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Operator: Good morning. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Methanex Corporation Fourth Quarter 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to the Vice President of Investor Relations at Methanex, Mr. Robert Winslow. Please go ahead, Mr. Winslow. Robert Winslow: Good morning, everyone. My name is Robert Winslow, and I recently joined Methanex as Vice President, Investor Relations. Welcome to Methanex' Fourth Quarter 2025 Results Conference Call. Our 2025 fourth quarter news release and 2025 annual report were posted yesterday, and can be accessed through our website at methanex.com. I would like to remind the listeners that our comments today may contain forward-looking information, which by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual results. We may also refer to non-GAAP financial measures and ratios that do not have any standardized meaning prescribed by GAAP, and are, therefore, unlikely to be comparable to similar measures presented by other companies. Any references made on today's call reflect our 63.1% economic interest in the Atlas facility, our 50% economic interest in the Egypt facility, our 50% interest in the Natgasoline facility and our 60% interest in Waterfront Shipping. To review the cautionary language regarding forward-looking statements, and to find definitions and reconciliations of the non-GAAP measures, please refer to our most recent news release, MD&A, annual report and investor presentation, all of which are posted on our website under the Investor Relations tab. I will now turn the call over to Methanex' President and CEO, Mr. Rich Sumner for his comments, followed by a question-and-answer period. Rich Sumner: Thank you, Robert, and good morning, everyone. We appreciate you joining us today to discuss our fourth quarter 2025 results. I'd like to start the call by thanking all our global team members for their continued commitment to responsible care and safety, which remains at the core of our company's culture. Over 2024 and 2025, we've had the best 2-year safety performance in our company's history, even as we navigated significant changes to our asset portfolio and supply chain. As a demonstration of these results, we've had 0 Tier 1 process safety incidents over the past 2 years and recorded only 0.09 and 0.12 recordable injuries per 200,000 hours worked in 2024 and 2025, respectively, compared with the chemical industry average of 0.59 in 2024. These outstanding achievements are a testament to our employees and contractors continued focus on strong planning, hazard awareness and reliable behaviors. Turning now to a financial and operational review of the company. Our fourth quarter average realized price of $331 per tonne, and produced sales of approximately 2.4 million tonnes generated adjusted EBITDA of $186 million and an adjusted net loss of $11 million. Adjusted EBITDA was lower compared to the third quarter of 2025, as higher sales of produced methanol were offset by a lower average realized price, and the impact of immediate fixed cost recognition related to plant outages in the fourth quarter. Turning now to industry fundamentals. We're closely monitoring the current events in the Middle East region and its impact on global markets and our business. Looking back on the fourth quarter, we estimate that global demand increased in China by about 4%, while demand outside of China was relatively flat. The increased demand in China in the fourth quarter compared to the third quarter was driven by increased demand for methanol into energy applications and higher operating rates by methanol to olefin producers, the latter also being supported by high operating rates and import supply availability from Iran. Steady imports from Iran, particularly through October and November, also led to higher coastal inventories in China, which pushed pricing towards the $250 per metric ton range. Towards the end of the fourth quarter, we believe seasonal gas constraints significantly reduced Iranian output leading to MTO producers reduced operating rates in response to decreasing supply. Through the first quarter of 2026, up until current market escalations, our average realized pricing has been quite stable with some small increases on slightly tighter supply conditions. After considering first quarter posted prices and factoring in higher discounts -- customer discounts through recontracting for 2026, our first quarter average realized price is estimated to be between $330 and $340 per tonne. The current escalation in the Middle East brings significant uncertainty to reliability of methanol supply to the market from this region. We continue to see significantly reduced methanol supply from Iran, and we believe it is also impacting operations and trade flows from other producers. This has led to an increase in spot methanol pricing in Asia Pacific and Europe with Chinese methanol prices now trading above $300 per metric ton and European spot prices now trading close to $400 per tonne. Now turning to our operations, where our methanol production was higher in the fourth quarter compared to the third quarter. Starting with our newly acquired assets in Texas. We produced 216,000 tonnes at Beaumont and 186,000 tonnes from our equity share of Natgasoline. During the fourth quarter, Beaumont experienced a short unplanned outage and Natgasoline took a plant 10-day outage to reduce a -- to replace the catalyst that's important to environmental compliance. We've been actively working with both of these manufacturing sites on integration plans, completing detailed reviews of systems and technical findings and are pleased with the progress to date. In Geismar production was slightly higher in the fourth quarter as all 3 plants operated reasonably well, although we did experience some minor unplanned outages. In Chile, after completing a plant turnaround in September, we operated both plants at full rates for most of the fourth quarter, utilizing gas supply from Chile and Argentina. During December, a third-party pipeline failure caused a temporary restriction on gas supply to our facilities, and this resulted in approximately 75,000 tonnes of lost production. The gas supplier developed a resolution to this issue in early '26, and we're now operating both plants at full rates, which we expect to sustain through April. In Egypt, we had higher production in the fourth quarter as the third quarter was partially impacted by seasonal gas availability constraints. There's been stabilization of gas balances in the region, but some continued limitations on supply to industrial plants are expected going forward, particularly in the summer. The plant is currently operating at full rates, and we're closely monitoring the regional situation for any potential impact on gas supply to the plant. In New Zealand, we produced 171,000 tonnes as increased gas supply was available in the nonwinter season. Notwithstanding the short-term dynamics, structural gas supply availability in New Zealand continues to be challenging, and we're working with our gas suppliers, and the government to optimize our operations in the country. Our expected equity production for 2026 is approximately 9 million tonnes of methanol. Actual production may vary by quarter based on timing of turnarounds, gas availability, unplanned outages and unanticipated events. Now turning to our current financial position and outlook. During the fourth quarter, solid cash flows from operations allowed us to repay $75 million of the Term Loan A facility and end the year in a strong cash position with $425 million on the balance sheet. Since the start of '26, we've repaid a further $50 million, and the balance of the Term Loan A facility is currently at $300 million. Our priorities for 2026 are to safely and reliably operate our business and continue to deliver on our integration plan. We remain focused on maintaining a strong balance sheet and ensuring financial flexibility and our near-term capital allocation priority is to direct all free cash flow to the repayment of the Term Loan A facility. Based on a forecasted first quarter average realized price between $330 and $340 per tonne and similar produced sales, we expect slightly higher adjusted EBITDA in the first quarter of 2026 compared to the fourth quarter. We'd now be happy to answer your questions. Operator: [Operator Instructions] Your first question comes from the line of Joel Jackson with BMO Capital Markets. Joel Jackson: Welcome aboard, Rob. Nice to hear from you again. Rich team, can you talk about costs? So if we look at Q4, and we think of costs, not gas costs but other costs logistics, other things going on, can you talk about what does that look like into the first half of this year in Q1? It seems like costs have really elevated. What's going on? Are there any artifacts, some of the things going on with the OCI taking over the OCI assets? Rich Sumner: Thanks, Joel. Yes. I mean a couple of points I'd make on cost is we did see that the unabsorbed costs come through. That's really about how the assets ran through December. We saw some outages there that just results in immediate recognition of those costs to the P&L. As we think into where we were, our fixed costs we would expect those to come down. Our ocean freight was probably a longer supply chain in the third and fourth quarter. As we said, we do have probably a higher percentage of sales coming through in the last few quarters as we -- higher than we expect as we move into the new year with our contracted position. And then we have not yet -- we're not all the way through the OCI transaction. So right now, we are spending costs as we move through to create the synergies post deal, and that will happen through 2026 and when we get into 2027. So we're not all the way there, obviously. And what we do need to do is to continue the integration plans. And as we move through, we'd expect beginning in 2027, that our fixed cost structure also adjusts down to the new base of the business. Joel Jackson: Okay. And then my second question is, obviously, you all know what's going on in the world. And there's a lot of methanol sitting in Iran and Saudi and around the Middle East. You obviously set your contract prices, your posted prices for March just on the onset of this. It's early, but what do you think is going to happen here in the market? Like if this continues, can you talk about what will we see in the short term, the medium term as you see your business potentially changing from what's going on? Rich Sumner: Yes, for sure. I think for us, I mean, I think the -- our first -- and first priority here is our supply to customers. And I think this is where our reliability of supply and our global supply chain really shows -- demonstrates its value. And where we are today is that's our first commitment. Pricing has obviously increased in all regions with the anticipation of tightness coming out because the amount of tons on the internationally traded market here is quite meaningful that's currently impacted. So our first commitment is to our customers. And as of right now, we'll see some benefits because of the tightness on pricing through March, but the real reset will come through into the second quarter. I think the big -- we're talking about around 15 million to 20 million tonnes of the globally internationally traded methanol market here. So it's a significant impact. which will ultimately impact all global markets, and we've seen pricing come up around the world, and we're watching things really closely here obviously, with our customers trying to make sure we keep them whole while also looking at the risks on the global market and potentially some demand destruction that could come out of the market as well. So watching things very closely, and we're really talking to all our suppliers about -- or all of our customers about how we can keep them supplied through this. Operator: Your next question comes from the line of Ben Isaacson with Scotiabank. Ben Isaacson: I have a question and a follow-up. Rich, can you remind us how opportunistic are you able to be when we have price spikes? I know most of your volume is contracted. So can you just talk about how you can take advantage of short-term price spikes? And is there some kind of lag in that recognition? Rich Sumner: Thanks, Ben. Yes, I mean, we're a term contract supplier. So our first priority is our commitment to our customers, and we reset price monthly. And so right now, we're selling based on our March contract price. And we would expect under current conditions that we would be resetting into April to be reflective of the market. So our first priority right today is the security of supply to our customers globally. Of course, there are certain mechanisms in our contracts, which may adjust up slightly, and that's built into our forecast. So you could see that there could be a little bit of a push up in our kind of guidance on where pricing is for the first quarter. But generally, it will reset into April. And our first commitment is really about, how do we make sure we keep the industry operating for our customers and really to help them take care of their business. Ben Isaacson: Great. And my follow-up is in the Middle East. I know things are moving very quickly. Are you aware factually of any damage to methanol assets or export or port infrastructure in Iran? And are you seeing a slowdown in gas flow from Israel to Egypt? Rich Sumner: Thanks, Ben. No, we're not aware of any damage to any methanol facilities. We're monitoring the situation really, really closely. As far as it relates to the gas supply from Israel and to Egypt, our understanding is that gas is not flowing that they've all but shut down the gas imports from Israel today. What we're working really closely with our gas suppliers in Egypt. Our plant continues to operate. It is the low season in terms of demand on the gas grid in Egypt. And -- the Egyptian government has been getting in excess supply or more supply through LNG imports. So, so far, we've got sustainable operations there, but we're watching things and monitoring them really closely. Operator: Your next question comes from the line of Hamir Patel with CIBC Capital Markets. Hamir Patel: Rich, in your price guidance for Q1, you referenced new customer discounts for 2026. So how should we think about, how much maybe on an annual basis, those have shifted? And will that largely be apparent in Q1? Or will it adjust over the year? Rich Sumner: I think the Q1 will be sort of -- is sort of the reset, Hamir. It's what we'll wind up seeing is that when we think about where our realized pricing is for Q1, if you go sort of region by region, China is going to be up because we saw that supply through Q4 built in China. So China is going to realize more in Q1. The European contract settlement actually results in slightly lower pricing for Q1 compared to Q4. And then when we look at where North America, Latin America and Asia Pacific are, they're kind of relatively flat on a realized basis. So that should be a resetting the discount for 2020 -- or Q1 should be consistent through or a good guide for the rest of the year. And then on an average realized basis, we're expecting to be up a little bit. And this is all pre the current developments, right? So I think prior to the current situation, we were going to be slightly up mainly because of China and factoring in all those other considerations. Hamir Patel: Okay. Great. And Rich, with respect to the 2026, the $9 million production guide, can you give us some color on some of the regional puts and takes embedded in that? I imagine the Egypt piece is probably maybe the most fluid. Rich Sumner: Yes, I think it's -- we've got a -- you can think of it in terms of these numbers about 6 million or a little over 6 million tonnes in North America, about 1.3 million to 1.4 million tonnes for Chile, which is consistent with where we were last year, around 0.5 million to 0.6 million tonnes for Egypt, which is obviously less than around an 80% operating rate. And then Trinidad would be one plant would be really the Titan plant around 800,000 tonnes. So I think -- and then New Zealand our guide for New Zealand is less than 0.5 million tonnes, and that's because of the situation we're faced with in New Zealand on gas supply. So those are rough numbers to help you with kind of breaking that out by plant. . Operator: Your next question comes from the line of Steve Hansen with Raymond James. Steven Hansen: I just want to go back to the discount issue or perhaps even just the weighted average global price just as we think about the shifting dynamics there. It did strike me that the realized price came in lower, but not just because of the discount but because of that global-weighted spread or global-weighted average, I should say. Has there been a material shift in the sales mix here in the last 2 quarters relative to prior? It does seem that the formulas we used in the past are becoming outdated. Rich Sumner: No, I think, what we do is we give guidance in terms of percentages in terms of regional allocations there, Steve. So I think you can use those as a good guide. And I think the proportion of China was higher as we move through Q4 for sure. And that's partly because when we acquired the assets, we did inherit a fairly large uncontracted position from the OCI business. We've contracted into Q1 now. And I think the what you'd see is that if you work the percentages, and the pricing you get close to our ARP. But I think, we can help you with that offline, if it's, for some reason, it's not adding up. Steven Hansen: Okay. No, that's very helpful. And just on the operational rhythm or cadence at the new facility in Geismar. It sounds like things are running well now. But just to give us a sense for again that cadence? Is it running sort of to plan, and you think you suggested even full rates? But I mean, is there anything else in sort of the tempo that we should expect to change over the balance of the year, whether it be turnarounds or other major hiccups? Rich Sumner: Yes. No, we're pleased with the operations in Geismar. We've gotten through our the ATR challenges that we had, and we feel really good about the way the asset is running. So in a lot of ways, it's about just continuing to ensure safe, reliable operations in Geismar, and the team is doing a fantastic job there. So we're -- we've put those issues behind us. And right now, we've got a really good, stable production coming out of Geismar. Operator: Your next question comes from the line of Jeff Zekauskas with JPMorgan. Jeffrey Zekauskas: I remember that you were less hedged on gas at Beaumont and Natgasoline. Is your hedging now consistent with your other North American plants, and when there was that gas spike at the end of January? Was that something that you felt or you were hedged against it? Rich Sumner: Yes. Thanks, Jeff. We -- so our hedging today, what we're guiding towards is around 50% hedged for our North American assets, and that's across the whole portfolio. We did see gas pricing, as we always see, come up through the winter period, and then we did hit the gas spike. We'll talk more about our operations when we get to our first quarter results, but we would expect and normally expect gas prices to come up, and then we have different ways to manage that. So we would have had some open exposure, but we would have been managing disclose more about that in our first quarter. We do expect the gas pricing, and that's part of the guide. Really, when we look at slightly higher earnings, part of the reason that it's slightly higher and not higher is because there is a bit higher gas cost coming through in the first quarter compared to the fourth quarter, which we'll give more information on when we go to disclose that in the coming weeks here. . Jeffrey Zekauskas: Okay. And in Trinidad, do you expect your operating rates to rise relative to the fourth quarter or fall in the first quarter? Rich Sumner: Well, we've got in Trinidad. We're running the one plant, the one -- the smaller Titan plant based on a gas contract for the plant. So we're expecting that operations should be very consistent. And yes, we'll operate that plant. Our main focus is going to be on gas contract renewals for the Titan facility. That contract comes up at the end of -- in September time frame, and we would expect to have good operations from that plant up until that time frame. We are looking at the contract renewal already. Most producers are already in discussions for their gas recontracting, their feedstock recontracting in Trinidad, and we're making sure we're in discussions as ours comes up later in the year. But I would anticipate that we're running that plant at similar rates to last year until that time. Operator: Your next question comes from the line of Josh Spector with UBS. Christopher Perrella: It's Chris Perrella on for Josh. As you had lower production out of the OCI -- the acquired assets sequentially. Can you just give us an update on the integration there and sort of what the cost puts and takes over the course of 2026 or what you guys are budgeting in there for the spend to get the synergies? Rich Sumner: Yes. No, the first thing I'd say about the assets is we're really pleased with the way the operations are going there. We -- when we modeled this, on the acquisition, we used operating rates of around 85% to 90%, and we've definitely achieved over and above that since we've owned the assets. We're really impressed with the teams that we're working with, and we're really working collaboratively together to bring our global expertise and work with the expertise at both sites to create value from the asset. So really happy with that. We did have some downtime in Natgasoline, and that was really partly an environmental compliance getting ahead of environmental compliance there and taking a proactive outage. And then we did have some minor downtime at the Beaumont plant as well. So really happy with the way the assets are running and as well as the other parts of the integration. What we did have is, we had, we said about $30 million in synergies that we were targeting to realize by the end of 2026. We've realized some of those, but you also have to take on higher costs when you're integrating systems, and you're integrating teams and other things during that phase. So we're in the middle of that right now, and we'd expect to try to complete that as we move through 2026, and then have realized the $30 million in synergies as we move into '27. Christopher Perrella: I appreciate that. Is there a step-up in the spend there in the year? Or is that cost now kind of baked in on a go-forward basis, at least through the end of the year? And then could you just -- has the gas supply situation in Trinidad absent the contract improved since the events in Venezuela? Rich Sumner: Yes. So to the first question about the spend there increased. I would say no. When we did the modeling around the deal, we would have set a certain assumption around operating rates, and we would have set an assumption around CapEx spend on average per year. The two things I'd say to that is the plants have been operating above our assumptions on the deal. And the second thing is both of the assets have come off of turnarounds in 2024 and 2025. So really, the CapEx spend relative to where we had deal assumptions, which would have been an average are much lower in the early phase of the asset acquisition, which is good for us because we're in a deleveraging period. On your second question, which is in regards to Venezuela, yes. So there's announcements about fields being developed there and for import into Trinidad. So that is a longer-term positive. When we look at the Dragon field that's recently been announced, the things I would say is, one, the size of these fields relative to the demand/supply gap, more than just the Dragon field needs to be developed. So there are other fields also being developed, but that's going to take time. It's going to take a lot of progress. And then ultimately, we're also going to need to ensure that the commercial agreements and pricing that is for that gas, allows that to make sense long term for methanol. So there's a lot to be done there, and our focus is really on the short term right now is how we're operating our plants in Trinidad with a contract renewal that's ahead of us before any of this gas could come on. Operator: Your next question comes from the line of Nelson Ng with RBC Capital Markets. Nelson Ng: Quick question on the supply/demand dynamics. Rich, you talked about potential demand destruction. Can you -- like I think you talked about in the past how MTO facilities are, like their economics are somewhat challenged. But do you expect a large reduction in MTO demand? And also from your customer perspective, do you have a sense of how price sensitive they are? Rich Sumner: Yes. So thanks, Nelson. Yes, just there's a lot of dynamics going on, obviously, right now. So we've seen, just in terms of MTO and MTO affordability, to your point, the price in methanol is rising, but so is the price downstream for the -- in the olefins market, and that's because, it's not -- methanol is constrained, but so is naphtha, so is all the oil derivatives that come out of the Middle East, which means naphtha pricing has gone up, which means olefins pricing has gone up, which means that makes methanol more affordable. So there's a lot of dynamics at play right now. That's what's you're actually uplifting China price, but their pricing in the downstream has gone up too. So the affordability dynamics are changing as well. So there's a lot in play. I think what's going to happen here is depending on the restriction on supply, it's going to be, okay, how does that supply get directed into which markets, and then what does that do to price? So we're watching things really, really closely. But right now, every -- all energy and energy derivatives are lifting up because the demand supply gap continues to grow every day that there's disruption in that region and not a lot of product flowing out. So we're going to monitor this really closely. Our commitments to work with our customers and on security of supply, and certainly, we see the forecast would be there's going to be pressure until some relief comes into the market. Nelson Ng: Okay. Got it. And then in terms of your production in New Zealand, it's staying relatively low in 2026. I presume that facility is marginally profitable. So I just want to get your sense on like what are some of the factors or some of the key factors you look at in terms of making a decision to potentially like mothball that last plant? Rich Sumner: Yes. So I mean, really, it's coming down to gas production and gas development and production out of the field. These are very mature fields, and there's not outside of the existing fields, there's not a lot of new exploration going on. So our concern would be that we have seen the forecast continue to decline. . And in that industry, you have to see capital going in, and you have to see development consistently happening for that to be -- for your operations to be sustained. So we're watching things really, really closely. Today, that we've got a profitable operation, but we are operating even when there's peak gas available, we're still operating at less than one plant at less than full rates, which is not ideal. So we're watching things really closely. And we're working with gas suppliers as well as the government to sustained operations, but it is a tough outlook right now. Operator: Your next question comes from the line of Matthew Blair with TPH. Matthew Blair: Great. Could you talk about whether you're truly realizing the benefits of the OCI acquisition that closed in mid-2025. And just looking at the total company EBITDA in Q3 and Q4, it's roughly flat to Q2, even though like global spot methanol prices are also about flat, and I think the OCI acquisition should have provided at least $250 million in EBITDA. So is this just a function of, I remember Q3, you had some accounting headwinds, Q4, it sounds like some unplanned outages, but are you getting the benefits of that OCI deal rolling through? Rich Sumner: Yes. So I think, maybe the way to answer this is just look at that -- if we look at kind of the numbers that we had on the deal at a $350 methanol price, we said it was slightly over $1 billion in EBITDA. So that would be $250. Methanol prices today are not at $350 per tonne, that's $20 lower across an asset base that's 9 million tonnes. So that's -- the big thing is price. We're also pre-synergies on the deal, so we haven't realized the synergies. And I did describe there are some other things on cost structure that are slightly above what our assumptions would have been on the deal. So as we see that some of those cost issues are transitionary. And I think we can get back to those numbers, but we certainly need the market to be a little tighter and methanol prices to be at the $350 level to hit the numbers that we disclosed. And in today's environment, we would be looking and thinking we're probably at least in the short term, going above $350. Matthew Blair: Okay. Sounds good. And then what percent of your North American methanol production is exported? And should we think about applying spot U.S. prices to those export volumes? Or is that really still on like a contract basis? Rich Sumner: We run our -- I think the way to think of it is we run our global supply chain, our assets through our global supply chain. So we give our regional sales percentages, and then you can see where our assets are located. So our -- we run things so that our product isn't assigned to any particular region. It's a flexible supply chain where we -- our main priority is to keep our customers full with in the most cost-effective manner to do that. So I think it's a little bit more, you have to put it together on where the product is going and how much we're selling. And right now, we've got -- we would give you the global sales allocation, and you can see where our assets are located. And so we will have some cross-basin flows from the Atlantic over into Asia Pacific, but mostly the product stays within the Atlantic Basin. Operator: Your next question comes from the line of Laurence Alexander with Jefferies. Laurence Alexander: I guess, first of all, just can you help parse what the current situation means for the market in terms of the near term? Like how much of the near-term disruption is shipping being rerouted, and to what extent, or how long do you think it will take for you to start seeing customers shutting capacity in response to a tighter market? Can you help sort of parse the near-term supply chain adjustment versus how you're thinking about the demand adjustment? Rich Sumner: Yes. So thanks, Laurence. I think when we look at what supply is impacted today, you have between Iran that Iran puts into the market around 9 million to 10 million tonnes a year. And then when you combine Saudi Arabia, Oman, Qatar, Bahrain in other countries that are going to be impacted. It's probably another 9 million to 10 million tonnes of a 100 million-tonne market, but really a globally internationally traded market about 55 million tonnes. So this is a pretty big impact. Of course, Iranian supply goes only into China. So that's a direct impact to the China market. And then the other product services, mainly the Asia Pacific region as well as some into Europe. So those trade flows today have stopped. How long this lasts, how quickly you can -- you work, you're going to first work off inventories, you're going to try and buy product to ensure security of supply. How long this lasts will impact. How long and how long people have on inventory will ultimately determine how long people can operate here. So our first commitment here is to our contract customers, and the security of supply that we provide through our contracts, and that's our #1 commitment, and we'll continue to monitor this as it evolves because it's certainly hitting methanol, and it's hitting a lot of other downstream oil and energy products as this develops. Laurence Alexander: And secondly, on your shipping fleets, given that you can reroute tankers more quickly than sort of somebody who's using the -- has a ship but that might be contracted to ship in other products rather than being committed to methanol. Should you be seeing a benefit in Q2 or Q3 from that? And can you help size it? Rich Sumner: Yes. I mean, I think the main thing for us is that this is where our time charters certainly give us that security within our supply chain. And so we have very little spot exposure in our fleet. We've seen shipping rates double on a lot of the lanes that we do. And so it's more of a what does it do to our competitors versus what does it do to us to the extent that pricing has to go up to help our competitors cover costs to meet security of supply well, then that's going to be baked into the pricing that we can benefit from. So it's not an immediate like instant hit to our cost structure because we -- ours are fixed in. But we do think that, that partially is compensated through increasing price that's required to get other products into market. So again, that's another factor that we'll be watching. And certainly, this shows that demonstrates the value of our Waterfront Shipping company and having dedicated ships to our business. . Operator: The last question comes from the line of Steve Hansen with Raymond James. Steven Hansen: Just in the event that this conflict does last longer than planned or longer than some people might expect, how do you think about the incremental or excess cash flow coming in the door? Is it just going to accelerate the paydown of Term Loan A? How you've been at a fairly rapid pace thus far, anyways. But is that how we should think about that excess cash flow that comes in the door? Rich Sumner: Yes. Our first commitment is to our balance sheet right now. We have, like I said in the opening remarks, we've got $300 million left on the Term Loan A, and that's our first priority for cash. Of course, we're going to monitor things really closely here. Volatility is important. You can have fly-ups, and then you can have reversals depending on how quickly things do change. But obviously, our first priority and commitment is to the balance sheet post-deal. And right now, obviously, this pricing environment is very supportive of that. Operator: There are no further questions at this time. I will now turn the call over to Mr. Rich Sumner. Rich Sumner: All right. Well, thank you for your questions and interest in our company. We hope you'll join us in April when we update you on our first quarter results. Operator: This concludes today's conference call. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the South Bow Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions]. Please be advised that today's call is being recorded. I would now like to hand it over to your speaker, Martha Wilmot, Director, Investor Relations. Please go ahead. Martha Wilmot: Thank you, Victor, and welcome, everyone, to South Bow's Fourth Quarter and Year-end 2025 Earnings Call. With me today are Bevin Wirzba, President and Chief Executive Officer; Van Dafoe, Senior Vice President and Chief Financial Officer, and Richard Prior, Senior Vice President and Chief Operating Officer. Before I turn it over to Bevin, I'd like to remind listeners that today's remarks will include forward-looking information and statements, which are subject to the risks and uncertainties addressed in our public disclosure documents available under South Bow's SEDAR+ profile and in South Bow's filings with the SEC. Today's discussion will also include non-GAAP financial measures and ratios that may not be comparable to those presented by other entities. With that, I'll turn it over to Bevin. Bevin Wirzba: Thanks, Martha, and good morning, everyone. We appreciate you joining us today. 2025 was an important year for South Bow. It was a year that tested our organization, but ultimately a year that demonstrated the resilience of our business and the discipline of our decision-making. We delivered financial results that were slightly ahead of expectations, advanced our first growth initiative to completion and most importantly, continue to operate safely. Safety remains the foundation of everything we do. In a year of significant activity, we delivered a strong occupational safety record, reflecting the commitment of our employees and contractors, even under challenging conditions. We also made meaningful progress on our Milepost 171 remedial actions, continuing to prioritize system integrity and working toward returning Keystone to baseline operations. Richard will speak to Milepost 171 shortly. Our focus on safety and operations goes hand-in-hand with South Bow's financial discipline. Strong financial performance in 2025, supported by our highly contracted and predictable cash flows enabled us to deliver on our capital allocation priorities. Now turning to growth. At our Investor Day last November, we outlined our ambitions to grow our business. Today, we see multiple potential paths to achieving those growth objectives. This will include a combination of organic opportunities that leverage our existing infrastructure to support anticipated crude oil production growth in the Western-Canadian Sedimentary Basin as well as inorganic opportunities that diversify and enhance the competitiveness of our base business. The policy environment in North America is becoming more constructive, and we believe Canada has a tremendous opportunity to grow production and add incremental egress in the coming years. Canadian producers aspire to materially grow their asset bases, and with our customer-led strategy, we are looking to put forward the most competitive solutions to meet their needs while aligning with our capital allocation principles and risk preferences. All growth at South Bow will be balanced with financial discipline. This is nonnegotiable for our team and Board of Directors. We remain committed to maintaining a strong balance sheet, returning a meaningful and sustainable dividend to our shareholders, all while investing in growth. That balance is central to our strategy. The Blackrod Connection project is a good example of how we think about organic growth at South Bow. It builds on existing infrastructure and enables us to safely and reliably move Canadian crude to a desirable market at a competitive toll. A recent endeavor of ours, the Prairie Connector project has garnered some attention. While currently in early stages, the project would provide firm transportation service from Hardisty, Alberta, leveraging and optimizing South Bow's pre-invested infrastructure and connecting to other systems downstream to deliver Canadian crude to U.S. refining and demand markets, including Cushing and destinations on the Gulf Coast. An open season to determine commercial interest is currently underway, and we look forward to discussing this potential solution further in the future. With that, I'll now ask Richard and Van to provide an update on the operational, commercial and financial aspects of the business. Go ahead, Richard. Richard Prior: Thanks, Bevin. I'll start by talking about our safety performance. We had significant construction activity levels across our business last year from the Blackrod Project to the Milepost 171 response and restoration to executing a significant Maintenance and Integrity Program. The scope amounted to more than 2.5 million work hours, where we achieved 0 recordable safety incidents. Our strong focus on safety supports the well-being of our workforce and the communities where we operate. Earlier this week, we placed The Blackrod Connection Project into commercial service less than 24 months from the time of sanctioning. The project was on time, on budget and with exceptional safety performance. As our first growth initiative, this is a significant accomplishment for the organization and demonstrates that we have a highly capable team who can develop and execute organic projects and deliver competitive solutions to our customers. Turning to Milepost 171. Last month, PHMSA posted the results of the independent third-party root cause analysis, which confirmed that the characteristics of the incidents were unique and that the pipe and wells met industry standards for design, materials and mechanical properties. We began proactively addressing many of the recommendations after the incident occurred last April and have made significant progress on our remedial actions and integrity work with 11 in-line inspection runs and 51 integrity digs to investigate 68 pipe joints completed across the system so far. In parallel, we continue to work closely with our in-line inspection technology providers to enhance tool performance and detection capabilities. We are operating the Keystone pipeline at a high system operating factor, which has enabled us to continue meeting our contracted commitments while under pressure restrictions. As we progress our remedial and integrity work and share our findings with the regulators, we expect pressure restrictions to be lifted in a phased manner. The lifting of pressure restrictions would present an opportunity for a modest increase in spot movements later in 2026. With that, I'll turn it over to Van to walk through our financial performance and outlook. P. Van Dafoe: Thanks, Richard, and good morning. First, I'll speak to our financial performance in 2025. South Bow delivered solid results despite a challenging backdrop that included geopolitical and market uncertainty, tight pricing differentials and pressure restrictions following Milepost 171. South Bow delivered normalized EBITDA of $1.02 billion in 2025, slightly above our expectations of $1.01 billion, with a modest out-performance driven by our Marketing segment. While 90% of our business is underpinned by high-quality cash flows generated from long-term contracts, our Marketing affiliate does make small contributions to our bottom line. Early last year, we took steps to reduce our risk exposure in the face of market volatility, and the team did a great job throughout the year to partially offset some of those losses. Our tax team also did an exceptional job optimizing our tax position throughout the year. Reflecting these efforts, South Bow reported distributable cash flow of $709 million, in line with revised guidance and more than 30% above our original guidance. This out-performance expanded our free cash flow position, enabling us to accelerate our de-leveraging priority. We exited 2025 with a net-debt to normalized EBITDA ratio of 4.7x, slightly better than the expected 4.8x. All other items were in line with our 2025 guidance. After a solid year, South Bow is starting 2026 in a position of strength, and we are reaffirming our financial outlook for the year. As Blackrod cash flows ramp in the second half of the year, we will continue to direct our free cash flow to strengthening our balance sheet, remaining on track to meet our leverage targets of 4x in the medium term. As we de-leverage, we also intend to allocate capital towards growth, and we will share our growth capital plans once we have sanctioned our next initiative. Finally, the stability of our financial results enables us to deliver a meaningful return to our shareholders. In 2025, we returned $416 million or $2 per share through our sustainable dividend. With that brief financial overview, I'll hand it back to Bevin for closing remarks. Bevin Wirzba: Thanks, Van. Thanks, Richard. To close, I'll come back to what defines South Bow. We operate critical and enduring energy infrastructure in a corridor that connects one of the strongest and most secure supply basins in North America to some of the most attractive refining and demand markets, and we have a growing set of customer-led opportunities that leverage our pre-invested infrastructure. We plan to do that with a focus on safety, integrity and discipline, and you can trust that our growth will be paired with balance sheet strength and sustainable shareholder returns, that is fundamental to how we run this company. 2025 showed what South Bow can deliver. We're confident in the foundation we've built and the path ahead offers even greater opportunity. You can expect us to execute it, the right way. With that, I'll now ask the operator to open the line for questions. Operator: [Operator Instructions] Our first question will come from the line of Theresa Chen from Barclays. Theresa Chen: With respect to the open season for the Prairie Connector Project. Can you discuss any early indications of commercial interest at this point, understanding that you are still very early on? And then in general, how are you thinking about competition for U.S.-bound WCS egress from Enbridge and Energy Transfer as well as the impact of incremental Venezuelan barrels flowing to the U.S. Gulf Coast, potentially displacing WCS in PADD 3. What do you see as Prairie Connector's key competitive advantages? Bevin Wirzba: Thank you, Theresa. This is Bevin, and thanks for joining the coverage group. So to direct our -- to your question on the Prairie Connector, we are in early stages, as I mentioned. We -- I did say in our remarks that we are a customer-led strategy, meaning that we had good alignment with our customers heading into the open season. So that's as much as I can share with respect to the outcome of the open season at this time. Obviously, we -- in addressing your second question, the impacts of the other open seasons in Venezuela, my earlier remarks also focused on providing the most competitive solution for our customers. And we believe what we've put forward is a very competitive offering that should attract the attention that we're looking for. So with respect to the other opportunities, owning and controlling the most competitive and direct path to the Gulf Coast has always been an advantage that South Bow has leveraged, and we will continue to do so. Theresa Chen: And in relation to the existing Keystone system, after sharing the root cause analysis related to Milepost 171, can you talk about the timeline of lifting the pressure restrictions in a phased manner. Can you give some details around this? What are your expectations for how much the pressure and hydraulic capacity could step up beginning in second half of 2026? And then within your annual guidance, how much of an impact is this, given expected capacity for higher spot movements, but also the expectations for tight differentials, nonetheless. Can you help us reconcile this? Bevin Wirzba: Yes. Thank you, Theresa. Even initially after the incident, as Richard pointed out, we've been working very closely with our regulator and all the remedial efforts, and we've made tremendous progress on the digs and in-line inspections to-date. And early on, we did -- we were able to have some derates lifted already on the system as we progress. And so what we've described in our release is that we intend to continue those remedial efforts at pace, here this year so that we could see a lifting of the correction action order by the end of this year. We're very -- we're in active dialogue with the regulator to ensure that what we're doing and what we're finding informs the plans as we go forward. In terms of the capacity that would be realized, it would be returning back to the kind of operational capacity that we delivered in previous years, which was, I believe, in 2024 and early 2025, we were just north of 600,000 barrels a day of delivered capacity. With respect to your last part of the question, we -- our outlook in terms of our earnings and our guidance, the timing of this incident kind of occurred where arbs were quite tight with TMX coming on in the early part of 2024, the basin was long pipe by approximately 250,000 barrels a day. In 2025, we saw the basin grow north of 100,000 barrels a day and continuing to grow here in 2026. So we believe that our guidance, while it includes the impact of not being able to move as many spot volumes as we had hoped, the market really -- doesn't really open for us until early 2027. And at that point, we should be -- we're planning and targeting to have the derates lifted so we can take advantage of those arbs, as the basin grows and overtakes kind of the egress out of the basin. Operator: Our next question will come from the line of Robert Hope from Scotiabank. Robert Hope: Two questions on the Prairie Connector. Maybe first, just in terms of a follow-up on when you think incremental capacity will be needed out of the basin? And then how would that mesh with what you would think would be a reasonable regulatory time frame and construction time frame if this project does proceed? Bevin Wirzba: Thanks, Rob. One of the benefits of having a strategy that focuses on our pre-invested corridors is that we're in a position where our permits are in place in Canada for the Prairie Connector, and we're working close with the Canadian energy regulator to manage through that. Obviously, it's early stages. So we're not going to share our timelines for a potential development timeline. But I would suggest much like the Blackrod Project where, we were working within an existing corridor, our ability to advance construction quickly in a regulated environment is consistent with the Prairie Connector Project kind of objectives. With respect to time line of the need for the project, you can see that from our customer base that most are announcing or are suggesting that they have growth ambitions over the next 3 to 5 years of quite materiality. And so being able to develop the project over the next -- in the midterm would be consistent with providing a competitive solution for our customers at the time frame of when they're intending to have their production growth. Robert Hope: All right. Appreciate that color. And then maybe as a follow-up, as we take a look at the -- what the Prairie Connector would connect into in the U.S. and the path down to the Gulf Coast. We've seen Bridger file already for some regulatory approvals there. But how do you envision working with partners to help get barrels down to the Gulf Coast? Bevin Wirzba: Yes. Great question, Rob. We won't speak on behalf of other developers. But what I can say is our team has learned through many previous projects that allocating risk appropriately amongst all stakeholders, our customers, ourselves as developers, partners is really critical. And so the team has been working diligently on that front to ensure that we have the right alignment amongst all stakeholders to ensure that we have a project that could be advanced within our risk preferences, which, as I've stated, is critical. We will not sacrifice our capital allocation discipline through advancing any project. Operator: Our next questions will come from the line of Robert Kwan from RBC Capital Markets. Robert Kwan: If I can just ask about your growth initiatives. I'm just wondering, is there a preference? Or do you -- how do you think about the role of joint ventures and partnerships versus just outright acquisitions kind of over and above the organic initiatives? Bevin Wirzba: Yes. Thank you, Robert. Within our strategy, we've always said that leveraging that pre-invested capital on the ground and organic allows us to develop projects at that 6x to 8x EV to EBITDA build multiple and Blackrod was demonstrated at the low end of that range. And so clearly, organic development that fits the needs of our customers with the same risk preferences that we've been able to achieve with even our base operations is far more accretive for our shareholders over the long term. But as I pointed out in my remarks, to complement that organic strategy, there are opportunities that we believe we could leverage inorganically that provide the diversity and provide some additional synergies to the business. Now obviously, those aren't being -- those won't advance at that same EV to EBITDA build multiple, but the combination of an organic and inorganic strategy, we believe, can deliver the shareholder returns we're targeting. Robert Kwan: And if I could just finish asking about the open season. There's some language there about asking potential shippers to demonstrate market demand for incremental egress opportunities. So just wondering what we should take away from that specific wording. And then how should we think about this with respect to the existing Keystone capacity in your contract rollovers or expirations that would occur in roughly the same proximity as this initiative? Bevin Wirzba: Two great points, Robert. First of all, the language is actually pretty benign in that, from a regulatory standard, we have to prove need and necessity for any development that happens. That need and necessity on our existing permits was demonstrated years ago, and that need and necessity still exists today. And so by -- the language is really pointing to that, our customers are indicating to us if they support the open season that they have need and necessity, they have growth ambitions that require us to develop this this capacity. On the second point, with respect to base Keystone operations and impact potential of re-contracting, the way we think about it is we're really developing a corridor. And the Prairie Connector would be in addition to that corridor, and it really serves the same customer base and the same demand markets. And so we believe that the combination of the two would be an extremely competitive corridor going forward, and we believe that we can provide that competitive solution for customers going forward, making the corridor in and of itself the ideal solution for getting Canadian -- Western Canadian oil sands production down to the Gulf Coast. Operator: Our next question will come from the line of Sam Burwell from Jefferies. George Burwell: Another open season question, but maybe from a different angle. Like are there any learnings to be had from what happened with the original Keystone XL, like especially on the U.S. side, I mean, anything that went wrong on that project that's within your control to perhaps do differently with this one? I mean, obviously, the route will be different, and it's different in many ways. But just curious like what gives you more confidence in this project its success where Keystone XL didn't? Bevin Wirzba: Sam, great question. I was around and many of our team were around during that initial or the last attempt. And so there are a tremendous amount of learnings. With subject to the permit that we have, we're developing it in a very consistent manner to that permit requirements. But our conversations with our customers and how we can work with them through a commercial offering, we're leveraging a lot of those learnings and those commercial discussions that obviously are confidential at this time. Certainly, there were -- as I mentioned in my opening remarks, is that the policy environment in North America has been far more constructive. The unfortunate events that are ongoing in Iran and what we've had in the tragic events in Ukraine really have demonstrated that energy security and establishing energy corridors is critical. And so those realities are a great backdrop for us to provide maybe a solution that increases energy security in North America between the great resource up in Canada to the strong demand markets in the U.S. Gulf Coast. George Burwell: Okay. Understood. And then the -- like sort of tying on to that, like the Bridger proposal mentioned that presidential permits required to cross the border. So just curious, like that was obviously an issue with Keystone XL that everyone knows about. But is there a point in time or a point in construction or some threshold met whereby the presidential permit is kind of iron clad and can't be revoked. And like just has anything changed with that dynamic since 2021 when Biden effectively put the kibosh on Keystone XL? Bevin Wirzba: Yes. Per my earlier remarks, Sam, we're only going to talk to our component of a project, which is delivering service from Hardisty to the border and my comments around risk allocation and structuring and your earlier comment around lessons learned. So there's a lot of things going into the commercial dialogue right now, amongst ourselves and then directly with our partners, and I'll leave our partners to speak to their own business. We've really focused on finding a solution that we can deliver for our customers, the allocation of risk that makes sense for all stakeholders in this approach. If we're not able to achieve those, that risk allocation that we all believe that we need, then the project just won't advance. Operator: Our next question will come from the line of A.J. O'Donnell from TPH. Andrew John O'Donnell: I'm going to sneak in one more about the Prairie Connector, maybe just talking about your existing -- leveraging your existing corridor. I think we know that you guys have some pipe already in the ground in Canada. But let's say things go to plan and the project moves forward, thinking about these barrels getting into Cushing and ultimately getting down to the Gulf Coast. I'm wondering if you could speak to what's needed on your U.S. Gulf Coast infrastructure in order to be able to accommodate potentially 450,000 barrels a day going down to the coast? Would that be all on the existing Keystone system? Or would you be looking to leverage other infrastructure as well? Any details you can provide there would be great. Bevin Wirzba: Yes. A.J., the Keystone system in this corridor has been built in phases, Phase 1, Phase 2, Phase 3. And Phase 2 and 3 was the extension of the Keystone System to Cushing and then to the Gulf Coast. And Phase 3 of the system, the Gulf Coast was sized and built for the original -- the expansion of that system, which is what we're now building into with our Prairie Connector. And so it's just a continuation of that sequenced expansion of the broader Keystone system is what we're intending. There are some -- we did build capacity on that Gulf Coast section for increased volumes. There will be some facility modifications through our base Keystone system that will occur. But this is all just a continuation of kind of that sequenced expansion of our base corridor. Andrew John O'Donnell: Okay. And then maybe just one more, shifting to Marketing. I realize it's a smaller portion of your business, but spreads have been on the move, particularly WCS Houston is trading pretty far back from Brent and WTI right now. Curious if you could speak to kind of what is going on at WCS Houston and if you're seeing any opportunities either in the short or medium term to potentially capture some upside there, either through marketing or maybe storage opportunities? Bevin Wirzba: Yes. A.J., great question. We're always in a dynamic crude oil market, as It appears in the last few years with some macro volatility earlier this year with Venezuela now with the war that's ongoing in Iran. We've taken a really risk-off strategy with our Marketing affiliate. As we pointed out, last year, we went through a situation where early in the year, there were tariffs that caused volatility. That caused us to kind of reevaluate how we leverage our Marketing affiliate and again, back to a customer-led strategy. The whole strategy around our Marketing affiliate is really to kind of reduce the overall operating costs and variable tolls for our customers. And so we don't try to take advantage purposely on any of the swings that we see down in Houston on the WCS. We do manage and contract Marketlink because we still have capacity there. And so we have seen some movements, as you say, but it's really a nonmaterial part of our strategy. We're focused on our -- 90% of our business is contracted and just managing that as best we can. Operator: Our next question will come from the line of Ben Fullerton from TD Cowen. Aaron MacNeil: I guess I had my associate run this one. It's Aaron MacNeil here. You guys highlighted Blackrod as a successful project in the context of the balance sheet in your prepared remarks. Maybe bigger picture, can you speak to how you may look to finance a potentially larger capital and longer duration project given the leverage and payout ratio profile of South Bow? Bevin Wirzba: Yes. Thanks, Aaron. At our Investor Day, we kind of laid out a number of the different financing strategies, whether it's financing a project at the asset level or whether it's partnering with other capital sources. We will look at the specifics of any kind of capital project to ensure that we manage the cost of capital as well as, match it to the execution risk. I think the point I'd like to make, though, is when you think about us developing projects, going back to my comments around within our risk preferences means that when you're -- we're not going to take risks that wouldn't allow us to debt finance something, and that can be a base case for people to look at, is you have to have the conditions and the contract terms and the investment-grade counterparties and the risks mitigated to a level that can attract debt level financing that aligns with our risk preferences. Now that might not be the best way to finance it, but the principles around managing the risks are consistent with any kind of financing approach. And so we wanted to make clear to our market in November that there's multiple solutions on that front. But I want to just remind that we go back to our risk preferences and making sure that anything we develop meets those criteria. P. Van Dafoe: And Aaron, it's Van here. We'll also keep with our de-leveraging journey to get to 4x kind of by that midterm 2028. So we're not deviating from that. Aaron MacNeil: Okay. That's helpful. And then switching gears a bit. we've been fielding a lot of questions on the Grand Rapids arbitration. I can appreciate that you're not going to speak to the ongoing legal matter, but I was just hoping you could help with some clarifying items. So first, again, I assume the answer is no here, but is the Blackrod Connection Project included in the scope of a potential sale? And then second, how should we be thinking about sanctioning new projects with connectivity to Grand Rapids while arbitration is ongoing? Bevin Wirzba: Yes. So Aaron, Blackrod, we advanced as South Bow alone, PetroChina is not involved in that project. They were offered an opportunity to participate in it. And that's as much as I can say as part of the partnership agreement when we do pursue growth, that's obviously the growth within the partnership frame, is open to all partners and whether or not our partners choose to capitalize into those projects is up to them. Operator: The next question will come from the line of Robert Catellier from CIBC Capital Markets. Robert Catellier: Most of my questions have been exhausted here, but I'll take a shot in the dark to see if you're interested in putting out a potential capital number for the Prairie Connector Project should it make it through the open season and have enough commercial interest. Bevin Wirzba: Yes, Robert, unfortunately, you're not going to bait me with that. I'll take a pass. We're obviously in early stages. Our team has done a good amount of work, obviously, given it's an existing corridor, but we're not establishing any costs at this point in time. Robert Catellier: Understood. And related to that, is there any ability or understanding that you can invest in some of the downstream pieces, whether it's Bridger's project or otherwise, should the project move forward? Bevin Wirzba: We're really speaking to the Prairie Connector component is how we're looking to participate going forward, and we're still in commercial discussions ongoing. But as you could appreciate, with the scale of what would be contemplated in Canada, that's a very meaningful development for South Bow. Operator: Our next question comes from the line of Jeremy Tonet from JPMorgan Securities. Jeremy Tonet: Just wanted to turn to Slide 19, if we could, with the Blackrod and project ramp there. If you could just, I guess, remind us what gives you confidence to the ramp. As you laid out in the slide, it looks like the '27 contribution could be 3x to 4x the size of '26 with the project just online now. Wondering if you could walk us through that a little bit more? Bevin Wirzba: Yes. Great question, Jeremy. We did the final tie-in well earlier this year. So our systems are fully prepared for our customer to begin the ramp-up. The sequence of events that we're not in control of are obviously on their end, whereby they would -- they've already been steaming their asset. Once the wells start producing, they'll fill their tankage and infrastructure, fill the pipeline and then fill our tankage. And then that's when the production will actually start hitting the Grand Rapids corridor. So there's a buildup that takes to effectively get through commissioning and filling the existing infrastructure, and that happens through the balance of the last half of this year. Now we have made comments in the market previously. I'll just remind folks that the commercial agreements that were agreed to between ourselves and our customer were to acknowledge that ramp in terms of their production growth. And then in 2027, our outlook is that we'll have a full year contribution of that EBITDA given the commercial agreements. Jeremy Tonet: Got it. Understood. And if we think about '27 in totality, are there any other major moving pieces as we think about growth at that point in time? Bevin Wirzba: Well, I'll refer to my previous remarks, Jeremy, where, we're working hard this year to move through the corrective action order and complete the remedial efforts, which would then allow us to have -- if those -- if the order is lifted, then we would return to being able to be full capacity on our base systems, which would give an opportunity for us to achieve that spot capacity out of the basin at a more material level than what we're experiencing. And just to remind you that, so 94% of our base system is take-or-pay, and we reserve 6% for spot capacity. So that is the capacity we're targeting to leverage in 2027. Operator: Our next question will come from the line of Patrick Kenny from NBCN. Patrick Kenny: Just maybe back on the funding plan for Prairie Connector, assuming a successful open season here. Just wondering if you can confirm your desire for the Alberta government's involvement, if any? Either as an equity partner or perhaps providing loan guarantees through construction just to help protect your financial guardrails along the way. Bevin Wirzba: Thanks, Patrick. Certainly, you're kind of referring to the model that was pursued historically. And I believe The Premier has been pretty clear that she wants private developers to develop projects. And so we're pursuing Prairie Connector as South Bow today. As with respect to your question around loan guarantees and other commercial matters, I'll just refer back to my comments that we're looking at the risk framework and allocating risks appropriately amongst the customers and us as a developer and broadly other stakeholders. We feel that we're in a different environment today where we're able to have those discussions and ensure that we've got good alignment of where those risks should be allocated. Patrick Kenny: Got it. And then maybe on the 60-day review period following the March 30 deadline, how should we think about this period just in terms of the binding commitment? Can they be nullified by any material change in policy such as the emissions cap, industrial carbon tax or any other developments that might come out of the MOU between Alberta and Ottawa? Or would these binding commitments basically be taking on the full stroke pen risk, so to speak, beyond March 30? Bevin Wirzba: Well, as you point out, Patrick, there's a lot going on that, when I refer to a constructive policy environment, constructive also means a very active policy environment where our customers are working closely with not only ourselves on this open season, but considering the broader framework that the Federal and Alberta Government are putting together. And that is obviously consistent with the timeline of what we're pursuing. I'm not able to speak to kind of those conditions or those discussions because not a part of them. But our time line with having a binding open season and the time frame there is just the regulated approach of how you develop a project. And that's why we've really been thoughtful around making a competitive solution for our customers, acknowledging the significant commitment that they have to make over the time frame of the development to commit to a project like this. So these are not small decisions by anyone. I think the basin customers have relayed that they're under the right policy environment, there is an ability for them to grow. And so we'll have to defer to them whether they feel that they have the confidence to grow into the capacity that we're we're offering. Operator: Our next question will come from the line of Benjamin Pham from BMO. Benjamin Pham: Maybe to start off on potential acquisitions. Can [ you both ] provide an update on your appetite and observations on acquisitions since your Investor Day? I'm also particularly interested in valuation levels on M&A versus organic growth? Bevin Wirzba: Yes, Ben, I think as articulated in the Investor Day and even in my earlier remarks, we're pushing all the [ bots ] down the field, both organic and inorganic, certainly organic with leveraging our pre-invested corridors has better valuations. But to complement and diversify our business, we've been in active dialogues to try to move down the path on inorganic opportunities. In both cases, as per even my last response to a previous question is, we can put forward the most competitive organic opportunities for our customers, but it still takes our customers to decide if they can commit. And on the inorganic side, we can provide a compelling potential solution for an acquisition, but it takes the counterparty to similarly view it as a good outcome. So we're managing a kind of multipronged approach where we're advancing conversations on organic and inorganic in parallel. Benjamin Pham: And maybe just a quick follow-up on that. You haven't -- it sounds like you haven't seen just with the market valuations expanding meaningfully since your Investor Day that the spread between the two, they haven't widened since that time? Bevin Wirzba: No. I think, obviously, we've seen a flight to the energy sector and in particular, to hard assets like infrastructure. So many have moved. I think that has just kind of raised the confidence in shareholders in the space and the investment proposition that infrastructure has. So I think it gives us more confidence in the equity capital markets if something did work on the inorganic side that it could be supported in a transaction. So yes, valuations have improved, but I think the strength and the thesis around infrastructure investment has strengthened as well. So I think that's -- if anything, it's a slight tailwind for us. Benjamin Pham: Got it. And maybe a follow-up on the Prairie Connector and you had the Big Sky proposal about a year ago. Are you able to maybe compare and contrast the two? Is it just simply more the downstream is changing, Canadian is unchanged? And then secondarily on the Canadian permits, is that just simply a matter of reaffirming that with the CR? Is there -- you mentioned earlier in your commentary, I just want to clarify that portion of it. Bevin Wirzba: Yes. So in contrast to Big Sky, I think the most important thing is the macro environment. Obviously, at the time that we pursued Big Sky in January of '25, we had a Canadian Government that was going through a significant transition. We had a potential tariff environment that was very uncertain. And we had a policy and regulatory framework that wasn't clear and didn't provide the signpost for our customers to legitimately view growth, any kind of meaningful growth as an alternative. So fast forward a year later, all those three things have materially moved in the favor of a more constructive environment to consider a development. We did find out that our -- this Prairie Connector Project, getting barrels to the U.S. Gulf Coast is a very strategic advantage and leveraging that pre-invested corridor more broadly also provides advantages. So that would be the comparison. With respect to the permitting situation, I mean, these are very complex developments. The largest of the permit requirements, as you say, are held with the Canadian energy regulator. We have to work within those permits that have been awarded, and there are expectations and things that we have to do to maintain them as we -- if we're able to begin developing the project. There are no other material permits that are required at this point in time. Operator: Our next question will come from the line of Sumantra Banerjee from UBS. Sumantra Banerjee: I was just curious about how you mentioned that you materially exited the TSA with TC and were you able to see some workflow optimization? I was just curious about any specific examples of the optimization you could talk to? Bevin Wirzba: Yes. Thanks, Sumantra. Our team had three objectives last year in addition to always, table stakes of safe operations, and that was -- and one of those objectives was exiting the TSAs as soon as we could. And that ties to one of our key objectives this year in terms of now optimizing our business workflows and processes. So we've already begun seeing some optimizations occur, even since October when we were effectively off of the TSAs. And we've got a number of work streams along that front in each of the areas. And an easy example would be in terms of supply chain and procurement in utilizing the historical ERP system that we had until we stood up our own system, all those business processes around invoicing and procurement were done in the old way. And now we're able to establish new procurement. We've got on financial planning and analysis and working on our systems, we've got a really good work stream on even building a new process around budgeting and real-time analysis of our financials and costs, giving the tools to our teams so that they can really run the business as efficiently as possible. So we see 2026 as a big year of standing up all those optimizations. And there is obviously, we're leveraging the latest technology in AI where it's appropriate and where it can help us make those processes more efficient. Sumantra Banerjee: 6 Got it. That's really helpful. And I just wanted to shift towards capital allocation really quickly. I know you outlined your priorities in the release, but just wanted to ask about how you're looking at balancing dividend growth versus reducing the leverage? Bevin Wirzba: So I'll start, but I'll turn it over to Van on our dividend policy. We're -- what I just want to remind folks is that we're going to stick to our capital allocation philosophy with respect to building out this business. And when we spun, we were allocated a significant amount of debt and then a very meaningful and sustainable dividend, but at a very high level and at payout ratios maybe a bit higher than we'd like. But maybe, Van, you can talk through our journey on de-leveraging and dividend growth? P. Van Dafoe: Sure. Yes. Thanks, Bevin. Our payout ratios on a DCF basis and on an earnings basis were higher than what we would like. We'd like them to be kind of on a DCF basis in the low 60s on a consistent basis and obviously under 100% on an earnings basis. So until that time, we would not even contemplate a dividend increase. On top of that, our journey to get to 4x leverage, again, we wouldn't contemplate a dividend increase until we get to that point. And once we do, our plan would never be to forecast future dividend growth. If we decide we are going to increase our dividend, we would state that, and that would be our new dividend level. Operator: This concludes the question-and-answer session. I would now like to turn it back over to Bevin for closing remarks. Bevin Wirzba: Thank you for joining us today and for your continued interest in South Bow. We look forward to connecting with you in a couple of months' time. Have a great day. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Operator: Good morning, ladies and gentlemen. Welcome to Central Puerto's Fourth Quarter of 2025 Earnings Conference Call. A slide presentation is accompanying today's webcast and will be also available on the Investors section of the company's website, centralpuerto.com/en/investors. [Operator Instructions] Please note, this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the company's corporate website at www.centralpuerto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto's CEO; Mr. Enrique Terraneo, the company's CFO; Mrs. Maria Laura Feller, Head of Investor Relations; and Mr. Alejandro Diaz Lopez, Head of Corporate Finance. Maria Laura, please go ahead. Maria Feller: Good morning, everyone, and thank you for joining us. We will walk you through Central Puerto's fourth quarter and full year 2025 results, discuss key operational and market developments and then open the line for questions. Before we begin, please note that my remarks may include forward-looking statements and references to non-IFRS measures, such as adjusted EBITDA. These statements are subject to risks and uncertainties, and actual results may differ materially. Definitions and reconciliations are available in our 4Q '25 earnings presentation and financial statements. Revenues for 2025 reached $782.8 million, up 17% year-over-year. 4Q '25 revenues were $172.8 million, decreasing 26% quarter-on-quarter and increasing 3% year-on-year. 2025 adjusted EBITDA was $337.2 million, an increase of 17% year-over-year. And 4Q '25 adjusted EBITDA was $84.7 million, down 16% quarter-on-quarter and up 30% year-on-year. Total generation for the year was 18.6 terawatt hour, down 14% year-over-year, largely reflecting historically low hydrology at Piedra del Aguila. And also in 2025, we undertook nonrecurring maintenance works in Central Costanera combined cycles and Lujan de Cuyo generation asset. Regarding business performance, 2025 marked a pivotal year of consistent growth and market normalization. The company strengthened its strategic positioning and reinforced its power generation asset portfolio for long-term value creation. Throughout 2025, Argentina's wholesale market -- power market advanced toward normalization. Since November 1, Resolution 400 has supported U.S. dollars-denominated spot prices and recognized a margin over variable costs. In December 2025, 97% of our revenues were denominated in U.S. dollars and we also progressed in the new thermal term market, signing around 11% of total volumes in the contracted market with approximately 900 megawatt hour delivered to industrial customers during November and December. Our CapEx plan in 2025 included fully executed projects over the year and additional projects that allow us to look forward and continue delivering growth. In 2025, our total CapEx was $202.4 million, consisting of concluding with 2024 projects such as the closing of the Brigadier Lopez combined cycle that achieved commercial operation during 1Q '26, and we concluded also the San Carlos solar farm project, our first solar greenfield project. The asset reached commercial operation in November 2025, adding 15 megawatts of renewable capacity to our portfolio. Together with Cafayate, our two 2025 solar projects doubled our installed solar capacity and increased our total renewable portfolio by 20%. Also, in 2025, we extended Piedra del Aguila concession. The company was awarded the concession under the Comahue Hydroelectric Complex privatization process, extending the operation -- the operating term of the Piedra del Aguila hydroelectric facility through 2055. Winning bid offer was $245 million paid in January 2026. The company is also focused on the battery energy storage system projects, looking forward to add 205 megawatts of new technology in 2027. Our growth plan is [ backed ] by our financial strength, flexibility and low leverage ratio. In December 2025, net leverage ratio was 0.3x annual adjusted EBITDA, which positions us well to add new financial debt to finance Piedra del Aguila concession extension and the fee payment and the battery energy storage system projects. 2025 revenues stood at $782.6 million, 17% above 2024 revenues despite the 14% decrease in generation volumes. Spot revenues growth in 2025 reflects additional revenues from the realignment of the spot price over the year and the Resolution 400 since November 2025. Also, we see the effect of the self-procured fuel oil with the associated cost pass-through in revenues. Offsets came from lower water inflows from Piedra del Aguila and the maintenance works in Central Costanera combined cycles. PPA sales growth include new MAT contracts in November and December 2025, including also cost of fuels incorporated in the energy component. Renewable revenues increased by 3% as wind farm volumes increased 5% due to higher wind resources and the full contribution from Cafayate solar plant since the end of August 2025. Full year 2025 EBITDA reached $337.2 million, a 17% increase year-on-year, primarily driven by revenue growth and the market normalization and higher margins from self-procured fuels, which added approximately $8 million. In 2025, total generation reached 18.6 terawatt hours, representing 14% decrease compared to 2024. Central Costanera's generation volumes decreased by 15% year-over-year, primarily due to maintenance work in both Mitsubishi and Siemens combined cycle during 2025. Second, Piedra del Aguila generated 38% less than in 2024, mainly due to historically low water inflows affecting hydro production. Finally, Lujan de Cuyo was 24% lower year-on-year, largely explained by maintenance works in the co-generation asset in the fourth quarter. Moving to installed capacity, our portfolio reached 6,938 megawatt hours in 2025, representing an increase of 234 megawatt hours compared to 2024. The increase was driven by several developments. Brigadier Lopez combined cycle was completed and the San Carlos solar project added 15 megawatts of solar capacity. Together with Cafayate solar farm acquired in August 2025, these two solar projects contributed by 20% of the renewal capacity additions during the year. Regarding market position, Central Puerto maintained its market leadership, reaching 14% market share of total SADI generation. Finally, looking at operational performance, our thermal fleet continued to show solid availability levels. In 2025, total thermal availability reached 77%, while combined cycle availability stood at 89%, reflecting strong operational reliability. During 2025, three thermal and renewable projects were completed, combining greenfield developments and M&A transactions, further expanding our generation portfolio. First, the Cafayate solar farm, which was acquired through an M&A transaction is already in operations. Second, we finalized Brigadier Lopez combined cycle project, which is also already in operation since January 2026. Third, the San Carlos solar farm also entering in operations in November 2025. In addition, we were awarded two battery energy storage system projects, which were granted in August 2025. These projects are currently under development and are expected to begin operations during the first half of 2027. Finally, an important milestone regarding the Piedra del Aguila hydroelectric plant was that Central Puerto successfully secured a 30-year concession extension for the plant through the privatization tender process. The concession fee payment was successfully completed in January 2026, marking another key step in strengthening our long-term asset base. In 2025, the Argentine power system reached a new record for the demand with a peak of 30,257 megawatts on February 10, 2025. Renewable generation rose 16.5% year-over-year and supplied about 19% of total demand, including hydro renewables representing roughly 39% of the total annual energy mix. Thermal fuel consumption declined 2.6% year-over-year with gas oil down 53% and fuel oil 60%, partially offset by 1.2% increase in natural gas and 5.2% increase in coal. As of December 31, outstanding financial debt was $337.8 million and net leverage ratio stood at 0.3x adjusted EBITDA. On December 19, we signed a $300 million syndicate A/B loan with IFC with an average life of 5 years to fund Piedra del Aguila concession fee and Central Puerto's BESS project. Also, our outstanding FONINVEMEM receivable credit was $118 million as of year-end. Overall, 2025 was a year of solid growth and continued progress as the market normalized. During the year, the company kept expanding and strengthening its generation portfolio to support long-term development. Looking ahead, we will focus on three priorities: discipline contracting commercialization, operational excellence and advancing our growth agenda. Fernando Bonnet: 2025 was a pivotal year for Central Puerto, marked by Piedra del Aguila concession extension by 30 years more, portfolio expansion, market normalization and strategic progress across our assets. We enter 2026 from a position of strength with robust liquidity and resilient business model. Thank you for your continued confidence in Central Puerto. Please let's stay connect. And now we will open the line for questions. Operator: [Operator Instructions] Our first question comes from Martin Arancet with Balanz. Martin Arancet: I have three. I would like to run them one by one, if that's okay. First, I was wondering if you could give us some color on why the decrease in the quarter-over-quarter EBITDA given that the market liberalization should have been at least positive for thermal exposed to the spot market. Fernando Bonnet: Martin, thank you for your question and your interest in Central Puerto. The main topic affected the 4Q 2025 is that we have a strong maintenance in our combined -- Central Puerto combined cycle and Mendoza combined cycles, the two of our biggest combined cycles. And because of that, we don't catch in those units, the benefits of the new regulation scheme. But it's only regarding to that. The rest of the equipment was okay and the new regulation is in place. So we expect that will be recovered in the first quarter 2025 -- '26, sorry. Martin Arancet: Okay. And sorry for this follow-up because probably you already disclosed this, but are those plants already working again? Fernando Bonnet: Yes, yes, yes, they start working at the end of December and the other one early January. So we don't expect additional maintenance for those units until 2027, '28. Martin Arancet: Okay. Then regarding one of your main focus for 2026, I was wondering how much of the thermal capacity that was under the legacy scheme do you think can compete for energy PPAs? How much of that do you already have contracted? And how do you see the market for signing the rest of the energy that you have? I don't know if you are seeing much interest. I don't know if you have discussed this with distribution companies. And if you expect probably a stronger interest for industrial consumers as we approach the winter where you have higher seasonal prices? Fernando Bonnet: Well, in terms of our capacity, we are -- we can contract, as you know, 20% of our combined cycles that are the spot legacy scheme. That is around 2 gigawatts, the whole combined cycle. So it's the 20% of that with the private customers, with big industries. And then this -- and we are doing around that 20% yet. During January, February and March, we're going to cover that capacity contracted. For -- to exceed that, we need to go to -- as you mentioned, we need to go to the distribution companies. And that is coming slower. The distribution companies need to discuss with the regulators -- each regulator because it's not only federal, it has local regulators in each provinces. And this is coming slowly because they need to discuss and receive a pass-through possibility in order to make the pass-through to the demand. So by now, we are entering with not a lot -- we are not doing a lot of transaction with distribution companies. Right now, we are, of course, in discussions. We are having advances, but we are not closing big deals yet. We expect that it could happen -- start happening during this year. Martin Arancet: Okay. Right. So do you think that to sign contract with distribution companies, you probably will require I don't know, some backup from CAMMESA or something like that, like it happened with the battery project? Fernando Bonnet: No, no, no, no. We -- of course, we're going to make our credit analysis, and we're going to pick the distribution companies that we think that they are suitable to giving credit, but we don't request additional CAMMESA backup. Talking about, as I mentioned, legacy energy selling because this is month on month, and we can cut the provision if they doesn't pay. So -- but talking about other projects like new generation or perhaps, [indiscernible] this is different. This will be different. Martin Arancet: Okay. And my last question then regarding the other main focus that you will have for 2026. I was wondering where do you see growth opportunities coming this year and probably also the next year? Because it seems that there is not enough incentives yet to add thermal capacity. Now with the thermal capacity competing also for PPAs with renewables, we have seen lower [ tenures ] in new PPAs and at slightly lower prices. So I don't know if adding more battery is now the best idea. And there has been a lot of comments regarding probably new renewable capacity for mining and oil and gas, but it doesn't appear to have materialized yet. So I was wondering where do you see the growth opportunities coming in the near term? Fernando Bonnet: Okay. Well, first of all, we have right now an auction in place for new battery storage system for the other provinces than Buenos Aires that was -- that we get awarded last year. So we are looking spots over the interior in different province Santa Fe, Mendoza, [ Corrientes ], Cordoba, there are opportunities there. This new auction is in place and will be -- have the due date in May this year. So this is an opportunity of expansion that we're going to look at. As you mentioned, in terms of renewables, right now, it's getting difficult to get new PPAs with existing demand. So we are looking for new demand. Now the existing one, as you mentioned, mining companies are one of them. Oil and gas companies are other possibilities, companies that needs -- perhaps gain efficiency in the product in their processes, like introducing steam, perhaps we can work on co-generations there. And looking forward for perhaps in the middle of this year or perhaps in the third quarter of an auction for new capacity that need to be set for cover some areas, specific areas like specifically Buenos Aires area. And I see there are opportunities, not -- as you mentioned, not trying to catch the existing demand with renewable because, as you mentioned, it's been challenging right now because the thermal are entering in the market and are stressing prices. Also, the hydros are entering the market and put some pressure there also. But I see opportunities, as I mentioned, in storage system capacity, in new demand coming from new players in the market like mining companies and a possibility in capacity -- new thermal capacity coming in some auction during this year. Martin Arancet: Okay. Great. So this thermal auction that you mentioned, something similar to the Terconf that got canceled? Fernando Bonnet: Well, it's not completely established by the government yet, but we have talking with them that could be something similar, but with different perhaps approach to the to the demand. So something like receiving a payment for capacity from CAMMESA. But well, it's something that are under discussion right now. Operator: We are going to go now for the question with Lucas Lombardo with BACS. Lucas Lombardo: I want to know the percentage of new term contract that -- the income from -- for the company. Fernando Bonnet: Okay. I think you are referring to how much of the 20% that we can sell to private consumers we reach. That is the question. Lucas Lombardo: Yes. Fernando Bonnet: Yes. We expect during March to cover all those 20%. Operator: Our next question comes from Matias Cattaruzzi with Adcap. Matias Cattaruzzi: I wanted to ask first about the outlook for 2026 and the -- how do you see volumes coming for next year, especially hydro volumes? And then how do you expect the PPA versus spot mix to be in next year regarding the new regulation? Do you expect PPAs to grow more in generation? Fernando Bonnet: Okay. Thank you. Talking about volumes for Piedra del Aguila specifically, the hydrological year starts on May. So it's difficult today to say that we're going to see better inflows than the previous year. Of course, the previous year was a low year, so in our expectations are to be better than that. But to have a clear view, we need perhaps 2 more months in order to see how the year comes. In terms of the thermal generation, we expect an increase because, as I mentioned before, two of our combined cycles were in maintenance during the whole month of December and the other one was in maintenance the whole month of September. So we don't see those maintenance in 2026. So we expect an increase of our thermal generation also. In terms of new PPAs coming, we -- as I mentioned, we are trying to catch additional demand from the distribution companies. This will unlock the possibility to sell the legacy energy above the 20% that we have already granted -- so we expect to have news on that this year. It's difficult to predict, as I mentioned before, it's difficult to predict the volume that we can reach there because the distribution companies are discussing with the regulators, the feasibility of make that pass-through directly to the demand and the terms of that pass-through. So right now, it's difficult to forecast the potential there, but we see potential. So I think we can catch more than the 20% that we are already selling, and we can go over that going to distribution companies. Matias Cattaruzzi: Great. And then do you intend to participate in the upcoming tender for national batteries? Fernando Bonnet: Yes, we are looking at, yes. Yes. We are looking at -- of course, it's different from the participation that we have in the last year because we are looking in places different for our facilities in -- the ones that we awarded last year, we established inside our facilities and it's convenient or very convenient for us. And right now, this new auction is all over the country. So we are looking at places. And the new reality in the battery storage system prices because the lithium goes up, the copper, all the materials the batteries used. So -- and the price according to the last auction. So we are looking at returns on that places that are outside from the -- our facilities -- are far from our facilities is not the same. So we are looking at, but we need to do more work in order to understand if something suitable for us or not. Matias Cattaruzzi: Great. Do you expect to participate in the upcoming privatizations by ENARSA assets? Fernando Bonnet: Yes. Yes, we are looking at. We don't have the mandate yet to move forward, but we are looking at. Matias Cattaruzzi: Great. And do you have any updates on the OpenAI-Sur Energy project? Fernando Bonnet: No, we have discussion with them. After that we award Piedra del Aguila that was very important for them that we have a huge hydro backup in us to give power to them. That was a great news for them. We discussed with them that, but we don't have a clear timing on any additional news coming from that place. Matias Cattaruzzi: Great. And last, can you give us like an EBITDA bridge for upcoming years until 2028? Fernando Bonnet: Well, I can give you some perhaps information regarding 2026. 2028 is, of course, need to -- we will expect to maintain that, but talking about increasing will be challenging regarding the expansion, as I mentioned, of new PPAs and how we're going to do in terms of the new coming auctions. But talking about 2026, we have some certainties that can share with you and the rest of the listeners. One important thing or the biggest improvement that we are seeing for 2026 and onwards is that the PPA, the Brigadier Lopez closing combined cycle PPA going to bring additional $60 million for our EBITDA. The other improvement, as we talked in the previous calls, the new regulation for spot market bring another between $70 million and $80 for our EBITDA. Piedra del Aguila also have an improvement compared to the old regime that compared to this new concession will bring additional $15 million. And if you perform the full year of the renewables that we acquired and build last year, this will add additionally $8 million and -- between $8 million and $10 million more. So [indiscernible] terms will be an improvement of $150 million, $160 million. Matias Cattaruzzi: Great. And I have two more questions. One is if you expect distributing dividends in 2026? Yes. And the second one would be more operational. With the upcoming IP for the Perito Moreno pipeline expansion, do you expect that your plants in the central area would get some more upside with lower costs due to lower gas prices because of the expansion of the [indiscernible] Perito Moreno? Fernando Bonnet: Okay. In terms of dividend, that is something that we'll be discussing by the Board of Directors. Right now, we have no guidance regarding to that, specifically because, as I mentioned, we have different projects under our pipeline, and we are performing some projects right now. So this is something that Board will be -- discuss in the next coming month. Talking about the TGS pipeline, we are -- we don't see a reduction on prices because the gas prices are set right now by the plant gas contracts that CAMMESA and the government signed during the former administration. So we received these prices -- or these prices are fixed until the end of 2028 when those contracts get to the end. So we don't see big reduction on prices until this plant gas goes to the end. In terms of the capacity or the transportation capacity of the TGS, we are analyzing the convenience or not to acquire that capacity. The problem is that going further in a big 10 or -- contract is like 15 -- of course, you can do less, but normally it will be 15 years of contract, is not fully discussed the regulation scheme in which we can recover this additional cost because this additional transportation will have an incremental cost related to what -- one that we are paying now. So it's not clear for us yet the new regulation scheme that will be available or the regulation scheme that will be available to recover that incremental cost. So right now, we are looking at, but we don't have a decision yet. Matias Cattaruzzi: Great. But wouldn't it be better for gas prices in the winter? Wouldn't you need less liquids or gasoline or fuel oil? Fernando Bonnet: Yes. The problem is to get here to our terminals, you do not only need the TGS expansion, you will need distribution here and the distribution in Buenos Aires area are very constrained. So we don't see a full elimination of diesel and LNG during winters for a while. Of course, will be a reduction because the TGS will inject here and also have some volumes that could go to the north. But we'll see a reduction, but not a full elimination of diesel and LNG. Operator: This concludes our Q&A session. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks. Fernando Bonnet: Well, thank you for your interest in Central Puerto. I will encourage you to ask any questions to our team that you may have. Thank you very much, and have a good day. Operator: This concludes today's presentation. You may now disconnect, and have a good day.
