaces that have been looking at actually power generation. So you have the reciprocating engine on the front end driven by natural gas to actually create pad power or maybe beyond pad power. I am wondering how you look at those two trade-offs, if you are even considering the electric generation space given kind of the wall of demand that is coming at us. Also, related to that, I do wonder—it is maybe more of a question for your customers, but you are in that discussion—how the space looks at the fact that electric power will be tight, will be in demand, maybe short supply at times, and pricing on the power to drive the compression may also become an interesting topic. Could you talk to that for a minute? Justin C. Jacobs: Sure. Happy to. On the power gen space, that is an area that we have looked at from an acquisition perspective and looked at a couple of specific opportunities. Some of the similarities are relatively straightforward in terms of the service model, the equipment, the rental nature of equipment, at least in certain applications. We understand that is a similar market. I think what we have seen from one of our public competitors shows that. As we look at it, some of our questions really relate to: are we going to see the same long-term applications as compression? We have not seen business—at least that we have looked at yet—in the power gen space that has a similar application length that we do, particularly with our large horsepower. We are going to continue to look at it very closely, and I am sure look at additional opportunities. As with all M&A, you never know exactly what will happen—it is kind of the sun, the moon, the stars—so it is certainly on our radar, but those are kind of how we look at it. Tim O'Tell: Okay. Great. I kind of expected something along those lines, wanted to feel you out a little bit on that because we have not discussed that. Another question I have, and this might be a little bit more for Ian than you, Justin. You mentioned Oxy and Steve kind of engaged with them and started to support a lot of capital for that particular customer in the 2019–2021 space in terms of some of the going online. One of the things I am noticing on the maintenance CapEx level is that that is creeping up. I am wondering if maybe you could talk to this a little bit. I am wondering if some of that maintenance CapEx is kind of associated with the initial bolus of that significant allocation of capital to the Oxy footprint, and whether we should expect that to level out for a few years until the next big bolus reaches, let us say, five years, or if that is on a trajectory that is likely to build as we go forward more or less ratably or steadily, trailing the growth that you have put up the last couple of years? Ian M. Eckert: Hi, Tim. Thanks for joining. You hit on a key point here. We have seen significant fleet horsepower growth over the last half a decade, and your assumption is correct. The initial tranche of those large-horsepower units are coming up on some key maintenance events that require maintenance capital, hence the increase that we see year on year from 2025 to 2026. I believe you can expect that to continue gradually, ticking upward given the significant horsepower we put in place over the last five years. Justin C. Jacobs: Tim, I know you know this well, but as we talk to our broader public shareholder base, just to make sure they understand the maintenance cycle here: specifically for the engine, you are looking at major maintenance roughly every three and a half years. At three and a half years you have a good-sized event, and at seven years you have a larger event in terms of cost, with other components on roughly similar cycles. Our expectation with the growing fleet size is that maintenance capital will gradually drift up in proportion with our fleet growth. Tim O'Tell: Right. And that makes perfect sense. But obviously it is taking a bit of a step up and it probably helps to actually set the table for that as we go forward. Also, that kind of circles back to my comment on discretionary cash flow and discretionary cash flow per share growth as we go forward. And then I am also—this is another question kind of for Ian—is the physical inventory adjustment that you took in the fourth quarter, is there more of that to come as we go into the front end of 2026 to kind of set the table for growth in adjusted gross margin again? Or is that really basically behind us, and going forward it is just actually tuning up operations more than anything else. Ian M. Eckert: Yes. That is very much behind us at this point in time. That was a one-time impact in the fourth quarter. Moving forward, I do not expect continued physical inventory adjustments of that scale. Tim O'Tell: Great. Okay. Thanks. I think that is all I have right now. Thank you, gentlemen, and another good quarter setting up for another interesting and fruitful year. Thanks. Justin C. Jacobs: Thanks, Tim. Appreciate you joining. Operator: Thank you very much. And again, if you have any questions, please go ahead and press 7#. Our next question comes from Rob Brown with Lake Street Capital Markets. Go ahead, please. Rob Brown: Hi. Good morning. I wanted to follow up on your comments about increased quoting activity. Just a sense of what areas are the most active and maybe the ability to expand, I think, your 50,000 horsepower this year. How early do you have to get the quotes in to expand that 50,000, and what could it be? Justin C. Jacobs: When I look at the quoting activity overall, at least from a geographic perspective, it is certainly dominated by the Permian Basin, as our existing business is, and so really no difference there from where we operate today. In terms of applications, as was said earlier in the call in one of the questions, we are seeing opportunities in the midstream, but we have not won one of those yet. On the 50,000—just to confirm—that is contracted growth that we expect to set in 2026. We are seeing a mix of larger existing customers in terms of quoting, some customers that are very large companies but relatively small customers for us where the quoting activity is far in excess of the amount of business that we have with them today, and then some new customers in there, a number of whom we have already won some units with. So I would generally describe it as broad-based. Rob Brown: Great. Okay. Thank you. And then, just on the comments around the natural gas demand, some of the demand drivers there. Do you foresee a better utilization in smaller-horsepower fleet from that, or how does that impact your business? Justin C. Jacobs: I would say that we have not modeled that into our forward guidance. I think it is a reasonable expectation that we will see it. We just have not included that in. As our business is increasingly becoming dominated by large-horsepower units, the impact to the business will be—it could be a reasonable amount—but I would not describe it as particularly significant relative to the overall size of the business. Rob Brown: Okay. Great. Thank you. I will turn it over. Justin C. Jacobs: Appreciate it, Rob. Thank you. Operator: Thank you very much. And again, if you have any questions, please press 7#. I do not see any other questions, sir. Justin C. Jacobs: Thank you, Luke. And thank you all for your questions and for your continued interest in Natural Gas Services Group, Inc. We sincerely appreciate your support, and we look forward to updating you on our progress next quarter. Ian M. Eckert: Thank you. Operator: Thank you, everyone. This concludes today's conference call. Thank you for attending.
Operator: Greetings. Welcome to Citi Trends, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants will be in listen-only mode. The question-and-answer session will follow the formal presentation. Please note that this conference is being recorded. At this time, I will hand the conference over to Nitza McKee, Senior Associate at ICR. Nitza, you may begin. Nitza McKee: Thank you, and good morning, everyone. Thank you for joining us on Citi Trends, Inc. fourth quarter and full year 2025 earnings call. On our call today is Chief Executive Officer, Kenneth Seipel, and Chief Financial Officer, Heather Plutino. Our earnings release was sent out this morning at 6:45 a.m. Eastern Time. If you have not received a copy of the release, it is available on the company's website under the Investor Relations section at www.cititrends.com. You should be aware that prepared remarks made today during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance. Therefore, you should not place undue reliance on these statements. We refer you to the company's most recent report on Form 10-K and other filings with the Securities and Exchange Commission for a more detailed discussion of the factors that can cause actual results to differ materially from those described in the forward-looking statements. I will now turn the call over to our Chief Executive Officer, Kenneth Seipel. Ken? Operator: Thank you, Nitza. Kenneth Seipel: Good morning, everyone, and thank you for joining us today on our fourth quarter and full year fiscal 2025 earnings call. I am proud to report that our fourth quarter performance caps an exceptional year of transformation at Citi Trends, Inc. The progress we delivered in 2025 reflects the disciplined execution across the organization and a renewed focus on serving our customer with style, value, and authenticity. Our team has worked incredibly hard this year to strengthen the foundation of this business. As a result, we are entering 2026 with growing momentum, a clear strategic direction, and increased confidence in our long-term growth trajectory. Let me begin with our fourth quarter results. Citi Trends, Inc. delivered 8.9% comparable store sales growth in Q4, representing 15.3% growth on a two-year basis and marking our sixth consecutive quarter of positive comparable sales. In the quarter, I am also pleased to report that we achieved EBITDA of $11.9 million, which is a 67% increase over Q4 of the prior year. What is particularly encouraging about our fourth quarter performance is the broad-based nature of the growth. We saw strength across all store volume tiers, all geographic regions, and both apparel and non-apparel categories. Customer traffic drove the majority of our growth. Transaction counts grew mid to upper single digits during the quarter; we also saw continued improvement in our basket size, demonstrating that our merchandising strategy is resonating. More customers visit our stores, and once inside, they continue to respond to our improving merchandise assortment and our value proposition. Our customers are telling us when we deliver compelling product at great value, they show up and they purchase. Encouragingly, that momentum has continued into fiscal 2026. Quarter-to-date, Q1 comparable store sales are trending in the high single digits supported by increased traffic and basket size during this important tax refund season. In Q4, Children's once again delivered an outstanding quarter, posting high single-digit growth and extending consistency and momentum for the year. This business has become a cornerstone of our company and is a model of disciplined execution. The team continues to deliver highly desired styles, consistent value, and improved in-stock positions. As we refine our merchandising strategies in Children's, the category continues to strengthen and remains one of our most reliable traffic drivers. Men's also posted another solid quarter of growth. Our updated strategy balances trend-forward product for younger customers while serving the sound preferences of our core male customer, good values, and improved in-stocks. The results validate that balanced approach, and we believe there is significant runway for continued growth in our Men's category. Women's footwear continues to show early signs of progress. The off-price and extreme value strategy is beginning to gain traction in our shoe area, and we are seeing improved customer response. We are also pleased with the progress across the board, and we believe that the broader footwear category represents significant growth potential going forward. Family basics and sleepwear was one of our top growth areas in the quarter. Our merchants introduced better styling and trend to complement the already strong values. The combination of trend-relevant styles and improved inventory positioning generated strong top-line sales performance and helped drive both traffic and conversion. From a marketing and brand perspective, this holiday season marked an important moment for Citi Trends, Inc. with the launch of our Joy Looks Good On You campaign and refreshed social media presence under @wearecitytrends. The results exceeded our expectations. Our flagship Joy video generated over 55 million views and engagements, demonstrating the power of authentic storytelling that reflects the communities we serve. If you have not seen it yet, I encourage you to go to www.cititrends.com for the original video and original content celebrating real moments of joy across the Black community. This campaign represents more than marketing. It brings to life our brand promise, which is styles that see you, prices that amaze you, and trends that tell your story. Going forward, the customer brand promise guides everything we do as we continue to strengthen our relationship with the communities we proudly serve. Now let us turn our attention to the full year 2025 results. In 2025, we executed against our three-phase strategy framework: Repair, Execute, and Optimize. Our first priority was the Repair phase, restoring the fundamental and foundational business disciplines required to run a successful retail company. I am very pleased with the work our team accomplished to strengthen our foundation, sharpen our merchandise strategy, and improve the operational disciplines required to support long-term profitable growth. For the year, comparable store sales increased 9.7%. Two-year comparable growth was 13.1%, and net sales reached a total of $820 million. In addition, we achieved more than 200 basis points of gross margin improvement, 120 basis points of SG&A leverage, and EBITDA growth of $26 million on a year-over-year basis to $11.8 million. Our EBITDA growth was achieved while also funding an above-target annual bonus for our team for the first time in several years. These results represent significant achievement in a relatively short period of time and reflect the early success of our transformation strategy. Our fiscal 2025 growth was driven by four factors: a sharper focus on our core Black customer, stronger merchandising assortments, better value communication, and a more engaging in-store experience. As I have shared previously, our rapid turnaround is enabled by Citi Trends, Inc. clear points of differentiation. First, our laser focus on serving Black customers, a customer segment that we understand deeply. Second, a strategic advantage of neighborhood-based locations that put us in the heart of the communities we serve. Citi Trends, Inc. holds a unique position as the only off-price retailer dedicated to Black consumers. Its cultural relevance is a significant competitive advantage. Black customers are trendsetters; they are early adopters of fashion, which enables us to curate assortments with immediate, authentic appeal. Our connection to this customer has been strengthened through the comprehensive consumer insights study we conducted, combined with the expertise of our trend director, which identifies and translates current and relevant trends into actionable merchandising strategies. This dual approach allows us to not only reflect our customers’ style preferences with greater precision, but also anticipate emerging trends before they hit mainstream popularity. This work is a key reason that we generated consistent comp store increases for the past 19 months. Transaction counts grew mid to upper single digits year over year every quarter in fiscal 2025, while basket size expanded throughout the year. We are attracting more customers, and they are spending more per visit—powerful evidence that our updated product assortment strategy is resonating. Our customers are discerning shoppers who recognize true value extends beyond price alone. When we deliver on-trend fashion, the right style, and quality merchandise, they are willing to invest more, and this insight guides our merchandising strategy. Beyond merchandising, we also made major strides operationally in 2025. We leveraged SG&A by 120 basis points through foundational business practices that drove better execution. Inventory management reached new levels of efficiency this quarter. We supported comp store sales growth with less average store inventory than last year, which is a testament to our improved buying processes, supply chain improvements, and smarter allocation. This efficiency creates a powerful flywheel effect, optimizing working capital, enabling greater flexibility to respond to emerging trends, and protecting our gross margins. Speed improvements in our supply chain allowed us to maintain optimal in-store inventory while reducing overall inventory levels. Enhanced work processes, productivity standards, and day-to-day management enabled us to significantly reduce in-process inventory. In late second half of this year, we implemented an AI-based allocation system across all of our merchandising categories. The results have exceeded our expectations. We are now deploying AI-based planning systems to streamline sales and inventory planning for our merchant teams and further enhance their effectiveness. Throughout 2025, we fundamentally transformed how we operate. We now run the business through standardized KPIs, real-time dashboards, structured business reviews, and performance-linked incentives. As I often say, retail is detail, and execution without measurement is just guesswork. Our KPI, data-driven approach provides visibility that keeps teams aligned and drives continuous improvement, which is the cornerstone of our execution strategy. In 2025, we also executed a strategic expansion and modernization program that positions us well for accelerated store growth. Our stores are embedded in communities where we have built trust over many years. The combination of convenient proximity and strong word-of-mouth recommendations creates powerful and sustainable traffic drivers. We opened three new locations and remodeled 62 stores in 2025, bringing approximately 30% of our fleet to an updated format. These refreshed stores inspire our teams, elevate brand perception, and signal our commitment to investing in local neighborhoods. Our late fall openings in Jacksonville, Florida, Columbia, South Carolina, and Bainbridge, Georgia exemplified our pilot market backfill approach, strategically opening new stores while simultaneously remodeling existing locations to capture greater market share. We remodeled nine additional stores across these markets—five in Columbia and four in Jacksonville—and amplified our presence through local marketing initiatives, including branded city bus wraps. After a full holiday season, these new locations have performed well above our expectations, validating our data-driven site selection methodology and giving us confidence to scale and accelerate our store growth. Before I turn the call over to Heather for more information on 2025, I want to take a moment to recognize the Citi Trends, Inc. team. A turnaround of this nature is hard work. There is a lot of speed and a lot of dedication required. I am really proud of our team—each person is highly engaged, very focused on our customer, and focused on building a better and more profitable company. I simply want to say thank you to everybody for the long hours, the consistent energy, the unwavering dedication, and the commitment to continuous improvement. I will now turn the call over to Heather to review the Q4 and fiscal 2025 business results in more detail, and then I will return to talk more about the 2026 outlook. Heather? Heather Plutino: Thank you, Ken, and good morning, everyone. I am excited to walk you through our financial results for the fourth quarter and for fiscal 2025, a highly transformational year for Citi Trends, Inc. We have accomplished a lot in a short period of time, but as we say, we are just getting started. Our momentum will continue through 2026, and the guidance I will share with you shortly will demonstrate that our objective of increasing shareholder return remains at the core of our transformation. Our performance in the fourth quarter demonstrates significant progress in our business transformation. We achieved robust top- and bottom-line results with comparable store sales increasing 8.9% and adjusted EBITDA of $11.9 million, both at the high end of our guidance range, confirming that our turnaround strategies continue to gain traction. Total sales for the fourth quarter increased 9.1% compared to Q4 2024 to $230.4 million. Comparable store sales increased 8.9%, with about two-thirds of comp sales growth from increased transactions and the remaining third from a higher average basket. On a two-year stack basis, comps increased 15.3%. As Ken said, this marks our sixth consecutive quarter of positive comp growth. Gross margin increased 20 basis points versus last year to 39.9%, driven by lower markdowns reflecting the impact of our improved merchandise assortment and value proposition, upgraded allocation process, and our inventory efficiency efforts. While we are pleased with our gross margin rate, it did fall a bit short of our expectations for the quarter due to slightly higher than expected freight expense and slightly higher markdowns to ensure we exited the quarter clean. Fourth quarter adjusted SG&A expenses totaled $80.0 million compared to $76.7 million a year ago. The increase to last year is due to increased store and DC expenses to support higher sales, and $1.8 million of incremental incentive compensation expense. SG&A was lower than expected in the quarter due to store and DC closures during January’s winter storm and a true-up of our year-end bonus accrual on actual KPI results. Adjusted SG&A as a percent of sales was 34.7%, leveraging 160 basis points versus last year. Adjusted EBITDA grew $4.8 million over last year to $11.9 million, with adjusted EBITDA margin, EBITDA as a rate of sales, up 180 basis points to 5.2%. During the quarter, we closed three stores. Turning to our full year fiscal 2025 results, total sales for the year increased 8.9% over last year to $820.0 million. Comparable store sales increased 9.7%, and 13.1% on a two-year basis. Consistent with each quarter of the year, full year comps were driven mostly by increased transactions, with increased average basket contributing the balance. Gross margin expanded 210 basis points to 39.6%, driven by fewer markdowns and lower shrink as we anniversaried last year’s strategic inventory reset, as well as a reduction in freight expense rate versus last year. Adjusted SG&A expenses were $312.8 million compared to $290.3 million in 2024. The dollar increase to last year includes $9.7 million of incremental bonus and equity expense, plus added store and DC expenses to support $67.0 million of incremental sales. As a percent of sales, adjusted SG&A rate leveraged 120 basis points versus last year. Adjusted EBITDA for the year grew to $11.8 million, a $26.0 million increase compared to a year ago. EBITDA margin grew 330 basis points, driven by gross profit expansion and SG&A leverage. During the year, we opened three new stores, remodeled 62 locations, and closed four stores, ending the year with 590 stores. Now turning to the balance sheet. We are pleased with our inventory position, ending the year with total inventory down 7.4% compared to a year ago. We remain focused on improving our inventory efficiency through faster turns and enhanced supply chain speed. Because of these ongoing initiatives, year-end average in-store inventory declined 2% versus last year. Our balance sheet remains healthy with $66.0 million of cash at the end of the year, no debt, and no drawings on our $75.0 million revolver. This financial strength gives us the flexibility to invest in growth while providing operational stability as we execute our transformation. Now turning to our outlook for fiscal 2026. As Ken mentioned, one of the areas of focus in the new fiscal year is consistent execution of our model. By delivering on our execution priorities, we expect to produce strong sales flow-through to profit in 2026. Before I get to the details of our outlook, let me spend a moment on a change we are making to two non-GAAP metrics. Beginning in fiscal 2026, we will be excluding equity-based compensation from adjusted SG&A and adjusted EBITDA. Equity-based compensation is a non-cash expense, and we believe its exclusion will increase clarity for our investors about our operating results while providing greater transparency on cash generation from operations. To help with modeling, fiscal 2025 equity-based compensation expense by quarter was $1.0 million in Q1, $1.5 million in each of the second and third quarters, and $1.4 million in Q4, totaling $5.4 million for fiscal 2025. In fiscal 2026, the expense is estimated to be in the range of $5.5 million to $6.0 million. The outlook I am about to walk through for these two non-GAAP metrics, adjusted SG&A and adjusted EBITDA, reflects this change for both 2026 and the prior year period. With that, in fiscal 2026, we are planning total sales growth of 6% to 8%, with comparable store sales growth of 5% to 7%; gross margin expansion of approximately 100 basis points driven by continued improvement in markdowns from our ongoing inventory efficiency efforts and leverage of our new merch planning and merch allocation systems, lower shrink as we continue to leverage new camera systems, and lower freight rates from planned supply chain enhancements; adjusted SG&A leverage of 70 to 100 basis points versus the adjusted rate of 37.5% in fiscal 2025, due to ongoing disciplined expense control, enabling us to leverage our highly fixed cost base as sales increase; adjusted EBITDA to be in the range of $34.0 million to $38.0 million compared to $17.2 million in fiscal 2025, with an increase in adjusted EBITDA margin of approximately 200 basis points from the 2.1% delivered in 2025. For the year, we plan to open approximately 25 new stores utilizing the data-driven site selection methodology we developed in fiscal 2025; these stores will be a mix of existing and new markets. We are anticipating four store closures in the year, and we will continue our remodeling program updating 50 locations, bringing the percent of the fleet in an updated store format to approximately 42% by year-end. Finally, full year capital expenditures are expected to be in the range of $35.0 million to $40.0 million, with the majority