Asli Demirel: Good morning and good afternoon, ladies and gentlemen. Welcome to Anadolu Efes' Last Quarter 2025 Financial Results Conference Call and Webcast. I'm Asli Demirel. I'm the Investor Relations and Risk Management Director of Anadolu Efes. Our presenters today CEO, Mr. Onur Alturk; and our CFO, Ms. Yasemen Cayirezmez. [Operator Instructions]. Unless explicitly stated otherwise, all financial information disclosed in this presentation are presented in accordance with TAS 29. Just to remind you, this conference call is being recorded, and the link will be available online. Before we start, I would kindly request you to refer to our notes in our presentation regarding forward-looking statements. Now I'm leaving the ground to Mr. Onur Alturk, Anadolu Efes' CEO. Sir? Onur Alturk: Thank you, Asli. Good morning and good afternoon, everyone, and welcome to Anadolu Efes' Full Year 2025 Operational and Financial Results Conference Call. Before we begin, I am delighted to welcome our new CFO, Yasemen Cayirezmez, who is with us today for her first results call in her new role. 2025 was a year in which we delivered a mixed set of results in a complex and evolving operating environment, but we continued our disciplined execution across our markets. On a pro forma basis, we delivered consolidated volume growth of 7% in full year 2025 and 5% in the last quarter of the year. Beer Group recorded a flat volume performance on a pro forma basis in full year 2025 as a softer domestic performance was offset by international operations. Supported by solid volume performance and timely pricing actions as well as tight discount control, we achieved a healthy top line at TRY 244 billion in 2025. In the last quarter, our EBITDA performance was supported by gross profit improvement and a reduction in our OpEx margin, reflecting our continued focus on strict cost discipline. However, our EBITDA recorded a slight decline around 2% year-on-year on a pro forma basis to TRY 40.5 billion in 2025 with 17 margin -- 17% margin. Our consolidated net loss was recorded around TRY 3 billion in the last quarter. Despite stronger operator profitability in the quarter and lower financial expenses compared to last year, net income was negatively impacted by lower monetary gains and tax adjustments, which in the following section, Yasemen will cover the impact in more details. Yet we were able to deliver a strong net income of TRY 9 billion for the full year. Free cash flow was negative both in fourth quarter and the full year. It was pressurized by weaker operational profitability. Higher interest expense payments as a result of a very high interest rates compared to previous year. Yet there was an improvement year-on-year, thanks to prudent CapEx spending and lower tax payments. Consequently, our consolidated net debt-to-EBITDA ratio stood at a level of 1.4x as of December 31, 2025, still at a healthy level. Finally, I'm pleased to announce our dividend proposal of TRY 0.34 per share, which is a testament of our commitment to delivering value to our shareholders. Looking more closely at our beer operations, diversification across markets was a key factor, supporting volume stability in 2025. In the fourth quarter, consolidated beer volumes reached 2.7 million hectoliter, increasing by 0.6% year-on-year with the contribution of all operations with the exception of Georgia. For the full year, consolidated beer volumes were 13 million hectoliter, broadly parallel to 2024 on a pro forma basis. Turkiye beer volumes declined by 1.1%, while international beer volumes increased by 0.8%, highlighting the balancing effect of our geographic footprint. As shown in the volume breakdown of our beer group operations in 2025, Turkiye remains our largest contributor, while our international markets particularly continue to support overall volume performance. Looking at our Turkiye beer operations, we delivered 1.4 million hectoliter volume in the fourth quarter, up 0.4% versus last year. For the full year, volume reached 2.6 (sic) [6.2] million hectoliters, representing a 1% decline year-on-year, broadly in line with our expectations. High base impact following growth for several years, persistent inflationary environment and less supportive tourism season weighed on domestic volume performance. Despite these headwinds, we continue to invest our portfolio through diversification by launching our new premium brand, Stella Artois. In a market where we clearly observe increasing premiumization, we believe Stella Artois is well positioned to meet evolving consumer needs and expectations. Additionally, in the second half of 2025, we started a distribution of raki Turkish [indiscernible] spirits in line with our ambition to strengthen our presence in the distilled spirits category. We are still in the process of buying 60% of Taris z m, which I believe you will hear from us the developments in the near future. Let me briefly touch on our international beer operations, where our volume performance was resilient throughout the year. Starting with Kazakhstan, we were pleased to see the market stabilization after a few years of contraction. In line with market as a clear market leader, we achieved to record a slight increase supported by low single-digit volume growth in last quarter of the year. This performance was supported by improved promotional activities as well as marketing campaigns together with our continued focus on the KEG segment, while a solid contribution also came from our export business. 2025 was also a strong year in terms of portfolio diversification, supported by successful launches, including Kruzhka Svezhego 0.0 and Wukong Ju, our new product, addressing the changing preferences of consumers. Turning to Moldova. Despite cycling a very strong low teens growth in 2024, full year volumes delivered low to mid-single-digit growth in 2025, which is supported by low single-digit volume growth in the fourth quarter. Throughout the year, affordability pressures remained a key challenge for the market, which is managed by our well-balanced brand portfolio, combined with targeted marketing campaigns and consumer activations. In Moldova, we also introduced one of Efes' most popular premium brands, Stary Melnik iz Bochonka, to the market this year. Additionally, as part of our continuous efforts on the premiumization, we also introduced the premium brand, Spaten to the market. Finally, Georgia, volumes declined mid- to high teens in the fourth quarter and mid-single digit for the full year, mainly reflecting the restructuring of our export operations from Georgia. Some of our export operations are doing local production and paying royalty fees to our Georgian operation. Therefore, as previously communicated, although restructuring led to a lower volume, it does not have an impact on profitability. It is also worth to mention that this impact will continue to weigh on volumes in 2026. We continue to invest in KEG business in Georgia, where there is an ongoing expansion on-trade channel. The negative impact of restructuring was partially offset by our positive momentum in KEG channel as well as premium segment. Regarding our soft drinks business, we -- CCI delivered a solid performance in 2025. Consolidated volume grew by 5% in the fourth quarter and increased by 8% for the full year. Central Asia was the key growth engine with Uzbekistan, Kazakhstan leading the growth. In Turkiye, volumes declined by 1% as a result of a deliberate choice to optimize portfolio since water category has relatively lower value contribution. Excluding water, Turkiye delivered 3.8% year-on-year volume growth, confirming the underlying strength of the core categories. International operations volume grew by 13.5%. Solid growth performance was supported across markets with Central Asia posting robust double-digit growth. Pakistan volumes increased by 1.3%, while Kazakhstan, Uzbekistan and Iraq delivered a robust growth of 15.5%, 33.7% and 12%, respectively. Let me hand over to Yasemen to review the financials now. Yasemen Guven Cayirezmez: Good morning, and good afternoon, everyone. Let me start by reminding that all figures I refer to are on a pro forma basis, excluding Russian operations to ensure comparability with this year. Unless otherwise stated, financials are presented in accordance with TAS 29. In the last quarter of 2025, revenue increased by 10.9% year-on-year to TRY 11.1 billion, yielding full year revenue of TRY 51 billion (sic) [ TRY 54 billion ]. On the other hand, gross profit declined by 4.6%, resulting in margin contraction of 680 basis points. This was a result of last year's low cost base related to very low hedge levels and aluminum costs in Turkey beer operations. Coming to EBITDA. EBITDA declined by 42.2% to TRY 649 million in the quarter, corresponding to 537 basis points margin contraction. Decline in gross profitability was reflected in the EBITDA, and this was partially mitigated by strict OpEx control, particularly in the last quarter. As seen on the bridge, there has been no increase in OpEx in the last quarter, and there are even savings in OpEx in full year. For full year 2025, Beer Group EBITDA reached to TRY 7.3 billion with a margin of 13.4%, which is down 209 basis points year-on-year. On the cash flow side, Beer Group free cash flow was TRY 834 million in the fourth quarter of 2025, thanks to the improvements in working capital as well as lower interest expense and taxes. In the full year, there was a year-on-year decline in free cash flow, mainly driven by softer beer operational profitability, together with the higher interest payments, yet thanks to our efforts to improve working capital, there was improvement both on working capital and CapEx spending. Going forward, improving free cash flow generation remains our top priority going into 2026. For analysis purpose, if you look at the numbers, excluding TAS 29 effects, underlying operational performance is materially stronger, both at consolidated and Beer Group levels. More specifically, on a TAS 29 excluded basis at Beer Group level, revenue would have been TRY 52.6 billion compared to TRY 54.3 billion under TAS 29. EBITDA would have been TRY 10.3 billion compared to TRY 7.3 billion as reported. Accordingly, EBITDA margin would have been 19.6% compared to 13.4% under TAS 29. With respect to debt and cash and debt management, as of end of 2025, consolidated net debt-to-EBITDA stood at 1.4x while excluding TAS 29 effects. This ratio improves to 1.2x. At the Beer Group level, net debt-to-EBITDA was reported at 4x, while excluding TAS 29, it was 2.8x. From the balance sheet perspective, gross debt at Beer Group level stands at approximately USD 0.9 billion with average maturity of 1.7 years, while 67% of gross debt is in hard currency. Our cash position is USD 0.2 billion with 34% held in hard currency and 24% in Eurozone currencies. As regards to risk management, for 2026, we already hedged 47% our aluminum exposure for Turkiye and CIS at USD 2,929. In Turkiye, 57% of our FX exposure has been hedged at a USD exchange rate of 47, while total FX exposure of Beer Group represents approximately 19% of cost of goods sold plus operating expenditures. Coming to the end of the presentation, I would like to underline that despite all the headwinds, we closed 2025 with a stable top line momentum as well as controlled costs and expense structure. For 2026, our priority is to restore positive free cash flow, maintain margin stability through disciplined cost control and improve working capital for sure. Thank you. Now I will hand it back for Q&A. Onur Alturk: Let me recap our strategic focus areas first for 2026. We are fully focused on execution guided by our clear priorities. First, strengthening our brand priority is at the core of our priorities. We plan to elevate brand quality, packaging and executional excellence across both production and sales operations. In parallel, we will continue our pricing discipline, supported by centralized revenue growth management and continuous product and channel mix optimization, focusing deeply on affordability. Second, we will continue to accelerate premiumization as a core growth driver. We will sharpen our portfolio to a higher value mix, scale, value-accretive packs and deepen premium offerings across key channels. Third, we are committed to strengthening the -- and diversify our organization through localization and expanding in spirits category. China and Uzbekistan are key engines of our agenda with localization initiatives moving forward in line with plans. At the same time, we are building a scalable distilled alcohol business with a clear focus on expansion, best-in-class trade execution and profitability. We will also ensure the effective integration of raki business and lay the foundations for a sustainable long-term organization. Therefore, this will strengthen our revenue and support sustainable top line growth. Our quality growth algorithm enables us to grow profit ahead of revenue and revenue ahead of industry growth, while financial discipline is at the heart of how we operate. We will sustain profitability through top line growth and strict cost discipline. We will continue to apply zero-based spending mindset across trade spending, CapEx and tight governance. And this will enable us to eliminate inefficiencies, simplify ways of working and strengthen operational agility. We will strengthen our balance sheet by improving average core working capital across all operations in 2026. Lastly, the most important one is to generate positive cash flow consistently and sustainably. Cash generation is not just an outcome. It's a strategic priority that strengthens resilience and expands our ability to invest. Looking into 2026, we anticipate a year that will remain volatile and complex. Again, persistent inflation, macroeconomic headwinds and geopolitical tensions are likely to continue shaping the environment we operate in. Amid the challenging environment, we expect our consolidated volume to grow mid-single digits with beer volumes to grow by low single digits and soft drinks volumes growth to be mid-single digits. According to the inflationary accounting figures, our consolidated net sales revenue per hectoliter is expected to grow low single digits. Material costs are expected to remain high, while we will manage our revenue growth with the pricing discipline, which will tightly offset some of the impact. And we expect to deliver a flat EBITDA margin across our consolidated beer and soft drink businesses, where the pressure on gross profitability will be compensated by tight OpEx management. According to without inflationary accounting figures, as a result of the revenue growth initiatives in both business lines, our consolidated net sales revenue per hectoliter is expected to grow by mid-teens on FX-neutral basis, where beer revenues per hectoliter is expected to grow high teens. The expected growth from soft drinks volume per unit case low to mid-teens, both on FX-neutral basis. In profitability side, we expect to deliver a flat EBITDA margin across our consolidated beer and soft drink businesses. Our CapEx over sales ratio will be stable at normalized levels of high single digits. Thank you for your patience. I think now we are ready to take questions. Asli Demirel: Thank you, Abe. We have a couple of questions on the floor. So let me start with reading the first one from Tore Fangmann from Bank of America. Could you please elaborate on how and when you can reach free cash flow breakeven and positive cash generation in the beer business? What are the exact stones? And can you already achieve that in 2026? Onur Alturk: So thank you. Let me take this one. Actually, the last part of my presentation that is emphasizing our strategic key focus areas are kind of an answer to this question. Thank you for the question. But the simple answer is focusing on top line and bottom line at the same time. Our international operations had a good start to the year like in Kazakhstan, Moldova and Georgia as well, which is lapping a softer base from last year. And also, we have good launch plans and good marketing plans in Turkiye for this year. But these are all about the top lines. And also, lastly, I mentioned about China, Uzbekistan, Azerbaijan and Belarus in order -- which will help us to increase our top line. But yet again, like the second half of last year and the first 2 months of this year, it's going to be cost disciplined actions, tight OpEx management, ZBB actions and of course, timely pricing in Turkiye and in other international operations. So it's going to be a combination of all these efforts. And the target -- the sole target is being cash flow positive at the end of this year, excluding Russia. Asli Demirel: Thank you very much, Onur bey. Another question comes from [indiscernible]. Several questions from my side. Could you please explain the low base effect for cost from the hedges that affected margins year-on-year? Yasemen Guven Cayirezmez: Let me start with the cash designation, which has an impact on Q4 2025. In Turkiye, the Q4 2024 FX hedge impact was the one-off cost advantage stemming from the use of a lower FX rate through cash designation. So we are no longer using cash designation in our accounting. Accordingly, we don't expect any gross margin dilution in our margins. So what are expectations for 2026 on the gross margin level, a flattish level. Asli Demirel: So Maxim -- there was a question from Maxim regarding gross margin, but Yasemen already mentioned about gross margin. So this year's margin -- this quarter's margin pressure year-on-year is not expected to be seen in 2026. So that was one-off. So I think that answers your question, Maxim. So another question comes from, again, [indiscernible] where do you see Beer Group net leverage ratio at the end of 2026? Yasemen Guven Cayirezmez: Our expectation for the leverage, I mean, net debt-to-EBITDA level is 2.8x for 2026. But of course, with TAS 29 numbers -- I'm sorry, without. Asli Demirel: Can you please run over your CapEx guidance for beer operations in 2026? Do you expect Turkish beer operation to turn into positive free cash flow in 2026 from [indiscernible]? Yasemen Guven Cayirezmez: Our aim for free cash flow to turn into positive within the next of the -- at the end of the 2026. But in terms of the timing, we don't expect any positive free cash flow until the fourth quarter of the year. Asli Demirel: Another question is regarding the impact about the latest Middle Eastern issues crisis. What is going to be the impact on direct impact on our operations? Yasemen Guven Cayirezmez: Actually, our Middle East exposure is very limited. So in terms of the volume and the revenue exposure, I can say that just 1% of our volume and revenue, respectively. Onur bey, do you have any comments on Middle East? Onur Alturk: Actually, as mentioned, based on our preliminary assessment, our direct financial exposure in Middle East is very limited, as mentioned. Our beer exports in the region cover 11 countries, but they represent around 1% of our total volume and roughly 1% of total beer group revenue. I mean, within that footprint, the high-risk markets are Iran, Iraq, Lebanon and Syria. In Iran, specifically, our exposure is asset-light as we operate through a licensing model with no owned assets, limited royalty income and fully collateralized receivables. So -- and also in Turkey, geopolitical developments could potentially create some short-term volatility for sure, whether through logistic constraints, operational disruptions or temporary demand fluctuations. However, we already put mitigation measures in place, including close coordination with our partners, potential route adjustments, careful inventory management and strict receivables control. I mean, overall, while geopolitical uncertainty in the region remains elevated, our current assessment is that the financial impact on Anadolu Efes should remain contained. Asli Demirel: Onur bey, another question comes from [ Melis ]. Can you comment on competitive landscape in Turkish beer market, the consumer sentiment right now and the market share evolve? Onur Alturk: I mean, Turkish markets was resilient last year. But after 4 consecutive years of growth, our beer volumes in Turkey declined slightly by 1% in 2025. One of the reasons was weak consumer demand as well. And the decline in consumer and affordability was another reason, especially the pressure was mainly felt in the second half of the year as the persistently inflationary environment continued to weigh on consumer purchasing power. We also saw somewhat less supportive tourism season last year, softer on-trade demand and of course, a more competitive discounting environment. In response, we maintain a disciplined commercial approach and focused on protecting value rather than chasing for volume. And we try to keep our margins and we try to protect our profits last year. And this year, again, it's going to be a competitive market environment. The year started soft in Turkish beer market again. It's going to be a tough year for us. And we will see, especially after Ramadan, after Bayram, we were -- we have high hopes for the season, summer season this year. Our market share, volume and value share is almost flattish, stabilizing right now. In summer season, we should expect with the marketing campaigns, with the marketing plans, with the launch plans, we are expecting better volumes, but the start of the year is soft. Asli Demirel: Thank you very much. I think there was a question regarding clarifying the free cash flow question. Let me read the question once again. In the beer business, you were expecting free cash flow positive by the end of 2026 in Q4, but free cash flow for the full year '26 will be negative. Can you then reach a fully positive free cash flow in 2027? I think there was a misunderstanding. Therefore, let's clarify. Yasemen? Yasemen Guven Cayirezmez: Our target to reach the positive free cash flow by the end of 2026 on a quarterly basis, we will not be able to see positive free cash flow until quarter 4. I believe this clarified the question. Asli Demirel: There was a question about dividend payment. Why did you increase your dividend payment compared to last year? Yasemen? Yasemen Guven Cayirezmez: Actually, we are paying as a dividend, the dividend that we get through the CCI as a pass-through. We don't pay any more cash from the beer business on top of that. Asli Demirel: This seems to be actually covering all the questions. If we are missing any questions, we can always help through e-mails or calls. So if there are no more questions on the floor, we may end up the call.
Operator: Ladies and gentlemen, welcome to the Lufthansa Group Q4 2025 Results Conference Call and Live Webcast. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Marc-Dominic Nettesheim, Head of Investor Relations. Please go ahead, sir. Marc-Dominic Nettesheim: Yes. Thank you very much. And also from my end, a very warm welcome, ladies and gentlemen, to the presentation of our full year results 2025. With me on the call today are our CEO, Carsten Spohr; and our CFO, Till Streichert. Both of them will present the results for the past year and discuss our commercial outlook for 2026, and afterwards, as always, you will have the opportunity to ask questions. [Operator Instructions] Thank you very much. And with that, Carsten, over to you. Carsten Spohr: Yes. Thank you, Marc, and a warm welcome from me as well to this full year '25 conference, which I think will start in a little bit of a different tone, not because it's our famous 100-year celebration this year, which makes it a special year for us anyway. But while we were focusing on this to a certain degree, obviously last weekend when everything was changed again. So maybe I'll share with you a few thoughts on where we are when it comes to the situation at the Gulf first, which is, as you know, very dynamic. And of course, with a few thoughts on the whole year before I hand over to Till for more details and expected by you feedback on our numbers. And of course, also, we'd like to give you a view ahead as much as possible in such a dynamic environment. On the Gulf situation, like many of us, I would assume, we're a little bit surprised by the various dynamic turns this takes. In the end, our crisis management always asks us for safety first, which, in our case, meant we stopped flying a day early to the region, which also allowed us to have hardly any aircraft on location because we brought them home before. We then brought our crews home and then went into the next phase of our management of the situation by deciding to close 10 destinations initially, which included Larnaca. We are opening this next -- this Saturday, again, we'll keep the others closed for probably a few more days at least to remain. I think there's more and more now doubts. This is a question of days of reopening or was it weeks, we prepare for both, and we'll take you through this in the Q&A session, if required. Second, of course, big impact spike on fuel prices. Till will come back to that. We actually believe, due to the fact that we are hedged higher towards our main competitors, actually only other airline hedged the way we are is Ryanair with which who, as you know, hardly overlap, should give us a relative advantage where now prices in the markets need to go up to cover for higher fuel prices, especially, of course, for our American competitors and partners to more or less are not hedged at all. Third, extension or extra sections to be flown to markets beyond the Gulf. We have seen huge demand since day 1 for bookings coming in from Asia, to Asia, also South Africa, also very much in China towards Beijing and Shanghai. So we now decided to put extra sections into the air with spare aircraft we have due to the cancellations, spare crews we have and also by the fact that we're still in the winter schedule which doesn't put our fleet to the max. So we already announced quite a few extra flights to Bangkok. There will be more coming to Singapore, to Shanghai, to Cape Town, and to India, which will probably confirm the course of the last day from our revenue management teams that we have record inbound bookings, especially to those regions I mentioned. And that will allow us probably give also later on to a more positive outlook on the commercial output, at least of this initial phase of this crisis than we otherwise would have been able to do. Last but not least, the mother of all questions probably for European airlines. How much is the situation changing the view and the behavior of travelers, customers on this obvious Achilles' heel of geopolitical topics beyond aviation but surely in aviation. So we all -- I think we, the Gulf carriers will reopen eventually but how our traffic flows, how are cargo flows being directed in the future based on this terrible experience locally, I think is the mother of our questions for our industries, and we're sure we'll be discussing that later on. With that, let me, nevertheless, take you, of course, now back to '25, which, as you might recall, we have called a transition year from the very beginning. Various topics in the pipeline, we have addressed to you before, and of course, happy to also discuss today. Overall, the turnaround of the Lufthansa Airline remains our utmost priority. As also mentioned in the former quarterly result sessions, starting from operations. We have seen significant improvements, which also allowed us to reduce our flight irregularity costs by 43%, equivalent of EUR 362 million, significant input into our improved numbers of '25. And overall, also, we were quite cautious with our capacity increase, which only resulted a 4% or a little less, even 3.8% growth by lifting our revenues to a new record of EUR 39.6 billion. Nevertheless, of course, we're able to improve our profits, as you know, to at least by 19% compared to '24. This is a delta of EUR 350 million, far away from where Till and I want to take the company, talk about the 8% to 10% margins, but at least a step in the right direction and especially when it comes to the core airline operational stabilization was the basis for everything to come. We once again saw strong earnings contribution from MRO and Logistics. But for us, important that also in the core of the core, we are moving forward. We also have seen the first but only the first positive impacts of our fleet modernization and the associated product improvements. As you know, we finally were able to certify our Allegris seats also the 787, which is a big part of the 23 new aircraft deliveries we received. As a matter of fact, 7 of these 23 were 787 with now more or less all certified seats across all classes. That fleet alone, Boeing 787 will grow to 32 aircraft by the end of the year, '27 will have a significant impact on our modernization. Allegris, our new product in Lufthansa and SWISS Senses are now underway out of 3 hubs: Munich, Zurich and Frankfurt. Not only we are receiving very positive feedback but maybe more important for you in numbers, we have been able to achieve 12% higher yields for Allegris than for the former business class. To give you an example on business class, that's a big element of bringing up our ancillary revenues, which already went up 15% last year. And I'm pretty sure we'll show you some good numbers for '26 a year from today. Overall, that, of course, forced us to discuss how much we want to make sure that shareholders already participate from this improvement. We decided to increase the dividend by 10% to EUR 0.33 per share, which is a 10% increase, resulting in a dividend yield of 4% and a payout ratio of 30%. With that, let me turn to the traffic regions. I think we all remember Liberation Day last spring, when there were doubts about the development of the North Atlantic, it turned out as expected that the North Atlantic remained strong. And by the way, continues to do so. We'll come back to that later. And we managed to expand and sell capacity on this most profitable market segment of ours by 5%. In the fourth quarter, with an overall capacity growth of roughly 4%, we even managed to slightly increase unit revenues on a currency adjusted basis, which was clearly a trend reversal to the demand situation we saw in Q3. Going forward, I think the backbone of North Atlantic will remain but I think it's already fair to say we will see an increased shift of point of sales to the U.S. This stage where American customers tend to book earlier than European customers in Q3, in Q2, we are almost at a 60% above share of point-of-sale U.S. and obviously below 40% in Europe. Again, due to the later booking patterns of Europeans this will shift a little bit. But again, I'm convinced the trend of last year where we grew our American passengers by 10%, and our European passengers only by 1%, will probably result in even stronger dynamics this summer. Second largest intercontinental area for Lufthansa is not anymore China but by now India, which is also obviously one of the fastest-growing aviation markets in the world. We signed a partnership agreement with our long-term partner, Air India, following just a few weeks after the EU and India had concluded a new trade agreement. We, in this case, includes not only Lufthansa but the German economy, the German business environment, are quite positive and bullish on India. And of course, Lufthansa Group wants to be part of it. But also in South Korea and Japan, where we slightly increased capacity, along with demand, we were able to bring up profitability. And that is also true for South America, which, as you know, becomes more important for us also due to the fact that with IATA, we were able to double our capacities to Argentina and Brazil. The idea for '26 is to grow 6% on intercont and more or less stay flat on cont. And as I said, this, of course, does not include our recent extra sections, we are now in the process of offering. So these numbers, of course, are based on the regular flight pattern, which probably will change due to the short-term demand we are trying to take advantage of. Nevertheless, focused growth will remain our fundamental principle. We've seen the upside of this '25 and we'll probably see more of this in '26. Coming to the next slide. Let me talk a little bit about our obviously unique business model based on the fact of not having the same home market as our main competitors in Paris and London. We will be even more focused on the 4 business segments, and we'll also show them now also in our financial reporting with the 4 strategic pillars we know. Network Airlines will continue to be our core of the core by 70% turnover share. Of course, with Lufthansa Airlines being the biggest part of it. But we will also now be more transparent on our success in the point-to-point business where Eurowings is continuous, not only going strong to defend our non-hub home markets. You all know this is the utmost priority for Eurowings historically, we also see due to the fact that other airlines have been leaving Germany due to the high cost structure, additional market opportunities on the leisure side, we are continuously exploring. Third pillar, Logistics. Not surprisingly, the more unplannable the global economy is, the better for cargo. We've seen a good year in '25. Till will give you more numbers on in a minute. And already, the way things are starting now after the Chinese lunar year with a complete mix up of traffic lanes and supply chains due to the situation at the Gulf, we're probably looking at a good year here as well. And on top of that, new consumer behavior when it comes to e-commerce, I think combined, will make this big. This is a strong part of our company to come. That's even more true for Technik. We all have discussed with you before that '25 due to tariffs, there has been a little bit of a slowdown of our increase of margin and profits, which we don't expect to see again in '26. And obviously, the more or less new part of the Technik business being defense will probably also get more headwinds -- sorry, tailwinds, tailwinds from the unfortunate military developments in Iran over the last days and more to come. So I'm sure we'll be talking this -- we will be talking about this rather more than less in the future. Till with that little call it, 360 and almost hourly dynamic situation where we are, I hand over to you and talk to you in a few more minutes with some outlooks on my side on the strategic path before we are ready for your questions. Till Streichert: Yes. Thank you, Carsten, and also a warm welcome from my side. Exactly as Carsten said, I'll deal with the 2025 looking backwards. And then, of course, looking into 2026 and commenting on our outlook and then Carsten and I will try to answer your questions, in particular, to 2026 as much as we can in the best possible way. But let's first get 2025 out of the way. So 2025, as you've seen, revenue increased by 5.4% to EUR 39.6 billion, enabled by disciplined capacity growth of 3.8% of our Passenger Airlines, strong third-party revenue growth at Lufthansa Technik and as well continued strong demand for air cargo. And while costs developed in line with expectations last year, the cost increases continued to weigh on our P&L, such as a 10% increase in fees and charges or also a 40% increase for emission certificates last year. On the positive side, we did benefit from a lower fuel bill in 2025 and that was EUR 514 million lower than the year before. Overall, adjusted EBIT increased by EUR 350 million to EUR 1.96 billion and our adjusted EBIT margin improved to 4.9%. Please note, due to a one-off tax valuation effect, our positive EBIT development did not translate into a higher net income. Adjusted free cash flow amounts to EUR 1.2 billion, and this is a significant improvement, and this significant improvement was driven by the stronger adjusted EBIT, tax reimbursements and a slightly lower net CapEx. Turning now to our Passenger Airlines. The segment surpassed last year's results despite a challenging environment. Adjusted EBIT increased by EUR 41 million, supported by favorable fuel prices, a significantly lower irregularity impact and a positive earnings contribution from IATA. We are especially happy about Lufthansa Airlines adjusted EBIT improvement of around EUR 250 million. And this reflects the positive impact of the turnaround program. And across all our airlines, capacity grew, as mentioned before, 3.8%, with growth being primarily deployed to the North Atlantic and Continental routes, reflecting the strategic importance of both markets. In the second half of the year, we shifted capacity growth towards intercont markets while streamlining cont traffic. Seat load factor was at 83.2%, slightly higher than 2024 and with a clear momentum towards year-end. As anticipated, yields came under pressure, particularly on short haul and parts of long haul. However, I want to highlight that in our important North Atlantic traffic, unit revenue increased in the fourth quarter by 2.1% on a currency-adjusted basis, confirming the resilience of the demand. Moreover, yield weakness was, to a large extent, compensated by strong growth in ancillary revenues, up 15% for the full year as well as significantly lower irregularity related compensation cost. On the cost side, we have improved our performance throughout the year, while ex fuel CASK still increased by 3.6% in the first half of the year. The increase in Q3 was only 0.5% and the Q4 CASK was almost flat to prior year. This impact of our turnaround measures is important given the ongoing substantial cost inflation in fees, charges and personnel costs. As mentioned before, Lufthansa Airlines is of fundamental importance to us. So I'm happy to report progress. In its turnaround program, we achieved measures with a gross earnings impact of more than EUR 500 million, a clear confirmation that the turnaround is gaining traction. Looking ahead, we expect to measure volume to increase to EUR 1.5 billion by the end of 2026 and to EUR 2.5 billion by 2028. As communicated in our -- on our Capital Markets Day, we are targeting a high single-digit adjusted EBIT margin by 2028 to 2030 for Lufthansa Airlines. The key building blocks of this trajectory are clear: The continued renewal of our fleet, productivity improvements and the combined power of many other initiatives of the turnaround program. On fleet, we expect the Allegris share of the Lufthansa Airlines wide-body fleet to reach as much as 50% by the end of the year. This goes hand-in-hand with an improved yield level, we currently see a 12% RASK uplift from Allegris. On productivity, we will shift further 14 aircraft into our more cost-efficient AOCs, Discover Airlines and City Airlines, City Airlines has recently taken up operations out of Frankfurt and will operate 18 aircraft by the end of the year in total. Discover will operate 32 aircraft, including four A350s. Combined with further measures to improve cockpit and cabin staffing, this is expected to increase crew productivity by about 7% in 2026 compared to prior year. On our 700 turnaround initiatives, let me just comment on some of them. One example is ancillary revenues where we expect a further push driven by the prominent placement of additional services as well as the consistent monetization of the Allegris seating options. Our new cont fare structure will lead to a more personalized offer with the aim to increase customers' willingness to pay. And on the cost side, we will increase operational efficiency and hence, achieve a further reduction as well in fuel consumption. All of this improves financial performance. And in 2026, we expect that we can limit the increase of the Lufthansa Airlines ex fuel CASK to a maximum of half the annual rate of inflation. Moreover, it is noteworthy that this unit cost increase is fully driven by premiumization, hence an investment into value creation for both our customers and ultimately, our shareholders. Ladies and gentlemen, structural improvements do not only apply to our mainline, we also focus on digital transformation on a group level. Let me briefly touch on the progress of our One IT program. One IT is a group-wide transformation program and its aim -- its aim is to move toward a completely unified IT backbone, a common data and AI foundation and an integrated operating model under the recently founded legal entity Lufthansa Group .IO. The objective is clear, structurally lower IT costs while unlocking digital business value. And I'm pleased that already in 2025, the launch year of the program, One IT delivered its first tangible financial contribution. We realized more than EUR 50 million of IT cost savings through quick wins such as contract renegotiations, sourcing optimization and application rationalization. In 2026, One IT will focus on the implementation of structural changes followed by scaling on in 2027. The program targets in total about EUR 200 million of sustainable annual cost savings by 2030. This IT transformation will also enable significant additional business, value for example, ancillary revenues, personalized advertising or cost improvements and customer servicing. And this is why One IT is not only a cost program, but a core enabler of value creation across the entire group. Let me now turn to our Logistics segment. Lufthansa Cargo once again delivered a strong performance in 2025, demonstrating that the business is well positioned in the post-pandemic air freight environment. The revenue growth of 4% was driven by a 5% capacity increase as a result of one additional freighter and increased belly capacity. Strong demand was driven by Asian e-commerce, semiconductors, aviation components and pharmaceuticals, all of them high-margin verticals and therewith putting them into the focus of Lufthansa Cargo. Lufthansa Cargo delivered an adjusted EBIT of EUR 324 million, representing a 29% improvement driven by higher volumes and improved load factors more than compensating a decline in yields. On the cost side, Lufthansa Cargo showed a strong performance, ex-fuel unit cost decreased by around 6% and main drivers were here, lower charter expenses, IT cost reductions and improved crew productivity through optimizing network planning. Looking ahead, we expect for Lufthansa Cargo a clear earnings increase in 2026, building on a disciplined execution of its strategy and the strong market position in special cargo and premium products. Turning to our MRO segment. Lufthansa Technik achieved a 12% revenue growth, with total revenue exceeding EUR 8 billion for the first time, driven by a 23% increase in third-party business. While this was an exceptional top line development, adjusted EBIT amounted to EUR 603 million, broadly in line with the previous year. And this result was achieved despite sizable external headwinds. One of those headwinds came from foreign exchange developments, while the weak U.S. dollar had a net positive effect for our airlines, Lufthansa Technik was impacted negatively with a mid-double-digit million euro earnings effect. Lufthansa Technik was also affected by the U.S. tariffs on aluminum and steel impacting the results by roughly EUR 30 million. But please note that this was already significantly lower than originally assumed due to the swift and successful implementation of mitigation measures. These measures included adjustment to the production flows, renegotiations with customers and optimizing customs processes. These steps contributed to an earnings recovery in the fourth quarter and we expect that the negative effects will diminish further in 2026. In parallel, Lufthansa Technik continued to expand its global footprint. New or growing facilities in Portugal, Tulsa, Calgary and Malta will contribute to substantial capacity additions, particularly in the engine segment. And in 2026, we expect earnings at Lufthansa Technik to increase significantly, supported by normalization of tariff impact, continued growth in the engine segment and the benefits of the commercial initiatives already underway. Turning now to cash flow. 2025 was a year of significant improvement for the group, both in terms of cash flow profile and resilience of our balance sheet. Operating cash flow increased to EUR 4 billion, driven by higher earnings as well as a tax repayment from a German tax audit. CapEx includes the final payments for 23 new aircraft, of which 9 were wide-body aircraft. This was partially offset by 19 sale and leaseback transactions and net CapEx stands at EUR 2.5 billion and is therefore slightly below previous year's level and also below our expectation at the end of Q3 due to a delivery shift of 4 wide-body aircraft into the first half of 2026. And adjusted free cash flow reached close to EUR 1.2 billion, which represents a meaningful increase of EUR 350 million. Looking at our balance sheet. The combination of strong operating cash flow and disciplined investment led to a significant strengthening of our liquidity position, and we ended the year with liquidity of around EUR 10.7 billion, above our target corridor of EUR 8 billion to EUR 10 billion. And we expect this liquidity position to return to the target corridor -- into the target corridor by year-end 2026 as we use these available funds for aircraft, invest and payments. Financial net debt increased to EUR 6.4 billion, mainly driven by the capitalization of leases. And when including our net pension position, total net debt remained stable year-over-year. And as our profitability increased, our leverage ratio improved to 1.8x. We continue to be solidly positioned with an investment grade credit rating and ample financial flexibility to support our fleet renewal and growth plans. Now let's talk about fuel prices, which is, of course, on top of everyone's mind right now. So fuel costs developed favorably throughout 2025 and amounted to EUR 7.3 billion in line with guidance. For 2026, our fossil fuel bill estimate is around EUR 7.2 billion, thereof EUR 7 billion for fossil fuel and EUR 0.2 billion for mandatory SAF. All figures as of last week Friday. These numbers represent a tailwind of approximately EUR 100 million versus 2025, predominantly driven by the weaker U.S. dollar. And as you know, our hedging strategy continues to provide protection against volatility while also allowing us to benefit from price declines. And for the Passenger Airlines, we have already hedged around 82% of our fuel needs for the remainder of 2026. Since last Friday, we have, of course, seen a substantial increase in the jet fuel price, resulting from both higher crude oil price as well as higher jet crack. I will comment on this in more detail in a minute when we talk about our full year earnings outlook. So let's go there. And speaking now about our outlook for the current financial year. This is obviously not easy given the events in the Middle East. On the one hand side, I see the strength of our group and the progress we make in executing our strategy in all the dimensions and also in all the dimensions that we can control. On the other hand, I see what's happening around us and this does have an impact as well on our financials. The bottom line impact will depend on which effects are outweighing the others and also on whether those effects will change subject to the duration of the current situation. Being in this situation for only 6 days by now, obviously, does not provide us with sufficient hard data points to draw final conclusions for the rest of the year. But of course, we have data points from the first couple of days, which we were going to talk -- which we are going to talk about in a minute. Let's go through the building blocks of our outlook. We plan to increase capacity by around 4% and here also in a disciplined way. Clear focus will be on intercont routes where we expect to grow in mid- to high single-digit range while cont capacity will be broadly unchanged. I do expect cost inflation to persist but it will be partly offset by our transformation programs and the ongoing fleet modernization. And on this basis, we expect adjusted EBIT for 2026 to be significantly above the 2025 level, consistent with our commitment to delivering sustainable profitability improvements. Now let me put this into perspective of the Middle East crisis, and let me describe to you what we are currently seeing. One slide before, we've shown you a fuel price forecast based on last week's Friday, and that is the way we always presented to you each quarter, including also the fuel sensitivity, the fuel matrix where you can go along the axis and get an idea how things can move. Now since then, fuel prices have increased and taking a short-term perspective, just for the next 2 months, current fuel price levels mean about a 20% to 25% higher fuel cost for March and April compared to the underlying figures reflected in our EUR 7 billion forecast for the full year. However, for March, the impact -- and again, that's normal, for March, the impact will be further limited as about 60% of our physical settlements for fuel are priced at the prior month level. This does give us additional time to also adjust our revenue management approach. Having said that, broadly, in terms of fuel dynamics, we don't believe that fuel price levels remain in the long run where they are right now. Then we also have impacts from flight cancellations. Since 28th of February, we, of course, have stopped flying into the region. These are 10 destinations. And overall, to give you an idea, Middle East traffic would have represented about 3% of our capacity in the first quarter. For comparison in 2025, it was just about 2%. So you can see that the overall impact is somewhat limited. We estimate about a EUR 5 million earnings impact per week from those cancellations based on lost business and cost of care. On the other hand, we are also observing positive earnings effect. And firstly, since last weekend, more people have been flying with the Lufthansa Group Airlines instead of connecting via the Gulf hubs. Since the weekend, additional bookings on our Asia and Africa routes have by far overcompensated the cancellations we've seen on our Middle East routes. Over the past days, revenue intake for departures in March was about 60% higher than last year. Global net revenue intake for the full year during those days, was more than 20% higher than last year, indicating a positive impact in booking intakes also beyond March. We expect this situation to persist as long as the hubs in the Middle East cannot be fully serviced. Secondly, many people are currently changing their travel plans in the short term. And on this topic, we see the possibility that travel patterns might also change for longer. Potentially persisting -- potentially persisting security concerns around the Gulf region might also lead to more traffic within Europe or through European hubs or U.S. destinations. Thirdly, with more than 80% hedge ratio, we are hedged to a higher degree than many others. This provides us with a relative advantage, especially compared to those who are not hedged at all. And fourthly, a large part of the airfreight capacity in the Middle East is currently affected, about around 18% of global capacity is not available at the moment. This means that also cargo streams are shifting. And Lufthansa Cargo has observed an increase in demand over the past few days. Moreover, we've seen rise in cargo yields of 5% worldwide and plus 35% in the Middle East and Asia over the past few days, even a further yield uplift from these markets is conceivable. More longer term, we might also see more shift from seafreight to airfreight when things are time critical. Therefore, for me, the conclusion or the message is kind of clear. We do control what we can control, and we are obviously closely monitoring what's going on in the world right now. And even in the light of the current situation, we are convinced that we can significantly increase our adjusted EBIT in 2026. However, let me also be clear, the range of uncertainty has increased and there was also the range of possible outcomes. Let's now go back to what we control, that's our CapEx. Our CapEx outlook. Net CapEx is expected to amount to around EUR 2.9 billion, reflecting the planned delivery of up to 45 new aircraft. That's the largest single year fleet expansion in our company's history. And adjusted free cash flow is expected to be around EUR 0.9 billion slightly below last year due to the higher investment volume. We expect 2026 overall, to be a year of continued progress for the group on our path towards our midterm targets and our businesses are well positioned and on a clear trajectory towards long-term value creation. And on that note, knowing that, of course, 2026 will be at the center of our discussion, I believe. I'd like to hand back to Carsten for further remarks on the strategic outlook. Carsten Spohr: Yes. Thanks, Till. And just a few words on, indeed, how do we look into the future, of course, based on what Till and I communicated at the Capital Markets Day back in September, where we announced our medium-term financial targets, you are well aware of by now, centering around 8% to 10% adjusted EBIT margins. First, lever of -- the 4 key levers I'd like to address is obviously airline growth in a profitable way, which means for us more long haul than short haul. We actually want to grow the intercont fleet to 200 aircraft while we keep the short-haul fleet more or less flat. The additional required feed will be provided by coordinating our hub traffic in the future, centrally over all 6 hubs, which will give us a higher share of feed passengers to intercont destinations rather than short-haul to short-haul. At the same time, we're, of course, leveraging the One Group approach beyond this example. We do see a 3% margin uplift from fleet and new premium alone but there's also elements of the loyalty ecosystem and the ancillary push, which will pay into our midterm targets. Last but not least, the so-called One IT, where we're harmonizing the IT network, at least across the 6 hubs in many regards, even beyond our hub and Network Airlines is another example of this second lever. Third, airline cost transformation. Operational excellence focus in '25 has provided the stability I quoted was -- mentioned to you before. Now starting in '26, efficiency will be higher on the priority list. And we do believe, including more modern aircraft, including, of course, lessons learned, and finally, enough staffing at the European and especially German hub airports, we will be able to show that we keep our unit cost despite cost inflation flat in '26 as we already did in the fourth and last quarter of last year. Another element of this will be the fact that we grow fastest in those airlines with the best cost competitiveness, thinking about Discover, for example, and Lufthansa City Airlines. Yes, and last but not least, the so-called fourth lever is the additional focus on MRO and cargo. You know our Ambition 2030 program in Cargo, by which we want to achieve EUR 10 billion of revenue with the 10% EBIT margin by the end of the decade. And also in Lufthansa Cargo probably supported by the recent developments in the Gulf, we are looking to claim the top 3 position globally, again, coming out of top 5. Last but not least, defense was already mentioned, and we strongly believe, again, with current affairs probably creating a tailwind here that defense will be a very stable and highly profitable part of Lufthansa Technik to a higher degree. Last but not least, let's talk about a little bit more about maybe the single most important lever and most impactful lever we have, our fleet renewal. You're aware we're taking -- we're in the middle or at the beginning, if you might say, of the largest ever step towards a more modern and productive fleet. We expect 45 new aircraft this year alone, more or less 1 per week, and there is an unheard number of 27 widebodies among them. That will bring us to a new tech quota across the whole group of 1/3 with obviously resulting cost advantages and productivity gains. Also, we see some light at the end of the tunnel of the Pratt & Whitney engine issue. As far as it looks now, we'll be able to bring down the number of grounded aircraft to less than 10, which is 30% less than last year. Coming to an end, getting ready for your questions, you might share my view that the Lufthansa brand is an iconic brand in our industry for many, many years now, celebrating our 100 anniversary today. No doubt, we intend to maintain this in the future. And part of that must be the further improvement of the customer experience and be an example of Starlink, which we are looking to offer to our customers as of Q2, be it new lounges in almost all of our hubs and flagship lounge to be opened soon in JFK, where all of our group airlines or more or less all of our long-range group airlines are serving the airport at least once a day, where overall, the further integration of IATA creating more synergies is a step towards that product improvement for our customers. So overall, again, with all the uncertainties existing, we're looking optimistically into '26, and now -- look forward to your questions and comments. Thank you very much. Operator: [Operator Instructions] And the first question comes from Jaime Rowbotham from Deutsche Bank. Jaime Rowbotham: Two questions from me. Firstly, Carsten, I wanted to ask about these puts and takes, pros and cons of the current unfortunate situation. Till did a great job of running through some of them. Interesting to hear bookings to Asia Africa over compensated for cancellations to the Middle East. I just wanted to focus it maybe on the transatlantic, given it's so important for you, your U.S. competitors aren't hedged, so they are likely raising fares and hopefully, you can follow that a bit. At the same time, though, I wonder if fares are going up at just the wrong time in the sense that some people might be nervous to travel at all, which could have a downward impact on demand. Maybe you could just flesh out either what you've seen so far or what you think happens next insofar as that's possible. Second one for Till. Thanks a lot, for clarifying what might happen to fuel for March and April. I just wanted to ask, if possible, about the full year. So on the fuel slide, you tell us you as of last Friday, $71 for Brent, $26 for the crack spread to get to EUR 7.2 billion. Obviously, Brent now $88 and the crack spread about $100 a barrel. So it's costing more to refine than to buy the oil. Hopefully, that won't last. But the forward curves are pointing to a scenario that's not even covered by your sensitivity table where the jet crack part on the x-axis could double or triple versus what you show. You also mentioned in the footnote, the hedging you've got is part on gas oil and part on Brent, so you don't actually have the crack spread hedged. With that in mind, have you had a chance to do any scenario analysis on what a mark-to-market type fuel bill might look like for all of 2026? Till Streichert: I'll go second first and then maybe on the puts and takes, Carsten, if you want to add a little bit. So Jaime, absolutely. I mean, this is top of mind question how this is going to evolve. And you are quite right in terms of hedging. We've got a split and you know that we usually hedge blend with about 35% and gas oil as a proxy for jet crack with about 50%. And it's true that, obviously, jet crack has moved up. You can almost say off the chart of our fuel matrix on the right-hand side. So here, I would just highlight, and again, mathematically, you can calculate all of that, and we have done that. And the impact, obviously, if you would imagine that it stays for the full year is of size. On the other hand side, I also don't believe that this situation will going to stay there for a long time. And you can see also, and I'm sure you've looked at the volumes that have been traded driving ultimately the crack price, the crack spread. It's on very low liquidity. And therefore, there was -- I would also say a bit on the back of what President Trump yesterday evening said to possibly also escort tankers through the Strait of Hormuz. Ultimately, I do believe that this is not going to stay for long at these levels. And of course, leading now into the other side of the equation, it's true that the hedge levels do we have give us a solid upward protection. And of course, this differentiates us versus others that follow a non-hedging policy. And therewith, I do expect that also yields also or in particular, on the North Atlantic have got the potential to go up and increase. Carsten Spohr: Yes, Jaime, Carsten here. I think you already kind of put it in your question. There are pros and cons, and I think it's very difficult right now to quantify them exactly after just a few days. Again, cost of cancellations exist, probably like EUR 5 million per week is our best estimate. But at the same time, as you pointed out, we have a relative advantage on the fuel cost on the one hand. I think there's also historically a certain move of bookings towards highly trusted brands in times of crisis, we are definitely SWISS as the [indiscernible] Switzerland and Lufthansa to a certain degree, we probably benefit from. Then, of course, the question is, is the overall potential softness in travel for us, European carriers overcompensated by the shift of travel from carriers in parts of the world where people don't want to go now towards us. Hard to quantify at this point but not completely probably unexpected that will happen to a certain degree. And as I said before, there will be flexibility in our network as we are now within days putting capacity into China, into South Africa into Southeast Asia, of course, we're happy to also reallocate capacity throughout the whole summer if needed. If, for example, the demand tool from Asia become so strong that the next best route tool from Asia is more profitable then the weakest route on the North Atlantic, we would move the airplane. But I think it's way too early to discuss that now. Till Streichert: Let me add maybe just 1 additional point, if I may, just to give you a bit of a holding line as well on the RASK side. If we would have spoken 10 days ago and talked about RASK expectation for the first quarter, I would have said currency adjusted, so ex-X positive but including FX, slightly negative. Now as we speak today, with the net booking intake that we've seen over the past few days, this has shifted clearly to the positive side. And I expect that the RASK for the first quarter should reach a positive territory, even including the unfavorable FX headwind in comparison to prior year because remember, obviously, the U.S. dollar started to depreciate just in the second quarter last year. Operator: And the next question comes from Stephen Furlong from Davy. Stephen Furlong: Carsten, Till and Marc, congratulations on the results. Carsten, in the prepared remarks, I mean, you talked about the industry being more resilient to crisis than it used to be. Could you just amplify that? And then maybe just talk about the Allegris products and talk again about the kind of rollout of that product. I know there's been a lot of kind of news, comments and reports about some delays and then not delays and what the revenue kicker you're getting from that excellent product? Carsten Spohr: Yes, Stephen, thanks. I think has said this numerous times about the industry being more resilient before the unfortunate events that the Gulf started a few days ago. Because, unfortunately, already before that, we have more military conflict in the world than ever before since 1945. And whereas usually, when there's a conflict somewhere, bookings usually collapse because people are afraid to fly and want to stay home, this hasn't happened, not only not the last days, let's even go beyond that. We have seen, as you well know, record demand in the industry basically since COVID. And what is the background of this. I share the view of some of my American counterparts that for consumers, traveling has been higher prioritized since COVID as before. That's 1 element. We definitely don't have a period of overcapacity due to the shortage of engine and plane productions at the OEM level. And I think last but not least, you see more wealth around the world, not only in the saturated markets but also in other parts of the world, which airlines serve. I think all that combined -- by the way, the last one is why especially the premium classes, as you know, are booming now for many years. So I think all that combined shows that even though the world has not become more stable, our industry has. And now to also the last days might add to this because imagine this would have happened 20 years ago, I think you would see a very different booking environment than what we are seeing since last weekend. Allegris, yes, we had significant delays in certifying the Boeing aircraft with our Allegris seats who have a different manufacturer than the seats in our Airbus wide-bodies are manufactured by. We wanted to split the risk many years ago and also the capacity of none of the seat manufacturers was big enough to provide all of our wide bodies. But now these airplanes are coming in quick time, as I mentioned, 9 are here already. By the end of the year, we have 36, I think, as I said in my opening remarks, we have 28 seats in the 787, of which 25 are now certified as the end of March. And there is now only 3 seats, which will not be able to be sold by the end of March. And we even now decided to pull that 1 week forward giving us additional revenue opportunities by already having the seats open for a flight a few days before the end of the winter schedule. But that's only the 787 topic. And as mentioned also by the end of the year, in the Lufthansa Airline, 50% of our seats will either be Allegris or in case of the 380 aisle access seats. So we're another manufacturer. So this is now in full swing. We mentioned before, we have 12% to 13%, 14% higher yields on these seats than on our regular business class seats. So that's big and also the ancillary revenue increase, which we're expecting for '26 to a high degree, will come from Allegris versus the first time we actually charge for different seat types in business class, so that will also be, I think, tailwind for '26 and beyond. I hope that answers your question. Operator: And the next question comes from Alex Irving from Bernstein. Alexander Irving: I'll ask 2, please, both around technology. First of all, on IT, you signed in the last quarter for a new IT platform to implement across 9 of your group airlines. There's an IATA paper that's been around for a while that talks about a 2% to 3% improvement to RASK platforming like this. Is that the right way to think about the upside for Lufthansa Group? Or is the incremental gain less given your work to date in areas like continuous pricing, for example? Second question is on the distribution side of things, specifically, how are you approaching decision about whether and how to sell in large language models? Are you planning to engage directly through an API or to rely on existing infrastructure GDSs, travel agents and continue to pay commissions? Do you have a view on when you're likely to sell your first trip through an LLM? Till Streichert: Okay. I'll make a start on the first one, and then I'll see how far I get on the large language model based selling. Look, I mean, as you know, quite right, we want to embark on the journey of implementing on the one order path, it will be a long-term journey for the industry and also us but it is important to be amongst those ones that joined the pack at the beginning. And we do believe that there are clear benefits on the IT infrastructure on the one hand side because, I mean, as you know, the P&R standard, e-ticket standard and the miscellaneous data standard gets basically consolidated into a single order that is more efficient and drives back office efficiency on the other hand side, quite right. Once you've got this type of let me say, Amazon order type model, marketing and retailing obviously benefits as well. I am aware that IATA quotes these figures of 2% to 3% RASK benefit. To be honest, I find it quite early to take a view on this. But I do believe that principally, there are benefits also on the revenue side from better retailing. I think particularly for us, what I believe is good. We obviously come with scale when you think of passengers that we've got. And whenever you touch these large-scale transformations, when you get it for done at scale, it does give you normally a greater benefit. Look on the distribution, to be honest here, and large language models, I have to admit I'm not that deep into the status where we are. What I can tell you is that, clearly, we are advancing on many fronts in the digital arena to improve customer servicing, through large language model-based trainings, bots. And I don't know what the digital adoption right now is, but we are making progress on that front. But happy to come back and have a dedicated conversation on this. Operator: And the next question comes from James Hollins from BNB Paribas. James Hollins: So Till, on the turnaround update, maybe I always see a slightly in charge of this, so maybe I'm wrong. But as you see it, where have you outperformed, underperformed so far on the turnaround program? And you may not choose to answer this but if I take the Lufthansa Airline EBIT growth of EUR 250 million, which was a gross benefit of EUR 500 million. Is that 50% net versus gross benefit, a good indicator for the full year '26 EUR 1.5 billion? And then probably for Carsten and I know there's lots going on but I thought I'd better mention the strike you had in Q1. Maybe you could update on the cost of that where we are on some of the open CLAs and whether this current situation tends to lead to a bit of a backtrack from some of the union aggression? Till Streichert: Yes. So I mean turnaround, first, to give you my kind of assessment, I am happy with what we have achieved last year. Again, it's not easy to get such a large-scale program off the ground. And the EUR 500 million gross figure, as you know, has come from several initiatives. We've got EUR 700 million in the entire funnel. Several of them obviously have gained traction and delivered in 2025. Let me say, where were we strong and where maybe things will be moving in the future towards. Point where we were clearly strong and successfully executed was operational stability. You remember that was one of our big topics at the beginning of 2025. Get stability back into the production, into the system. That is good for our customers, was good for our customers. You can see that in NPS, customer satisfaction everywhere. And also in the significant benefits on the so-called IRREG cost charges and foregone revenue that is sizable. And that's a clear proof point but also on many other smaller initiatives. And again, I wouldn't speak about EUR 700 million initiatives if it wouldn't be quite granular. We've made good progress. What's ahead of us is clearly the focus on productivity. And this is why I made it also a point on my chart on my slide. And there, we will continue to move capacity into our lower-cost AOCs, Discover Airlines, City Airlines. You can see the aircraft that we are moving and also starting operations for City Airlines from Frankfurt and there with big focus for 2026 and beyond is productivity. Now to your question, gross versus net. Look, it's hard to say. To isolate it on a program level because we do have, obviously, underlying cost inflation drivers from a salary point of view, from a fees and charges point of view, and therefore, it's a bit of a harder ask to say how this -- how the gross is directly translated into a net. But I do see us on track to get the EUR 1.5 billion in 2026 delivered. Carsten Spohr: Yes. On the strikes, the number you're asking for day of strike like the 1 we just had, we probably estimated to be around [ EUR 50 million. ] You might see that's a lot less than what we had before. Why is that? Well, there's less support this time for the units going on strike, which results in more volunteers to continue operation. So therefore, we don't ground the whole fleet as we were forced to in the past but keep our most profitable routes in the area that's reducing the cost. Looking ahead, we are in constructive talks both with our cabin union, as a matter of fact happening today, and Verdi, our ground staff union and also for the cockpit union, actually, we have now 2 corporate units in Germany but for the 1 which is affected here for Unabhangige cockpit, we have offered even in a moderated fashion to talk about the bigger scheme of things, which right now has not been agreed to yet but the individual pilots very much want to stop the shrinking of the main airline, which becomes more and more obvious, as Till just pointed out with our shift of airplanes. So I'm quite optimistic that eventually, that shrinking on behalf of the pilots should come to an end, which will require us to talk on the bigger scheme of things. So I don't see any strike action like the one we saw in 2012 to 2016 or anything because there, we just now too much what the members want and believe that the answers, of course, can only be a reduction of the cost disadvantage of the main airline to the other AOCs in Lufthansa, whereas a strike itself and even the things they're asking for in the strike, and we are not willing to give in the airline with the lowest profit would increase the distance and the disadvantage on the cost side. So this will not be a long-lasting, I think, exercise. Operator: The next question comes from Harry Gowers from JPMorgan. Harry Gowers: First question, maybe just related to Jamie's question on the fuel hedging. Can you just confirm, do you fully hedge the crack component and that's all included within your comments on the March to April monthly impact? I think you said that gas oil hedging is a proxy for jet crack, and so does that type of hedging basically fully cover the price increases we're seeing in the crack spread market at the moment? That's the first one. And then second one, just on the ex-fuel unit costs. You have this comment around 2026 ex-fuel CASK is expected to be half of inflation for Lufthansa Airlines? Can we extrapolate that for the entirety, I guess, of the kind of new network airline segment? Is there any reason why those other airline businesses won't be reporting a similar cost results? And maybe just related to that, if I can squeeze 1 in, what are you assuming for the union agreements? And staff cost inflation in your overall kind of cost and EBIT guidance for the year? Till Streichert: Okay. Maybe a comment on just union agreements. I'll leave to you, Carsten, and I'll go on the first question -- on the second question first, ex-fuel unit cost. So let me be clear what I said is indeed for Lufthansa Airlines, half of inflation is our target. Now overall, as you will remember, we stayed away from giving a group guidance on CASK overall. So we limited it to a specification just for Lufthansa Airlines. Of course, all of the other airlines, our business units have got CASK saving programs in place but I don't want to give an overall cost guidance for the entire group. Going back to the first question, which is a fuel hedging, once again, we hedged gas oil 50%. So 50% is the element of our hedge. Our hedging composition included 35%. And gas oil as a proxy that is strongly correlated to jet crack but it's true currently, Jet crack is very high. We believe that the spread between jet and gas oil will come back to normal levels. And I think the spread currently is inflated mainly because of the illiquidity in the market. Carsten Spohr: Yes. Harry, if I got your question right, you wonder how union agreements would impact our guidance. So I think it's fair to say they will not impact our guidance. Where we have talks, we kind of know what we are willing to offer and how that would result in financial outputs. Of course, it's in our planning. And in the last strike we had for the pilots on the mainline, we told them that as long as the main line is not reaching its targets in terms of profitability. And that actually is the lowest profitability airline in the group. There is no any financial room for maneuver to pay even higher pension benefits, which are already higher than the ones in the other airlines. So there's also no room for additional costs here. That remains is, of course, the cost of strikes. But at the same time, the more strikes there are, the less airplane will be in that airline. So I think there's almost like a natural hedge if you want to use the term from our fuel environment. So the answer again, to your question is that there is no impact on the guidance to be expected from the current labor conflicts. Operator: And the next question comes from Axel Stasse from Morgan Stanley. Axel Stasse: I have two from me. On the first one, coming back on fuel, apologies. How much of that fuel inflation can be passed on? Obviously, you mentioned your exposure to jet and gas oil crack. But obviously, the U.S. guys are not hard at all. So if fuel goes up by 10% approximately, how much of that can be passed on? Can we assume half of it? The reason why I'm asking is because I'm slightly surprised to see you we're comfortable of providing an EBIT guidance without a lot of visibility in the near term on fuel. And I therefore assume you guys feel comfortable passing that on. So just trying to understand the extent of it. And then the second question is can you provide maybe an update on TAP, what are the latest news here? And how comfortable are you on TAP? Till Streichert: I'll take the first one, just on fuel once again. Two comments I would add in addition to what I already explained. I mean, first of all, ticket prices are made at the market level but we do see already increased yields also on the North Atlantic and the fuel price surcharges are being implemented. Now how much of that exactly I can't tell you but the situation is dynamic, and therefore, I think it is just not prudent to give you a statement on that. I think if in the future, fuel prices remain elevated, clearly, everyone and in particular, those ones that follow a no-hedge strategy or have got less hedge protection will need to pass on fuel prices. And that, in my view, provides an opportunity and allows for equally pass-through from our end of additional fuel cost. We have done first price increases already through the fuel price surcharge and have implemented them. And sorry, and just 1 more thing, Cargo. I wanted to speak about both segments. Cargo obviously works on a pass-through model as well. And there -- there is literally -- it's not on a daily basis but within a week, prices get adjusted for the input cost of fuel. Carsten Spohr: Yes. Actually, there's nothing really new on TAP. As you know, we are in the process because we believe there would be a perfect addition to our multi-hub network, also due to the fact that we are currently the weakest on the Latin American market. The overlaps are less than they would be for others, which probably has an impact on the antitrust approvals to be obtained. At the same time, there are so many open questions about the process and the outcome that it's impossible at this point to answer is creating value for our shareholders or not. If it doesn't create shareholder value, we will not do it. We don't need it. If it ends up to be a win-win of Portugal TAP and us, we will maybe see more progress here. Nothing else to add. Operator: And the next question comes from Muneeba Kayani from Bank of America. Muneeba Kayani: Firstly, Till, if I can just clarify your comments around the impact from the Middle East on kind of near-term March, April. Did you say that the higher bookings demand that you're seeing for Asia, Africa and all is compensating just the cancellation costs? Or is it compensating cancellation costs and the jet fuel higher costs on the unhedged portion? So that's my first question. And then secondly, just going back to the transatlantic and Carsten, in your experience, how long does it take for kind of U.S. airlines to adjust the capacity in such shocks on the oil price, given their lack of hedging? Till Streichert: Mona, let me take the first question, albeit I might not give you a totally conclusive answer on that. But yes, first of all, and let me go on the net booking intake and just to run you through that. And I've really taken the view on kind of what numbers do we see right now. And since last Saturday, our net booking intake has developed strongly, exactly as I said. And when we compare these net bookings which we have received between Saturday and Wednesday, end of day, for the month of March, this figure is about 60% higher than 1 year ago. And my second statement on the inflow side was, if I compare same period, those few days, net bookings for the rest of 2026, this figure is 20% higher than 1 year ago. So clearly, what I said on the negative side, the cost of the cancellations of the Middle East, we have comfortably covered. To your question now, does that cover as well the fuel cost. Look, it really depends on how long the fuel prices remain elevated because I've equally given you a view on March and March as such, while I said, nominally 20%, 25% higher fuel bill as we obviously settle the physical fuel bill with a month's delay, you can actually knock half of it off for a month, okay? So it's not that straightforward to say how all-in looks like but there are puts and takes. And I think we should clearly see both of them, albeit I'm not giving you a net figure right now because I can't. Carsten Spohr: Yes. Muneeba, Carsten, you asked for my experience, and I think the things I experience is twofold. First of all, the speed of reaction is a function of the impact of -- on the traffic. Think about 9/11, it took us all only days to come up with a different schedule when the skies reopened than the schedule we had before because it was so obvious impact was huge. I think this is a different situation here. But none of us knows how long the war will last, how long the impact will last, at which degree but I think it's worth to say that all of us have become much better in reallocating capacity to demand, also due to the lack of aircraft in general. What does that mean? When you have a route which is not performing well anymore, you can more easily find another route to provide profitability and value for your shareholders than in the past where maybe you already had loss-making routes and couldn't find something else because otherwise, we would have done it before. So I think with the profitability where it is also for the international business of the U.S. carriers, we're going to see a very market-focused reaction on both sides of the Atlantic, which fuses our optimism -- fuels our optimism, sorry, for my language. Operator: And the next question comes from Andrew Lobbenberg from Barclays. Andrew Lobbenberg: Can I ask about IATA, we haven't spoken about that beautiful pretty picture on the slide of the planes? How are you thinking about the decision to take majority in general? And then how are you thinking about it in the context of the unsettling events in the Gulf? And then can I just come back to the scale of current bookings? You've given us really precise figures on how bookings have come in for those destinations in the range of the Gulf that have gained. What has happened to booking inflows for short-haul Europe? What has happened to booking inflows on the North Atlantic in that short time period? Till Streichert: So look, first of all IATA, on it, maybe I'll just divert the sac, and just IATA has done a good 2025. Organically, they've reached breakeven on adjusted EBIT, which is positive, which is great. And you can actually back-calculate what also their overall net income was. Our 41% contributed with EUR 90 million. On our side, I do see many benefits of calling and integrate -- calling early and integrating IATA faster. We've made very good progress throughout last year. But as you can imagine, with the call option being open to be decided in June, we will keep our options open, and we continue to assess and then take a decision nearer by the time and will communicate. Secondly, on the different travel on the -- sorry, your second question was on Europe and North Atlantic in terms of sentiment, travel sentiment. We actually have so far not observed worsening of travel sentiment or also bookings in intra-Europe or North Atlantic but of course, it's to be seen. Operator: And the next question comes from Ruairi Cullinane from RBC Capital. Ruairi Cullinane: What have you done to Middle East capacity this summer? And linked to that, should we expect the EUR 5 million per week cost of cancellations to tail off even if the conflict doesn't come to an end soon? And then secondly, are you any less comfortable hedging fuel through Brent and the gas oil and leaving spread to jet fuel unhedged? Could you consider that in the future? Till Streichert: First of all, Middle East, I've given you an idea of the sizing. Last year, it was about 2% of our capacity. In Q1 normally that would have been 3%. Remember, last year, there was also a bit of on and off of flying into the Middle East, and this is why it was 2%, and we had it increased it a little bit. So I think what I've given you now is a EUR 5 million negative impact while we are not flying will rather go down because it does include, of course, a view on the cost of care. We took a view now of also those additional costs that is just on the ones where we actually need to care -- where we need to support, while also passengers guests are staying still need to be repatriated or flown back. If it stays long, we will clearly reallocate capacity. And then even this element of what I called negative impact or lost business from Middle East will obviously go away. And therewith, I would say this is not so much of an impact medium term. In terms of strategy of hedging, look, I think I've described it probably to the fullest extent I can do on this call. And we -- our hedging strategy is clearly designed through options and that's different to swaps where we want to participate, also in the downwards movement and therefore, I'm comfortable with the strategy that we have so far in place. Operator: And the next question then comes from Antonio Duarte from Goodbody. Antonio Duarte: The first one is on ancillaries. So 15% growth year-on-year, clearly doing very well, namely with Allegris rollout. Could you give us some color here where you see these terms of ranges going forward? And my second question is turning to the MRO. As you said, a bit of a margin compression seen in '25, a bit of recovery expected from your defense, et cetera. Would you be comfortable with the full recovery from the margin seen in '24? And any color on that would be great. Till Streichert: Okay. Let me make a start just on ancillaries. We have explained what we've seen on Allegris. And the additional seat options and also ancillary sales overall. If I split that, I do believe that the ancillary sales as such has got substance to continue. But of course, it's hard to be at a double-digit rate going forward, just a law of big numbers at one point in time. Therewith, I would like to go back to the Allegris element within the ancillaries. And here, we clearly see the benefit of selling the different seat options. And the main driver of that is obviously the number of aircraft coming with the Allegris cabin into it, and that has got runway and gives us longevity to continue to grow the ancillary sales category. Carsten Spohr: We always call it the big 3, Antonio, baggage, seating upgrades. And that, I think, will continue to drive ancillaries up as Till explained, with Allegris, of course, a special push. MRO, you know that in '25, MRO was suffering almost -- as the only part of the Lufthansa Group under tariffs, which, as you well know, for airplanes and engines don't apply. These tariffs, as we all know, have been ruled illegal by the Supreme Court. So at least they don't go forward. Probably there will also be reimbursements as we all know. So that will be definitely 1 of the reasons why we believe we can not only get back to '25 -- sorry, '24 margins in MRO, but we will continue to go towards the 10% we have planned for the end of the decade. And I'll leave that defense element out, which as I mentioned before, we'll see, I think, another support for the strategic development of Lufthansa Technik, even though it doesn't necessarily monetize short term. But again, we are committed to our 10% margin in '23. And some of the ramp-up costs we had in for Canada, for Portugal also won't repeat themselves. So overall, my optimism continues. Operator: Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Marc-Dominic Nettesheim for any closing remarks. Marc-Dominic Nettesheim: Thank you very much for your questions, for your interest and for the lovely discussion. We are happy to continue this from the Investor Relations side. We wish you a lovely afternoon and talk to you soon. Bye-bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Good morning. My name is Carmen, and I will be your host today. Welcome to Canfor and Canfor Pulp's Fourth Quarter Analyst Call. [Operator Instructions] During this call, Canfor and Canfor Pulp's Chief Financial Officer will be referring to a slide presentation that is available in the Investor Relations section of the company's website. Also, the companies would like to point out that this call will include forward-looking statements. So please refer to the press releases for the associated risk for such statements. I would now like to turn the meeting over to Susan Yurkovich, Canfor Corporation's President and Chief Executive Officer. Please go ahead, Susan. Susan Yurkovich: Thank you, Carmen, and good morning, everyone. Thanks for joining the Canfor and Canfor Pulp Q4 2025 Results Conference Call. I'll kick off with a few comments this morning before I turn things over to Stephen MacKie, Canfor's Chief Operating Officer and the CEO of Canfor Pulp; and Pat Elliott, Chief Financial Officer of Canfor Corporation and Canfor Pulp. I'm also joined by Kevin Pankratz, our Senior Vice President of Sales and Marketing for Canfor; and Brian Yuen, Vice President of Sales and Marketing for Canfor Pulp, who will be available to take questions as well. Before discussing our fourth quarter results, I just want to highlight the significant transformation that Canfor has undertaken over the past several years. Our strategy is focused on strengthening our operating platform to reduce the impact of elevated duties, further diversify our asset base and product offering and improve our cost competitiveness. In that vein, since 2023, we've made the difficult but necessary decisions to close 9 high-cost sawmills, including 2 in 2025, with a total capacity of 2.3 billion board feet. At the same time, we've invested heavily in new facilities in the U.S. South, expanded our operations in Sweden and proactively managed our Canadian business in response to the challenges we are seeing accessing economic fiber in BC and elevated countervailing and antidumping duties as well as the more recent Section 232 tariffs. While 2025 was another challenging year, we have started to see the benefit of these strategic actions. And although the near-term uncertainty is likely to persist, Canfor is well positioned to navigate the challenging markets, supported by our high-quality globally diversified operating platform. Looking ahead, we continue to believe the medium- to long-term lumber demand fundamentals remain strong and the improvements to our asset base will enable us to capitalize on stronger market dynamics going forward. Finally, notwithstanding the current market uncertainty, we have maintained a strong balance sheet and have the flexibility to pursue strategic growth should the right opportunities present themselves, although we will continue to remain patient and disciplined in our approach. I'd now like to turn it over to Stephen to provide an overview of Canfor Pulp. Stephen MacKie: Thanks, Susan, and good morning, everyone. Canfor Pulp continues to be impacted by weak global pulp and paper markets with ongoing trade disputes and broader economic uncertainty contributing to elevated inventory levels and weak pricing through much of 2025 and continuing into 2026. Against a challenging market backdrop, we continue to focus on achieving targeted cost reductions and improving our operating performance. While we have made some progress on identified initiatives in recent months, weak market conditions continue to weigh on our financial results and available liquidity with results in the fourth quarter further impacted by scheduled maintenance downtime at Northwood. Notwithstanding the pending transaction with Canfor, Canfor Pulp's management team remains committed to mitigating the impact of global trade dynamics and economic uncertainty by closely managing factors within our control. This includes managing our balance sheet, preserving available liquidity and continually assessing our operating footprint based on our cost structure, the availability of economically viable fiber and market demand. I will now turn it over to Pat to provide an overview of our financial results. Patrick A. Elliott: Thanks, Steve, and good morning, everyone. In my comments this morning, I'll speak to our fourth quarter financial highlights, a summary of which is included in our overview slide presentation, as always, in the Investor Relations section of Canfor's website. Our lumber business generated an adjusted EBITDA loss of $8 million in the fourth quarter, $6 million lower than the prior quarter. These results continue to reflect weak lumber market conditions, particularly for Southern Yellow Pine as well as lower sales realizations in Canada following the introduction of Section 232 tariffs in the fourth quarter. Our European lumber business generated adjusted EBITDA of $42 million in 2025. However, weak demand and elevated log costs have contributed to losses in recent quarters. Given ongoing cost pressures in the region, we recorded a $214 million (sic) [ $250.6 million ] asset write-down and impairment charge in the fourth quarter, which has been excluded from our adjusted EBITDA. Looking ahead, we have started to see improvements in our underlying cost structure in Sweden and remain well positioned to navigate the current market challenges. While we expect European demand to remain relatively flat in the first quarter, constrained lumber supply across the region is anticipated to support higher pricing heading into the second quarter. In North America, industry-wide downtime in December has contributed to stronger lumber pricing to start the year, particularly for Southern Yellow Pine. Although near-term volatility is expected to persist, our lumber business is well positioned to navigate the current market dynamics, the transformation of our operating platform Susan previously mentioned. Turning to our pulp business. Canfor Pulp reported an adjusted EBITDA loss of $17 million in the fourth quarter, $14 million lower than the prior quarter, reflecting the ongoing impact of weak global markets as well as scheduled maintenance at Northwood. Canfor Pulp ended the quarter with net debt of $104 million and $40 million of available liquidity, while Canfor, excluding Canfor Pulp and the duty loan completed in 2024, ended the fourth quarter with net debt of approximately $226 million and available liquidity of $1.2 billion. Looking ahead to 2026, we anticipate capital spend of approximately $175 million in our lumber business with $35 million for Canfor Pulp, inclusive of capitalized maintenance. In addition, Canfor has also entered an agreement to acquire all of Canfor Pulp's issued and outstanding shares not already owned by the company and will receive the results of the shareholder vote later today. Following a write-down and impairment charge in the fourth quarter, it's highly probable that Canfor Pulp will reach its financial covenants in the first quarter, absent a successful transaction with Canfor. As Stephen mentioned, regardless of ownership structure, Canfor Pulp continues to review its underlying business as it looks to optimize and mitigate financial losses. Despite challenging market conditions and elevated capital spending in recent years, Canfor's balance sheet remains solid. With lower capital spending over the next several years, we believe our financial position provides flexibility to manage current market uncertainty and support potential strategic investments should the right opportunity arise. And with that, we are now ready to take questions from analysts. Operator: [Operator Instructions] For our first question that comes from the line of Ben Isaacson with Scotiabank. Ben Isaacson: Just a couple of questions. First one, Susan, for you. Just in the lumber market in North America overall, since the last conference call 3 months ago, have you seen an uptick in distressed assets and potential assets available for sale in the marketplace? And sorry, if not, are you surprised by that? Susan Yurkovich: Well, I think there's no question, Ben, that the elevated duties that we're all paying is -- it's a big challenge for every company. It's putting a lot of pressure on companies across the country as we -- because those are cash deposits. So we know that, that's a challenge. Have I done an inventory or have asked all of our competitors exactly what their position is? No, but I know it's a challenge for us, and it's a challenge for everybody across the business. Ben Isaacson: And then, Pat, for you, the $210 million in '26 CapEx guidance, I saw the split between lumber and pulp. But can you give a little bit more detail in terms of maintenance versus growth? Or maybe asking it in a different way, how much of that is discretionary? Patrick A. Elliott: Yes, Ben, thanks. I think we've already identified one project, the sawmill we bought in El Dorado, Arkansas, there's a rebuild going on there. There's a number of other sort of smaller discrete projects with -- I'd say about 40% of the budget is on the discretionary side. The remainder is maintenance. Ben Isaacson: Okay. And -- but on that discretionary, I mean, that seems quite committed. There's really not an opportunity for a pullback if markets deteriorate. Is that fair to say? Patrick A. Elliott: Well, look, there's always opportunity to do that. I think we're committed to doing it. The balance sheet supports it. It's strategic, particularly in Arkansas as it relates to our facility there at Urbana as well and the synergies that come with doing it and kind of having 2 mills in that region. So I think we are going to proceed with it, but that's more of a choice. Ben Isaacson: Understood. And then just final question is on the pulp inventory days of about 47, I think, you mentioned. Can you just give some historical context in terms of how much that has swung around in good times and bad? Patrick A. Elliott: Yes. So Ben, thanks for the question. I would say for sure, inventories on the softwood side are well above the balance range. And if you use historically, that range has been in the high 30s to mid-40s at most. So again, assuming that balance is in terms of a balanced supply-demand fundamental, 40 days, we've got about a week's worth of inventory overhang sitting in the producers' hands. And when you're talking about a 25 million tonne market, that's about 0.5 million tonnes in there. Operator: [Operator Instructions] Our next question comes from Hamir Patel with CIBC Capital Markets. I do not hear any audio from Mr. Patel. Susan Yurkovich: No, we can't hear him either. Operator: Well, at this time, there are no further questions. I will turn the call back to Susan Yurkovich for any closing comments. Please go ahead, Susan. Susan Yurkovich: Sure. Thanks, operator. And Hamir, if you're having trouble with your phone, maybe just give us a call, and we'll try and help you out there. Thanks very much for joining us on today's call, and we'll see you next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.
Operator: Greetings, and welcome to the Doman Building Materials Group Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Ali Mahdavi. Please go ahead. Ali Mahdavi: Thank you, operator. Good morning, everyone, and thank you for joining us this morning for Doman Building Materials Fourth Quarter and Full Year 2025 Financial Results Conference Call. Joining me this morning are Amar Doman, Chairman and Chief Executive Officer; and James Code, Chief Financial Officer. . If you have not seen the news release which was issued yesterday, it is available on the company's website at domanbm.com as well as on SEDAR+, along with our MD&A and financial statements. I would also like to remind you that a replay of this call will be accessible until March 20, 2026. Following management's presentation of the 2025 fourth quarter and full year results, we will conduct a Q&A session for analysts only. Instructions will be provided at that time for you to join the queue for questions. Before we begin, we are required to provide the following statements regarding forward-looking information, which is made on behalf of Doman Building Materials Group Ltd., and all of its representatives on this call. Remarks and answers to your questions today may contain forward-looking information about future events or the company's future performance. This information is subject to risks and uncertainties that may cause actual events or results to differ materially. Any information regarding forward-looking statements is made as of the date of this call, and the company does not undertake to update any forward-looking statements. Please read the forward-looking statements and risk factors in the MD&A as these outline the material factors which could cause or would cause actual results to differ. The company will not provide guidance regarding future earnings during today's call, and management does not anticipate providing guidance in future quarterly or interim communications with investors. I'll now turn the call over to Amar. Amardeip Doman: Thanks, Ali, and good morning, everybody. Thank you for joining us on today's call. Let me start by highlighting some of our key financial metrics, followed by some color on our operations during the fourth quarter. And then I will hand the call over to Jay Code, who can review the numbers in further detail. 2025 presented itself to certain challenges, which were not dissimilar to the prior year with constant falling lumber pricing and other relevant economic headwinds. While we are not directly impacted by tariffs, the building materials sector in general, continue to navigate the effects of tariffs, fluctuating construction material pricing elevated interest in mortgage rates and even and uneven building activity across various regions. While these conditions created near-term pressure, our teams responded very well managing this. We remain focused on what we can control, operational efficiency, customer service, cost disciplines and safety while positioning the business for long-term success. Despite the pricing movements across all construction materials categories in our portfolio on both sides of the border, we exited 2025 with strong performance across all our key financial metrics, including revenues, gross margin, EBITDA and net income, while paying our shareholders a quarterly dividend of $0.14 per common share or $0.56 per common share on an annual basis. We are both pleased and proud of the company's performance throughout 2025, given the market conditions we had to work through. Despite trends and volatility that at times presented us with challenges, we remain encouraged and pleased with the resilience of our diversified business model withstanding these cycles resulting in Canadian revenues, gross margin, adjusted EBITDA and net earnings totaling $3.1 billion, $505 million, $256 million and $80 million, respectively. Our ability to deliver consistent performance across a variety of market cycles, results from our tireless focus on operations and to the many successful acquisitions we've completed throughout the years. Now focusing on the most recent fourth quarter results, adjusting for normal seasonality, we remain active across all business divisions, our ongoing cost management and focus on operational efficiencies enabled the company to demonstrate revenue performance, while gross margin continued to be within our target range as well as EBITDA and bottom line. We are very proud of our financial performance and believe there is a lot to be gained from the strength and momentum, which has resulted from our successes in recent years. As a result of these efforts during the fourth quarter, we saw revenues coming in at $644 million, gross margin at 16.6% or $107.2 million, EBITDA amounting to $44.3 million, net earnings of $11 million; and lastly, our quarterly dividend of $0.14 per share was again declared. We remain cautiously optimistic about the prospects ahead and look forward to further demonstrating the strength and leverage available in our business model as we continue to be well positioned to take advantage of sensible growth opportunities. On the heels of successfully integrating recent acquisitions, our relentless focus on paying down debt and strengthening our balance sheet remains a priority, which will enable us to be in a strong position to take advantage of strategic opportunities. Overall, 2026 is off to a decent start, despite severe weather issues in some of our regions, which we're prepared to deal with. I continue to be pleased with how our growth strategy continues to unfold, resulting in strong sales and earnings in the face of a tough year-over-year pricing environment while remaining focused on margin protection during these times. In 2025, we were also able to demonstrate the positive impact of prior year acquisitions for the full fiscal year. We are very proud of our acquisition of Doman Tucker Lumber and prior to that Southeast forest products. As you probably are aware, Jay Code, our CFO, of 15 years, will be retiring on April 7. So before handing the call off to Jay, one last time to provide a review of the company's full financial results on behalf of the entire Doman family, I would like to extend our sincere thanks for your years of dedicated service at Doman. Your commitment, professionalism and contributions have made a lasting impact on our team and organization. I'm truly grateful for all you have done and wish you continued success in your well-deserved retirement. Over to you, Jay. James Code: Thank you very much for those kind words, Amar, and good morning, everyone. Sales for the year ended December 31, 2025, were $3.12 billion versus $2.66 billion in '24, representing an increase of $456 million or 17.1%, largely due to the positive impact of the company's acquisitions completed in 2024. The company's sales in the year were made up of 81% construction materials compared to 76% last year, with the remaining balance of sales resulting from specialty and allied products of 16% and other sources of 3%. Doman's gross margin was $505.5 million versus $424.8 million in '24, an increase of $80.7 million, benefiting from the contributions of our '24 acquisitions as well as ongoing execution of our margin enhancement strategies. Gross margin percentage was 16.2% this year compared to 16% achieved in the previous year. Expenses for '25 were $349.1 million compared to $306.5 million last year, an increase of $42.6 million or 13.9%. As a percentage of sales, 2025 expenses were 11.2% compared to 11.5% in '24. Distribution, selling and administration expenses increased by $19.9 million or 8.7% to $249.1 million in 2025 versus $229.2 million in 2024, mainly related to activities of the acquired companies as well as broad inflationary pressures. As a percentage of sales, DS&A was 8% this year compared to 8.6% in the prior year. Depreciation and amortization expenses increased by $22.8 million or 29.5% from $77.2 million to $100 million, mainly due to additional property, plant and equipment and intangible assets related to the '24 acquisitions. Finance costs for 2025 were $72.9 million compared to $53.7 million in 2024, an increase of $19.1 million largely as a result of additional costs related to the financing of the Doman Tucker Lumber acquisition on October 1, 2024. We note directly attributable acquisition costs during the comparative prior year were $3.3 million and these costs included due diligence, legal, environmental, financial, management resources and other advisory services directly attributable to the acquisition activities. EBITDA in 2025 was $256.4 million compared to $192.2 million in 2024, an increase of $64.2 million or 33.4%. Adjusted EBITDA in the comparative prior year before the nonrecurring acquisition costs was $195.5 million. Our EBITDA in 2025 benefited from the full year inclusion of the results from the 2024 acquisitions, but these benefits were partially offset by the previously discussed overall weaker pricing in certain construction materials categories as well as an increase in expenses due to inflationary pressures. Net earnings for 2025 were $80.3 million compared to $54.2 million in 2024, an increase of $26.1 million. And turning Now to the statement of cash flows, operating activities before noncash working capital generated $163.6 million in cash compared to $148.7 million in 2024. Stronger operating cash flows in 2025 were largely driven by this year's significant increase in net earnings. Financing activities in 2025 consumed $235.7 million of cash related to repayments of debt and payments to equity stakeholders. And during the comparative prior year, the company utilized debt facilities to finance the Doman Tucker Lumber acquisition, resulting in $345.5 million of cash provided by overall net financing activities. The company returned $49 million to shareholders through dividends paid in 2025, largely in line with 2024, and the shares issued net of transaction costs generated an additional $1.8 million of cash compared to $1.5 million in the prior year. Payment of lease liabilities, including interest, consumed $32.3 million of cash compared to $29.1 million in 2024. And we note the company's lease obligations generally require monthly installments, and these payments are entirely current. We also note the company was not in breach of its lending covenants during the year ended December 31, 2025. overall, investing activities this year generated $45.6 million of cash compared to consuming $474.3 million in 2024. Investing activities this year included the sale of the company's timber loans for total cash proceeds of $75.2 million, whereas investing activities in 2024 included the Southeast Forest Products and Doman Tucker acquisitions for total cash consideration of $460.8 million. Additionally, the company invested $29 million in new property plant and equipment during the year compared to $14.2 million of property plant and equipment expenditures in 2024. This concludes our formal commentary, and we'd now be happy to respond to any questions that you may have. Thank you. Operator: [Operator Instructions] And our first question comes from the line of Kasia Kopytek with TD Cowen. Kasia Trzaski Kopytek: Its Kasia on the line. First question is on your margin enhancement strategies. You posted really strong margins in Q4. Can you give us an update on the sorts of things you're working on to keep margins high and just articulate your general confidence in your ability to keep margins towards the high end of your historical range going forward? Amardeip Doman: Sure, Kasia. Without us telling all our trade secrets, certainly, our lumber buyers have done a hell of a job on both sides of the border, positioning well when there was dips buying under the market and positioning ourselves ahead of time for market gyrations and really buying in those gross margin dollars. So that was evidenced in Q4, and Q1 year has started off in the same fashion. So I've got to give the credit to the lumber buyers really working through rough waters here, but really digging deep and making things make sense for us. So that's really where it's coming from. James Code: I'd add there, Kasia, that freight optimization strategies had also a significant role in the margin enhancements. In 2025, we began to use new technology for the business. And that's starting to show in the freight cost. The freight cost being a significant part of our cost of goods. . Kasia Trzaski Kopytek: Right. You've talked about this great strategy in the past. Are we in the early innings of that? Is there still a lot of runway left for optimizing those kind of costs? James Code: Yes. I'd say early. We're in the early innings. We have rolled it out in only 2 of our divisions. And so we've got a ways to go to take full benefit from that. Kasia Trzaski Kopytek: Okay. And this is probably a question for you as well. The selling, distribution and administrative expense, can you comment on the kind of inflation that you're seeing in these expense categories? And maybe reference what a normalized range could look like for you guys going forward? James Code: Yes. It's -- I'd say, broadly in line with the consumer price index. We're talking about a significant portion of that being compensation costs and then facility costs, we're releasing facilities, leasing material handling equipment, that kind of thing. So we'd be in that 3% range in '25, I would estimate, overall. . Kasia Trzaski Kopytek: Okay. And then $61 million to $63 million quarterly that sort of a range that we're looking at and the inflation on top of that. Is that fair? James Code: Yes. Yes. Q4 being, as Amar pointed out, normally a seasonal slower period for us. So we would expect to ramp up costs a little bit in the busier quarters. Kasia Trzaski Kopytek: Right. And on CapEx, there was a bit of a ramp to end the year. Any special projects worth calling out. If I recall correctly, you guys are pretty excited about things in the pipeline for your specialty lumber. Amardeip Doman: Exactly, yes. That -- there's a bunch of noise inside that number. So we can attribute it pretty much all to either upgrading or investing in new fencing equipment for our sawmills, including into the Carolinas a new market for us. So some of that production will start to evidence later this year. We've upgraded our sawmill in Gilmer. We were there this week, and it's running. We're getting close to getting it to the point of -- we're happy with the volumes. The bugs are getting out of that. So those investments are -- and I commented earlier in my comments, the fencing market continues to be strong for us. And certainly, with some tariffs being on South American countries or a lot of U.S. spend comes in. There's a shortage right now. So we're trying to amp up pretty quickly and modernize upgrade and get more efficient. Kasia Trzaski Kopytek: Okay. So the level we saw in Q4, is that a new run rate going forward? Or should we see levels go back to what you did in the first 3 quarters of the year? Amardeip Doman: Yes, that would be kind of a high water. James Code: Yes, we still expect cash to be under 1% of revenue for PP&E expenditures. So Q4 was a little bit high, just based on lumpiness of where we spend -- timing of spending. . Operator: The next question comes from the line of Nikolai Goroupitch with the IBC Capital Markets. Nikolai Goroupitch: With both Lowe's and Home Depot forecasting a relatively flat R&R market this year. Do you share a similar order outlook? And do you -- how do you see the treated lumber market performing in comparison? Amardeip Doman: Yes. I think everyone is just trying to forecast in a very, very murky world. It's hard to make predictions here. So I think everyone is cautious the repair and renovation market, yes, I think it's going to be flat. We had a decent takeaway year last year despite that. I think we'll have the same this year. . I think it's just kind of what you see is what you get out there and I think Lowe's and Depot certainly have the same forecast, just kind of flat to off a bit, maybe up a bit really hard to read, frankly. And as far as our pressure treated category, we're very pleased with our initial bookings and volumes heading into '26. The first 2 months are booked and we're pleased with what we see. So not superly excited, for sure, it's just the way the world is. But certainly, we're going to be hitting good base hits this year, and we should be just fine. Nikolai Goroupitch: Okay. And with lumber prices climbing over the past few months in the U.S. South and producers earning a decent margin in the region, do you think mills will add hours and in turns bring more SYP production online in this market? Amardeip Doman: Yes. Some have and some haven't. The increase wasn't dramatic. And of course, it was through very, very slow months, a little bit in December and then into January and then the cold, the deep freeze really came in and stalled everything and it's kind of flatlined. So don't really see the mills ramping up, and I'm hoping they kind of don't so we can kind of keep the sustainability of a bit of a higher pricing for everybody involved would be, I think, decent for the industry. Operator: The next question comes from the line of Zachary Evershed with National Bank Financial. Zachary Evershed: Could you give us a little bit more commentary on how volumes trended throughout the quarter? I know that the cold months can be slow, but maybe a bit of an idea of how things were paced in November, December into January and February? Amardeip Doman: Yes. I wouldn't say it was abnormal. It was just a normal fourth quarter. I think some of the research analysts had different views on pricing or volumes and there was quite a range. And for us, it was just a routine fourth quarter. Pricing started to pick up in kind of the first week of December, but it's December. So it's a bit of a so what. We did some good buying to help protect the margins. And I think -- 2 key things for the fourth quarter. I think one, our debt reduction; and number two, our margin stability was great. So the pulse of the business is just fine as it's the balance sheet. Zachary Evershed: And speaking of that balance sheet, maybe you could tell us about what's in your crosshairs for M&A at the moment? Amardeip Doman: Yes. We're still looking to fill in some of those white spaces, if you will, on the map, where we're not directly located yet, and we'll continue to work through those opportunities. But we will be in those markets, just a matter of the right opportunity coming up and the balance sheet is ready. So stay tuned, and we'll continue on with our strategy. . Zachary Evershed: And then just one last one, pretty speculative here. Obviously, we've got a very volatile tariff framework, some global geopolitical instability. The R&R side of things seems to be pretty cautious. What's your view on new residential housing in North America this year? Amardeip Doman: Yes. I think the worst is behind us, I think. I think the interest rates will continue to go down. Obviously, nobody likes what's happening with oil today. But I think that if these rates continue to tick down in the United States like they are, we're under 6% now. We're starting to see some action. So that's good. . I don't expect some boom, but I think there will be more action as people can move around and get out of some of those cheaper mortgages they did during COVID now as the gap is getting closed. So for what it's worth, our view is the worst is behind us. But not crazily excited about things running up hard, but I don't think they get worse from here. Operator: The next question comes from the line of Ian Gillies with Stifel. Ian Gillies: Amar, are you able to talk a little bit about where you're at with adding value-added services into your various facilities? I mean whether it be as a percentage of revenue? Or what inning you think you may be in and where you'd like to get to? Amardeip Doman: Yes. The value added is our primary business. We'll continue to grow in areas such as fencing, manufacturing, 1 inch. We've got some good strategies inside the company to organically grow with our customer base that are national in the United States, and of course, across Canada. So we're working on all kinds of things inside with our specialty sawmills. Obviously, they're smaller, but they're very effective into our marketplace with niche products. So I won't dive into all that into the weeds today. But some of those investments in dollars that we talked about earlier on the call are directly going into our specialty value-added side of the business, and we're going to continue to amp that up we mentioned when we bought Tucker back in '24. Some of those strategies want to cross-pollinate over to Doman Lumber side and then vice versa, getting and defensing on the East Coast of the United States in a big way starting mid this year. We're going to be producing a lot of fence boards out there and the market is ready for it. So stay tuned, we're right on track. Ian Gillies: Okay. There's been a number of government programs either announced or bandied about on both sides of the border. Are there any in particular that you would point to that you're particularly excited about that you think could benefit Doman moving forward or perhaps demand drivers that are well understood. Amardeip Doman: Yes. I think you've heard me say it before, the government getting involved in housing has never worked. I don't think it works this time either. I think it's more of a press release than anything. I think the market has to figure things out, developers, cost of land, cost of materials, mortgage. I just don't see the government coming in. If they do great, we can do some supplying to them. Probably the modular guys that do well, who we supply across Canada. And then, of course, in the United States, the government won't get involved in building housing, building that market to figure it out. Operator: The next question comes from the line of Frederic Tremblay with Desjardins Capital Markets. Frederic Tremblay: Starting with maybe the sensing side. Obviously, a big component there this year. I was wondering if you can help us better understand the capacity increase in fencing, given all the investments that you're putting together now? And maybe just a clarification on when you expect the revenue contribution from those initiatives to come through in the financials. Amardeip Doman: Sure. Yes. I don't have percentages ready for you today, but probably in the second or third quarter, we'll have a clearer picture of exactly how the modifications are going at the sawmills and our new venture in the Carolinas to start up there as well sometime in Q2, the start of Q3. We also did not have storms last year. This year, they're forecasting a heavier hurricane season or at least a hurricane season. And when that happens, that drives a lot of quick demand for our fencing products. So we expect to have a busier volume year. And apologies, Frederic, I don't have percentages. But I just know that we're going to get more efficient, doing it with less labor, more automation and the volumes are going to pick up. And our goal is to be probably the #1 fence producer in the United States over the next 2 years, and I think we're going to get there. Frederic Tremblay: That's very helpful. And would you say sensing products in general are margin accretive compared to the individual margin of the company? Amardeip Doman: They are. As we manufacture everything inside right from the log, right to the finished pressure-treated pick it on the truck right to the retailer. We capture those margins all along the way with the manufacturing in there. And it's not something that moves around like random lengths pricing. So we try to do our best to maintain the margin to -- there's obviously a higher cost to it being a manufactured item than distribution. So to protect those margins, and by investing in the plant and the equipment in the sawmills, we're certainly getting more efficient in driving those costs down. . Frederic Tremblay: Great. And then last question for me. Just coming back on the M&A topic. Maybe from the valuation angle, are you seeing any sort of changes in seller's expectations given the state of the market now? Are you noticing any valuation changes on there? James Code: Yes. Valuation perspectives on M&A, Frederic, I think, is what your question is. And we're not seeing any dramatic changes in expectations from sellers at this point. And we're remaining disciplined in what we will be willing to pay certainly. It has to be within our multiple range, and we're not going outside that range ever. . Operator: The next question will come again from the line of Kasia Kopytek with TD Cowen. Kasia Trzaski Kopytek: The sensing products, Amar. I know you said you don't have a percentage for go-forward contribution handy, but can you give us a sense of fencing, what percentage fencing encompasses of your current product mix? Is it less than 5%? So what's the number? Amardeip Doman: It's between 5% and 10% and rapidly growing. We're pretty much sold out everything that we made currently which is a great place to be. We've never been in that position. A lot of it is to do with the tariffs again out of South America. Material is just stalled coming out of there, and it was so big going into Houston and Florida than being redistributed around. And it's basically crickets. And the demand has turned on strong. So number one, we're looking after all of our current customers and then taking on some new business from customers that really need that we're close to and then we're trying to turn on our production as fast as possible. These things don't happen overnight. But it's a key part of our business, Kasia, that we're going to grow in. And frankly, we're very excited about the domestic production made in the U.S.A., et cetera, and carrying on with that mantra, and not importing these materials. And frankly, we did import some ourselves as well. That game is pretty much over and we'll be making our own. Kasia Trzaski Kopytek: Okay. And then ending on M&A, the Temecula acquisition, is that a precursor to a possible pivot in your M&A strategy going forward towards more of these types of products? What I mean here is away from commodity wood products? Amardeip Doman: Yes. Our Electrical division is small. Obviously, Hawaii is the big piece. California, with Temecula just acquired a small outfit, but certainly a key for us. We'll see where that leads. Our leader there will bring us M&A opportunities as he sees fit. And also organically grow with certain customers in that field in Hawaii works because of our [indiscernible] lumber division, there's some nice synergies we have with warehousing, et cetera, with products. And it's not our #1 growth category, it's a very, very key business unit for us or we would not have invested in California. So kind of a stay tuned, cash. I don't think it's an exciting story at this point. But it's very key piece of what we're doing. And nice to have a little diversification there on some product lines. It's a well-run division, good leadership. Operator: Thank you. There are no further questions at this time. And I'd like to turn the call back over to Ali Mahdavi for closing remarks. Ali Mahdavi: Thank you, operator, and thank you, everyone, for joining us again this morning. This concludes today's call. We look forward to speaking to you again during our first quarter 2026 financial results call. I'll hand it over back to the operator, and I wish you all have a great weekend. . Operator: Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good morning, ladies and gentlemen. Welcome to Central Puerto's Fourth Quarter of 2025 Earnings Conference Call. A slide presentation is accompanying today's webcast and will be also available on the Investors section of the company's website, centralpuerto.com/en/investors. [Operator Instructions] Please note, this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the company's corporate website at www.centralpuerto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto's CEO; Mr. Enrique Terraneo, the company's CFO; Mrs. Maria Laura Feller, Head of Investor Relations; and Mr. Alejandro Diaz Lopez, Head of Corporate Finance. Maria Laura, please go ahead. Maria Feller: Good morning, everyone, and thank you for joining us. We will walk you through Central Puerto's fourth quarter and full year 2025 results, discuss key operational and market developments and then open the line for questions. Before we begin, please note that my remarks may include forward-looking statements and references to non-IFRS measures, such as adjusted EBITDA. These statements are subject to risks and uncertainties, and actual results may differ materially. Definitions and reconciliations are available in our 4Q '25 earnings presentation and financial statements. Revenues for 2025 reached $782.8 million, up 17% year-over-year. 4Q '25 revenues were $172.8 million, decreasing 26% quarter-on-quarter and increasing 3% year-on-year. 2025 adjusted EBITDA was $337.2 million, an increase of 17% year-over-year. And 4Q '25 adjusted EBITDA was $84.7 million, down 16% quarter-on-quarter and up 30% year-on-year. Total generation for the year was 18.6 terawatt hour, down 14% year-over-year, largely reflecting historically low hydrology at Piedra del Aguila. And also in 2025, we undertook nonrecurring maintenance works in Central Costanera combined cycles and Lujan de Cuyo generation asset. Regarding business performance, 2025 marked a pivotal year of consistent growth and market normalization. The company strengthened its strategic positioning and reinforced its power generation asset portfolio for long-term value creation. Throughout 2025, Argentina's wholesale market -- power market advanced toward normalization. Since November 1, Resolution 400 has supported U.S. dollars-denominated spot prices and recognized a margin over variable costs. In December 2025, 97% of our revenues were denominated in U.S. dollars and we also progressed in the new thermal term market, signing around 11% of total volumes in the contracted market with approximately 900 megawatt hour delivered to industrial customers during November and December. Our CapEx plan in 2025 included fully executed projects over the year and additional projects that allow us to look forward and continue delivering growth. In 2025, our total CapEx was $202.4 million, consisting of concluding with 2024 projects such as the closing of the Brigadier Lopez combined cycle that achieved commercial operation during 1Q '26, and we concluded also the San Carlos solar farm project, our first solar greenfield project. The asset reached commercial operation in November 2025, adding 15 megawatts of renewable capacity to our portfolio. Together with Cafayate, our two 2025 solar projects doubled our installed solar capacity and increased our total renewable portfolio by 20%. Also, in 2025, we extended Piedra del Aguila concession. The company was awarded the concession under the Comahue Hydroelectric Complex privatization process, extending the operation -- the operating term of the Piedra del Aguila hydroelectric facility through 2055. Winning bid offer was $245 million paid in January 2026. The company is also focused on the battery energy storage system projects, looking forward to add 205 megawatts of new technology in 2027. Our growth plan is [ backed ] by our financial strength, flexibility and low leverage ratio. In December 2025, net leverage ratio was 0.3x annual adjusted EBITDA, which positions us well to add new financial debt to finance Piedra del Aguila concession extension and the fee payment and the battery energy storage system projects. 2025 revenues stood at $782.6 million, 17% above 2024 revenues despite the 14% decrease in generation volumes. Spot revenues growth in 2025 reflects additional revenues from the realignment of the spot price over the year and the Resolution 400 since November 2025. Also, we see the effect of the self-procured fuel oil with the associated cost pass-through in revenues. Offsets came from lower water inflows from Piedra del Aguila and the maintenance works in Central Costanera combined cycles. PPA sales growth include new MAT contracts in November and December 2025, including also cost of fuels incorporated in the energy component. Renewable revenues increased by 3% as wind farm volumes increased 5% due to higher wind resources and the full contribution from Cafayate solar plant since the end of August 2025. Full year 2025 EBITDA reached $337.2 million, a 17% increase year-on-year, primarily driven by revenue growth and the market normalization and higher margins from self-procured fuels, which added approximately $8 million. In 2025, total generation reached 18.6 terawatt hours, representing 14% decrease compared to 2024. Central Costanera's generation volumes decreased by 15% year-over-year, primarily due to maintenance work in both Mitsubishi and Siemens combined cycle during 2025. Second, Piedra del Aguila generated 38% less than in 2024, mainly due to historically low water inflows affecting hydro production. Finally, Lujan de Cuyo was 24% lower year-on-year, largely explained by maintenance works in the co-generation asset in the fourth quarter. Moving to installed capacity, our portfolio reached 6,938 megawatt hours in 2025, representing an increase of 234 megawatt hours compared to 2024. The increase was driven by several developments. Brigadier Lopez combined cycle was completed and the San Carlos solar project added 15 megawatts of solar capacity. Together with Cafayate solar farm acquired in August 2025, these two solar projects contributed by 20% of the renewal capacity additions during the year. Regarding market position, Central Puerto maintained its market leadership, reaching 14% market share of total SADI generation. Finally, looking at operational performance, our thermal fleet continued to show solid availability levels. In 2025, total thermal availability reached 77%, while combined cycle availability stood at 89%, reflecting strong operational reliability. During 2025, three thermal and renewable projects were completed, combining greenfield developments and M&A transactions, further expanding our generation portfolio. First, the Cafayate solar farm, which was acquired through an M&A transaction is already in operations. Second, we finalized Brigadier Lopez combined cycle project, which is also already in operation since January 2026. Third, the San Carlos solar farm also entering in operations in November 2025. In addition, we were awarded two battery energy storage system projects, which were granted in August 2025. These projects are currently under development and are expected to begin operations during the first half of 2027. Finally, an important milestone regarding the Piedra del Aguila hydroelectric plant was that Central Puerto successfully secured a 30-year concession extension for the plant through the privatization tender process. The concession fee payment was successfully completed in January 2026, marking another key step in strengthening our long-term asset base. In 2025, the Argentine power system reached a new record for the demand with a peak of 30,257 megawatts on February 10, 2025. Renewable generation rose 16.5% year-over-year and supplied about 19% of total demand, including hydro renewables representing roughly 39% of the total annual energy mix. Thermal fuel consumption declined 2.6% year-over-year with gas oil down 53% and fuel oil 60%, partially offset by 1.2% increase in natural gas and 5.2% increase in coal. As of December 31, outstanding financial debt was $337.8 million and net leverage ratio stood at 0.3x adjusted EBITDA. On December 19, we signed a $300 million syndicate A/B loan with IFC with an average life of 5 years to fund Piedra del Aguila concession fee and Central Puerto's BESS project. Also, our outstanding FONINVEMEM receivable credit was $118 million as of year-end. Overall, 2025 was a year of solid growth and continued progress as the market normalized. During the year, the company kept expanding and strengthening its generation portfolio to support long-term development. Looking ahead, we will focus on three priorities: discipline contracting commercialization, operational excellence and advancing our growth agenda. Fernando Bonnet: 2025 was a pivotal year for Central Puerto, marked by Piedra del Aguila concession extension by 30 years more, portfolio expansion, market normalization and strategic progress across our assets. We enter 2026 from a position of strength with robust liquidity and resilient business model. Thank you for your continued confidence in Central Puerto. Please let's stay connect. And now we will open the line for questions. Operator: [Operator Instructions] Our first question comes from Martin Arancet with Balanz. Martin Arancet: I have three. I would like to run them one by one, if that's okay. First, I was wondering if you could give us some color on why the decrease in the quarter-over-quarter EBITDA given that the market liberalization should have been at least positive for thermal exposed to the spot market. Fernando Bonnet: Martin, thank you for your question and your interest in Central Puerto. The main topic affected the 4Q 2025 is that we have a strong maintenance in our combined -- Central Puerto combined cycle and Mendoza combined cycles, the two of our biggest combined cycles. And because of that, we don't catch in those units, the benefits of the new regulation scheme. But it's only regarding to that. The rest of the equipment was okay and the new regulation is in place. So we expect that will be recovered in the first quarter 2025 -- '26, sorry. Martin Arancet: Okay. And sorry for this follow-up because probably you already disclosed this, but are those plants already working again? Fernando Bonnet: Yes, yes, yes, they start working at the end of December and the other one early January. So we don't expect additional maintenance for those units until 2027, '28. Martin Arancet: Okay. Then regarding one of your main focus for 2026, I was wondering how much of the thermal capacity that was under the legacy scheme do you think can compete for energy PPAs? How much of that do you already have contracted? And how do you see the market for signing the rest of the energy that you have? I don't know if you are seeing much interest. I don't know if you have discussed this with distribution companies. And if you expect probably a stronger interest for industrial consumers as we approach the winter where you have higher seasonal prices? Fernando Bonnet: Well, in terms of our capacity, we are -- we can contract, as you know, 20% of our combined cycles that are the spot legacy scheme. That is around 2 gigawatts, the whole combined cycle. So it's the 20% of that with the private customers, with big industries. And then this -- and we are doing around that 20% yet. During January, February and March, we're going to cover that capacity contracted. For -- to exceed that, we need to go to -- as you mentioned, we need to go to the distribution companies. And that is coming slower. The distribution companies need to discuss with the regulators -- each regulator because it's not only federal, it has local regulators in each provinces. And this is coming slowly because they need to discuss and receive a pass-through possibility in order to make the pass-through to the demand. So by now, we are entering with not a lot -- we are not doing a lot of transaction with distribution companies. Right now, we are, of course, in discussions. We are having advances, but we are not closing big deals yet. We expect that it could happen -- start happening during this year. Martin Arancet: Okay. Right. So do you think that to sign contract with distribution companies, you probably will require I don't know, some backup from CAMMESA or something like that, like it happened with the battery project? Fernando Bonnet: No, no, no, no. We -- of course, we're going to make our credit analysis, and we're going to pick the distribution companies that we think that they are suitable to giving credit, but we don't request additional CAMMESA backup. Talking about, as I mentioned, legacy energy selling because this is month on month, and we can cut the provision if they doesn't pay. So -- but talking about other projects like new generation or perhaps, [indiscernible] this is different. This will be different. Martin Arancet: Okay. And my last question then regarding the other main focus that you will have for 2026. I was wondering where do you see growth opportunities coming this year and probably also the next year? Because it seems that there is not enough incentives yet to add thermal capacity. Now with the thermal capacity competing also for PPAs with renewables, we have seen lower [ tenures ] in new PPAs and at slightly lower prices. So I don't know if adding more battery is now the best idea. And there has been a lot of comments regarding probably new renewable capacity for mining and oil and gas, but it doesn't appear to have materialized yet. So I was wondering where do you see the growth opportunities coming in the near term? Fernando Bonnet: Okay. Well, first of all, we have right now an auction in place for new battery storage system for the other provinces than Buenos Aires that was -- that we get awarded last year. So we are looking spots over the interior in different province Santa Fe, Mendoza, [ Corrientes ], Cordoba, there are opportunities there. This new auction is in place and will be -- have the due date in May this year. So this is an opportunity of expansion that we're going to look at. As you mentioned, in terms of renewables, right now, it's getting difficult to get new PPAs with existing demand. So we are looking for new demand. Now the existing one, as you mentioned, mining companies are one of them. Oil and gas companies are other possibilities, companies that needs -- perhaps gain efficiency in the product in their processes, like introducing steam, perhaps we can work on co-generations there. And looking forward for perhaps in the middle of this year or perhaps in the third quarter of an auction for new capacity that need to be set for cover some areas, specific areas like specifically Buenos Aires area. And I see there are opportunities, not -- as you mentioned, not trying to catch the existing demand with renewable because, as you mentioned, it's been challenging right now because the thermal are entering in the market and are stressing prices. Also, the hydros are entering the market and put some pressure there also. But I see opportunities, as I mentioned, in storage system capacity, in new demand coming from new players in the market like mining companies and a possibility in capacity -- new thermal capacity coming in some auction during this year. Martin Arancet: Okay. Great. So this thermal auction that you mentioned, something similar to the Terconf that got canceled? Fernando Bonnet: Well, it's not completely established by the government yet, but we have talking with them that could be something similar, but with different perhaps approach to the to the demand. So something like receiving a payment for capacity from CAMMESA. But well, it's something that are under discussion right now. Operator: We are going to go now for the question with Lucas Lombardo with BACS. Lucas Lombardo: I want to know the percentage of new term contract that -- the income from -- for the company. Fernando Bonnet: Okay. I think you are referring to how much of the 20% that we can sell to private consumers we reach. That is the question. Lucas Lombardo: Yes. Fernando Bonnet: Yes. We expect during March to cover all those 20%. Operator: Our next question comes from Matias Cattaruzzi with Adcap. Matias Cattaruzzi: I wanted to ask first about the outlook for 2026 and the -- how do you see volumes coming for next year, especially hydro volumes? And then how do you expect the PPA versus spot mix to be in next year regarding the new regulation? Do you expect PPAs to grow more in generation? Fernando Bonnet: Okay. Thank you. Talking about volumes for Piedra del Aguila specifically, the hydrological year starts on May. So it's difficult today to say that we're going to see better inflows than the previous year. Of course, the previous year was a low year, so in our expectations are to be better than that. But to have a clear view, we need perhaps 2 more months in order to see how the year comes. In terms of the thermal generation, we expect an increase because, as I mentioned before, two of our combined cycles were in maintenance during the whole month of December and the other one was in maintenance the whole month of September. So we don't see those maintenance in 2026. So we expect an increase of our thermal generation also. In terms of new PPAs coming, we -- as I mentioned, we are trying to catch additional demand from the distribution companies. This will unlock the possibility to sell the legacy energy above the 20% that we have already granted -- so we expect to have news on that this year. It's difficult to predict, as I mentioned before, it's difficult to predict the volume that we can reach there because the distribution companies are discussing with the regulators, the feasibility of make that pass-through directly to the demand and the terms of that pass-through. So right now, it's difficult to forecast the potential there, but we see potential. So I think we can catch more than the 20% that we are already selling, and we can go over that going to distribution companies. Matias Cattaruzzi: Great. And then do you intend to participate in the upcoming tender for national batteries? Fernando Bonnet: Yes, we are looking at, yes. Yes. We are looking at -- of course, it's different from the participation that we have in the last year because we are looking in places different for our facilities in -- the ones that we awarded last year, we established inside our facilities and it's convenient or very convenient for us. And right now, this new auction is all over the country. So we are looking at places. And the new reality in the battery storage system prices because the lithium goes up, the copper, all the materials the batteries used. So -- and the price according to the last auction. So we are looking at returns on that places that are outside from the -- our facilities -- are far from our facilities is not the same. So we are looking at, but we need to do more work in order to understand if something suitable for us or not. Matias Cattaruzzi: Great. Do you expect to participate in the upcoming privatizations by ENARSA assets? Fernando Bonnet: Yes. Yes, we are looking at. We don't have the mandate yet to move forward, but we are looking at. Matias Cattaruzzi: Great. And do you have any updates on the OpenAI-Sur Energy project? Fernando Bonnet: No, we have discussion with them. After that we award Piedra del Aguila that was very important for them that we have a huge hydro backup in us to give power to them. That was a great news for them. We discussed with them that, but we don't have a clear timing on any additional news coming from that place. Matias Cattaruzzi: Great. And last, can you give us like an EBITDA bridge for upcoming years until 2028? Fernando Bonnet: Well, I can give you some perhaps information regarding 2026. 2028 is, of course, need to -- we will expect to maintain that, but talking about increasing will be challenging regarding the expansion, as I mentioned, of new PPAs and how we're going to do in terms of the new coming auctions. But talking about 2026, we have some certainties that can share with you and the rest of the listeners. One important thing or the biggest improvement that we are seeing for 2026 and onwards is that the PPA, the Brigadier Lopez closing combined cycle PPA going to bring additional $60 million for our EBITDA. The other improvement, as we talked in the previous calls, the new regulation for spot market bring another between $70 million and $80 for our EBITDA. Piedra del Aguila also have an improvement compared to the old regime that compared to this new concession will bring additional $15 million. And if you perform the full year of the renewables that we acquired and build last year, this will add additionally $8 million and -- between $8 million and $10 million more. So [indiscernible] terms will be an improvement of $150 million, $160 million. Matias Cattaruzzi: Great. And I have two more questions. One is if you expect distributing dividends in 2026? Yes. And the second one would be more operational. With the upcoming IP for the Perito Moreno pipeline expansion, do you expect that your plants in the central area would get some more upside with lower costs due to lower gas prices because of the expansion of the [indiscernible] Perito Moreno? Fernando Bonnet: Okay. In terms of dividend, that is something that we'll be discussing by the Board of Directors. Right now, we have no guidance regarding to that, specifically because, as I mentioned, we have different projects under our pipeline, and we are performing some projects right now. So this is something that Board will be -- discuss in the next coming month. Talking about the TGS pipeline, we are -- we don't see a reduction on prices because the gas prices are set right now by the plant gas contracts that CAMMESA and the government signed during the former administration. So we received these prices -- or these prices are fixed until the end of 2028 when those contracts get to the end. So we don't see big reduction on prices until this plant gas goes to the end. In terms of the capacity or the transportation capacity of the TGS, we are analyzing the convenience or not to acquire that capacity. The problem is that going further in a big 10 or -- contract is like 15 -- of course, you can do less, but normally it will be 15 years of contract, is not fully discussed the regulation scheme in which we can recover this additional cost because this additional transportation will have an incremental cost related to what -- one that we are paying now. So it's not clear for us yet the new regulation scheme that will be available or the regulation scheme that will be available to recover that incremental cost. So right now, we are looking at, but we don't have a decision yet. Matias Cattaruzzi: Great. But wouldn't it be better for gas prices in the winter? Wouldn't you need less liquids or gasoline or fuel oil? Fernando Bonnet: Yes. The problem is to get here to our terminals, you do not only need the TGS expansion, you will need distribution here and the distribution in Buenos Aires area are very constrained. So we don't see a full elimination of diesel and LNG during winters for a while. Of course, will be a reduction because the TGS will inject here and also have some volumes that could go to the north. But we'll see a reduction, but not a full elimination of diesel and LNG. Operator: This concludes our Q&A session. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks. Fernando Bonnet: Well, thank you for your interest in Central Puerto. I will encourage you to ask any questions to our team that you may have. Thank you very much, and have a good day. Operator: This concludes today's presentation. You may now disconnect, and have a good day.
Operator: Good morning, and welcome to the NewLake Capital Partners Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to Jack Perkins, Investor Relations. Jack Perkins: Thank you, operator, and good morning, everyone. Joining me today are Gordon DuGan, Chairman; Anthony Coniglio, President and Chief Executive Officer; and Lisa Meyer, Chief Financial Officer. Before we begin, please note that certain statements made during today's call may be considered forward-looking under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to various risks and uncertainties. We will also reference non-GAAP measures, including FFO and AFFO. Reconciliations to the most direct comparable GAAP measures are included in our earnings release. With that, I'll turn the call over to our Chairman, Gordon DuGan. Gordon DuGan: Thank you, Jack, and good morning, everyone. We are very pleased with our fourth quarter and full year 2025 performance delivered against a backdrop that remains challenging for the cannabis industry with continued capital scarcity and inconsistent operator execution. For the year, we generated $51 million of revenue, $44 million of AFFO and returned $1.72 per share in dividends from our $2.09 per share of AFFO, highlighting the cash flow generation of our business. Since our IPO in 2021, we have paid $6.86 per share in dividends. Our team remains focused on disciplined risk management, re-tenanting where necessary and sourcing high-quality opportunities. Our measured pace of origination reflects intentional discipline as we navigate the current environment and position the company for future growth once reforms materialize. On the policy front, the most notable development of the quarter was obviously President Trump's executive order directing the Attorney General to accelerate the process of rescheduling cannabis from Schedule I to Schedule III. This represents an important and constructive federal signal, but one that now requires decisive follow-through from the Department of Justice. Rescheduling is critical to eliminating the burdensome 280E tax regime and supporting additional reform that could restore access to capital, both foundational to the long-term health of this industry. Like many, we are awaiting DOJ action. Until that occurs, we will continue to operate cautiously based on today's regulatory environment and maintain our disciplined risk-aware approach. As we look into 2026, NewLake is entering the year with a strong balance sheet. We have more cash than debt. We have no expensive preferred stock and basically the lowest leverage ratio of any REIT that I'm aware of. We expect continued cannabis industry headwinds until reforms are ultimately completed. And against that backdrop, we will remain disciplined, waiting for the opportunities that will come as the industry progresses. Thank you for joining us, and I'll now turn the call over to Anthony. Anthony Coniglio: Thank you, Gordon, and good morning, everyone Fourth quarter results were in line with our expectations, delivering $0.51 per share of AFFO and an 85% AFFO payout ratio. Our full year results exceeded those of 2024, which is especially notable in a market where competitors reported year-over-year declines in both revenue and AFFO. Throughout 2025, our team remained focused on mitigating risks across the portfolio, addressing vacancies and sourcing high-quality investment opportunities. That's work that's continued into 2026. During the year, we closed 2 smaller transactions with our existing tenant Cresco Labs, and we partnered with tenants, Curaleaf and C3 to optimize property performance and further reduce long-term risk in the portfolio. During our last call, we provided details about the C3 amendment. But as a reminder, that higher-than-expected construction costs reduced the attractiveness of the Hartford project, and we worked collaboratively with our tenant to structure a transaction, providing a better risk/reward for our shareholders. Overall, our portfolio remains in solid position. Our top 3 tenants, Curaleaf, Trulieve and Cresco, which together represent more than 50% of our annualized base rent, each reported strong 2025 results, including positive operating cash flow. Curaleaf generated $1.3 billion in net revenue, delivered a 50% adjusted gross margin and produced $90 million of free cash flow. Trulieve continued to demonstrate industry-leading profitability with 60% gross margins and $230 million of free cash flow. Cresco reported sequential improvements in gross margins to 52%, extended their debt maturities to 2030 and generated over $70 million in operating cash flow during the year. Having said that, the broader cannabis landscape remains challenging without federal reform, and we continue to proactively manage risk while seeking opportunities to strengthen the portfolio. We're also closely monitoring developments at The Cannabist, which remains in forbearance with its creditors following a debt default. In the first quarter of 2026, The Cannabist completed the sale of its San Diego operations where we lease a dispensary. The new operator, Wellgreens, has taken over the location, and we are pleased to welcome them to our tenant roster. In connection with the transition, we completed a lease amendment under which Wellgreens assumed full operational control of the property, and we secured a 5-year lease extension. This amendment underscores the property's strategic value within the cannabis ecosystem, enhances long-term cash visibility and reflects our disciplined, proactive approach to asset management in the portfolio. The transition also reduces our exposure to The Cannabist from 9% to 8% of annualized base rent. Turning to policy. While federal momentum is encouraging, we remain appropriately cautious until a final rule rescheduling cannabis is published. Eliminating 280E through a move to Schedule III would meaningfully improve long-term cash flow fundamentals for our tenants and in our view, pave the way for additional reforms such as the SAFER Banking Act and broader state-level expansion. In addition, shortly after our last earnings call, the President signed a continuing resolution that closed the long-standing hemp loophole from the 2018 Farm Bill. This loophole enabled a nationwide market for intoxicating hemp-derived THC products outside state-regulated systems. We believe this unregulated channel siphoned revenue from the state licensed operators. If fully implemented as scheduled on November 12 of this year, the ban on hemp-derived THC could help stabilize pricing and support operator revenue growth in the second half of 2026 and into 2027. The combination of these reforms, rescheduling and the elimination of hemp-derived THC, once implemented, has the potential to meaningfully improve industry fundamentals and by extension, our tenant quality. Importantly, we're not taking these reforms for granted nor are we adjusting underwriting or capital allocation based on anticipated policy outcomes. With respect to our vacant properties, we continue to advance re-tenanting efforts. Interest remains healthy, and we will update investors as developments become tangible. Our focus remains on thoughtful, risk-adjusted decisions designed to protect long-term shareholder value. With that, I'll turn it over to Lisa. Lisa Meyer: Thank you, Anthony. For the full year of 2025, our portfolio generated total revenue of $51.1 million, representing a modest 1.9% increase from $50.1 million for the full year of 2024. The key factors contributing to this revenue growth include rental income from the 2025 acquisition of 2 Ohio dispensaries, a full year of rent generated from a property that we acquired in 2024 for $4 million, a full year of rent generated from funded improvement allowances during 2024 of $15.1 million and annual rent escalators that consistently boost our revenue. The increase in revenue was partially offset by the impact of vacancies at 2 properties previously leased to Ayr and 1 property previously leased to Revolutionary Clinics. As a result of this modest revenue growth, we experienced a corresponding increase in our net income and AFFO. Net income attributable to common stockholders for the full year of 2025 totaled $26.3 million compared to $26.1 million for the full year of 2024. AFFO for the full year of 2025 totaled $43.8 million or $2.09 per share, reflecting a 0.3% year-over-year increase. Moving on to the fourth quarter of 2025. Total revenue was $12.3 million, reflecting a modest decrease of approximately 1.4% year-over-year. This decrease was primarily driven by vacancies previously mentioned. During the fourth quarter of 2025, we applied the remaining Ayr security deposit of approximately $408,000 to partially offset unpaid rent amounts. The lower rental income and additional property carrying costs drove corresponding declines in our results for the quarter. Net income attributable to common stock for the 3 months ended December 31, 2025, totaled $6 million or $0.29 per share. AFFO for the fourth quarter was $10.6 million or $0.51 per share, representing a 3% decline compared to the same period in 2024. On December 15, 2025, the company declared a fourth quarter cash dividend of $0.43 per share, which was paid on January 15, 2026. This dividend represents an AFFO payout ratio of 85%. For the full year of 2025, our aggregate dividend totaled $1.72 per share, reflecting an AFFO payout ratio of 82%. Most recently, our Board of Directors declared the first quarter 2026 cash dividend of $0.43 per share. The dividend is payable on April 15, 2026, to shareholders of record as of March 31, 2026. As of December 31, 2025, our balance sheet remains strong with $433 million in gross real estate assets and only $7.6 million in outstanding debt. Our leverage remains exceptionally low at 1.6% debt to total gross assets and a debt service coverage ratio of approximately 78x. Furthermore, we have no debt maturities until May of 2027. Our liquidity is solid with $106.3 million available, including $23.9 million in cash and $82.4 million in untapped capacity under the revolving credit facility. With that, I will turn the call over to the operator. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Pablo Zuanic with Zuanic & Associates. Pablo Zuanic: Just following up on the comment on the Ayr security deposit that was applied to rental in the fourth quarter. Just very basic math question, trying to model 1Q. All else equal, what would be the impact on the Ayr side? Because you still applied some deposits and escrow, I think, to rental income in 4Q. If you can explain that, please, quantify that. Lisa Meyer: Yes. So the $408,000 represents a little over 1.5 months of rent. So I guess it's approximately... Anthony Coniglio: Yes, that's it. Just the $408,000. Lisa Meyer: Yes. Pablo Zuanic: Right. Okay. So that's -- I mean that's all else equal, and I know that a lot of things can change, but at least based on what we know right now, that would be the major change when we try to model 1Q, right? Or would there be any expense items that have cadence or that are different from 4Q? Again, just it's a basic modeling question to start. Lisa Meyer: Yes. No, it would just be the $408,000. We already have the property carrying costs on balance sheet -- I mean on the income statement. So those will just continue to roll forward. Pablo Zuanic: Okay. And then, Anthony, in the recent IIPR call, they sounded quite, I guess, positive or bullish on their ability to re-tenant facilities. I don't know if you share those comments. From my point of view, it's taking a while to retenant the facility in Massachusetts from Rev Clinics. And I'm not sure where we are with retenanting the 2 Ayr properties in Pennsylvania and Nevada. But if you can -- it's a 2-part question. Do you echo the positive sentiment from IIPR? And then maybe just more color in terms of when and how you can retenant to cannabis operators or to people outside the industry. Anthony Coniglio: Yes. Thank you for the question, Pablo. We've been at this now over 7 years. We talk to a lot of operators. We're very cautious about this industry. Given some of the stuff we talked about in the prepared remarks, the fact that this industry lacks access to regular way capital, the onerous 280E taxation on the industry and how that limits capital flows to the companies. And so while we have seen a modest pickup in interest in the vacant properties, we're just going to continue to be very cautious. I would say specifically about Massachusetts, there are some structural changes to the state regulatory approach such as increasing the cap on dispensaries that any one operator could own that is part of driving some renewed interest in the sector. And so while we're having some activity around our properties, we won't be announcing LOIs. We're only going to announce actual lease activity. And so while I'm cautiously optimistic, we're certainly not going to strike the tone here at NewLake that we think everything is great, and we're going to be able to backfill these properties with no problem. That's not our position. Gordon DuGan: And I would just add to that, Anthony, that I agree with everything you said. And we are seeing a modest pickup in activity and operator interest in expansion, and we do have activity on all 3 sites. But it's tough getting a lease across the line on any of these. So we're -- as Anthony said, I think we're very appropriately cautious about announcing anything ahead of getting something done. Pablo Zuanic: That's good color. I appreciate it. Look, and then just moving on to Cannabist and Acreage. And again, I know there's only so much you can share about these companies. I realize you have access to data that is not public, so you cannot comment on that. But in the case of Cannabist, you talked about the California property, so great. That's been with the new operator. But can you comment on the other Cannabist operations, I mean, cultivation dispensary in Illinois, cultivation dispensary in Massachusetts. Are they operational? And I guess as an analyst, I should know that, but I'm not -- are they operational? What color can you share, if not from the operator or a bit more at the state level? And the same question regarding Acreage cultivation in Massachusetts and Pennsylvania. Whatever color you can share, Anthony. I mean from my point of view, those are 2... Anthony Coniglio: From what we know all those properties are operational. Is it possible they closed down yesterday? It is. I'm only limited on what we know. We don't run the properties. But it's our belief that they're all currently operational. Obviously, Illinois is a better state to operate in for those familiar with the industry than it would be safe for Massachusetts. And we take some comfort that Acreage is owned by a very large Canadian company, albeit having a ring-fenced structure, but that transaction closed only a little over a year ago, and I think Canopy sees meaningful opportunity long term in owning and maximizing the value from a U.S.-based MSO like Acreage. And so I think you could look at the first quarter dividend announcement and also connected with that if we had something material to tell you, we take transparency with our investors very importantly. And so we would have announced something. But as we stand here, all of our tenants are in compliance with their leases. Nobody is in a default position when we sit here today. Gordon DuGan: Maybe just a little extra color on that. I would -- you picked on exactly the 2 right tenants to focus on. And I'd be more worried about Cannabist and Acreage, and we'll just have to see how they both play out. But Acreage has been prompt in paying rent. And Cannabist, I think, similarly up to now, but they have defaulted on their -- they're in forbearance on their senior debt. So we're watching that very closely. Pablo Zuanic: Yes. All right. That's great color again. Just moving on, in terms of the Connecticut property that's held for sale in your balance sheet, C3, I think if I read correctly, in the 10-K, if that property is sold above your book value, that goes to C3. If it's sold below book value, C3 is responsible for that. Can you clarify that and correct -- I mean, correct me if I'm wrong in my interpretation. Anthony Coniglio: You're correct, but I'd provide an amplification around if it's sold above market value, there is a corridor of value where C3 participates so they can recover some of their very significant investment into the property. But beyond that corridor, premiums on the property come to NewLake. And you are also correct, and I would reiterate that the extent that there's even a $0.01 below our basis, we are reimbursed 100%. Pablo Zuanic: Right. But what happens if the property is not sold for a year or 2? I mean the agreement remains in place, I suppose, right? Anthony Coniglio: Yes. We continue -- they continue to be a tenant and they continue to pay rent while they're seeking -- while we're seeking a sale of the property. Pablo Zuanic: Okay. Sorry, I didn't realize that. So that property, although it's held for sale at the moment, it is paying rental and it's current. Yes. Anthony Coniglio: Correct. Yes. Pablo Zuanic: Just moving on, and apologies if there's somewhere else on the Q&A line here. In the case of IIPR, in their conference call, they disclosed that they've been served by the SEC. There's a bit -- I don't know what that exact legal term is, subpoena or investigation. When I hear things like that, I wonder if there's any read across for the rest of the industry, for other sale-leaseback operators. I mean, obviously, if you have been served, you would probably issue a press release on that. But in my opinion, when there's this type of investigations, they are not just company specific, but we can be looking at the industry and practices in the industry. So there could be some minimal risk read across for NewLake. But again, please correct me if I'm wrong. Anthony Coniglio: I don't believe so at all. Let me be clear. We are not under investigation. We have not received any SEC inquiries. We do not have any subpoenas from the SEC. And we take transparency and investor communication extremely seriously. As you could tell from the way we've been doing this for 5 years, we try to be very upfront about issues in the portfolio, about the condition of our tenants. I don't know, Pablo, that there really is a read-through from this. If you look at the disclosure, and that's really all that any of us have to go on right now. If you look at the disclosure, it looks like it was an outgrowth of their class action lawsuits that were pertaining to the transparency of the disclosures that the company had made. We don't have any class action lawsuits. We've never been accused of not being transparent in our communications with investors. So I would not think that there is a read-through to other sale-leaseback providers. Pablo Zuanic: Okay. And the very last question, and I know you touched on the policy front, and we know that it's uncertain, although we are all positive at the federal level and state level. But can you give more color in terms of your conversations with operators? Are people trying to get ahead of Virginia or Pennsylvania and that could lead to discussions that are more positive and constructive right now in terms of future opportunities for NewLake. And by the same token, like you said, with rescheduling, the credit quality of your operators, tenants improves, more business. But is all this news flow translating into more active conversations with operators out there or not really yet? Am I putting too much of a positive spin on this right now? Anthony Coniglio: It is, but to a small extent. I would say that similar to what we saw in Florida, before the ballot initiative, there were some operators that were building up -- build out in anticipation. A large majority were awaiting the actual results. I'd say in Pennsylvania, it's a similar thing. We've heard of a couple who are thinking about and looking forward to some expansion, others and many of them are not. And so it's a mixed bag. I would say that the level of activity for us has increased -- in terms of looking at new deals has increased in the first quarter from the fourth quarter. But I don't want to give you the impression that it's up tenfold that it's a massive pipeline. It certainly isn't that, which quite frankly is a good thing because it tells me that this industry is remaining disciplined about its CapEx obligations because even though we fund for real estate on any of these projects, there's a meaningful amount of equity investment that an operator needs to put into a cultivation facility or a dispensary in terms of equipment, people training and other various expenses to get these facilities up and running. And so I think people are being generally judicious about not leaning too hard into the what can happen. They're doing their research, having the conversations, but I think being appropriately cautious. Gordon DuGan: Yes. I would say it is -- I think it is fair to have a more positive outlook on that. We're seeing more operator interest in places like Massachusetts. Virginia, hopefully, is close to some positive momentum. Pennsylvania, you mentioned. So yes, it feels like for the first time in a while, the operators are modestly better and more optimistic. It's really been -- the industry has been tough. And it does feel like some green shoots are appearing. Pablo Zuanic: And again, I would say congratulations to the team for having maintained the discipline throughout in a very tough environment. Operator: Our next question is from Craig Kucera with Lucid Capital. Gordon DuGan: Sorry, Craig, you had to wait so long. Those are good questions though. That was useful. Craig Kucera: Yes, they were. Yes, absolutely. So I've got a few follow-up questions on Cannabist. So I guess you were able to get the California asset retenanted without any real downtime, obviously. Were the lease terms -- I know you mentioned it was a 5-year lease, but as far as the rent, was that more or less in line with what Cannabist was paying? Anthony Coniglio: One clarification. It's not a 5-year lease. It's a 5-year lease extension. Craig Kucera: Extension. Okay. Anthony Coniglio: That was an extension. So we added duration to that lease generating from an NPV perspective, as you know, we created value by getting that lease extension. And Cannabist... Gordon DuGan: Anthony, what was the old lease term? Anthony Coniglio: We had about 6 years remaining. Gordon DuGan: Okay. Yes. So we pushed it out to 11, obviously, or roughly. Anthony Coniglio: Yes, and rental... Gordon DuGan: yes, Go ahead. Sorry, Anthony. Anthony Coniglio: No, no, go ahead, Gordon. Rent was not adjusted. Craig Kucera: Okay. That's helpful. And of the remaining 4 assets that Cannabist has leased, can you give us a split of how much is coming from Massachusetts versus Illinois? Anthony Coniglio: It's about half and half. In Illinois, we have a dispensary and a cultivation, and we have the same in Massachusetts. Craig Kucera: Right. Okay. And do those leases kind of have your standard, call it, 6-month rent deposit affiliated with them? Anthony Coniglio: The deposits vary on those leases. It's not 6 months. It varies. Sometimes you have a little bit more on cultivation, a little bit less on dispensary. But if those go into default and we have an announcement, we'll talk about the security deposits associated with those. Craig Kucera: Okay. That's helpful. And just one more on Cannabist. I guess, can you give us a sense of the rent coverage of those assets? Are those kind of in line with your -- I think you typically have maybe 3.5% on the cultivation, 9% on the dispensary. Are they in that kind of ballpark range? Anthony Coniglio: We don't disclose specific property level asset-by-asset coverages. The way I'd answer your question is by focusing on the state's operating environment. And I think what you would find is that Illinois, given the size of that market, given the more limited license nature of that market has a better operating profile overall for cannabis operators in the state versus, say, a Massachusetts. We've spoken many times over the last couple of years about the difficulties in Massachusetts, primarily driven by the lack of ability to become vertical with the cap at 3 on dispensaries, but also the proliferation of cultivation licenses that occurred over the last 4 years. And in fact, the state has taken notice and recently at a February regulatory commission hearing, the CCC was requesting input on a potential moratorium for new cultivation licenses. And so that's part of what's driving some of this increase in interest in Massachusetts because with the moratorium, it could make the state dynamics better and provide a better floor support for wholesale revenue there and couple that with the increase in the cap on dispensary ownership where the legislature approved a bill that would let you go to 6, the House has approved one that lets you go to 4, and they're in reconciliation right now. Those are some of the tailwinds that people are feeling a little bit better about Massachusetts today. But coming back to your question, Illinois is an easier market to operate in than Massachusetts. Craig Kucera: Right, right. That's helpful. Changing gears, last quarter, you mentioned that you might look at expanding outside of the cannabis sector. Does the sort of improving legislative environment momentum maybe put that on pause? Or are you still evaluating maybe expansion outside of cannabis? Anthony Coniglio: We continue to evaluate all opportunities to deliver growth for shareholders. And so yes, during the quarter, we were evaluating noncannabis opportunities. And when we think there's an opportunity for good risk/reward, we'll present it to our investment committee and ultimately, the Board for approval. Gordon DuGan: Yes. If I might just add to that, I think there is some subtle positive momentum that would raise the bar on noncannabis opportunities given some positive momentum. And almost without exception, we still find the highest cap rates in the net lease sector in the cannabis sector. So it's a tough bar. Most of the alternatives that we've looked at, some of them are, we think, attractive, but they're lower return alternatives. And that's always been sort of the premise of the cannabis sale-leaseback industry, very high returns, higher risk. And I think we've navigated that very well. But it's still -- the bar -- the positive momentum from the regulatory standpoint has probably raised the bars in a subtle way for doing something outside of it. Craig Kucera: That makes sense. Just one more for me. You mentioned the strength of the public companies that represent, I think, about 50% of your portfolio. And obviously, we can look at that and there's a lot of visibility into their operations. But can you talk about your private tenants? Are you seeing any degradation in 4-wall coverage or any concerns there? Anthony Coniglio: No. And you point out we can't discuss their specific profitability, but they are performing as expected. And that's not a -- they are performing well. We have some private operators that have profit and cash flow profiles that people in the industry would love to have that financial performance. But we are -- everybody is performing in line with our expectations. Operator: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Anthony Coniglio for any closing comments. Anthony Coniglio: Great. Thank you all for joining us today. We appreciate your continued support, and we look forward to updating you in the months ahead. Have a nice weekend.