of spend on new stores and remodels. In closing, we are proud of the significant progress we made in 2025, which has fundamentally transformed our business. We successfully executed on our key strategic priorities, strengthened our operational foundation, and delivered solid results. We are well positioned to capitalize on the strong foundation to build momentum throughout 2026, focusing on consistent execution, driving operational improvements, and investing in the initiatives that will fuel sustainable, profitable growth. We remain confident in our ability to deliver our long-term financial targets and firmly believe that the work we are doing today positions us to achieve those objectives while creating meaningful value for our shareholders. Ken said it well, but I just want to add my thanks to our dedicated teams across Citi Trends, Inc. whose unwavering commitment continues to drive our success. Their talents, resilience, and focus on delivering results have been instrumental in our transformation journey. With that, I will hand the call back over to Ken. Ken? Kenneth Seipel: Thank you, Heather. Now let me turn to our business initiatives for fiscal 2026. As we enter 2026, we are firmly in the Execute phase of our growth plan, focused on delivering the customer brand promise. Our brand promise is clear: styles that see you, prices that amaze you, and trends that tell your story. Every one of our internal team members is acutely focused on bringing the brand promise to life for every customer, every store, every day. In support, we developed three priorities for 2026, which are consistent execution, sales flow-through to profit, and accelerated growth. The first is consistent execution. With established practices now in place, we have identified several very specific product opportunities to continue our comparable store sales growth. A key focus for 2026 will be repositioning our Women's business to fully capture the style, trend, and sizing opportunities we see in the market. We are updating our product offerings across Juniors, Plus, and Missy categories to ensure trend-right merchandise is front and center for our female customers. This represents a significant opportunity to drive traffic and sales growth. Throughout 2026, we will maintain our disciplined focus on improved style, trend, and value across all product categories. The success we have seen in Children’s and Men’s demonstrates what is possible when we execute consistently, and we are applying those learnings company-wide. Our creative director has significantly improved our focus on key trends in the market and is working with our buyers to curate a refined assortment of styles. From opening price points to premium branded fashion, our merchant team translates these trends into compelling styles that deliver exceptional value to our customers. We have opportunity to grow our off-price buying strategy to ensure continuous flow of exciting brands and products at incredible value. The off-price market remains robust, giving us the advantage of being highly selective. This is part of our competitive advantage and customer value proposition. Off-price values fueled growth in family footwear, and we see a path of continued improvement in shoes and throughout the store. We remain excited about our Extreme initiative featuring compelling brands at discounts of up to 75% off MSRP, which is driving increases in traffic and basket size while protecting margins. We have completed several exciting deals so far this year, and we are excited about getting the product into our stores soon to add excitement to the treasure hunt shopping experience. Building on our strong marketing campaign efforts from holiday, in 2026 we will consistently execute marketing throughout the year. Our plans include expanding our social media engagement and influencer partnerships to maintain strong brand awareness, developing community-focused initiatives throughout the year that create meaningful connections with customers whose stories we are honored to help tell, and continuing to invest in marketing that authentically represents and celebrates our core customer. This is not just about visibility. It is about deepening relationships and reinforcing Citi Trends, Inc. as an essential retail partner for the communities that we proudly serve. Our next priority is generating strong sales flow-through to profit, which means incremental sales must convert to disproportionate profit growth. Our plan this year calls for top-line growth in the mid to high single digits while more than doubling our adjusted EBITDA performance. 2026 will be a pivotal year in the profit profile for our company. We have several tested and validated initiatives underway to help us deliver exceptional profit growth, and none more important than our recently implemented AI-based product allocation system. More accurate store-by-store product allocation is not only improving sales, but we are seeing significant reduction in markdowns and reduction of inventory working capital. In addition, by the end of Q2, we will have advanced AI-based facial recognition security cameras in place in our stores. Our test this past fall indicated a significant change in theft and accountability. In conjunction, we are updating store product scanners and communication equipment to help improve work productivity and increase customer service in our stores. The supply chain is focused on transportation cost efficiency and is in the process of implementing improved best-practice standards to help increase the capacity for product growth while working more efficiently. As I mentioned, we now have KPIs for each of our functions and dashboard reporting to ensure we execute as planned. Our third priority is growth. Our growth will be disciplined, return-focused, and strategic. Our plan is backed with tangible, actionable initiatives that will generate over a million dollars of EBITDA by 2027. In 2026, we will remodel 50 stores, open approximately 25 new stores, and prepare to open 40 new stores in 2027. Our new store expansion is guided by a disciplined approach that combines analytics, market expertise, and financial metrics. Using AI tools, we have analyzed three years of transaction data from every store combined with comprehensive geolocation studies to understand the specific customer and market characteristics that drive success. This data-driven approach has demonstrated approximately 90% accuracy in the sales prediction. This will help us identify and replicate our most successful store profiles while minimizing risk as we expand our footprint. Beyond the analytics, we are applying strict financial criteria to every new store decision, targeting mature store averages of approximately $1.5 million in sales and mid-teens four-wall contribution margins. This three-part approach—advanced AI-driven analytics, local market expertise from our real estate team, and disciplined financial hurdles—positions us to expand intelligently while maximizing returns on investments. One of our growth priorities is ensuring our entire team has embraced the concepts of personal accountability for results and the ownership of continuous self-development. Citi Trends, Inc. is evolving into a learning organization, which is a company that facilitates the continuous learning and development of all employees to transform itself, adapt to changes, and improve performance, positioning us to maximize growth opportunities as they arise. Speaking of growth opportunities, our strong, debt-free balance sheet has enabled us to explore growth beyond the three-year plan. We are in early stages of reviewing synergistic acquisition opportunities that are complementary to our strategic plan. So in closing, progress at Citi Trends, Inc. is well underway. Our track record of consistent comparable store sales increases shows our strategy is working. Our execution is more consistent, and our customer connection is stronger than ever. We are debt free, disciplined, and positioned for growth. We have a clear path to profitable expansion, stronger earnings, and lasting shareholder value. We are clearly focused on our customer. The foundation is stronger, and the opportunity ahead is significant. But we still have processes to refine, categories to optimize, and systems to build. We are more than just a retailer; we are a neighborhood destination for Black families, delivering style, trend, value, and trust that no one else can deliver. Citi Trends, Inc. is executing with discipline, growing with purpose, and unlocking sustainable growth and shareholder value. I am confident in our strategy and our team's ability to execute. The foundation we built positions us well for continued growth in 2026 and well beyond. Thank you for your time. I will turn it over to Rob now to facilitate questions and answers. Rob? Operator: Thank you. We will now be conducting a question-and-answer session. In the interest of time, we ask you to please limit yourself to one question and one follow-up. If you would like to ask a question at this time, please press 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. Participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from the line of Michael Baker with D.A. Davidson. Please proceed with your questions. Michael Baker: Thanks, guys. I will run through a couple real quick. First, just weather/cadence—looks like maybe a little bit of a slowdown in January, but a better February. A lot of retailers saw weather issues in January. Can you talk about that? And then I presume February was helped by tax refunds. That is the first question. Secondly, if you could talk about closeouts percent of sales, where you are in that, how much that can grow. And then third, if you could touch on the last thing you said there, the synergistic acquisitions, a little bit more detail, and then exactly what that could be. Is that a real estate play? Is that a different concept? If you could help us there. Thanks. Kenneth Seipel: Thanks, Mike. In terms of weather, a couple of comments on that. As we all know, the January weather got a little bit tough toward the tail end, and we tracked an impact that last 10 days or so that probably impacted our comp line a little bit more. It was a little bit offset—we should be honest about that—and say that we did have a bit of an advantage in early January of a non-comparable weather event for the prior year. So there is a little bit of an offset there, but there was a bit of an impact. I believe at one point, and I may be wrong on this—Heather, correct me—but I think we had nearly half of our stores closed for multiple days. All of that was really part of it. Interestingly enough, beyond the snow, the trends picked right back up immediately, and as you point out, February and early March have been running through our past trends. Anything you would add there, Heather? No? The next question is on closeouts. The answer to that is a little complicated to give you because it varies a bit by category. I called out that our shoe team has a pretty high penetration of closeouts, so they are working deals and finding some pretty exceptional deals out there, and it is one of the reasons that business is really starting to turn around nicely. So it is a high penetration in shoes; a little less penetration that we are seeing in our Men's category, which has been in and out of closeouts, and we had a really good Q4, but part of their Q4 success was driven by closeouts. From a percentage point of view, it depends on the category itself. The point I am making is the deal market is really robust right now, and as we are learning how to manage these deals, run them through the DCs, be more efficient there, and be a bit more expedient around the deal-making process, we see a real path to adding—this is a complementary, additive thing. You have heard me say in the past, I think Extreme values can grow to about 10% over time—we are less than halfway there. Closeouts are about, overall, 30% of our mix—we are not quite there either. These are two big items of growth for next year that will keep our comps moving in addition to the discipline that I referred to. I think your last question was around acquisitions. As I mentioned, it is completely early stages. We are literally at a point where we are starting to get a banking team aboard. They are surveying the landscape for us, considering options. As we go forward, we see a path that, because we are doing so well and we have such a great marketplace corner, we are being selective about items that might help us accelerate our growth. I want to be clear. This is not an idea of just going in and doing a bunch of acquisitions—I am not interested in that. I am interested in what we can do to complement our overall success. I do not mean to be sidestepping your question; I do not have a clear answer yet. We literally are in early stages. I hope that by summertime, I can come back with more color and give you a bit more. Just appreciate we broadened our lens, and we are thinking about the next phase of growth for Citi Trends, Inc. beyond our LRP. Heather Plutino: Mike, the only thing I would add is that the reason we have added it to the script and started talking about it is to keep with our goal of always being very transparent with our investors about what is on our mind and what is the longer term for Citi Trends, Inc. We are keeping our focus on the stated goal of EBITDA growth of $60.0 million versus 2024, but, oh, by the way, what is around the corner. It is a testament to what Ken talks about as bifocal vision. We are looking at what is in front of us and then what is longer term. Just wanted to call that out. Michael Baker: That makes perfect sense. Thank you. Thanks, Mike. Thanks, Mike. Operator: Our next question is from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions. Will (for Jeremy Hamblin): Hey. This is Will on for Jeremy. Thanks for taking my questions. Off to an impressive start. I just wanted to start by going back to the comp trends in Q1. Lapping the plus 10% from last year, could you give us any color on how the rest of the quarter shapes up in terms of the April lap from last year? Kenneth Seipel: For sure. As I mentioned in the script, we are anticipating high single digits at this stage. April this year, as you would expect, is a little tricky. There is a bit of a calendar shift with Easter coming out of April and so forth. We are looking at it in a combined quarter, plus the addition of tax refunds and a lot of moving parts in Q1 this year. That is why we are confident in our guide and the trend right now of high single digits. As you point out—thank you for mentioning—that is on top of our 10% last year, so it is a really nice two-year stack trend. Will (for Jeremy Hamblin): Got it. And then it sounds like unit growth plans remain on track. What are you thinking on expected cadence for the 25 openings this year, and any color on your visibility into the 40 openings expected for next year and how that pipeline is shaping up? Heather Plutino: I will take 2026, and I will turn that back to Ken for the longer term. We have already opened two stores in February, so our goal to get to 25 stores this year is well underway. We anticipate about 10 more stores opening in the July timeframe, and then the balance—13—opening in October. We will consider 2026 a bit of a transition year, and I will ask Ken to describe the 2027 cadence. Kenneth Seipel: Thank you. Going forward, strategically, we will be grouping all of our store openings around three time periods throughout the year, so it will be fairly easy to model. We will be opening a block of stores in the spring period, typically around March; that leads into the tax refund time and into Easter. The other opening period will be mid-July; that preps the block of stores to move right into the back-to-school period. The third opening period will be mid-October, to get ready for holiday and open into peak. You can see the rhyme or reason here: we are strategically opening stores going into peak periods. That allows us to have some of our best product out there, and the customer reason to shop is stronger. Over time, it will help us introduce our stores successfully to new marketplaces. We do not have an exact cadence worked out for 2027 yet, but in my mind, you could divide that by three and get pretty close. We are trying to have a balanced attack, and you will not be far off if you take the 40 divided by three across those time periods I mentioned. Will (for Jeremy Hamblin): Got it. That is super helpful. Last one for me. Could you share any update on the rollout of the loyalty program and some of the ways you are planning to leverage that program in the near and longer term? Kenneth Seipel: Thanks for asking. We are very excited about the loyalty program. It is in testing right now in a few stores. We ran into a couple of hiccups, to be honest. We were not excited about some of the messaging and marketing; we have been busy doing some things and did not give that the right energy. I put that on pause for a bit. We want to get the messaging and marketing correct and make sure the consumer reason to shop is very strong. We have to build a great value proposition around CRM. There is no question this will be a fantastic success for us. I have seen it in the past, and we are already seeing high engagement in this program. But I want to be careful; I do not want to do it just to do it. I want to do it really well. Our teams are working on that, and I expect in the back half of the year we will have a full-blown rollout of CRM and, of course, all the data that flows from those programs. Will (for Jeremy Hamblin): Appreciate the color. Best wishes. Thank you. Operator: Thank you. At this time, I will turn the floor back over to Kenneth Seipel for closing comments. Kenneth Seipel: Thank you, everyone. We appreciate you joining us today, and we look forward to giving you an update in June. Take care now. Operator: Thank you. Ladies and gentlemen, thank you for your participation. This concludes today’s conference. You may disconnect your lines at this time, and have a wonderful day.
Operator: Good day, and thank you for standing by. Welcome to the Summit Midstream Corp. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randall Burton, Vice President of Finance and Treasurer. Please go ahead. Randall Burton: Thanks, Operator, and good morning, everyone. If you do not already have a copy of our earnings release and presentation, please visit our website at www.summitmidstream.com, where you will find it on the homepage, Events and Presentation section, or Quarterly Results section. With me today to discuss our fourth quarter and full year 2025 financial and operating results are J. Heath Deneke, our President, Chief Executive Officer, and Chairman; William J. Mault, our Chief Financial Officer; and Chris Tennant, our Chief Commercial Officer, along with other members of our senior management team. Before we start, I would like to remind you that our discussion today may contain forward-looking statements. These statements may include, but are not limited to, our estimates of future volumes, operating expenses, and capital expenditures. They may also include statements concerning anticipated cash flow, liquidity, business strategy, and other plans and objectives for future operations. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can provide no assurance that such expectations will prove to be correct. Please see Summit Midstream Corp.'s Annual Report on Form 10-K for the fiscal year ended 12/31/2025, which the company filed with the SEC on 03/16/2026, as well as our other SEC filings, for a listing of factors that could cause actual results to differ materially from expected results. Please also note that on this call, we use the terms EBITDA, segment adjusted EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow. These are non-GAAP financial measures, and we have provided reconciliations to the most directly comparable GAAP measures in our most recent earnings release. And with that, I will turn the call over to Heath. J. Heath Deneke: Great. All right. Well, thanks, Randall, and good morning, everyone. I wanted to start this morning by introducing you to a new voice you will hear on the call today. Chris Tennant, who joined Summit Midstream Corp. in February as our Chief Commercial Officer, is joining us. Chris brings more than three decades of experience across the oil, natural gas, and NGL value chain, and he will be leading our commercial organization going forward. Chris has hit the ground running since joining the team and is already making a strong impact across the organization. I am excited to have him here and look forward to the contributions he will make as we continue executing on Summit Midstream Corp.'s growth strategy. Turning now to slide three. We are very pleased with the progress Summit Midstream Corp. made during the quarter and in the first couple of months of 2026. From a financial perspective, Summit Midstream Corp. generated approximately $58,600,000 of adjusted EBITDA in the fourth quarter along with $33,700,000 of distributable cash flow and $17,000,000 of free cash flow. Operationally, and despite the weakening of oil prices in 2025, we continue to see solid development activity across our systems with seven rigs currently running behind our footprint and approximately 90 drilled but uncompleted wells. At this point, we have visibility to between 116 and 126 well connections in 2026, which is relatively modest compared to prior years. However, we could see activity accelerate in the second half of the year as producers look to take advantage of the recent run-up in oil prices. On the commercial front, we have made a tremendous amount of progress since our last update. Starting with the Double E Pipeline, we recently signed two 11-plus year transportation agreements totaling 440,000,000 per day of firm capacity. In addition, we received an affirmative FID notice on the previously announced Producers Midstream 2 100,000,000 a day agreement that we announced last year. In the aggregate, this represents more than a half a Bcf a day of new long-term take-or-pay agreements that we have executed over the past six months. With these new agreements and the corresponding step-up in committed take-or-pay volumes over the next several years, our Permian segment adjusted EBITDA is expected to grow from $34,000,000 in 2025 to roughly $60,000,000 by 2029. With these new contracts, Double E’s existing mainline capacity is now generally fully subscribed. However, as Chris will get into further in the call, we have launched a binding open season to solicit additional customer commitments to support a mainline compression project that would expand the pipeline’s capacity by approximately 50% to roughly 800,000,000 a day. Additionally, we successfully refinanced the Double E capital structure with a new $440,000,000 term loan facility, which enables an $85,000,000 distribution back to Summit Midstream Corp. we intend to use to repay $45,000,000 of accrued and unpaid dividends and reduce borrowings under the ABL. We will walk through the details of the transaction later in the call, but this transaction is a major win for the company as it increases our financial flexibility while allowing us to continue to execute on these high-return growth projects at Double E, including the mainline compression project, without straining Summit Midstream Corp.’s corporate balance sheet. In addition, the repayment of the accrued dividends on the Series A preferred stock further simplifies Summit Midstream Corp.’s balance sheet and is also an important step towards enabling a sustainable return of capital program for our shareholders in the future. We are also very excited about the growth outlook in the Rockies segment as we continue to see development activity up in the Bakken shift towards our pipeline footprint in Williams and Divide Counties. As Chris will cover later in the call, our Polar and Divide system is uniquely positioned to benefit from that shift, as evidenced by a new long-term crude gathering agreement that we executed in the fourth quarter in Divide County. There is also a lot of positive momentum building up around our G&P system in the DJ Basin that we are excited about as well. I am sure we will be updating everyone on this as we move throughout the rest of 2026. And finally, at the end of the call, I wanted to walk investors through a snapshot of Summit Midstream Corp.’s strong and highly visible organic growth outlook that will be led by our Permian and Rockies segments. We are very excited about the commercial momentum we have around the business and the growing backlog of very attractive, high-returning organic growth projects that we believe will position the company to achieve over $100,000,000 of adjusted EBITDA growth by 2030. We believe we will generate a tremendous amount of shareholder value in the coming years as we execute on these growth plans, maintain our financial discipline, and continue our focus on improving the balance sheet. I will now turn the call over to Bill to walk through our financial results and guidance on slide four. William J. Mault: Thanks, Heath, and good morning, everyone. And before jumping to slide four, why do we not stay on page three. Summit Midstream Corp. reported fourth quarter adjusted EBITDA of $58,600,000, resulting in full year 2025 adjusted EBITDA of $243,000,000. Capital expenditures totaled $19,000,000 for the quarter and $89,000,000 for the full year. With respect to Summit Midstream Corp.’s balance sheet, we ended the year with net debt of approximately $930,000,000 and approximately $890,000,000 pro forma for the $40,000,000 repayment of the ABL associated with the $85,000,000 one-time distribution from the new Summit Permian Transmission term loan. This brings pro forma leverage to approximately 3.9 times. Our available borrowing capacity at the end of the fourth quarter totaled approximately $387,000,000, which included roughly $1,000,000 of undrawn letters of credit. Now on to the segments. The Rockies segment, which includes our DJ and Williston Basin systems, generated adjusted EBITDA of $27,800,000, a decrease of $1,200,000 relative to the third quarter, primarily driven by a decline in liquids volumes due to natural production declines, partially offset by modest growth in natural gas volumes. Liquids volumes averaged approximately 66,000 barrels per day during the quarter, a decrease of roughly 6,000 barrels per day relative to the third quarter, primarily due to natural production declines and no new well connections. Natural gas volumes averaged approximately 160,000,000 cubic feet per day, an increase of roughly 2,000,000 cubic feet per day relative to the third quarter as wells connected early in the year continued to ramp toward peak production. During the