Arthur Johnson: Good morning, everybody. I appreciate you taking the time to be here today as we talk about our results for 2025. And I want to thank everybody also online that will be tuning in to listen and watch this. The timing today is very, very interesting. And I thought before I got into the presentation, I'd just make a few comments and updates on what's going on. Our -- we have people in Saudi Arabia. We have people in Dubai, where they're all safe right now. We've been checking on them on a regular basis. I think that trying to predict what's going to happen with that situation in the next couple of weeks is kind of a crazy guess right now. Nobody knows. We don't know. But it is one that definitely has the world focused on energy. And I think if there's one takeaway as we start this out for Hunting's -- what we did in '25 and what the future holds for us, I think it highlights again the importance of energy security and the fact that when you look at our clients' reserve life as far as people like Shell saying 6 years in a row, the reserve life has declined. I think it only points to a long-term bright outlook for the oilfield service industry and for Hunting in particular. So as we start this presentation, I always want to reach out and thank the team at Hunting. There's a tremendous amount of talent within our organization and a great team that delivers these results. And I'm just very privileged to work with this group of people every day. So I want to thank them first and foremost, for all of their support and what they do. Operational highlights. 2025 was a great year for us. I don't think you're going to see a whole lot of changes from what we kind of preannounced back in January. We had a lot of highlights for the year, a lot of hard work done and a lot of good execution took place. The 2 acquisitions we were able to add into the group with Flexible Engineering Solutions and also the Organic Oil Recovery position us well to continue to diversify our client base and to be more global in all that we need to do from a revenue point of view. We executed a good bit of the KOC orders. Those are done. Fortunately, I don't have any boats full of pipe waiting to get through the Strait of Hormuz right now. So that's part of the good story that that's done. We opened up a new facility in Dubai. It was kind of the cornerstone for the move out of Europe, where we had to close 2 facilities in the Netherlands. Further restructuring, obviously going on in our European business, but we're excited about the opportunities to be closer to the customer and have a better cost basis in Dubai. We were able to finally dispose of our interest in Rival Downhole. So we're now totally out of the downhole drilling tools side of the business. wish our ex-employees and joint venture partners great success in that, but it was a good way to generate cash to be put to other acquisitions that made more sense for us for the long term. We continue to focus, as I mentioned, on our efficiencies. We've announced today an additional $15 million cost savings plan. There's a lot of moving pieces to that, everything from more efficiency on the shop floor to organizational changes, shared service issues that we're going to address, and that will play out over the next 12 to 18 months or so. Capital allocation has been a different story for us in the last year or so with the share buybacks. We've announced a couple of them, obviously. We are about done with the $60 million first 2 tranches, and we've announced today our intention is to do another $40 million to be completed by March of '28. I don't want anybody reading into this, and I've talked to some people earlier. We still intend to be very acquisitive and focusing on M&A. So I don't want anybody to take a signal that, oh, we can't find anything to do with our money. We just feel that with our outlook for profitability and the cash generation that we have the potential to do, we want to make sure we're giving returns back to our shareholders. Financial highlights. The key one was the EBITDA number of $135.7 million. The rest of the things, oil price-wise and that that you all know, share buyback that I already talked about. Sales order book down from last year, but it's really a more normalized level. And I always like to highlight that really doesn't include much at all for Titan because of the short-cycle nature of the Titan business. We anticipate that sales order book number accelerating substantially through and into Q2. The scorecard for our 2030 strategy, a lot of boxes ticked. I think of all of them, when we talked about the cash flow generation. The 2, I think, maybe most important to me or to highlight was the fact that we continue to move our EBITDA margins higher. We're still striving to get to that 15% number. Hopefully, maybe that will happen this year. But I mean, our plans are that we've got the products and we've got the geographic reach to continue to grow and go after high-margin business. Cash generation was a real big deal for us in the past year. I'd like to highlight that we generated the $63 million in cash, but that's after also doing all the acquisitions, increasing the dividend and doing the share buyback. So the company, to me, financially, we're in a very, very healthy place and a good place to be to in order to fund our growth going forward. This chart here just shows you some of the stats on where we're at with our EBITDA growth for the year. OCTG, to me, it's probably industry-leading EBITDA margins for what we do in that area of the business, very strong performance, some of the strongest margins in the company's history in OCTG, thanks to the effort of our teams in North America and in Southeast Asia. Subsea business going in the right direction. It was a business where we had some good results in the year. Some of those segments of business like our coupling business at our Stafford location are really just accelerating now as it's a follow-up to the subsea tree awards and then how we receive the orders for those components going forward. Advanced Manufacturing, it was really a 2-part story for the year. Some good results in Dearborn, great traction on the non-oil and gas side. The electronics business has lagged, and I'll talk a little bit about that in more detail later. And then one of the happiest parts of the story for Hunting in 2025 has really been the improvement on the Titan business. So the number isn't at our 15% range. But when I look at our results there compared to our peers, especially over the last half year plus, we've definitely done better from an earnings and margin point of view, and I think that, that will continue. The acquisition update, Flexible Engineered Solutions, our integration plans have all come together well. There's been no hiccups, no hurdles. We didn't find anything unfortunate. So everything we thought we had is there. Opportunities are very large part of the big second quarter upside we're anticipating has to do with Brazil and Guyana. The picture you see there is one of the Guyana FPSOs with the DBSCs attached to them. It's one of those developments with Exxon where titanium stress joints were not going to be used. But as I talked about when we made this acquisition, we wanted to be able to play on every FPSO opportunity out there as we see that a growing market. And this is a case where the DBSCs are being purchased and used to help that installation on that FPSO. Organic oil recovery. We're getting a lot of good traction on that right now. Everybody or a lot of people have seen the announcement from our client Buccaneer, for their East Texas operation that they had. Considering the hundreds of thousands of conventional wells in North America, that to us was a really great sales point with what they talked about, the water cut being reduced and the production doubling. We anticipate that as a good start for our North American business. And if you all remember, before we made the acquisition, we did not have the rights in the Western Hemisphere. So we're excited about that. We've got trials going on right now in Brazil. And one big one we've got in Angola with a major oil company down there. So I think there's really good upside with OOR. The OCTG business talks there about some of our progress there. TEC-LOCK, Travis Kelley, who leads that business for us in Houston and his team have done a great job. We continue to gain market share on that. And it kind of aligns with our story we have with Titan right now in North America. As clients have more challenging wells, and I think the last number that I heard was 40% of all shale wells in the U.S. right now are 3 miles long or longer. And in the case of some of our clients even doing these U-shaped wells, failure is just not an option when you're 2 miles from the wellhead or further. So the TEC-LOCK product line is trusted for its performance and its integrity downhole, and that has driven a lot of that growth there. Plus again, it's also the fact that we highlight our virtual mill concept. So whether it's in North America, whether it's in the Middle East, whether it's in West Africa, -- we're not tied to one steel supply, which gives our clients a lot of flexibility. The accessory business was very strong last year, driven by a lot of work in South America and a bit of a resurgence on recompletions and workovers in the Gulf of America. We see the upside there being very, very bright. We've also picked up more of the subsea work for -- not for our own product line, but doing work for people like FMC and OneSubsea, which has helped that business out as well. Our joint venture in India is performing as planned, delivering good contribution of earnings. The outlook continues to be bright. The shop is busy. India, if anything, and talk about energy security, they're the ones that need to build up their own domestic source of hydrocarbons, hydrocarbon production, and we're well placed in that operation there to see that grow. And then there's just a note about KOC there. Right now, just everybody has asked me 100 times, KOC tenders have been delayed. And so right now, our anticipation is that those will go out in the next week or so, but that could change tomorrow. But if that happens, the award dates would probably not be until April. Fortunately, for our plan this year, we don't have much in the guidance planned for KOC because even if we had the orders today, you have to make the steel, it's 6 months to do that, you have to thread it, the shipping and the like so. That was not planned on being a big part of this year's business. Non-oil and gas, there you see it broken down by different product segments. Again, Dearborn has really been the star on the non-oil and gas side with space, nuclear, power gen. We're seeing -- there's some new jet engine business that we're doing first articles on and working on now. We're not going to tell you the client yet, but I see a big upside to that. And as I've mentioned earlier, it's been kind of a reinvention of the capacities at that facility in Maine, where it was very focused on oil and gas product lines. Now the focus is on non-oil and gas, primarily, again, aerospace and defense, and we want to make sure we have the kit and the tools in place to capture that business. Electronics is a bit of a different story, mainly because while we've worked hard to diversify the product -- client base there, we're still very, very reliant on oil and gas. We have had an uptick in the medical side. We have captured a couple of new clients on the defense side, but it still is more focused towards oil and gas. And with rig counts down, especially in North America, the CapEx purchases that our client -- our big OEM customers would make has just been lagging. We announced also today $5 million cost savings plan. That has many, many moving pieces to it. It's some sensitive when it talks about people and things like that. So I'm not going to have a lot of detail about that to pass on to you today. But I think the key message is it's an ongoing process. I highlight up there that in the past year, for example, we generated some meaningful cost savings from our lean manufacturing focus. We've been doing that for 17 years now. I started that program a long time ago, and my favorite line is that I remember as a salesman sitting in a drilling engineer's office, and I never had any one of them ever tell me they drilled a well fast enough and they were done. So that's kind of the same with our manufacturing operations. It can always be better, and we get bright minds in there. We start looking at things like AI and the likes. So we're going to continue to focus on making sure we do things quicker, faster and better. Balance sheet efficiency, good numbers there. Bruce and the team have done a super job there. Inventory turns are much better than they have been over the last couple of years, free cash flow, nice generation. And well, especially today, share price is up. So way to go, team. I mean, I'd like to see that reaction today. Dividends, as we said, continuing to grow as well. And let's see. Precision Engineering. Talking about product lines right now, again, a little bit more detail. OCTG, I talked a bit about. We see, again, strong market opportunities throughout North America due to the complexity of what's going on there. We have not seen much of a rig count response yet on natural gas. We think that could be a very nice driver in the second half of the year. But right now, the business is performing very well, and there's the statistics for that. Subsea, I guess I talked about that a bit earlier. The key is really the awards that we anticipate receiving in Q2. So that's an area where the tender activity right now is very, very high. Our total order -- total inquiry base right now is over $1 billion. A big part of that is on the subsea side, both with the FES, the EnPro product line as well as the titanium stress joint business. We're seeing more decommissioning opportunities in the North Sea that's going to benefit the EnPro product line. But all in all, I think things are all going in the right direction. It's a substantial business we have now with our ability to bundle a lot of these products to people. I think it's going to make our ability to enhance sales even greater. We have a new office opening up in Kuala Lumpur this year to have more exposure in the Asian market. So all speed -- full speed ahead for our Subsea business. And then the Titan business, which, again, Adam Dice and the team have done an amazing job. I was just out in Tampa about 1.5 weeks ago with the team out there. We've made great improvements on efficiencies. I saw some new laser equipment out there that we're using for gun manufacturing performing extremely well. But the key is it's coming down to a point where I would say that 2 years ago, it was a lot of 3 bids in a buy by clients in the North American marketplace. We're seeing -- I'll say the pricing pressures are still there, but to a lesser extent because clients are realizing they just can't have failures downhole with these shale wells becoming longer and longer and the fact that you need dependability and you need dependability in supply. And that's where our distribution centers are a nice part of what our sales offering is to our client base. But I'm very happy with the turnaround and improvement in earnings that we've seen at Titan. International activity remains strong, and we think the international business will continue to grow. And I'm a big believer that the most common sedimentary rocks in the world are shale and they're all over the place. And again, with energy security being an important factor, we're already seeing talks about places like Algeria, in Libya, in Turkey, in Australia as potential growing markets for unconventionals, and we want to and will be a big part of that whenever it happens. Again, advanced manufacturing, I've already talked a good bit about that. Order book is there. I'm not going to go through all the numbers right now. Interestingly, the nuclear business, which if you went 20 years ago back, that was a big part of the Dearborn business is now starting to come back. And again, we're a company that is known with our reputation as being a high provider of products, small business now that has great upside, and we continue to work the power gen and the aerospace and defense business as well. On electronics, it's again trying to get that diversification. But sooner or later, with these wells, with the drilling intensity going on, there needs to be a CapEx cycle that will increase purchase of drilling tools, such as -- excuse me, such as MWD equipment and the like. And when that happens, it will benefit our electronics business as well. And then just some other manufacturing talks about some of the few areas. The key is we're moving OOR into the subsea business with the numbers starting in January. We had a good year with our trenchless business. And we also -- we talk about what we've done in Dubai, which part of that manufacturing is based on our well testing equipment that we manufacture, which now we're closer to the client and closer to where the applications are going to be. And with that, I'm turning it over to Bruce. Bruce Ferguson: Thanks, Jim. Good morning, everyone. Delighted to present a strong set of results this morning. Jim has covered a number of these key points, but just to wrap up on the numbers, they're fairly similar to what we presented back in January, okay, -- good set of solid numbers despite that challenging market conditions as well. We've got EBITDA up 7% to 13%. So that's the focus on the higher-margin product lines like a subsea, like OCTG. The restructure of EMEA is coming through as well. We'll get the full benefit coming through '27 of those savings. Titan recovery is helping those margins going from 0% up to 7% for Titan. So that's feeding through to that recovery as well. We want to get that to 15%, and that's a key target. Oil and gas, we still want to do a measured diversification. in terms of moving into businesses that are non-oil and gas, but we can still hit the right margins. So that's up 10%. You can see that growth. EPS up 9%. We're not seeing the full benefit of the share buyback yet coming through EPS. We'll see that more in '27. It's good to see that's up 9% to $0.341. Jim talked about the order book. It's normalized in the sense that KOC is no longer in there, near $358. Quarter 2 is going to be a big quarter for us. We've got a big tender pipeline of north of $1 billion. So a lot of that is coming through Subsea, OCTG, the new FES acquisition has got a really strong tender pipeline. So we're looking for a big conversion in quarter 2 into orders, and we'll see that order book increase by the end of quarter 2. Return on capital up to 10% in double figures. We're almost at 11%. I mean that's a key target for us. We want to get that to 15%. That's probably -- we're probably 18 months 24 months away from that. But again, it's focusing on that higher return businesses and diluting the capital employed on the balance sheet where we can as well, exiting product lines that are not getting there. Dividend growth, alongside the share buyback, we want to get that dividend back to -- increase that to shareholders as well. We've got 13% per annum from 2025 onwards to the end of the decade. Part of the reason we can do that is our working capital efficiency. We're seeing that now back in 2020, that was over 70% working capital to sales. We're now at 33%. So that's given us more cash to play with, and that's going back to shareholders in the form of buybacks and dividends as well. And we also took the opportunity to extend the RCF, the $200 million RCF by 12 months out to 2029, gives us that good option for further optionality there as well. One of the key features and really promising performance has been OCTG in '25 and '24. And that is over 46% of our sales is OCTG. And that's really from 3 pillars. It's coming from our development of our virtual mill, and that allows us to bid for the huge tenders we're seeing in the Middle East and elsewhere. We're seeing some really good performance in U.S. land and TEC-LOCK with the longer laterals. We're also getting good performance coming from India as well and some good packages coming through from completion accessories. It's a real success story on OCTG. And it's that pivot into that offshore international visit business that's allowed us to do that. In terms of our P&L, just picking off some of the key highlights there. There's our turnover, which is flat year-on-year it just over $1 billion. Good to see that our gross profit, EBITDA and operating profit margins have improved by 1 point each, again, reflecting that push to take costs out to focus on the higher-margin businesses as well. We've got our profit after tax of $58, gives an EPS of $0.34.1, and we've got that total dividend declared of $0.13 for the year, again, showing that increase. A little bit more detail about our product lines and operating segments. You see the good in terms of the external metric of 15% OCTG, Subsea well over the 15%, good to see. Perforating Systems is a recovery story. That was at 0% last year, now up to 6%. We think we can get that up to double digits for the end of '26, those cost efficiencies come through international business picking up as well. Advanced manufacturing, that's some electronics division has been softer with less CapEx coming through. It's been at 9%. Again, there's restructuring going on there to address the electronics division. Other manufacturing, that's basically 0. That's been caught up in the real storm of all the restructuring, the well intervention, the well testing business in EMEA. So all that equipment has been getting moved from Aberdeen down, into Dubai. We've got closure of 4 facilities. So we're seeing a much better improvement coming through in '26. If you look at the segments, you've got Titan there coming down the way the verticals at 6% margin. North America, very good performance at 19%. Subsea at 17%. EMEA has been the big struggle, that's had everything. A weak market, all the restructuring going on, all the disruption coming through there as well. We will get the benefit of that full year of $11 million cost savings coming through 2026, and that will see an improvement going through there. Balance sheet is strong. We've got net assets of $900 million. Not much movement there in terms of our depreciation and CapEx more or less cancel each other out, a bit more in terms of $80 million onto the goodwill and other intangibles, that's the FES and OOR acquisitions going on there. And still despite -- we talked about all the returns to shareholders, and we'll talk about that in a little bit more detail, we're still sitting with cash of $63 million as well. A little bit of the working capital revenue, a key metric for us as well, keeping that below the 35% mark. And that is key for us when we look at cash flow, and that helps us to keep that cash balance on the balance sheet. In terms of working capital improvements, you can see from 2020, that's when we we're at 75% of working capital, of set to revenue. We've now got that down to 33%. If you look at our inventory balance for the year, a lot of good work being done there. We've reduced that inventory balance by $65 million over the year. Good to see there. We've been smart in terms of we did exit since 2020, a number of our higher capital businesses like OCTG and Aberdeen, also OCTG in Canada as well. Smart use of working capital instruments to finance our KOC orders. That's helped with the discount letter of credits and advance payments to the mills as well. So that has allowed us to at least a lot more cash, and that's allowed us to make the shareholder returns. And again, this shows where that cash is coming from and how we've used that over the last period. We've got that at the end of 2024, we had $104 million of cash on the balance sheet. We added $135 million of EBITDA for the year. We have controlled our -- we had inflow from working capital. That gave us as we go through those -- the year to $201 million of cash. This is where we've used it, $73 million in net disposals, $33 million of share buyback, that equates to about 7.2 million of shares we bought back, dividend payments of $19 million and treasury shares, employment share scheme of $18 million, okay? And we're still left with $63 million on the balance sheet. So that's a really pleasing position to be in. In terms of order book, there's a little bit more color around $358 million. That has -- that is 20% lower than we were at the end of December '24. That does reflect the fact we've completed through KOC. We do see that being replenished through Subsea through OCTG awards, hopefully, some OOR awards coming through there as well. And we'll have a figure approaching with the $500 million we get to quarter 3. But that tender pipeline is strong. It's over $1 billion. It's good to see that coming through. That does tie into what we're seeing in -- especially in the subsea space and the big awards coming out for OCTG as well. So in terms of guidance, I think in terms of the phasing for the year, we're definitely looking at a back-end loaded year in terms of the big awards coming through quarter 2 and then that recognition being more into the second half of '26. And that's how we modeled and budgeted the year. So that's consistent with that. Obviously, a lot of uncertainty out there just now, but there's nothing that we're going to change at the moment. This stays totally the same as what we announced back in January. EBITDA growth of between $145 million and $155 million, that EBITDA margin improving between 13% and 14%. Effective tax rate, depending on deferred tax assets, jurisdictions should be between 25% and 28%. CapEx a little bit higher than what we saw this year, we're around the $30 million mark for '25. I think that's going up to $40 million, $50 million. We're doing a little bit more automation work, some robotics, replacement of CapEx, a bit more capacity into our Chinese facility as well to allow us to thread for the KOC and likes. And we're still confident we can achieve that 50% free cash flow conversion as well. Okay. With that, Jim, I'll hand back to you. Arthur Johnson: Thanks, Bruce. Anyhow, we're laying out here where we're at '25, '26 targets. Those are some of the areas that we're focused on. I'll get into some more detail here in a little bit. But highlights, again, we always consider ourselves a technology company. So we continue to focus on developing new products, whether it's in premium connections, subsea applications, well intervention, Titan, it's pretty much nonstop. It goes part into the lean philosophy we've had on operations, and it has to do with making sure that we're relevant in the market for the days ahead. OCTG, Bruce and I have already talked a good bit about that. We're well placed for that cycle that we're in right now. We see it as being one that's going to continue to grow, especially in the international markets year-over-year. I've talked already a little bit about non-oil and gas and the subsea bundling that we have, our opportunities there. Just a topic on new technology. Subsea, I'll point you to the one on the bottom, the stack FAM. You've heard us talk about our FAM application before that fits and works with the subsea tree to allow a variable operations performed on a standard subsea tree. The stack FAM, the whole goal of it is really to accelerate tieback opportunities in brownfield sites. So if you look at even places like the U.K. where nobody apparently wants to drill anymore, you've still got areas where you can tie back to infrastructure that's there. And this is an opportunity with this new product line to perhaps grow business there as well as a lot of more mature areas like the Gulf of America, for example. OCTG, the WEDGE-LOCK product line, we continue to look at new applications, but it's also new diameters of pipe, new grades of material, things like that, that we're constantly testing at our testing facility in Houston as well as using some third-party facilities in Texas. The well intervention business is one where we've tried to get smarter tools, some smart tools. Our Opti-TEK Tubing Cutter is almost CNC in precision as far as what it can do in cutting product for cutting tubing, downhole. Opti-TEK Data Stem again, it's a smart tool for more advanced downhole measurements on slick line applications. And then the Opti-TEK valves are really more of a lean manufacturing effort to try to make things more lightweight to reduce the floor space at the well site, and that's what that is right there. Perforating systems, again, our ballistic release tools, our gyro tools, those are things that we actually rent. Some of the new developments we've put in there is for our benefit from a cost point of view for refurbishment and the like, but they're also -- they also have the technology that customers are asking for today. Titan growth, I mentioned earlier, you see the numbers there that we've shown the growth and anticipated growth, but there's a lot more of a market potential out there than even the Saudi Arabia and Argentina. I mean I'm excited about the opportunities in Australia. You've seen people like Liberty make moves into Australia. They have a huge resource down there for unconventionals, Mexico, unconventionals, Algeria and Libya, big unconventional markets. And the thing with the opportunities and even in the U.S., we talk international here, -- but domestically, today, the average well in big parts of the Permian is actually producing about 20% less oil per foot of completion than what it was doing 3 years ago. So as the sweet spots get used up, the Tier 1 acreage becomes less and less part of the portfolio, the operators are going to have to just drill more. They're going to have to drill longer wells, drill more to hold production at levels that are going to maintain their profitability and tighten and our premium connection business will be a key part of that deliverable part. OCTG, there's lots of nice colored parts there of where we do business at. It's an international business. We have the technology and the virtual mill concept that allows us to compete on an even playing field with our much, much bigger competitors out there. The customers trust Hunting and trust the value we bring to the table and the dependability that we have with our broad suite of connections and our excellent manufacturing capabilities in places like Houma, Louisiana and Houston, Texas and in Singapore to provide the completion accessories to put all this stuff together for an operator downhole. Non-oil and gas, we've identified more areas. I talked a bit earlier about nuclear. I've talked about some new things going on, on the jet engine side, some customers other than Pratt & Whitney that we're talking to right now. The power gen to me is a big, big growth story. We're actually getting overflow work from our big power gen customer that we're actually putting also in one of our facilities in Houston now. We see that as growing as data centers become more demanding on where they're going to get their electricity from. A lot of it is going to have to be from natural gas-fired generation that will supply, hopefully, components for the turbine shafts as well as that's going to be a driver for the tighten in the premium connection business. And then with the addition of FES, we now do have more opportunities in the offshore wind market as the FES team has a long track record of supplying connectors for some of that. And while it's probably not a huge growth area in the U.S. right now, there's still a lot of progress being made in European markets for offshore floating wind and the like. Subsea bundling, just a slide here. We're now -- I look back to 2018 when we had OneSubsea business. Now we've got a multiple grouping of product lines that gives us the ability to have huge geographic reach. But the key is to go in at a customer and be more relevant. And the more things you can put in front of them as far as we can do this, the more opportunities you're going to have from a tender basis and I think a success basis to also win business. So we're excited about what we've done so far. I mean if you look at, for example, our titanium stress joint business was 0 when we bought this. It was one of those cases where we knew we were on to something when we bought it. If you looked at the numbers at that time, it's like, why did you do this? Well, it became the anchor of what has built the subsea business. So it's a great -- there's great opportunities for us and having people like ExxonMobil being a star client of ours is a good housekeeping seal of approval like we would say in the States for the things that we do in the subsea marketplace. So in summary, we had a very, very good year. We're going to continue to focus on our capital allocation plans, which are going to benefit shareholders. We're maintaining our guidance. Again, I started the whole meeting off talking about where I see this business going. And I'd like to say we're not here. I'm not focused on what's going on in the next 3 months. I'm looking at where we're going to be in the next 3 years, 5 years, where is the growth of the business. That's why we're doing the things that we are, why we're investing in our people. We're investing in the CapEx. We're adding new product lines because I truly believe as you look at the, again, reserve life of our clients. I mean, other than Saudi Aramco, most of them are down, down, down every year. And the world is not going to use less hydrocarbons over the next decade. It's going to be more. Natural gas, people are worried about oil prices. I think the recent events in the Middle East, they're forgetting about gutter shutting down their LNG trains and not being able to ship LNG. And that's going to be affecting markets globally, but it also brings that energy security picture back in play more. And I just think that we're a company that's essential to the world prospering as far as a contributor to the oilfield service industry. So with that, that's kind of where we're at. I hope you've enjoyed the presentation and had a lot of detail. I'm excited about the year ahead, and I'm excited that I get to work with a great bunch of people that make it happen. So we'll open it up to questions. Okay. No, I'm just kidding. Go ahead. Alex Smith: Alex Smith from Berenberg. Just good to touch on the subsea business, potentially exciting year for growth. You mentioned Q2, potentially some big tenders. Any kind of color you can give on where those tenders are, location? And then just on the bundling, do you have like a dedicated sales team that are now going to go in and start selling that bundled product? And is that the kind of key driver for growth for that pipeline? And lastly, just on M&A, still a big part of the business kind of strategy, subsea in particular. What does the competitive market look like? Any other color? Arthur Johnson: Okay. I'll try to remember the answer all this. So on the sales side, yes, we have dedicated teams working on that. We've integrated the sales process. At FES, they really they were -- it was owned by 2 gentlemen. It was a reputation that they sold the product on, really not a very sales-focused organization. They didn't have to be. And so now with the bundling, like I mentioned, we relocated demand from Houston to KL to be working with our Singapore team because a lot of the shipbuilding FPSO construction is done in Asia. So it's good to be there integrating with those offices for opportunities. So yes, we are doing that bundling. The first question was, again, repeat that one. Alex Smith: Just on where the... Arthur Johnson: Where it's at? All the places you would expect. There's a heavy load of tenders in Brazil right now, but it's in the Gulf of America, it's in West Africa, it's in Suriname, it's in Guyana. It's all those places that are wet that you would think about. And then as far as -- the last question was. Alex Smith: M&A. Arthur Johnson: M&A. So M&A is one that you can never predict. I'd like to say our heart was broken a couple of times over the last couple of years because one thing that Hunting does well is go into due diligence very strongly. So we don't want to -- we want to make sure we know what we know. And in cases in the past, we had too specific where once we started getting into due diligence, we had to drop pencils and say time out because of certain things we found out. So we will always be very prudent on how we approach that. It also has to fit our strategy. We don't want to get into things that are not tangential to what we do as a company. For example, I'm not going to go and buy a company that makes windows and doors tomorrow, right, or something like -- I mean, it's going to have to fit technology and what we want to do. The market out there right now, it's -- I don't think it's really any different than it's been a year or 2 ago. I think that will this make a pause in opportunities? Perhaps. But we are screening things on a steady basis, and it's just finding -- it's kind of like getting married. You got to find the right partner and make sure the union is going to work. And we're focused on growing our business through M&A and haven't let up on that. Toby Thorrington: Toby Thorrington from Equity Development. I have 3. I think -- so first of all, North American division appeared to have a very good second half of last year as far as I can see, perhaps a bit more insight into why that was the case and your expectations for '26, expecting year-on-year improvement in North America? Arthur Johnson: Yes. I think if you look -- I think it's been as long as I've been in this job. I think every year, things have always been back-end loaded, at least through Q3. What we saw this year, and it matches the dialogue you've probably heard from Halliburton and people like that, we did not have the budget exhaustion issues, and we did not have too many weather issues as far as the holiday issues post mid-November. So that was a big positive for Titan for our connection business, we could get orders out for threading. Rigs were still running and putting pipe in the ground. So I think it was just the fact that it was a pretty good year from a, a number of factors, whether it's weather budgets and the like. I think that, again, the year 4, we're expecting better things and continued growth in North America in '26 through a number of different product lines. Toby Thorrington: That leads into the second question. Guidance for FY '26 EBITDA margin is 13% to 14%. Can I test your sort of confidence in that figure given that OCTG looks like it's going to have a weaker year this year? Arthur Johnson: Yes. I don't know -- well, it will maybe from a top line number, but from a margin -- it has nothing to do with pricing. It's not a margin perspective there. So margins, if anything, I think, will enhance because we're seeing more premium applications even on the shale plays. We're anticipating an improvement in the Gulf of America. And if you look at the margin profile for OCTG, that's really the best margin products or the offshore stuff, right, not the land. But with the benefit that we did have a very successful Gulf lease that the Trump administration put through, that won't really probably pay into holes in the ground until '27, but that foundation is there, we think, driving it forward. So yes, it's going to be an area -- we're not cutting prices. We see areas where we can improve our margins. Part of that's in the $15 million of cost savings. Part of it's in the lean initiatives that we've had. But the market is pretty steady as far as pricing goes. Not a lot of pressures. Toby Thorrington: I'm hearing very confident in group 13% to 14% EBITDA... Arthur Johnson: Yes, I am. And I think overall for the group, one of the big drivers is going to be the Subsea business. We've had a lag in our Stafford business the last year or 2, as I mentioned. You saw subsea tree awards took a big fall in '25. They're coming back now. We're starting to get those orders in. And as I mentioned, the backlog at our Stafford business is double what it was this time a year ago. So those are all -- again, it hits efficiencies, hits throughput in the facilities. I think Titan is going to again overperform based on even where we're at today, and that's going to be a plus for the company's overall margin as well. Toby Thorrington: Okay. That leads into the third question, subsea related. FES, if I saw the notes correctly, the contribution in the year was about $10 million revenue a small loss, I think. Pre-acquisition, the run rate -- revenue run rate of that business was near to $40 million, I think. So that probably requires a bit more... Arthur Johnson: No. I mean, I think it's, again, it's a lumpy business. It's where we could reduce revenue recognition in '25, getting them all into our proper accounting systems and the like. But the business -- the opportunities are still there. I mean that's where a big chunk of the pipeline that we see in '26 is sitting in FES. And so I think it will never be a straight line in that business just because of the project nature of it, but we haven't changed our optimism or our thoughts on that business one bit. Toby Thorrington: Okay. Could you quantify the FES contribution to the order book at the year-end? Do you have that number? Arthur Johnson: Do you know what it was, Bruce, off the top of your head? Bruce Ferguson: I don't have that, actually. It's a big chunk of the pipeline. Alex Brooks: Alex Brooks at Canaccord. I'm actually going to ask some sort of return on capital and balance sheet-related questions, if you don't mind. Yes, it's Bruce. So firstly, of the $15 million new cost savings program announced today, does that include some balance sheet work as well? Bruce Ferguson: That could be part of that, yes, our own facilities, et cetera. So there could be an element of that coming off balance sheet, yes. Alex Brooks: At year-end, obviously, you had a significant reduction in payables, even though it was overall good working capital performance. Is that kind of roughly where you normalized at? Or sort of what's the -- was there anything exceptional in that year-end position? Bruce Ferguson: That was the reversal of the KOC. So that was a big -- we use the bank acceptance bonds to defer payment to the Chinese mills. So once that is paid off, that is a more it's a more normalized position. But it will flow with the big orders as they come through in the timing of the orders down the line, Alex. Alex Brooks: And in terms of pushing return on capital up towards 15%, if we just take the guidance, you'll achieve a little bit more this year than you did last year because -- but is there scope for capital employed improvement as well as... Bruce Ferguson: Well, we're always looking at that similar to what we did back in the 4, 5 years ago with some of the low-return product lines facilities, OCG in Aberdeen, OCG in Canada, that the benefit of less capital that came off the balance sheet, improved the operating profit as well. So all I can say is we're always looking at some of the product lines that aren't hit the mark. They're always under constant review, what we can do there on both sides, capital employed and getting that operating profit up as well. Alex Brooks: And then just finally, because I'm looking at the slide in front of me, I've got nearly $200 million of dividends and over a similar period, a little bit more than $100 million of share buyback if it stays at the same rate. Is that something which you think is a reasonable split of return to shareholders, somewhere in the sort of 50-50, 40-60 range? Bruce Ferguson: Yes, I think it's a good balance. It's something for everyone from that side in terms of buybacks. That's something we think is working. We're still confident in terms of -- we still believe we're undervalued even though we're above net asset value. I think there's still value to be had in there. And yes, that constant return, that 13% increase in share -- the dividends as well. So I think it's a good balanced return, and that's probably where we're going to be at over the rest of the decade, yes. Alex Brooks: And then I've got one final question, which is one of the things that really shines out to me from the presentation is how much of the business is new. So, is it possible to quantify because the chemical industry does this as they kind of talk about X percent of revenue is products introduced in the last 5 years. Do you think you'd have a number for that? Arthur Johnson: Not standing right here now, but we can get that for you. I mean it is fair, true. I mean, I was thinking this morning coming into here. We're now working on what, year 152 of Hunting, and it's been in a company that has constantly evolved to the times, right? And I think what we've done in the last 5 years even has been that evolution, becoming more of a subsea company, adding things and taking on some risk. I mean, OOR, there were times when Bruce and I were like, is this going to work? We know it is. And that's why we spent the money to get control of it. But it's looking at the -- again, it's like the old Wayne Gretzky thing, right? Skate to where the puck is going, not where it's at today. And that's what we're trying to do when we look at our business -- and yes, I'm very, very pleased with how the team has put. I mean there was no TEC-LOCK a few years ago. There was a small subsea business, no OOR. We were stuck with pipe all over the place that was really bad return on capital employed. So I think we've evolved like Hunting's tradition has shown that they do. Mick Pickup: It's Mick from Barclays. A couple of questions, if I may. Can I just go back to that tender pipeline you talked for a big Q2. You said it's subsea and OCTG. Obviously, subsea, your positions are pretty strong with OCTG, there's some big 800-pound gorillas in the world. So could you just split that between subsea and OCTG, just so we get an idea of confidence on that? Arthur Johnson: And what the split is? I mean, right now, I would say the split is over $100 million on just the Dearborn side on future business going forward. And then the bulk of it is split. I would say there's a couple of hundred million that we know of that I can remember off the top of my head in the subsea side and then the bulk of it is OCTG. So we're seeing some OCTG tenders in places like Turkmenistan. We're seeing more in Indonesia is actually a growing market right now. We had some nice business in already the start of this year in that market. So it's all over the place, Nick. But I mean those are the 3 areas where the main drivers are. I mean the FES -- talk about the FES pipeline alone is nine-figure pipeline. Mick Pickup: Okay. And then kind of be greedy. Obviously, you've highlighted a lot of new places you've gone to. If I look at the OCTG world, one of the big players did a big pull out in its results on geothermal, saying that's the next big thing, and you were the first to talk about that at your Capital Markets Day a few years ago. So what you're seeing of that? And every major bank, I'm sure at the moment has got some junior wanting to become the space analyst given IPOs coming down the route. Obviously, you've got exposure there. So can you talk about what you're seeing in that? Arthur Johnson: So in the geothermal side, most of what we've seen activity-wise has actually been in the international market. So it's been -- Philippines was a good market for us and Indonesia. We haven't seen a lot in the U.S. because the geothermal -- typically, where we played with things like titanium tubulars or very high chrome areas. If it's a commodity L80-grade material going into some of this geothermal stuff, I think Vallourec's done some of that business, captured some of that, but it's not just hasn't been an area for growth for us in North America. On the aerospace side, we're really excited about that. And it's almost part of following up on the last question. We've almost had to reinvent Dearborn because it was so focused equipment-wise and asset-wise on the oilfield side of the business. And it's a business that started years ago in defense and aviation, then went in the oilfield, and now it's going back to more aerospace. So we're excited about the rocket business. Actually, Blue Origin is a bigger customer for us than is SpaceX, while we do business with both. But we see some really good things happening there. One of the other small parts of our story is our investment in Cumberland, the third -- the 3D printing company. That company is in the black now. They're seeing growth. One of their big customers, we're making -- I say we because we own 1/3 of the company. One of their big customers is Firefly, which is the ones that another space company that put -- I think they put a product on the moon. And so we see growth in a couple of areas on that, that I think is going to benefit us in the years ahead. Is there anything online? Any questions from online? Bruce Ferguson: So the webcast questions have been answered in this Q&A. I'll pass back to you for some closing remarks. Arthur Johnson: Okay. Well, I just want to thank you all for your time and for being here and your support. Again, I want to thank all of our -- I want to thank our customers out there, all of our employees for what they do, our investors for being with us for the ride. Again, I've talked about we want -- we don't want renters. I mean we really want investors that see our vision and what we're trying to do for the long term to drive value into this company. So on for a good '26. Thanks again. I think we're done.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper Fourth Quarter 2025 Operating and Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Farooq Hamed, VP, Investor Relations. Please go ahead. Farooq Hamed: Thank you, operator. Good morning, and welcome to Ero Copper's Fourth Quarter and Full Year 2025 Earnings Call. Our operating and financial results were released yesterday afternoon and are available on our website along with our financial statements and MD&A for the 3 and 12 months ended December 31, 2025. Our corresponding earnings presentation can be downloaded directly from the webcast and is also available in the Presentations section of our website. Joining me on the call today are Makko DeFilippo, President and Chief Executive Officer; Wayne Drier, Executive Vice President and Chief Financial Officer; Gelson Batista, Executive Vice President and Chief Operating Officer; and Courtney Lynn, Executive Vice President, External Affairs and Strategy. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. For a detailed discussion of these risks and the potential impact on our business, please refer to our most recent annual information form available on our website as well as on SEDAR and EDGAR. Unless otherwise noted, all figures discussed today are in U.S. dollars. With that, I'll now turn the call over to Makko DeFilippo. Makko Defilippo: Thank you, Farooq, and thank you to everyone joining us this morning. As we pre-released our 2025 production results and 2026 guidance in early February, I'd like to take a step back here and explain why we believe Ero is extremely well positioned in the current market environment. Last week, as many of you would have seen, we released our maiden preliminary economic analysis on the Furnas project. This was an important milestone for the company and one of our key objectives this year. Over the past 18 months, our exploration and engineering work, combined with extensive historical technical programs completed by Vale on the project since the early 2000s, has enabled the design of an integrated open pit and underground mine expected to produce a total of more than 1.2 million tonnes of copper, 2 million ounces of gold and 9 million ounces of silver over an initial 24-year mine life. Highlighting the quality of Furnas and reinforcing why it is a cornerstone asset in our long-term growth strategy. Over the first 15 years of operation, Furnas is expected to produce approximately 70,000 tonnes of copper, 111,000 ounces of gold and more than 500,000 ounces of silver annually at first quartile C1 cash costs of approximately $0.24 per pound of copper produced. At long-term consensus metal prices, the PEA delivers an after-tax NPV of approximately $2 billion and an IRR of more than 27% on $1.3 billion of initial capital. Taken together, these metrics uniquely position Furnas from a capital intensity perspective relative to comparable projects while delivering strong economic outcomes across a wide range of commodity prices. Said differently, we see an exceptional project that is both financeable and buildable. As strong as it is, the PEA is just a starting point for us, and we are focused on maintaining momentum this year. In 2026, we plan to complete an additional 50,000 meters of exploration drilling, targeting extensions of high-grade mineralization around planned underground infrastructure. We will also continue pursuing opportunities we see to further strengthen economics, which include the addition of a magnetite recovery circuit to produce a high-grade magnetite concentrate as well as a gravity pre-concentration stage to enhance gold recoveries. Both initiatives offer potential to further increase byproduct revenue, and we are encouraged by the initial results we are seeing. Getting back to what differentiates Ero, we have clearly outlined a great long-term growth project in Furnas, and we are thrilled to be advancing it towards a construction decision over the coming years. Perhaps most importantly, the capital required to advance Furnas to that point is expected to remain relatively modest as we continue to advance technical studies, drilling and permitting work streams. At the same time, capital spending across our existing operations is projected to decline as we transition out of a multiyear investment phase that included the construction of Tucuma and major investments at Caraiba over the past several years. These investments are either complete or in the case of our new shaft project at Caraiba, are past peak capital spend. As a result, Ero is exiting a major investment cycle with an exceptional long-term growth asset, increasing cash generation capacity, declining consolidated capital requirements and three operating mines with the right mix of metals at exactly the right time in the commodity price cycle. When I look across the broader sector, many companies, including most of our peers, are jumping into major project builds within the next year. We like this dynamic. Switching gears slightly. I do want to touch on our 2025 results and '26 guidance. And I would start by recognizing the resilience and dedication of our teams that work through a number of challenges to deliver meaningful improvements across the business as the year progressed. These efforts resulted in sequential quarters of improving operational performance, the unlocking of a major new additional value driver for our business at Xavantina. Starting with Caraiba, Q4 represented our strongest operating quarter of the year. Mill throughput reached nearly 1.2 million tonnes, up 18% compared to Q3 and an all-time record for the operation. This drove copper production 15% higher quarter-on-quarter and contributed to C1 cash costs of $2.27 per pound. At Tucuma, copper production increased more than 22% quarter-on-quarter, representing another record for the operation. Higher process grades helped offset an extended period of unplanned downtime in December, driven by a pull forward of Q1 maintenance for an early mill liner replacement. This pull forward was due to an OEM wear part quality issue that impacted multiple operations in the region, including ours. C1 cash costs in Q4 were $1.75 per pound, which I would note approximately $0.10 of this was attributable to expensing the unamortized portion of the liners. Turning to Xavantina. Production increased 53% quarter-on-quarter, driven by higher grades and improved throughput as we began to see the benefits of our efforts transition the mine to mechanized mining. In addition, our gold concentrate program resulted in an incremental 15,000 ounces of gold in Q4. As a result, total gold from Xavantina, including mine production and concentrate shipments was nearly 20,000 ounces in the quarter and over 50,000 ounces for the full year. Behind these numbers, what makes 2025 one of our best on record, in my opinion, is that our operational teams delivered these results while achieving one of our best years ever in terms of consolidated safety performance. Whatever might be said about 2025, nothing matters to me more than this metric. As I look ahead to 2026, our guidance assumes the operational performance gains we achieved in the fourth quarter are effectively sustained through the year. While we continue to work on opportunities to further improve performance across the business, especially in the second half of this year at Tucuma, these are not reflected in our guidance. At Tucuma, we are well advanced on adding additional tailings filtration equipment this year to unlock additional throughput capacity for this operation. We have equipment being manufactured right now. And if all goes according to plan, we would expect this to benefit the operation in the fourth quarter. As I mentioned, the potential benefits here as well as the associated capital investment have not been reflected in our 2026 guidance. This was a deliberate decision for three reasons: First, guiding to steady state was important for us this year. Second, there is a lot of daylight between now and the fourth quarter. And perhaps most important, in the current metal price environment, we expect the payback on this investment to be 1 to 2 quarters. So while it is a very important objective, and we expect to complete it this year, it will not change our strategy or capital allocation decisions in 2026. At Xavantina, we are investing in our ventilation circuit, mine development and equipment to increase mine capacity and output. This is a low-hanging long-term value driver inherent to our business when we look at the available milling capacity we have there. Last but not least, at Caraiba, we are advancing the new shaft project for the Pilar mine and are pursuing several operational improvement initiatives that we hope to discuss later this year. To touch briefly on cadence for 2026, we are guiding consolidated copper production of between 67,500 to 77,500 tonnes. This reflects year-over-year growth driven primarily by higher sustained plant throughput at Caraiba and Tucuma, partially offset by lower planned grades. Copper production is expected to be weighted towards the second half of the year due to mine sequencing and a modest increase in throughput throughout the year. At Xavantina in 2026, we are guiding mine production of 40,000 to 50,000 ounces. We expect Q1 to be the softest production quarter of the year. This cadence reflects mine sequencing as well as a tie-in of a major ventilation upgrade during the quarter, including the completion of the new [indiscernible] surface. Production is expected to be weighted towards the second half of the year as a result. Gold concentrate sales are expected to continue throughout the year, but we expect that to be relatively modest in Q1 due to the rainy season. For some additional context there, you'd be hard-pressed to find a more simple operation in our portfolio. There are only three steps. We remove the material from stockpile, we then spread it out in the sun to dry, then transport the material for shipment. As you can likely imagine, step two in that process is far less productive during the rainy season. With that, I will turn the call over to Wayne, who will walk through our financial results in more detail. Wayne Drier: Thank you, Makko. Our fourth quarter financial results were driven by record copper concentrate sales, a 59% increase in gold dore sales, the commencement of gold concentrate sales and stronger copper and gold prices during the period. All of these factors drove quarterly revenue to a record $320 million or $143 million higher compared to the third quarter. Consolidated C1 copper cash cost per pound were approximately 1.5% higher quarter-on-quarter with the increase predominantly coming from Tucuma, where we experienced higher transportation, demurrage and port costs in the quarter related to the COP30 activities in Para State. This had an impact of approximately $0.10 per pound on our Tucuma C1 costs, which were also impacted by the accelerated amortization of the mill liner Makko referenced earlier. Gold C1 cash cost per ounce declined by approximately 29% from the third quarter. As a result, the company delivered stronger operating margins, with adjusted EBITDA growing to $186.7 million in the fourth quarter and $409.7 million for the full year. Adjusted net income attributable to owners of the company was $108.4 million for the quarter and $220.4 million for the year or $1.04 and $2.12 per share, respectively. Our liquidity position at quarter end stood at $150.4 million, including $105.4 million in cash and cash equivalents and $45 million of undrawn availability under our revolving credit facility. We continue to deleverage our balance sheet with net debt declining to approximately $502 million at year-end from $545 million at the end of the third quarter. Combined with significantly higher 12-month trailing EBITDA, this resulted in a material improvement in our net debt leverage ratio, which decreased to 1.2x at the end of Q4 from 1.9x in Q3 and 2.6x at the end of 2024. With copper and gold production expected to grow in 2026 as well as the additional cash flow from Xavantina's gold concentrate sales, we intend for debt reduction and return to shareholders to be key elements of our midterm capital allocation strategy. At December 31, we had $155 million drawn on our revolver, which we intend to pay down fully in 2026. We would like to maintain a strong cash position on the balance sheet and target a net debt-to-EBITDA ratio below 1x ahead of commencing a return of capital program. I'll now pass the call back to Makko for some closing remarks. Makko Defilippo: Thank you, Wayne. Before we move into the Q&A session, let me recap the 3 key elements of Ero's value proposition. First, over the past decade, Ero has consistently unlocked value that wasn't fully recognized often through work supported by strong partners. Clear examples include our gold concentrate program and our broader partnership with Royal Gold at Xavantina and more recently, the advancement of the Furnas project with our partner, Valley Base Metals. Second, we've taken a disciplined countercyclical approach to capital allocation, investing in building projects during periods when development activity across the sector was limited. That strategy has positioned Ero favorably relative to our peer group that are now preparing to enter major capital investment phases. Third, Furnas represents a high-quality, long-life asset being advanced with a top-tier partner and we view it as a compelling cornerstone for Ero's long-term growth. With that, I will now turn the call back to the operator to open the line for questions. Operator: [Operator Instructions] First question comes from Orest Wowkodaw with Scotiabank. Orest Wowkodaw: Question around the gold concentrate stockpiles at Xavantina. You haven't issued any guidance for what those volumes could be this year. But with the 15,000 ounces you sold in the fourth quarter, is that a good guide for shipments in periods or quarters where there's no rainy season? Makko Defilippo: Yes. Thank you for the question, Orest. Obviously, a bit of a tricky situation. Obviously, we came out with initial resource on the 20% of the volume that we were able to sample. So it's difficult for us, as you can imagine, to give exact guidance. But we certainly expect strong volumes and shipment. I would point to what we achieved in Q4. That was at the tail end of the rainy season. So if you -- just for context, the rainy season in Mato Grosso typically starts in November and goes through March, April, depending on the year. And so part of those sales did occur when the rainy season was started. We're obviously advancing several initiatives on site to increase volumes from there. And as I said on the outset of the call, Q1 is the heart of the rainy season. This has been an exceptionally rainy year in Brazil, as you are probably aware, from some of the news flow and flooding that's happened throughout the country. And therefore, we expect very, very modest sales in Q1 and then ramp up pretty aggressively Q2, Q3. Orest Wowkodaw: And in terms of the stockpile itself, have you seen anything that may suggest that the grade for the other 80% of the stockpile would be materially different than what you have sampled? Makko Defilippo: Difficult to say Orest, but nothing -- obviously, as we go into the future, we don't have samples there, but to date, nothing that suggests otherwise. Operator: The next question comes from Emerson Vieira with Goldman Sachs. Emerson Vieira: I would like to understand a little bit more on Tucuma Q3 press issue. So can you provide us an update here? Have you guys already ordered the mobile filter that is expected to increase the future availability? And any update on time could be very helpful. Also, how long should be the maintenance in the first quarter in order to advance with the new aligners replacement? And just a third one on Tucuma, can you please reconcile the production guidance for 2026? I mean, what are you guys expecting in terms of grades and throughput ramp-up throughout the year? Those are my questions. Makko Defilippo: Thank you. Quite a bit to unpack there. So if I missed something, I apologize, just ask it again, but thanks for the questions. So first, on the filter press capacity, yes, that equipment has been ordered. It's being manufactured. As I said in the prepared remarks, that is a very important objective of ours. But given the -- given what we've outlined, it's not included in our guidance, first and foremost, we expect the payback on that investment to be very fast in this environment. And we expect it to be operational in Q4 as both the quantum of the investment there as well as the current prevailing copper price that investment and completion of that project has very little influence on how we think about our business for 2026. As I said, it was not included in our guidance. So that's first and foremost on that point. The second part of your question was related to the maintenance that happened related to the mill lining. So to be clear, there, we expected that maintenance to occur in Q1. We had to pull that into Q4, so it's already been completed effectively for the year. That was approximately a 10-day period of downtime that happened in Q4 and impacted our Q4 results. Emerson Vieira: All right. So no more maintenance, downtown... for... Makko Defilippo: We have planned downtime every month. So that is still part of our team, but we have no extended period of downtime that we're planning in Q1 of this year. Emerson Vieira: All right. And just the last one on the reconciliation on grade and throughput comparing to the guidance, please? Makko Defilippo: Yes. Great question. Thank you. So when we obviously came out -- had a strong result last year in terms of grade, we do expect grades to come down. We are currently looking at -- throughout our guidance, just below 3 million tonnes of processed throughput. And I would say somewhere between 1.3% and 1.4% copper for the full year. Operator: The next question comes from Guilherme Rosito with Bank of America. Guilherme Rosito: So I have two. The first is on Tucuma. I wanted to dive a bit deeper into the C1 cash cost guidance. I just wanted to understand how we could explain the cost increase throughout the year versus what we were in 4Q. I appreciate that there is lower grade and not including the feed. So with the feed there could be a change to guidance. But I'm just trying to understand as you have more fixed cost dilution as you increase processing and also the [ CRCs ] are higher than what you guys are currently doing at Caraiba. So I'm just trying to understand all these moving parts and what's driving costs higher this year? And second on Xavantina, I just wanted to explore a bit if you could talk about the benefits from the mechanization investments you guys did last year. How should we expect that to translate into the results this year? And what do you guys expect in terms of grades throughout the year? How this should fluctuate, what sort of volatility we should see throughout the year? So that's it. Makko Defilippo: Thank you for the questions. So yes, starting with Tucuma, a really, really good question there. Main drivers for guidance, as you mentioned, is grade. So obviously, we're coming off of a year of significantly higher grades that has a direct influence on our Q1 -- our C1 costs. We also are putting in additional maintenance efforts there to stabilize the operations. Those are, I would refer to those additional costs as nonstructural. On the TC/RC and shipment side, we've been getting some questions about differences from Caraiba to Tucuma. I would point to two major influencing factors there. Number one, the grade of the concentrate is lower. So therefore, there's more costs associated on a per pound copper basis, number one. Number two, we have quite a bit further to transport that material. And so when you take those two together, we do see higher TC/RCs. We're seeing a market now in the TC/RC across our business that looks favorable relative to where we expected it to be for the budget. That said, those are mostly longer-term contracts that we have in place. So we are not getting the full benefit of the benchmark pricing. And then more fundamentally, as you'll probably appreciate better than most people, we are seeing a very strong BRL headwind across our business. That's true across all of our operations, and that's been reflected in our guidance. So I would say big moving factors there on Tucuma cost drivers would be the grade that we're mining, the additional maintenance costs that we're incurring. Again, we expect -- we do expect to see a benefit in Q4 from those costs. The TC/RCs and shipment related costs in part because the grade of concentrate is lower than Caraiba. Your second question on the benefits of mechanization really points to two things. As you've heard me talk about on a number of calls here over the year, reducing exposure of our workforce is one of the top benefits of that investment, and it was one of the key driving factors in making that investment. So getting our workforce away from the work phase to the maximum extent possible. So that's number one. Number two, if you just take a step back and I hope you have the opportunity to show you what the team has been doing at Xavantina later this year. But that mill only operates between 15 and 20 days per month, and that's a function of the asset being mine constrained. So as we look ahead to the future and notwithstanding the cadence of production that we just talked about this year, given the tie-in of the ventilation circuit improvements that we're making, we expect over time here to be able to better match mine output with mill capacity, again, not reflected in our long-term guidance, but it's one of the key low-hanging value drivers that we see in our business. And Gelson and the team here are working diligently, and we hope to be in a position to talk about what that might look like later in the year. Operator: Your next question comes from Fahad Tariq with Jefferies. Fahad Tariq: There was a comment made earlier on the call about potential capital return once the net debt to EBITDA gets to the targeted levels below 1x. Maybe just any additional color on that, what form that would be in timing, et cetera? Makko Defilippo: Yes, I'll jump in and Wayne can piggyback if I missed anything or has anything to add. I would say really, there's 3 steps here that we see as being critically important to driving that decision and timing. First and foremost, as Wayne mentioned, we want to see our net debt leverage ratio below 1x. As you can see from our Q4 results, we're -- given where we were in Q3 to Q4, we're rapidly approaching that metric. Obviously, the world is a volatile place. So we'll see what happens over the next few quarters, but we're pretty close to that metric at 1.2x right now. Secondly, as we mentioned, we want to pay down our revolver. So as at year-end, we had $155 million drawn. That's just a logical place to pay down our debt. And again, we are cognizant that paying down debt, including our revolver is a de facto return to shareholders. So that's an important component of that strategy. And number three, we're having a lot of discussions with our top shareholders about what that might look like and timing. I would say stay tuned. Let's get through steps 1 and 2 before we get too excited about step 3. Fahad Tariq: Sounds good. And then maybe on Furnas, the idea of you're entering a period where some of your peers are getting into a build cycle and Furnas is, I guess, much longer dated. Any opportunity to -- or any appetite to try to accelerate that? Or is that even possible given like what the stage is at right now and the terms of the earning agreement and what needs to be done? Makko Defilippo: Yes. We're very excited about Furnas as you probably heard in our prepared remarks and saw in our webcast materials. The reality is it's a few years out. We like that positioning. We need to do work to advance through a prefeasibility study execute on some of those value drivers that we see as low-hanging fruit to increase the value of the project, increased byproduct revenue. And then we still need to do advance several permitting work streams. The reality, I think, is we do have the appetite to advance that project as fast as possible. I would say that we're already doing that. And we still expect modest capital spend over the next the next few years as a result of the acceleration there. Operator: Next question comes from Stefan Ioannou with ATB Cormark. Stefan Ioannou: Just kind of curious, back on the gold concentrate sales. I think originally, it was suggested that you might -- we're anticipating selling down the entire stockpile over, say, 12 to 18 months. Just given our better understanding of the rainy season and whatnot now, is that a sort of a number we should think it was probably going to be stretched out over a bit more time? Makko Defilippo: Yes. Look, let's see, right that 12 to 18 months we talked about that time later in November. If you put out -- if you look at what we talked about in our guidance came out this year, we said through mid-2027 those time lines are kind of give or take a month, are pretty well aligned from our perspective. Stefan Ioannou: Okay. Okay. So still mid-20 27-ish. Okay. And just maybe switching gears, just on the -- you mentioned an exploration spend of $30 million to $40 million. Is that really the lion's share at Furnas or is there any other sort of notable projects we should be thinking about from an exploration point of view this year? Makko Defilippo: It is a great question. Yes, the lion's share of that is at Furnas. I would say that we're still advancing some opportunities throughout the portfolio, both at Tucuma and at Tucuma, Xavantina, and Caraiba at various stages of development. Again, I think the best guidance I can give you at this point is that we're excited about what we're doing there. We expect to give an update at our Investor Day later in the year. Operator: The next question comes from Craig Hutchison with TD Cowen. Craig Hutchison: I was just wondering if the heavy rainfalls, will that have any impacts on concentrate shipments or timing of shipments from Tucuma as well? Or is it just isolated to Xavantina? Makko Defilippo: Yes, great question. We plan for cadence across our operations for a normal amount of operational disruption. I would say that what we've seen to date at our other operations is in line with what we expected and built into our budget and guidance for the year. So we're not seeing anything out of the ordinary in terms of operational disruption. There is operational disruption across all our operations due to the rating season. That's been reflected in our guidance and how we think about cadence for the full year. Craig Hutchison: Okay. Great. And then just TC/RCs in terms of your C1 cash costs, are you able to provide what you're assuming for TCRs for the year? Makko Defilippo: Those are based on long-term contracts that are commercially sensitive, but I would say the -- what we've heard in the market is well below zero. We're not reflecting that at either of our operations. And as I said, they're long-term contracts that are commercially sensitive. Still very low in a historical context. As I mentioned, when I think about what are the big headwinds and tailwinds for our business, at Caraiba, we have a big tailwind from byproduct gold prices. That was probably pretty clear. And if you look at how that byproduct line item has tracked over the last several years, but we're seeing headwinds on seaborne shipping freight given what's happening in the world today. And then also on the BRL, which has been a big -- I think last year, the BRL was in the top -- was one of the top performing currencies against the U.S. dollar. And so that's a bit of a headwind. So definitely some gives and takes. We feel pretty happy with where our guidance is at this point in time, given some of the gives and takes that we're seeing there. But obviously, we'll keep everyone updated if we see things moving significantly one way or another. Operator: Next question comes from Anita Soni with CIBC World Markets. Anita Soni: I just wanted to follow up a little bit on Furnas. I was wondering in terms of -- I wanted to tie in the exploration drilling that you've done with the PEA. Can you just talk about how much of the drilling that you've done, how much was included in this PEA? And is there still like some that was outlined that didn't get included? Makko Defilippo: Yes. Perfect. Thank you for asking the question. You're absolutely right. The PEA, we started drilling at the tail end of 2024. The PEA includes 28,000 meters of drilling of the 50,000 meters that we drilled last year and we expect to complete another 50,000 meters this year. So if you're looking for -- there's several stages under the earn-in agreement, we'll have effectively -- we expect to complete all phases of drilling, all drilling requirements by the end of 2026. And as I mentioned, that PEA only includes 28,000 meters of drilling. Our objectives with the drill program that we completed in the second half of last year and the first part of this year are twofold. Number one, as we move to pre-feasibility study, we need to convert that inferred mineralization that's included in the PEA into measured and indicated resources that we can include it in the mine plan. And then number two, we -- as you can see in the production profile, really years 16 through '24, we see a drop-off, and that's related to the -- really to the extent of drilling we've been able to do. So we've targeted as part of our drill program some key step-outs around some of the planned underground infrastructure that if successful, we expect to improve the production profile later in the mine life. Obviously, we still need to do the drilling and the mine planning to support what I just said there. So -- but we're looking forward to advancing that work stream and getting it included into the pre-feasibility study. Anita Soni: Yes. That was the second question. Just wanting to drill a little bit into the inferred category. How -- what kind of drill density do you have now? And what do you need to get it into for the M&I? Makko Defilippo: Well, I don't have that right off the top of my head. We can circle back on that one. What I can tell you is that about 60% of the material that we have, including the PEA is inferred. I will follow up with you just after this call on drill spacing. Obviously, that will be outlined in the technical report that will be filed here shortly. I just don't have that information right at my fingertips. Anita Soni: That's fine. If you're going to file the technical report, that was my third question when you're going to file that because I'd like to get into the weeds on that. And then I would also then want to figure out some of the dilution questions as well because I noticed your M&I and inferred does not have any dilution at all [indiscernible]. But that's it for my question. Makko Defilippo: Yes. Just to clarify there, it's an important point on dilution. You're correct. The resource statement doesn't include dilution. The mine plan has been fully diluted and you'll see that reflected around the assumptions that are outlined in the technical report. Operator: The next question comes from Dalton Baretto with Canaccord Genuity. Dalton Baretto: I just want to follow up on some of that Furnas drilling there, but from a different perspective. Makko, you talked about all the drilling that was done last year that was not included in a lot of the drilling this year. My understanding was that sort of the high-grade cores of the deposit, they extend down deeper and possibly deeper than Vale had anticipated. And I'm just trying to understand how much of your drilling is chasing that higher-grade material and whether we could see some sort of a grade bump on the next resource update. Makko Defilippo: Good questions. Look, I think the way that I would think about this is the project as it stands today is -- it stands on its own 2 feet, right? We're working on some additional value drivers to smooth up the production profile to further enhance the economics. But as you see from the numbers, it absolutely stands on its own 2 feet. We -- if you look at the last drill hole that we drilled as part of the PEA, I'm going to quote some numbers here, so take this with a little bit of grain salt, but it was about around 150 meters at 0.8% copper 0.5 gram gold more or less. And that was the last hole that we drilled that was included in the PEA of that 28,000-meter program. That intercept was 600 meters below surface. We clearly see opportunity to extend the deposit, both to depth and laterally along strike. We expect to include those in future studies. And as I said, we'll be advancing those drill programs here. In terms of grade bump, look, we still need to do the infill drilling that will be included in the pre-feasibility study. So there are several stages of technical studies to go here. I would say the work that not only we did but also the very, very strong technical work that Vale has done over the years to build an incredible foundation that we were able to build on, I think, really speaks to the quality of the project. And we work with our technical team regularly. We have an excellent relationship, and we're really moving this forward together to create the best value possible. And when I think about what we've done collectively to drive not only production substantially underground, but also the mine calls for about 30% of its tailings -- expected tailings production to go back underground as paste backfill. We've really worked jointly to reduce the environmental footprint and hopefully set ourselves up for an excellent fast-track project. Dalton Baretto: Makko. And then can you remind me, is there some sort of a mechanism in your agreement with Vale that gives you the option to buy the piece that you currently won't earn into? Makko Defilippo: No. We're very happy to be pursuing this project in partnership with Vale Base Metals. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Makko DeFilippo for any closing remarks. Please go ahead. Makko Defilippo: Yes. Thank you, everyone, for joining us today. Obviously, we're always available for follow-up questions. I appreciate the robust discussion on the Q&A side as usual. I think one last bit of housekeeping here shortly on our website, for those of you who are interested, we will be hosting a Capital Markets Day in mid-September. That will be physically in person in Sao Paulo and obviously, virtually. And as I said, that information will be on our website shortly. Thank you all very much. Have a great weekend. Thank you. Bye-bye. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Roisin Currie: Good morning, and welcome to those of you in the room. Nice to see a lot of familiar faces, and welcome to those of you who are watching online. So the agenda today will be in the usual format. I will provide an overview of the results we've announced today, along with some key highlights, and then I'll hand over to Richard to take us through the financial performance in more detail, and I'll then take you through our strategic progress and finish with the outlook for the year before I take your questions. So we continue to make progress despite the challenging market conditions, as you can see from the numbers on the slide. As you can see, total sales growth for full year '25 is just under 7%, and that includes 2.4% on a like-for-like growth for company-managed shops and not on the slide, but it's also 4.3% for our franchise shops. Underlying operating profit and underlying PBT are both in line with expectations. With operating cash inflow, 4% -- 4.5% higher than 2024, and we are proposing an ordinary dividend of 69p, in line with the year before. Operating cash generation remains robust and will build further in the coming years, with CapEx also stepping back from its peak in 2025. This provides significant capacity for additional returns to shareholders, which Richard will provide more detail on in a few minutes. So we are outperforming the market. So just to spend a couple of minutes on our performance versus the market. I'm pleased to say that the recent data from Circana to the end of December 2025 shows that we have increased our market share of visits by 0.5 percentage points to 8.6% at a time when the overall market visits have declined by just over 3%. Pressure on income does continue to be the main driver and convenience for the consumer remains the priority with location access and channel flexibility critical. There is some evidence of dietary trends, but that is a relatively small factor. The breadth of appeal we have alongside our value credentials and the continued innovation in the business focused on menu, value and convenience alongside the strength of our vertical integration ensures our resilience when market conditions are challenging, but also remains our formula for our long-term success. So I will now welcome Richard to talk about the financial performance in detail. Richard Hutton: Great. Thank you, Roisin, and good morning, everybody. I'll start with Slide 6, which just gives you the high-level overview of the profit in the business over the last year. So you can see sales up almost 7%. We did have the reduction of 4% in operating profit and 9.4% at the PBT level. And as we highlighted back in January, we've pulled out a small exceptional item, which relates to an understatement of VAT, which we self-identified but goes back a number of years. So in reporting these results, we pulled out the element that relates to prior years so as not to distort the 2025 number. So that gives you an underlying PBT and then the full PBT for the year of GBP 167 million. The income tax charge, we'll show you later, slightly higher than normal, which I'll explain, which gives an impact on diluted earnings per share, which were down 10.7% and we'll get into some of the ratios behind that in just a moment. But first, on Slide 7, we'll dive into the segmental analysis of sales. So we segment our sales into those from company-managed shops and those that are through the business-to-business channel, which is primarily relationships with our franchise partners that get us into locations we couldn't otherwise reach. It also includes grocery channel development in the B2B channel, which obviously has moved on slightly in the last year as we launched with Tesco, a small range with Tesco back in September. But most of the progress here relates to the addition of shops and like-for-like growth through the B2B channel. So underlying each of those, as Roisin has already said, we've got 2.4% like-for-like through the company-managed shop channel and another 4.3% like-for-like growth through franchise system sales. You can see the overall rate of growth in the B2B channel is slightly higher. That partly reflects that like-for-like position. but also the proportion of shops we're opening through franchise relationships is about 1/3 of our net openings. So as a proportion of the base, it's a faster rate of growth in that channel. And if we look on Slide 8 at the relative performance of Greggs, I mean, Machine has already flagged to you that we've taken a significant amount of share in the last year. This tracks one of the benchmarks that we've pulled out to give us a feel for how Greggs has performed versus the overall food to go segment. And the yellow line on this chart is the Barclaycard data that they publish for the eating and drinking out-of-home segment. So that's all retailers who are identified as being -- serving the eating or drinking out of home. And you can see that Greggs' like-for-like performance, the dashed blue line, tracks that quite closely. So our like-for-like performance has been broadly in line with the market. But we've significantly outperformed the market through the growth in our new stores and the addition of extra channels such as grocery. So total sales growth significantly ahead of the market on that measure. Turning to Slide 9. The ratio analysis of the P&L here reflects some of the volume pressure and also the investment in the year, which will benefit us in future years. So if we work our way down, you can see at the gross margin level, a relatively stable position. We saw a more balanced position between cost and price inflation last year and a smaller amount of dilution from the increased participation rate in our app as people take advantage of the discounts available for shopping more frequently with us. In distribution and selling costs, that's where you see the sort of more of the operational gearing in the business. So there's a couple of things there. The volume impact last year has a gearing effect in terms of the fixed costs such as rent on the shop, but also the recovery of wage cost inflation. There's a slight under recovery there because wages were one of the most inflationary elements last year, which I'll come on and show you in a minute. So some dilution there on the ratio. And then we see the opposite effect in admin expenses, where we've controlled the overhead in the business well, and that gets leveraged more heavily as we grow the estate and spread it more thinly. So overall, underlying operating profit down by 1% in margin terms. And then you see an increase in the net finance expense. The primary driver of that is that in 2024, we were holding a lot of cash on deposit, which we've subsequently been deploying into the investment program. We obviously haven't enjoyed the interest coming in on those cash deposits in the current year. And then at the very bottom there, you can see return on capital employed, which is one of the key things that we focus on as a business. The ROCE for 2025 was 16%. That reflects the investment in capital employed as we've deployed cash into the program of capital expenditure that we will update you on in just a second. But obviously, the top line performance as well. Now we've talked in the past about that we believe 20% is a good long-term estimate for what we believe Greggs should be able to deliver. We still believe in that, and I'll describe to you in just a few moments our thoughts on how we progressively get back to that going forward. Turning to Page 10. You've got the usual analysis here of the Greggs cost base, which emphasizes just that people costs and food and packaging are the 2 biggest areas. The good news here is that we expect a much less inflationary year ahead in 2026. We saw 5.6% cost inflation in 2025. We expect that to be close to 3% in the year ahead, which is a real change from the last few years when obviously, inflation has been a real headwind. Food & packaging will be part of that. We expect that to be a very low single-digit figure for the year ahead. And we've got about 4 months of our food and packaging needs covered. Energy is obviously quite a volatile market at the moment. We're pleased to say we've actually got all of our electricity covered for this year, and that is the vast majority of our energy mix. And we've got more than half of it for next year as well. So we're in as good a place as we could probably hope to be given the current environment. The main thing we were exposed on is diesel costs, which is about 1/8 of our overall energy mix. So it's relevant, but not a big factor. People costs are the biggest part of the cost base and were very inflationary last year with a combination of bigger increases in the national living wage and obviously, the national insurance pass-through as well. So we saw just over 8% wage inflation or wage cost inflation last year. We expect that figure to be close to 4% this year, a balance of the pay award, which we've made and also some annualization of that national insurance increase. And there's a phasing impact here as well because we've negotiated to move our annual pay award. The majority of it will bite in April now. It's previously been aligned with the calendar year in January. That helps us to align more with the National Living Wage increase going forward. But it means that we'll have relatively low wage inflation through Q1 of this year. So there is a kind of a balance factor in terms of when cost inflation comes in this year. We think that will help the first half result, and we do expect to see relatively strong profit progress in the first half. We've guided that for the year as a whole, we expect that to be a relatively flat year because we've got the cost of the new Derby site coming in the second half. So there's a bit of trading off there between H1 and H2. And then the final piece on shop occupancy costs, rents are relatively stable as a cost ratio. And there is some benefit from the changes to business rates. So you'll be aware that in the budget, there was a change made to benefit small shops. We believe that, that will benefit Greggs on an annual basis for about GBP 4 million from April, so GBP 3 million to the current financial year. Sticking with costs on Slide 11. We obviously work each year to try and reduce our costs and to offset the cost pressures through our cost reduction initiatives. And we have a good track record in this, and 2025 was the best year ever in that respect. So we took about GBP 13 million out of the business through our cost initiatives in 2025. I thought it was worth just giving you a bit of color on the sort of things that we've been doing. The retail area is obviously where most of our cost is. And in that sense, using sophisticated workforce planning tools is a key element to make sure we deploy hours optimally in our shops to make sure we get the right balance of service and cost. So we've been putting a new plan called in, which has been very effective. We've been using technology to automate non-value-adding tasks and increase the speed of service. And some good examples of that are new tillware. And I hope some of you, if you've been to Greggs recently, will have noticed that the actual experience of paying at the till is actually faster, and I've certainly experienced that with our new tillware and our new payment terminals. Temperature monitoring is a huge task in our shops to make sure that we keep everything food safe, and it's a very manual process currently. So we've got some interesting experiments going on with automated monitoring, which we think will really help the business going forward. In supply, the game there is really taking advantage of the fact that we own our own supply chain to do end-to-end reviews, which make sure we optimize the route through our supply chain all the way from our suppliers through to shops through our distribution and manufacturing operations. And by making sure we get the right packaging and ingredients in the right sizes, they flow through really efficiently, we get a real cost advantage. So we're constantly looking at how we optimize that. We've been in-housing some of our manufacturing where we've had additional capacity come on stream that's allowed us to do that. And looking forward, there'll be more opportunity for automation as the new sites in our distribution chain come online. And the offices have a role to play as well. So in our support teams, technology is starting to help us with automation on desktops, new systems for customer and shop support, which are making the whole process more productive. It's meaning our teams can cope with the growth in the business without adding more resource. And increasingly, AI tools will support that even further going forward. Let's talk about CapEx now on Slide 12. So you can see the peak year for CapEx in Greggs, GBP 287 million that we invested in the business last year. And if you look year-on-year, you'll see that the retail side of that in terms of new shops, shop fitting and equipment was relatively stable. We had a comparable amount of activity in terms of opening shops and refurbishing them. But the big difference was in the supply chain, where we invested GBP 147 million across our operations, including the new sites to create capacity for the future. There was also a step-up in IT, where we're putting in the upgraded SAP system, the S/4HANA version, which is going well, and we got the first elements of those -- that installed in the summer. If I turn to the forward look on Page 13, I think this is the interesting piece. So if you look beyond this year, we've got a substantial decrease in the amount of capital expenditure from this year onwards. So CapEx reduces to around GBP 200 million in the current year and then reduces further, and we've given a range of GBP 150 million to GBP 170 million from '27 onwards. And in looking again at the CapEx program through this phase, we obviously kind of came in under the guidance last year. We've looked hard at the out years as well. We've taken about GBP 20 million, GBP 25 million out of the capital intensity looking forward here. And the interesting thing in the backdrop to this slide is if you look at the gray sort of shadow behind, that's the operating cash generation of the business. And you can see how essentially last year, we were utilizing all of that in terms of the CapEx investment program. But as we go forward, a huge gap emerges, which is effectively the free cash position that will give us discretion. Obviously, that has to fund the ordinary distributions in the business, but we start to see some quite substantial headroom as we go through next year and onwards, particularly. So scope for further returns, as Roisin indicated at the start of this. Page 14 talks about our shop estate expansion and a quick reminder first of the sort of metrics we use to manage our expansion against strong return rates. So we look for a target return rate of 25% cash return on the investment that we put into both our shop and the supply chain that supports it. And we typically achieve that after 2 or 3 years and the shops go on to achieve a mature performance in excess of 30% on an ROI basis. And generally, the growth locations that we're moving into are outperforming the traditional estate. And we talked in the summer a lot about incremental growth and why we were not concerned about cannibalization. And just to reiterate some of the key points that we talked about then. In new catchments where we're landing shops, 53% of our shops last year were in areas where there was no existing Greggs within a mile. So we are pushing into areas where people just don't have access to Greggs. And even in those areas where there was a shop within a mile, the recorded level of sales transfer from the existing state was less than 5%. And we factor that into the shop appraisal to make sure that when we make the decision, we know it's still going to make an incrementally good return for the business. And that was proven again in 2025 with the look-back test on cannibalization. And the other great measure we have is by using the app data. So we can see from the app data that the frequency of visit for Greggs customers increases when you give them access to more shops in new convenient locations. And we ran some data that we showed you in the summer. We've rerun that again at the end of the year. And again, it confirms the incrementality of the visits and the increase in frequency that we see when we become more convenient. I mentioned ROCE earlier, and Slide 15 talks a bit about the levers that we'll be pulling to restore ROCE over the years ahead. Obviously, that estate growth is absolutely key because growing the estate to utilize the capacity that we're creating is one of the most important elements of that. So it's great to see that we're still getting those strong returns and that, that white space exists. We'll be accessing that both through our own estate growth and through the partnerships with franchise partners that give us access to areas we couldn't otherwise get to. We'll be disciplined on capital allocation. And you can see we've trimmed the CapEx a little bit. We'll hold that as tight as possible going forward while still making sure that we maintain and invest in the business. But we're in a position where we've deployed an awful lot into the supply chain, and we've got that capacity there to use. So it will reduce the amount that we need to invest in the years ahead. And as I've described to you, we continue to explore further cost saving and productivity opportunities. The team are enthused by the success and want to drive that even harder as we go forward. And then finally, obviously, there's an element which is driven by the market and performance in that. But also, we have additional income streams that we've been pushing and accessing. You've heard about the Tesco development that we put in place in the autumn of last year. That will be a more material factor in the year ahead, and we've expanded the reach of that into more stores. Roisin will talk to you a little bit about some of the stuff that we've been experimenting with in terms of convenience retailing, where we've been looking at some concepts, which will help us to access smaller locations that can't support a Greggs store with both automated and manual sort of vending solutions. And there are other things in the background that we're not quite ready to talk about that we've been working on, which we believe will also leverage the Greggs brand to drive additional income in the years ahead. So more on that to come. So packaged together, we still are targeting and pushing ourselves to get that return back to where we [indiscernible]. Just finishing off then with balance sheet, tax and dividends. The cash is in a decent position despite the big investment phase we've been through. I mean the cash inflow of GBP 273 million is a real strength of the business at the operating level. The net cash position at the end of the year was GBP 46 million. That was supported by GBP 25 million drawn from the revolving credit facility. So we actually had about GBP 70 million in cash. And we've got liquidity of GBP 146 million with the remaining undrawn element of our RCF. So plenty of room should it be required. And a quick reminder of our capital allocation priorities. Number one, invest to maintain the business well, keep that strong balance sheet, and we target about a 3% of revenue cash position just to deal with the seasonality through the year. an attractive ordinary dividend that's 2x covered by earnings, and you'll see that we've maintained that again this year and then selectively invest where we see attractive returns for growth. And then finally, of course, return any surplus cash to shareholders. And that could be special dividends. It could be buybacks when we get to that point. We're open-minded about that, and we'll make that decision based on what's the best route for that cash at the time. And finally, just the figures to finish off on tax and earnings. The corporation tax rate, I flagged earlier was slightly higher. It's about 1% higher than we would normally expect, and that relates to the allowability of deductions relating to share options. And the fact that the Greggs share price was lower meant that the deduction you get for tax itself on share option exercises was itself lower. So that's a temporary thing. And looking at our forward guidance, we still believe that being about 1% ahead of the headline rate is the right way to model the tax rate for Greggs going forward. So overall, the underlying EPS was 122.8p, and we've declared a final ordinary dividend of 50p, which gives you 69p for the full year, and that's maintained at the same level as in 2024. And as I just indicated, we look for an earnings cover of 2x. And as we get back to that level, the dividend will grow again. So as a quick roll through. I'll hand you over to Roisin to take you through the plan. Roisin Currie: Great. Thanks, Richard. So I'll spend a few minutes, and I will talk about the operational and strategic review for the business. So on the slide behind me, you have just got the Greggs formula for long-term success. So I just want to reflect on the things that have made and continue to make Greggs successful. And these are particularly important when the market is tough because they differentiate us from other brands and they're integral to the strength of the business. So the first factor on the slide is the breadth and choice that we offer our customers, enabling them to shop with us frequently. And this isn't just about product range. It's also about the flexibility we have to operate in so many different locations and channels and be convenient and accessible to customers when they are on the go. Next is our value leadership. And we pride ourselves in this, and we have got a long-term track record of being #1 for value for fresh prepared food and drink, and that hasn't changed. It continues to be a key focus area, and we remain #1. Innovation and rapid evolution is, of course, key because food tastes and drink tastes change over time. We work hard to ensure we stay relevant and constantly innovate to drive profitable sales growth. And we've got a strong track record of this for many years, innovating to meet changing needs, dietary trends with great value options, demonstrating us now being #1 in the out-of-home market for breakfast and #2 for coffee. Our focus on spotting trends and then following them fast with great value price points continues. And finally, our vertical integration drives quality and efficiency that is a genuine competitive advantage versus the market. So let me talk through those areas in some more detail. So we are the fastest-growing brand in food to go. So in terms of market context, the slide in front of you is from Circana data. So it demonstrates the strength of the Greggs brand across all of the key dayparts and missions. And I'm pleased to report we're #1 in breakfast. We're #2 in lunch. We are #3 in snacking, and we are now #4 in dinner and in delivery. So you can see how strong Greggs continues to be in the traditional areas of lunch, breakfast and snacking. But I'm particularly pleased that I can show you is moving up the rankings later in the day and on delivery areas that, as you know, we've been focusing on. As I said earlier, our market share has grown from 8.1% to 8.6%, the fastest growth of any brand in food and the go. And at the bottom, you can see in terms of the segments that we represent in terms of the demographics, when you compare the market share of visits with Greggs share of visits, we are pretty much in line with the market, having broad appeal across all demographic sets is another great strength of the brand. And on to value. Value leadership remains critical for us. We remain market leading with the gap to our food to go competitors widening. You can see that in the chart. So that plots the YouGov data over the past 4 years, and Greggs is the yellow line at the top. fresh prepared food and drink, the hot options we provide and the customization we offer ensures we are differentiated from other value operators such as the supermarkets. We also know that our loyalty scheme and the value deals that we offer continue to deepen the value for customers when they shop at Greggs. And on Slide 22, we're just looking at the estate, and we have shown you this chart before, but it just demonstrates how the business has been evolving over the last decade to reshape and move into the new catchment areas with different customer missions, ensuring we are well positioned to be more convenient for customers on the go. Now if you went back 10 years, then the traditional element of the state, which is the blue -- the blue sort of segment and mainly on high streets, that would have accounted for around 80% of our total shop estate. And as you can see, it is now 50%. In the traditional estate segment, our relocation strategy has been key to our continued success, and we've relocated around 15% of those shops since 2019, making sure that now they are in the best locations. We do treat those relocations as new shops, so they don't appear in terms of the growth in our like-for-like numbers. And in the underrepresented catchments, the new shops that we're opening expand our reach and continue to deliver strong returns. Our target for this year is around 120 net new shops, which is the same as last year. And just to bring to life the underrepresented catchments, so these are areas such as roadsides, retail parks, supermarkets, travel locations, given the estate greater balance and accessing new locations with strong returns. We demonstrated last year, and Richard talked about it earlier in terms of our summer presentation, these new shops do so without affecting sales in the existing estate, so it's incremental growth. The chart on the slide demonstrates the significant expansion opportunity we continue to have. So the blue bars on the slide show our current penetration. And as you can see, with the exception of industrial locations, no other location has yet reached 25% penetration. Our successful expansion strategy continues to target these areas where we currently have that low penetration, most typically remote from our current shops. So again, Richard talked about last year, over half of our shops were opened with no Greggs shop within a mile. The planned openings for this year have a similar profile. And worth saying in terms of the numbers on the right of the chart, the white space work that we've done in terms of viable locations reflects the opportunity for our full-size Greggs shops. But we continue to be agile in terms of our formats. So the format flexibility we have and expanding further will unlock opportunities that our smallest full service operations are simply not able to access. The trial of our first 3 bite-sized shops is early days, but promising. And we have some further trials planned very shortly, which will unlock other opportunities with strong returns. And as Richard says, the innovation doesn't stop there. So we continue to come up with more innovative ways to make sure that we can provide the convenience for our customers to unlock additional customer missions. So we are looking at some unattended retail solutions. unattended retail solutions is the new word for vending. So we have a number of trials that are in the pipeline currently that we will talk to you about as we embark on those trials. But format evolution is complemented by increasing the channels and dayparts that customers can access Greggs through, as you will see on the slide. Richard mentioned it, but we updated last year that we increased our range in Iceland, and we also expanded into Tesco. We started when we talked to you last year with 800 larger Tesco stores. We have just expanded into a further 1,900 Tesco Express stores. Pleasing to say that delivery continues to grow. So it's now at 6.8% of our mix. And we know that these are incremental sales and they deliver a higher basket size. We are now working on some improved technology that will mean we can support this channel better and grow further. And loyalty, I think I said numerous times before, continues to surpass our expectations. So now over 26% of our transactions are scanned through the app, and that allow us to increase our CRM engagement with customers. We've been doing something called Greggs Quest. We rolled that out to all of our customers in November. And really, that's challenges that encourage the customers that rewards their visits and encourage them to come back to us more frequently. Evening, very pleasing to see, still remains our fastest-growing daypart. So it's now at 9.4% of our sales with evening delivery still being a significant growth opportunity. We continue to be really pleased with the steady growth that we're seeing in the evening daypart. We're still growing ahead of the average like-for-like rate, and it's very similar to the long-term growth pattern that we established at breakfast. And at the heart of Greggs is our range. So our menu sits at the heart of Greggs, and we win by delivering on our purpose, making great tasting, freshly prepared food and drink accessible to everyone. This translates to democratization of food on the go. Rapid evolution of value-focused menu options is key to meeting consumers' changing tastes and requirements. As I've shown you earlier, Greggs is a brand with broad appeal. We are representative of all demographics, and we don't over-index significantly in any one segment. Dietary trends have always been a key factor in the evolution of our menu and the breadth of choice that we offer. And we've worked hard over many years to ensure that we have choices available for everyone throughout the day. Our performance continues to be driven predominantly by the broader macroeconomic pressures on consumer spending, but we do monitor developments around weight loss medication closely. Consumers on this medication still seek convenient food on the go, and we're already catering to a number of those dietary trends. So the demand for fiber, higher protein and smaller portions, which forms part of a much wider health trend. We have introduced last year a number of products such as our Ginger and Turmeric shots, our protein shakes, our egg pots, and we've seen strong growth in those high-protein items that we offer. But we continue to evolve the menu. We continue to make sure we keep it fresh, we keep it relevant, and we excite customers with new products and new flavors. Some examples would be the Tanduri Chicken Pizza and the Red Pepper Feta and Spinach Bake. And as you would expect, we have a pipeline of new ideas and innovation to ensure that we continue to evolve the range and provide the new exciting products that our customers want. So not sure of any of you in the room are matcha fans, but we have just introduced to the menu a couple of weeks ago, our Ice Match Latte at very affordable price point of GBP 3. So if you haven't tried it, you should rush out to Greggs and get one. The breadth of choice that we offer and our ability to enter new categories at value prices enables and ensures that we stay relevant, excite our customers with new choices, focus on market trends and support the expansion into the new channels and dayparts that we offer. And then on to our supply chain, which I have spoken about many times, but to support our growth plans, you know that we have invested in further supply chain capacity, primarily the 2 new state-of-the-art national distribution centers, creating overall logistics capacity of up to 2,500 shops. Both sites are on schedule and on budget with Derby on track to open later this year and Kettering in 2027. This approach to capacity expansion benefits from productivity improvements from automation, enabled by the scale of our operation at those sites. By picking upstream, the new sites increase the throughput and capacity of the existing radio distribution centers, which will still continue to serve our shops. I won't spend too much time on technology because Richard has covered a number of these areas, but we do continue to invest in technology to enhance our growth while ensuring the robustness of our process and driving greater efficiency. As Richard just said, we have successfully migrated our finance and procurement processes to the new SAP S/4HANA system from August last year, and we've got further migration in some key areas this year. Richard also talked earlier about the tasks we're automating in our shops to support service and efficiency, which is really important and the CRM capability for our support teams that has AI functionality. So our support teams can now use that to serve both colleagues and customers better and faster. And last point in the slide, our data capability continues to improve, which supports all areas of the business and helps us make better decisions. But we continue to pride ourselves in doing the right thing with significant progress on our commitment to the Greggs pledge, which is our approach to ESG. Our original commitments that we set out took us through to the end of 2025. So we spent a lot of time last year engaging with a broad range of stakeholders to shape the future priorities for 2026 and beyond. Really proud to say we made a significant progress across all the areas of our Greggs pledge. On the slide behind me, you've got a number of highlights. Great progress on reducing our carbon footprint, reducing unsold food waste through our Greggs outlets and making progress in ensuring that our packaging is easily recyclable for our customers. We're retaining the 3 core pillars of our Greggs pledge, stronger healthier communities, a safer planet and a better business still see at the heart, and we're now launching our next 5-year pledge commitments. So finally, looking forward now into 2026, we have a strong pipeline of opportunities to open new Greggs shops in catchments that will deliver strong returns. Great progress has been made in building the supply chain infrastructure for this next phase of growth. In a challenging market, we continue to deliver both like-for-like and total sales growth and make great progress against our strategic plan. Our like-for-like growth for the first 9 weeks has been at 1.6% and total sales have grown by 6.3% with strong cost control supporting profit progression. Our expectations for 2026 are unchanged, and we remain confident in the growth opportunities available to Greggs and our ability to progress them. So on that point, I will just pause and then Richard and I will be happy to take your questions. And we have got a couple of roving mics in the room. And I think Richard is also going to monitor questions from those of you that are online. So thank you, and I will take your questions. Roisin Currie: We have got a couple of roving mics in the room. And I think Richard is also going to monitor questions from those of you that are online. So thank you, and I will take your questions. I'll start from over here. Jonathan Pritchard: Jonathan Pritchard from Peel & Hunt. Two from me for me. Firstly, I think I try to remember whether a call or a meeting. But you talked about clarity on deals and marketing those deals better. Could you just tell me how you progressed on that and whether there's a sort of slight difference between franchise and owned stores in those deals and the communication. And then secondly, on current trading, just a bit on shape really. I was surprised I didn't see the word weather and rain in the statement because clearly, that is something you hate way. Is there any change there since you still running, has it got a bit better? Just any additional comments, please? Roisin Currie: Thanks, Jonathan. I'll let Richard take kind of traded and I'll come back to market. Richard Hutton: Yes. So I think the weather has been bad on bad really, hasn't it? Clearly, as you'll have noticed, particularly in the South of England, it was an incredibly wet January. And -- but we had storms last year, and we had snow last year. So I think we've had sort of bad weather in both elements. I think the key thing to call out in the trading so far is that there is less price inflation in the number. So the underlying volume position is very consistent with what we saw in Q4 running into the first couple of months of this year, but with less pricing. And we hope that, that puts consumers in a better place as we go forward. Roisin Currie: In terms of the deals that are out there and the marketing, I'm just looking to my right absolute with some of the sort of marketing -- what we did last year very successfully is we continue to lean into breakfast. When I talk about market share moving from 8.1% to 8.6% we've taken market share across every single day part. So that is really pleasing. What we did know is that we had a 2-part lunch deal, and we could see that in the marketplace, a common sort of feature of deals was a 3-part meal deal. So we then went back on our big deal, which was the GBP 5 3-part meal deal. We obviously do that through a lot of out-of-home marketing. So that's probably the biggest sort of way we try to reach the consumer. So if you're on the high street, you see a bus shelter somewhere with the point of sale, we will try to have the Greggs message there. The other significant piece of marketing collateral we have is the digital screens in our windows. So again, they are up and down across the U.K., and we will work them hard to make sure that we punch above our way in terms of getting those big deals out there. The new piece for us last year was in our app. So for our customers, we introduced a sort of at home part of sort of an app sort of communication messaging as part of the app. And so now if you're an app customer, you will see the messaging coming up around what is the new products that we're launching. Our most recent one was the matcher, which we know we brought to the market at a value sort of leading GBP 3. But what we've not lost focus on is the 2-part breakfast deal as well because, again, that is a key part of offering value to the customer. So what the marketing team trying to do very successfully is lean into the new deals, but they have an always-on strategy to make sure that what we are known for and what is value, we also get that message out there. In terms of your question around franchise, the deals are the same. So I guess we reach customers, it doesn't matter to a customer, if it's a franchise shop for a company managed shop, they are shopping at Greggs and therefore, we want to make sure that they get the same messaging. The one difference that you have in a franchise shop is price points because obviously, they set their own price points, and we've got some ceilings around that. But again, the team will work for that franchise partner to make sure that the digital screens are used to reach customers with that value offering. And even in a franchise location, we will still be the best value operator by far in that location. Richard Taylor: It's Richard Taylor from Barclays. I've got three questions, please. Firstly is on your 20% ROCE target. Even with fixed capital employed, that would imply profits quite long way ahead of where people are expecting any out years now. I know you're not saying in 2028, but how should we think about the lift there? Is that utilization of supply chain? What other things should we think about? Secondly, how should we think about your pricing this year with a 3% like-for-like cost inflation? I know you moved at the start of the year, you done now, would you expect to move again. And finally, you've historically held a cash buffer, which you still have. But when we look forward, your slide on CapEx, Richard, what do you think about your plans for cash in FY '27 and FY '28 is a buffer that you still would like to hold in those out years as well? Richard Hutton: Yes. That sounds like my tear sheet, doesn't it? It also allows me to address a couple of the points that have come in online actually, which are also about that cash position. So Joseph, if you asked about capital allocation, I think you probably asked the question before I presented on capital allocation. So hopefully, you're happy on that. Simon, you asked about debt on the balance sheet, which I think links to Richard's point. So we had about GBP 25 million of debt on the balance sheet. We've actually repaid that since, but we'll probably draw some more down from the RCF when we pay the dividend in April, May time. So we'll be using the RCF through the next year. I suspect we probably won't need to use it next year onwards. And Simon was asking what's our forward plan in terms of is it structural debt or is it not? It's not. I think, again, the capital allocation policy hopefully explained that, that we're looking for about 3% of sales as our sort of our cash buffer to manage working capital. The RCF is our reserve to enable us to weather any storms and we put in place after the pandemic. And I think it's a super important thing to have in place in case there was something like that again. Pricing, we're in a great place with pricing because we did make the increases. Most of what we need to do for this year, we anticipate is already in place through the moves that we made in January. So we'll see how cost inflation pans out through the middle of the year, but I'm kind of cautiously hopeful we don't have to do much more. But there may need to be some small tweaks. But generally, we're in a decent place already in terms of recovery of cost. And then the broker journey, I think you should see as a longer-term ambition. We obviously had a sort of perhaps a nearer-term plan for that before the experience of last year that set us back a bit having negative volumes last year. We'll have to work a little bit harder on both revenue streams and on cost to get us back to that target. So certainly not thinking about it in terms of 2028. And so I think probably the point at which we reach it is probably beyond the scope of sort of most of your forecast at the moment. But we strongly believe that effectively, it's a tweak to the plan before with a bit more sort of revenue and a bit more sort of action on cost. And we can see the opportunities. Timothy Barrett: Tim Barrett from Deutsche. Two questions, please. also. Firstly, what you say on first half versus second half profit growth is nice and clear. implicit within that, are you assuming a pickup in like-for-likes in the second quarter or the next 12 months in terms of just trying to square the circle really how you get profit growth in the first half of that number. And then a quick one on CapEx. Can you say what's implicit within your new 2027 and 2028 guidance on net new stores, please? Richard Hutton: Yes. Yes. So on that final piece, in terms of net new stores, we're implying that we'll run at broadly the current rate in terms of about 120 net new stores. We're going to hold refits fairly tight this year. So we'll probably only see 50 or 60 refits, about half the number that we did last year, and that's part of the response to the capital intensity at the moment and also a reflection of just the longevity that we've seen in the current refit, which is standing up well. So we'll hold that fairly tight, but expand at a net rate of about 120. I'm going to link into another online question there where Joseph is asking what will the approximate maintenance CapEx be going forward? Typically, we've guided that to be about 5% of turnover. It's probably slightly less than that at the moment because of the investment in supply chain, which will hold us in good stead in the years ahead. So it's probably going to be slightly less than that at a maintenance level and then you layer on that expansion CapEx. The like-for-like question, I think, was about what do we need to strike the right balance in terms of progress in the first half. Yes, we're probably -- I mean, we would be opening, say, 1.6% in the first couple of months was slightly behind where we would have liked to have been. The good news is that the profit conversion has probably been stronger than we'd anticipated, and that's a reflection of both some of the cost margin dynamics that I described but also the fact that we gripped operational costs quite hard in the middle of last year as a response to trading conditions. And we're still carrying that strong position, and it hasn't annualized. So I think with the focus we've got on that in the business in the first half, we should continue to see the benefit, and it gives us a very strong drop-through in terms of the growth that we are seeing. Roisin Currie: I'll just go right if I just needs to hand the makeover, thank you. Unknown Analyst: Thank you. Vince Ryan here from Goodbody. I'll just go right if I just needs to hand the makeover, thank you. Fin Ryan here from Goodbody. Two questions from me, please. Firstly, in terms of the supply chain investments, could you outline what you're factoring in, in that incremental cost from Derby in the second half of the year? And as we sort of roll into 2027, how much incremental cost should come on the P&L from -- as Kettering comes live? And just could you also give us a sense in terms of the phasing of sort of the date when sort of everything is in place versus how long it will actually take to get to full operational capacity in terms of distribution centers? And then secondly, in terms of the retail rollout, I appreciate you've got a lot more Tesco stores coming on stream this year for the frozen product. Any thoughts in terms of how incremental that can be to revenues and profits for '26? And any options to go to bring those products into like Sainsbury's or A or the other retailers? Roisin Currie: I'll let Richard take your question, and I'll take the second part. Richard Hutton: So yes, the Derby cost will be broadly what we guided previously, which we said about a 40 basis point headwind this year. So if you sort of extrapolate that at current turnover levels, you'll see it's high single digits in terms of millions of pounds net impact on this year. That will then roll over and impact the year ahead as well, at which point we'll start to reduce some of the Kettering costs, but we're then starting to see some of the leverage coming through in terms of utilization of those sites. So that gives you kind of a bit of a clue as to what we expect profit progress in the first half to be because we have said we're holding the kind of the broad guidance that we believe it will be a flat outlook for profit this year with that decent underlying progress in the first half then held back by the increase in costs as those come through. Catering looks like it will be around the middle of next year in terms of its timing. So again, that cost annualizes out in the middle of '28. So I guess we get to the end of '28, having kind of taken the 2 big step-ups in cost through that period. And then we're into that leveraging sort of period going forward where addition of new shops comes at very little incremental CapEx. We're just investing in the retail side of it. And obviously, some of that will be franchise partners, which won't involve capital either. So we start to work it much harder from then on. Roisin Currie: In terms of your question on where we go in the sort of grocery channel, I think one thing I would say is -- and we've -- we had the partnership with Iceland Foods since 2011, and we know that we have not yet maxed out that partnership. So as we've seen as we've gone with Tesco, actually, we're doing some other new products with Iceland. So that tells you actually, there's more to go with that original partner. I think we've been very pleased with the progress in Tesco as have they. So what we're now doing is we are in discussions with them around how do we maximize the current partnership that we've got. And if you think about it, with our partnership with Tesco, it's not just the grocery chain that we've got that partnership. We also have Greggs within Tesco currently, and we have a pipeline for other opportunities. So I think just now, it's about maximizing those 2 current partners. In saying that, we are obviously in discussions with others, but our focus for this year will certainly be about maximizing the partnerships that we've got in place, which keeps it simple for us and means we can take the learning around what else we could do in the future. I will just come right behind sorry, I will come over to this side of the room in a minute. So we'll go over the other side of the room after your sales. Gary Martin: It's Gary Martin here from Davy's. Just a couple of questions from me. Just starting off on the cost conversion piece and just dovetailing off of some of the commentary from yourself, Richard. It seems though from Slide 11, it looks as though there's a fairly elaborate plan in place in terms of cost optimization. Would you be able to maybe run us through how much of that is kind of low-hanging fruit or how much of the kind of hard yards are ahead just in terms of how you plan to optimize in the future from a cost base perspective? That's my first question. And then just the second one, just on the market share piece. So I'd just be curious just to get the grips with the base all eating and drinking out of home index that you're using to measure market share growth off of. Does that include some of the retail meal deals, for example? Roisin Currie: I'll let Richard take your cost [indiscernible] and I'll be back [indiscernible]. Richard Hutton: Should I call it low hanging. That's a good question. I don't want to sound easy. I mean people have to work hard on this. I mean it does involve -- if it was too easy, to be honest, it wouldn't count as part of this sort of objective because it's -- it's about structurally changing the way we do things to make it more efficient and to tackle legacy costs that we don't need anymore. And that's important because there are always new costs coming into the business as well. I tend not to talk as much about that. But when we bridge profit year-to-year, there's always something new that you have to do either from a compliance point of view or to make sure that you are secure and embracing the latest technology. So looking at legacy costs and taking this approach that we do is super important. I think there are things that we can see and there are always new ideas. Sometimes they're inspired by things that people achieve and one group sort of like achieves a breakthrough and others then think, oh, okay, we could do that and sort of learn. So sharing within the business, comparing those with other businesses that we have good relationships with to see what they're doing also helping that. So it's quite a big program. And whilst it might not be dramatic in any 1 year, just by working every year at it and sort of keeping that sort of pressure on and celebrating games, however, small, it sort of just encourages people to keep looking and turning over stones that have been turned over before and because the world changes. And if you look back 5 years, you can just see it's a very different place, isn't it? And the things that you thought were important then may not be as important today. So yes, it's hard to sort of -- I wouldn't call it low-hanging though. I would -- otherwise, it would just be what took you so long. You have to work at these games. Roisin Currie: On market share, so the Circana data that we use is stated behavior. So that's asking the consumer where do they eat out of home and food to go. So it will include any of the behavior in the likes of the food to go sections of a Tesco, Sainsbury's, et cetera, is included in the Circana data. So -- and it's asking customers on a regular basis, where have they purchased recently, which is the best sort of metric on market share that we've got. So it will have all the food to go specialists in there and it will have the food to go part of the supermarkets in there as well. Richard Hutton: Just to pass on the mic. I'm going to take an online question, if I may. One from Darren Shirley at Shore Capital. It's traditional at these events that Darren asked me to split out the price inflation and volume aspects of like-for-like and that I refused. But I'm going to shock him today by actually doing it. So Darren says, what's the inflation contribution to the 1.6% like-for-like so far this year. Just under 4% is the answer, Darren. And we had just under 5% last year, so that's the 1% sort of reduction in inflation. So you can see that slightly over 2% was the volume impact year-to-date. Roisin Currie: So we're coming to [indiscernible] then we will come over to the other side. Ross Broadfoot: Ross Broadfoot from RBC. Two on the new shops, please. You said 53% of 2025 shops in areas with no existing shop within a mile. Why is a mile a good benchmark? I'm sure that will differ across the estate. There any color you can give in terms of sort of behavior that you're seeing? And then second, you talked about sales transfer of 5%. What's the profit impact? And how quickly would you expect those shops to recover? Richard Hutton: Yes. It's an arbitrary decision, honest to me. It could have been a kilometer, it could have been a mile, it could have been in 5 miles. But if you think about sort of when you're actually going out for your lunch, would you walk a whole mile? You probably wouldn't, would you because you'd come across something in that. It's a long way. So as a broad measure, and I know there are some other studies that have used that as a broad metric. But it is quite a big -- that's quite a big sort of catchment distance. So we've used that. We actually sort of typically look at sensitivities within more like half a mile in our appraisals to identify shops where we believe there is a risk of cannibalization. But the reality is it depends on the journey the customer is on as well. It's not really -- if you think around here, people are wondering around on foot. That's one thing. If you're on a busy trunk road, then actually a mile might just be a minute of your journey. And therefore, the more relevant thing is actually, are there other options that are accessible from the same road? Or is it taking a transaction from where you're actually going to go at your destination, which we don't always know. So it's complex and none of this is perfect, but really we present this stuff to try and give you some assurance that we do look at it carefully. We do try our very best to avoid the risk of cannibalization. We do this when we're working with partners as well. We have to agree where shops open so that we don't transfer sales between locations. And that will be absolutely true of the new developments that we get into as well, whether that's convenience retailing or other things. Roisin Currie: Just on that point, just to Richard's point, I guess we're trying to give confidence around providing data points and actually, that's why we've come up with one well. Internally, we actually look at catchments and we look at the customer mission. So if you thought about London in particular and you think about Liverpool Street Station, actually, you've got a Greggs in Liverpool Street Station. You've got about 3 others within local proximity. If you're at the mission of you're a commuter, you do not come out of the station to seek out a Gregg. So we need to be accessible when you're there -- but similarly, if you're out about in food, you wouldn't come into a station to seek out a Greggs. So we need to be accessible there. I think the point around convenience and accessibility are still #1 in the food to go market. And that's why we've got the confidence in the amount of white space and the underrepresented catchments ahead of us. On the other question -- the other part of the question, I think, was the profit impact on the sales transfer of the 5% was the other part of your question? Richard Hutton: Yes, without pulling out the appraisal. Typically, we would look at it and say, okay, on the sales transfer, it will be like a 50% drop-through. So that will be the kind of the rate of profit cannibalization that we would then factor into the shop that was losing sales from the new shop. Unknown Analyst: One just on the Greggs apps. I have a number in the past of incrementality and frequency been about presumably that starts to diminish now? And is it still in your eyes accretive given that the tenant product is for free? Richard Hutton: Yes. That's interesting. We were looking at this just recently because we've -- now that we've got sort of data scientists in the business, we've been able to sort of apply a more technical analysis to this. And my team was starting to form the view, my finance team that this was becoming more mature now and essentially, you shouldn't expect to see quite as much incrementality because it's becoming part of the core offer at Greggs really for a regular customer. Interesting, the data scientists went at the app data and looked at it and came up with an even stronger number than the finance team were. So that said, I mean, it's a tough market with low like-for-likes generally at the moment, isn't it? So we do still believe that it underpins frequency of visit, but it's become, I think, more of an essential as part of your mix really is to have something which rewards the customers who are loyal to you. But -- so if it was driving the incrementality the data scientists are saying, then we'd be sort of shooting off the charts, wouldn't we? And the fact that we're not, I suppose, shows just how important it is in terms of securing the loyalty of your existing customer base. Whether it attracts new customers, that's always the heart of it rather than holding on to the customers you have. But I think it's a super important part of our armory. Roisin Currie: I think another piece just to add on the app is last year, we had just under another 2 million downloads in terms of customers downloading the app for the first time. I think the team has done a great job. When we started to launch ice drinks, we saw that really resonating with the sort of 18 to 34 consumer demographic that we offered ice drinks as a free that you got for download in the app. We saw a real spike in that. So I think it's constantly making sure that you try and get those customers that currently aren't on the app on to it, then we can communicate with them. We can send them quest, we can drive frequency of purchase still a really important part in the armory. Unknown Analyst: All right. Great. And then second question, there's quite a lot of quite big moves across the different business divisions. The B2B has seen quite a big step-up in trading profit margin this year. The retail business seems to have seen quite a big step down in the second half, which then is obviously offset by the cost savings that you mentioned earlier. How much of this is -- I'm not regular count, but there's been a change in the value and lease calculations and the CGUs you mentioned. Is there anything to do about going on there that's creating these large swings? Or if you can maybe just aggregate what's exactly going on there? Richard Hutton: No. I mean just like-for-like, the big factor there. Obviously, we had a bit of a reset in the middle of last year when we had the very hot weather. I think we'd expected stronger like-for-likes last year than actually came through. And increasingly, we became aware that this was very much a market-wide factor. So as you've seen, if Greggs has basically got through last year on a 2.5% like-for-like and taken 0.5 percentage point of market share. Gosh, it must be very tough in other places. So I think it's really just a factor of that, Ben. I mean, the overall impact has been consistent across the business. We have been able to start driving some additional sales through channels such as grocery. But broadly, I couldn't pull out anything that's skewing things from half to half, particularly. Roisin Currie: I'll ask you to pass the mike up front. Thank you. And then we probably just probably got time for two more questions. We'll take one left side, and we'll get you Andy. Conroy Gaynor: Conroy Gaynor from Bloomberg Intelligence. So the first one, just looking at your ever-evolving portfolio of new products. Are there any incremental margin mix benefits that we could be thinking about this year and beyond as you roll those out? And the second one, like many companies, as you're going further down this AI data science journey, are there any genuine competitive advantages that you can pick out that you think Greggs would benefit from? For example, is it your scale or ability to leverage the brand? Is it the fact you have a rich history of trading data piece of stats. But how can you leverage that into a competitive advantage. Roisin Currie: So let me take the competitive advantage one and then I'll let Richard talk about margin mix. I think AI and technologies are really interesting one because I don't think that there's a silver bullet. I think you're absolutely right around there will be opportunity for us to leverage our scale. But if we look at some of the work that we're doing with the support teams just now at Greggs House, it's using in technology that's got AI functionality to then actually move to Agent AI, where actually you are trying to automate a lot of processes. So they sort of mundane and routine of which a business of scale has got lots so you would assume actually that will give us a competitive advantage. I think for us, AI is around -- actually, there are going to be many different strands to this that will actually deliver the advantage. From a supply chain perspective, automation especially with Derby catering, that will be significant for us. And that is why that vertical integration does give us a competitive advantage, especially when we have got on automation in those sites. And then I think from a shop perspective, if you think about our labor cost, it's significant because we are a small box shop model. So therefore, you need people to serve. But we are, to Richard's point earlier, we are looking at lots of the ways that our teams have to do task in those shops. And when they do task, it takes away from serving the customer. So you can't serve the queue as quickly if we can automate a lot of those tasks. Actually in our shops, we believe we can get more volume throughput in terms of those customers and serving those queues. And then I think from a data perspective, our app is where, to Richard's earlier point about our data scientists that we've now got on board, our app is where we do need to mine that data and try and understand the behavior. And because we serve 8 million customers each week, there's a lot of data there that we should be able to mine in terms of 1/4 of those transactions are through the app. So I think it will be many faceted, but it will not be a silver bullet, but there's lots of areas that we have to get after. Margin mix? Richard Hutton: Yes. I think over time, what happens with margin mix is that things which are -- some things become commoditized. And therefore, you can't command the same strong margin on a pack of crisp because everybody sells one. And the way we kind of protect and drive margins is actually by the value adding in the shops. So the things that you bake in store, the things that you make in the back of the store, the things that -- the drinks and things that you produce tend to be the higher-margin items because you can't -- you haven't got the same, you can't compete with that in a commoditized way. You have to put the effort in. I think the matcher thing is the latest example of that. It's -- despite our keen price point, it's a very high-margin item still. And it's sort of, I suppose, injecting interest into the ice drinks category more generally, which again is high margin as hot drinks have been. So I think that's the way the business evolves over time as it pushes it into new areas which tend to have attractive margins, accepting that there's behind the scenes, some of the older items become more commoditized. And it just evolves over time, and it's always been that way. So directionally, it's interesting. I think drinks, if you were to show the mix of food and drink and Greggs over time, drinks are a much more significant part of the mix and a lot of the innovation is still coming in those areas. Roisin Currie: So we'll come to Andy, and then I don't know if you want to check there anything online after that. And then I'll need to bring it to a close because I've then got a press call. But Richard will be around indeed for a few minutes afterwards for anything we didn't get to, Andy. Andrew Wade: Just might be my memory failing, which is quite likely. But just looking back at the market share 1 on Slide 8, your like-for-like versus the market. I'm sure when we looked at that to sort of looked at this a year ago or 6 months ago, you were fairly -- your dotted line is consistently outperforming or as it looks like the sort of last 6 months or so, it's a bit pretty much in line with? Is that a narrative that you recognize? Or am I slightly misremembering? Richard Hutton: It may be we were using the takeaway in sort of fast food line time. I can't quite recall, Andy. There's two measures which are relevant. One is the takeaway sector and this is a much broader one. Typically, we've outperformed the takeaway sector more strongly than the overall measure, but we felt, look, the overall sort of eating and drinking out of home is probably the fairest measure of the totality of the market. and a more stable line because the takeaway fast food sector tends to be quite promotionally driven. And you see quite big spikes, which don't really teach you much in terms of your comparative performance. So I'd have to check back, but I suspect that's the answer. Andrew Wade: Okay. Second one then, sort of thinking about your recovery in ROCE, which is effectively, I suppose not going to have a massive change in the capital base, effectively, recovering in EBIT margin. Can you do that if you continue to have negative like-for-like volumes? Richard Hutton: Well, it makes it harder, doesn't it? We -- in our core plan, we assume that the market continues to stay tough for a while yet. We don't assume that it's going to kind of fix itself in a few months. So we've taken a multiyear view, but we also assume that the market will stabilize in time and this sort of like economic pressure that people have been under will get easier. And I think the first signs of that are this easing of inflation. And I genuinely hope that this is the start of an improving cycle in terms of people being under less pressure. In fact, the government have been confident enough to reduce the rate of increase of the living wage, I think, is indicative of that and hopefully gets us to a place where we are in less inflationary times. Andrew Wade: Just on the, I guess, a similar point. So we've now sort of had negative volumes for, I guess, 18 months, maybe a bit more than broadly 18 months. So we've annualized through negative volumes, negative volumes on negative volumes. So is your view that now that effectively the consumer sort of step down but continued deteriorating? Is that how you're viewing it? Richard Hutton: A little for now because we can't see a reason not to carry on with that assumption. And it's prudent to plan on that basis because then you don't overplan your cost base. So we try and plan on a cautious, prudent basis with some sort of cautious optimism that we've maybe been a bit too prudent. Particularly, I think in the coming year, it'll be very interesting to see what happens in June and July when we had very, very hot weather last year. I mean having now it may happen again, of course. And that's the basis we plan on, but hopefully, that might give us a little bit of upside. Roisin Currie: And what I would say is we're doing a lot to try and disrupt that and make sure we find reasons for the consumer to come into us. So actually match is a really good example of that. We've already leaned into ice drinks. Match has another demographic. So then we're leaning into that, but at a value price, and there'll be more on the menu that we'll do this year. So I guess it's how do you continue to bring that excitement, use your app, get the consumer message out there and you can start to try and buck that trend. So there's loads in our armory that we deliver this year. So on that note, I'm probably going to bring us to a close. And thank you for your time today. What I would say is I do need to run a press call to go to, but I am sure Richard and Dave will be around if there's any other questions, but thank you, and thanks to those online.
Operator: Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation Conference Call on the Fourth Quarter 2025 financial results. We have with us Mr. Takis Arapoglou, Chairman of the Board; Mr. Nikolas Tsakos, Founder and CEO; Mr. George Saroglou, President and Chief Operating Officer; and Mr. Harrys Kosmatos, Co-CFO of the company. [Operator Instructions]. I must advise that this conference is being recorded today. And now I'll pass the floor to Mr. Nicolas Bornozis, President of Capital Link and Investor Relations Adviser to Tsakos Energy Navigation Limited. Please go ahead, sir. Nicolas Bornozis: Thank you very much, and good morning to all of our participants. I am Nicolas Bornozis, President of Capital Link and Investor Relations Adviser to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the 12 months and fourth quarter ended December 31, 2025. In case you do not have a copy of today's earnings release, please call us at (212) 661-7566 or e-mail at ten@capitallink.com, and we will have a copy for you e-mailed right away. . Now please note that parallel to today's conference call, there is also a live audio and slide webcast, which can be accessed on the company's website on the front page at www.tenn.gr. The conference call will follow the presentation slides, so please, we urge you to access the presentation slides on the company's website. Now please note that the slides of the webcast presentation will be available and archived on the website of the company after the conference call. Also, please note that the slides of the webcast presentation are user controlled, and that means that by clicking on the proper button, you can move to the next or to the previous slide on your own. Now at this time, I would like to read the safe harbor statement. This conference call and slide presentation of the webcast contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, which may affect TEN's business prospects and results of operations. And at this moment, I would like to pass the floor to Mr. Arapoglou, the Chairman of Tsakos Energy Navigation. Mr. Arapoglou, please go ahead, sir. Efstratios-Georgios Arapoglou: Thank you, Nicolas. Good morning, good afternoon to everyone. Thanks for joining our call today. I have really nothing to add on the brilliant financial performance and the usual quality operating performance for TEN. Just 4 points from me worth noting. All of our 19 new buildings under construction, including the 2 recent VLCCs and the LNG are already in the money. The second point is that we sold the 10-year-old VLCC generating $82 million of free cash to be added to the $300 million already existing cash cushion that we traditionally keep. The third point is that the locked-in contracted future revenue has now gone over the $4 billion mark, excluding profit shares. And lastly, which is very important, 22 of our vessels are taking full advantage of the high rates in the spot markets through profit share as we speak. So all the above, I believe, guarantee a continued strong performance going forward. And with this, I give the floor to Nikolas Tsakos. Nikolas Tsakos: Thank you, Chairman. Good morning, good afternoon to everybody here from Athens -- from peaceful Athens, Greece. We just reported a very strong year, a year that has been a milestone period for TEN, a year in which we concluded significant strategic transactions for the future growth of the company and in very specific segments as the shuttle tanker and the dual fleet segment. The last quarter of 2025 has been a very strong quarter, and that was before the geopolitical events that started early in January, with the changes and the opening up of Venezuela, one of the largest traditional exporters of sweet crude to the west that has been lagging behind due to political reasons. The opening of Venezuela to the mainstream fleet like ours, we were the first vessel under a several charter to transport the first, let's call it, legal export to the United States after the change of the political environment there. And soon after that, of course, we have the issues in the Red Sea and the Gulf of Aden that have made it even further -- have even further strengthened spot rates to levels that at least our generation has never seen before. And I think these are the highest levels ever recorded in recent times. In this environment, TEN has been able to conclude very successfully 2025 and is taking advantage of the very strong rates that we are facing since the beginning of the year. In the meantime, we were able to disinvest some of our older tankers, putting aside in excess of $100 million to our cash reserves and reducing significantly our debt. And we were, I would say, lucky enough with a very good timely orders of our VLCCs at what today look -- our 3 VLCCs at what look today to be at very, very significant discount to today's market and also recently to our LNG orders. We maintain our moat of modernizing our fleet according to our clients' requests. We are looking to -- we have already a significant dividend policy. Our last dividend was in the later part of February and we're looking forward as we're following day-to-day, and I think we have -- we are following the developments, the geopolitical developments in the Middle East in order to, first of all, to secure the safety of our seafarers, the crew and the cargoes on board and take advantage of this very strong market environment. So all in all, I would say, as far as the market is concerned, good news. Good news, perhaps not for the right reasons because none of us -- I think nobody in the world is happy to have good news under war circumstances, but we have to run a tight and safe ship and this is what we have been doing. And with that, I will ask George, if you -- Mr. Saroglou, our President, to give us a more detailed analysis of what happened in 2025 and we'll be happy to answer your questions later. George Saroglou: Thank you, Nikolas. We are pleased to report today on another profitable quarter and year. Before reflecting on the company's performance of last year, a few words for the current events unfolding in the Middle East and the Arabian Gulf. Shipping faces another geopolitical event in the Arabian Gulf and the Strait of Hormuz. The Strait of Hormuz sits on one of the world's busiest shipping routes, acting as a gateway to the oil and gas fields, refineries and terminals of the Arabian Gulf. 1/5 of the world's oil and liquefied natural gas passes through this narrow strait. It's a vital shipping lane for dry bulk commodities as well. Spot rates across all tanker vessel classes have spiked at levels far above the already strong rates in existence prior to the start of operation, Epic Fury. Substitute barrels from the U.S.A., Venezuela, Brazil, Guyana and West Africa are expected to benefit tanker rates and ton-mile demand. When the conflict started last Saturday, we had 3 vessels under time charter approaching the Arabian Gulf. We monitor 24/7 and follow the advice and updates of maritime security centers, flag, state, P&I and insurance underwriters. In coordination with our charterers, we assess the risk associated with any potential assets through this high-risk area. None of our vessels have entered for now this area, and they are kept outside the Strait of Hormuz. Charterers consider diverting some or all of them to other loading areas outside of the Arabian Gulf. Our foremost concern remains the safety and well-being of our seafarers on board these vessels and all those vessels that are in proximity and the structural integrity of our assets. Even without the latest geopolitical events, tanker markets have remained healthy during the course of last year. Energy majors continue to approach our company for time charter business. Since the start of the fourth quarter of 2025, we concluded 20 new time charter fixtures and extensions of existing time charters. Today, we have a backlog of approximately over $4 billion as minimum fleet contracted revenue. We have 33 years history as a public company. We have started with 4 vessels in 1993, and we have turned every crisis the world and shipping have faced through the years into a growth opportunity. If we move to Slide #4, we see that today, we have managed to have TEN as one of the largest energy transported in the world with a very young, diversified, versatile pro forma fleet of 83 vessels. In Slide 4, we list the pro forma fleet of all conventional tankers, both crude and product carriers. The red color shows the vessels that trade in the spot market, and we have 9 as we speak, 2 more from our last call and our new buildings under construction. With light blue, we have the vessels that are on time charter with profit sharing, 13 vessels, and with dark blue, the vessels that are on fixed rate time charters, 42 vessels. In the next slide, we leased the pro forma diversified fleet, which consists of our 3 LNG vessels, including the new order we announced today and our 16 vessel shuttle tanker fleet. We are one of the largest shuttle tanker operators in the world with a very young and technologically advanced fleet after the tender we won last year in Brazil to build 9 shuttle tankers in South Korea. We have 6 shuttle tankers in full operations after taking delivery of both Athens 04 and Paris 24 last year, which commenced long time charters to an energy major. If we combine the 2 slides and account only for the current operating fleet of 64 vessels, 22 vessels or 34% of the operating fleet has market exposure spot and time charter with profit sharing, while 55 vessels or 86% of the fleet is in secured revenue contracts, time charters and time charters with profit sharing. The next slide lists our clients with whom we do repeat business through the years, thanks to our industrial model. ExxonMobil is the largest revenue client. Equinor, Shell, Chevron, TotalEnergies and BP follow. We believe that over the years, we have become the carrier of choice to energy majors, thanks to the fleet that we have built, the operational and safety record, the disciplined financial approach, the strong balance sheet and good financial performance. The left side of Slide 7 presents the all-in breakeven costs for the various vessel types we operate in the company. Our operating model is simple. We try to have our time charter vessels generate revenue to cover the company's cash expenses that is paying for vessel operating and finance expenses for overheads, chartering costs and commissions and we let the revenue from the spot and profit-sharing trading vessels to make contributions to the profitability of the company. Thanks to the profit-sharing elements, for every $1,000 per day increase in spot rates, we have a positive $0.11 impact on the annual earnings per share based on the number of TEN vessels that currently have exposure to spot rates, 22 vessels. We have a solid balance sheet with strong cash reserves. The fair market value of the operating fleet exceeds today $4 billion against $1.9 billion debt and net debt to cap of around 47%. Fleet renewal and investing in eco-friendly greener vessel has been key to our operating model. Since January 1, 2023, we have further upgraded the quality of the fleet by divesting from our first-generation conventional tankers, replacing them with more energy-efficient new buildings and modern secondhand tankers, including dual fuel vessels. In summary, we sold 18 vessels with an average age of 17 years and capacity of 1.7 million deadweight ton and replaced them with 34 contracted and modern acquired vessels with an average age of 0.5 years and 4.7 million deadweight capacity. We continue to transition our fleet to greener and dual fuel vessels. We are currently one of the largest owners of dual-fuel, LNG-powered Aframax tankers with 6 vessels in the water. Global oil demand continues to grow year after year. OPEC+ accelerated their voluntary production cuts, wars, economic sanctions, sanctions lifted tankers and geopolitical events positively affect the tanker market and freight rates while the tanker order book remains at healthy levels as a big part of the global tanker fleet is over 20 years and will need to be replaced gradually. And with that, I will pass the floor to Harrys Kosmatos, who will walk us through the financial performance for the fourth quarter and last year. Efstratios-Georgios Arapoglou: Thank you, George. Harrys? Harrys Kosmatos: Thank you, George. So let's start with a review of the year 2025. So with 2025 starting on the whim with an avalanche of global tariffs and tit-for-tat actions by China on U.S. proposed port fees, measures that were subsequently revised or suspended, all in the backdrop of ever-growing geopolitical turmoil, the tanker markets remained elevated and oil majors increased their long-term cargo requirements. To this effect, TEN through to its tried and tested operating model of seeking long-term cover provided the vessels required for its blue-chip clientele to meet its needs. This operational tweak, however, did not hinder the fleet from taking advantage of the equally strong but more erratic spot market as it had a good complement of vessels benefiting from trading spot. In particular, with the fleet in the water averaging 62 vessels identical to 2024, days under secure revenue employment, that is vessels on time charters and time charters with profit sharing provisions increased by 12.6%, while days on spot declined by 33%. Of interest, during 2025, days on profit sharing contracts alone increased by 12.4% from 2024, highlighting TEN's commitment to adding another layer of employment to benefit from the very lucrative spot market. Today, 1/3 of our fleet, that is 22 vessels, 9 on pure spot and 13 on profit sharing contracts are directly impacted by the historical strong spot market. As a result of this employment shift, during 2025, TEN generated close to $800 million in gross revenues and $252 million in operating income, which incorporated $12.5 million of capital gains from the sale of 4 older vessels. Capital gains during the equivalent 2024 12 months were up $49 million from the sale of 5 vessels. In line with the above employment pattern and fewer vessels on dry dock compared to 2024, 10 in '25 from 15 last year in '24, fleet utilization increased to 96.6% from 92.5% in 2024. The time charter equivalent rate the fleet attained during 2025 was a healthy $32,130, similar to 2024 levels. Reflecting the reduction of the fleet's spot exposure mentioned above, voyage expenses declined from $153 million in 2024 to $122 million in 2025, a saving of $30 million. A saving of $4.4 million was also incurred by a reduction in charter hire expenses whilst vessel operating expenses increased by just under $13 million from the year prior to settle at $211 million. The introduction of larger and more specialized vessels in the fleet like Suezmax and shuttle tankers in place of Handysize and Aframax vessels that were sold contributed to that increase. As a result, operating expenses ship seat per day for 2025 average a competitive $9,990, about 1/3 of the time charter equivalent rate mentioned above. Depreciation and amortization came in at $170 million for 2025 from $160 million reflecting the introduction of 4 newbuilding vessels. General and administrative expenses in 2025 were at $42 million from $45 million in 2024, to a large extent, the result of the amortization of stock compensation awarded in July 2024 and scheduled to fully vest by July 2026. A decline was also experienced in our cost of interest as a result of lower interest rates, which despite $174 million increase in the company's debt obligations from 2024 due to new loans for TEN's newbuilding program came in at $98 million compared to $112 million in 2024, another saving of $14 million. Interest income came in at $10.5 million which was another meaningful contribution. At the end of 2025 with just 62 vessels on average in the water and 20 vessels -- and a 20-vessel newbuilding program, TEN's total debt obligations were at $1.9 billion with net debt to cap -- while net debt-to-cap stood at a comfortable 46.7%. TEN's loan-to-value at the end of 2025 was a conservative 48%. As a result of all the above, the company during 2025 generated a healthy net income of $161 million or $4.45 in earnings per share. Adjusted EBITDA for the year came in at $416 million, while cash at hand as at the end of December 2025 stood at $298 million. After having paid $148 million in scheduled principal payments, $190 million in yard predelivery installments and capitalized costs and $27 million in preferred share coupons. And now let's go over the quarter 4 summary results. The fourth quarter of 2025 experienced similar fleet employment patterns, which had fleet utilization reaching 97.7% from 93.3% during the 2024 fourth quarter. During the 2025 fourth quarter, 2 vessels underwent scheduled dry dockings compared to 4 in the 2024 fourth quarter, which naturally contributed to this improvement. With an identical number of vessels in the water with the 2024 fourth quarter, albeit of greater deadweight, the fleet generated $222 million of gross revenues and $81 million in operating income which similarly to the 2024 fourth quarter did not have any gains or losses from vessel sales. The result in time charter equivalent per ship per day, reflecting the ever-increasing strength in rates was at $36,300, 21% higher than the 2024 fourth quarter level. Voyage expenses during this year's fourth quarter were lower compared to last year's fourth quarter, experiencing a $7.6 million drop to settle at $26.8 million. Operating expenses, on the other hand, increased to $56 million from $51 million in the fourth quarter of '24 due to some extent by operating larger vessels. The result in operating expenses per ship per day for the fourth quarter of 2025 came in at $10,558. Again, 1/3 of the fleet average TCE and still competitive, thanks to the efficient and proactive management performed by TEN's technical managers. Depreciation and amortization were a little higher from the 2024 fourth quarter at $44.4 million. General and administrative expenses were at $6.2 million lower from last year's third quarter at $9.2 million. Interest came in at -- interest costs came in at $25 million, similar to the 2024 fourth quarter, while interest income contributed about $3 million to the bottom line. As a result of all the above, TEN during the fourth quarter of 2025 reported $58 million of net income or $1.70 in earnings per share, a 200% increase from the 2024 fourth quarter. The adjusted EBITDA during the fourth quarter of 2025 settled at $128 million, $42 million here from the 2024 fourth quarter number. And with that, I'll pass it back to Nikolas. Thank you. Nikolas Tsakos: Thank you, Harrys, for having so many positive numbers. I will allow you to make long presentations as long as the numbers are positive because -- well, as we said, the fourth quarter was only the beginning of the end, I would say, of a very fruitful year for 2025, a year that we have been able to establish a renewal -- a significant renewal of the fleet. We have been able to take and absorb the new acquisitions of the Viken fleet, which we did earlier fully in the company. And we were able to have an increase of our utilization to close to 98%, which I think this is really something that we want to congratulate also the operation department of Tsakos Shipping and Trading for keeping the ships -- the propellers earning almost 100% of the day. And this figure includes dry dockings and special surveys. So it's really, I think, the highest utilization in the company's history. And the beginning of '26, we had, I would say, surprises mainly on the geopolitical front. We have the change and the lifting of sanctions from Venezuela, which has allowed companies like ourselves to be able to participate even more in that -- in those trades. And of course, recently, the events in the Persian Gulf which have created spot rates or have led to spot rates and prices of oil that we have not seen for a generation. The company is very well prepared to navigate such a tremulous environment. And as Mr. Saroglou showed us in our earlier slide, I think the company comes stronger out of every crisis. I think most of you listening are too young to remember most of the crisis that we have been -- that we have gone through in the last -- 7 crisis in the last 30-odd years, but the company has been able to build and build further. And I think this graph is very evident that the Harrys, next time don't forget you have 12.5% growth that we usually have to show that the company has been growing year after year regardless of difficult markets. Another important factor we have increased the dividend. We paid the last part of our dividend in February and we're looking to reward shareholders accordingly as we move forward. A lot of question marks. We're actually focusing on the safety of our seafarers, as Mr. Saroglou said and also protecting our assets and the cargoes in our assets. We are going through situations that we have not seen in a generation. But we are well prepared to be able to take advantage of that. And with that, I would like to open the floor and also to thank the Chairman for his good words earlier to any questions. Thank you. Operator: [Operator Instructions] Our first question comes from the line of Climent Molins with Value Investor's Edge. Climent Molins: I wanted to start by asking about the 2 LNG carrier orders you announced today. Could you talk a bit about whether you're already in discussions for long-term charter employment. And if so, what duration are you targeting? Nikolas Tsakos: Yes. I mean, there is -- as I said, the LNG segment is a segment that we have been participating from a very early stage back in 2007. However, I think for good reasons, we have never overextended ourselves in investing in that segment. We always want to participate in new ships and new technologies, and that's what we have done. And with these ships, it's too early to charter long term, but there is a lot of appetite going forward. So I think this is more as a long-term investment for this growing segment of the business rather than something that we have done with a charter in mind. Climent Molins: All right. Makes sense. I also wanted to ask about the [indiscernible]. Could you talk about how the index-linked portion is calculated? Is it benefiting from the surge in spot rates we've seen in recent days? Nikolas Tsakos: The [indiscernible] on a profit sharing arrangement based on trading routes of the Far East, end of Transatlantic. So of course, it's participating in this situation and the current employment ends in about 8 months. And of course, there is a significant appetite for such a [ prong ] ship going forward. Climent Molins: That's helpful. As I understand it, you very recently fixed 2 MR2 new builds that were delivered earlier this year. Are they employed at fixed rates or at variable hire? And if it's the former, at what rate are they employed? Nikolas Tsakos: We cannot tell you all the secrets. You have to call Mr. Kosmatos. When you see him in New York, you can ask Mr. Kosmatos. He's only allowed to write this in a piece of paper and secretly hand it to you under the table. But they are -- I would say, they are fixed rates, and they're very, very accretive in the mid- to high 20s. That's all I can say. And I think these are the highest that those ships have been fixed -- these type of ships have been fixed in the recent months or at least this is what our chartering department tells us. Climent Molins: Makes sense. Harrys, we definitely need to catch up soon. Harrys Kosmatos: Looking forward to it, gentleman. Climent Molins: Yes. I also have a question on the shuttle tanker newbuilds. We've seen some of your peers getting very good financing terms and support from the Korean export agency. Is this something we should kind of expect on your shuttle tanker orders as well? Nikolas Tsakos: Of course. Of course, I mean, we are one of the biggest supporters of South Korean yards and all the -- we try to keep all -- we are currently to the Herculean task of our newbuilding department. We had site offices in all the major South Korean yards. So we have a very big site office in Samsung as big in Hanwha, the ex Daewoo, and of course, a big one in Hyundai, which we never stopped having versus perhaps if you recall, we just took delivery of our last vessel there in October. So we keep on maintaining very hands-on site offices in this -- in all of them. And of course, we get the appreciation from the Korean banking system. And I think our team has concluded one of the largest syndications for the finance of those vessels at very, very competitive terms. Climent Molins: That's good to hear. And final question from me. Big picture, 2026 has started very strongly for you and both earnings and free cash flow are set to rise very significantly. Could you talk a bit about how you think about your capital allocation priorities? How do you plan to balance deleveraging fleet renewal and increase shareholder returns going forward? Nikolas Tsakos: Well, I think, as we said, our -- we make sure that we are securing the well-being of the company long term. And as we speak, I think as we see today, [indiscernible] accounted, I think that by the end of the first and second quarter, we might be in excess of $0.5 billion in liquidity, which means that our priority is the reward of our shareholders, which we are the largest ones as the management. And then, of course, we would be allocating our newbuilding program is almost fully financed, as I said, with the recent syndication. So rewarding our shareholders, reducing debt significantly. And we might be looking at next year, April next year to actually repurchasing some of our very, very usual preferreds. Operator: Our next question comes from the line of Poe Fratt with Alliance Global Partners. Charles Fratt: Yes. I was trying to isolate the impact of the profit sharing agreements that you had in the spot market exposure on the increase in voyage revenue in the fourth quarter versus the third quarter. Can you quantify the impact of the increase in the TCE rate. What was the exposure to the spot market versus the contribution from profit sharing? Harrys Kosmatos: Well, we did see a lot of profit sharing coming in later -- well, throughout '25, and we are beginning to see recently. And actually, a number of our vessels have been rechartered on higher elevated floor rates to what they were previously. Just to give you an idea, over and above the fixed rate that I mentioned earlier in the fourth quarter of '25, we got an additional $27 million from the profit sharing income that came in. So obviously, we did have some benefit. It seems that the numbers will -- I mean they look that we are moving in the right direction and perhaps to recall the similar amounts of additional income going forward. So again, $27 million over and above the flow rate on those profit sharing vessels in the fourth quarter. Nikolas Tsakos: Yes. That's a significant amount. I mean, this is almost like 50% of the profitability of the fourth quarter. So it's not -- it's -- the profit arrangements have huge contribution being $27 million on $58 million of profit. Charles Fratt: Yes, that's exactly what I was looking for. And so there were some -- there was a positive increase on some of rechartering or recontracting the time charters that you had. And when you look at the first quarter and looking maybe at the first half of the year, my sense is that rates started to move in the fourth quarter, but the really significant move is more in the February time frame. And obviously, it's a little early just because of what's going on in the Middle East. But is there an additional step-up that we should see in the first quarter in profit sharing? Nikolas Tsakos: Yes. I mean, the way things are today, I think the profit sharing has gone off the chart because of -- and as Harrys said, I mean, for example, we had the categories of ships that we would profit share for anything above $20,000 a day. And the next fixture was anything about $35,000 a day. So you understand that we made sure that we pushed the fixed part of the profit sharing as high as possible for as long as possible and then the profit sharing goes. So yes, I think the first quarter, it's going to be another step up from where we left the fourth quarter. Harrys Kosmatos: And I think of interest, Poe, is that from the 13 vessels that we currently have on profit sharing, 7 are Suezmaxes and 2 are VLs. Nikolas Tsakos: Yes. So they're actually the big boys of profit sharing. Charles Fratt: Yes. I was going to say and that's where you're seeing the meaningful increases. Maybe it will still [ flip ] down to the smaller sizes, but at this point in time, your exposure to the larger segments is -- or larger sectors is really good. When you look at the decision to sell the [ B ], what -- how did you -- was this an inquiry from somebody as far as trying to -- there's been a big acquirer out there, was there an inquiry that came in that led you to hit the bid? Or was this part of your strategic fleet renewal? And then if you could talk about what other potential assets are on the block that we could see sold in 2026, that would be helpful. Nikolas Tsakos: Yes. I mean there's always -- it takes 2 to tango. So it was not that we were out. I mean, our philosophy has always been that we're looking to sell any vessel which is between 10 and 15 years old. As you very well know, there have been people who have been buying these assets at prices that make a huge sense. I think we were, I would call it, lucky enough in November to order 3 VLs of Hanwha at prices of today. And just to put it in perspective, the newbuilding, so we show -- we ordered those ships. I think it has been reported at $128 million. And we sold the 10-year-old ship, which if you equate, it's a newbuilding price, it's in excess of $170 million. So it doesn't -- it's always good to take advantage of these possibilities. And the good thing is that we are going to be using the ship up to almost the middle of the year since we're taking advantage right now in a huge way of the big market -- of the spot market. And we're going to be selling here and delivering here back to the new owners sometime in June, end of May, June. So in a sense, we were able to have our [indiscernible] for the first 6 months. Charles Fratt: Yes, that was a pretty timely rollover as far as just the [ issues ] went open in the, I guess, December time frame. Just go back to, if you wouldn't mind, the chartering strategy, profit sharings kicked in, you see a step-up in the first quarter, probably the second quarter too. Where do you get more aggressive in trying to lock in the higher rates? Nikolas Tsakos: We are always -- I mean, we have set an evident step-up in all categories of the vessels. And as long as we are able to have the profit sharing arrangement, which is something that very few others do, we should keep it that way. You've seen on Slide #7 on Page 7, you see our breakevens, which I think are very, very competitive. I mean, we have an all-in breakeven for VLs up to $28,000. Today, they're averaging above $100,000, including the profit sharing. So there's a little profit to make there. Suezmax is breakeven of everything at $25,000. I think we're closer to $80,000. Aframax is $21,000 -- well, Aframax and LR2s, if you put them together, about $22,500. Again, we're in the $70,000s and $80,000s there. our Panamaxes, which are our oldest segment in the $18,000 and I think that's where we got the $30,000-plus profit share arrangements. So those are in the money. Our Handysizes are down to $10,000, which means there are actually operating expenses and some interest since they're very, very well amortized. The LNGs -- and our shuttle tankers are also very much into the money at $34,000 time charter. So when we can make sure that we get covering our minimum significantly, then we do the profit share. I think Page #7 portrays, Mr. George, what Mr. -- our President has put up on the board. Charles Fratt: Yes, that's helpful. And if I may, one more question. Obviously, the turmoil in the Middle East just had an impact on rates. But the other side of the question is, right now, and I know you don't have any tankers in Hormuz way. But what are you expecting on the insurance expense side? And then also how much exposure do you have to higher fuel costs as we look at the rest of 2026? Nikolas Tsakos: This is actually a very good point. I think we have had in the last week a 500% increase on insurance on war risk insurance. I think from what we used to do it at $0.15 per deadweight ton, we're up to close to $1 now or $0.75 to a $1. So that's a huge increase. It's 500%. Of course, all this is paid directly by the charter. So it does not really influence -- it's not -- it's a pass-through cost for us. But it shows how the market rates this risk. As far as our fuel costs, I mean, we have -- first of all, we have close to 25% of our existing requirements covered, George, for the next couple of years at very competitive rates. But also being mainly on a time charter basis, all the fuel cost surges or not affects our clients. So we do not have that. I mean we have a huge fleet, but being on time charter, the risk of the surge or drop of the bunker costs are taken up by the charters in a very big way. Charles Fratt: Great. And I'm sorry, if I may squeeze one last one in. What's your dry docking schedule for the rest of the year? Harrys Kosmatos: Okay. We are starting quite live for the first quarter. We only have 2 vessels, 2 Suezmaxes for Q1. We have 5 vessels in the second quarter, 7 vessels in the third quarter and 3 vessels in the fourth quarter. Nikolas Tsakos: Hopefully, we will be able to see you in New York next week. Operator: And we have reached the end of the question-and-answer session. Now I'd like to turn the floor back to CEO, Mr. Nikolas Tsakos for closing remarks. Nikolas Tsakos: Well, thank you for participating and listening in to our 2025 end of the year results. It has been a productive year. Your support has been appreciated. We have seen significant, I think, close to 60% increase of share price in the last year, which shows the trust that the public markets are putting on TEN. And hopefully, this is only the beginning. We have seen, again, a very steady trading and a very positive trading of our preferreds. The company would maintain its distribution policy of keeping shareholders -- of rewarding shareholders. We are going through a period of uncertainty in the world. And what we try to do with them is to take as much of this uncertainty possibly out through our chartering policy, which is always to the most blue-chip end users out there. And with that, we want again to thank you. Wish you a good weekend. And hopefully, we'll see you in New York next week. Thank you. Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.
Arthur Johnson: Good morning, everybody. I appreciate you taking the time to be here today as we talk about our results for 2025. And I want to thank everybody also online that will be tuning in to listen and watch this. The timing today is very, very interesting. And I thought before I got into the presentation, I'd just make a few comments and updates on what's going on. Our -- we have people in Saudi Arabia. We have people in Dubai, where they're all safe right now. We've been checking on them on a regular basis. I think that trying to predict what's going to happen with that situation in the next couple of weeks is kind of a crazy guess right now. Nobody knows. We don't know. But it is one that definitely has the world focused on energy. And I think if there's one takeaway as we start this out for Hunting's -- what we did in '25 and what the future holds for us, I think it highlights again the importance of energy security and the fact that when you look at our clients' reserve life as far as people like Shell saying 6 years in a row, the reserve life has declined. I think it only points to a long-term bright outlook for the oilfield service industry and for Hunting in particular. So as we start this presentation, I always want to reach out and thank the team at Hunting. There's a tremendous amount of talent within our organization and a great team that delivers these results. And I'm just very privileged to work with this group of people every day. So I want to thank them first and foremost, for all of their support and what they do. Operational highlights. 2025 was a great year for us. I don't think you're going to see a whole lot of changes from what we kind of preannounced back in January. We had a lot of highlights for the year, a lot of hard work done and a lot of good execution took place. The 2 acquisitions we were able to add into the group with Flexible Engineering Solutions and also the Organic Oil Recovery position us well to continue to diversify our client base and to be more global in all that we need to do from a revenue point of view. We executed a good bit of the KOC orders. Those are done. Fortunately, I don't have any boats full of pipe waiting to get through the Strait of Hormuz right now. So that's part of the good story that that's done. We opened up a new facility in Dubai. It was kind of the cornerstone for the move out of Europe, where we had to close 2 facilities in the Netherlands. Further restructuring, obviously going on in our European business, but we're excited about the opportunities to be closer to the customer and have a better cost basis in Dubai. We were able to finally dispose of our interest in Rival Downhole. So we're now totally out of the downhole drilling tools side of the business. wish our ex-employees and joint venture partners great success in that, but it was a good way to generate cash to be put to other acquisitions that made more sense for us for the long term. We continue to focus, as I mentioned, on our efficiencies. We've announced today an additional $15 million cost savings plan. There's a lot of moving pieces to that, everything from more efficiency on the shop floor to organizational changes, shared service issues that we're going to address, and that will play out over the next 12 to 18 months or so. Capital allocation has been a different story for us in the last year or so with the share buybacks. We've announced a couple of them, obviously. We are about done with the $60 million first 2 tranches, and we've announced today our intention is to do another $40 million to be completed by March of '28. I don't want anybody reading into this, and I've talked to some people earlier. We still intend to be very acquisitive and focusing on M&A. So I don't want anybody to take a signal that, oh, we can't find anything to do with our money. We just feel that with our outlook for profitability and the cash generation that we have the potential to do, we want to make sure we're giving returns back to our shareholders. Financial highlights. The key one was the EBITDA number of $135.7 million. The rest of the things, oil price-wise and that that you all know, share buyback that I already talked about. Sales order book down from last year, but it's really a more normalized level. And I always like to highlight that really doesn't include much at all for Titan because of the short-cycle nature of the Titan business. We anticipate that sales order book number accelerating substantially through and into Q2. The scorecard for our 2030 strategy, a lot of boxes ticked. I think of all of them, when we talked about the cash flow generation. The 2, I think, maybe most important to me or to highlight was the fact that we continue to move our EBITDA margins higher. We're still striving to get to that 15% number. Hopefully, maybe that will happen this year. But I mean, our plans are that we've got the products and we've got the geographic reach to continue to grow and go after high-margin business. Cash generation was a real big deal for us in the past year. I'd like to highlight that we generated the $63 million in cash, but that's after also doing all the acquisitions, increasing the dividend and doing the share buyback. So the company, to me, financially, we're in a very, very healthy place and a good place to be to in order to fund our growth going forward. This chart here just shows you some of the stats on where we're at with our EBITDA growth for the year. OCTG, to me, it's probably industry-leading EBITDA margins for what we do in that area of the business, very strong performance, some of the strongest margins in the company's history in OCTG, thanks to the effort of our teams in North America and in Southeast Asia. Subsea business going in the right direction. It was a business where we had some good results in the year. Some of those segments of business like our coupling business at our Stafford location are really just accelerating now as it's a follow-up to the subsea tree awards and then how we receive the orders for those components going forward. Advanced Manufacturing, it was really a 2-part story for the year. Some good results in Dearborn, great traction on the non-oil and gas side. The electronics business has lagged, and I'll talk a little bit about that in more detail later. And then one of the happiest parts of the story for Hunting in 2025 has really been the improvement on the Titan business. So the number isn't at our 15% range. But when I look at our results there compared to our peers, especially over the last half year plus, we've definitely done better from an earnings and margin point of view, and I think that, that will continue. The acquisition update, Flexible Engineered Solutions, our integration plans have all come together well. There's been no hiccups, no hurdles. We didn't find anything unfortunate. So everything we thought we had is there. Opportunities are very large part of the big second quarter upside we're anticipating has to do with Brazil and Guyana. The picture you see there is one of the Guyana FPSOs with the DBSCs attached to them. It's one of those developments with Exxon where titanium stress joints were not going to be used. But as I talked about when we made this acquisition, we wanted to be able to play on every FPSO opportunity out there as we see that a growing market. And this is a case where the DBSCs are being purchased and used to help that installation on that FPSO. Organic oil recovery. We're getting a lot of good traction on that right now. Everybody or a lot of people have seen the announcement from our client Buccaneer, for their East Texas operation that they had. Considering the hundreds of thousands of conventional wells in North America, that to us was a really great sales point with what they talked about, the water cut being reduced and the production doubling. We anticipate that as a good start for our North American business. And if you all remember, before we made the acquisition, we did not have the rights in the Western Hemisphere. So we're excited about that. We've got trials going on right now in Brazil. And one big one we've got in Angola with a major oil company down there. So I think there's really good upside with OOR. The OCTG business talks there about some of our progress there. TEC-LOCK, Travis Kelley, who leads that business for us in Houston and his team have done a great job. We continue to gain market share on that. And it kind of aligns with our story we have with Titan right now in North America. As clients have more challenging wells, and I think the last number that I heard was 40% of all shale wells in the U.S. right now are 3 miles long or longer. And in the case of some of our clients even doing these U-shaped wells, failure is just not an option when you're 2 miles from the wellhead or further. So the TEC-LOCK product line is trusted for its performance and its integrity downhole, and that has driven a lot of that growth there. Plus again, it's also the fact that we highlight our virtual mill concept. So whether it's in North America, whether it's in the Middle East, whether it's in West Africa, -- we're not tied to one steel supply, which gives our clients a lot of flexibility. The accessory business was very strong last year, driven by a lot of work in South America and a bit of a resurgence on recompletions and workovers in the Gulf of America. We see the upside there being very, very bright. We've also picked up more of the subsea work for -- not for our own product line, but doing work for people like FMC and OneSubsea, which has helped that business out as well. Our joint venture in India is performing as planned, delivering good contribution of earnings. The outlook continues to be bright. The shop is busy. India, if anything, and talk about energy security, they're the ones that need to build up their own domestic source of hydrocarbons, hydrocarbon production, and we're well placed in that operation there to see that grow. And then there's just a note about KOC there. Right now, just everybody has asked me 100 times, KOC tenders have been delayed. And so right now, our anticipation is that those will go out in the next week or so, but that could change tomorrow. But if that happens, the award dates would probably not be until April. Fortunately, for our plan this year, we don't have much in the guidance planned for KOC because even if we had the orders today, you have to make the steel, it's 6 months to do that, you have to thread it, the shipping and the like so. That was not planned on being a big part of this year's business. Non-oil and gas, there you see it broken down by different product segments. Again, Dearborn has really been the star on the non-oil and gas side with space, nuclear, power gen. We're seeing -- there's some new jet engine business that we're doing first articles on and working on now. We're not going to tell you the client yet, but I see a big upside to that. And as I've mentioned earlier, it's been kind of a reinvention of the capacities at that facility in Maine, where it was very focused on oil and gas product lines. Now the focus is on non-oil and gas, primarily, again, aerospace and defense, and we want to make sure we have the kit and the tools in place to capture that business. Electronics is a bit of a different story, mainly because while we've worked hard to diversify the product -- client base there, we're still very, very reliant on oil and gas. We have had an uptick in the medical side. We have captured a couple of new clients on the defense side, but it still is more focused towards oil and gas. And with rig counts down, especially in North America, the CapEx purchases that our client -- our big OEM customers would make has just been lagging. We announced also today $5 million cost savings plan. That has many, many moving pieces to it. It's some sensitive when it talks about people and things like that. So I'm not going to have a lot of detail about that to pass on to you today. But I think the key message is it's an ongoing process. I highlight up there that in the past year, for example, we generated some meaningful cost savings from our lean manufacturing focus. We've been doing that for 17 years now. I started that program a long time ago, and my favorite line is that I remember as a salesman sitting in a drilling engineer's office, and I never had any one of them ever tell me they drilled a well fast enough and they were done. So that's kind of the same with our manufacturing operations. It can always be better, and we get bright minds in there. We start looking at things like AI and the likes. So we're going to continue to focus on making sure we do things quicker, faster and better. Balance sheet efficiency, good numbers there. Bruce and the team have done a super job there. Inventory turns are much better than they have been over the last couple of years, free cash flow, nice generation. And well, especially today, share price is up. So way to go, team. I mean, I'd like to see that reaction today. Dividends, as we said, continuing to grow as well. And let's see. Precision Engineering. Talking about product lines right now, again, a little bit more detail. OCTG, I talked a bit about. We see, again, strong market opportunities throughout North America due to the complexity of what's going on there. We have not seen much of a rig count response yet on natural gas. We think that could be a very nice driver in the second half of the year. But right now, the business is performing very well, and there's the statistics for that. Subsea, I guess I talked about that a bit earlier. The key is really the awards that we anticipate receiving in Q2. So that's an area where the tender activity right now is very, very high. Our total order -- total inquiry base right now is over $1 billion. A big part of that is on the subsea side, both with the FES, the EnPro product line as well as the titanium stress joint business. We're seeing more decommissioning opportunities in the North Sea that's going to benefit the EnPro product line. But all in all, I think things are all going in the right direction. It's a substantial business we have now with our ability to bundle a lot of these products to people. I think it's going to make our ability to enhance sales even greater. We have a new office opening up in Kuala Lumpur this year to have more exposure in the Asian market. So all speed -- full speed ahead for our Subsea business. And then the Titan business, which, again, Adam Dice and the team have done an amazing job. I was just out in Tampa about 1.5 weeks ago with the team out there. We've made great improvements on efficiencies. I saw some new laser equipment out there that we're using for gun manufacturing performing extremely well. But the key is it's coming down to a point where I would say that 2 years ago, it was a lot of 3 bids in a buy by clients in the North American marketplace. We're seeing -- I'll say the pricing pressures are still there, but to a lesser extent because clients are realizing they just can't have failures downhole with these shale wells becoming longer and longer and the fact that you need dependability and you need dependability in supply. And that's where our distribution centers are a nice part of what our sales offering is to our client base. But I'm very happy with the turnaround and improvement in earnings that we've seen at Titan. International activity remains strong, and we think the international business will continue to grow. And I'm a big believer that the most common sedimentary rocks in the world are shale and they're all over the place. And again, with energy security being an important factor, we're already seeing talks about places like Algeria, in Libya, in Turkey, in Australia as potential growing markets for unconventionals, and we want to and will be a big part of that whenever it happens. Again, advanced manufacturing, I've already talked a good bit about that. Order book is there. I'm not going to go through all the numbers right now. Interestingly, the nuclear business, which if you went 20 years ago back, that was a big part of the Dearborn business is now starting to come back. And again, we're a company that is known with our reputation as being a high provider of products, small business now that has great upside, and we continue to work the power gen and the aerospace and defense business as well. On electronics, it's again trying to get that diversification. But sooner or later, with these wells, with the drilling intensity going on, there needs to be a CapEx cycle that will increase purchase of drilling tools, such as -- excuse me, such as MWD equipment and the like. And when that happens, it will benefit our electronics business as well. And then just some other manufacturing talks about some of the few areas. The key is we're moving OOR into the subsea business with the numbers starting in January. We had a good year with our trenchless business. And we also -- we talk about what we've done in Dubai, which part of that manufacturing is based on our well testing equipment that we manufacture, which now we're closer to the client and closer to where the applications are going to be. And with that, I'm turning it over to Bruce. Bruce Ferguson: Thanks, Jim. Good morning, everyone. Delighted to present a strong set of results this morning. Jim has covered a number of these key points, but just to wrap up on the numbers, they're fairly similar to what we presented back in January, okay, -- good set of solid numbers despite that challenging market conditions as well. We've got EBITDA up 7% to 13%. So that's the focus on the higher-margin product lines like a subsea, like OCTG. The restructure of EMEA is coming through as well. We'll get the full benefit coming through '27 of those savings. Titan recovery is helping those margins going from 0% up to 7% for Titan. So that's feeding through to that recovery as well. We want to get that to 15%, and that's a key target. Oil and gas, we still want to do a measured diversification. in terms of moving into businesses that are non-oil and gas, but we can still hit the right margins. So that's up 10%. You can see that growth. EPS up 9%. We're not seeing the full benefit of the share buyback yet coming through EPS. We'll see that more in '27. It's good to see that's up 9% to $0.341. Jim talked about the order book. It's normalized in the sense that KOC is no longer in there, near $358. Quarter 2 is going to be a big quarter for us. We've got a big tender pipeline of north of $1 billion. So a lot of that is coming through Subsea, OCTG, the new FES acquisition has got a really strong tender pipeline. So we're looking for a big conversion in quarter 2 into orders, and we'll see that order book increase by the end of quarter 2. Return on capital up to 10% in double figures. We're almost at 11%. I mean that's a key target for us. We want to get that to 15%. That's probably -- we're probably 18 months 24 months away from that. But again, it's focusing on that higher return businesses and diluting the capital employed on the balance sheet where we can as well, exiting product lines that are not getting there. Dividend growth, alongside the share buyback, we want to get that dividend back to -- increase that to shareholders as well. We've got 13% per annum from 2025 onwards to the end of the decade. Part of the reason we can do that is our working capital efficiency. We're seeing that now back in 2020, that was over 70% working capital to sales. We're now at 33%. So that's given us more cash to play with, and that's going back to shareholders in the form of buybacks and dividends as well. And we also took the opportunity to extend the RCF, the $200 million RCF by 12 months out to 2029, gives us that good option for further optionality there as well. One of the key features and really promising performance has been OCTG in '25 and '24. And that is over 46% of our sales is OCTG. And that's really from 3 pillars. It's coming from our development of our virtual mill, and that allows us to bid for the huge tenders we're seeing in the Middle East and elsewhere. We're seeing some really good performance in U.S. land and TEC-LOCK with the longer laterals. We're also getting good performance coming from India as well and some good packages coming through from completion accessories. It's a real success story on OCTG. And it's that pivot into that offshore international visit business that's allowed us to do that. In terms of our P&L, just picking off some of the key highlights there. There's our turnover, which is flat year-on-year it just over $1 billion. Good to see that our gross profit, EBITDA and operating profit margins have improved by 1 point each, again, reflecting that push to take costs out to focus on the higher-margin businesses as well. We've got our profit after tax of $58, gives an EPS of $0.34.1, and we've got that total dividend declared of $0.13 for the year, again, showing that increase. A little bit more detail about our product lines and operating segments. You see the good in terms of the external metric of 15% OCTG, Subsea well over the 15%, good to see. Perforating Systems is a recovery story. That was at 0% last year, now up to 6%. We think we can get that up to double digits for the end of '26, those cost efficiencies come through international business picking up as well. Advanced manufacturing, that's some electronics division has been softer with less CapEx coming through. It's been at 9%. Again, there's restructuring going on there to address the electronics division. Other manufacturing, that's basically 0. That's been caught up in the real storm of all the restructuring, the well intervention, the well testing business in EMEA. So all that equipment has been getting moved from Aberdeen down, into Dubai. We've got closure of 4 facilities. So we're seeing a much better improvement coming through in '26. If you look at the segments, you've got Titan there coming down the way the verticals at 6% margin. North America, very good performance at 19%. Subsea at 17%. EMEA has been the big struggle, that's had everything. A weak market, all the restructuring going on, all the disruption coming through there as well. We will get the benefit of that full year of $11 million cost savings coming through 2026, and that will see an improvement going through there. Balance sheet is strong. We've got net assets of $900 million. Not much movement there in terms of our depreciation and CapEx more or less cancel each other out, a bit more in terms of $80 million onto the goodwill and other intangibles, that's the FES and OOR acquisitions going on there. And still despite -- we talked about all the returns to shareholders, and we'll talk about that in a little bit more detail, we're still sitting with cash of $63 million as well. A little bit of the working capital revenue, a key metric for us as well, keeping that below the 35% mark. And that is key for us when we look at cash flow, and that helps us to keep that cash balance on the balance sheet. In terms of working capital improvements, you can see from 2020, that's when we we're at 75% of working capital, of set to revenue. We've now got that down to 33%. If you look at our inventory balance for the year, a lot of good work being done there. We've reduced that inventory balance by $65 million over the year. Good to see there. We've been smart in terms of we did exit since 2020, a number of our higher capital businesses like OCTG and Aberdeen, also OCTG in Canada as well. Smart use of working capital instruments to finance our KOC orders. That's helped with the discount letter of credits and advance payments to the mills as well. So that has allowed us to at least a lot more cash, and that's allowed us to make the shareholder returns. And again, this shows where that cash is coming from and how we've used that over the last period. We've got that at the end of 2024, we had $104 million of cash on the balance sheet. We added $135 million of EBITDA for the year. We have controlled our -- we had inflow from working capital. That gave us as we go through those -- the year to $201 million of cash. This is where we've used it, $73 million in net disposals, $33 million of share buyback, that equates to about 7.2 million of shares we bought back, dividend payments of $19 million and treasury shares, employment share scheme of $18 million, okay? And we're still left with $63 million on the balance sheet. So that's a really pleasing position to be in. In terms of order book, there's a little bit more color around $358 million. That has -- that is 20% lower than we were at the end of December '24. That does reflect the fact we've completed through KOC. We do see that being replenished through Subsea through OCTG awards, hopefully, some OOR awards coming through there as well. And we'll have a figure approaching with the $500 million we get to quarter 3. But that tender pipeline is strong. It's over $1 billion. It's good to see that coming through. That does tie into what we're seeing in -- especially in the subsea space and the big awards coming out for OCTG as well. So in terms of guidance, I think in terms of the phasing for the year, we're definitely looking at a back-end loaded year in terms of the big awards coming through quarter 2 and then that recognition being more into the second half of '26. And that's how we modeled and budgeted the year. So that's consistent with that. Obviously, a lot of uncertainty out there just now, but there's nothing that we're going to change at the moment. This stays totally the same as what we announced back in January. EBITDA growth of between $145 million and $155 million, that EBITDA margin improving between 13% and 14%. Effective tax rate, depending on deferred tax assets, jurisdictions should be between 25% and 28%. CapEx a little bit higher than what we saw this year, we're around the $30 million mark for '25. I think that's going up to $40 million, $50 million. We're doing a little bit more automation work, some robotics, replacement of CapEx, a bit more capacity into our Chinese facility as well to allow us to thread for the KOC and likes. And we're still confident we can achieve that 50% free cash flow conversion as well. Okay. With that, Jim, I'll hand back to you. Arthur Johnson: Thanks, Bruce. Anyhow, we're laying out here where we're at '25, '26 targets. Those are some of the areas that we're focused on. I'll get into some more detail here in a little bit. But highlights, again, we always consider ourselves a technology company. So we continue to focus on developing new products, whether it's in premium connections, subsea applications, well intervention, Titan, it's pretty much nonstop. It goes part into the lean philosophy we've had on operations, and it has to do with making sure that we're relevant in the market for the days ahead. OCTG, Bruce and I have already talked a good bit about that. We're well placed for that cycle that we're in right now. We see it as being one that's going to continue to grow, especially in the international markets year-over-year. I've talked already a little bit about non-oil and gas and the subsea bundling that we have, our opportunities there. Just a topic on new technology. Subsea, I'll point you to the one on the bottom, the stack FAM. You've heard us talk about our FAM application before that fits and works with the subsea tree to allow a variable operations performed on a standard subsea tree. The stack FAM, the whole goal of it is really to accelerate tieback opportunities in brownfield sites. So if you look at even places like the U.K. where nobody apparently wants to drill anymore, you've still got areas where you can tie back to infrastructure that's there. And this is an opportunity with this new product line to perhaps grow business there as well as a lot of more mature areas like the Gulf of America, for example. OCTG, the WEDGE-LOCK product line, we continue to look at new applications, but it's also new diameters of pipe, new grades of material, things like that, that we're constantly testing at our testing facility in Houston as well as using some third-party facilities in Texas. The well intervention business is one where we've tried to get smarter tools, some smart tools. Our Opti-TEK Tubing Cutter is almost CNC in precision as far as what it can do in cutting product for cutting tubing, downhole. Opti-TEK Data Stem again, it's a smart tool for more advanced downhole measurements on slick line applications. And then the Opti-TEK valves are really more of a lean manufacturing effort to try to make things more lightweight to reduce the floor space at the well site, and that's what that is right there. Perforating systems, again, our ballistic release tools, our gyro tools, those are things that we actually rent. Some of the new developments we've put in there is for our benefit from a cost point of view for refurbishment and the like, but they're also -- they also have the technology that customers are asking for today. Titan growth, I mentioned earlier, you see the numbers there that we've shown the growth and anticipated growth, but there's a lot more of a market potential out there than even the Saudi Arabia and Argentina. I mean I'm excited about the opportunities in Australia. You've seen people like Liberty make moves into Australia. They have a huge resource down there for unconventionals, Mexico, unconventionals, Algeria and Libya, big unconventional markets. And the thing with the opportunities and even in the U.S., we talk international here, -- but domestically, today, the average well in big parts of the Permian is actually producing about 20% less oil per foot of completion than what it was doing 3 years ago. So as the sweet spots get used up, the Tier 1 acreage becomes less and less part of the portfolio, the operators are going to have to just drill more. They're going to have to drill longer wells, drill more to hold production at levels that are going to maintain their profitability and tighten and our premium connection business will be a key part of that deliverable part. OCTG, there's lots of nice colored parts there of where we do business at. It's an international business. We have the technology and the virtual mill concept that allows us to compete on an even playing field with our much, much bigger competitors out there. The customers trust Hunting and trust the value we bring to the table and the dependability that we have with our broad suite of connections and our excellent manufacturing capabilities in places like Houma, Louisiana and Houston, Texas and in Singapore to provide the completion accessories to put all this stuff together for an operator downhole. Non-oil and gas, we've identified more areas. I talked a bit earlier about nuclear. I've talked about some new things going on, on the jet engine side, some customers other than Pratt & Whitney that we're talking to right now. The power gen to me is a big, big growth story. We're actually getting overflow work from our big power gen customer that we're actually putting also in one of our facilities in Houston now. We see that as growing as data centers become more demanding on where they're going to get their electricity from. A lot of it is going to have to be from natural gas-fired generation that will supply, hopefully, components for the turbine shafts as well as that's going to be a driver for the tighten in the premium connection business. And then with the addition of FES, we now do have more opportunities in the offshore wind market as the FES team has a long track record of supplying connectors for some of that. And while it's probably not a huge growth area in the U.S. right now, there's still a lot of progress being made in European markets for offshore floating wind and the like. Subsea bundling, just a slide here. We're now -- I look back to 2018 when we had OneSubsea business. Now we've got a multiple grouping of product lines that gives us the ability to have huge geographic reach. But the key is to go in at a customer and be more relevant. And the more things you can put in front of them as far as we can do this, the more opportunities you're going to have from a tender basis and I think a success basis to also win business. So we're excited about what we've done so far. I mean if you look at, for example, our titanium stress joint business was 0 when we bought this. It was one of those cases where we knew we were on to something when we bought it. If you looked at the numbers at that time, it's like, why did you do this? Well, it became the anchor of what has built the subsea business. So it's a great -- there's great opportunities for us and having people like ExxonMobil being a star client of ours is a good housekeeping seal of approval like we would say in the States for the things that we do in the subsea marketplace. So in summary, we had a very, very good year. We're going to continue to focus on our capital allocation plans, which are going to benefit shareholders. We're maintaining our guidance. Again, I started the whole meeting off talking about where I see this business going. And I'd like to say we're not here. I'm not focused on what's going on in the next 3 months. I'm looking at where we're going to be in the next 3 years, 5 years, where is the growth of the business. That's why we're doing the things that we are, why we're investing in our people. We're investing in the CapEx. We're adding new product lines because I truly believe as you look at the, again, reserve life of our clients. I mean, other than Saudi Aramco, most of them are down, down, down every year. And the world is not going to use less hydrocarbons over the next decade. It's going to be more. Natural gas, people are worried about oil prices. I think the recent events in the Middle East, they're forgetting about gutter shutting down their LNG trains and not being able to ship LNG. And that's going to be affecting markets globally, but it also brings that energy security picture back in play more. And I just think that we're a company that's essential to the world prospering as far as a contributor to the oilfield service industry. So with that, that's kind of where we're at. I hope you've enjoyed the presentation and had a lot of detail. I'm excited about the year ahead, and I'm excited that I get to work with a great bunch of people that make it happen. So we'll open it up to questions. Okay. No, I'm just kidding. Go ahead. Alex Smith: Alex Smith from Berenberg. Just good to touch on the subsea business, potentially exciting year for growth. You mentioned Q2, potentially some big tenders. Any kind of color you can give on where those tenders are, location? And then just on the bundling, do you have like a dedicated sales team that are now going to go in and start selling that bundled product? And is that the kind of key driver for growth for that pipeline? And lastly, just on M&A, still a big part of the business kind of strategy, subsea in particular. What does the competitive market look like? Any other color? Arthur Johnson: Okay. I'll try to remember the answer all this. So on the sales side, yes, we have dedicated teams working on that. We've integrated the sales process. At FES, they really they were -- it was owned by 2 gentlemen. It was a reputation that they sold the product on, really not a very sales-focused organization. They didn't have to be. And so now with the bundling, like I mentioned, we relocated demand from Houston to KL to be working with our Singapore team because a lot of the shipbuilding FPSO construction is done in Asia. So it's good to be there integrating with those offices for opportunities. So yes, we are doing that bundling. The first question was, again, repeat that one. Alex Smith: Just on where the... Arthur Johnson: Where it's at? All the places you would expect. There's a heavy load of tenders in Brazil right now, but it's in the Gulf of America, it's in West Africa, it's in Suriname, it's in Guyana. It's all those places that are wet that you would think about. And then as far as -- the last question was. Alex Smith: M&A. Arthur Johnson: M&A. So M&A is one that you can never predict. I'd like to say our heart was broken a couple of times over the last couple of years because one thing that Hunting does well is go into due diligence very strongly. So we don't want to -- we want to make sure we know what we know. And in cases in the past, we had too specific where once we started getting into due diligence, we had to drop pencils and say time out because of certain things we found out. So we will always be very prudent on how we approach that. It also has to fit our strategy. We don't want to get into things that are not tangential to what we do as a company. For example, I'm not going to go and buy a company that makes windows and doors tomorrow, right, or something like -- I mean, it's going to have to fit technology and what we want to do. The market out there right now, it's -- I don't think it's really any different than it's been a year or 2 ago. I think that will this make a pause in opportunities? Perhaps. But we are screening things on a steady basis, and it's just finding -- it's kind of like getting married. You got to find the right partner and make sure the union is going to work. And we're focused on growing our business through M&A and haven't let up on that. Toby Thorrington: Toby Thorrington from Equity Development. I have 3. I think -- so first of all, North American division appeared to have a very good second half of last year as far as I can see, perhaps a bit more insight into why that was the case and your expectations for '26, expecting year-on-year improvement in North America? Arthur Johnson: Yes. I think if you look -- I think it's been as long as I've been in this job. I think every year, things have always been back-end loaded, at least through Q3. What we saw this year, and it matches the dialogue you've probably heard from Halliburton and people like that, we did not have the budget exhaustion issues, and we did not have too many weather issues as far as the holiday issues post mid-November. So that was a big positive for Titan for our connection business, we could get orders out for threading. Rigs were still running and putting pipe in the ground. So I think it was just the fact that it was a pretty good year from a, a number of factors, whether it's weather budgets and the like. I think that, again, the year 4, we're expecting better things and continued growth in North America in '26 through a number of different product lines. Toby Thorrington: That leads into the second question. Guidance for FY '26 EBITDA margin is 13% to 14%. Can I test your sort of confidence in that figure given that OCTG looks like it's going to have a weaker year this year? Arthur Johnson: Yes. I don't know -- well, it will maybe from a top line number, but from a margin -- it has nothing to do with pricing. It's not a margin perspective there. So margins, if anything, I think, will enhance because we're seeing more premium applications even on the shale plays. We're anticipating an improvement in the Gulf of America. And if you look at the margin profile for OCTG, that's really the best margin products or the offshore stuff, right, not the land. But with the benefit that we did have a very successful Gulf lease that the Trump administration put through, that won't really probably pay into holes in the ground until '27, but that foundation is there, we think, driving it forward. So yes, it's going to be an area -- we're not cutting prices. We see areas where we can improve our margins. Part of that's in the $15 million of cost savings. Part of it's in the lean initiatives that we've had. But the market is pretty steady as far as pricing goes. Not a lot of pressures. Toby Thorrington: I'm hearing very confident in group 13% to 14% EBITDA... Arthur Johnson: Yes, I am. And I think overall for the group, one of the big drivers is going to be the Subsea business. We've had a lag in our Stafford business the last year or 2, as I mentioned. You saw subsea tree awards took a big fall in '25. They're coming back now. We're starting to get those orders in. And as I mentioned, the backlog at our Stafford business is double what it was this time a year ago. So those are all -- again, it hits efficiencies, hits throughput in the facilities. I think Titan is going to again overperform based on even where we're at today, and that's going to be a plus for the company's overall margin as well. Toby Thorrington: Okay. That leads into the third question, subsea related. FES, if I saw the notes correctly, the contribution in the year was about $10 million revenue a small loss, I think. Pre-acquisition, the run rate -- revenue run rate of that business was near to $40 million, I think. So that probably requires a bit more... Arthur Johnson: No. I mean, I think it's, again, it's a lumpy business. It's where we could reduce revenue recognition in '25, getting them all into our proper accounting systems and the like. But the business -- the opportunities are still there. I mean that's where a big chunk of the pipeline that we see in '26 is sitting in FES. And so I think it will never be a straight line in that business just because of the project nature of it, but we haven't changed our optimism or our thoughts on that business one bit. Toby Thorrington: Okay. Could you quantify the FES contribution to the order book at the year-end? Do you have that number? Arthur Johnson: Do you know what it was, Bruce, off the top of your head? Bruce Ferguson: I don't have that, actually. It's a big chunk of the pipeline. Alex Brooks: Alex Brooks at Canaccord. I'm actually going to ask some sort of return on capital and balance sheet-related questions, if you don't mind. Yes, it's Bruce. So firstly, of the $15 million new cost savings program announced today, does that include some balance sheet work as well? Bruce Ferguson: That could be part of that, yes, our own facilities, et cetera. So there could be an element of that coming off balance sheet, yes. Alex Brooks: At year-end, obviously, you had a significant reduction in payables, even though it was overall good working capital performance. Is that kind of roughly where you normalized at? Or sort of what's the -- was there anything exceptional in that year-end position? Bruce Ferguson: That was the reversal of the KOC. So that was a big -- we use the bank acceptance bonds to defer payment to the Chinese mills. So once that is paid off, that is a more it's a more normalized position. But it will flow with the big orders as they come through in the timing of the orders down the line, Alex. Alex Brooks: And in terms of pushing return on capital up towards 15%, if we just take the guidance, you'll achieve a little bit more this year than you did last year because -- but is there scope for capital employed improvement as well as... Bruce Ferguson: Well, we're always looking at that similar to what we did back in the 4, 5 years ago with some of the low-return product lines facilities, OCG in Aberdeen, OCG in Canada, that the benefit of less capital that came off the balance sheet, improved the operating profit as well. So all I can say is we're always looking at some of the product lines that aren't hit the mark. They're always under constant review, what we can do there on both sides, capital employed and getting that operating profit up as well. Alex Brooks: And then just finally, because I'm looking at the slide in front of me, I've got nearly $200 million of dividends and over a similar period, a little bit more than $100 million of share buyback if it stays at the same rate. Is that something which you think is a reasonable split of return to shareholders, somewhere in the sort of 50-50, 40-60 range? Bruce Ferguson: Yes, I think it's a good balance. It's something for everyone from that side in terms of buybacks. That's something we think is working. We're still confident in terms of -- we still believe we're undervalued even though we're above net asset value. I think there's still value to be had in there. And yes, that constant return, that 13% increase in share -- the dividends as well. So I think it's a good balanced return, and that's probably where we're going to be at over the rest of the decade, yes. Alex Brooks: And then I've got one final question, which is one of the things that really shines out to me from the presentation is how much of the business is new. So, is it possible to quantify because the chemical industry does this as they kind of talk about X percent of revenue is products introduced in the last 5 years. Do you think you'd have a number for that? Arthur Johnson: Not standing right here now, but we can get that for you. I mean it is fair, true. I mean, I was thinking this morning coming into here. We're now working on what, year 152 of Hunting, and it's been in a company that has constantly evolved to the times, right? And I think what we've done in the last 5 years even has been that evolution, becoming more of a subsea company, adding things and taking on some risk. I mean, OOR, there were times when Bruce and I were like, is this going to work? We know it is. And that's why we spent the money to get control of it. But it's looking at the -- again, it's like the old Wayne Gretzky thing, right? Skate to where the puck is going, not where it's at today. And that's what we're trying to do when we look at our business -- and yes, I'm very, very pleased with how the team has put. I mean there was no TEC-LOCK a few years ago. There was a small subsea business, no OOR. We were stuck with pipe all over the place that was really bad return on capital employed. So I think we've evolved like Hunting's tradition has shown that they do. Mick Pickup: It's Mick from Barclays. A couple of questions, if I may. Can I just go back to that tender pipeline you talked for a big Q2. You said it's subsea and OCTG. Obviously, subsea, your positions are pretty strong with OCTG, there's some big 800-pound gorillas in the world. So could you just split that between subsea and OCTG, just so we get an idea of confidence on that? Arthur Johnson: And what the split is? I mean, right now, I would say the split is over $100 million on just the Dearborn side on future business going forward. And then the bulk of it is split. I would say there's a couple of hundred million that we know of that I can remember off the top of my head in the subsea side and then the bulk of it is OCTG. So we're seeing some OCTG tenders in places like Turkmenistan. We're seeing more in Indonesia is actually a growing market right now. We had some nice business in already the start of this year in that market. So it's all over the place, Nick. But I mean those are the 3 areas where the main drivers are. I mean the FES -- talk about the FES pipeline alone is nine-figure pipeline. Mick Pickup: Okay. And then kind of be greedy. Obviously, you've highlighted a lot of new places you've gone to. If I look at the OCTG world, one of the big players did a big pull out in its results on geothermal, saying that's the next big thing, and you were the first to talk about that at your Capital Markets Day a few years ago. So what you're seeing of that? And every major bank, I'm sure at the moment has got some junior wanting to become the space analyst given IPOs coming down the route. Obviously, you've got exposure there. So can you talk about what you're seeing in that? Arthur Johnson: So in the geothermal side, most of what we've seen activity-wise has actually been in the international market. So it's been -- Philippines was a good market for us and Indonesia. We haven't seen a lot in the U.S. because the geothermal -- typically, where we played with things like titanium tubulars or very high chrome areas. If it's a commodity L80-grade material going into some of this geothermal stuff, I think Vallourec's done some of that business, captured some of that, but it's not just hasn't been an area for growth for us in North America. On the aerospace side, we're really excited about that. And it's almost part of following up on the last question. We've almost had to reinvent Dearborn because it was so focused equipment-wise and asset-wise on the oilfield side of the business. And it's a business that started years ago in defense and aviation, then went in the oilfield, and now it's going back to more aerospace. So we're excited about the rocket business. Actually, Blue Origin is a bigger customer for us than is SpaceX, while we do business with both. But we see some really good things happening there. One of the other small parts of our story is our investment in Cumberland, the third -- the 3D printing company. That company is in the black now. They're seeing growth. One of their big customers, we're making -- I say we because we own 1/3 of the company. One of their big customers is Firefly, which is the ones that another space company that put -- I think they put a product on the moon. And so we see growth in a couple of areas on that, that I think is going to benefit us in the years ahead. Is there anything online? Any questions from online? Bruce Ferguson: So the webcast questions have been answered in this Q&A. I'll pass back to you for some closing remarks. Arthur Johnson: Okay. Well, I just want to thank you all for your time and for being here and your support. Again, I want to thank all of our -- I want to thank our customers out there, all of our employees for what they do, our investors for being with us for the ride. Again, I've talked about we want -- we don't want renters. I mean we really want investors that see our vision and what we're trying to do for the long term to drive value into this company. So on for a good '26. Thanks again. I think we're done.