quarter, we connected 33 new wells in the DJ Basin, which we expect to reach peak production in 2026. We currently have six rigs running behind the system, including four in the Williston and two in the DJ, and approximately 65 DUCs, which provides good visibility into expected development activity in 2026. The Permian Basin segment, which includes our 70% interest in the Double E Pipeline, reported adjusted EBITDA of $8,700,000, an increase of $100,000 relative to the third quarter, primarily due to higher volume throughput on the pipeline. Volume throughput on Double E averaged 861,000,000 cubic feet per day during the quarter. The Piceance segment reported adjusted EBITDA of $10,000,000, a decrease of $2,500,000 relative to the third quarter, primarily due to a modest decline in volume throughput and certain revenues recognized in the prior quarter. Finally, the Midcon segment reported adjusted EBITDA of $21,500,000, a decrease of approximately $2,100,000, primarily due to lower volume throughput from natural production declines across the Arkoma and Barnett systems. During the quarter, we connected six wells in the Arkoma and no new wells in the Barnett. Subsequent to quarter end, we connected an additional six wells in the Arkoma, and there is currently one rig running behind the Arkoma and approximately 20 DUCs. Let me now turn to page four and discuss our outlook for 2026. We are establishing 2026 adjusted EBITDA guidance of $225,000,000 to $265,000,000 and total capital expenditures of approximately $85,000,000 to $105,000,000, which includes $35,000,000 to $50,000,000 in base business growth capital, approximately $15,000,000 to $20,000,000 of maintenance capital, and approximately $35,000,000 of contributions to the Double E joint venture. The $35,000,000 of contributions to the Double E JV are expected to be fully funded through the new term loan facility we closed yesterday. The majority of the base business growth capital will be directed toward pad connections in the Rockies and Midcon regions, where we continue to see steady development activity behind our systems. Similar to previous years, our guidance range incorporates real-time feedback we are receiving from our customers regarding their development plans, and we actively track rigs and completion crews across our systems to ensure well connects remain on schedule. Just as a reminder of our risking methodology, if our producers hit their current turn-in-line dates and production targets, we would expect to be near the high end of our adjusted EBITDA guidance range. The midpoint of the range reflects modest risking applied to current drilling schedules, while the low end assumes additional delays in well connects expected later in the year, which could push some of that activity into 2027. Across our footprint today, we currently have seven rigs running and approximately 90 DUCs behind our system, which provides line of sight to the 116 to 126 well connections expected in 2026. Approximately 80% of those expected well connections are crude oil-oriented wells. The remaining 20% are natural-gas-oriented. Commodity price assumptions for this range assume average crude oil prices in the mid-sixties and a natural gas price of approximately $3.40 per MMBtu. There has been a lot of upside movement in crude oil prices over the past few weeks, which, if sustained throughout the year, could lead to acceleration of activity from our customers and improvement in product margin associated with certain percentage-of-proceeds contracts in the DJ Basin. In the Rockies, we are currently expecting 90 to 100 well connects in 2026, a fairly even split between the DJ and the Williston. This level of activity, along with the 33 wells connected in the fourth quarter, will drive volume throughput growth in natural gas and liquids. Additionally, of the roughly 45 to 50 wells expected in the Williston, we will be gathering both crude and produced water for nine of those wells, for which we expect around a three-to-one produced water to crude oil ratio. Expected well connections in the DJ are a little bit lower in 2026 than the historical average. This is primarily due to the recently announced acquisition of Verdad Resources, a key customer behind the system, by Peoria Resources, a subsidiary of JPEX Core. Long term, we are excited about the acquisition and expect it to be a net positive to development, but as with all upstream consolidation, it has created some near-term delays in development. In the Midcon, we are expecting 26 wells to be connected to the system, including nine in the Arkoma and 17 in the Barnett. In the Arkoma, all but three of those wells are already connected and flowing, and in the Barnett, all 17 wells are currently in DUC inventory. Our key customer in the Arkoma is evaluating additional development in late 2026 and early 2027, but we have not included that potential activity in our financial guidance until we get confirmation that they intend to drill and complete those wells. With the level of activity included in our financial guidance, we would expect volumes in Midcon to be relatively flat year over year. In the Piceance, we are expecting no new well connects in 2026, which will result in continued decline in volume and EBITDA relative to 2025. Additionally, shortfall payments are expected to decline by approximately $4,000,000 from $17,000,000 in 2025 to approximately $13,000,000 in 2026. As a reminder, MVCs and shortfall payments completely roll off in 2026, so 2027 will not have MVC shortfall payments in the Piceance. Shifting to the Permian, year-over-year EBITDA growth is primarily driven by contractual step-ups in the long-term take-or-pay transportation agreements that fully ramped in November 2025. Additionally, we expect two of the recently signed firm transportation agreements on Double E to begin service in 2026, which will provide some incremental EBITDA. I will now turn the call over to Chris to discuss the commercial momentum we are seeing on Double E and expected growth in EBITDA associated with recently executed commercial contracts on slide five. Chris Tennant: Thanks, Bill, and good morning, everyone. Over the past several months, we have made significant progress commercializing the remaining free-flow capacity on the pipeline. With the recently executed transportation agreements, including the previously announced Producers Midstream contract, Double E has secured over 500,000,000 cubic feet per day of new long-term take-or-pay commitments over the past six months. Upon full ramp of those agreements, Double E will have approximately 1.6 Bcf per day of firm take-or-pay contracts with a group of prominent, primarily investment-grade shippers. These agreements also expand Double E’s downstream connectivity with new and highly valued delivery points into the Transwestern Central Pool, the Huber Benson pipeline, and a planned future connection with Desert Southwest Pipeline. These connections significantly increase the end-market optionality available to our shippers and improve access to several important demand centers. Given the strong commercial momentum we have seen, the remaining free-flow capacity on the pipeline is now effectively full, which has accelerated our efforts to pursue a mainline compression expansion. As Heath mentioned earlier, we recently launched a binding open season to solicit additional shipper commitments to support that project, which could expand Double E’s capacity by approximately 50% from 1.6 Bcf per day to roughly 2.4 Bcf per day. Based on our currently contracted volumes, we expect the Permian segment adjusted EBITDA to reach approximately $60,000,000 by 2029. Importantly, if we are successful in fully commercializing the planned expansion capacity, that EBITDA contribution could increase to approximately $90,000,000 or more by 2030. Stepping back for a moment, we continue to see strong underlying fundamentals across the Delaware Basin. Producers are continuing to improve drilling efficiencies and extend lateral lengths, while processing capacity across West Texas and New Mexico continues to expand. As a result, demand for reliable residue gas takeaway remains strong, and we believe Double E is very well positioned as a critical transportation corridor connecting the Delaware Basin to multiple downstream markets. With that commercial update, I will turn it back to Bill to walk through the recent Double E refinancing on slide six. William J. Mault: Thanks, Chris. Yesterday, Summit Permian Transmission entered into a new $440,000,000 senior secured term loan facility maturing in March 2031, including $340,000,000 funded at closing, a $50,000,000 committed delayed draw facility to support expansion projects, and a $50,000,000 accordion feature for future growth opportunities. Proceeds from the facility were used to repay the existing Permian Transmission credit facility and the subsidiary preferred equity at Summit Permian Transmission HoldCo, simplifying the capital structure and extending the maturity profile of the asset. The transaction also enabled an $85,000,000 distribution back to Summit Midstream Corp., and as Heath mentioned earlier, Summit Midstream Corp. intends to use those proceeds to repay approximately $45,000,000 of accrued preferred dividends and reduce borrowings on the ABL by approximately $40,000,000. Beyond improving our leverage profile and strengthening the balance sheet, the new facility also provides the capital needed to fund the expected growth projects on Double E, including the recently announced plant connections and the potential mainline compression expansion project Chris mentioned. Overall, this transaction simplifies the capital structure, funds high-growth projects, and positions Summit Midstream Corp. with greater financial flexibility moving forward. With the planned repayment of the Series A preferred stock accrued and unpaid dividends, Summit Midstream Corp. will have satisfied all conditions to allow for a return of capital program to its common shareholders. And with that, I will turn the call back to Chris to discuss our recent commercial success in the Williston Basin on slide seven. Chris Tennant: Thanks, Bill. In the fourth quarter, we executed a new 10-year crude oil gathering agreement with a producer in Divide County, North Dakota. The agreement includes a large area of dedications, spanning more than 200,000 acres along our existing Polar and Divide systems, and represents a meaningful expansion of dedicated acreage supporting our infrastructure in the region. This new customer is currently running one rig on their development program. The first pad associated with this agreement, consisting of four three-mile laterals, is expected to be turned in line in early 2026. More broadly, we continue to be encouraged by the innovation we are seeing from Williston Basin operators, particularly as they extend lateral lengths and improve drilling and completion efficiency. These improvements are helping drive development activity in areas such as northern Williams County and southern Divide County, where Summit Midstream Corp.’s systems are well positioned. This agreement expands both our dedicated acreage position and long-term development inventory, and we believe it positions us well to capture additional development across our footprint. Importantly, we are actively pursuing several additional commercial opportunities in the region and remain very encouraged by the level of engagement we are seeing from the operators. With that overview of the Williston activity, I will turn the call back to Heath for some closing remarks. J. Heath Deneke: Thanks, Chris. Let us turn to page eight. Here we have attempted to give investors a better sense of Summit Midstream Corp.’s long-term growth trajectory and some key assumptions that support it. Starting with activity across our G&P segments, we are currently projecting total system well connects in 2026 to come in below the historical averages we have experienced in recent years. We believe this is primarily due to timing impacts brought on by some significant upstream consolidation that involved key customers in our Rockies segment and a recap that is underway in the Midcon segment. We also believe that the oil price dip below the $60 mark towards the end of last year and into 2026 caused a temporary pause in second-half activity, which is still reflected in our current guidance for the year. However, as we look forward with input from our customers, we expect activity levels to climb back up to at least the historical average levels we have experienced over the past three years, if not greater, in a low-$60 oil and low-to-mid-$3 gas price environment. Given growing demand for natural gas and a tighter outlook on oil supply, we think this is a conservative but reasonable baseline assumption that has a lot of further upside potential, particularly in the 2028 to 2030 timeframe. We should also point out that the outlook includes roughly $18,000,000 of MVC-related shortfall payments in the Piceance segment that roll off from 2025 to the second half of 2026 and, conservatively, also assumes no new well connects through 2030. Moving over to the top right section of the slide, as we have discussed, we expect Permian segment adjusted EBITDA to reach approximately $60,000,000 by 2029 based on the new contracts we have already secured on Double E. If Chris and team are able to fully commercialize the capacity associated with the Double E mainline compression expansion, the Permian segment adjusted EBITDA contribution could grow to over $90,000,000 by 2030. Combining the Double E growth outlook along with the Rockies and Midcon expected segment growth, we believe Summit Midstream Corp.’s existing portfolio is very well positioned to add more than $100,000,000 of organic EBITDA growth by 2030. Touching on the capital slide on the lower left-hand section of page eight, we are forecasting total capital expenditures to trend above our normal $50,000,000 to $70,000,000 range as we execute on these high-returning capital investments in the Permian and Rockies segments in 2026 through 2028, but we expect capital spending to normalize and transition back to primarily maintenance and well connect capital in the out years. Taken together, these drivers provide visibility towards very meaningful earnings growth and significant value creation for our shareholders. As I have stated earlier, we are really excited about the growth outlook for the business, but I want to stress that we are also not taking our eyes off the ball. Further strengthening the balance sheet, maintaining our financial discipline, continuing our focus on achieving our long-term three-and-a-half-times leverage target at SNC, and enhancing shareholder returns with a return of capital program are all key components that we believe will maximize shareholder value as we execute the business plan. With that, Operator, we are ready to open the call for questions. Operator: Thank you. Please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Mark Reichman with Noble Capital Markets. Your line is now open. Mark Reichman: Thank you. With new take-or-pay agreements announced, what level of additional commercial commitments is needed to move forward with the mainline compression expansion to 2.4 Bcf per day and when would a final investment decision occur? J. Heath Deneke: Thanks, Mark. I am going to let Chris Tennant, our new Chief Commercial Officer, take this one. Chris Tennant: Hey, Mark. Thank you for the question. This is a very attractive project for Double E Pipeline with an estimated sub-three-times build multiple. We are very hopeful to close half this open capacity early in the open season. Capex and rate depending, if we follow that cadence, we could see an FID decision as early as this summer. Mark Reichman: And then would you discuss the capital needs between, say, 2026 and 2029 to achieve the $100,000,000 of EBITDA growth by 2030? J. Heath Deneke: Yeah. Mark, it is Heath. So, look, if you kind of set Double E aside, right? If you look at our historical capital, we have come out in the range between $50,000,000 and $70,000,000 between growth and maintenance. We think that is likely to be what we would spend on the G&P segment businesses throughout the five-year forecast period. So really the step-up is going to be oriented around Double E and, as Bill pointed out in the call earlier, that capital is largely going to be financed through the new term loan that we put in place at Double E. So just think of it as $50,000,000 to $70,000,000 for our general G&P segments per year, and for the next few years, we will probably see a similar amount of capital for Double E, roughly in that $35,000,000 a year, Mark, for the next two to three years. William J. Mault: Yeah, Mark. And you can read into the fact we sized the delayed draw and the accordion at about $100,000,000 of incremental potential borrowings under that new term loan. So that should give you a general sense if we are $30,000,000 to $35,000,000 a year for the next, call it, two to three years, utilizing that $100,000,000. Mark Reichman: I see. That is very helpful. And then with respect to the 2026 guidance of 116 to 126 well connections, which basins and/or factors are most likely to drive upside or downside to that outlook? And how sensitive is it to changes in commodity prices? William J. Mault: Yeah. Great question, Mark. I will start with a couple stats, and then I will give you some color on upside/downside volatility. So today, we have got 90 DUCs. So that represents the lion’s share of that range of well connects already that are drilled but not completed. We also have seven rigs running, six in the Rockies, one in the Midcon. So those rigs right now, think about them as basically starting to drill for activity that I would characterize more as late second quarter, third quarter-type well connects. So between the DUCs and the rigs, we have got a lot of confidence in that range. In the Midcon, as an example, we are only expecting nine wells in the Arkoma as we sit here today. We only need three more to round out that nine. We have already had six that came online in the first quarter. And then the Barnett, as an example, all 17 wells are DUCs. Those are slated to come online in the June/July timeframe and really just require a completion crew to get out there to finish them up. We spend a lot of time looking at that data when we establish our guidance range so that we have confidence in what we are putting out there. Now as it relates to your upside/downside to the outlook, I would tell you that this plan is based on a $65 strip WTI and about $3.40 on Henry Hub. Strip today is $85 on crude and $3.70 on Henry Hub. In markets like this, historically, we have seen that this price indicator really incentivizes our customers to either accelerate development or try to bring on new well connects. So from an activity perspective, we are in a period where there is more upside than down from a commodity price perspective. And then lastly, as it relates to commodity price, as you know, in the DJ we have percentage-of-proceeds contracts. If you just run through current strip, so that $85 and $3.70, that is, call it, another anywhere from $5,000,000 to $10,000,000 of increased product margin that is not reflected in our guidance range today. Obviously, there is a lot of uncertainty around what is going on in the Middle East. We thought it was prudent to keep our conservative assumption around strip. I think that represents some pretty material upside for us this year based on what we are seeing right now. J. Heath Deneke: Yeah. Mark, just to add a little bit to that too. I think when you think of the range, if you accept the producer-driven forecast, which, in 2025, we saw some slippage to the right on that, which is why we came in lower. But when you think about 2026, I think just given the commodity price signals, most of the customers we talk to are trying to accelerate that activity, so more likely that they will hit their timing. If they hit their timing, that is generally going to push us to the higher end of the range. Then, the other component, it is not like you can snap your fingers overnight and get new rigs and new completion crews under contract. But we do know that several folks that were planning wells already for the 2027 timeframe are looking to see if they can bring those wells into the fourth quarter. That will not add as big of an impact for the year because you will be talking probably just a few, two to three months maybe, of contribution, but it will be a good sign as you get some momentum going into 2027 at a minimum. Mark Reichman: And then just lastly, following the Double E refinancing and preferred dividend repayment, how are you thinking about the path and timeline to reach the 3.5 times leverage target? When could the company realistically consider reinstating common shareholder dividends, and would asset sales or joint ventures be part of the deleveraging strategy? J. Heath Deneke: Well, look. Mark, what I would say is, if you just look at, for example, the high end of the range, right? If we hit the $265,000,000 mark, we think our leverage will be roughly 3.6 times. So I do not think it is out of the question for us to consider a dividend policy over the next twelve months. It is highly going to depend on this year and where we end up from an overall leverage perspective. But as you pointed out, the arrears are paid off. That is a major step to get out of the way, and I think as soon as we feel comfortable that we are getting to our target and are able to sustain that leverage target, that is when you are going to see us want to turn on a dividend. Your question around asset sales or JVs being part of the deleveraging strategy, I would say I do not think that those things are going to drive our deleveraging strategy. I think we are going to see that leverage come down as we execute our base plan. But we are very opportunistic. We have done quite a bit of M&A both on the sell side and the buy side and optimized the portfolio. So I think when we think about JVs and growth, I think those are more likely going to be the triggers to move forward from the M&A front. Mark Reichman: Well, this has been very helpful. Thank you very much. Chris Tennant: Thank you, Mark. Thank you. Operator: Our next question comes from the line of Greg Brody with Bank of America. Your line is now open. William J. Mault: Hey, guys. J. Heath Deneke: Hey. Greg Brody: Just thinking, congrats on the Permian contracts. I was looking—it is an opportunity that is exciting there. Just thinking about longer term, I know in the past you have talked about folding the Permian asset into the company. Obviously, this opportunity allows you to delay that. And I am just curious if you think about, in terms of allocating capital, do you think about contributing capital into the JV to potentially reduce leverage and maybe collapse the unrestricted sub and restricted group, or are you thinking about that? William J. Mault: Yeah. Greg, great question. And, look, we have talked a lot about that over the years. A couple things. One, our high-yield bonds mature in 2029. So I think it is reasonable to expect that sometime in 2028, a year or so in advance of that maturity, we would look to refinance that bond. One thing that we were successful in getting under this new term loan is really a supportive call protection structure. So it is non-call one, then it steps down to 102 in year two, 101 in year three, and par thereafter. So if we are executing a refi and you get some of this EBITDA growth on these commercial contracts, we can really clean up that term loan and refinance it alongside our bonds in 2028 without a bunch of leakage. So that was an important deal point for us when we were negotiating this transaction. And then, Greg, as you know, when you are in a high growth mode with a decent amount of capital spend, that really takes 12 to 24 months for that EBITDA to show up. This type of financing is actually a pretty attractive solution just to maintain a delevering profile at Summit Corporate while we are executing on this growth. Greg Brody: Yeah. That makes sense. Maybe just, since you touched it, the question on M&A. It was asked, but maybe just a little bit more color around the opportunity set today and the activity level we could see over the next year. J. Heath Deneke: Yeah. So, Greg, I would say this. We focused on today’s call about the $100,000,000 of organic growth really to set the baseline for what is in the plan today, where we think this company will go with the existing portfolio, and we are not dependent on M&A to achieve that. I think, but one of the key things that we think is important for Summit Midstream Corp. and our investors is that the business needs to continue to scale up. I think if we can scale up and keep the balance sheet in good shape, we think that is going to dramatically improve the investability of the company. There will be more institutional-type investors that would come into the stock. It just creates more room, if you will, for investors to come in and invest in Summit Midstream Corp. So I think we do think—and we are actively working on—opportunities around our portfolio that we can either bolt on synergistic assets and continue to do what we have done in the past, which is look for assets that are high free-cash-flow generating that we can buy at a really attractive valuation and fold into the portfolio. William J. Mault: Yeah. And, Greg, I would tell you that, as you know, we spent a lot of time getting this balance sheet to where it is today. As we evaluate M&A, we have been very disciplined, looking for things that are at a minimum leverage-neutral and value-accretive, and also have focused on high free-cash-flowing businesses, as Heath mentioned. I do not think you are going to see us really veer off that methodology as we evaluate potential acquisitions. Greg Brody: Thank you for the time, guys. William J. Mault: Thanks, Greg. Thank you. Operator: That concludes the question-and-answer session. Thank you all for your participation on today’s call. This does conclude the conference. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore, Inc.'s fourth quarter and full year 2025 conference call. During today's call, all parties will be in a listen-only mode. Following the company's prepared remarks, the call will be opened for questions and answers. During the question and answer session, we will ask that you limit yourself to one question and one follow-up. This conference is being recorded, and a replay will be made available on the company's website following the call. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead. Al Petrie: Thank you, Dave. And on behalf of the management team, I would like to welcome all of you to today's conference call to review W&T Offshore, Inc.'s fourth quarter and full year 2025 financial and operational results. Before we begin, I would like to remind you that our comments may include forward-looking statements. It should be noted that a variety of factors could cause W&T Offshore, Inc.'s actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Today's call may also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. With that, I would like to turn the call over to Tracy W. Krohn, our Chairman and CEO. Tracy W. Krohn: Thanks, Al. Good morning, everyone, and welcome to our year-end 2025 conference call. With me today are William J. Williford, our Executive Vice President and Chief Operating Officer, Sameer Parasnis, our Executive Vice President and Chief Financial Officer, and Trey Hartman, our Vice President and Chief Accounting Officer. They are all available to answer questions later during the call. We delivered solid operations and financial results in 2025 by remaining focused on our strategic vision. Our proven strategy is simple and effective: we focus on cash flow generation, maintaining and optimizing our high-quality conventional assets, and opportunistically capitalizing on accretive opportunities to build shareholder value. We are successfully executing our strategy and remain committed to operational performance, returning value to our stakeholders, and ensuring the safety of our employees and contractors. Our ability to deliver consistent production and EBITDA results while integrating producing property acquisitions has helped W&T Offshore, Inc. grow during our 40+ year history. In 2025, we accomplished many things, so here are the bullet points. One, we increased production every quarter in 2025 from 30,500 barrels of oil equivalent per day in the first quarter to 36,200 barrels of oil equivalent per day in the fourth quarter by focusing on production enhancement projects. Two, while we did not drill any new wells, we invested $55,000,000 in 2025 CapEx and performed 34 workovers and four recompletions. Three, we generated adjusted EBITDA of $130,000,000 for full year 2025. Four, we continued to focus on enhancing our liquidity and reducing debt, and at year-end 2025 we grew cash by $31,000,000 year over year to almost $141,000,000 and reduced our net debt $74,000,000 to $210,000,000, further strengthening the balance sheet. And five, we reported year-end 2025 proved reserves of 121,000,000 barrels of oil equivalent with a PV-10 of $1,100,000,000. Obviously, those numbers have gotten better since March due to geopolitics. Six, we accomplished all of this while also returning value to our shareholders through our quarterly dividend. We have paid nine consecutive quarterly cash dividends since initiating the dividend policy in late 2023, and announced the first quarter 2026 payment that will occur later this month. Going into a little more detail about the positive production numbers we were able to deliver in 2025, normally, in the first quarter of every year we have some temporary downtime associated with the impact from cold weather and freezes. We experienced some in 2025 and again in 2026 as well. But through our focused production uplift projects and continued focus on ramping up recently acquired fields, we were able to achieve quarter-over-quarter growth and year-over-year growth. In the fourth quarter, production was up 2% over Q3 2025 and up 13% over the same quarter in 2024. Over the years, we have consistently created value by very methodically integrating producing property acquisitions, enhancing their capabilities, and thus extracting greater value. After we close any acquisition, we take time to assess and more fully evaluate the newly acquired assets. We have a large footprint across the Gulf Of America, so we look for ways to optimize operations, increase production, and utilize that large footprint where we can. That reduces costs and maximizes value. We work really hard on logistics. The assets we acquired in 2024 added meaningful reserves at attractive prices, and they required some additional capital and expense spending to maximize the production capability in all those fields. By 2025, we had also completed all the major projects on the acquired assets, and the production and cash flow benefits from the diligent work of this team to get all those properties online and up to our operating standards are reflected in our results. Moving into 2026, we remain focused on enhancing production and minimizing decline across our asset base through low-cost, low-risk workovers or rate inflation. We remain focused on cost control and capturing synergies associated with those asset acquisitions. We reduced our fourth quarter LOE to $22.4 per barrel of oil equivalent, which was 4% lower compared with 2025, and our absolute costs were below the midpoint of our guidance. Looking ahead, we are expecting our 2026 costs to be lower compared to 2025, which I will discuss later in the call. For the full year 2025, our capital expenditures were $55,000,000, coming in below the low end of our capital guidance. In the fourth quarter, we finished a $20,000,000 pipeline facility project at West Delta 73 that will help support production growth, improve operational performance, and increase our net realized pricing. We expect to see the benefit of that project in 2026. Overall, our capital expense will be back-half loaded in 2025, driven by recompletion and facility capital work to bring online and increase production in multiple fields related to the 2024 acquisition. In addition, our asset retirement settlement costs totaled $37,000,000 for 2025 as we continue to responsibly decommission assets. You can see our operational performance in 2025 allowed us to focus on improving our balance sheet. At the beginning of 2025, we had several transactions that strengthened and simplified our balance sheet, adding material cash to the bottom line and improving our credit ratings from S&P and Moody's. In January, we successfully closed the $350,000,000 offering of new second-lien notes that decreased our interest rates by 100 basis points and, together with other transactions, reduced our total debt by $39,000,000. We also entered into a new credit agreement for a $50,000,000 revolving credit facility which matures in July 2028 that replaced the previous $50,000,000 credit facility provided by Calculus Lending. We also sold a non-core interest at Garden Banks that included about 200 barrels of oil equivalent per day for $12,000,000. We received $58,000,000 in cash for an insurance settlement related to the Mobile Bay 78-1 well. All of these actions have allowed us to enhance liquidity and improve our financial flexibility. These financial actions, coupled with strong operational performance, allowed us to increase cash by $31,000,000 and reduce our net debt by $74,000,000 at year-end 2025. All of this was accomplished in what I consider to have been a much lower price environment for oil and gas. Our ability to execute our strategy delivered positive results in 2025, including an improved balance sheet, enhanced liquidity, growing production, and adjusted EBITDA, all of which have positioned us for success as we move into 2026. We are well positioned to take advantage of growth opportunities like we have done in the past, focusing on accretive, low-risk acquisitions of producing properties rather than high-risk drilling in the uncertain commodity price environment. These acquisitions must meet our stringent criteria of, one, generating free cash flow; two, providing a solid base of proved reserves with upside potential; and three, providing for the ability of our operations team to reduce costs. With our experience, strong balance sheet, and full-year track record of successfully integrated acquisitions, we believe we are well positioned to add to this impressive portfolio of assets. Turning to our year-end reserve results, we have a portfolio of conventional Gulf Of America assets that have established and recorded value over time. Over the past two years, our overall year-end reserves have remained virtually flat, including the volume and PV-10. We produced 24,600,000 barrels of oil equivalent of production, but we also made an accretive acquisition of several fields that helped to offset this production. Since closing the latest acquisition in January 2024, we have generated almost $285,000,000 in adjusted EBITDA, while only spending about $167,000,000 in capital expenditures, including acquisitions. We believe that our strategy of acquiring and enhancing producing properties continues to add value to our shareholders as reflected in our reserve amounts and value. For year-end 2025, our SEC proved reserves were 121,000,000 barrels of oil equivalent with a PV-10 of $1,120,000,000 in a reduced price environment. Notably, we recorded an increase to PDP PV-10 of $279,000,000—that is proved developed producing reserves—compared to year-end 2024, as we had reserves reclassified to proved developed producing. The reserves were classified as 71% proved developed producing, 24% proved developed non-producing, and only 5% proved undeveloped. At year-end 2024, only 52% were proved developed producing and 17% were proved undeveloped. W&T Offshore, Inc.'s reserve life ratio at year-end 2025, based on year-end 2025 proved reserves and 2025 production, was 9.8 years, about 10 years. Approximately 42% of year-end 2025 SEC proved reserves were liquids, with 32% crude oil and 10% NGLs, and we had 58% natural gas. Yesterday, we provided detailed guidance for first quarter and full year 2026 in our earnings release. In 2026, as I previously mentioned, we incurred unplanned downtime at several fields due to winter freezes that temporarily reduced our production volumes. We are predicting the midpoint of Q1 2026 production to be around 35,000 barrels of oil equivalent per day. We are continuing to focus on production enhancement projects throughout 2026, and we expect the full 2026 production midpoint to also be around 35,000 barrels of oil equivalent per day. This is assuming no additional acquisitions or drilling. Our ability to maintain low-decline production is a testament to our quality, our culture of operational excellence, and the strength of our reserves. With several capital projects completed in 2025, we are planning much lower capital expenditures for 2026 due to a substantial reduction in capital projects associated with pipelines, at about $22,000,000 at the midpoint, or less than half the amount invested in 2025. This does not include acquisitions. We are also forecasting about $38,000,000 in plugging and abandonment expenses for 2026, which is in line with the $37,000,000 we spent in 2025. We have a reliable asset base of low-decline wells. We have focused more on acquisitions over the past several years rather than on drilling many new wells, which has kept our capital spending much lower. Turning to costs, our guidance for 2026 LOE is projected to be lower than 2025, despite higher production in 2026. Similar to the capital projects, we spent operating expenses on recently acquired fields to bring them in line with our operational standards. Additionally, some of the capital projects that we undertook in 2025 should lead to lower expenses and higher price realizations. With that said, I believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term. Safety is paramount, and we are always working hard to reduce costs without impacting safety or deferring asset integrity work. Our first quarter 2026 LOE is expected to be between $63,000,000 and $70,000,000 and full year 2026 LOE of $265,000,000 to $295,000,000, which reflects the savings I mentioned earlier. Our first quarter gathering, transportation, and production taxes are expected to range between $8,000,000 and $9,000,000. First quarter cash G&A costs are expected to be between $15,000,000 and $17,000,000. As we mentioned in yesterday's earnings release, the DOI, Department of Interior, has proposed some positive regulatory changes that would roll back obligations from the 2024 rule that would have required companies to set aside about $6,900,000,000 in supplemental financial assurance. About $6,000,000,000 would apply to small businesses that make up most of the operators in The Gulf. The proposed changes will better align financial assurance requirements with actual decommissioning risk and could reduce industry-wide bonding by approximately $484,000,000 annually. These proposed revisions have been published in the Federal Register with a 60-day public comment period that is expected to end on 05/08/2026. We welcome these changes proposed by the Trump administration that can further encourage U.S. offshore production growth and further increase America's energy independence. Before we wrap up the call, I would like to say how proud I am of all the people who have helped make W&T Offshore, Inc. a success since we founded the company in 1983. Throughout that time, we have been an active, responsible, and profitable operator in the Gulf Of America. We are staunch advocates for this offshore industry. We believe that our outstanding long-life assets will continue to provide value for our shareholders and our country for many more years. As the largest shareholder, I believe we are well positioned to continue to grow and add value as we move into 2026. Our guidance forecasts that we can modestly grow production and reduce costs, which should lead to a continued build of our cash position. This allows us to remain active in evaluating growth opportunities both organically and inorganically. We have a long track record of successfully integrating those into our portfolio, and we continue to believe the Gulf Of America is a world-class basin that supports value creation. We remain focused on operational excellence and maximizing the cash flow potential of our asset base. With that, Operator, we will now open for questions. Operator: We will now open for questions. Please pick up your handset before pressing the keys. Our first question comes from Derrick Whitfield with Texas Capital. Please go ahead. Derrick Whitfield: Good morning, all, and great update. Starting with your guide, it is clear that you are prioritizing capital discipline and preservation in the current macro environment, not overly focusing on the front part of the curve. With that said, could you speak to where you see the greatest opportunity in the market for cash-on-cash returns, and if there is a sustained price scenario where you would be more inclined to engage the drill bit? Tracy W. Krohn: Thanks, Derrick. Sure. We still think that there will be acquisitions available, and we are confident that we will have our fair share over the next one to two years. We have maintained a record over 40 years of being able to replace and replenish those reserves. Short term and long term, we still see those as possibilities for growth. Organically, we do have prospect inventory, but we feel that our efforts are better placed in making acquisitions as opposed to trying to drill right now. All those prospects, with the exception of a couple of them, are actually held by production. Derrick Whitfield: Great. And for my follow-up, I wanted to focus on the regulatory policy updates you referenced in your prepared remarks. As you see it today, could you speak to what it means for W&T Offshore, Inc. from an insurance cost perspective? And if there could also be potential impacts to your cost of capital as you start to reduce the financial burdens? Tracy W. Krohn: Sure. To us, that means that the insurance premium costs will be going down in the future. We have made a lot of those payments already this year. What that means is that, because of the change in the regulations with regard to financial assurance—which was a term that was, or supplemental financial insurance rather, is a term that was coined in the Obama administration and further exasperated in the Biden administration—that provided so-called financial assurance for decommissioning costs. Most of these leases have, in the chain of title—and that is referenced in the actual lease that operators signed as lessees—you are required, as a lessee on any lease, to be jointly and severally liable for all the due decommissioning liabilities on the lease. So if Exxon owned a property or Shell or Chevron or anybody owned the property 20 years ago and had a lease interest, sold it, it lapsed, whatever, and the lease comes up having remaining decommissioning liabilities, those responsible in that queue are liable jointly and severally for all of those assets being removed from the ocean floor and decommissioning of all the wells. So the government never really needed these financial assurances. This was something that was done by this administration to be punitive. Unfortunately, it sucked a few companies out of The Gulf. A few of our competitors are gone and are not there anymore. A few producers that were contributing to the overall energy output of The United States are no longer there. Clearly, those premiums could have been used better as actual capital to get rid of some of those decommissioning issues that companies had. We feel like this is a proper and fitting action that the government has taken, and we applaud them greatly. Derrick Whitfield: Terrific. Great update, guys. Tracy W. Krohn: Thank you, sir. Operator: Our next question comes from Jeffrey Robertson with Water Tower Research. Please go ahead. Jeffrey Robertson: Thank you. Good morning. Tracy, can you talk about the depth of inventory W&T Offshore, Inc. has for recompletions and workovers that help you maintain or offset natural declines? Tracy W. Krohn: I will do better than that. I will defer that question to William J. Williford, who is our Chief Operating Officer. William J. Williford: Hey. Good morning, Jeff. Thanks for that. Thank you for the question. We have been spending a lot of time at our Mobile Bay asset, and that is a gas asset. We have been doing a lot of asset stimulations, and we have ongoing asset stimulations set up and approved to do in 2026. That is going to help maintain our production decline in Mobile Bay. Also, we have recompletes associated with some of our deepwater fields that are already set up and already on our reserve books, and we are just executing them based on where the production is in the current well. With that, we have several other opportunities, both on workovers and recompletes similar to that, that allow us to not only maintain the current production decline, flatten it out, but also increase it. That is why you see an increase year over year of our production based on 2026 guidance versus what you see in 2025. Jeffrey Robertson: With respect to the regulatory environment that Derrick asked about, Tracy, do any of the proposed changes have an effect on what is attractive to W&T Offshore, Inc. in the acquisition market and the valuations of assets? Tracy W. Krohn: I am sorry. I did not hear all of that question. Would you repeat it again, please? Jeffrey Robertson: With respect to the regulatory changes that you see on the horizon, how does that affect, if any, the type of acquisitions that make sense for W&T Offshore, Inc. to look at, and potentially the valuations of properties in The Gulf? Tracy W. Krohn: Yes. One of the things that I think you will see as a result of the change in regulatory requirements is fields will be allowed to produce longer, because you will not have to have these massive cash outlays or insurance outlays from a market that has shrunk and has shrunk a great deal. You will not have these massive cash and collateral requirements required by these companies to attempt to extort money from companies for their own purposes. We are involved in a lawsuit right now with some of the surety providers on an antitrust basis. That is one of the things that we have had to deal with as an industry. That takes away from the capital that is available to do actual work and drill wells and make improvements to leases. Jeffrey Robertson: Thank you. And if I could ask just one more, Tracy, when you think about the types of acquisitions that you want to look at, if you focus primarily on exploitation and development, are you able to find properties that you can acquire without paying for what the seller might think is drilling upside? Tracy W. Krohn: Drilling upside is nebulous. Of course, that is always the highest-risk asset class, or potential asset class. You never really know what you are going to find until you put a hole in the ground to investigate it. No, I do not think that that changes the outlook. Most people do not think about additional drilling assets as primary in the consideration, unless you have already made a discovery and you are drilling on the fringes of that discovery. I think that you know this well. I know this is the largest basin by area in The U.S., and it is the second-largest by producing assets. We have been able to make a pretty good living over the last 40 years and increase values for shareholders and for our contractors and everybody else. It is a lovely little food chain that exists in the Gulf Of Mexico. This will help continue that trend that the Obama and Biden administrations helped to, or tried to, get rid of. Operator: Thank you. The next question comes from Derrick Whitfield with Texas Capital. Please go ahead. Derrick Whitfield: Hey guys, thanks for allowing me to ask additional questions. Before the follow-up, I wanted to ask about the facility and production enhancements you pursued with Cox and the new marketing agreement for Mobile Bay. More specifically, could you help quantify or provide color on the uplift you expect in realizations and volumes by product? Tracy W. Krohn: That is a pretty comprehensive question, Derrick. I am not sure I have all the answers for your questions there right now as a sum total. What we do not do in The U.S. is we do not provide for a methodology of giving value to 2P reserves. We have to go to great lengths to explain that. In Europe, you are allowed to include 2P reserves in your reserve base. In The United States, via the SEC, we are not allowed to do that. That is the bigger difference that is hard to quantify. We do see that as value, and we have seen that year over year over year as an increase to our reserves by virtue of the type of reservoirs that we have—mainly water-drive reservoirs—that will actually provide a pressure mechanism by which Mother Nature actually helps us to drive that oil to the producing perforations. We are fortunate in this basin to have Mother Nature giving us a helping hand, so to speak. Derrick Whitfield: And, Tracy, maybe on that point, if I am looking at slide 16 of your new presentation, the way that I am reading that is that in your 2P bookings, you effectively do not need to drill any new wells, and you have the probable outcome of receiving additional recovery, thereby, again, increasing longevity of the asset base without new development capital being spent. Is that a fair prediction? Tracy W. Krohn: That is very fair. Derrick, I get a little bit nervous about quantifying some of these results because, in past administrations, that has been frowned on as an expression of 2P. But clearly, we book more cash and reserves over time as we realize that 2P part of our production stream. Traditionally, think about 1P reserves as proved producing and proved undeveloped and proved behind pipe, and then 2P is probable producing and probable behind pipe, probable undeveloped. We get a large portion—in fact, in that presentation that you referred to, it is about $750,000,000—of additional cash flow without any CapEx, hence no drilling, that comes to the wellbore in the form of cash and additional reserve bookings over time. It is a very effective tool that we find in the Gulf Of Mexico to add value without having to make capital expenditures. Derrick Whitfield: Great update. Thanks for your time. Tracy W. Krohn: Thanks. You too. Operator: This concludes our question and answer session. I would like to turn the conference back over to Tracy W. Krohn for any closing remarks. Tracy W. Krohn: Thank you, Operator. These are really unbelievable times right now. We are involved in a war in The Middle East that clearly demonstrates the point that things which affect us that we cannot control are always geopolitical. Other than that, we have pretty good control over our destiny. Even with existing or former administrations, the oil and gas business is not going to go away, fortunately. Thinking about political challenges, our business has always been challenging as a regulatory function, and I do not try to belie that truth in anything other than, yes, the regulatory bodies—generally, the people that work at these agencies—have good intentions. Some of their political masters do not, and we recognize that. I feel like with the current administration, some of those barriers are coming down, and rightfully so. We have been persecuted as an industry and even as individuals by certain administrations. I will leave it with that and tell you that I think we will have better news next quarter as well. Thank you very much, and we will talk to you again soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Neuronetics, Inc. Reports Fourth Quarter 2025 Financial and Operating Results. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press 11 on your telephone. You will then hear an automated message confirming your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Mark R. Klausner. Sir, please go ahead. Mark R. Klausner: Good morning, and thank you for joining us for the Neuronetics, Inc. Fourth Quarter 2025 Conference Call. Joining me on today's call are Neuronetics, Inc.'s President and Chief Executive Officer, Keith J. Sullivan, and Steven E. Pfanstiel, Neuronetics, Inc.'s Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, the Greenbrook integration, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics, Inc.'s business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K, which was filed premarket today. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we will also discuss certain information on a non-GAAP basis, including EBITDA. Management believes that non-GAAP financial information, taken in conjunction with U.S. GAAP financial measures, provides useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it is my pleasure to turn the call over to Neuronetics, Inc.'s President and Chief Executive Officer, Keith J. Sullivan. Keith J. Sullivan: Thanks, Mark. Good morning, everyone, and thank you for joining us today. Before I get into our results, I am pleased to announce that the Board has appointed Dan Reavers as our next President and Chief Executive Officer of Neuronetics, Inc., effective March 23. Dan is a proven leader with more than 30 years in medical devices, and he knows how to build and scale commercial health care businesses. Having spent time with Dan through the search process, I am confident he is the right person to lead the company into the next chapter, and I am looking forward to working with him to ensure a smooth transition. Now turning to our performance. A little over a year ago, we closed the Greenbrook acquisition and set out to build a vertically integrated mental health company with the technology, the clinical infrastructure, and the scale to fundamentally change how patients access treatment for mental health conditions. I am proud to say that in our first full year as a combined company, we have done exactly that. We delivered strong fourth quarter results with adjusted pro forma revenue growth of 23%, driven by our strongest capital shipment quarter of the year and continued momentum across our Greenbrook clinic network. We also achieved the key milestone of positive operating cash flow in the fourth quarter, driven by revenue growth, operational discipline, and the cash collection improvements that we have been implementing throughout the year. Starting with the update on Greenbrook. Over the course of 2025, we executed against our growth initiatives, and the results speak for themselves. Full-year clinic revenue grew 28% on an adjusted pro forma basis. Our Regional Account Manager program is building awareness among referring providers and helping more patients find relief from their depression in our clinics. In the fourth quarter, our referring provider network added 430 new providers, a 25% increase year over year, contributing to over 1,300 new referrers added across 2025. This growth was supported by significantly higher field engagement, with our regional teams completing more than 47,000 physician outreach activities during the year. These efforts drove over 2,300 patient referrals in Q4, representing a 46% increase over the prior-year period. Our automated patient transfer process, educational tools, scheduling QR codes, and coordinated intake team engage patients while they are still at the primary care doctor's office. These capabilities are improving referral-to-treatment conversion while reducing friction for both the provider and the patient across the Greenbrook network. We are nearly complete with our SPRAVATO rollout, with 84 clinics now providing the treatment. Throughout 2025, we optimized our billing practices based on the economics of buy-and-bill versus administer-and-observe, and we have taken a disciplined approach to deploying the right billing model by state, by payer, and by clinic. Our efforts across both SPRAVATO and TMS continue to drive strong results, with total treatment volume up 18% year over year in the fourth quarter. On the operational side, we continue to drive standardization across the network, focused on getting patients into treatment faster and simplifying their experience at our clinics. We deployed tablet kiosks across all locations, streamlining check-in and making it simple for a patient to remit their patient-responsibility payments at the time of the visit. We are also piloting a patient portal that allows patients to complete intake forms and submit insurance information before their appointment, with the goal of offering an all-digital intake pathway in the future. We are starting to leverage AI in our benefits investigation, with initial applications helping us file claims faster and more accurately, increasing first-pass acceptance rates while reducing labor. Collectively, these efforts are enabling our team to care for more patients daily while improving our cash conversion. Turning to our NeuroStar business and the BMP program. On the system side, we had a strong finish to the year, shipping 49 systems in the quarter at an average selling price above our target for the fourth consecutive quarter. That tells us customers continue to see the value in NeuroStar and in the support that comes with it. As we have discussed throughout the year, we made a deliberate decision to realign our capital team towards higher-volume, higher-growth accounts that could add NeuroStar TMS into their practices quickly, meaning that they have the staff available to incorporate TMS into their practice, are credentialed with insurance payers, and therefore can get up and running treating patients faster. With that focus on TMS-ready accounts, we are seeing the benefits in system ASP, a reduction in resources needed to go from purchase to treatment of the first patient, and in the quality of accounts we are adding to the network. We believe this positions our NeuroStar business well heading into 2026, and I will discuss more about that shortly. On a pro forma basis, treatment session revenue increased 6% in Q4 on strong treatment utilization growth of 11%. Our Better Me Provider program had over 420 active sites at the end of 2025, with nearly 100 additional sites working towards qualification. Since inception, the program has connected more than 66,000 patients interested in NeuroStar TMS with one of our Better Me Providers. BMP sites continue to deliver significantly higher patient volumes and faster response times than nonparticipating sites, and we have observed that treatment session utilization is increasing at these sites, indicating strong patient flow and demand for existing equipment. We also continue to see growing recognition of NeuroStar TMS as a treatment option for adolescents. During the quarter, TRICARE West expanded coverage for TMS therapy to include adolescents age 15 and older diagnosed with depression, and the coverage is effective across 26 states. That is a meaningful development for military families and further validates the expanding insurance landscape for adolescent TMS treatment. Moving on to our Provider Connection program, which we launched last April. The program has gained real traction. Our field team has held over 400 educational meetings resulting in more than 210 new referral sites by year end. We have also seen strong engagement through the directed provider campaigns and the inside sales outreach efforts. This program takes what we have learned at Greenbrook about educating primary care physicians on the benefits of NeuroStar TMS and applies it across our entire NeuroStar customer base, and it is becoming a meaningful part of how we help patients find and access care with NeuroStar providers. We are also leveraging our Greenbrook infrastructure to offer new services to our NeuroStar customers. Through our intake center, we are now providing benefits investigations and patient management support to partners like Transformations Care Network and Elite DNA. Our benefits investigation model delivers financial clarity to patients within 24 hours, helping practices accelerate patient decision-making, and our patient management program guides patients from initial interest through to treatment, ensuring seamless engagement at every step. These programs are already driving new patient starts at our partner sites and represent a scalable model that we can extend across our national enterprise accounts. Stepping back, I want to put this year into context. When we announced the Greenbrook acquisition, we laid out a thesis that combining NeuroStar's technology platform and training programs with the Greenbrook National Care Delivery Network, we would expand patient access, accelerate growth, and create a path to profitability. One year in, that thesis is playing out. We grew revenue, we reached positive operating cash flow, we strengthened our balance sheet, and we built a platform that is now enabling opportunities that neither company could have pursued on its own. I will now turn it over to Steve to take you through the financial details, and then I will come back to talk about what those opportunities look like heading into 2026. Steven E. Pfanstiel: Thank you, Keith. Good morning, everyone. Unless otherwise noted, all performance comparisons are being made for 2025 versus 2024. Total revenue in the fourth quarter was $41.8 million, an increase of 86% compared to revenue of $22.5 million in 2024, primarily driven by the inclusion of Greenbrook operations following our acquisition in December 2024. On an adjusted pro forma basis, fourth quarter revenue increased 23% versus the prior year. Total revenue from our NeuroStar business, inclusive of our system revenue as well as treatment session revenue, was $18.3 million in 2025. On a pro forma basis, taking into account the impact of the intercompany revenue, this represents an increase of 9% versus the prior year. U.S. NeuroStar system revenue was $4.4 million, an increase of 15% on a year-over-year pro forma basis, and we shipped 49 systems in the quarter. This compares favorably to our fourth quarter 2024 shipments of 46 units, and we continue to see strong system ASP in the quarter. U.S. treatment session revenue was $12.4 million. On a pro forma basis, treatment session revenue increased 6% compared to the prior-year quarter. The reported decline of 4% is primarily attributable to the absence of prior-year Greenbrook intercompany purchases. Clinic revenue was $23.5 million for the three months ended 12/31/2025, a 37% increase on an adjusted pro forma basis, driven by growth in treatments across both NeuroStar TMS and SPRAVATO treatments. Gross margin was 52% in 2025 compared to 66% in the prior-year quarter. The decrease was due to the inclusion of Greenbrook's clinic business, which operates at a lower margin. It is worth noting that Q4 gross margin was our highest quarterly margin of the year, reflecting the impact of our efficiency efforts within the Greenbrook clinics as well as favorable product mix. Operating expenses during the quarter were $26.7 million, an increase of $0.4 million, or approximately 1.4%, compared to $26.4 million in 2024. The increase was primarily attributable to the inclusion of Greenbrook's general and administrative expenses of $8.5 million, partially offset by a reduction of R&D expenses. During the quarter, we incurred approximately $2.2 million of non-cash stock-based expense. Net loss for the quarter was $7.2 million, or $0.10 per share, as compared to a net loss of $12.7 million, or $0.34 per share, in the prior-year quarter. Fourth quarter 2025 EBITDA was negative $4.3 million, as compared to negative $11.0 million in the prior year. Moving to the balance sheet and cash flow. As of 12/31/2025, total cash was $34.1 million, consisting of cash and cash equivalents of $28.1 million and restricted cash of $6.0 million. This compares to total cash of $19.5 million as of 12/31/2024. Cash provided by operations in the fourth quarter was a positive $0.9 million, representing a continuation of the steady improvement we delivered throughout 2025. To put this in context, our operating cash burn improved sequentially every quarter this year from negative $17.0 million in Q1 to positive $0.9 million in Q4. This progress reflects the compounding effect of our continued revenue growth, expense discipline, revenue cycle management improvements, and operational efficiencies across the business. In March 2026, we amended our debt agreement with Perceptive, which reduces our outstanding debt obligation and interest expense. Under the amendment, we made a one-time principal payment of $5.0 million to Perceptive, along with adjustments to the existing covenants. Now turning to guidance. For the full year 2026, we expect total revenue of between $160 million and $166 million, with the midpoint of that range representing greater than 9% growth versus 2025. We expect to see strong revenue performance in our clinic business, with growth year over year in the double digits to mid-teens. For the NeuroStar business, we see increased momentum driving revenue growth year over year in the low to mid-single digits. For the first quarter 2026, we project revenue of between $33 million and $35 million. We expect full-year gross margin to be between 47% and 49%. This reflects the impact of efficiency efforts within our clinic network as well as product mix associated with higher clinic revenue growth. As we drive revenue growth, we remain highly focused on operating efficiency. We expect operating expenses of between $100 million and $105 million for the full year, inclusive of approximately $8.5 million of non-cash stock-based compensation. This total includes investments and costs associated with efficiency efforts primarily in 2026. We expect to see the full benefit of these efforts by the end of the third quarter, with operating expenses at an annualized run rate of less than $100 million by the fourth quarter 2026. For the full year 2026, we expect cash flow from operations to be between negative $13 million and negative $17 million. This includes the necessary investments in efficiency, particularly in 2026, to continue our efforts to drive towards sustainable operating cash flow. Similar to last year, we expect our operating cash burn will be highest in the first quarter due to seasonality of both businesses, where we typically see our lowest patient volumes and lowest capital revenues. Additionally, the first quarter is when we see higher annual cash outlays, such as licenses and incentive compensation. Operating cash flow is projected to improve significantly beginning in the second quarter and then sequentially through the remainder of the year, with operating cash flow being positive during the second half of the year. I will now turn it back to Keith for his closing remarks. Keith J. Sullivan: Thank you, Steve. I would now like to spend a few minutes on multiple meaningful opportunities ahead of us in 2026. We have spent the last year proving that our integrated model works. We now have a national platform with over 420 BMP accounts and Greenbrook locations across 49 states, a proven playbook for launching therapies in clinic-based settings, deep relationships with primary care physicians, and an infrastructure that gets stronger with every patient we treat. As we move into 2026, we are focused on leveraging that platform to drive the next phase of growth through two key initiatives. First, we are expanding how we bring NeuroStar TMS systems to market. As we continue to analyze the TMS market, we have determined that different customers want to acquire access to our technology in different ways. We are piloting new models to meet these customers' needs, allowing them to utilize NeuroStar TMS in a way that works best for them. We are testing these approaches during the first quarter and will provide updates throughout the year on their progress. We have expanded our capital sales team to help target and capture these opportunities. Second, we will continue to see strong growth in demand for depression treatment at our Greenbrook clinics. We now know that a significant unmet need remains. There are approximately 4 million patients with treatment-resistant depression, or TRD, in the United States, and individuals who have failed two or more antidepressants have limited effective options. NeuroStar TMS and SPRAVATO are both important therapies for many of these patients, but the vast majority of the TRD population remains undertreated, and we believe new therapy options can help us reach more of these patients. That is why we are excited to continue to advance our collaboration with COMPASS Pathways on COMP360 psilocybin, a potentially transformational new treatment for TRD. We believe that this could represent one of the most meaningful developments in mental health treatments in decades. COMPASS has recently completed two Phase 3 studies demonstrating highly statistically significant and clinically meaningful results, including durable improvement through at least 26 weeks after just one or two doses. COMPASS plans to submit an NDA, with the potential for an FDA decision by year end. Our Greenbrook clinics are uniquely positioned to be the leader in offering new therapies like this. We already serve a large TRD population across our network, and we believe a new FDA-approved option has the potential to drive increased awareness and engagement from both patients and referring providers. Through our experience integrating and scaling SPRAVATO across the Greenbrook network, we have built a proven playbook for launching REMS-compliant therapies, those requiring enhanced safety protocols and administration in clinic-based settings. We have a national footprint, experienced staff, and an operational infrastructure to support a launch, and because of the alignment with our existing SPRAVATO operations, we expect only limited incremental investment to support this new modality, if approved. Through our existing collaboration with COMPASS, we are preparing to commercially offer this treatment upon an FDA approval. We have identified the initial centers for the rollout, and we are working closely with COMPASS to align launch plans and to support the establishment of favorable coverage policies with payers. We see this as a natural extension of what we have built, further expanding Greenbrook's care platform to deliver innovative treatments to patients who need them most. Beyond treatment-resistant depression, we are also excited about the broader promise of psychedelic-class treatments, which have the potential to help patients suffering from PTSD, generalized anxiety disorder, and other serious conditions. We want Greenbrook to be the platform that can serve all these patients, and our track record of launching and scaling treatments across a national clinic network gives us confidence that we can deliver on that vision. We are excited to share more as we get closer to the potential launch in 2027. Before we open for questions, I want to take a moment to reflect on my time at Neuronetics, Inc. When I joined over five years ago, we were a single-product company with a bold vision. Today, we are a vertically integrated mental health platform with a national clinic network, a growing base of committed NeuroStar providers, and a pipeline of potential new treatment modalities on the horizon. None of that happens without this team. The people at Neuronetics, Inc. and across the Greenbrook clinics show up every day with a commitment to patients. I am proud of what we have built together, and I am proud of the difference we are making in the lives of patients and providers across the country. I leave this company in a position of strength and in very capable hands with Dan. I believe the best is truly ahead for Neuronetics, Inc. With that, I would like to turn the call over to the operator for questions. Operator: Thank you. To withdraw your question, please press 11 again. We will now open for questions. Our first question is from William John Plovanic with Canaccord. Your line is now open. William John Plovanic: Hey, great. Thanks. Good morning, and thanks for taking my question. So first of all, Keith, congratulations on your retirement, on significant transformation of a business. I think this was $50-ish million in revenues when you took over five years ago, and just adding Greenbrook and the scale and finally hitting that targeted cash flow positive, you know, it is definitely a hard-fought battle, but one, and congratulations. I have three questions. One of them is simple. So just, you know, one, I am going to start with the tough one. Just any granularity, color you can provide on the CID in Florida and this Michigan and what documents they are really asking for, and is this related to Greenbrook? Steven E. Pfanstiel: Bill, that is an investigation that is ongoing at the moment. What we can say about it is that we are providing all of the information to the U.S. Attorney's Office in the Middle District of Florida. They have requested documentation for billing practices prior to the acquisition of our acquisition of Greenbrook, and we are cooperating fully with them. William John Plovanic: Okay. Thank you. And then just secondly, on this SPRAVATO, thanks for the update. You know, on the COMP360, just if you could give us any feeling for difference in time the patients have to be in the facility post-treatment or delivery of medication, and then, you know, any difference in the profitability. Like, is it going to be shorter and more profitable, or the patient hangs out longer and it is less profitable per hour, per minute, whatever way you metric you look at. How do we think about that as that rolls out? Keith J. Sullivan: Bill, we have asked Corey Anderson, who is our Chief Technology Officer and running the Greenbrook side of the business, to join us today. So I am going to let him answer that question for you. Corey Anderson: Good morning, Bill, and thank you for the question. So COMP360 is administered in supervised doses within the clinic setting, so there is not a daily or recurring protocol. Unlike these daily medications, the treatment effect appears to be durable after just one or two administrations. So if it is approved, COMP360 would be administered under a REMS protocol requiring certified health care settings, trained staff, and patient monitoring, very similar to what we are currently doing with SPRAVATO. Steven E. Pfanstiel: Yeah, Bill, this is Steve. Just to add, you asked about the economics. We are working closely with COMPASS to look at reimbursement and understand that as we get closer to launch. So more to come on that piece, but I would view it similar to how we have looked at SPRAVATO A and O and SPRAVATO B and B. You know, if the reimbursement is there, it is a great business, but we are not going to take on business that is not going to be profitable at the end of the day. I think COMPASS is working hard, and we are working hand in hand with them to make sure we have got adequate reimbursement to make this a profitable business. William John Plovanic: Great. And then last question, Steve, is you ended the year with $34.1 million, $6.0 million was restricted. Now you paid down $5.0 million to Perceptive. Did that $5.0 million come out of the restricted or the non-restricted? And how do you feel about the cash position given the projected Q1 cash burn? Steven E. Pfanstiel: Yeah. So it does not come out of the restricted piece. So if you looked at 2025, we had $34 million. If you take that $5 million off, it would be a pro forma cash balance of $29 million. If you look at the midpoint of our operating cash flow guidance, we would still have, call it, $14 million to $15 million of cash at year end, obviously some of that being restricted, but that is a cash balance that we have been comfortable with, especially as we are focused on efficiency, reducing overall expenses, and profitability, especially in the second half of this year. I think the other benefit of paying that down is we get interest expense reduction from that. We are probably going to save close to $600,000 annually just for that $5 million paydown, and it just optimizes that overall debt balance that we have out there. So net-net, we are comfortable with where we sit, and I think it continues reducing that operating cash flow burden by taking out some interest. William John Plovanic: Great. Thanks for taking my questions. Operator: Thank you. Our next question is from Adam Maeder with Piper Sandler. Your line is open. Adam Maeder: Hi. Good morning, Keith and Steve. And, Keith, wishing you all the best in the next chapter. A couple of questions from me. I guess I wanted to start on the guidance front and just double click on the 7% to 11% top-line guidance for the overall business. If I heard correctly, double digits to mid-teens growth for the clinic, low to mid-single-digit growth for standalone. Can you just help us understand within the clinic how much is coming from SPRAVATO, and then on the NeuroStar or standalone side of things, volume versus capital? And then I had a couple of follow-ups. Steven E. Pfanstiel: Yeah, thanks, Adam. I will give a little bit of commentary on that. On the clinic side, we expect the majority of the growth to come from the volume side of it, although in Q1, in particular, we will have a lot of SPRAVATO growth due to BNB. So as you recall, we really did not have buy-and-bill volume in 2024, and it was actually pretty limited in Q1 of this past year. In fact, we kind of stabilized more in Q2 of last year at about one out of every seven SPRAVATO treatments being buy-and-bill, but prior to that, in Q1, it was still very limited. So I think what you will see on the growth is Q1 driven by that SPRAVATO BNB impact. Once we get into Q2, it is annualizing, and from that point forward, really, it is about just volume growth overall. SPRAVATO growth, I think, will be volume growth that will be higher than in TMS in general, but we have not broken out that growth rate. Maybe just to give you a flavor, SPRAVATO was probably 30% of our treatment at the start of 2025. It was about 35% by year end 2025. I would expect to see that pattern continue of SPRAVATO representing more of that treatment volume on a quarter-over-quarter basis throughout 2026. It is just a significant growth. I think the thing to remember about SPRAVATO in particular is once you start a patient and they respond, they stay on maintenance therapy long term, whereas with TMS, it is a course of 36 treatments, they are done, and they will come back only if they need to. So it is a little different cadence of how those patients build over time, but SPRAVATO certainly has that continuing maintenance therapy that patients stay on long term. On the NeuroStar side, to give a little bit of color there, Keith mentioned that we do have additional capital reps. We have been generally at around 40 capital shipments a quarter, a little less in Q1, a little higher in Q4. We would expect that to increase to as much as 45 or more as their impact is felt over time. So I think it will take a little bit of time for those reps to get up and running, and then the guidance we gave really, because our treatment session is just the biggest segment of the business, we would expect growth there to largely match the overall guidance of what we gave for the NeuroStar side of the business. Adam Maeder: That is great color. Appreciate that, Steve. And for the follow-up, I actually wanted to ask about Q1 guidance. The Street was a little bit higher than where you have guided to for the first quarter, maybe some mismodeling on our part. But can you just talk about the trends in the business quarter to date? And are you seeing anything that has maybe deviated from past trends? I would just love some incremental color for the first couple of months of the year. Steven E. Pfanstiel: Thanks. I will give a couple of comments there. Certainly, one is we are still just over a year into the Greenbrook acquisition. A big piece of what we have come to understand is that there is seasonality in the business itself, and we find in November and December we see new starts come down on the clinic side of the business. That is just holiday impact. So that kind of works its way through the first part of Q1 here. We tend to have a little bit of that