Roisin Currie: Good morning, and welcome to those of you in the room. Nice to see a lot of familiar faces, and welcome to those of you who are watching online. So the agenda today will be in the usual format. I will provide an overview of the results we've announced today, along with some key highlights, and then I'll hand over to Richard to take us through the financial performance in more detail, and I'll then take you through our strategic progress and finish with the outlook for the year before I take your questions. So we continue to make progress despite the challenging market conditions, as you can see from the numbers on the slide. As you can see, total sales growth for full year '25 is just under 7%, and that includes 2.4% on a like-for-like growth for company-managed shops and not on the slide, but it's also 4.3% for our franchise shops. Underlying operating profit and underlying PBT are both in line with expectations. With operating cash inflow, 4% -- 4.5% higher than 2024, and we are proposing an ordinary dividend of 69p, in line with the year before. Operating cash generation remains robust and will build further in the coming years, with CapEx also stepping back from its peak in 2025. This provides significant capacity for additional returns to shareholders, which Richard will provide more detail on in a few minutes. So we are outperforming the market. So just to spend a couple of minutes on our performance versus the market. I'm pleased to say that the recent data from Circana to the end of December 2025 shows that we have increased our market share of visits by 0.5 percentage points to 8.6% at a time when the overall market visits have declined by just over 3%. Pressure on income does continue to be the main driver and convenience for the consumer remains the priority with location access and channel flexibility critical. There is some evidence of dietary trends, but that is a relatively small factor. The breadth of appeal we have alongside our value credentials and the continued innovation in the business focused on menu, value and convenience alongside the strength of our vertical integration ensures our resilience when market conditions are challenging, but also remains our formula for our long-term success. So I will now welcome Richard to talk about the financial performance in detail. Richard Hutton: Great. Thank you, Roisin, and good morning, everybody. I'll start with Slide 6, which just gives you the high-level overview of the profit in the business over the last year. So you can see sales up almost 7%. We did have the reduction of 4% in operating profit and 9.4% at the PBT level. And as we highlighted back in January, we've pulled out a small exceptional item, which relates to an understatement of VAT, which we self-identified but goes back a number of years. So in reporting these results, we pulled out the element that relates to prior years so as not to distort the 2025 number. So that gives you an underlying PBT and then the full PBT for the year of GBP 167 million. The income tax charge, we'll show you later, slightly higher than normal, which I'll explain, which gives an impact on diluted earnings per share, which were down 10.7% and we'll get into some of the ratios behind that in just a moment. But first, on Slide 7, we'll dive into the segmental analysis of sales. So we segment our sales into those from company-managed shops and those that are through the business-to-business channel, which is primarily relationships with our franchise partners that get us into locations we couldn't otherwise reach. It also includes grocery channel development in the B2B channel, which obviously has moved on slightly in the last year as we launched with Tesco, a small range with Tesco back in September. But most of the progress here relates to the addition of shops and like-for-like growth through the B2B channel. So underlying each of those, as Roisin has already said, we've got 2.4% like-for-like through the company-managed shop channel and another 4.3% like-for-like growth through franchise system sales. You can see the overall rate of growth in the B2B channel is slightly higher. That partly reflects that like-for-like position. but also the proportion of shops we're opening through franchise relationships is about 1/3 of our net openings. So as a proportion of the base, it's a faster rate of growth in that channel. And if we look on Slide 8 at the relative performance of Greggs, I mean, Machine has already flagged to you that we've taken a significant amount of share in the last year. This tracks one of the benchmarks that we've pulled out to give us a feel for how Greggs has performed versus the overall food to go segment. And the yellow line on this chart is the Barclaycard data that they publish for the eating and drinking out-of-home segment. So that's all retailers who are identified as being -- serving the eating or drinking out of home. And you can see that Greggs' like-for-like performance, the dashed blue line, tracks that quite closely. So our like-for-like performance has been broadly in line with the market. But we've significantly outperformed the market through the growth in our new stores and the addition of extra channels such as grocery. So total sales growth significantly ahead of the market on that measure. Turning to Slide 9. The ratio analysis of the P&L here reflects some of the volume pressure and also the investment in the year, which will benefit us in future years. So if we work our way down, you can see at the gross margin level, a relatively stable position. We saw a more balanced position between cost and price inflation last year and a smaller amount of dilution from the increased participation rate in our app as people take advantage of the discounts available for shopping more frequently with us. In distribution and selling costs, that's where you see the sort of more of the operational gearing in the business. So there's a couple of things there. The volume impact last year has a gearing effect in terms of the fixed costs such as rent on the shop, but also the recovery of wage cost inflation. There's a slight under recovery there because wages were one of the most inflationary elements last year, which I'll come on and show you in a minute. So some dilution there on the ratio. And then we see the opposite effect in admin expenses, where we've controlled the overhead in the business well, and that gets leveraged more heavily as we grow the estate and spread it more thinly. So overall, underlying operating profit down by 1% in margin terms. And then you see an increase in the net finance expense. The primary driver of that is that in 2024, we were holding a lot of cash on deposit, which we've subsequently been deploying into the investment program. We obviously haven't enjoyed the interest coming in on those cash deposits in the current year. And then at the very bottom there, you can see return on capital employed, which is one of the key things that we focus on as a business. The ROCE for 2025 was 16%. That reflects the investment in capital employed as we've deployed cash into the program of capital expenditure that we will update you on in just a second. But obviously, the top line performance as well. Now we've talked in the past about that we believe 20% is a good long-term estimate for what we believe Greggs should be able to deliver. We still believe in that, and I'll describe to you in just a few moments our thoughts on how we progressively get back to that going forward. Turning to Page 10. You've got the usual analysis here of the Greggs cost base, which emphasizes just that people costs and food and packaging are the 2 biggest areas. The good news here is that we expect a much less inflationary year ahead in 2026. We saw 5.6% cost inflation in 2025. We expect that to be close to 3% in the year ahead, which is a real change from the last few years when obviously, inflation has been a real headwind. Food & packaging will be part of that. We expect that to be a very low single-digit figure for the year ahead. And we've got about 4 months of our food and packaging needs covered. Energy is obviously quite a volatile market at the moment. We're pleased to say we've actually got all of our electricity covered for this year, and that is the vast majority of our energy mix. And we've got more than half of it for next year as well. So we're in as good a place as we could probably hope to be given the current environment. The main thing we were exposed on is diesel costs, which is about 1/8 of our overall energy mix. So it's relevant, but not a big factor. People costs are the biggest part of the cost base and were very inflationary last year with a combination of bigger increases in the national living wage and obviously, the national insurance pass-through as well. So we saw just over 8% wage inflation or wage cost inflation last year. We expect that figure to be close to 4% this year, a balance of the pay award, which we've made and also some annualization of that national insurance increase. And there's a phasing impact here as well because we've negotiated to move our annual pay award. The majority of it will bite in April now. It's previously been aligned with the calendar year in January. That helps us to align more with the National Living Wage increase going forward. But it means that we'll have relatively low wage inflation through Q1 of this year. So there is a kind of a balance factor in terms of when cost inflation comes in this year. We think that will help the first half result, and we do expect to see relatively strong profit progress in the first half. We've guided that for the year as a whole, we expect that to be a relatively flat year because we've got the cost of the new Derby site coming in the second half. So there's a bit of trading off there between H1 and H2. And then the final piece on shop occupancy costs, rents are relatively stable as a cost ratio. And there is some benefit from the changes to business rates. So you'll be aware that in the budget, there was a change made to benefit small shops. We believe that, that will benefit Greggs on an annual basis for about GBP 4 million from April, so GBP 3 million to the current financial year. Sticking with costs on Slide 11. We obviously work each year to try and reduce our costs and to offset the cost pressures through our cost reduction initiatives. And we have a good track record in this, and 2025 was the best year ever in that respect. So we took about GBP 13 million out of the business through our cost initiatives in 2025. I thought it was worth just giving you a bit of color on the sort of things that we've been doing. The retail area is obviously where most of our cost is. And in that sense, using sophisticated workforce planning tools is a key element to make sure we deploy hours optimally in our shops to make sure we get the right balance of service and cost. So we've been putting a new plan called in, which has been very effective. We've been using technology to automate non-value-adding tasks and increase the speed of service. And some good examples of that are new tillware. And I hope some of you, if you've been to Greggs recently, will have noticed that the actual experience of paying at the till is actually faster, and I've certainly experienced that with our new tillware and our new payment terminals. Temperature monitoring is a huge task in our shops to make sure that we keep everything food safe, and it's a very manual process currently. So we've got some interesting experiments going on with automated monitoring, which we think will really help the business going forward. In supply, the game there is really taking advantage of the fact that we own our own supply chain to do end-to-end reviews, which make sure we optimize the route through our supply chain all the way from our suppliers through to shops through our distribution and manufacturing operations. And by making sure we get the right packaging and ingredients in the right sizes, they flow through really efficiently, we get a real cost advantage. So we're constantly looking at how we optimize that. We've been in-housing some of our manufacturing where we've had additional capacity come on stream that's allowed us to do that. And looking forward, there'll be more opportunity for automation as the new sites in our distribution chain come online. And the offices have a role to play as well. So in our support teams, technology is starting to help us with automation on desktops, new systems for customer and shop support, which are making the whole process more productive. It's meaning our teams can cope with the growth in the business without adding more resource. And increasingly, AI tools will support that even further going forward. Let's talk about CapEx now on Slide 12. So you can see the peak year for CapEx in Greggs, GBP 287 million that we invested in the business last year. And if you look year-on-year, you'll see that the retail side of that in terms of new shops, shop fitting and equipment was relatively stable. We had a comparable amount of activity in terms of opening shops and refurbishing them. But the big difference was in the supply chain, where we invested GBP 147 million across our operations, including the new sites to create capacity for the future. There was also a step-up in IT, where we're putting in the upgraded SAP system, the S/4HANA version, which is going well, and we got the first elements of those -- that installed in the summer. If I turn to the forward look on Page 13, I think this is the interesting piece. So if you look beyond this year, we've got a substantial decrease in the amount of capital expenditure from this year onwards. So CapEx reduces to around GBP 200 million in the current year and then reduces further, and we've given a range of GBP 150 million to GBP 170 million from '27 onwards. And in looking again at the CapEx program through this phase, we obviously kind of came in under the guidance last year. We've looked hard at the out years as well. We've taken about GBP 20 million, GBP 25 million out of the capital intensity looking forward here. And the interesting thing in the backdrop to this slide is if you look at the gray sort of shadow behind, that's the operating cash generation of the business. And you can see how essentially last year, we were utilizing all of that in terms of the CapEx investment program. But as we go forward, a huge gap emerges, which is effectively the free cash position that will give us discretion. Obviously, that has to fund the ordinary distributions in the business, but we start to see some quite substantial headroom as we go through next year and onwards, particularly. So scope for further returns, as Roisin indicated at the start of this. Page 14 talks about our shop estate expansion and a quick reminder first of the sort of metrics we use to manage our expansion against strong return rates. So we look for a target return rate of 25% cash return on the investment that we put into both our shop and the supply chain that supports it. And we typically achieve that after 2 or 3 years and the shops go on to achieve a mature performance in excess of 30% on an ROI basis. And generally, the growth locations that we're moving into are outperforming the traditional estate. And we talked in the summer a lot about incremental growth and why we were not concerned about cannibalization. And just to reiterate some of the key points that we talked about then. In new catchments where we're landing shops, 53% of our shops last year were in areas where there was no existing Greggs within a mile. So we are pushing into areas where people just don't have access to Greggs. And even in those areas where there was a shop within a mile, the recorded level of sales transfer from the existing state was less than 5%. And we factor that into the shop appraisal to make sure that when we make the decision, we know it's still going to make an incrementally good return for the business. And that was proven again in 2025 with the look-back test on cannibalization. And the other great measure we have is by using the app data. So we can see from the app data that the frequency of visit for Greggs customers increases when you give them access to more shops in new convenient locations. And we ran some data that we showed you in the summer. We've rerun that again at the end of the year. And again, it confirms the incrementality of the visits and the increase in frequency that we see when we become more convenient. I mentioned ROCE earlier, and Slide 15 talks a bit about the levers that we'll be pulling to restore ROCE over the years ahead. Obviously, that estate growth is absolutely key because growing the estate to utilize the capacity that we're creating is one of the most important elements of that. So it's great to see that we're still getting those strong returns and that, that white space exists. We'll be accessing that both through our own estate growth and through the partnerships with franchise partners that give us access to areas we couldn't otherwise get to. We'll be disciplined on capital allocation. And you can see we've trimmed the CapEx a little bit. We'll hold that as tight as possible going forward while still making sure that we maintain and invest in the business. But we're in a position where we've deployed an awful lot into the supply chain, and we've got that capacity there to use. So it will reduce the amount that we need to invest in the years ahead. And as I've described to you, we continue to explore further cost saving and productivity opportunities. The team are enthused by the success and want to drive that even harder as we go forward. And then finally, obviously, there's an element which is driven by the market and performance in that. But also, we have additional income streams that we've been pushing and accessing. You've heard about the Tesco development that we put in place in the autumn of last year. That will be a more material factor in the year ahead, and we've expanded the reach of that into more stores. Roisin will talk to you a little bit about some of the stuff that we've been experimenting with in terms of convenience retailing, where we've been looking at some concepts, which will help us to access smaller locations that can't support a Greggs store with both automated and manual sort of vending solutions. And there are other things in the background that we're not quite ready to talk about that we've been working on, which we believe will also leverage the Greggs brand to drive additional income in the years ahead. So more on that to come. So packaged together, we still are targeting and pushing ourselves to get that return back to where we [indiscernible]. Just finishing off then with balance sheet, tax and dividends. The cash is in a decent position despite the big investment phase we've been through. I mean the cash inflow of GBP 273 million is a real strength of the business at the operating level. The net cash position at the end of the year was GBP 46 million. That was supported by GBP 25 million drawn from the revolving credit facility. So we actually had about GBP 70 million in cash. And we've got liquidity of GBP 146 million with the remaining undrawn element of our RCF. So plenty of room should it be required. And a quick reminder of our capital allocation priorities. Number one, invest to maintain the business well, keep that strong balance sheet, and we target about a 3% of revenue cash position just to deal with the seasonality through the year. an attractive ordinary dividend that's 2x covered by earnings, and you'll see that we've maintained that again this year and then selectively invest where we see attractive returns for growth. And then finally, of course, return any surplus cash to shareholders. And that could be special dividends. It could be buybacks when we get to that point. We're open-minded about that, and we'll make that decision based on what's the best route for that cash at the time. And finally, just the figures to finish off on tax and earnings. The corporation tax rate, I flagged earlier was slightly higher. It's about 1% higher than we would normally expect, and that relates to the allowability of deductions relating to share options. And the fact that the Greggs share price was lower meant that the deduction you get for tax itself on share option exercises was itself lower. So that's a temporary thing. And looking at our forward guidance, we still believe that being about 1% ahead of the headline rate is the right way to model the tax rate for Greggs going forward. So overall, the underlying EPS was 122.8p, and we've declared a final ordinary dividend of 50p, which gives you 69p for the full year, and that's maintained at the same level as in 2024. And as I just indicated, we look for an earnings cover of 2x. And as we get back to that level, the dividend will grow again. So as a quick roll through. I'll hand you over to Roisin to take you through the plan. Roisin Currie: Great. Thanks, Richard. So I'll spend a few minutes, and I will talk about the operational and strategic review for the business. So on the slide behind me, you have just got the Greggs formula for long-term success. So I just want to reflect on the things that have made and continue to make Greggs successful. And these are particularly important when the market is tough because they differentiate us from other brands and they're integral to the strength of the business. So the first factor on the slide is the breadth and choice that we offer our customers, enabling them to shop with us frequently. And this isn't just about product range. It's also about the flexibility we have to operate in so many different locations and channels and be convenient and accessible to customers when they are on the go. Next is our value leadership. And we pride ourselves in this, and we have got a long-term track record of being #1 for value for fresh prepared food and drink, and that hasn't changed. It continues to be a key focus area, and we remain #1. Innovation and rapid evolution is, of course, key because food tastes and drink tastes change over time. We work hard to ensure we stay relevant and constantly innovate to drive profitable sales growth. And we've got a strong track record of this for many years, innovating to meet changing needs, dietary trends with great value options, demonstrating us now being #1 in the out-of-home market for breakfast and #2 for coffee. Our focus on spotting trends and then following them fast with great value price points continues. And finally, our vertical integration drives quality and efficiency that is a genuine competitive advantage versus the market. So let me talk through those areas in some more detail. So we are the fastest-growing brand in food to go. So in terms of market context, the slide in front of you is from Circana data. So it demonstrates the strength of the Greggs brand across all of the key dayparts and missions. And I'm pleased to report we're #1 in breakfast. We're #2 in lunch. We are #3 in snacking, and we are now #4 in dinner and in delivery. So you can see how strong Greggs continues to be in the traditional areas of lunch, breakfast and snacking. But I'm particularly pleased that I can show you is moving up the rankings later in the day and on delivery areas that, as you know, we've been focusing on. As I said earlier, our market share has grown from 8.1% to 8.6%, the fastest growth of any brand in food and the go. And at the bottom, you can see in terms of the segments that we represent in terms of the demographics, when you compare the market share of visits with Greggs share of visits, we are pretty much in line with the market, having broad appeal across all demographic sets is another great strength of the brand. And on to value. Value leadership remains critical for us. We remain market leading with the gap to our food to go competitors widening. You can see that in the chart. So that plots the YouGov data over the past 4 years, and Greggs is the yellow line at the top. fresh prepared food and drink, the hot options we provide and the customization we offer ensures we are differentiated from other value operators such as the supermarkets. We also know that our loyalty scheme and the value deals that we offer continue to deepen the value for customers when they shop at Greggs. And on Slide 22, we're just looking at the estate, and we have shown you this chart before, but it just demonstrates how the business has been evolving over the last decade to reshape and move into the new catchment areas with different customer missions, ensuring we are well positioned to be more convenient for customers on the go. Now if you went back 10 years, then the traditional element of the state, which is the blue -- the blue sort of segment and mainly on high streets, that would have accounted for around 80% of our total shop estate. And as you can see, it is now 50%. In the traditional estate segment, our relocation strategy has been key to our continued success, and we've relocated around 15% of those shops since 2019, making sure that now they are in the best locations. We do treat those relocations as new shops, so they don't appear in terms of the growth in our like-for-like numbers. And in the underrepresented catchments, the new shops that we're opening expand our reach and continue to deliver strong returns. Our target for this year is around 120 net new shops, which is the same as last year. And just to bring to life the underrepresented catchments, so these are areas such as roadsides, retail parks, supermarkets, travel locations, given the estate greater balance and accessing new locations with strong returns. We demonstrated last year, and Richard talked about it earlier in terms of our summer presentation, these new shops do so without affecting sales in the existing estate, so it's incremental growth. The chart on the slide demonstrates the significant expansion opportunity we continue to have. So the blue bars on the slide show our current penetration. And as you can see, with the exception of industrial locations, no other location has yet reached 25% penetration. Our successful expansion strategy continues to target these areas where we currently have that low penetration, most typically remote from our current shops. So again, Richard talked about last year, over half of our shops were opened with no Greggs shop within a mile. The planned openings for this year have a similar profile. And worth saying in terms of the numbers on the right of the chart, the white space work that we've done in terms of viable locations reflects the opportunity for our full-size Greggs shops. But we continue to be agile in terms of our formats. So the format flexibility we have and expanding further will unlock opportunities that our smallest full service operations are simply not able to access. The trial of our first 3 bite-sized shops is early days, but promising. And we have some further trials planned very shortly, which will unlock other opportunities with strong returns. And as Richard says, the innovation doesn't stop there. So we continue to come up with more innovative ways to make sure that we can provide the convenience for our customers to unlock additional customer missions. So we are looking at some unattended retail solutions. unattended retail solutions is the new word for vending. So we have a number of trials that are in the pipeline currently that we will talk to you about as we embark on those trials. But format evolution is complemented by increasing the channels and dayparts that customers can access Greggs through, as you will see on the slide. Richard mentioned it, but we updated last year that we increased our range in Iceland, and we also expanded into Tesco. We started when we talked to you last year with 800 larger Tesco stores. We have just expanded into a further 1,900 Tesco Express stores. Pleasing to say that delivery continues to grow. So it's now at 6.8% of our mix. And we know that these are incremental sales and they deliver a higher basket size. We are now working on some improved technology that will mean we can support this channel better and grow further. And loyalty, I think I said numerous times before, continues to surpass our expectations. So now over 26% of our transactions are scanned through the app, and that allow us to increase our CRM engagement with customers. We've been doing something called Greggs Quest. We rolled that out to all of our customers in November. And really, that's challenges that encourage the customers that rewards their visits and encourage them to come back to us more frequently. Evening, very pleasing to see, still remains our fastest-growing daypart. So it's now at 9.4% of our sales with evening delivery still being a significant growth opportunity. We continue to be really pleased with the steady growth that we're seeing in the evening daypart. We're still growing ahead of the average like-for-like rate, and it's very similar to the long-term growth pattern that we established at breakfast. And at the heart of Greggs is our range. So our menu sits at the heart of Greggs, and we win by delivering on our purpose, making great tasting, freshly prepared food and drink accessible to everyone. This translates to democratization of food on the go. Rapid evolution of value-focused menu options is key to meeting consumers' changing tastes and requirements. As I've shown you earlier, Greggs is a brand with broad appeal. We are representative of all demographics, and we don't over-index significantly in any one segment. Dietary trends have always been a key factor in the evolution of our menu and the breadth of choice that we offer. And we've worked hard over many years to ensure that we have choices available for everyone throughout the day. Our performance continues to be driven predominantly by the broader macroeconomic pressures on consumer spending, but we do monitor developments around weight loss medication closely. Consumers on this medication still seek convenient food on the go, and we're already catering to a number of those dietary trends. So the demand for fiber, higher protein and smaller portions, which forms part of a much wider health trend. We have introduced last year a number of products such as our Ginger and Turmeric shots, our protein shakes, our egg pots, and we've seen strong growth in those high-protein items that we offer. But we continue to evolve the menu. We continue to make sure we keep it fresh, we keep it relevant, and we excite customers with new products and new flavors. Some examples would be the Tanduri Chicken Pizza and the Red Pepper Feta and Spinach Bake. And as you would expect, we have a pipeline of new ideas and innovation to ensure that we continue to evolve the range and provide the new exciting products that our customers want. So not sure of any of you in the room are matcha fans, but we have just introduced to the menu a couple of weeks ago, our Ice Match Latte at very affordable price point of GBP 3. So if you haven't tried it, you should rush out to Greggs and get one. The breadth of choice that we offer and our ability to enter new categories at value prices enables and ensures that we stay relevant, excite our customers with new choices, focus on market trends and support the expansion into the new channels and dayparts that we offer. And then on to our supply chain, which I have spoken about many times, but to support our growth plans, you know that we have invested in further supply chain capacity, primarily the 2 new state-of-the-art national distribution centers, creating overall logistics capacity of up to 2,500 shops. Both sites are on schedule and on budget with Derby on track to open later this year and Kettering in 2027. This approach to capacity expansion benefits from productivity improvements from automation, enabled by the scale of our operation at those sites. By picking upstream, the new sites increase the throughput and capacity of the existing radio distribution centers, which will still continue to serve our shops. I won't spend too much time on technology because Richard has covered a number of these areas, but we do continue to invest in technology to enhance our growth while ensuring the robustness of our process and driving greater efficiency. As Richard just said, we have successfully migrated our finance and procurement processes to the new SAP S/4HANA system from August last year, and we've got further migration in some key areas this year. Richard also talked earlier about the tasks we're automating in our shops to support service and efficiency, which is really important and the CRM capability for our support teams that has AI functionality. So our support teams can now use that to serve both colleagues and customers better and faster. And last point in the slide, our data capability continues to improve, which supports all areas of the business and helps us make better decisions. But we continue to pride ourselves in doing the right thing with significant progress on our commitment to the Greggs pledge, which is our approach to ESG. Our original commitments that we set out took us through to the end of 2025. So we spent a lot of time last year engaging with a broad range of stakeholders to shape the future priorities for 2026 and beyond. Really proud to say we made a significant progress across all the areas of our Greggs pledge. On the slide behind me, you've got a number of highlights. Great progress on reducing our carbon footprint, reducing unsold food waste through our Greggs outlets and making progress in ensuring that our packaging is easily recyclable for our customers. We're retaining the 3 core pillars of our Greggs pledge, stronger healthier communities, a safer planet and a better business still see at the heart, and we're now launching our next 5-year pledge commitments. So finally, looking forward now into 2026, we have a strong pipeline of opportunities to open new Greggs shops in catchments that will deliver strong returns. Great progress has been made in building the supply chain infrastructure for this next phase of growth. In a challenging market, we continue to deliver both like-for-like and total sales growth and make great progress against our strategic plan. Our like-for-like growth for the first 9 weeks has been at 1.6% and total sales have grown by 6.3% with strong cost control supporting profit progression. Our expectations for 2026 are unchanged, and we remain confident in the growth opportunities available to Greggs and our ability to progress them. So on that point, I will just pause and then Richard and I will be happy to take your questions. And we have got a couple of roving mics in the room. And I think Richard is also going to monitor questions from those of you that are online. So thank you, and I will take your questions. Roisin Currie: We have got a couple of roving mics in the room. And I think Richard is also going to monitor questions from those of you that are online. So thank you, and I will take your questions. I'll start from over here. Jonathan Pritchard: Jonathan Pritchard from Peel & Hunt. Two from me for me. Firstly, I think I try to remember whether a call or a meeting. But you talked about clarity on deals and marketing those deals better. Could you just tell me how you progressed on that and whether there's a sort of slight difference between franchise and owned stores in those deals and the communication. And then secondly, on current trading, just a bit on shape really. I was surprised I didn't see the word weather and rain in the statement because clearly, that is something you hate way. Is there any change there since you still running, has it got a bit better? Just any additional comments, please? Roisin Currie: Thanks, Jonathan. I'll let Richard take kind of traded and I'll come back to market. Richard Hutton: Yes. So I think the weather has been bad on bad really, hasn't it? Clearly, as you'll have noticed, particularly in the South of England, it was an incredibly wet January. And -- but we had storms last year, and we had snow last year. So I think we've had sort of bad weather in both elements. I think the key thing to call out in the trading so far is that there is less price inflation in the number. So the underlying volume position is very consistent with what we saw in Q4 running into the first couple of months of this year, but with less pricing. And we hope that, that puts consumers in a better place as we go forward. Roisin Currie: In terms of the deals that are out there and the marketing, I'm just looking to my right absolute with some of the sort of marketing -- what we did last year very successfully is we continue to lean into breakfast. When I talk about market share moving from 8.1% to 8.6% we've taken market share across every single day part. So that is really pleasing. What we did know is that we had a 2-part lunch deal, and we could see that in the marketplace, a common sort of feature of deals was a 3-part meal deal. So we then went back on our big deal, which was the GBP 5 3-part meal deal. We obviously do that through a lot of out-of-home marketing. So that's probably the biggest sort of way we try to reach the consumer. So if you're on the high street, you see a bus shelter somewhere with the point of sale, we will try to have the Greggs message there. The other significant piece of marketing collateral we have is the digital screens in our windows. So again, they are up and down across the U.K., and we will work them hard to make sure that we punch above our way in terms of getting those big deals out there. The new piece for us last year was in our app. So for our customers, we introduced a sort of at home part of sort of an app sort of communication messaging as part of the app. And so now if you're an app customer, you will see the messaging coming up around what is the new products that we're launching. Our most recent one was the matcher, which we know we brought to the market at a value sort of leading GBP 3. But what we've not lost focus on is the 2-part breakfast deal as well because, again, that is a key part of offering value to the customer. So what the marketing team trying to do very successfully is lean into the new deals, but they have an always-on strategy to make sure that what we are known for and what is value, we also get that message out there. In terms of your question around franchise, the deals are the same. So I guess we reach customers, it doesn't matter to a customer, if it's a franchise shop for a company managed shop, they are shopping at Greggs and therefore, we want to make sure that they get the same messaging. The one difference that you have in a franchise shop is price points because obviously, they set their own price points, and we've got some ceilings around that. But again, the team will work for that franchise partner to make sure that the digital screens are used to reach customers with that value offering. And even in a franchise location, we will still be the best value operator by far in that location. Richard Taylor: It's Richard Taylor from Barclays. I've got three questions, please. Firstly is on your 20% ROCE target. Even with fixed capital employed, that would imply profits quite long way ahead of where people are expecting any out years now. I know you're not saying in 2028, but how should we think about the lift there? Is that utilization of supply chain? What other things should we think about? Secondly, how should we think about your pricing this year with a 3% like-for-like cost inflation? I know you moved at the start of the year, you done now, would you expect to move again. And finally, you've historically held a cash buffer, which you still have. But when we look forward, your slide on CapEx, Richard, what do you think about your plans for cash in FY '27 and FY '28 is a buffer that you still would like to hold in those out years as well? Richard Hutton: Yes. That sounds like my tear sheet, doesn't it? It also allows me to address a couple of the points that have come in online actually, which are also about that cash position. So Joseph, if you asked about capital allocation, I think you probably asked the question before I presented on capital allocation. So hopefully, you're happy on that. Simon, you asked about debt on the balance sheet, which I think links to Richard's point. So we had about GBP 25 million of debt on the balance sheet. We've actually repaid that since, but we'll probably draw some more down from the RCF when we pay the dividend in April, May time. So we'll be using the RCF through the next year. I suspect we probably won't need to use it next year onwards. And Simon was asking what's our forward plan in terms of is it structural debt or is it not? It's not. I think, again, the capital allocation policy hopefully explained that, that we're looking for about 3% of sales as our sort of our cash buffer to manage working capital. The RCF is our reserve to enable us to weather any storms and we put in place after the pandemic. And I think it's a super important thing to have in place in case there was something like that again. Pricing, we're in a great place with pricing because we did make the increases. Most of what we need to do for this year, we anticipate is already in place through the moves that we made in January. So we'll see how cost inflation pans out through the middle of the year, but I'm kind of cautiously hopeful we don't have to do much more. But there may need to be some small tweaks. But generally, we're in a decent place already in terms of recovery of cost. And then the broker journey, I think you should see as a longer-term ambition. We obviously had a sort of perhaps a nearer-term plan for that before the experience of last year that set us back a bit having negative volumes last year. We'll have to work a little bit harder on both revenue streams and on cost to get us back to that target. So certainly not thinking about it in terms of 2028. And so I think probably the point at which we reach it is probably beyond the scope of sort of most of your forecast at the moment. But we strongly believe that effectively, it's a tweak to the plan before with a bit more sort of revenue and a bit more sort of action on cost. And we can see the opportunities. Timothy Barrett: Tim Barrett from Deutsche. Two questions, please. also. Firstly, what you say on first half versus second half profit growth is nice and clear. implicit within that, are you assuming a pickup in like-for-likes in the second quarter or the next 12 months in terms of just trying to square the circle really how you get profit growth in the first half of that number. And then a quick one on CapEx. Can you say what's implicit within your new 2027 and 2028 guidance on net new stores, please? Richard Hutton: Yes. Yes. So on that final piece, in terms of net new stores, we're implying that we'll run at broadly the current rate in terms of about 120 net new stores. We're going to hold refits fairly tight this year. So we'll probably only see 50 or 60 refits, about half the number that we did last year, and that's part of the response to the capital intensity at the moment and also a reflection of just the longevity that we've seen in the current refit, which is standing up well. So we'll hold that fairly tight, but expand at a net rate of about 120. I'm going to link into another online question there where Joseph is asking what will the approximate maintenance CapEx be going forward? Typically, we've guided that to be about 5% of turnover. It's probably slightly less than that at the moment because of the investment in supply chain, which will hold us in good stead in the years ahead. So it's probably going to be slightly less than that at a maintenance level and then you layer on that expansion CapEx. The like-for-like question, I think, was about what do we need to strike the right balance in terms of progress in the first half. Yes, we're probably -- I mean, we would be opening, say, 1.6% in the first couple of months was slightly behind where we would have liked to have been. The good news is that the profit conversion has probably been stronger than we'd anticipated, and that's a reflection of both some of the cost margin dynamics that I described but also the fact that we gripped operational costs quite hard in the middle of last year as a response to trading conditions. And we're still carrying that strong position, and it hasn't annualized. So I think with the focus we've got on that in the business in the first half, we should continue to see the benefit, and it gives us a very strong drop-through in terms of the growth that we are seeing. Roisin Currie: I'll just go right if I just needs to hand the makeover, thank you. Unknown Analyst: Thank you. Vince Ryan here from Goodbody. I'll just go right if I just needs to hand the makeover, thank you. Fin Ryan here from Goodbody. Two questions from me, please. Firstly, in terms of the supply chain investments, could you outline what you're factoring in, in that incremental cost from Derby in the second half of the year? And as we sort of roll into 2027, how much incremental cost should come on the P&L from -- as Kettering comes live? And just could you also give us a sense in terms of the phasing of sort of the date when sort of everything is in place versus how long it will actually take to get to full operational capacity in terms of distribution centers? And then secondly, in terms of the retail rollout, I appreciate you've got a lot more Tesco stores coming on stream this year for the frozen product. Any thoughts in terms of how incremental that can be to revenues and profits for '26? And any options to go to bring those products into like Sainsbury's or A or the other retailers? Roisin Currie: I'll let Richard take your question, and I'll take the second part. Richard Hutton: So yes, the Derby cost will be broadly what we guided previously, which we said about a 40 basis point headwind this year. So if you sort of extrapolate that at current turnover levels, you'll see it's high single digits in terms of millions of pounds net impact on this year. That will then roll over and impact the year ahead as well, at which point we'll start to reduce some of the Kettering costs, but we're then starting to see some of the leverage coming through in terms of utilization of those sites. So that gives you kind of a bit of a clue as to what we expect profit progress in the first half to be because we have said we're holding the kind of the broad guidance that we believe it will be a flat outlook for profit this year with that decent underlying progress in the first half then held back by the increase in costs as those come through. Catering looks like it will be around the middle of next year in terms of its timing. So again, that cost annualizes out in the middle of '28. So I guess we get to the end of '28, having kind of taken the 2 big step-ups in cost through that period. And then we're into that leveraging sort of period going forward where addition of new shops comes at very little incremental CapEx. We're just investing in the retail side of it. And obviously, some of that will be franchise partners, which won't involve capital either. So we start to work it much harder from then on. Roisin Currie: In terms of your question on where we go in the sort of grocery channel, I think one thing I would say is -- and we've -- we had the partnership with Iceland Foods since 2011, and we know that we have not yet maxed out that partnership. So as we've seen as we've gone with Tesco, actually, we're doing some other new products with Iceland. So that tells you actually, there's more to go with that original partner. I think we've been very pleased with the progress in Tesco as have they. So what we're now doing is we are in discussions with them around how do we maximize the current partnership that we've got. And if you think about it, with our partnership with Tesco, it's not just the grocery chain that we've got that partnership. We also have Greggs within Tesco currently, and we have a pipeline for other opportunities. So I think just now, it's about maximizing those 2 current partners. In saying that, we are obviously in discussions with others, but our focus for this year will certainly be about maximizing the partnerships that we've got in place, which keeps it simple for us and means we can take the learning around what else we could do in the future. I will just come right behind sorry, I will come over to this side of the room in a minute. So we'll go over the other side of the room after your sales. Gary Martin: It's Gary Martin here from Davy's. Just a couple of questions from me. Just starting off on the cost conversion piece and just dovetailing off of some of the commentary from yourself, Richard. It seems though from Slide 11, it looks as though there's a fairly elaborate plan in place in terms of cost optimization. Would you be able to maybe run us through how much of that is kind of low-hanging fruit or how much of the kind of hard yards are ahead just in terms of how you plan to optimize in the future from a cost base perspective? That's my first question. And then just the second one, just on the market share piece. So I'd just be curious just to get the grips with the base all eating and drinking out of home index that you're using to measure market share growth off of. Does that include some of the retail meal deals, for example? Roisin Currie: I'll let Richard take your cost [indiscernible] and I'll be back [indiscernible]. Richard Hutton: Should I call it low hanging. That's a good question. I don't want to sound easy. I mean people have to work hard on this. I mean it does involve -- if it was too easy, to be honest, it wouldn't count as part of this sort of objective because it's -- it's about structurally changing the way we do things to make it more efficient and to tackle legacy costs that we don't need anymore. And that's important because there are always new costs coming into the business as well. I tend not to talk as much about that. But when we bridge profit year-to-year, there's always something new that you have to do either from a compliance point of view or to make sure that you are secure and embracing the latest technology. So looking at legacy costs and taking this approach that we do is super important. I think there are things that we can see and there are always new ideas. Sometimes they're inspired by things that people achieve and one group sort of like achieves a breakthrough and others then think, oh, okay, we could do that and sort of learn. So sharing within the business, comparing those with other businesses that we have good relationships with to see what they're doing also helping that. So it's quite a big program. And whilst it might not be dramatic in any 1 year, just by working every year at it and sort of keeping that sort of pressure on and celebrating games, however, small, it sort of just encourages people to keep looking and turning over stones that have been turned over before and because the world changes. And if you look back 5 years, you can just see it's a very different place, isn't it? And the things that you thought were important then may not be as important today. So yes, it's hard to sort of -- I wouldn't call it low-hanging though. I would -- otherwise, it would just be what took you so long. You have to work at these games. Roisin Currie: On market share, so the Circana data that we use is stated behavior. So that's asking the consumer where do they eat out of home and food to go. So it will include any of the behavior in the likes of the food to go sections of a Tesco, Sainsbury's, et cetera, is included in the Circana data. So -- and it's asking customers on a regular basis, where have they purchased recently, which is the best sort of metric on market share that we've got. So it will have all the food to go specialists in there and it will have the food to go part of the supermarkets in there as well. Richard Hutton: Just to pass on the mic. I'm going to take an online question, if I may. One from Darren Shirley at Shore Capital. It's traditional at these events that Darren asked me to split out the price inflation and volume aspects of like-for-like and that I refused. But I'm going to shock him today by actually doing it. So Darren says, what's the inflation contribution to the 1.6% like-for-like so far this year. Just under 4% is the answer, Darren. And we had just under 5% last year, so that's the 1% sort of reduction in inflation. So you can see that slightly over 2% was the volume impact year-to-date. Roisin Currie: So we're coming to [indiscernible] then we will come over to the other side. Ross Broadfoot: Ross Broadfoot from RBC. Two on the new shops, please. You said 53% of 2025 shops in areas with no existing shop within a mile. Why is a mile a good benchmark? I'm sure that will differ across the estate. There any color you can give in terms of sort of behavior that you're seeing? And then second, you talked about sales transfer of 5%. What's the profit impact? And how quickly would you expect those shops to recover? Richard Hutton: Yes. It's an arbitrary decision, honest to me. It could have been a kilometer, it could have been a mile, it could have been in 5 miles. But if you think about sort of when you're actually going out for your lunch, would you walk a whole mile? You probably wouldn't, would you because you'd come across something in that. It's a long way. So as a broad measure, and I know there are some other studies that have used that as a broad metric. But it is quite a big -- that's quite a big sort of catchment distance. So we've used that. We actually sort of typically look at sensitivities within more like half a mile in our appraisals to identify shops where we believe there is a risk of cannibalization. But the reality is it depends on the journey the customer is on as well. It's not really -- if you think around here, people are wondering around on foot. That's one thing. If you're on a busy trunk road, then actually a mile might just be a minute of your journey. And therefore, the more relevant thing is actually, are there other options that are accessible from the same road? Or is it taking a transaction from where you're actually going to go at your destination, which we don't always know. So it's complex and none of this is perfect, but really we present this stuff to try and give you some assurance that we do look at it carefully. We do try our very best to avoid the risk of cannibalization. We do this when we're working with partners as well. We have to agree where shops open so that we don't transfer sales between locations. And that will be absolutely true of the new developments that we get into as well, whether that's convenience retailing or other things. Roisin Currie: Just on that point, just to Richard's point, I guess we're trying to give confidence around providing data points and actually, that's why we've come up with one well. Internally, we actually look at catchments and we look at the customer mission. So if you thought about London in particular and you think about Liverpool Street Station, actually, you've got a Greggs in Liverpool Street Station. You've got about 3 others within local proximity. If you're at the mission of you're a commuter, you do not come out of the station to seek out a Gregg. So we need to be accessible when you're there -- but similarly, if you're out about in food, you wouldn't come into a station to seek out a Greggs. So we need to be accessible there. I think the point around convenience and accessibility are still #1 in the food to go market. And that's why we've got the confidence in the amount of white space and the underrepresented catchments ahead of us. On the other question -- the other part of the question, I think, was the profit impact on the sales transfer of the 5% was the other part of your question? Richard Hutton: Yes, without pulling out the appraisal. Typically, we would look at it and say, okay, on the sales transfer, it will be like a 50% drop-through. So that will be the kind of the rate of profit cannibalization that we would then factor into the shop that was losing sales from the new shop. Unknown Analyst: One just on the Greggs apps. I have a number in the past of incrementality and frequency been about presumably that starts to diminish now? And is it still in your eyes accretive given that the tenant product is for free? Richard Hutton: Yes. That's interesting. We were looking at this just recently because we've -- now that we've got sort of data scientists in the business, we've been able to sort of apply a more technical analysis to this. And my team was starting to form the view, my finance team that this was becoming more mature now and essentially, you shouldn't expect to see quite as much incrementality because it's becoming part of the core offer at Greggs really for a regular customer. Interesting, the data scientists went at the app data and looked at it and came up with an even stronger number than the finance team were. So that said, I mean, it's a tough market with low like-for-likes generally at the moment, isn't it? So we do still believe that it underpins frequency of visit, but it's become, I think, more of an essential as part of your mix really is to have something which rewards the customers who are loyal to you. But -- so if it was driving the incrementality the data scientists are saying, then we'd be sort of shooting off the charts, wouldn't we? And the fact that we're not, I suppose, shows just how important it is in terms of securing the loyalty of your existing customer base. Whether it attracts new customers, that's always the heart of it rather than holding on to the customers you have. But I think it's a super important part of our armory. Roisin Currie: I think another piece just to add on the app is last year, we had just under another 2 million downloads in terms of customers downloading the app for the first time. I think the team has done a great job. When we started to launch ice drinks, we saw that really resonating with the sort of 18 to 34 consumer demographic that we offered ice drinks as a free that you got for download in the app. We saw a real spike in that. So I think it's constantly making sure that you try and get those customers that currently aren't on the app on to it, then we can communicate with them. We can send them quest, we can drive frequency of purchase still a really important part in the armory. Unknown Analyst: All right. Great. And then second question, there's quite a lot of quite big moves across the different business divisions. The B2B has seen quite a big step-up in trading profit margin this year. The retail business seems to have seen quite a big step down in the second half, which then is obviously offset by the cost savings that you mentioned earlier. How much of this is -- I'm not regular count, but there's been a change in the value and lease calculations and the CGUs you mentioned. Is there anything to do about going on there that's creating these large swings? Or if you can maybe just aggregate what's exactly going on there? Richard Hutton: No. I mean just like-for-like, the big factor there. Obviously, we had a bit of a reset in the middle of last year when we had the very hot weather. I think we'd expected stronger like-for-likes last year than actually came through. And increasingly, we became aware that this was very much a market-wide factor. So as you've seen, if Greggs has basically got through last year on a 2.5% like-for-like and taken 0.5 percentage point of market share. Gosh, it must be very tough in other places. So I think it's really just a factor of that, Ben. I mean, the overall impact has been consistent across the business. We have been able to start driving some additional sales through channels such as grocery. But broadly, I couldn't pull out anything that's skewing things from half to half, particularly. Roisin Currie: I'll ask you to pass the mike up front. Thank you. And then we probably just probably got time for two more questions. We'll take one left side, and we'll get you Andy. Conroy Gaynor: Conroy Gaynor from Bloomberg Intelligence. So the first one, just looking at your ever-evolving portfolio of new products. Are there any incremental margin mix benefits that we could be thinking about this year and beyond as you roll those out? And the second one, like many companies, as you're going further down this AI data science journey, are there any genuine competitive advantages that you can pick out that you think Greggs would benefit from? For example, is it your scale or ability to leverage the brand? Is it the fact you have a rich history of trading data piece of stats. But how can you leverage that into a competitive advantage. Roisin Currie: So let me take the competitive advantage one and then I'll let Richard talk about margin mix. I think AI and technologies are really interesting one because I don't think that there's a silver bullet. I think you're absolutely right around there will be opportunity for us to leverage our scale. But if we look at some of the work that we're doing with the support teams just now at Greggs House, it's using in technology that's got AI functionality to then actually move to Agent AI, where actually you are trying to automate a lot of processes. So they sort of mundane and routine of which a business of scale has got lots so you would assume actually that will give us a competitive advantage. I think for us, AI is around -- actually, there are going to be many different strands to this that will actually deliver the advantage. From a supply chain perspective, automation especially with Derby catering, that will be significant for us. And that is why that vertical integration does give us a competitive advantage, especially when we have got on automation in those sites. And then I think from a shop perspective, if you think about our labor cost, it's significant because we are a small box shop model. So therefore, you need people to serve. But we are, to Richard's point earlier, we are looking at lots of the ways that our teams have to do task in those shops. And when they do task, it takes away from serving the customer. So you can't serve the queue as quickly if we can automate a lot of those tasks. Actually in our shops, we believe we can get more volume throughput in terms of those customers and serving those queues. And then I think from a data perspective, our app is where, to Richard's earlier point about our data scientists that we've now got on board, our app is where we do need to mine that data and try and understand the behavior. And because we serve 8 million customers each week, there's a lot of data there that we should be able to mine in terms of 1/4 of those transactions are through the app. So I think it will be many faceted, but it will not be a silver bullet, but there's lots of areas that we have to get after. Margin mix? Richard Hutton: Yes. I think over time, what happens with margin mix is that things which are -- some things become commoditized. And therefore, you can't command the same strong margin on a pack of crisp because everybody sells one. And the way we kind of protect and drive margins is actually by the value adding in the shops. So the things that you bake in store, the things that you make in the back of the store, the things that -- the drinks and things that you produce tend to be the higher-margin items because you can't -- you haven't got the same, you can't compete with that in a commoditized way. You have to put the effort in. I think the matcher thing is the latest example of that. It's -- despite our keen price point, it's a very high-margin item still. And it's sort of, I suppose, injecting interest into the ice drinks category more generally, which again is high margin as hot drinks have been. So I think that's the way the business evolves over time as it pushes it into new areas which tend to have attractive margins, accepting that there's behind the scenes, some of the older items become more commoditized. And it just evolves over time, and it's always been that way. So directionally, it's interesting. I think drinks, if you were to show the mix of food and drink and Greggs over time, drinks are a much more significant part of the mix and a lot of the innovation is still coming in those areas. Roisin Currie: So we'll come to Andy, and then I don't know if you want to check there anything online after that. And then I'll need to bring it to a close because I've then got a press call. But Richard will be around indeed for a few minutes afterwards for anything we didn't get to, Andy. Andrew Wade: Just might be my memory failing, which is quite likely. But just looking back at the market share 1 on Slide 8, your like-for-like versus the market. I'm sure when we looked at that to sort of looked at this a year ago or 6 months ago, you were fairly -- your dotted line is consistently outperforming or as it looks like the sort of last 6 months or so, it's a bit pretty much in line with? Is that a narrative that you recognize? Or am I slightly misremembering? Richard Hutton: It may be we were using the takeaway in sort of fast food line time. I can't quite recall, Andy. There's two measures which are relevant. One is the takeaway sector and this is a much broader one. Typically, we've outperformed the takeaway sector more strongly than the overall measure, but we felt, look, the overall sort of eating and drinking out of home is probably the fairest measure of the totality of the market. and a more stable line because the takeaway fast food sector tends to be quite promotionally driven. And you see quite big spikes, which don't really teach you much in terms of your comparative performance. So I'd have to check back, but I suspect that's the answer. Andrew Wade: Okay. Second one then, sort of thinking about your recovery in ROCE, which is effectively, I suppose not going to have a massive change in the capital base, effectively, recovering in EBIT margin. Can you do that if you continue to have negative like-for-like volumes? Richard Hutton: Well, it makes it harder, doesn't it? We -- in our core plan, we assume that the market continues to stay tough for a while yet. We don't assume that it's going to kind of fix itself in a few months. So we've taken a multiyear view, but we also assume that the market will stabilize in time and this sort of like economic pressure that people have been under will get easier. And I think the first signs of that are this easing of inflation. And I genuinely hope that this is the start of an improving cycle in terms of people being under less pressure. In fact, the government have been confident enough to reduce the rate of increase of the living wage, I think, is indicative of that and hopefully gets us to a place where we are in less inflationary times. Andrew Wade: Just on the, I guess, a similar point. So we've now sort of had negative volumes for, I guess, 18 months, maybe a bit more than broadly 18 months. So we've annualized through negative volumes, negative volumes on negative volumes. So is your view that now that effectively the consumer sort of step down but continued deteriorating? Is that how you're viewing it? Richard Hutton: A little for now because we can't see a reason not to carry on with that assumption. And it's prudent to plan on that basis because then you don't overplan your cost base. So we try and plan on a cautious, prudent basis with some sort of cautious optimism that we've maybe been a bit too prudent. Particularly, I think in the coming year, it'll be very interesting to see what happens in June and July when we had very, very hot weather last year. I mean having now it may happen again, of course. And that's the basis we plan on, but hopefully, that might give us a little bit of upside. Roisin Currie: And what I would say is we're doing a lot to try and disrupt that and make sure we find reasons for the consumer to come into us. So actually match is a really good example of that. We've already leaned into ice drinks. Match has another demographic. So then we're leaning into that, but at a value price, and there'll be more on the menu that we'll do this year. So I guess it's how do you continue to bring that excitement, use your app, get the consumer message out there and you can start to try and buck that trend. So there's loads in our armory that we deliver this year. So on that note, I'm probably going to bring us to a close. And thank you for your time today. What I would say is I do need to run a press call to go to, but I am sure Richard and Dave will be around if there's any other questions, but thank you, and thanks to those online.
Guilherme Paiva: Good morning, ladies and gentlemen, and thanks for standing by. As a reminder, this conference is being recorded. Its broadcast is intended exclusively for the participants of the events and may not be reproduced or retransmitted without the express authorization of Embraer. This conference call will be conducted in English, but please let me say a short announcement for Portuguese speakers. [Foreign Language] My name is Gui Paiva, and I'm the Head of Investor Relations, M&A and Venture Capital for Embraer. I want to welcome you to our fourth quarter of 2025 earnings conference call. The numbers in this presentation contain non-GAAP financial information to help investors reconcile Eve's financial information in GAAP standards to Embraer's IFRS. We remind you Eve's results will be discussed at the company's conference call. It is important to mention that all numbers are presented in U.S. dollars as it is our functional currency. This conference call may include statements about future events based on Embraer expectations and financial market trends. Such statements are subject to uncertainties that may cause actual results to differ from those expressed or implied in this conference call. Except in accordance with the applicable rules, the company assumes no obligation to publicly update any forward-looking statements. For detailed financial information, the company encourages reviewing publications filed by the company with the Brazilian Comissao de Valores Mobiliarios or CVM [Operator Instructions] Participants on today's conference call are Francisco Gomes Neto, President and CEO of Embraer; Antonio Carlos Garcia, Chief Financial Officer; [ Baltasar de Sousa], Corporate Communications Manager; and myself. This conference call will have 3 parts. In the first part, top management will present the company's Q4 results. In the second part, we will host a Q&A session only for investors. And last but definitely not least, in the third part, we will host a dedicated Q&A session only for the press. It is my pleasure to now turn the conference call to our President and CEO, Francisco Gomes Neto. Please go ahead, Francisco. Francisco Neto: Thank you, Gui, and good morning and good afternoon to everyone. It is a pleasure to be here with you to share Embraer's fourth quarter and full year 2025 results. 2025 was a remarkable period for our company. We met our deliveries guidance on the operational side, while we outperformed the expectations on the financial side. This performance reflects a longer trend. Embraer has been able to deliver 2 digits of revenue growth over the past 3 years despite the supply chain challenges. 2025 was also a marquee period for the E2 program with strong sales across all continents, which has consolidated further the E2 platform as a benchmark in the small narrow-body segment. At the company level, our record revenue and backlog provides strong visibility to investors about our ability to deliver sustainable growth for many years to come as we have robust processes and governance in place. We have made significant progress across the production chain through closer collaboration with suppliers, process digitalization and investments in artificial intelligence tools. The production level initiatives have now been extended across all our platforms, and they should help support production stability in 2026 and onwards. We are well positioned in strategic markets, supported by partnerships under discussion with global players in India, Mahindra and Adani Group and in the U.S., Northrop Group. These partnerships reinforce our strategic position and support long-term growth potential across both our Commercial Aviation and Defense segments. To conclude, all our business units are performing very well with solid execution and bigger backlogs. During the quarter, we saw a strong sales momentum across all business units. In Commercial Aviation highlights included new orders from TrueNoord for 20 E195-E2s, Helvetic Airways for 3 E195-E2s as well as 4 E175 orders from Cote d'Ivoire. In Executive Aviation, revenues reached an all-time high of circa $750 million as we delivered 53 business jets, the highest number ever in a single quarter. In Defense & Security, we reinforced our global footprint with Sweden's order for 4 KC-390 plus 90 options. And Portugal signed a 6 aircraft order along with 10 options for NATO countries. Finally, in Service and Support, we signed an E195-E2 pool program with Airlink and the maintenance service extension with the Republic for its E1 fleet. Let me now walk you through our sales performance for the full year. During the 12 months, Commercial Aviation recorded 157 E2 new orders across all continents, plus 140 options. In addition, the E1 program reinforced its market position with 64 new orders plus 68 options. These achievements increased the division's backlog to $14.5 billion with an impressive 2.8:1 book-to-bill ratio. In Executive Aviation, total sales reached approximately $2.3 billion, supported by strong demand across the portfolio, including the continued success of the Phenom 300, now the world's best-selling light jet for 14 straight years. The backlog in the division now stands at $7.6 billion, supported by a consistent 1.1:1 book-to-bill ratio. Defense & Security achieved another strong year with 5 KC-390 aircraft sold to 2 NATO countries, plus 19 additional options and 10 A-29 Super Tucanos sold to Uruguay, Panama and Sierra Nevada. The business unit closed the quarter with a $4.6 billion backlog and a 1.4:1 book-to-bill ratio. Finally, in Service and Support, the sales momentum remained strong. During the year, the program added approximately 75 aircraft and the Executive Care program signed another 37 new contracts. As a result, the business unit finished the quarter with a $4.9 billion backlog and a 1.2:1 book-to-bill ratio. Together, these results drove a consolidated 1.7:1 book-to-bill ratio for Embraer in 2025. I will now move on to our operational results for the year, and my comments will reflect year-over-year comparisons. In Commercial Aviation, revenues increased by 7%, driven by higher volumes. The adjusted EBITDA margin improved from 2.5% to 2.7%, supported by lower expenses. Executive Aviation, revenues increased a significant 25%. The adjusted EBITDA margin increased from 11.7% to 12%. The gains recorded from higher volumes, pricing and operating leverage more than offset the negative impact of U.S. tariffs. Moving to Defense & Security. Revenues grew 36%, mainly because of higher KC-390 and A-29 Super Tucano volumes. The adjusted EBITDA margin improved from 6.2% to 7.9% as a consequence of operating leverage and client mix. In Service and Support, revenues rose 18%, driven by higher volumes and the ramp-up of the OGMA GTF engine shop. Adjusted EBITDA margin decreased from 16.5% to 15.5%, mainly because of the ramp-up of new operations. Before I conclude, I would like to share a brief update on EV's steady progress. The first flight of EV's eVTOL prototype in December 2025 marked an important milestone. Since then, our full-scale prototype has run 28 missions for a total of more than 1 hour in over flights. The program continues to advance through flight tests towards certification in 2027. Antonio Garcia: Thank you, Francisco. Good morning and good afternoon to everyone. I'd like to start by highlighting that despite a year marked by challenges and volatility, the company remains focused on disciplined execution, delivering results in line with its commitments. Let's now take a closer look at our financial results for the fourth quarter and full year 2025. All my comments will be based on year-over-year comparison unless otherwise noted. Turning to next slide, I will start with deliveries. In the last quarter, Embraer delivered 91 aircraft, 32 commercial jets, 53 executive jets and 6 defense related. This represents a 21% increase with Commercial Aviation deliveries up 3% and Executive Aviation up significant 20%. More importantly, for the full year, we delivered 78 jets in Commercial Aviation for a 7% increase and in line with our 77 to 85 aircraft guidance for the period. Meanwhile, in Executive Aviation, we delivered 155 jets, up a relevant 20% during the period and at the high end of our 145 to 155 aircraft guidance for the year. In Slide 12, backlog and revenue. Our company-wide backlog reached $31.6 billion during the quarter, up a significant 20% and higher than our previous record. The backlog for Commercial Aviation and Defense & Security increased plus 42% and plus 10%, respectively, for support plus 7% and for Executive Aviation plus 3%. In addition to our firm backlog, we currently have approximately $20 billion in options held by our customers. These are not included in our backlog, but they represent a meaningful upside potential over the coming years. As these options are exercised, they could support a significant expansion of our backlog, potentially profit towards $50 billion over time. Beyond the size of the backlog, it is also important to focus on its quality and overall composition. The current backlog reflects a more attractive customer mix, which positions the company for a more favorable firm margin profile perspective over time. Any financial impacts from this mix will continue to depend on execution, delivery phasing and external factors. Moving on to revenues. Our top line increased 15% and almost reached $3 billion in Q4 '25. From a business perspective, our revenue remained well diversified across segments. Commercial Aviation accounted for 37%, Executive Aviation, approximately 30%, Service and Support around 20%; and Defense & Security 13%. Our top line of $7.6 billion for the full year was above the high end of our guidance, an increase of plus 18% when compared to 2024. Moving to the next slide, please. We generated $298 million in adjusted EBITDA in Q4 '25 with an 11.3% mark and $889 million in the year with an 11.7% mark. compared to 12.1% margin a year ago if we exclude the onetime impact of the Boeing agreement. Slide 14, adjusted EBIT. Now adjusted EBIT was $231 million for the quarter with an 8.7% margin compared to 11.5% in the same period a year ago. As we highlighted in our last earnings call, we expected a relevant impact from U.S. imported tariffs in Q4. In addition, we faced additional infrastructure-related costs, which weighed on margins. Tariffs totaled $27 million during the period and nonrecurring infrastructure costs reached $20 million. For the year, we generated $657 million with the same 8.7% margin, in line with last year if we exclude the onetime Boeing gift and surpassing the upper end of our 8.3% guidance for 2025. This performance was achieved despite the impact of U.S. import tariffs and reflects our discipline in our ongoing cost reduction initiatives and efficiency gains. Let's move now to the next slide. Embraer generated $738 million in adjusted free cash flow in the quarter, mainly supported by operations, higher number of aircraft delivered and sales campaign. For 2025, we generated $491 million in adjusted free cash flow and helped the company to cover on average close to 60% of its EBITDA in free cash flow over the past 3 years. The 2025 figure compares to $676 million in 2024, which includes a one-off $150 million inflow related to the Boeing agreement. We exceeded our guidance of $200 million or higher, supported by our continued efforts to reduce working capital requirements. Looking now at our investments, excluding Eve, we allocated almost $100 million during the quarter. The figure includes $27 million in CapEx, $34 million in addition to intangibles, $12 million in the Pool program to support new contracts and $27 million in research. On a yearly basis, Embraer stand-alone invested a total of $383 million in 2025, 10% lower compared to $428 million in 2024. Our capital allocation continues to be geared towards segments with higher returns, such as Executive Aviation Service and Support, mainly in U.S. We continue to see our CapEx run rate at close to $400 million per year in the near future. In Slide 16, adjusted net income. Our adjusted net income was positive $153 million for the quarter, supported by a 5.8% adjusted margin compared to 7.5% in the same period last year. Meanwhile, we ended the year with $253 million in the adjusted net income compared to $461 million in the prior year. We finished the year with a 3.3% adjusted margin. It was lower than 7.2% recorded in 2024. I would like to emphasize the decline was mainly driven by the onetime $150 million impact from the Boeing agreement, less favorable net results and U.S. import tariffs. Turning to next slide, let me walk you through the financial bridge from our reported EBIT in 2025 to both reported and adjusted net income. We finished the year with $608 million in EBIT after accounting for $340 million in net financial mainly inflated by the mark-to-market gains of our share price in our stock-based compensation plan, $91 million in tax credit and $7 million in minority interest. We arrived at $352 million in reported net income. To arrive at adjusted net income, we exclude extraordinary items. These adjustments included a negative $137 million related to deferred taxes, which was partially offset by a positive $38 million from [indiscernible] results. With that, we get $253 million in adjusted net income for the year. Looking at the evolution of our earnings per share, we have seen solid sequential improvement over the past few years. EPS was negative $0.2 per ADS in 2021, improved to $1.4 per ADS in 2024 if we exclude the one-off related effect and reached $1.9 per ADS in 2025. This trajectory highlights the structural improvements in profitability and the progress we have made in strengthening the company's earnings profile over the past few years. In Slide 18, financial position. We continue to strengthen our balance sheet throughout the year. And as a consequence, our liquidity position has increased significantly our stand-alone net debt decreased by $220 million, reaching a net cash position of $109 million at the end of 2025. The solid position of our balance sheet ensures the company remains well prepared to navigate potential volatility ahead. Consequently, our leverage position, excluding if improved further from 0.1x net debt to EBITDA to 0.1x net cash to EBITDA by the year-end. As a reminder, in the third quarter, we announced a new liability management initiative, which was fully executed. The average maturity of Embraer debt without Eves increased to 9.1% from 3.7 years, significantly improving our debt maturity profile. Today, 96% of our debt is long term, which provides us with financial flexibility. Importantly, these actions also led to a reduction in our average cost of debt, which declined to 5.5% from 6.2%, further strengthening our financial profile. Slide 19, shareholder remuneration. We declared a total of BRL 568 million in 2025 in shareholder remuneration, combining interest in equity and dividend. This amount corresponded to BRL 0.78 per share and represents a dividend yield of approximately 0.9%. As a reminder, this distribution should be complemented by an additional dividend to ensure compliance with the minimum 25% net income distribution required under the Brazilian corporate law. The full amount will be paid in a single installment following our 2026 Annual Shareholders Meeting. Slide 20, guidance. Before I present our 2026 guidance, I would like to remind you, Embraer has delivered its financial estimates year in and year out since 2021, reflecting a disciplined approach to planning and execution. Now to conclude my presentation, let me go over the details of our 2026 guidance. In terms of operations, we forecast Commercial Aviation should deliver between 80 and 85 aircraft. Meanwhile, for Executive Aviation, we forecast 160 to 170 jets, representing a year-over-year increase of approximately 6% in both segments based on the midpoint of the range. Turning to financials. We forecast a consistent double-digit growth. We estimate top line to settle between $8.2 billion and $8.5 billion, with the midpoint of the range, 10% higher than what we generated last year. We forecast EBIT margin between 8.7% and 9.3% for the year, which would imply around $750 million at the midpoint of the range and approximately 15% higher than the adjusted $657 million EBIT generated in 2025. Finally, if we move to free cash flow generation. We estimate an adjusted free cash flow without Eve of $200 million or higher for the year. Remember, our midterm goal is to convert 50% of our EBITDA in free cash flow. If we look from 2024 to 2026, we should generate circa $1.4 billion or more in free cash flow, which is 50% of circa $2.8 billion implied EBITDA by our 2024 and 2025 and our 2026 guidance. It is important to highlight this guidance reflects our assessment of the operating environment prior to February '20 before the latest round of changes to U.S. import tariffs. We are taking a conservative approach at this point in time because of decreased policy uncertainty and prefer to wait for additional visibility before making any changes to our outlook. We will update or reiterate our 2026 guidance on a quarterly basis as the year goes by. Let me stop here, and now I hand it back to Francisco for his final remarks. Thank you very much. Francisco Neto: Thank you, Antonio. To conclude, 2025 clearly marked the consolidation of our strategy across all businesses. In Commercial Aviation, record orders supported the consolidation of the E2 platform as they reinforced its global relevance and provided long-term visibility for the business. In Executive Aviation, strong retail and fleet demand supported by higher delivery volumes reflected the strength of our portfolio, which was further reinforced by the recent announcement of the next generation of the Praetor 500E and 600E. In Defense & Security, we continue to advance KC-390 campaigns globally, including key strategic opportunities. In Service and Support, the growing footprint of our operations is strengthening our ability to generate recurring revenues. Our continued focus on driving efficiency and financial discipline across all areas of the company is paying off as our best-in-class operations and services that support our customers. Looking ahead, we expect substantial growth over the midterm, while we prepare the company for a more ambitious long-term expansion, supported by a new generation of products and technologies, always grounded in our culture of safety first and quality always. With that, I would like to move on to the Q&A session. Operator: [Operator Instructions] We remind you again, this conference is being recorded. This broadcast is intended exclusively for the participants of this event and may not be reproduced or retransmitted without the express authorization of Embraer. We also highlight this conference call is being conducted in English with translation to Portuguese. Please let me say a short announcement for Portuguese speakers. [Foreign Language] [Operator Instructions] The first part of the Q&A session will be exclusively for equities research analysts and investors. The second part of the Q&A will be only for the press. The first question comes from Marcelo Motta with JPMorgan. Marcelo Motta: The question is regarding the strategic partnerships that the company have been announcing. So just wondering if you can provide us an update on the stage of it once in India for the commercial and for the defense and also in the U.S. for defense. Francisco Neto: Thank you, Marcelo. Francisco speaking. Good question to start the Q&A today. So yes, we are focused on strategic partnerships to support long-term growth for Embraer. And the 2 main ones are India, where we have been working 2 fronts, the MTA, mid transportation aircraft with India Air Force that we've been working for a few years already and a more recent partnership, this one with Mahindra. So we expect an RFP from the customers still this year. And the second one is with the Adani Group is to focus on the executive civil aviation to improve connectivity between smaller cities in India. Both opportunities can bring a relevant business and potential growth for Embraer. So again, defense, we expect RFP for this year. And civil aviation, we are still building the case, but we have said that if we get orders still in 2026, can do the rollout of jets by 2028 in India. In the U.S. -- sorry, thank you, Antonio. In the U.S., we are -- we announced recently the partnership with the Northrop Grumman to develop the boom capability for the C-390 as an option for -- to complement the tanker fleet of U.S. Air Force with our KC-390. This we don't have a time line defined it, but we are working very hard. We recently took the KC for demonstrations in the U.S. Operator: The next question comes from Kristine Liwag with Morgan Stanley. Gabrielle Knafelman: This is Gaby on for Kristine. Just a follow-up on the Northrop Grumman partnership. On the partnership around adding BOM capability to the KC-390, could you provide any more detail or color on the structure of the partnership and how responsibilities are being split strategically, how significant is adding a boom for the KC-390s competitiveness, particularly in the context of [indiscernible]? And how should we think about the potential size of the opportunity over time? Francisco Neto: Thank you for the questions, Kristine. So at this point, we have signed an MOU with Northrop Grumman and the main focus is the collaboration to enhance the capabilities of the KC-390 Millennium focusing on the integration of an autonomous boom refueling system and agile combat employment solutions. This is designed to meet the future needs of U.S. Air Force and allied nations, not only U.S. We don't have a time frame defined yet, but the main purpose is really to engage this discussion with the U.S. Air Force and have the KC-39 to complement the fleet they have. We don't see this collaboration, our strategy is based on the premise that it does not compete with the KC-46 or any other strategic tanker, but rather, it's a complementary capability. And our intention, if we get a sizable order, this aircraft will be assembled and produced in the U.S. We don't know the size yet, and we don't have a clear view about time frame, Kristine. Gabrielle Knafelman: Great. And just a quick follow-up, if I can. Can you just provide a quick update on the supply chain environment across both commercial and Executive Aviation? What are the major constraints you're still seeing? And what areas have you seen improvement in? Francisco Neto: Last year, we face some issues in supply chain, but even then we -- as a company, we were able to overcome the issues and deliver the aircraft in the year. This year, we see the supply chain improving, but it's still with a few bottlenecks that we want to be even more proactive this year than we were last year to anticipate all the issues and act with greater effectiveness. And we have started doing that already in January. And yes, we are -- I'd say, we are monitoring the situation, but we are positive that this year is going to be better than last year. Operator: [Operator Instructions] The next question comes from Myles Walton with Wolfe Research. Myles Walton: Great. I was hoping you could touch on the margin outlook by segment, maybe just a little bit more color below the surface. Pretty good to have margin expansion. I think service and support probably going against you. And I think I heard that the tariffs are in the guidance, and I would imagine those would be incremental year-on-year given a full year of effect. So maybe just talk to what the margins would be without tariffs? And then also any color of where the uplift is happening within the segments? Guilherme Paiva: Myles, thanks for the question. This is Gui. I think one way to kind of think about the outlook for margins is to account that last year, we paid $54 million in tariffs. And we are carrying over around 2025 from inventory into '26. So if you adjust for that, we are probably looking for something close to 75 to 100 basis over time as both of them unwind. And... Antonio Garcia: Myles, it's Antonio speaking. Just to complement, I would say, overall picture, we -- if you see what we have reported and the trajectory that we are right now and the huge impact on tariffs was in Executive Aviation, and we delivered the same number we delivered last year and percentage-wise, which means it doesn't matter if you have tariffs or if we have a crisis, we always find a way to compensate. And I would say, if we take service and Executive Aviation is already on double-digit space on the margin profile, and we are moving towards defense, I would say, it's up to speed also to go also to double digit, I would say, then we keep on our challenge here with Commercial Aviation to move to mid-single digit. I would say, on a consolidated level, we are coming closer to double-digit EBIT margin for this company here. Myles Walton: Okay. Great. And then maybe just one other one on cash flow performance in the fourth quarter. Is this similar to last year where some of the defense orders came through with higher advances? Or were there other attributes driving the performance? Antonio Garcia: I would say, some effects. We -- for sure, we have -- we delivered more than 90 aircraft in Q4. That's -- and especially in commercial aviation, where the -- when we deliver, get more cash than compared with the others because of the size of the advanced payment and by delivery, we get more money. I would say 2, 3 effects, a lot of deliveries concentrated in Q4. And luckily, we got some final anticipation and advanced payment from defense customer, if you -- and to be honest, also nice sales campaign in December on Executive Aviation, I would say, some up altogether, we brought this nice development in Q4. You know that it's hard for us to predict. That's why you see the guidance 200 plus again, but it was more or less the same as happened in 2024. Operator: The next question comes from Noah Poponak with Goldman Sachs. Noah Poponak: Just wanted to follow up on the delivery projections and profile here. I know at commercial, you've talked about getting back above 100. I hear you -- it sounds like supply chain is still a bit of a hurdle. I guess it's a little surprising to see the low end of the guidance pretty much flat. Maybe you could just talk about the hurdles left to get back to 100, when you think you can get there? And then on the executive side, similar question. I know you've talked about potentially expanding capacity to get to 200 there. What's the latest thinking and time frame to get to those types of numbers on the executive side? Francisco Neto: Thank you, Noah. Francisco speaking. Yes, I understand your point, but we are very focused this year to be from the mid to the high end of the guidance in terms of commercial aviation deliveries. And I said before, we believe we are better prepared this year with the supply chain to get there, while we are preparing the ground to reach 100 aircraft probably in 2027. We are working in that direction and not confirmed yet for sure, but we are working in that direction to create capacity to be there by '27, maximum 2028. We believe 2027 will be feasible. Same on the Executive Aviation. We are working in 2 fronts. We are expanding capacity in some bottlenecks of the production. We have been doing that already for a couple of years, while we work on improving efficiency in our production lines. So now we produce one Praetor or one Phenom in half of the time that we used to do back in 2021. So we are moving -- I'd say we're moving fast to reach those targets, production targets in the next years. Antonio Garcia: And we have orders for that. Francisco Neto: And we have order for that with the best news, right? Yes. Noah Poponak: Okay. Great. And how does the rate of growth in services that you've embedded in this initial 2026 guidance, how does that compare to what you saw in 2025? Antonio Garcia: We -- Noah, this is Antonio speaking here. It's nice to talk to you again. We are seeing Service and Support -- Service and Support also in the double-digit space in regards to growth, I would say. And to be honest, it's growing faster than the aircraft division because we have other contracts as well. And that's why we see even a fast speed growth for Service and Support comparing to -- with the aircraft delivery on the other 3 segments. I would say, more than double digit for Service and Support to move forward for the next 2, 3 years. Operator: The next question comes from Lucas Marquiori with BTG Pactual. Lucas Marquiori: I just wanted to follow up on the tariff discussion and actually try to understand what's the situation there. I know there's different sections of investigations and that, I mean, our latest understanding was that this is 0 now. I just wanted to confirm that. And for how long should it remain that way? Or what's the bureaucratic there that we need to see happening for that to change? And also, if there is any difference in tariffs for Embraer versus its main rivals or its main peers, if there's any kind of a dislocation of competitiveness or actually an improvement in competitiveness because of the 0 tariffs right now. Just wanted to hear your thoughts on that one. Francisco Neto: Lucas, thanks for your question. Well, first, yes, we confirm that all Embraer aircraft engines and parts are exempt from the 10% tariffs as of February '24. Yes, we still have some inventory that we paid the tariff in U.S. inventory, but we'll deal with that during the year, and this is already included in our projections. Of course, we welcome the level playing field in our industry since Embraer was the only manufacturer to pay tariffs on aircraft exports before. And this outcome will benefit our U.S. customers. So airlines, they can renew -- they can keep their plan to renew their fleet of jets, and we'll keep buying a lot of U.S. parts because more than 40% of our aircraft has a U.S. content. So I think the decision was very positive and it will benefit not only Embraer, but U.S. customers and suppliers as well. What was the -- how long this will take, this question? Antonio Garcia: 232, 301. Francisco Neto: We expect this to be a long-term decision. And about the sections, 232, 301, we are now monitoring the topics very closely and while we keep focus on our regular business. But so far, we don't expect any big changes, but this geopolitical situation is a little volatile. But let's see, we are now very optimistic that this will remain, and we will continue to reinforce our position and the aerospace industry position in the U.S. as well. Antonio Garcia: And Lucas, Antonio speaking here. We did -- we ran an assessment and we came to a conclusion. It's too early to bet to stay or is going to revert in another section here. That's why when you see our guidance profile, as of today, we see more upside than downside because we are not paying tariffs. But we have to wait because we don't want to -- it could be very complicated and volatile as we are seeing the word every single day. Operator: The next question comes from Alberto Valerio with UBS. Alberto Valerio: I would like to talk about the orders for the year. What should we expect? We should expect 1x book? Or do you think that it could be even more, but the guidance of commercial and executive is still having some supply issues on it included? Antonio Garcia: Alberto, Antonio speaking. You asked about our expectation for new sales company or just... Francisco Neto: I didn't get your question. Alberto Valerio: Exactly, exactly. So what should we expect in terms of book-to-bill for the year, if it will be one time or if we can expect a little bit more than the guidance, for instance, [indiscernible] on the commercial jets because you have still some supply issues for the year? Francisco Neto: Well, first of all, Alberto, I mean, we had stellar year last year in terms of sales of E2, right, 157 new sales plus 140 options. This brings a lot of confidence in the platform for the future, and we keep selling the E1s as well. For this year, as I said before, we are preparing to increase our production output for E-Jets for the next years. So we expect this year -- we are working in various sales campaign, and we expect the book-to-bill again above 1:1 for this year in terms of sales. And I mean, supply chain, as I said before, we are working now this year, again, very, very close to the supply, especially the pacers in order to mitigate the issues, delivery this year, the guidance, we expect from mid to high end of the guidance and prepare the company to increase the production in the following years for E-Jets. Operator: The next question comes from Andre Mazini with Citi. André Mazini: So 2 questions. The first one around defense and geopolitics, of course, that's a hot topic. So will it make sense to accelerate defense applications for Eve? Would that increase LOIs, predelivery payments and even get maybe to breakeven faster? I know Eve have their own earnings call, but I think it's pretty important for Embraer as well. So I wanted to hear your thoughts on that. This is the first one. The second one about the buyback program just announced. If you can read it, the buyback program as meaning that over the next 12 months, right, the duration of the program, you prefer to allocate capital in Embraer stock rather than going for a large new programs such as a new airframe and et cetera? And more generally, how do you think about the trade-offs of buyback, plowing money back into the company and new development -- plowing money back into buybacks, right, or new developments on aircraft, airframes and whatnot? Francisco Neto: Thanks, Andre. I answer number one, and then Antonio and Gui will answer number two. So Eve now, we are very focused on the certification process of the Eve, the product we have, the EV 100. And I know they are discussing all the opportunities. But at this point of time, they are really focused on the certification of the program until the end of 2027. I think for more questions, I recommend you to go to the Eve presentation, they will give you more details. Antonio Garcia: And Antonio speaking. In regards to the buyback, it's quite simple. We -- if you see the material fact issue, we are considering to replace the equity swap we have in the market. Basically, what we are doing are just changing, reducing the active swap into share from the treasury in order to hedge our long-term incentive program. It's going to be much more faster than 12 months, probably going to take 1 or 2 days to be concluded. That's more or less -- we are not increasing the shares, just changing from active swap to a share buyback. And we do not -- today, the company does not do this buyback in regards to total shareholder remuneration just to hedge the long-term incentive plan. Guilherme Paiva: And also just to complement, the company continues to invest heavily on the businesses that we have the higher ROIC, and that includes Executive Aviation and services. Operator: The next question comes from Luiza Mussi with Safra. Luiza Mussi Tanus e Bastos: Just a follow-up question because we saw some media reports yesterday indicating that India actually has opened a bid for like 60 units from military aircraft and the total contract value will be $11 billion. I mean, could you share like your perspectives on this deal in terms of how you expect the competitive dynamics to evolve? And how could you differentiate yourself like from the other competitors? Francisco Neto: Luiza, thanks for the question, Francisco speaking. We are very excited about this opportunity because we believe we have the best value proposition for India with our product, the [ KC-390 ]. It is very competitive, very modern, exactly for that segment. And we have also been working with Mahindra with a lot of activities to be compliant with Made In India expectations from them. So again, we are very excited and working very hard to win that business. That will be a very important step for the KC program. So yes, this is -- the original plan was from India is to buy from 40 to 80 aircraft. So 60 is the midpoint. And yes, this will generate billions of dollars in terms of revenue opportunity. Operator: The next question comes from Lucas Laghi with XP Investments. Lucas Laghi: Two quick follow-ups. First one on the Services division. I mean, margin performance is very strong. Just trying to understand what has been the main drivers this quarter. I mean you mentioned materials, for example. Just trying to understand if this -- I mean, should you continue to work with 20-ish percent EBIT margin going forward? I mean is this assumption that we should guide for -- in the upcoming years? And a follow-up on the guidance for 2026 regarding -- still regarding the margin. But I mean, we estimate around $90 million of EBIT impact considering a 10% tariff, which you mentioned that you included as an assumption for your guidance. So just to understand if that is the level of impact that we could consider as an upside given that you are -- I mean, merged in a current 0% tariff environment. So just to understand the size of the upside potential regarding EBIT for this year in this tariff topic. Antonio Garcia: Lucas, this is Antonio speaking. Thanks for the nice question. To be honest, I would love to take the 20% margin for Q4 for Service division and move forward, but not now. What's happened in Q4, we have a lot of bad guys throughout the year and then has been compensated in Q4 also with compensation for suppliers, this and this. That's why we see this nice 20% margin in Q4. For sure, we are not happy with 15%. We are moving towards a bigger number, but I would say, for your assumption here, 15%, 16% is okay to move forward. But we do see improvement, but not in the pace that we should assume already for 2026. And for the tariffs, I would ask Gui. Guilherme Paiva: So I think for 2025, we paid $54 million. And as I mentioned, we have about $25 million in inventory. So you can use that $80 million as a good proxy. But we're going to unwind that in '26 and in '27, right, because the inventory impact will hit us in '26 and will be only unwound in '27. So I would expect 2/3 of the benefits to come in this year if the status quo is maintained for the tariff, and we hope it does, with the balance 1/3 being upside for '27. Operator: Our next question comes from the chat and is from Andre Ferreira with Bradesco BBI. Congratulations on the results. The guidance assumes tariffs. So to confirm, if it is exempt, is there upside to the margin numbers? Would that translate in any way to the delivery guidance as well? Guilherme Paiva: Andre, thanks for the question. I think we just answered that with Lucas in the previous question. So let's move on to the next, please. Operator: The next question is also from the chat with -- it's from Kristine Liwag. Following up on the supply chain question, there's a public dispute between Airbus and Pratt about engine deliveries. For your commercial delivery outlook in 2026, how much conservatism is built into your assumption? And is Pratt able to support? Francisco Neto: Thanks for the question. Yes, I think as I said before, we have some bases that we are working on very closely in 2026. But I mean, we have been working in a very collaborative way with our suppliers, I mean, trying to help each other. And again, we are very confident that we will deliver the aircraft we are planning for the year, and we don't have any big issues with Pratt this year. They are doing that. Operator: Thank you very much. This concludes the question-and-answer session for equity research analysts and investors. Now we will start the Q&A session dedicated to the press. First, we will answer questions in English and then we will answer questions in Portuguese. We will also answer questions sent via the platform chat. [Operator Instructions] The first question comes from Pablo Diaz. Unknown Analyst: Can you hear me? Francisco Neto: Yes, we can. Unknown Analyst: Just wondering about the joint venture with Adani in India and the new line -- production line for the E175. Wondering if that production line is going to be focused on the E1 and if there is any possibility for that line to later migrate to E2 providing the certification process is retaken. Francisco Neto: Pablo, thanks for the question. At this point of time, we have -- we don't have a joint venture yet. We have signed an MOU with Adani to explore the opportunities in this civil aviation. And at this point of time, focus on the E175 E1. Operator: The next question comes from Curt Epstein with Aviation International News. Curt Epstein: I was wondering if you could detail the impact on your Executive Aviation division by the tariffs over the past year. Guilherme Paiva: I think the easy way to think is that out of the $54 million that we paid in '25, about 80%, 85% of that was in our Executive Aviation division. Antonio Garcia: For 9 months. Guilherme Paiva: Yes. Antonio Garcia: Starting April onwards. And for the whole year, should be something like $60 million to $70 million, but today, you are back to 0, Curt. Operator: This concludes the question-and-answer session in English for the press [Operator Instructions] [Interpreted] Our first question is from the chat by Nelson [ Doring ]. We'll see the first Gripen being delivered in the 25th of March in Gaviao Peixoto. Congratulations, Bosco and the defense staff. Is Embraer going to be a part of the Gripen agreement in Colombia and other potential contracts? Unknown Executive: [Interpreted] Thank you for your question. No, we haven't established any contracts. However, we do have a good collaboration with Saab. We are working with them to cooperate with them and if possible, to bring the assembly of these aircraft to Gaviao Peixoto because we have installed capacity, it would be good for us and for them, but we don't have any subcontracts that we have entered into yet. Operator: [Interpreted] We have no audio from Mr. [ Nascimento ]. So our next question, again from Nelson [ Doring ] also came through the chat. How does Embraer see the landscape for raw material supply as aluminum and titanium as critical elements for engines and avionics, both for military and civil aviation. Unknown Executive: [Interpreted] Nelson, thank you again for your question. 