negative seasonality impacting us in Q1. If you look at the overall level of revenue, clinic seasonality is meaningful. It is not uncommon for us to see a huge swing between Q1 and Q4. That is a big piece of that. I would say seasonality also impacts us on the NeuroStar side of the business, especially when you think about capital. Capital is always lighter in Q1 versus Q4. That has to do with how capital budgets are planned in clinics and at our customers. Generally, they are using it in Q4 and using less of it in Q1. Depending on how you look at that, those are two big seasonality impacts. I think the other thing that has really been an impact here, especially over the last couple of months, we have had some weather impacts, which affects patients being able to get in the clinic. We are going to have some of that every winter, but that is obviously something we have to manage as we think about January, February, March, and some of the storms we have had. So that bleeds into the seasonality that we generally see as we go from Q1, which, again, is always our lowest revenue quarter of the year, to Q4, which is generally the highest. Adam Maeder: That is helpful. Thanks. I will jump back in the queue. Operator: Thank you. Our final question is from Daniel Walker Stauder with Citizens. Your line is now open. Daniel Walker Stauder: Yeah, great. Thanks for the questions. Just first off, Keith, congratulations on a great run. It has been great working with you. So I am sending my congrats and just reiterating everyone else's comments. I guess, first, on the COMPASS collaboration, you know, that is really positive news, and I know we have talked a bit about this new wave of therapeutics and the potential role Neuronetics, Inc. could play here, but I was hoping you could give us any more color on this agreement specifically. It sounds like you will be the preferred provider, but is there any exclusivity involved at this point? And if not, could there be in the future? Thanks. Corey Anderson: Yeah, thanks for the question. So, you know, Greenbrook has been working with COMPASS over the past three years, and we have continued to advance that collaboration to help them with their preparations for commercial launch. We anticipate through the course of this year we will have continued discussions about our preparations as an organization to launch the therapy. As you are probably aware, our CMO, Dr. Jeff Grammer, participated in a COMPASS-hosted webinar in January, and we have laid out our operating plans to be prepared for the launch next year. As to the point of exclusivity, COMPASS has about seven of these strategic collaborations to help them prepare for commercial readiness, and Greenbrook is one of them. Daniel Walker Stauder: Great. Appreciate it. And just following up on that, staying with COMPASS, you know, it sounds like there should not be too much more of a lift, but, you know, beyond having to update some of your workflow maybe, are there any other updates you need to make, such as personnel or anything physical to your clinics? I am really just trying to get more of an appreciation of how seamlessly this could integrate into the current infrastructure you have. Thank you. Corey Anderson: Yeah. So, as you are aware, we operate about 84 SPRAVATO clinics under this REMS framework across the country, and I think our infrastructure and experience in running these SPRAVATO clinics provides three key advantages for Greenbrook. First, our clinical staff is experienced in both administering and monitoring these patients under treatment. Second, we have a significant infrastructure and investment in the back-office support of benefits investigations, prior authorizations, and ultimately helping patients access care. And third, we have a deep network of referring providers, psychiatrists, primary care doctors, and others that refer their patients to Greenbrook for these treatments. So I think the infrastructure is largely there, and we will be able to provide COMP360 treatments within the clinics and with the staff already in place at Greenbrook. Daniel Walker Stauder: Appreciate that. Just one final one from me on the SPRAVATO rollout. It sounds like you are nearly complete with all the 89 sites, but I just wanted to ask on the utilization of SPRAVATO for these newer converted clinics. How quickly has this ramped once it is available? Is it weeks, months, quarters? Just trying to get a sense of some of these utilization trends. Thank you. Steven E. Pfanstiel: We look at our utilization, our marketing, and our conversion rates on a daily basis. We are able to identify where we need to add SPRAVATO and where we do not. So in the five locations that are remaining, we are building up that marketing presence there to be able to hit the ground running. We are very comfortable with each one of our locations generating SPRAVATO at the proper level and with the proper billing process, either buy-and-bill or administer-and-observe. Daniel Walker Stauder: Great. Appreciate it, guys. Thank you. Operator: Thank you. I would now like to turn the call back over to Keith for closing remarks. Keith J. Sullivan: Thank you, operator. Thank you all for your interest in Neuronetics, Inc. I really appreciate your support over the last five and a half years while I have been here. It has been a pleasure working with our three analysts and all of the investors. I look forward to hearing the updates on the Q1 call and getting you updated at that point. Thank you all. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Welcome to the Ampco-Pittsburgh Corporation fourth quarter 2025 earnings results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kimberly P. Knox, Corporate Secretary. Please go ahead, ma'am. Kimberly P. Knox: Thank you, Nick, and good morning to everyone joining us on today's fourth quarter 2025 conference call. Joining me today are J. Brett McBrayer, our Chief Executive Officer, and David G. Anderson, Vice President, Chief Financial Officer, and President of Air and Liquid Systems Corporation. Also joining us on the call today is Samuel C. Lyon, President of Union Electric Steel Corporation. Before we begin, I would like to remind everyone that participants on this call may make statements or comments that are forward-looking and may include financial projections or other statements of the corporation's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties, many of which are outside the corporation's control. The corporation's actual results may differ significantly from those projected or suggested in any forward-looking statements due to various risk factors, including those discussed in the corporation's most recently filed Form 10-Ks and subsequent filings with the Securities and Exchange Commission. We do not undertake any obligation to update or otherwise release publicly any revision to our forward-looking statements. A replay of this call will be posted on our website later today. To access the earnings release or the webcast replay, please consult the Investors section of our website at amphcophgh.com. With that, I would like to turn the call over to J. Brett McBrayer, Ampco-Pittsburgh Corporation’s CEO. J. Brett McBrayer: Thank you, Kim. Good morning, and thank you for joining our call. The fourth quarter was a busy quarter for Ampco-Pittsburgh Corporation where we initiated and completed the removal of significant underperforming assets from our portfolio. As we emerge from the slowdown in the steel market, we expect these actions to improve adjusted EBITDA by $7 million to $8 million annually. As reported in our press release, consolidated adjusted EBITDA for the fourth quarter was $3.2 million, down from $6 million the prior year. This anticipated dip in performance was driven by the pause in customer orders in our Forged and Cast segment after the announcement of new global tariffs. Consolidated adjusted EBITDA for the full year was $29.2 million. This performance is an improvement from the prior year despite the revenue impact FCEP experienced during 2025. With strong demand continuing in our Air and Liquid Processing segment, A&L achieved record revenue and income for 2025. As we shared in a recent press release, bookings for both operating segments have accelerated in the first two months of this year. I am now going to turn the call over to David G. Anderson, Chief Financial Officer and President of our Air and Liquid segment, for further comments on this quarter's results for Air and Liquid. David G. Anderson: Thank you, Brett. Good morning. As Brett mentioned, 2025 was a record-breaking year for Air and Liquid, as we achieved new highs in both revenue and adjusted EBITDA. In Q4, revenue was 10% higher than prior year while full-year revenue was 7% above prior year. The Q4 revenue increase was driven by higher revenue in air handlers and heat exchangers, while full-year revenue was higher in all product lines. Adjusted EBITDA in Q4 was $3.3 million versus $3.7 million in the prior year. The decrease versus prior year was driven by unfavorable product mix. Full-year adjusted EBITDA of $15.4 million was the highest in Air and Liquid’s history and a 21% increase over prior year. Backlog declined year over year by $8 million, primarily driven by the U.S. Navy's decision to terminate production of the Constellation frigate program, which resulted in $7.1 million of orders being removed from the backlog in late 2025. Costs related to the terminated orders are expected to be paid by the Navy along with normal profit margins. While backlog ended $8 million lower, we did see significant order activity at the start of 2026. As referenced in our press release dated March 10, order activity was up 73% for the first two months of 2026 compared to prior year. Bookings in the first two months of 2026 for the U.S. Navy market were over $9 million, which more than replaced the $7.1 million from the Constellation frigate program termination. We continue to see positive activity in multiple markets across our product lines. 2025 orders and shipments for heat exchangers in the nuclear market were the highest in our history as this market continues to show long-term growth potential. There continues to be strong demand from the U.S. Navy, and we expect this demand to continue as the Navy moves forward with fleet expansion plans. The manufacturing equipment installed in 2024 has already increased manufacturing capacity for our pump product line, and there is more capacity expansion in process. Additional manufacturing equipment from the Navy funding program arrived at our facility in early 2026 and is expected to begin producing products in 2026. There is additional equipment expected later this year. This equipment will position us to meet the expected growth in the market. We are also seeing significant demand for our commercial pumps due to the AI data center market. Our commercial pumps are used in the gas turbine market, which is seeing extremely high demand due to the need for additional power for data centers. Bookings for commercial pumps were at a record high in 2025. Demand for custom air handlers remained strong as there continues to be significant demand in the pharmaceutical market for our air-handling products. In summary, 2025 was the best year in Air and Liquid’s history, and we are well positioned in markets that are showing significant long-term growth potential. J. Brett McBrayer: Thank you, David. Samuel C. Lyon, President of Forged and Cast Engineered Products (FCEP), will now share more details regarding his group's performance. Samuel C. Lyon: Thank you, Brett, and good morning, everyone. For 2025, the Forged and Cast Engineered Products Division, FCEP, reported net sales of $70.9 million compared to $66.5 million in the fourth quarter 2024. For the full year, we achieved total net sales of $292.6 million, representing a stable top-line performance compared to $280.6 million in the prior year. Our operating results reflect the strategic transformation of our footprint. On a GAAP basis, the FCEP segment reported an operating loss of $44.7 million for the full year. As Brett mentioned, this was primarily driven by one-time exit costs, including a $41.4 million deconsolidation charge associated with the closure of our U.K. facility. Given these large one-time charges, we believe adjusted EBITDA provides a clearer picture of our underlying performance. For the full year of 2025, FCEP generated $24.4 million in adjusted EBITDA. In the fourth quarter, adjusted results were $2.2 million compared to $5.5 million in the prior year. This Q4 decrease was primarily driven by fewer operating days in the U.S. than in 2024, higher FCEP production relative to rolls, FX headwinds, and ramp-up costs in Sweden. In the U.S., we proactively curtailed production days in response to temporary softness in roll demand driven by the digestion of steel tariffs. With the U.K. closure behind us, one of our primary focuses is optimizing our Sweden facility. We have a clear roadmap for improvements in Sweden throughout 2026 that will begin to materialize in our results this year and be fully realized in 2027. The recent weakening of the dollar to the SEK has created a short-term headwind, as supplies and labor are in SEK and euros, while approximately 40% of our product is sold to the U.S. in dollars. We are adjusting 2027 pricing to account for this and moving some European customers to purchase in SEK. We are executing a production ramp-up in Sweden and expect to reach a production level approximately 20% higher than 2025 by 2026. Sweden is also improving its mix by removing some lower margin rolls originally destined for the U.K. and is currently finishing lower margin backlog orders from 2025. We expect the order book to be fully normalized by the end of Q2, positioning us for full margin realization starting in Q3 2026. Our North American customers remain optimistic about 2027 and expect improved volumes, which will translate into higher demand for our rolled products. While European market softness persists, consolidating our cast operations in Sweden allows us to better manage utilization. Further consolidation is occurring globally. Recently, two competitors have begun winding down operations, creating opportunities for both cast and forged rolls. Additionally, stricter European quotas and increased tariffs set to take effect in 2026 should meaningfully increase utilization for our customers, driving higher roll demand in 2027. For our U.S. forged operations, our backlog and pricing have increased meaningfully for our non-roll FCEP as a result of the Section 232 tariffs, which have provided additional diversification in our backlog. In summary, 2025 was a pivotal year. With the U.K. facility closure, the operational roadmap for Sweden, and tariff protection for our U.S.-made products shipping to U.S. customers supporting pricing, we are well positioned for significant margin expansion in 2026 and full-year 2027. J. Brett McBrayer: Thanks, Sam. I will now turn the call over to David G. Anderson, our Chief Financial Officer, for more detail regarding our financial performance for the quarter. David G. Anderson: Thank you, Brett. As indicated in both our Form 10-Ks and in our press release 8-Ks filed yesterday, there was a great deal of one-time, primarily non-cash items recorded in the quarter related to the previously disclosed decisions to exit the unprofitable U.K. operations and the small steel distribution business in the U.S. In mid-October, we issued a press release and filed a Form 8-Ks, which detailed the accelerated exit from our U.K. cast roll facility through a structured insolvency process. The mostly non-cash deconsolidation and other costs related primarily to the U.K. exit totaled $42.4 million in Q4 and $52.2 million full year. We also recorded a non-cash $11.9 million after-tax expense in Q4 related to a revaluation charge of our asbestos accrual. All of this certainly causes a great deal of noise in our Q4 results, which, when we move to discuss adjusted EBITDA, it becomes much easier to see the core business, how it performed in 2025, and expectations of what it looks like going forward. I do want to provide some details on the non-cash asbestos expense, what it means, and perhaps more importantly, what it does not mean. At 12/31/2025, we had a third party evaluate our asbestos accrual and provide the adjustment needed based on their projection of payments in the years ahead. This does not mean that we expect our asbestos payments to increase in the years ahead. It is quite the opposite. The estimate projects we will begin to see our asbestos payments decrease starting in 2027. The reason for the increased asbestos accrual at 2025 is because their projection shows the decrease will be slower than what they projected as of 12/31/2024. Ampco-Pittsburgh Corporation's net sales for Q4 2025 were $108.8 million, an increase of $7.8 million compared to net sales for Q4 2024. Full-year 2025 net sales of $434.2 million were an increase of $3.8 million compared to prior year. The increase in both Q4 and full year was driven by higher sales in both operating segments. As shown in our press release yesterday, Q4 adjusted EBITDA of $3.2 million was lower than prior year primarily due to reducing the number of operating days in our FCEP facilities because of the temporary lower roll demand caused by the tariffs. Full-year adjusted EBITDA of $29.2 million was $1.1 million higher than prior year and has increased for the third consecutive year. The higher adjusted EBITDA was driven by increased revenue and lower SG&A expenses and was partially offset by lower overhead absorption caused by reducing the operating days. Total selling and administrative expenses declined $2.8 million, or 5%, for full-year 2025 versus prior year and were lower primarily due to lower employee-related costs, partially offset by higher sales commission expenses in both segments. Depreciation and amortization expense for the quarter and for full year are higher than prior year periods due to the accelerated depreciation portion of the exit charges associated with the U.K. operation and the steel distribution business. The change in other expense/income was primarily driven by lower foreign exchange transaction losses, but also lower pension income given the lower expected long-term asset returns due to the asset allocation changes made to protect the higher retained funded status of our U.S. defined benefit plan. At year-end 2025, our pension plan was nearing fully funded status and in early 2026 did achieve fully funded status. At 12/31/2025, the corporation's liquidity position included cash on hand of $10.7 million and undrawn availability on our revolving credit facility of $25.5 million. As I mentioned at the beginning, there was a great deal of noise in Q4 and full-year 2025, including the U.K. and steel distribution business shutdowns, and the impact to our overhead absorption caused by the pause in roll orders due to the tariff impact. However, as we enter 2026, the roll market is showing that it is recovering, and the shutdown costs are behind us now. Operator, at this time, we would like to open the line for questions. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star. The first question will come from Justin Bergner with Gabelli Funds. Please go ahead. Justin Bergner: Good morning, Brett. Good morning, Sam. Good morning. David, I just want to delve a little bit more into the Air and Liquid Processing margins. Could you review the mix dynamic in the fourth quarter? And should I think of the mix for the full year and the margins for the full year as being more representative of Air and Liquid Processing as the company grows off of the 2025 base in that business? David G. Anderson: Yes. I would say the full year is definitely more representative of what we would typically see. Q4 just was a little bit of an unusual mix for us, and it is really timing of what orders are shipping when into which markets, but it is just a short-term Q4 issue. I think the full year is much more representative of what you would typically see. Justin Bergner: Okay. Any color you can give on what sort of incrementals this business should generate as it grows? If you do not want to go there, I totally understand, but figured I would put that out there. David G. Anderson: The margins are generally good. What I can tell you is in the growth markets that we are seeing—nuclear, the Navy markets—those are all good markets for us. There is very limited competition because there are a lot of barriers to entry. It is very difficult to supply into those markets, so that is favorable for us. Justin Bergner: Okay. Fantastic. And with respect to forged and cast rolls, help me understand the inflection from the headwinds in 2025 to the strong orders in 2026. I mean, the tariffs were in place in 2025, so what is changing in terms of behavior or market behavior? Samuel C. Lyon: Justin, there was a lot of noise because, first of all, the tariffs had to be calculated. On the cast side almost all the rolls we make are composite, so part of them is cast iron and part of them is steel, so you have to calculate what the tariff is. We and the whole industry had to figure out what the tariff was going to be, so you did not even know what your pricing was going to be. A lot of customers, particularly in the U.S., paused what they were doing, what they were taking, until that was figured out. And just on the large roll side, which is our most profitable product line, the demand for those kind of slowed down as well as people digested what was happening. So now that is all digested, and you can see that the U.S. continues to raise pricing on hot-rolled coil as an indicator. Nucor is above $1,000 a ton now, and demand has been slowly increasing in the U.S. One other thing I will mention is another thing happened when the U.S. increased tariffs. Canada and Mexico reduced their material coming into the U.S. They have since put tariff protections in place as well to support their markets, and so we are seeing everybody kind of follow the model of the U.S., which should all be positive for us, as our biggest markets are North America and Europe. Justin Bergner: Okay. And one more follow-on on Forged and Cast Engineered Products. With respect to the costs in euros and the revenue in dollars, I think you said that is 40%—a certain percentage—of Sweden only? Samuel C. Lyon: Yes. Justin Bergner: Okay. So 40% of Sweden incurs costs in euros and revenues in dollars. Will that get resolved this year or next year in terms of pricing? Samuel C. Lyon: Pricing will be 2027, but we have already seen a recovery from the low point. SEK to the dollar was as low as 8.8, 8.9. It is 9.3 this morning. So it is already—well, we do not know what it is going to do—but right now it is kind of reverting to the mean a little bit. We run almost all exclusively on yearly contracts. So there was some adjustment in 2026. There will be further adjustment for 2027. It has not been as significant in euro to dollar, but there has also been a decrease there. And so our competitors will be in the same boat as us from a pricing perspective. Justin Bergner: Thank you for taking all my questions. Samuel C. Lyon: Thanks, Justin. Operator: The next question will come from John Bair with Ascend Wealth Advisors LLC. Please go ahead. John Bair: Good morning, gentlemen. I have a question. I saw an article not too long ago about Westinghouse's AP1000 reactors. I was wondering if you are involved in supplying any components there or any involvement with that. David G. Anderson: John, it is Dave. I can answer that. The short answer is yes. We have supplied to Westinghouse in the past, and we have supplied to that particular product. So that would definitely fall under our heat exchangers. We do not know the timing yet of when they are expecting those, but we have certainly seen some of the same indicators that they are expecting to ramp up a lot of building those. So that is a positive for us for sure. John Bair: How much of a lead time is there in that? I mean, I am sure it is a long build cycle, but where would you fit into the order cycle of that? David G. Anderson: We usually fit in fairly early because they want to secure things like heat exchangers fairly early in the process. So once they have their timetable, then we will start to see activity from them. John Bair: Is there very much inquiry in that regard, or is that just kind of out in the distance at this point? David G. Anderson: Still a little bit in the distance for that particular—the Westinghouse, the AP1000s. We are certainly seeing continued nuclear market activity though across—from the plant restarts to all the other things that I have talked about on some of the other calls, the small modular units—the nuclear market continues to be quite active. John Bair: Very good. Thank you. David G. Anderson: Thank you. Thanks. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to J. Brett McBrayer for any closing remarks. J. Brett McBrayer: Thank you, Nick. In closing, I want to thank our employees who are making the positive improvements you heard about today. With the actions taken in the fourth quarter, our core business is improving. We anticipate improved profitability as we emerge from the slowdown in the steel market. We are excited to demonstrate the improved results from these strategic actions in 2026. I want to thank the Board of Directors and our shareholders for your continued support and for joining our call this morning. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and welcome to the Academy Sports and Outdoors, Inc. Fourth Quarter Fiscal 2025 Results Conference Call. The call is being recorded, and all participants are in a listen-only mode. Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors, with one follow-up. Please press 0 on your telephone keypad. I would now like to turn the call over to Dan Aldridge, Vice President, Investor Relations for Academy Sports and Outdoors, Inc. Dan Aldridge: Good morning, everyone, and thank you for joining the Academy Sports and Outdoors, Inc. Fourth Quarter and Fiscal Year 2025 Financial Results Call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our most recent 10-Ks and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. This morning, we will review our financial results for the fourth quarter of 2025 and the full year, provide an update on strategic initiatives, discuss outlook for the year, and share guidance for the full year fiscal 2026. After we conclude prepared remarks, there will be time for questions. With that, I will turn the call over to CEO, Steve Lawrence. Steve Lawrence: Thanks, Dan, and good morning to everyone on the line today. On our call this morning, we plan to cover our fourth quarter and full year results for 2025, along with providing initial guidance for 2026. I will remind you that we also have an Analyst Day planned for April 7 in New York City that will also be webcast. We will go into more detail on our long-range plan and how the investments we have been making in 2025 and 2026 play into our multiyear strategy. I will start with the fourth quarter, which played out largely as we forecast, with sales coming in at $1,700,000,000, which is a 2.5% increase versus last year and translated into a negative 1.6% comp decrease. These results were within our implied guidance range for the quarter. As we shared on our last call, sales were strong over the Thanksgiving and Cyber Week time periods. Similar to prior years, we saw customer spending patterns soften in December and then surge during the week leading into Christmas, which continued into the last week of the month. January was softer than we anticipated, primarily driven by the large winter storms in the last ten days of the month, which caused roughly half of our stores to be partially or fully shut down for two to three days. We saw the business rebound once our stores reopened. As we discussed on prior calls, the big unknown for us this holiday was how the customer was going to react to the inflationary pressures on pricing for goods that were imported from overseas. Our forecast was for average unit retails to be up low double digits for the quarter. We delivered against that by raising our average unit retails up 10% through a combination of promotional optimization, growing sales in the better/best end of our assortment, and some strategic AUR increases. All these efforts helped improve our gross margin by 140 basis points versus last year. Pulling back to the full year, I am proud of how our team executed in a choppy environment. We navigated through all the challenges in 2025 while still growing top line sales to $6,050,000,000, or up 2%, which resulted in solid market share gains across our footprint. We also put in place many foundational building blocks which should help drive sales in 2026 and beyond, some of which include, first, I am proud of how the team rallied midyear to mitigate the impact of the incremental tariffs that were levied in late Q1 and Q2 of last year. The team had to react midyear after most of the merchandise was already purchased and managed to offset the increased expense through a combination of sourcing country diversification, inventory pull-forward at lower costs, and pricing and promotional optimization work. The result of these efforts yielded an annual AUR increase of 6% which translated into a gross margin rate of 34.8%, or plus 90 basis points versus the prior year. As we embarked on this journey to raise AURs, we also committed to not losing our reputation for having outstanding value by constantly monitoring pricing across the marketplace. What we found through the ongoing customer research work we do is that we have managed to improve average unit retails across the full year while also improving our value perception with customers relative to key competitors. I can assure you that this was no easy feat. Another key accomplishment was the 13.6% growth we drove in our .com business. We put a lot of new players in place late in 2024, and they jumped in and quickly worked to improve core search and site experience fundamentals. They also showed tremendous agility throughout the year as we incorporated emerging AI capabilities into our site for data enrichment on our items to help improve relevance in search, leveraging image generation capabilities on our private brand apparel, and finally, introducing agentic AI onto our site for the first time, the launch of Scout, prior to Christmas. While we are still in the early innings on these efforts, we are excited about the initial results we are seeing on this front. Third, new store expansion remains our number one growth opportunity. During the year, we successfully opened up 24 new stores, which in aggregate are tracking to exceed their year one performance. At the same time, stores that opened in 2022 through 2024, which are now in the comp base, drove mid-single-digit comp increases. We expect this tailwind to grow in 2026 as the 2025 vintage of new stores rolls into the comps as we progress throughout the year. Fourth, the team was laser focused on improving in-stocks through a combination of assortment rationalization efforts coupled with the rollout of RFID scanners to all of our stores in Q2. During the year, we shifted to weekly counts and inventory updates on brands that are RFID-enabled, which in aggregate represent roughly 25% of our annual volume. The end result was improvement in store in-stocks across the company by 500 basis points, which had a major impact on overall customer satisfaction along with improving conversion. We also believe that the merchants did a great job of leaning into emerging trends and brands, which helped reinforce our position as a key destination during gift-giving time periods such as Father’s Day and Christmas, along with stock-up time periods such as back to school. Adding in-demand brands such as Jordan and Converse to our assortment, coupled with expanding other hot-trending items such as Birkenstocks, Perliville 101, Turtlebox speakers, and the Ray-Ban Metas, helped us drive traffic into our stores during the key moments on our customers' calendars. This is another initiative that we will continue to push on in 2026. Next, our My Academy Rewards loyalty program has continued to grow since we kicked it off in mid-2024. We now have over 13,000,000 customers enrolled in this program. This is another initiative that we are still in the early innings on. We have some exciting plans to accelerate growth on this front in 2026 that we will share in a couple of minutes. Finally, all these efforts combined to help us drive new customers in our stores, which was evidenced by the 10% growth we saw in consumers whose household income is over $100,000 a year. The increased traffic from this cohort is, in effect, helping us diversify and somewhat de-risk our customer base, with these higher-income consumers now representing our largest and fastest-growing customer cohort. To be clear, we remain focused and committed to maintaining our position as the value provider in the sports and outdoor space. That being said, we believe layering on new trending brands and items targeted at the better/best end of the assortment is a good way for us to both expand our share of wallet with existing customers, while also attracting new customers to shop with us. Shifting gears to 2026, as you saw in our press release earlier this morning, we are providing sales guidance for 2026 of plus 2% to plus 5% total growth, which translates into a negative 1% to plus 2% comp sales. The low end of our guidance contemplates a continued muted backdrop for discretionary consumer spending. Our belief is that most of the macroeconomic pressures the consumer faced in the back half of 2025 will carry into 2026. In particular, inflationary pressures on goods sourced outside of the U.S. should continue through the first half of the year. Assuming no additional dramatic changes in trade policy, we believe that as we lap the increased tariff costs in the back half of the year, prices should settle in at their new levels. That being said, there are also several tailwinds that should help us overcome some of these macroeconomic pressures. The first three I will mention are external events that we should benefit from. First, we are still early in the tax return season, but we believe consumers should see higher income tax refunds this year. In the past, we have seen categories such as firearms, gun safes, and work boots benefit from earlier and/or higher refunds during the tax season. It is hard to discern how much of an impact we are currently seeing from refunds, but I will share with you that through the first seven weeks of the quarter we are running a positive comp. We believe some portion of these results could be attributed to higher tax refunds. Second, as most of you are aware, the World Cup is coming to the U.S. this summer, and approximately 30 matches will be played in venues across our footprint. We believe this should translate into increased tourism and foot traffic in the second quarter, which should provide a sales lift for our licensed team and tailgating businesses. Longer term, we have seen events such as this drive increased participation in youth soccer, which should help drive sales in our sporting goods business in the back half of the year and into 2027. Finally, 2026 is the 250th anniversary of the United States. We traditionally see strong selling over the summer in patriotic merchandise, and we believe this year will be even stronger when you couple the surge in national pride around our 250th birthday with all of the excitement for Team USA this summer. At the same time, we have multiple self-help initiatives we put in place, which should also enable us to drive comp growth. We expect the momentum we started to build in our .com results in 2025 will continue to propel the business forward. We are accelerating Academy’s digital transformation by building a modern omnichannel business that will deepen engagement with our customers through data-driven personalization. Key enhancements for 2026 include moving to an AI-based semantic search platform on our site in late Q2 to improve relevancy and conversion. We are also working with leading AI platforms such as OpenAI and Google to enable our catalog of products and offers to surface inside their ecosystems, which will greatly simplify the browsing experience for customers who are using AI as a search engine for shopping. We also continue to grow our online assortment through additional drop-ship partnerships. When you combine this push to expand our endless aisles with the new handheld devices we rolled out to stores, in conjunction with RFID last year, you can see we are empowering our store team members to take care of their customers’ needs in real time by dramatically expanding the assortment available to them well beyond what is physically available in that individual store. Lastly, we continue to expand our reach beyond our own channels through third-party storefronts on platforms where our customers frequent. Chad Fox, our Chief Customer Officer, will present at our Analyst Day on April 7 to give you a deeper dive into many of the topics I just covered, along with some of the other initiatives that we have in the works for later in the year and beyond. Another big landmark for us in 2026 will be the relaunch of the Academy credit card. We launched this program seven years ago, and for many years this served as our only loyalty vehicle. In 2024, we introduced My Academy Rewards as a way to extend loyalty offers to customers who either did not want and/or did not qualify for a private label credit card. These programs have worked in parallel to each other but were not connected. With this relaunch in Q2, we have streamlined the sign-up process and are also creating a unified customer loyalty program with expanded ways to provide increased value to our customers. The new program will have three tiers. My Academy Rewards, which is currently comprised of 13,000,000 members, is the base tier and does not require an Academy credit card to access. Key benefits customers get for joining My Academy include a sign-on first discount of $15 off their next purchase, a birthday reward, free shipping on .com orders over $25, and a $25 reward after spending $500 inside of Academy within the first 90 days. The second tier is a private label credit card that can only be used at Academy. The value proposition for this tier includes all the benefits of joining My Academy with some additional perks. The sign-up first discount accelerates from $15 off to $30 off. Customers get free shipping on all .com orders with no minimum, and similar to today, customers receive 5% off all purchases made in our stores and .com site on this card. The third tier is a new My Academy Rewards Mastercard which can be used as a normal credit card across all purchases. Benefits for this tier include all the ones I listed for the private label credit card along with a couple of additional incentives. First, they get a higher spending limit than customers traditionally get on a private label credit card. In addition to the 5% off for spending with us, these customers also get 2% back on all purchases made outside of Academy and rewards they can redeem to shop back at Academy. Finally, they get an initial $50 reward to shop after they spend their first $500 outside of Academy on their card. The beauty of this new card is a unique and best-in-class value that helps solve an unmet customer need. Most retailers’ cards only give rewards for spending within the brand’s four walls or on their website. Our My Academy Rewards Mastercard will allow all the game families that we serve to leverage all their spend on weekly necessities such as groceries and gas, taking the rewards from this spend and redeeming them at Academy to buy all the gear they need to fuel their families’ activities and passions. We will fully relaunch the program and convert existing cardholders over to the new card in Q2 in advance of Father’s Day. All reissued cards will have a reactivation reward included with their new credit card, which should help drive a good tailwind heading into the key store selling time period. Similar to last year, we will continue to add and expand our offering of better and best brands that resonate with our core consumers. For example, while we launched the Jordan brand in 145 doors last spring, some categories such as boys’ apparel, socks and slides, and backpacks have already expanded out to all doors. We will expand our Jordan Brand Shop concept this spring out to an additional 55 stores, which will take this integrated presentation to more than 200 doors overall. At the same time, we also will continue to expand our offering from Nike of higher-level fashion in both footwear and apparel into all stores and online. Another key trend we are rapidly growing is our offering of work and western wear. We are capitalizing on this growing lifestyle movement by expanding our breadth of assortment with key brands such as Carhartt, Wrangler, and Ariat, while also expanding our vendor matrix to test emerging brands such as Hooey and Brunt. On the fitness front, one of the hottest trends out there is 80 races across the globe. We are their exclusive brick-and-mortar partner in the U.S. and will bring their branded training equipment to over 70 Academy doors this spring so people can train at home for the races. The last big merchandise initiative I will cover today is our continued push into the baseball lifestyle culture. We continue to expand our assortment of the hottest hats and gloves and have supplemented that with an assortment of apparel and lifestyle accessories from hot new brands such as Baseball Lifestyle 101, Dirty Mid’s, and Bruce Bolt. This area was one of our best-selling categories for the holiday, and we expect that the momentum will carry through in the spring and summer selling seasons. We plan to share more on our other exciting brand launches at our Analyst Day in April. The last self-help initiative I will cover is leaning into and expanding on some of the strategic investments we made over the past couple of years. As I mentioned earlier, rolling out RFID scanners last year was a game changer for us as it helped us improve in-stocks and drive higher conversion rates. This spring, we are expanding tagging to include our private branded apparel and footwear products. This will allow us to facilitate weekly counts and update inventory on roughly one-third of our sales base by the end of spring. We also remain committed to our new store expansion plan, and as we shared in our Q3 call, our plan is to open up 20 to 25 new stores in 2026. The majority of these stores will be infill within our legacy and existing markets and should be strong performers for us right out of the gate. At the same time, as we move through the year, the 2025-vintage new stores will start to flow into our comp base. By the end of the year, we will have over 50 stores that opened between 2022 and 2025 impacting our comparable sales growth. We will give you a deeper dive into how we have refined our real estate strategy during our Analyst Day on April 7. To summarize, we are proud of all that the team accomplished in 2025. We expect the macroeconomic backdrop to be challenging for the lower- and middle-income consumer, but believe that there are a combination of external factors that, when coupled with our internal initiatives, should allow us to grow top line sales 2% to 5% while also driving margin expansion and earnings per share growth in 2026. I will now turn it over to Carl to give you a deeper dive into Q4 and full year financials for 2025, along with our initial guidance schedule for 2026. Carl? Carl Ford: Thank you, Steve. Fourth quarter net sales were $1,700,000,000, up 2.5%, and comparable sales were down 1.6%. Breaking down the comp, transactions were down 6.4% while ticket was up 5.1%. In the fourth quarter, Academy Sports and Outdoors, Inc. generated net income of $133,700,000 and diluted earnings per share of $1.98. Fourth quarter adjusted net income was $132,900,000, or $1.97 in adjusted diluted earnings per share. Gross margin of 33.6% in the fourth quarter was up 140 basis points versus last year and exceeded our implied guidance. The majority of the expansion was driven by efficiency gains in our supply chain and the lapping of costs incurred for port disruption from the prior year. Merch margin, inclusive of tariffs, was flat as we managed prices while maintaining alignment with our value pricing strategy. SG&A expenses came in at 23.7% of sales for the fourth quarter, an increase of approximately $21,000,000, or 70 basis points. The increase was driven by growth initiatives totaling approximately 135 basis points, comprised of 115 basis points of new store growth, as we have opened 24 new stores in the last twelve months, and 20 basis points of technology investments to fuel our omnichannel growth. The acceleration in new store growth from 2022 to 2025 has had an outsized impact on SG&A expense growth, but as we move through 2026, the number of new stores at 20 to 25 will be similar to FY25. Looking at the balance sheet, we ended the quarter with $330,000,000 in cash, which was a 14% increase from the prior year. Our inventory balance was $1,500,000,000, an increase of 15% compared to last year. On a per-store basis, inventory dollars were up 6.3% while inventory units were flat. For the full year, we generated $435,000,000 in cash from operations, of which we reinvested $172,000,000 back into the business to drive our growth initiatives. These actions led to approximately $263,000,000 of adjusted free cash flow, of which we returned $234,000,000 to investors through $35,000,000 in dividends and $199,000,000 in share repurchases at an average price of $50.62. In terms of capital allocation, our strategy remains focused on generating cash flow to reinvest into our growth initiatives for the business and to return the majority of our free cash flow back to investors through dividends and stock repurchases. During the fourth quarter, we paid $8,600,000 in dividends and repurchased approximately $100,000,000 of our shares at an average share price of $54.03. We are pleased to announce the Board recently approved a 15% increase in our dividend, resulting in $0.15 per share payable on April 10, 2026 to stockholders of record as of March 20, 2025. Our guidance for 2026 is as follows. Net sales are expected to range from $6,180,000,000 to $6,360,000,000, an increase of 2% to 5%, with comparable sales of negative 1% to positive 2%, with a midpoint of positive 0.5%. I would like to share the assumptions that influence our 2026 guidance. As we head into 2026, we expect the consumer to continue to face a challenging economic backdrop, but we are confident that our internal initiatives alone support the midpoint of our guidance. The low end of our sales guidance contemplates a continued muted backdrop in discretionary consumer spending, and the high end represents an improvement in consumer health, aided by the macro events already mentioned. We also expect traffic to improve as our internal initiatives continue to resonate and prices stabilize throughout the year. Our gross margin rate is expected to range from 34.5% to 35.0%. GAAP net income is between $380,000,000 and $415,000,000. Adjusted net income, which excludes stock-based compensation of approximately $37,000,000, is forecasted to range from $410,000,000 to $445,000,000. Our gross margin gains for the full year of 2025 were primarily driven from merch margin expansion, as we expanded Nike and launched the Jordan brand, and while we do not anticipate the same level of expansion, we do see growth as we expand the Jordan Brand Shop concept into 55 more doors and expand softline brands like Birnabow. This, of course, will be partially offset by the impact of continued tariffs, especially in the first half of the year. In addition, we expect shrink to be a tailwind as we continue to roll out RFID to more brands and private label apparel and footwear. We expect GAAP diluted earnings per share of $5.65 to $6.15 and adjusted diluted earnings per share of $6.10 to $6.60. The earnings per share estimates are based on an expected share count of 67,000,000 diluted weighted average shares outstanding for the full year. These amounts do not include potential future repurchase activity. Our current authorization had $437,000,000 remaining at the end of fiscal 2025. We are also confident in the strength of our cash flows and expect to generate between $250,000,000 and $300,000,000 of adjusted free cash flow after investing $200,000,000 to $240,000,000 back into the business in the form of capital expenditures, primarily for our strategic growth initiatives. Looking at the anticipated shape of the year, our Q1 performance through the first seven weeks is off to a positive comp sales start, and we expect it to be our strongest quarter as we lap a negative 3.7% comp from 2025. On the surface, the second quarter could appear the most challenging as we lap a positive comp, the launch of the Jordan brand, and the subsequent Nike assortment expansion. However, we are optimistic as we expect to see tailwinds from the launch of the new My Academy Rewards Mastercard, as well as the continued rollout of the Jordan Brand Shop concept into 55 doors this spring. Additionally, we expect to see a tailwind from the World Cup, increased tax refunds, and America’s 250th anniversary. We expect the positive momentum in the first half to carry over into the second half of the year, but we are mindful that tariffs and any prolonged impact to gas prices could have a negative impact on the U.S. consumer. It is also important to remember that the 20 to 25 new store openings in 2026 will be more back half-weighted when compared to fiscal 2025 due to the initial pausing of signing new leases for 2026 when tariffs caused uncertainty in construction prices. We will provide updates to our guidance each quarter as conditions warrant. To conclude, we are optimistic as we head into the new fiscal year and believe we have made the right investments and strategic decisions. I look forward to speaking with you again during our Analyst Day on April 7 about our long-range plan. Operator, please open the line for questions. Operator: Thank you. At this time, we will be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Christopher Horvers with JPMorgan. Your line is now live. Christopher Horvers: Thanks. Good morning, guys. So my first question is on sales. You mentioned a large number of store closures in January. Can you quantify how much of a headwind that was to your overall performance in the fourth quarter? And then as we try to parse out what the right underlying trend in the business is, where are you any specificity on where you are running quarter to date? You did have weather headwinds that you lapped last year in February, and then March was not that much better. And then you have had the war recently, which I think historically when these events happen, it does drive some sort of run on the ammo business. So how do you think about the puts and takes of what the right underlying trend is? And have you seen any of that impact from what is going on around? Steve Lawrence: Yes, sure. I will start. So, Chris, we saw trends coming through Christmas pretty strong in the last week leading up to Christmas and even the week after Christmas. January was actually running positive for us. We had roughly half of our stores closed for about three days. It was over a weekend this year versus last year where we had some weather; it was during the week. If you took those three days out where we had roughly half of our stores shut down, we were running a positive comp in the mid-single-digit range. We estimate that was probably worth about 100 basis points in comp of a headwind for us within Q4. We were pleased to see, though, that once the stores reopened, as we said, the business resumed. February was strong. We were happy with the positive comps. We had positive comps across every division. That has continued into early March, so it feels pretty broad-based. I would tell you that ammo, the category you just mentioned, got better during the quarter in Q4. We talked on the previous call about how we were up against the run-up part of the election in Q3, and we saw that business start to stabilize in Q4. It started off running down high single digits; by the end of the quarter it was running down low single digits. It was running positive comp in February before the war kicked off a couple of weeks ago, and then since then, it has obviously accelerated a little bit. But it has also been a solid business for us. It probably was aided a little bit by current events. Christopher Horvers: Understood. And then my follow-up question, Carl, is on the SG&A side. You mentioned that you are going to annualize; you will have two back-to-back years of similar unit growth. As you look at what has happened, you know, ex the lapping, you will lap Jordan, the Jordan rollout, and some of the costs that you put in on the advertising and the updates there. But you have been running 6%, 7%. It looks like we were thinking that was the right trend here in 2026, but the guidance seems to imply about 2% to 3% SG&A growth this year. Is there anything, like how much of that is the annualization of a similar number of store opens? Is there some investments that are being dialed back, or anything unique to get down to that math? I know you mentioned the cadence of the year and how the stores are going to be weighted. So any additional detail on that would be helpful as well. Thanks so much. Carl Ford: Yes. So the main driver of our SG&A growth has been the store increases, and so as we move from 16 in 2024 to 24 in FY25, that had an outsized impact. We are guiding 20 to 25. We think that is the right number for us next year. We feel good about all of the openings. Simply not having the growth in the number of units—it will be about 8% unit growth for us—provides a good level of leverage. As it relates to next year’s guidance, at the midpoint, what is implied is modest leverage from an SG&A standpoint. I will remind you that in 2025, we had $7,500,000 in the Jordan launch cost that was associated with primarily the 145 shop doors. That is going to be less this year, and it will be in Q2, not Q1. And then overall, we are looking for ways to leverage in the business, doing things smarter and more efficiently. We found some automation opportunities—that is helpful—and we are going to have modest leverage next year at the midpoint. Christopher Horvers: Thanks very much. Have a great spring. Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live. Simeon Gutman: Good morning, guys. So if you look at 2025 in the rearview mirror, discretionary spend was fairly light across the board for most end markets, but you were lapping easier compares and you did add a few initiatives, which are working, still seem promising. So looking at the following year—and I appreciate the range, and it is early, and there is a lot of geopolitical things brewing—but, big picture, the return to positive comps, why do you think it is taking as long as it is given initiatives and the drivers and the confidence of landing maybe in the higher end of that range for this year? Steve Lawrence: Yes. I think when we talked about guidance, Simeon, we were looking at the puts and the takes. I would say from a headwind perspective, I think that the consumer was under pressure, as you noted, last year. I think that persisted throughout most of the year, and I think that was probably the one thing that stopped us from getting all the way across the line to get a positive comp. I will note that we actually grew the top line last year, which is the first time since 2021 that we have grown the top line, so that is a good starting point, but we know delivering consecutive positive comps is the key moving forward. That is why we really talked about some of the growth initiatives we have, both self-help as well as some external. You look at our .com business; that has been surging and was up almost 14% last year. I think we have a really good foundational base there. We are going to continue to lean into that. I think some of the moves the team is making and leaning into AI are really going to help out there. The new stores continue to get stronger. We mentioned that our new stores that opened from '22 to '24 ran a mid-single-digit positive comp, and we had roughly 25, 26 that we were feeling that last year. That number doubles this year as more stores fill in the comp base. That becomes an increasing tailwind. I cannot underestimate the impact of this loyalty credit card relaunch and integration. That is a big, big deal for us. It was two separate programs based off when we launched them. I think integrating it is really going to allow us to start delivering value to the consumer. Then you think about other things. We have got some outsized growth in some categories we are carrying, like work and westernwear—those are trending lifestyle initiatives out there that we are really doubling down on this year. We will continue to lean into newness with all the things we have mentioned on the call. Then you have the external tailwinds like the tax refunds, World Cup, and then obviously the 250th anniversary of the United States. So we feel like we have got a really good point of view around what we think the headwinds are. We think we have got a lot of self-help as well as external tailwinds that allow us to get back to positive comps. We think this is the year that happens. Simeon Gutman: Thanks. And a follow-up, the store economic model—if you step back, how is the profitability ramp of the newer stores? And then given the lighter comp backdrop, how do you think of the year-two, year-three stores, or the economic model with the returns producing the way you thought? Carl Ford: Yes, thanks for asking. Our stores in year one are a little bit better than what we anticipated. And with mid-single-digit comps for those that are in the comp set—and that is after the fourteenth month that they enter the comp set—they are performing well. So we are pretty pleased with it. We have seen some opportunities to infill in legacy and existing markets. Those typically perform a little bit better than those in our newer markets where we are establishing brand awareness. From an economic model standpoint, from a CapEx standpoint, it is $2.5 to $3.5 million of net CapEx, and then we invest some incremental inventory there too. We expect a 20% ROIC. From a multiyear standpoint, from a growth trajectory, what we are seeing is that they continue to grow. In the legacy markets, it is pretty steady growth, and then in the new markets, when you look at those that are in the comp set, they are growing well into years two and three as well. Again, we like what we are seeing. We have learned a ton over time since we started launching in 2022. We feel really good about the 2026 cohort. Simeon Gutman: Thanks. Good luck. See you in a couple weeks. Steve Lawrence: Thanks. Operator: Our next question comes from John Heinbockel with Guggenheim Securities. Your line is now live. John Heinbockel: Hey, guys. I wanted to start with this year, the waterfall effect of new stores. Looks like that could be, I do not know, 60 or 70 basis points or something like that at a mid-single digit. Is that fair? Does that sort of suggest mature stores you think will be flattish? And then the impact of loyalty and Mastercard launch, could that be as impactful as the waterfall? How would you sort of compare the two? Steve Lawrence: I think you are in the right range, John. I think that we saw mid-single-digit growth last year in the 2022 through 2024 vintage stores, and you multiply that times the percentage they contribute, it is probably about a 30 basis point tailwind last year that will probably come close to doubling this year. I think you can assume a very similar sort of lift for the loyalty relaunch. And I will remind you, that is for about a half a year because we are really kicking the full relaunch off heading into Father’s Day. So we will also get the benefit of that as we lap the first half of next year as well. So we are really excited about both those initiatives. John Heinbockel: And then maybe as a follow-up, I know there has been a lot of opportunity with regard to supply chain, which I guess has been pushed out a little bit. What is the current update on all of the initiatives? Some of it is technology. Some of it is throughput. Where are we on that? Where are we tracking? Carl Ford: Yes. From a supply chain standpoint, I will get to the future-facing in a second, but we did see the majority of our gross margin gains in the fourth quarter through the supply chain. Some was from lapping—I do not even know if people remember this, but in Q3 and Q4, there were proposed East Coast port strikes. We took some mitigating activities. We were up against those. The efficiencies that we saw in 2025 were more than just the lapping, and I think Rob Howell, our Chief Supply Chain Officer, is doing a great job as it relates to driving efficiencies out of transportation as well as DC efficiency. Moving forward, I would like to couch the majority of the ongoing benefit because we are going to contextualize that in the Analyst Day on April 7, but we have rolled out one of our distribution centers on the Manhattan Active warehouse management program. We are looking to slate the Katy distribution center and the Cookeville distribution center later. It will not be in 2026. We have got some pretty good efficiencies that are going on there right now based off the unitary management there, and that is implied within the guidance. As it relates to beyond that, I still feel really good about the supply chain efficiencies that we spoke about previously, but I would like to give you more color—if you do not mind, I would like to wait until April 7 to speak to beyond 2026. John Heinbockel: Sure. Thank you. Operator: Our next question comes from Brian Nagel with Oppenheimer. Your line is now live. Brian Nagel: Hi, good morning. Thank you for taking my question. I want to—look, a lot of questions and a lot of focus on just this path towards consistent positive comps at Academy. The way I want to frame the question is, today we are hearing, and over the last few quarters, it seems as though the tools to get there are taking shape. You have the new stores and the new product launches, e-commerce effort, etcetera. But we are still not there yet. The question is, is there something in the business, maybe aside from a more difficult macro backdrop, that is offsetting all those positives that are taking shape, that is becoming a bigger headwind for Academy and its push towards positive comps? Steve Lawrence: I would say if you go back and look at 2025 in a vacuum, probably one of the bigger headwinds we faced was ammo. That is a big business for us. It does move the needle, and there were a lot of events that drove that business in 2024 that were not there in 2025. But outside of that, I would say there is nothing I would point to outside of just getting these initiatives and strategies really mature and starting to contribute fully. I think that is the thing that is going to allow us to break through and post a positive comp, and that is why we are excited about all the different initiatives we put together. We are seeing really good green shoots beneath the surface on all the initiatives we talked about, and we think this is the year where all those things culminate and pull together and get us across the line. So we are seeing momentum in the business coming out of Christmas into the first part of this year. We want to be very muted about what we see from a consumer backdrop out there, but we are encouraged by what we are seeing, and we think that the culmination of all those initiatives is what it is going to take to get us there. Carl Ford: I agree with everything Steve said. The primary headwind is the economic health—the financial health—of the American consumer. That is what is moving against e-com being up 13.6%, new stores mid-single-digit comps, Nike and Jordan taken together—because we did not have Jordan the previous year—up high single digits. That headwind, except for the category of ammo that Steve spoke to, is the financial health of the American consumer. And that is embedded within our guidance. We feel great about the initiatives moving forward. But I am seeing credit card delinquencies at double what they were in 2024. I feel job growth in America is not going to be strong in 2026. I think that gas staying high—we are just really conscious of a headwind associated with financial health. Brian Nagel: That is very helpful. And, Carl, I guess my follow-up will be—just to—you made the comment just a second ago about gas prices. So obviously a very big focus right now for the market. A lot of questions of how high and the duration. But given the nature of your business and your consumer and given where your stores are generally located, historically have you seen higher or elevated oil or gas prices more of a friend or foe for your consumers? Steve Lawrence: Yes. I will jump in here, Brian. I would tell you that, obviously, gas prices being high is not good for discretionary spending in America. That is not a good thing for us or for any of our competitors because it just takes more share of wallet from the consumer. On the flip side, to the point I think you are alluding to, we have a big base of stores in Texas, and higher oil prices lead to higher rig count. Higher rig count leads to higher employment in the oil patch, and that sometimes can be a tailwind for us. We are not going to prognosticate on how long this is going to take or how long this is going to play out. But there are definitely puts and takes with what is going on in the world today. We got a question earlier about the impact on some of our categories. Ammo tends to be one of those categories that reacts positively when we have events like this happen. So we are watching it closely. We are not trying to prognosticate about what is going to happen in the war, but we think we have a really good balanced approach based off of the backdrop that Carl mentioned, as well as the self-help initiatives that we have internally to help us overcome those headwinds. Brian Nagel: Very helpful. I appreciate all the color. Thank you. Operator: Our next question comes from Michael Lasser with UBS. Your line is now live. Michael Lasser: Good morning. Thank you so much for taking my question. I wanted to mention some of the puts and takes on your sales outlook for this year. Carl, in your remarks, you talked about a 200 to 300 basis point swing from the low end to the high end of the guide based on macro factors, and yet you are also pointing to some good guys from the macro, whether it is tax refunds, the World Cup, or the 250th anniversary celebration. So are you factoring in around 200 to 300 basis points of a contribution from those factors? Because a year from now, when we are having this conversation, we are going to have to dimension how much of your performance in 2026 is based on what Academy is doing versus how much was based on macro, and it will be very helpful to understand what you assumed within your outlook. Thank you. Carl Ford: Yes. So we started with what our plan is, and it is not a range. It is what we think we are going to deliver. Our self-help initiatives—the things that we are talking to you about: new stores, e-commerce (aided by all the things that Steve said), the loyalty program—these things that we are launching and, in some cases, building upon, get us to the midpoint of that 2% to 5% guidance range. At the low end, we anticipate that macroeconomic factors stay the same and that the tailwinds associated with those three big events you just mentioned—World Cup, 250th, and elevated tax refunds—are completely negated by macro headwinds. At the top end, the 5%, those macro events, those three things, outweigh the headwind associated with financial pressure on the consumer and give us a little bit of a net tailwind, if you will. So our self-help initiatives get us to the midpoint. The three things that are macro drivers are either going to be overwhelmed by financial pressure of the consumer or will give us some benefit, and that was really what differentiated the 2% to 5% low-high guidance. I will tag on this question, Michael, thanks. The other thing I would say is that when you think about the value of the external tailwinds versus the self-help, the self-help are much greater than the external. We think the World Cup is probably worth about 30 basis points for the year. That being said, we think that just the loyalty credit card alone is equal to that this year with having a half year next year. So that should mute or overcome whatever we would be up against from a World Cup perspective. Tax refunds will be repeated; I do not think those are going to be lower next year. And so then you come back to the 250th anniversary of the United States. Helpful—it certainly can drive a surge in patriotism and help us with red, white, and blue. But it is not as big as the impact of the new store comp waterfall, the impact of .com in our business. So I would say that the majority of what gives us confidence this year about being able to bend the curve and get back to a positive comp is the self-help initiatives that are going to drive it. Michael Lasser: Got you. Very, very helpful. My follow-up question is the changing nature of the Academy model pivoting to maybe a slightly higher income and a slightly higher vendor base that might have a higher expectation for how you showcase their product. So as a result, is that driving an increase in your operating expenses? Because if we look at your results in the fourth quarter, your gross profit dollars actually exceeded the consensus forecast, but operating income was a bit short, and it really all came down to SG&A. And the question is, are you seeing less visibility in your SG&A dollars as you pivot to maybe a higher operating cost model as a result of these changes? Carl Ford: Yes. I do not think there is an elevated operating cost model. Again, there are some launch costs, which I walked through for Jordan associated with rolling out the shops, and then we do have a Jordan enthusiast that staffs on key time periods for that. But I really would not point to elevated operating costs as the issue. I think, in looking at the consensus for the fourth quarter on an SG&A rate standpoint, we do still pay people when we close our stores. So if that was a 100 basis point headwind to the fourth quarter comp, we still incur some of those costs without having the sales that they provide. But the majority—almost twice as much—of the deleverage, 135 basis points in the fourth quarter, was because of our growth initiatives that we are pretty committed to. Those will normalize as it relates to the number of stores year-over-year in 2026, which is why we are guiding to modest leverage in SG&A in 2026. Steve Lawrence: The thing I would add on to Carl’s points—I agree with everything he said—is that at our core, we are a value retailer. We are not getting away from that. I want to make sure we do not leave any doubt in anybody’s mind that we are losing focus on that. I think we are in an environment where the lower-end consumer under $50k is really under pressure, is opting out or trading down. We still actively market to them and want them to shop with us. I think we see them come back during times of deep value, like when we run clearance events or when we are in a key time period; we see them come back and shop with us. We see this layering on of better/best brands as the way to somewhat diversify and de-risk our assortment a little bit. From twofold: number one, it helps customers who maybe could not find those brands in our stores previously stay with us and shop when they had to leave. And on the other side of it, I think it is helping us bring in a new customer. So we are still a value-based retailer. We think these new brands help us diversify and de-risk our customer and bring in a slightly more elevated customer, but we do not want you to think in any way, shape, or form that we are losing focus on the value-based customer as well. Operator: Our next question comes from Kate McShane with Goldman Sachs. Your line is now live. Kate McShane: Hi, thanks for taking our question. We are just curious if we could get a little bit more detail about how each business segment performed during the quarter? And then just as a second unrelated follow-up question, when you are thinking about the loyalty program or this new iteration of the loyalty program, what is being incorporated into the margin implications of that in 2026? Steve Lawrence: Yes. So from how the different categories worked out in Q4, we saw strength across a lot of our core businesses. Bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear were all strong. Some of the softer businesses for us during the quarter were more seasonal in nature. So seasonal footwear—think boots—and outerwear. I already mentioned ammo was a little soft. I would say Drinkware was a little soft, primarily driven by lapping some really big numbers from the year before, and Ride Ons was a little tougher for us this holiday. When we went back and looked at it, we had to kind of cobble together an assortment there based off of the tariff environment, trying to find the right goods out there. What is exciting is as we have crossed over into spring and moved to a positive comp, all the businesses are performing pretty well right now. We are seeing pretty broad-based solid business across all the different businesses. Could you repeat the second part of your question, Kate? I was writing something down, and I missed the second part. Kate McShane: Oh, yes—just any kind of cost implications from the launch. Steve Lawrence: Yes. So on the loyalty, what we did is we went back—you know, we always have done different, sometimes targeted, discounts through various loyalty programs that we have. We basically pulled those all together and are bundling them in from a rewards perspective. So we do not expect it to really impact the overall gross margins. It is going to be more repurposing of discounts that we were using in the past for other purposes that we are going to repurpose via loyalty and be much more targeted. So rather than kind of broadly giving out coupons on certain events or certain time periods, it is going to be really targeted at loyalty members, which we think is going to really help us accelerate against them. Kate McShane: Thank you. Operator: Jonathan, are you muted? Jonathan Richard Matuszewski: Oh, good morning. Can you hear me okay? Operator: Yes, now we can. Jonathan Richard Matuszewski: Oh, great. Carl, you mentioned plans for traffic to improve in 2026 versus 2025. So maybe just at the midpoint of your comp range, what is embedded for traffic versus ticket? And how does that change at the lower end and upper bounds of the range? Carl Ford: We do not really guide based off of traffic, so I do not think I can directly answer your question. But I will say, as it relates to all of the context that we have given around sales growth, all of those are traffic drivers. So new stores, positive comping existing stores, launching and annualizing, gross traffic. E-commerce—we look at a couple of different ways to understand share. We look at Similarweb information associated with session growth, and we see that we are taking share there. We think that some of the agent search—and I do not know if you have looked at our website at Scout, the little assistant that helps you with large language searches—that is going to get better, quicker, faster, stronger. The additional Jordan shops—those are traffic drivers. So we have not overtly guided towards the basket or traffic, but I know that traffic will be improved from what we saw in 2025. Jonathan Richard Matuszewski: Okay. Thank you. And then just a quick follow-up. Just looking for more color in terms of the traffic decline this quarter. I do not know if you can share any details in terms of by income cohort, and understand how the lower-income quintiles are reacting to the AURs versus the other cohorts? Thanks so much. Steve Lawrence: Yes. So the traffic trends we saw by cohort mirror what we saw all year that we talked about on previous calls. At the high end, we continue to see a double-digit increase in traffic count—low double-digit increase—from customers in households making over $100,000 a year. At the lower end, we continue to see probably a high single-digit decline in those lower-income consumers, and the middle kind of is holding its own. That is the behavior we have seen all year, and it continued into Q4. Once again, I do not think that the AUR increases and the assortment mix are what is really driving the traffic declines in the lower income. I think they are just under pressure and are opting out or trading down. As I mentioned earlier, we do have some different time periods and strategies and tactics we have to try to engage with them. We were pretty pleased with some of the reaction we saw during February around our clearance event. I think that was a lower-income consumer coming back in and really taking advantage of the values there. And once again, as we run other promotional windows later in the year or clearance events, we are going to get that customer to come back, but they are definitely under pressure. Jonathan Richard Matuszewski: Understood. Best of luck. Thanks. Operator: Our final question is from Anthony Chukumba with Loop Capital Markets. Your line is now live. Anthony Chukumba: Thank you so much for squeezing me in. I guess I just have one question, two parts. It is on the Jordan brand. Just in terms of how has the brand—you know, it has been, I guess, six or seven months now—how has it performed relative to your initial expectations? And then also, do you think that is going to help with bringing some other high-profile brands that you currently do not have in your merchandise assortment? And, Steve, I think you know which brands I am referring to. Steve Lawrence: I do, Anthony. Thank you for the question. We are very pleased with the relationship that we have with Nike and the Jordan brand. We do not have a last year for Jordan, so what we can cite is that if you combine Nike and Jordan together, they grew high single digits, which we were very pleased with. And we are going to continue to expand and grow Nike and Jordan. We are getting more access to premium footwear that we are pushing deeper into the chain. You take a performance running shoe like Vomero, and last year we got it at launch. You are going to see that probably go out to roughly 150 doors as we head into back to school. I think how we brought the Jordan brand to life really showed the Nike team, as well as vendors across the spectrum, what we can do when we launch a new brand. And we certainly use that as a proof point as we are talking to new brands. We will share some information around some new brands in the April 7 update, and obviously, if we get to a place where we are ready to announce, we can announce some of the brands you have asked about in the past. Trust me, you will not have to ask us a question. We will probably tell you before you ask us. Anthony Chukumba: Fair enough. I will see you guys in New York. Steve Lawrence: Okay. Thanks, Anthony. Operator: We have reached the end of the question and answer. I would now like to turn the call back over to Steve Lawrence for closing comments. Steve Lawrence: Thanks. In closing, we made a lot of progress across numerous fronts in 2025, which allowed us to both grow top line sales for the first time in a couple of years as well as continue to gain market share. We believe that we have the strategies and tactics in place to continue this growth in 2026 and move back to comp store growth as well. As always, I would like to thank our 22,000-plus team members for their hard work and efforts, which are helping make Academy the best sports and outdoor retailer in the country. We look forward to meeting with most of you on April 7 and sharing how we plan to build on the initiatives we outlined today in 2026 and beyond. Thank you all for joining our call today, and have a great rest of your day, and happy Saint Patrick’s Day. Operator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.