2026, in our calculation should be better in terms of supply when compared to 2025. There will still be some difficulties in terms of parts, but raw material is not one of the difficulties. I think as for raw materials, we are quite comfortable with the current inventory we have. And there is another item that we are monitoring quite closely to ensure not only the year's total production, but a better production of aircraft production throughout the year. So again, we are working very closely with suppliers since the beginning of the year, and we are quite positive and comfortable when it comes to aircraft delivery for 2026. So we'll try again. Operator: [Interpreted] Next question from Mr. Nascimento for Vale Trezentos e Sessenta News. Jesse Nascimento: [Interpreted] I do apologize for my mistake. It was something related to my own equipment. I have 3 basic questions, Francisco. The first question is whether Embraer in the period where tariffs were implemented, I know that you -- you had a meeting with the representatives of the Brazilian Foreign Relations Office in New York in an attempt to align the issue of tariffs. So this is question number one. If you want, I can ask the 2 other questions later on. Unknown Executive: [Interpreted] When in fact, Embraer did not take direct part in that event. I mean, we just did a follow-up, but we were not there at the time. What we did was try to facilitate the event, but we didn't have any direct participation. Jesse Nascimento: [Interpreted] And my second question is about the recent decision by the U.S. when the President was questioned by the courts that said that he couldn't charge the tariffs, that the tariffs were unconstitutional. Do you think that Embraer could try to collect the tariffs that were charged unduly? And how much more of the tariffs were charged? Unknown Executive: [Interpreted] In terms of recovering the money paid in tariffs, we are monitoring the situation, trying to understand what our peers will do and what kind of outcome they will get from there. So then we will decide what to do. I mean, in terms of what has been paid, we already paid $80 million. Jesse Nascimento: [Interpreted] Okay. So finally, Francisco, we see the war escalating in the world and countries trying to strengthen their defense. I mean -- and Embraer with KC and Super Tucano should fit into that scope. My question is whether Embraer is developing or thinking about developing new equipment for the defense side to probably serve some worldwide need. Unknown Executive: [Interpreted] [indiscernible], right now, our focus is in selling our equipment. KC is a new product that was launched in 2019. And also taking this opportunity with -- I mean, sales of Super Tucano and also some of our equipment from Atech, one of our subsidiaries. But right now, there is nothing being developed at the moment. Operator: [Interpreted] Our next question comes from the chat from Chandu Alves from Ovale. Do we know the deadlines of the RFP for 60 jets for India? How long is this process going to take? When are we going to get an answer? And who is competing for this? Unknown Executive: [Interpreted] Right. First question. We're keeping an eye on this, but we can't control their deadlines. Of course, the clients from India are going to set their deadlines. We expect to see an RFP this year a request for proposals. This is an important step for aircraft selling because competitors will be showing their RFPs and then they will have some time to go over them. Of course, right now, we have no visibility over that. And our competitors are Lockheed Martin from the U.S. with the 630 hectare and Airbus in Europe with A400. Operator: Our next question is from Leda Alvim, Bloomberg News. Leda Alvim: [Interpreted] Could you please confirm the values that we have in paid tariffs for now? If you could break it down by segment, that would be useful. Antonio Garcia: [Interpreted] Leda, this is Antonio. In total, we already paid $80 million. 85% of that is for Executive Aviation and the rest of it is for service and support. So $80 million so far is everything we've paid since April 2025. And since February '24, we went back to 0, but we still don't know what's going to happen from now on. Operator: Next question also from the chat from Paulo Ricardo Martins with Folha de Sao Paulo. Paulo Ricardo Martins: [Interpreted] How can the war in Iran impact Embraer? Could it jeopardize the delivery of aircraft for the Middle East? Unknown Executive: [Interpreted] Ricardo, thank you for your question. Ricardo, thank you for your question. At the moment, we are just monitoring the situation very closely. Our main focus and #1 focus is with the people we have in the region because they are experiencing the situation day-to-day. We are they're trying to cater to their needs and the expectations of the families. We are also taking care of our suppliers, both direct and indirect in the region. And so far, we haven't seen any critical issue that could compromise our deliveries. And we are not seeing any impacts in deliveries or even short-term sales. So the focus now at the moment is just to monitor the situation so as to help us take mitigating actions in due time so that we can deliver whatever we are launching for this year. Operator: Ladies and gentlemen, thank you very much. That concludes the Q&A session of today's conference call. And this concludes Embraer's conference call. Thank you for joining us, and have a very good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Good day, and thank you for standing by. Welcome to the Q4 2025 Aecon Group, Inc. Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Borgatti, Senior Vice President of Corporate Development and Investor Relations. Please go ahead. Adam Borgatti: Thank you, Deani. Good morning, everyone, and thanks for participating in our year-end 2025 results conference call. Joining me today are Jean-Louis Servranckx, President and CEO; Jerome Julier, Executive Vice President and CFO; and Alistair MacCallum, Senior Vice President, Finance. Our earnings announcement was released yesterday evening, and we posted a slide presentation on our website, which we'll refer to during this call. Following our call, we'll be glad to take questions from the analysts. [Operator Instructions]. As noted on Slide 2 of the presentation, listeners are reminded that the information we're sharing with you today includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties. Although Aecon believes the expectations reflected in these statements are reasonable, we can give no assurance that the expectations will prove to be correct. Before moving to our financial results, I'll first turn the call over to Jean-Louis to highlight a few of Aecon's important accomplishments in 2025. Jean-Louis Servranckx: Thanks, Adam. As noted on Slide 3, 2025 was a transformative year of growth and significant milestones for Aecon with record revenue of $5.4 billion and backlog additions of $9.5 billion, supported by a balanced and derisked backlog profile. Revenue grew 28% over 2024 with 84% of the $1.2 billion increase in revenue through organic growth. Revenue from U.S. and international markets also increased by $386 million or 87% in 2025 over 2024. We delivered our strongest safety performance in over 5 years while maintaining disciplined risk management across major projects and programs. We further advanced our nuclear leadership in North America with our partnership selection to deliver the G7 first grid-scale Small Modular Reactor or SMR at the Darlington Nuclear Generating Station. We also commenced the definition phase of the Pickering Refurbishment Program and an Aecon partnership was awarded a development phase contract at Energy Northwest's Cascade SMR project in the U.S. Backlog growth was also highlighted by Aecon's largest contract award to date, the Scarborough Subway Extension progressive design-build project, adding approximately $2.8 billion under a collaborative target price model. We expanded strategically through the acquisitions of Bodell Construction, Trinity Industrial Services, and KPC Power and Electrical Services. We strengthened our leadership team with the appointment of Thomas Clochard as Chief Operating Officer and received industrial recognition with gold stages on Renew Canada's Top 100 Infrastructure Projects list, reflecting our involvement in 17 ranked projects, including four of the top five. And as noted on slide four, we achieved significant operational milestones, including completing the world's largest nuclear refurbishment program at the Darlington Nuclear Site ahead of schedule and below budget in early 2026, providing a model for major nuclear projects on a global scale. Substantial completion was achieved on the Finch West and Eglinton Crosstown LRTs, which were two of the three remaining legacy projects. And we delivered Canada's largest battery energy storage facility, the Oneida Energy Storage Project. I will now turn the call over to Jerome for our financial results, and we'll return to address our outlook at the end of the call. Jerome Julier: Thanks, Jean-Louis, and good morning, everyone. I'll speak to Aecon's consolidated results, review results by segment, and address Aecon's financial position. Additional information has been provided to help clarify the underlying results, excluding impacts from the legacy projects and divestitures. Detailed reconciliation tables are included on slides 15 through 17 in the conference call presentation. Turning now to slide 5. On a reported basis, record revenue for the year of $5.4 billion was $1.2 billion, or 28% higher compared to 2024. Adjusted EBITDA of $235 million compared to $83 million last year. An operating profit of $87 million compared to an operating loss of $60 million in 2024. Adjusted EBITDA and operating profit in 2025 were negatively impacted by $94 million in legacy project losses, compared to legacy project losses of $273 million in 2024. Adjusted diluted earnings per share for the year was $0.40, compared to adjusted diluted loss per share of $0.99 in 2024. As only noted, reported backlog of $10.7 billion at the end of 2025 was a record year-end level and compared to backlog of $6.7 billion a year ago. New contract awards of $9.5 billion were booked in the year compared to $4.7 billion in the previous year. Now looking at results by segment. Turning to slide 6. Construction revenue of $5.4 billion in 2025 was $1.2 billion or 28% higher than the previous year. Revenue was higher in all sectors, with the largest increase in nuclear operations, driven by a higher volume of refurbishment, new build and engineering services work in Ontario and the United States. Higher revenue in industrial was driven by an increase in field construction work on critical mineral facilities in Western Canada and incremental revenue in the U.S. from the Bodell and Trinity acquisitions completed in the third quarter of 2025. Revenue was also higher in urban transportation solutions, primarily from an increase in subway and commuter rail system projects. In civil operations, higher revenue was mainly due to an increase in power and rail projects and from major project work performed internationally, partially offset by a lower volume of highway, road, and bridge building activity. In utility operations, higher revenue was due to a higher volume of gas distribution work in Canada and electrical work in the U.S., partially offset by a lower volume of telecommunications work and battery energy storage systems work as our team successfully delivered 3 grid-scale projects in the year. On an as adjusted basis, construction revenue was $5.3 billion in 2025 compared to $4.1 billion last year. Turning to slide 7. Adjusted EBITDA of $220 million compared to $34 million last year. The primary driver of the increase was lower losses from fixed-price legacy projects in the year. On an as adjusted basis, the Adjusted EBITDA was $315 million in 2025. Turning to slide 8. Concessions Adjusted EBITDA for the year was $57 million compared to $87 million last year, driven by lower income from O&M activities and a decrease in management and development fees related to concession projects nearing or achieving substantial completion of construction activity in 2025. The book value of equity of our concessions portfolio at year-end was $251 million, up 7% versus the end of 2024. On slide 9, we brought together the as-adjusted information to exclude impacts of the legacy projects and divestitures to provide insight into the underlying performance of the business. For the construction segment, on an as-adjusted basis, Adjusted EBITDA was $315 million in 2025, representing a 6% margin and $8 million increase over 2024. On slide 10, at the end of 2025, Aecon held core cash and cash equivalents of $94 million, which excludes $393 million of cash, representing Aecon's proportionate share held in joint operations. In addition, at December 31, 2025, Aecon had committed revolving credit facilities of $1 billion, of which $257 million was drawn and $4 million was utilized for letters of credit. Aecon has no debt or working capital credit facility maturities until 2029, except equipment loans and leases in the normal course. Aecon's board of directors approved an annualized increase to the dividend of $0.01 per share, resulting in a quarterly dividend of $0.1925 per share. The dividend will be paid on April 2, 2026 to shareholders of record on March 23, 2026. At this point, I'll turn the call back over to Jean-Louis to address our business performance and outlook. Jean-Louis Servranckx: Thank you, Jerome. Turning now to slide 11, Aecon continues to build resiliency through a balanced and diversified work portfolio. In 2025, roughly 55% of Aecon's construction revenue was related to power and utility services across the nuclear, civil, utilities, and industrial sectors, with nuclear representing the largest share. This represents a purposeful transition in our business, with the percentage of power activity increasing significantly over the past five years. Approximately 30% of Aecon's construction revenue was derived from power and utility services in 2020. Through our growth and diversification, Aecon is a profoundly different company now than we were several years ago. Turning to slide 12. Demand for Aecon services continues to be strong. With backlog of $10.7 billion at the end of 2025, recurring revenue programs seeing robust demand and a strong bid pipeline, Aecon believes it's positioned to achieve further revenue growth in 2026 and is focused on achieving improved profitability and margin predictability, all while improving the risk profile of our business. Recurring revenue was $926 million in 2025. The proportion of recurring revenue from utility services increased from $610 million to $728 million, an increase of 19% over 2024. Recurring revenues are typically executed on a non-fixed price basis, with the majority being over and above our reported backlog figures. Turning to slide 13, Aecon expects 2026 revenue to exceed 2025 levels based on Aecon strategic positioning in sectors with attractive demand profiles and a healthy pipeline of project opportunities tied to power generation, critical resource development, mass transit infrastructure, water, and defense. In the concessions segment, Aecon continues to focus on opportunities to add to the existing portfolio of Canadian and international concessions to support trends in aging infrastructure, mobility, connectivity, energy, and population growth. Beyond the fixed price legacy projects, we believe that the deliberate shift towards a greater weighting of improved risk-adjusted programs in combination with a strong focus on operational excellence, is anticipated to support a stabilization and gradual improvement of Adjusted EBITDA margins in the construction segment in 2026. Aecon plans to maintain a disciplined capital allocation approach focused on long-term shareholder value through acquisitions and divestitures, organic growth, dividends, capital investments, and share repurchases on an opportunistic basis. We are focused on making strategic investments to support our strong growth, whether through the concessions portfolio to provide access and entry into new markets or to increase operational effectiveness. Our overall look for 2026 is very positive. We are extremely excited about the momentum we have built and remain focused on executing our strategy to drive long-term shareholder value. I want to express my sincere thanks to our growing team for their resilience, high professionalism, and safety always mindset that has positioned Aecon for what comes next. Thank you. We'll now turn the call over to analysts for questions. Operator: [Operator Instructions]. And our first question comes from Sabahat Khan of RBC Capital Markets. Sabahat Khan: Great. Just you provided a bit of color on the sort of the opportunities ahead. I was hoping you could dig a little bit into some of the announcements we've been seeing from the Canadian government on the infrastructure side. Just hoping you could provide a bit of color on behind all these headlines, where are we in maybe some of these projects hitting the bidding process? Are you bidding on some of these already? Maybe if you could just tie in the announcement from the other day related to NORAD as well. Just curious to get some more color on that project. Jean-Louis Servranckx: Yes. I will take this one. First of all, as an introduction, where we are today is a result of being extremely serious and focused about our strategy. We are extremely disciplined with this. We are now following our plan 2024 to 2027. We had an update mid-2025. Basically, where we are today belongs to 4 vectors. The first one was Aecon has to become a powerhouse. As I've noted during my speech, we are now a little more than 55% related with power. It's an incredibly important shift for our company that was before much more road and bridges. Point number 2, Aecon has to become what we call a sovereignty champion. We are coming to your questions. You probably have noticed that we were among the first five project of nationally important that were defined with the Contrecoeur port in Montreal and the SMR construction, I mean, in Darlington. We also announced a few days ago that we had been awarded this Arctic Over-the-Horizon project. This project was a target for Aecon. I mean, we wanted to come back to Defence Construction Canada. We have not been there for quite a number of years because the jobs were much more refurbishments of buildings, hangars, and not that much infrastructure. We decided that we had to be back. We have been awarded the first two pieces of this job. Ultimately, there will be several others for what has been announced as a total size that could be $3 billion to $5 billion. It's a complex project. We are leader. We want it with an outstanding scoring result. It's a purely collaborative job. It means that we first have a validation phase, then we have a development or a detailed definition phase, then we have construction that should begin in 2027. It was very important for us, and we got it. Third point of our strategy, we'll come back to this. Aecon has to be a national and a local strong player in the US. We'll come back to it. Number four, Aecon has to become more international, what we also have been doing. I hope I've answered your question. Sabahat Khan: Yes. Just, maybe a bit more, if I could follow up there on just behind some of these initial projects, have you seen an uptick in bidding activity, or are these projects still initial phases? Just wondering sort of when some of the other larger projects or some of this investment might hit the ground? Jean-Louis Servranckx: When you discuss with Defence Construction Canada, or you also can go to their website, I mean, obviously, the number of project that are now on the list and that will be put on the market, I mean, during the few years to come has been multiplied by quite an interesting factor. We are tracking this. Of course, you have also, for example, learned about Alto, I mean, the high speed train with the first phase between Montreal and Ottawa. I mean, this is a pure kind of project for which Aecon is excellently positioned now. Sabahat Khan: Great. And then just my last question. Obviously, you're talking a bit about the power opportunity and the business here. Can you maybe just rehash sort of the utility strategy? Is that something that is it more growing it via some of these power project opportunities? How big of a role would M&A play in that? Maybe just a little bit of color there, and I'll pass along. Jean-Louis Servranckx: I mean, obviously, the power part of utilities is growing and is growing well. Our utility sector is also about gas. It's also about telecom. It's also about fiber to the home and those kind of activities. Power is what is growing. At the same time, in United States and in Canada, I mean, basically, the main topic of today is about electricity addition. This is the wave, and we were not wrong 3 years ago when we just called this and decided to focus our efforts on this part of the link. This being said, as I've always told you, Aecon has to stay balanced. It has to stay balanced between the different core competencies that we have. It's about urban transportation, it's about industrial, it's about nuclear, it's about utilities, and it's about civil. We have to keep balanced, but we know that the wave is about power. Jerome, you want to add something? Jerome Julier: Sure. Just to close the loop on it, on the utility services side of the business, the capability that we have both in Canada and the United States centers around grid-scale, battery storage, substations, distribution, transmission. Now increasingly, electrical testing, verification, meter replacement with the new team that's joined us. Our perspective is we want to continue to build capacity to serve these end markets. There's an undeniable growth trend, even in the more bearish case for power demand. We just see an enormous opportunity for us to continue to build out that area. We'll do it organically. We'll do that through M&A to the extent the opportunities fit our buy box, our culture, and our safety record. We continue to view it as an area of opportunity for capital deployment for sure. Operator: And our next question comes from Yuri Lynk of Canaccord Genuity. Yuri Lynk: Just want to dig in a little bit on the outlook for construction segment Adjusted EBITDA margin. Calling for some stabilization here, after a number of quarters of decline, and then maybe some improvement in the back half of the year. Maybe just what are the puts and takes that get us stable here, and then what could possibly drive some upside in the back half of the year on the margin? Jerome Julier: For sure. The message is simply that the direction of travel for like the construction margin, whether you look at it on a reported or Adjusted basis, that the message is very much consistent, is stabilization on the direction of travel with the potential for improvement. That's largely a function of through 2025, the business has moved the type of execution that's flowing through and being recognized into revenue away from some of the progressive elements and fixed price contracts, which generally carry higher margins. You know, in some ways on fixed price, certainly higher risk to a much more stable risk-adjusted return that we view as very attractive from an Aecon perspective. We've now reached that point where we've stabilized that transition. You know, the vast majority of our work is done under more appropriate contract structures. The risk-adjusted margin profile that we're recognizing is strong, given the contract structures that we're in front of. The improvement is going to stem largely from operational efficiency gains, improved cost and schedule performance on our jobs. As well as the drop off of legacy and then the Western Civil area that's added a dilutive impact to the overall margin profile in '25 and late '24. I think from that perspective, it's a mix of factors, but I think all of this is in the context of a business that's continues to grow quite well. We think there's good torque in that message. Yuri Lynk: Are those Western Civil contracts still dragging or they're finished or stable? Jerome Julier: Our view is we have a handle on their completion and finalization, we're going to continue to just to close them out, right? They're effectively I think backlog wise, we're probably talking kind of sub $100 million here. Same thing on the legacy side, sub $100 million in the context of $5.4 billion of overall rev. We're feeling better about it. Yuri Lynk: Last one for me, just on the bookings, I mean, a huge bookings year, 2025. Safe assumption that we're not going to get to that level of bookings in '26. Can you just remind us of any progressive contracts that might be suitable to be booked in '26? Like I'm thinking Pickering is probably one, but any help on just how we think about the new awards outlook this year. Jean-Louis Servranckx: I will take this one. Yes, you're right. I mean, the increase in our backlog, I mean, in 2025 is mainly due to big chunk, I mean, of job. I mean, we told you about Scarborough. What is coming now, I mean, obviously Pickering is an important one. We are also on Winnipeg on a very interesting wastewater treatment plant where we are finishing the development phase. We are also working, you probably remember on a fish passage and a civil job in the United States, I mean, over Hanson Dam, that should most probably come to our construction backlog. We are waiting, I mean, for a few results, or eventual awards on some UDS projects on which we have been bidding during the last months. Operator: Our next question comes from Chris Murray of ATB Cormark Capital Markets. Chris Murray: Maybe kind of following on, kind of what to expect in 2026, especially on the revenue line. Certainly really strong revenue growth through this year. You know, there's a few projects that we've been in. Actually, I was thinking of the Ontario GO Electrification project as well. You gave the indication that you expect revenues to be higher in '26 and '25, which given where the backlog is, that's I guess probably what we should have been expecting. But I'm just trying to gauge how you think the magnitude's going to show up. I can't believe that this 20% clip on year-over-year growth is going to continue, but maybe if you can characterize it a little bit better, that would help us kind of shape our view. Jerome Julier: Sure thing, Chris. The growth in '25, I mean, we'd likely describe as exceptional, rather than just very good. 8-plus percent of that was organic, which is roughly $1 billion. You know, just the growth that Aecon produced in 2025, if that was its own business, would've been a top 20 construction company in Canada, that was formed out of Aecon. We are not anticipating that level next year. Our commentary in the outlook is formed on the basis of, number one, the backlog, number two, really strong recurring revenue programs across the business, but you know, in particular the Utilities group. Number 3, all sectors are really well positioned for where demand trends exist today. If we look, 2025 was effectively a flat or down year in construction in North America, except for a select few sectors, and those sectors were the 5 sectors in which we're involved. 2026, we continue to see good outlook. You know, overall general industry trends, people are calling for something in the order of low mid-single digit growth. Again, we think we can, we can handily beat that, but we're not going to get to the level we got in 2025. I don't anticipate that absent some significant M&A. We're expecting another good year after an excellent year, but not we have to temper expectations, right? We can't expand our human capacity and deliver the amount of skill trades, that we use as the basis for business, at that clip on a continual basis, right? We need to be smart about it. Chris Murray: Okay. Maybe if I ask the question a different way. If I think if I look at your backlog kind of characteristics today, you've got about $3.6 billion that looks like delivered or planned for the next 12 months. $1 billion of probably recurring revenue that's in the pipeline. How should we think about at least even with the project demand in here, is it fair to think, like what would be about the right number to think about stuff that you can actually book and execute in the same year, kind of on a normal run rate? Maybe that's a different way to think about this. Jerome Julier: Yes. If I gave you that, we'd be plugging to the revenue number that we have in our business plan, which we're not going to disclose. The opportunity set is strong at both procurement, go get change orders, ability to expand in existing projects and secure additional work packages. If you go back historically, it's a relatively broad range that we've been able to pull together across the years. You know, 2025, if you look at where we were in 2024, obviously that kind of go get element was quite strong. I don't think it'll be as strong in '26, if you want to try to track back against that. Chris Murray: Okay. Next question really quick. You know, just we're starting to see another one of these, kind of legacy issues, getting solved, I guess, in the quarter. Can you just give us any color around the solution and if it had any material impact on the numbers in the quarter? Jean-Louis Servranckx: Maybe I just begin with where are we physically on those job, and then Jerome will add a few figures that are all in our report. As you have noticed, we are now substantially completed on Finch and Eglinton LRT, following what we call the revenue service demonstration, which is an extremely complex demonstration of the capabilities of all the systems we have been building. This is done on those two LRT. Our maintenance and TTC operation is going quite well. We are very happy about it. Gordie Howe, we are nearing substantial completion. It's about finalizing operational readiness of all our systems and finalizing the onboarding of all border agencies and installation in their office. I've read a few comments. Just to be clear, substantial completion is totally separated from opening of the bridge. It means that we are now in the last centimeters to go to substantial completion. The opening of the bridge is a different topic. We are on those three job finalizing our commercial discussion with all our clients. I mean, we have no disputes. We are under discussion, and we think that within the next few months we will be over with that. A few figures? Jerome Julier: Financially, the legacy projects had a negative impact of $6 million in the quarter, Chris. Total for the year was $94 million. It's obviously substantially less than what we had last year. The big focus in 2026, as Jean mentioned, is the successful delivery of the final project and then the closeout of the commercial terms associated with all three. Given where we stand today, I'm not sure it's actually additive or constructive for the overall Aecon discussion to zoom in too much on these items. Like, we're getting basically narrowing down the level of outcomes, so not immaterial, but like less material levels. What we might likely do in '26 is just report everything all together and then close out this chapter. Like, we're in the twilight phase of the legacy. We're focused on what comes next, around some pretty stellar opportunities that we're in execution and procurement on. I think we're going to want to talk a lot about that in '26 and a lot less about this very difficult phase that I think the team's done an extraordinary job managing through. Chris Murray: Okay. Great. I probably asked the question a little bit wrong. I was actually more curious about the Rio Tinto agreement and just if that had any material impact on the quarter. Jerome Julier: If it was material, we would have disclosed it. No. That's just another successful completion by our operational legal team to settle a dispute or claim situation with a client and it's closed off. I think from a macro level, if you kind of take it out a little bit, the real message here is that Aecon does a really good job at managing risk exposures and reducing the overall enterprise level risk that we're putting forward. In '24 to '25, the business has been in a better position in '25 to '26. Again, we think we're in a better risk-adjusted position. The idea is creating a more boring, more stable, more predictable Aecon from a financial perspective, and then a more exciting, more thrilling Aecon from a perspective of the people who work and you know, a very dependable Aecon from the perspective of our clients. I think we're advancing along all three of those. Operator: And our next question comes from Michael Tupholme of TD Cowen. Michael Tupholme: My first question is just about the nuclear, the nuclear business. Obviously a key growth area for Aecon in 2025, and it was your most important growth area in the year. I guess as we look to 2026, the question is, beyond executing on the substantial volume of nuclear work that you already have in hand, what should we be watching for and expecting as far as nuclear developments and progression in terms of new nuclear opportunities, in 2026? Jean-Louis Servranckx: Okay. As an introduction, I just want to come back to this incredible news about Darlington refurbishment. I mean, in February of 2026, we just finalized the refurbishment of the 4 reactor under budget and 4 months ahead of schedule. I mean, it's extraordinary. You cannot imagine the number of calls and questions that we are receiving. I mean, something like this is the first time we have good news on a big nuclear project for the last 20 years. How did you do it? We are extremely proud because Aecon, during the last 8 years on this project, was on the critical path of its execution. It's a very good news for the nuclear industry to have been able to demonstrate that when it is well organized, it works. Obviously, I mean, on refurbishment, we are still on two major programs. I mean, Bruce, with 4 reactors to complete up to 2032, and Pickering, I mean, 4 reactors, we have just begun the development phase and turbine up to 2035. Regarding new construction in Canada, we are working on the first unit of the small modular reactor, the 300 megawatts from GE Hitachi. A completion forecasted around 2030. It's going well. We have, at this stage, something like 1,100 people, I mean, between staff and workers on site. Nothing has yet been decided regarding new big nuclear in Canada in terms of technology from OPG or from Bruce. We are working with those two utilities on the development phase with various options. In United States, I mean, we are working on three different topics. Major component replacement, mainly with Dominion, but also now with Energy Northwest. Second vector is the Department of Energy on their national lab in Savannah River. The third one you have noticed we have been awarded for Energy Northwest. I mean, the collaborative de-development to complete the planning, the design, and the construction of a 12x 80-megawatt X-energy reactor with Kiewit and Black & Veatch. It's just beginning. We are at planning and then pure definition phase, but it's a new build. What's important with this is to say that Aecon is technology agnostic. I mean, we work for CANDU and we're extremely strong, I mean, with CANDU. We work with GE Hitachi. We are beginning with X-energy. We have been working in the past, and we are working today with Westinghouse. It just means that we are ideally positioned for what is coming. Michael Tupholme: That's helpful. Maybe just one quick follow-up on that response. As far as the Energy Northwest Cascade Advanced Energy Facility opportunity, is that something that as you move through this next phase, you could get to the point you're at where you are booking more meaningful amounts into backlog in 2026, or is that a beyond 2026 opportunity? Jean-Louis Servranckx: So it's going to be beyond. I mean, at the moment, we are at pure definition phase. I mean, it's a new kind of reactor. This will require, I mean, some time just to get it well in the box between the next phases will be launched. Michael Tupholme: Got it. Thank you. Then maybe for Jerome, you have a few questions about 2026 revenue outlook. I think you provided us some good information. The question is really about as we look beyond 2026, obviously, all of the transformation that's occurred at the company and the focus on different vectors has been done with a longer-term view. Can you talk about what sort of visibility you have into revenue growth and beyond 2026 as you look to 2027 and future years? You talked a moment ago about sort of 2026 being able to hopefully do better than industry-level growth. How do we think about sort of that period beyond '26? Jerome Julier: There's a few things. One, we've done a good job building out the stable recurring revenue side of the business on the utilities front. We see opportunities to build out there. The next component is if you look at our backlog, something in the order of $5 billion of the backlog is executable effectively kind of beyond the two-year period. The way we define backlog, Mike, as you know, is it needs to be a project that has been awarded with costs and scope and schedule. It's really kind of a air quotes hard backlog definition. We have visibility for financials that extend beyond based on the projects that we're in procurement on, right? For instance, Arctic Over-the-Horizon, that will not enter backlog until we exit the validation phase. But we have a pretty good handle given the work that's been done by the big construction teams as to what that could look like. Where we sit today, we one, items that have been we've effectively secured but not entered into backlog, recurring revenue, pipeline of work, just overall trends in the sectors where we're present, the inbounds that we're receiving from a demand perspective gives us a strong degree of confidence that the business is positioned where it ought to be positioned. And so you're probably looking for something a little bit more than that other than to say that, like, we feel, we feel pretty good about the trajectory that Aecon's on today, and an ability certainly in the medium term to outpace the overall industry. Operator: And our next question comes from Frederic Bastien of Raymond James. Frederic Bastien: Guys, it's been almost 2.5 years since Oaktree made its strategic investment in Aecon Utilities. How would you grade yourself or Aecon on a report card with respect to that investment, and what can we be looking forward to in the future? Jerome Julier: So the utilities business has been performing well in the context of a very difficult regulatory environment in Canada. When Oaktree entered into the equity of Aecon Utilities, we were facing some pretty good demand tailwinds not shortly thereafter, telecom regulations, OEB regulations. A lot of the core markets where Aecon Utilities has historically been focused, were just faced with customer profile, reducing CapEx to redeploy to other jurisdictions based on regulatory challenges in those markets. The team did a very good job reimagining where they could put their resources. In the context of a business that was very heavily focused on pipeline and telecom, what we saw in 2025 was the addition of the Xtreme group in Michigan provided very strong growth in the United States. Our execution on 3 major grid-scale battery projects, which is an internal partnership between industrial and utilities, all those got done with just extraordinary schedule and cost performance. Then we also had KPC and then Ainsworth added to the mix as well. Overall, though, the performance in a very tough environment where we operate wasn't bad. Wasn't bad at all. Like the team is. We're very proud of what they've been able to produce. Oaktree's a constructive partner. They've got a very good read on aspects of the market in the United States, which when combined with our own intel and perspectives gives us a very good growth algorithm for that market. I mean, we're not going to give ourselves a letter grade, but we're happy with how it's worked out. Frederic Bastien: Great. I think one of the options that you would be contemplating further down the pipe is potentially turning this Aecon Utilities into an IPO. What are your thoughts there? Jerome Julier: Our focus with the business is to continue to grow and build out the recurring revenue programs and expand its diversification from a market client and geographic perspective. First things first. Frederic Bastien: Okay. We saw obviously the recurring revenues types of utilities go up nicely year over year. What's behind the? There was a drop if you look at the other side of the recurring revenue pie. There's been a drop from about 50%. What's in that? What's in there as well? Jerome Julier: So that would capture a variety of items ranging from aggregate sales, but most of the change that we've seen on that level relates primarily to some of the progressive design phases that were more active in 2024 that have effectively flipped into construction now. When we think about some of these collaborative projects that we're on and we're expanding kind of design and pre-construction resources where it's not tied to backlog, but it's kind of like an ongoing recognition of revenue, it falls into this bucket from a kind of disclosure perspective. Then as those projects have flipped into construction, it's now just moved into another part of the business. You know, it's less here, but more elsewhere. Operator: And our next question comes from Krista Friesen of CIBC. Krista Friesen: Congrats on the quarter. Obviously, a number of opportunities in front of you guys, whether it's utilities, nuclear, defense, build Canada. How are you feeling about your capacity? Maybe that's the labor force. To ask it a different way, what do you feel is your limiting factor when you're looking at all of these opportunities? Jean-Louis Servranckx: Obviously, construction, I mean, as I used to say, is about people and processes. Here, we have to be careful about people availability. At this stage, we have no issue. I remind you that we have extremely strong relation with the trades community and the trade unions. We have been able because it was part of our strategy and we had quite a good view about what was coming to discuss with them and to be ready. We do not have at this stage issue. For example, our workforce in the nuclear to finish Bruce and Pickering is extremely strong. I mean, not only in Canada, I mean, in United States we have something like 1,500 workers in our nuclear sector, very much loyal to the company. I would tend to say, so far, so good. The battle on the staff and the executive, I mean, has always existed between company. It's an open market. The fact that Aecon, I mean, has a bright future, is helping us a lot to be able to attract, to train, to retain, a lot of new and former executives. At this stage, I will say I'm not that worried. We are extremely focused on the contract mode of our new project, of our backlog, and I think we have done quite a good exercise to de-risk. You remember that we have inverted, I mean, our proportion of fixed lump sum costs and collaborative progressive variable costs. This is what I can say to you at this stage. Krista Friesen: And maybe just thinking about defense specifically, do you feel that you have all the capabilities that you would like to have to execute on these defense projects? Or are there M&A opportunities to build out your expertise in that space? Jean-Louis Servranckx: I mean, for what we have at the moment, I mean, specifically Arctic Over-the-Horizon Radar Program, I mean, we are ready. We are ready. I mean, It was a target, and we have been preparing this extremely carefully. Obviously, you have heard that there is going to be 4 new bases, I mean, for aircraft in the northern territories. We're not going to take and win those 4 job. We don't want to. I mean, we are extremely careful. We are not looking at M&A to be able to execute those jobs. Operator: And our next question comes from Maxim Sytchev of NBCM. Maxim Sytchev: Jean-Louis, maybe, first question for you. I mean, nuclear right now is 30% of the business, and given the visibility of all the new build stuff that's coming up, and I mean, obviously the construction revenue sort of attached to it, is it conceivable we could be driving like maybe close to half of revenue in 5 to 7 years from nuclear for Aecon? Is that too aggressive of a potential assumption? Jean-Louis Servranckx: I think it's too aggressive, Maxim we just have to realize when we speak about new build and new technology, for example, or upgraded reactors, I mean, it takes quite a lot of time to take them from definition or planning phase toward construction where the bulk of the revenue is. This will take time, and that's good. That's good for us. I think that the 50% is too much aggressive. This being said, I come back to the fact that we want to be balanced. We want to be balanced because, I mean, we don't have in hand the control of all the parameters. We think we have a good mix at the moment. We worked a lot to modify it. It may grow, I mean, on the nuclear side, but not at up to the level you have been citing. Jerome Julier: And then just to layer on top of it, all other sectors are also growing, right? And so if we were in a dynamic where we only had one shining star in the constellation, it probably wouldn't be a crazy assumption. The fact that all five of our sectors in the construction segment are very well-positioned, I think reduces that impact quite materially. Maxim Sytchev: Yes. Okay. That's fair. And then quickly just in terms of potential M&A in the U.S., I mean, I presume anything in the utilities power space still commands pretty lofty multiples. I'm just wondering what are your thoughts there and what are you seeing on the ground while obviously benefiting from your own multiple expansion? Any comments would be great. Jerome Julier: Sure. Multiples are strong and it's a reflection of the dynamic in that market. It's very clear the people who have the ability to service utilities are doing quite well now in the context of the CapEx budgets that the utilities need in order to keep pace with the demand profile. You know, part of that is clearly tied to compute consumption, whether it's for AI or kind of Bitcoin mining or whatever it is that is running through those server farms. Part of it's also reindustrialization, which I think we shouldn't lose track of. You know, the administration's policies are focused on onshoring a lot of that productive capacity, and that just consumes a ton of energy as well. Yes, the multiples are expanding. Yes, it's creating a acquisition. We need to be very specific with what we want to target. We have very particular parameters and ways that we approach it. You know, we generally don't want to find ourselves in a situation where we're bidding for businesses that are mercenary or private equity rollovers. Like, it just. This is a challenging dynamic. We need to have businesses that will be additive to Aecon, from a not just revenue and EBITDA and earnings perspective, but they need to be additive from a capability standpoint, safety standpoint, and team standpoint. Like, our job is to find the way. If you look at the average multiples that we've, we pay for M&A, over the last dozen acquisitions that the company's done, they tend to be appropriate for what we trade at the Aecon level. Our job is to thread the needle and finesse that. Like, that's why, if people want to go pay whatever the multiple that Quant is trading at, they can easily go do that. If they want to find a better way of doing it, that's our job. Operator: I'm showing no further questions at this time. I'd like to turn it back to Adam Borgatti for closing remarks. Adam Borgatti: Thanks very much, and I appreciate everyone's attention and interest. We're available for follow-up calls at any time. I wish you a great rest of you speak with you soon. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Hello, and welcome to the Algonquin Power & Utilities Corp. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Brian Chin, Vice President of Investor Relations. Please go ahead. Brian Chin: Thank you, operator, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings conference call. Joining me on the call today will be Rod West, Chief Executive Officer; and Rob Stefani, Chief Financial Officer, who will share prepared remarks. Other members of the management team are also available to answer your questions during the Q&A portion of the call today. To accompany today's earnings call, we have a supplemental webcast presentation available on our website, algonquinpower.com. Our financial statements and management discussion and analysis are also available on the website as well as on SEDAR+ and EDGAR. We would like to remind you that our discussion during the call will include certain forward-looking information and non-GAAP measures. Actual results could differ materially from any forecast or projection contained in such forward-looking information. Additionally, all net earnings information to be discussed today is for continuing operations and is attributable to the common shareholders of Algonquin. Certain material factors and assumptions were applied in making the forecasts and projections reflected in forward-looking information. Please note and review the related disclaimers located on Slide 2 of our earnings call presentation at the Investor Relations section of our website at algonquinpower.com. Please also refer to our most recent MD&A on SEDAR+ and EDGAR and available on our website for important additional information on these items. On the call this morning, Rod will provide a business update, and Rob will follow through with details of our financial results. We'll then open the line for questions. [Operator Instructions]. And with that, I'll turn things over to Rod. Roderick West: Thanks, Brian, and good morning, everyone. Thanks for joining us. 2025 was a turning point for Algonquin. We delivered strong results, improved earned returns, made substantial operational and regulatory progress and meaningfully strengthened our balance sheet. And those results reflect something broader. Algonquin is a different company today than it was a year ago. We are more focused, more disciplined and to each other and to our stakeholders more accountable. We have sharpened our strategy, assembled an experienced leadership team and laid the foundation for a sustained performance culture. In short, we're advancing toward our goal of becoming a premium pure-play regulated utility. Turning to Slide 5. I'll begin my remarks today by walking through our accomplishments in 2025. We delivered full year net earnings per share of $0.27 and adjusted net EPS of $0.34, which exceeded the top end of our guidance range by $0.02. These results demonstrate that our Back-to-Basics strategy is driving measurable improvements in our underlying fundamentals. And as we've discussed before, becoming a premium utility starts with getting the fundamentals right. Since I joined Algonquin, we focused on, first, improving operational discipline to improve customer outcomes and driving efficiencies by bending our cost curve; and second, strengthening regulatory strategy execution through more proactive stakeholder engagement, all to drive more constructive and timely outcomes. Our 2025 results provide recent evidence of that focus. We reduced operating expense as a percentage of gross revenue by -- from approximately 38% in 2024 to roughly 36% in 2025. We achieved constructive regulatory outcomes across a range of proceedings, and we improved our earned ROE from 5.5% in 2024 to approximately 6.8% in 2025. We also made progress this year in strengthening our balance sheet. We used net proceeds from the sale of our renewable business, excluding our hydro assets to retire approximately $1.6 billion of debt, materially improving our cap structure and financial flexibility. And finally, we continue to simplify the company and the story, both through portfolio actions and by reducing complexity inside the regulated platform. While we clearly have much more work to do, this was a good start, and we carry that momentum into 2026. Looking ahead to 2026 on Slide 6, our priorities build directly on what we have achieved over the last 12 months. Operationally, cost discipline remains a core priority. As we transition to a more commodity aligned structure and centralizing shared services around cost and value, we expect to capture additional efficiencies and drive consistency across our gas, water and electric portfolio. As we undertake these efforts, we're also implementing a centralized capital projects team to improve our execution performance and reducing risk. At the same time, we're focused on improving the safety and reliability of our system, supporting positive customer outcomes and maintaining affordability across all of our jurisdictions. To drive better customer experiences, we've been making improvements across our end-to-end process design, focusing on the moments that matter most to our customers. This includes more accurate billing and better delivery of information during any kind of disruption. From a regulatory standpoint, we're pleased to receive approval of our settlement in Empire Electric Missouri's rate case in January this year. We're working there to see the rates implemented, which remains subject to evaluation of specific customer metrics. We were also glad to reach settlement agreements at New England Gas, CalPeco Electric and Arizona Litchfield Park Water & Sewer and look forward to advancing them towards approval and implementation. I'll speak to each rate case in a bit more detail shortly. Finally, at the corporate level, we've recently onboarded key leaders, including Rob as our new CFO; Pete Norgeot as our new Chief Operating Officer; and Kristin von Fischer as our new Chief Human Resources Officer. Our execution against these priorities underpins our financial outlook. For 2026, we're pleased to reaffirm our earnings guidance. The drivers supporting this year's guidance range are well defined, and we're confident in our ability to execute. Relative to where we were last June, we now expect our effective tax rate in 2027 to be in the mid- to high 20s percent range as compared to the previously anticipated low to mid-20s percentage range. We're continuing to evaluate tax strategies to optimize the tax rate, but expect the majority of the benefits from those strategies to be realized after 2027. This largely results in an updated expected adjusted net EPS range for 2027 of $0.38 to $0.42. With an executive team that brings deep utility experience now in place, in addition to the aforementioned tax optimization work, we're focused on disciplined execution and constructive regulatory engagement to position the business to deliver sustainable earnings growth over the long term while also looking for additional opportunities to bridge the gap caused by the tax rate relative to last June. Turning to Slide 7. While there is more to be done to bring resolution to a number of key rate cases, we're seeing the benefits of our regulatory and stakeholder engagement approach. By prioritizing earlier dialogue to identify areas of common ground as well as advancing more pragmatic filings, we've been able to achieve settlement agreements. We expect these agreements will deliver reasonable regulatory outcomes that benefit our customers and allow us to recover investment in our systems efficiently. Let me walk through our key recent proceedings. In January this year, the Missouri Public Service Commission approved our settlement agreement for Empire Electric, which is our largest operating utility. This authorizes a $97 million revenue increase after we meet customer metric performance requirements for 3 consecutive months, with an additional potential $13 million of annual revenue increase based on meeting further performance requirements starting in the second half of 2026. In California, we received a proposed decision at CalPeco Electric, adopting the proposed settlement agreement, which provides for a $48.6 million revenue increase retroactive to January 2025, an ROE -- allowed ROE of 9.75% and an equity ratio of 52.5%. We are awaiting a final decision. In Massachusetts, we reached a settlement for New England Natural Gas, which calls for a $45.3 million revenue adjustment, of which approximately $17.9 million is non-gas system enhancement plan revenue, with 2 additional step-ups in rate base in subsequent years. The settlement includes an allowed ROE of 9.3% and an equity ratio of approximately 52.9% and a rate stay out -- the rate case stay out through October 31, 2029. We've requested a commission order by the end of this month. In Arizona, just this week, we filed a proposed settlement for Litchfield Park Water & Sewer. The settlement, which was reached with the Arizona Corporation Commission staff calls for a $15.3 million revenue adjustment and an ROE -- allowed ROE of 9.75% with a 54% equity ratio. Hearings are scheduled for late March of this year. And finally, in Kansas, we filed a rate case at Empire Electric in December, requesting a $15.8 million base rate adjustment, which represents a net requested increase of $12.5 million with a 3-year phase-in for a gradual adjustment. Slide 8 helps put all of this in context. Over the past year, we have steadily resolved rate cases across multiple jurisdictions, advancing from filing to constructive resolution to implementation of rates. As we look ahead, we now have line of sight to resolving a significant portion of the remaining requested revenue adjustments this year, which will inform our forward earnings trajectory. Turning to Slide 9. We are fortunate to operate in high-quality jurisdictions that have attractive regulatory mechanisms. This includes tracker mechanisms, multiyear rate plans, forecasted test years and formula rate structure. These regulatory mechanisms underpin the majority of the expected rate base growth between now and 2028. Building on this foundation, recent legislative and regulatory developments across our states are supporting enhanced investment recovery. Recent advances in Missouri, Arizona, New Hampshire and Oklahoma are further strengthening our regulatory frameworks with the adoption of future test years, CWIP for new gas generation, plant and service accounting and consideration of formula rates. Overall, these developments reinforce the constructive regulatory environments in which we operate. With that, I'll turn it over to Rob to walk through our financial update for the quarter and year-end. Rob joined the company just this past January on January 5. Many of our analysts and investors may already know Rob from his time as CFO of Southwest Gas Holdings. He also previously served as CFO and Treasurer of PECO Energy, a Philadelphia-based electric and gas utility subsidiary of Exelon. Rob joins a strong team of experienced utility executives in the C-suite. And as we continue to build our utility platform, Rob's utility leadership experience, strategic skill set and financial expertise will be leveraged to build a strong foundation for the company as we solidify our strategy and execute on our path to becoming a premium utility. So again, Rob, and for my last time formally welcoming you, I'll hand the call over to you. Robert Stefani: Thanks, Rod, and good morning, everyone. I've been immersed in my first 2 months at Algonquin, and I'm excited to partner with Rod and the leadership team here to build a premium utility through disciplined execution across the organization. With that, I'll turn to our results on Slide 11. We reported full year GAAP net earnings of $208 million compared to $54.8 million in 2024. Full year adjusted net earnings were $258.8 million, up approximately 17% from $221.6 million in 2024. For the fourth quarter, GAAP net earnings were $29.4 million compared to a net loss of $110.2 million in the fourth quarter of 2024. These strong results reflect the progress we are making to deliver steady, predictable earnings. I'll now discuss the drivers behind this improvement as I walk through our adjusted net EPS results. On Slide 12, we provide our fourth quarter 2025 adjusted net EPS walk to common shareholders. Fourth quarter adjusted net EPS to common was $0.06 per share, which was flat year-over-year. On the top line, the increase in adjusted net earnings was primarily driven by $10.3 million from the implementation of new utility rates at BELCO Electric, Midstates Gas, Peach State Gas, Missouri Water, New York Water and several of our Arizona water and sewer systems. Moving to interest expense. We realized a $17.9 million reduction, reflecting the paydown of debt using proceeds from both the sale of the renewable energy business and the sale of our ownership stake in Atlantica. This has been a consistent positive driver throughout the year and a direct result of our balance sheet strengthening efforts. Operating expenses and depreciation were modestly higher by $6.1 million, driven by fourth quarter costs associated with the targeted relief initiative for customers agreed to as part of our Empire Electric Missouri settlement. Full year basis, operating expenses were essentially flat. These benefits were offset by the removal of $10.9 million in Atlantica dividend income, which impacts the corporate group as well as a $7.3 million write-off related to the CalPeco solar project that was discontinued. Taxes were flat year-over-year. Moving on to Slide 13. Full year adjusted net EPS attributed to common was $0.34 per share, up from $0.30 per share in 2024, representing approximately 13% growth. This exceeded the top end of our previously stated guidance range by $0.02 per share, driven by accelerated realization of our operating expense savings, lower depreciation expense resulting from authorized deferrals and tax adjustments. Let me walk through the key drivers in more detail. New utility rates contributed $41.6 million of benefit from approved rate implementations across several gas, water and electric systems throughout the year. We saw $13.9 million of favorable weather, predominantly at our Empire Electric system. In addition, we benefited from $11.9 million in depreciation deferrals. These factors were partly offset by the costs associated with the targeted relief initiative at Empire and CalPeco write-off mentioned previously. We also recognized a $15.9 million Hydro Group tax adjustment that was largely recognized in the first half of the year from the Hydro reorganization completed in connection with the sale of the renewable energy business. Interest expense declined by $81.1 million, reflecting the paydown of debt using proceeds from the sale of the renewable energy business completed in January 2025 and the prior sale of our Atlantica ownership stake. The removal of $76.3 million in dividend income from the sale of an ownership stake in Atlantica was the single largest headwind for the year. As a reminder, the repayment of debt using the Atlantica sale proceeds contributes to the interest expense savings across both the Regulated Services Group and the corporate group, which partially offsets the lost dividend income. We also absorbed a higher effective tax rate and common share dilution from the mandatory underlying shares as approximately 77 million common shares were issued upon the settlement of the purchase contracts in 2024. The Regulated Services Group growth was driven by the combination of new rate implementations, favorable weather, lower interest expense and the depreciation deferral benefits, partially offset by higher operating expenses and the solar project discontinuations. Turning to Slide 14. We are updating our 3-year regulated utility capital expenditure outlook now totaling approximately $3.2 billion from 2026 through 2028. This includes approximately $800 million in 2026, ramping to $1.1 billion in 2027 and approximately $1.3 billion in 2028. Cash flow from the business and existing cash balances are expected to internally fund approximately 65% to 70% of the capital investment requirements. This capital plan is focused on reliably serving our customers with investments in safety, reliability and service across our electric gas and water systems. As you can see on the slide, the capital spend is expected to be diversified across our commodity types. Our large capital expenditure plan supports our strong organic regulated utility growth proposition. As Rod highlighted, across our jurisdictions, mechanisms exist to pursue recovery via capital trackers, formula rates and other interest rate case mechanisms. I'd note that the 2025 capital expenditures totaled approximately $604 million, down from approximately $757 million in 2024, with the decrease primarily due to investment in our integrated customer solution platform, which was largely completed in 2024. In terms of rate base, year-end 2025 rate base was approximately $8.2 billion, up from $7.9 billion at year-end 2024. We expect our rate base to grow to approximately $8.5 billion by the year-end 2026, $9 billion by the year-end 2027 and approximately $9.7 billion by year-end 2028, representing a compound annual growth rate of nearly 6% from 2025 year-end through 2028. On Slide 15, our balance sheet was meaningfully strengthened following the completion of the sale of the renewables business in January of 2025. We used approximately $1.6 billion of net proceeds to pay down debt. Combined with proceeds from the sale of our Atlantica ownership stake, we have significantly improved our credit profile. Total debt stands at approximately $6.5 billion. After adjusting for equity credit on our hybrid debt, Empire securitization bonds and preferred equity, our adjusted net debt profile supports our current credit ratings. We have a solid investment-grade credit rating with stable outlooks from S&P and Fitch. Moody's rates our operating subsidiary, Liberty Utilities at Baa2 with a stable outlook. We continue to expect no equity issuance through 2027. On the near-term financing front, we plan to refinance the Algonquin unsecured notes that are due in June 2026, and we continue to manage our maturity profile in a disciplined manner. Lastly, we expect to pay an annualized dividend of $0.26 per share, subject to Board approval. On Slide 16, you'll see a sources and uses table depicting the cash flows between the holding company of our U.S. operating businesses, Liberty Utilities Company, or LUCO, and the publicly traded holding company, Algonquin Power & Utilities Corporation or APUC. Our 2026 financing plan at APUC of approximately $1.6 billion includes nearly $1.45 billion upstream from LUCO. We expect this upstream to fund repayment of the June 2026 APUC of $1.15 billion debt maturity and the approximately $100 million Suralis term loan as well as the Algonquin common equity dividend. We expect to raise approximately $1.15 billion at LUCO through bond issuances to retire the June maturity at APUC. Cash flow from ops of approximately $500 million and a draw of about $500 million on the credit facility together are expected to fund domestic regulated CapEx and the upstreaming of cash to APUC. Through these actions, we aim to proactively refinance upcoming maturities, fund the business, maintain liquidity and manage leverage without incurring additional incremental debt. Let me walk through our financial outlook on Slide 17. First, we are reaffirming our 2026 adjusted net EPS estimate in the range of $0.35 to $0.37, consistent with the outlook we originally provided in June of 2025. The drivers supporting 2026 performance are underway, and we are confident in their achievability. As Rod discussed earlier, we are revising our 2027 adjusted net EPS estimate to a range of $0.38 to $0.42. We updated our assumptions regarding the company's effective tax rate in 2027, which is now expected to be in the mid- to high 20s percent range as compared to the previously anticipated low to mid-20s percent range. We are continuing to evaluate tax strategies to optimize the tax rate, but expect the majority of the benefits from such strategies to be realized after 2027. The guidance revision also reflects expected timing of gas operational excellence activities to extend into 2027 before normalizing. With that, I'll turn the call back over to Rod for his closing remarks. Roderick West: Before we open the line for questions, I want to step back and leave you with a few thoughts on where we are and where we're headed now that literally, this is my 1 year in the job. It was March 7 last year when I began my tenure. When I joined Algonquin just over a year ago, I said that this company had the very real potential to become a premium pure-play utility. In 2025, we began turning that potential into results. Our leadership team is now in place, and we're delivering results through our Back-to-Basics strategy. We're focused on driving operational execution and constructive regulatory engagement to drive an attractive near-term financial profile as we close the gap to our authorized return. We have a strengthened balance sheet with a credit rating profile that provides low-cost access to capital and no expected equity needs through 2027. We're executing a customer-focused capital plan of approximately $3.2 billion, focused on organic investment to enhance safety, reliability and improve customer service. As we continue to reearn our right to grow, we're keeping our eye on additional opportunities in our service territories. We believe this adds up to a clear and compelling investment thesis as we position Algonquin as a singularly focused pure-play regulated utility operating across high-quality, increasingly constructive jurisdictions. As you've heard me say, every component of our vision, mission and strategy is being developed with achieving sustainable premium attributes at the forefront. We're staying focused on capturing the opportunity ahead and executing the mission we've laid out. I couldn't be more excited about what's in store for 2026 and beyond. Thanks for your time this morning. And with that, I'll turn it back to the operator for questions. Operator: [Operator Instructions] Our first question comes from the line of Baltej Sidhu with National Bank of Canada. Baltej Sidhu: Just on the revised 2027 guidance, can you share details or the largest drivers that underpin the new assumptions towards the mid- to high 20s effective tax rate versus the prior assumptions? Robert Stefani: Yes. Thanks, Baltej. It's Rob Stefani. Look, throughout my onboarding, we reviewed the financial projections. And during that assessment, the forward view of the effective tax rate moved from the low to mid-20s to the mid- to high 20s that we currently expect. That resulted in just over about $0.03 per share of EPS deduction. We're actively looking at tax optimization strategies, but those appear to really move past 2027, if pursued. As a result and in the interest of transparency, we revised that 2027 range down. Anything else I can add there for you? Baltej Sidhu: No, I think I got it there. And then just a follow-up there for you, Rob, just more from a strategic overview. You've been in the seat now for 60 days. Could you share your thoughts on the largest levers that the business can pull in the near term and also potential procedures or processes that Algonquin doesn't have yet that you've seen elsewhere in your prior experience? Robert Stefani: Yes. I mean, look, I think the strategy that Rod and the team have put together is strong, and that's really hinges around the rate case cadence and rate case strategy and engaging across our jurisdictions, bringing leaders in from very well-recognized utilities to enhance the operating platform like Amy and Pete and Kristin. And so as I think about kind of levers we can pull as a management team with a lot of experience at premium utilities, I think that's really at the forefront. And then the balance sheet, we've got over $1.4 billion of liquidity. We've got a strong investment-grade balance sheet, and that provides us the flexibility to pursue organic growth as well as assess other opportunities. So as you think about levers, the leadership team, that refocus on regulatory engagement and then the sound financial balance sheet provides us a lot of flexibility. Operator: Our next question comes from the line of Elias Jossen with JPMorgan. Elias Jossen: I wanted to start on the additional opportunities you mentioned at the end of your remarks. Can you just frame what types of opportunities you see in the market and maybe touch on whether those would include some portfolio optimization opportunities as well? Roderick West: I'll start and certainly let Rob weigh in with his early observations. The opportunities from my vantage point aren't new. Our growth story starts with organic growth within our existing jurisdictions where we have both the opportunity, and I would dare say the mandate to create different customer outcomes in the areas we serve. And the underpinning of our rate base growth is predominantly organic. What we've said in prior -- the last prior couple of quarters, particularly since last May, is that the portfolio, we've done the work on our existing portfolio with all the potential scenarios around puts and takes. And what you've heard from us is that we remain opportunistic. There was nothing so compelling given the screening criteria for M&A that keeps us disciplined on our core business. There was nothing immediately so compelling that it required us to move now. But to the extent that there are opportunities for us to take a look at potential moves within the portfolio, we're poised to do that. There was a capital recycling opportunity. Again, we have a point of view around things that might be in the dashboard. But our focus still -- and remember, it's only -- from my vantage point, at least, it's only 12 months in. We're under the hood right now improving the existing portfolio with an eye towards creating sustainable returns from that base. And we'll continue to be eyes wide open on additional moves, but they got to be accretive. They got to be transactional to be able to be executed, and they can't so unduly distract us from the commitments we've made. So opportunistic is the word. Elias Jossen: Great. And then we've seen some initial rate case and broader operational execution across the business. But maybe thinking a bit further out, how should we think about this transitioning from an ROE improvement vision to one that is more growth driven by solid rate base trends and growth across the business? Roderick West: Yes. That's the right question and the one that's occupying us. It starts first on our end by improving the outcomes for customers and our own operational discipline, earning the right to make requests for the -- and I use the term gently, the tweaks and the regulatory mechanisms in our respective states. I'll give you a prime example. I'll use the state of Missouri because I remember off the top of my head, I think it's Senate Bill 4 that created forward test year formula rate plans for water and gas, I believe, and it did not include electric. But given what we know to be our capital focus to create customer outcomes and support economic development in that Empire region, it would be a helpful component if we didn't have -- if we had the access to forward test years and formula rates in the electric business, right? But those require legislative adjustments. And I could see where we would align -- we can align with our stakeholders there to help support more timely and constructive recovery mechanisms consistent with our customer-centric capital plan. That's just one example of the types of tweaks where we have an opportunity to close the gap and allow returns by coming to the regulator with an all-out effort to lower cost to be focused on affordability, while at the same time, meeting our aligned objectives around improving customer outcomes, supporting economic development and certainly for us, meeting our financial obligations to our owners. Operator: Next question comes from the line of Nelson Ng with RBC Capital Markets. Nelson Ng: Rod, congrats on your first anniversary on the job. My first question just relates to CalPeco, the solar project that was canceled or written down. Can you just give a bit of background on that project and like how big it was? Because I think there are several solar assets at CalPeco already, but I just want to kind of understand -- provide a bit of color. And then also, I guess it was also included in adjusted earnings and why it wasn't adjusted out? Robert Stefani: Yes. So just regarding the question on the CalPeco solar write-off, that project was in Nevada, was meant to bring power in CalPeco. Just given where the economics of the project were and our assessment of the ability to earn a fair return on it, we decided not to move forward. As far as why it wasn't included in adjustments, I think as a utility with the rate base, the size of ours, obviously, you'll have projects that could potentially be abandoned along the way. And so view that more as something that wouldn't necessarily be classified as one-off. Obviously, you strive to limit those. But in that case, we wanted to reflect it within operating expenses year. Nelson Ng: Okay. Great. And then my next question is, I know, Rod, you previously talked about potentially redomiciling. Do you have any updates or early indications on that process? And I was just wondering whether that could potentially impact your effective tax rate. Roderick West: The short answer is it could. And the other answer is it's ongoing. I won't be in a position to announce anything on the redomicile question other than to say we are advancing our analytics around answering those types of questions to the extent that a redomicile conversation could influence our point of view on our respective tax strategy and the options available to us. And we're taking those types of -- that type of analysis to our Board to answer those very questions. So -- but we don't have announcements to make. I think those are premature, but the work is without question underway. Operator: Next question comes from the line of Robert Hope with Scotiabank. Robert Hope: So I appreciate the incremental color on 2028 CapEx and rate base on the presentation. Can you provide some incremental color on what you think the natural growth rate of your utilities are in a more steady-state environment? The presentation shows 5% to 6% rate base -- 5% to 6% rate base CAGR to '28. But if we actually take a look at '28 with $1.3 billion of CapEx, you're closer to 8% growth on the rate base. Is this what you view to be a more indicative number for the natural growth of the business? Robert Stefani: Yes. Thanks, Robert. I think towards the end of that forecast, I think you have to remember, we've got the ARIS generation project as well as our investment in the transmission and SPP, which we're very excited about. So it's back-end weighted due to that SPP transmission project and really more of the spend on ARIS. So that's what really drives the outsized growth towards the end of that forecast period. Robert Hope: All right. That's helpful. And then as a follow-up there, maybe just in terms of the SPP transmission, can you provide us an update on where you are with the number of those projects? And would it be fair to assume that, that does hit '28, but that will be a multiyear project towards the end of the decade? Roderick West: One, it's a multiyear project for sure, where the lion's share of the capital really shows up in the back end of the decade. We're going through various regulatory processes associated with SPP and our counterparties in both the transmission and the generation projects internally. We're tracking along with our regulator expectations around how that capital deployment is actually going to flow through rates, and we're shaping our regulatory strategy around aligning recovery with our capital deployment expectations. And so it's -- as you know already from your history, you know how this works. Given the size of the capital programs, particularly as it relates to the history of Algonquin and the Empire District, it's one of the largest projects we've ever had in the company's history. It's critical for us that we align our CapEx programs with constructive regulatory recovery. And to their credit, the respective states are aware of the significance of us getting that piece right, and we're bringing them along with us on the journey. Operator: Next question comes from the line of Ben Pham with BMO. Benjamin Pham: You mentioned the progress on operational efficiencies for '25. You mentioned the uptick in ROE. Can you comment then maybe specific for Rod, as you think about the last 12 months, you kind of tracking to what you're expecting coming in? Was there anything you learned along the way in the last 12 months, surprises, areas you can tweak a bit more. So a progress update on 2025 versus when you first started? Roderick West: Yes. It's a great question, and I've been in constant both assessment and reflection mode. I think the extent to which I had a point of view around bidding the cost curve and the need for us to rightsize the service company in support of our utility objectives, that's really been reinforced the deeper I've gotten into the organization. The need for consistent operational both cadence and standards for customer outcomes for safety and operational performance, the need is great. To the extent that you have operating entities from, let's say, Bermuda out from an eastward perspective to CalPeco to the West, you have different operating cultures and experiences. The 13 U.S. states in 4 different countries each have different regulatory cultures. But from our vantage point, the need to have a singular focus on safety, customer outcomes and operational excellence required more engagement from leadership, which is why I knew that I needed to be surrounded by folks who understood what excellence looks like so that we could role model the very behavior we're seeking to now reinforce 2, 3, 4 levels down in the company. And the other piece of the puzzle is the stakeholder engagement where I'm bringing and we are intentionally bringing our stakeholders along with us on the journey. It's really important for us as leaders to show up with our regulators who we're asking to support us on the journey to create different customer outcomes. And that means putting capital to work. More importantly, all of this stuff is happening in an environment where affordability is an absolute headwind regardless of what the actual price to value might actually be. The narrative around affordability is influencing our regulators' receptivity to additional rate recovery. But they recognize being intellectually honest, that customers can't receive the benefits of economic development and lower cost without efficient investment and timely recovery. And so I'm not surprised by what I've seen because I've been in the industry long enough to where I'm recognizing pattern recognition, but in every different jurisdiction, context matters and it influences how our employees, our regulators, the communities and the customers that we serve, how they receive our value proposition. My objective then is to provide you as much transparency as our investors in the path ahead and create a predictable pathway of meeting your expectations so that you take the journey with us. But I've been pleasantly surprised by the receptivity of our employees to this pure-play strategy and the standard. And I'm really pleased that I've been able to convince my colleagues around the table to join me on this journey of realizing what I still very much believe is a fantastic future for Algon. Benjamin Pham: Okay. That's great. And then maybe to turn to some of the other questions highlighted, the 2028 CapEx, the rate base you have there. You now have CFO, Rob in the seat, he's looked at the numbers in more detail. Are you in a position near term or next couple of months to think about your guidance beyond '27 with these additional details? Or is even through 2030 guidance, that may be unrealistic just given that you're still walking and running? Roderick West: Yes. I think you better believe we're looking at that. But to the extent that I would give guidance beyond, say, a growth CAGR for earnings, I'm grappling with what level of certainty do I have given the multitude of states, regulatory constructs, investment opportunities, portfolio scenarios on top of the earlier questions that were being asked and continue to be asked around domicile. I don't know that in the next couple of months, I'm going to give you -- be in a position where I'm comfortable giving you a longer view. But from the moment we came on board and now that we've settled and Rob has settled in -- settling in as CFO, we're putting the meat on the bones around the longer view and zeroing in on reducing that cone of uncertainty as we and the Board begin making some decisions around the answer to some of those broader questions, whether it's portfolio, domicile, all of those things influence the tax assumptions for '27. But it's a work in progress, and I don't -- I won't create an expectation of some big reveal, but I need you to know that we're under the hood constantly assessing how far out can we have clarity so that we can project transparently that clarity to you. But we are definitely working on that. Operator: Next question comes from the line of Mark Jarvi with CIBC Capital Markets. Mark Jarvi: Just in terms of the CapEx ramping through '27 and again through '28, Rob, you've articulated that you don't want the company really spending capital unless you can earn a fair return on it. So just as you stand here today, the confidence that the regulatory improvement there, confidence in recovering that invested capital to get across '27, '28. And just is that sort of the signal then the higher CapEx through '28, just that increasing confidence that the earned ROE continues to track higher beyond 2027? Roderick West: The short answer is yes. And again, for me, looking at -- and certainly, Rob, as we're shaping out the capital plan and matching the earnings, we're also doing the dance around timing. And what I am trying to get my comfort around, and this kind of goes to my relative visibility into a 5-year plus kind of look is how does the timing play out? I know that I got some big chunky investments in transmission and generation in the next couple or 3 years. Missouri, I got a 2-year stay-out period, right, where I'll be working to feather in the implementation of the rates that we settled on, while at the same time, knowing I got to put capital to work to advance the larger chunkier projects in transmission and generation, all of which are accretive to the value of the firm. But the work is ongoing for me, how do I bend the cost curve in the near term to create and maintain the margins while still feathering in investment and getting support of our regulators to, in some instances, perhaps accelerate existing mechanisms to keep us whole. All of those things are part of managing the business. And as we've alluded to, there are some areas where we just have to put more resources to work to provide the outcomes to customers to earn the right for those more efficient recovery mechanisms. But Rob and I are -- along with the executive team, know that our responsibility to you is to map out how we close the gap between our allowed returns and earned. And we are dead set on remaining focused on achieving those outcomes as quickly and as efficiently as we can. I need you to know that that's not -- that's never lost on us. Mark Jarvi: That makes sense. And then just if I hear you right, would we maybe sort of higher sort of variance potentially on CapEx in '27, '28 just because you're still working through this process? And then I guess, Rob, in terms of the comments around 2027, no equity, just the view in terms of how you fund through 2028? Robert Stefani: Yes. So we haven't put out guidance on 2028. And I think to Rod's earlier point, I think as you look across the business and anything we could do there, I think it's just premature. But as we look out, as you look at our balance sheet, as you look at bringing in decisions on the regulatory front, we feel confident in that ability to get through 2027 without an equity issuance. I think the capital plan is exciting. It is back-end weighted, but not an insignificant part of that is FERC transmission that would earn a return along the way that's compelling. So as we think about those kind of opportunities and closing the gap on ROE, I mean, that's exactly that and getting in on the state side to close the gap on the distribution end. That's what we got to be doing. So I think it's exciting. Those projects, unfortunately, they're towards the back end. But as Rod highlighted, they do continue past 2028. So something to kind of look forward to in the forecast, but also beyond that. Operator: Next question comes from the line of John Mould with TD Cowen. John Mould: I'd just like to start with the Missouri rate case and the customer metrics that you need to have in place there for 3 consecutive months. Could you maybe just -- and I appreciate those are metrics that were included in the settlement that you're comfortable with. I'm just wondering if you could give us some color on your progress on those customer metrics and how you're thinking about kind of time to hitting that 3 consecutive month window? Roderick West: Yes. And I have Amy, our Chief Customer Officer, here. I'll start the question, and I'll look for some body language from Amy to tell me if I'm off on it. And I've shared before that these -- the customer metrics were all around items like accuracy, timeliness of billing, which sounds simple, but for us, represented the outcomes of a series of end-to-end processes that presented opportunities for improvement. We did not believe those metrics, all of which would be the types of things that any utility would view as reasonable. We believe we have satisfied those metrics, but we are in the process of validating with the commission the sustainability of -- the achievement and sustainability of those metrics so that we could then satisfy for the commission that we met the conditions precedent for rate implementation. And Amy and her team have literally been working 24/7 to ensure not only the achievement, but the durability of the fixes that created the friction in Missouri. And our expectation is that we're going to answer the bell for the regulator, but also for our customers to meet that -- to meet those time lines and outcomes. So we're on track, but we're in the process of validating that with the commission, and that is a condition precedent of rate implementation per for this element. But think about timeliness, think about accuracy of bills and the durability of the system upgrades that we -- and tweaks that we have made along the way. John Mould: Okay. And then just maybe a quick one on the hydro. How should we think about where that sits in the pecking order of potential recycling opportunities? It doesn't impede your pure-play positioning and wouldn't displace an equity need over the next couple of years because you don't need to come to market, but it does represent your only non-reg assets. So how should we think of that relative to the rest of the portfolio and in terms of what you -- the kind of interest or conversations you've had in the market since you identified that? Roderick West: Yes. And I'm -- it's not going to be exciting to hear because there isn't one thing different than what you've heard before. And I don't -- well, actually, I do want to sound like a broken record because I want us to be consistent, is no longer what we consider to be material, right, just given where the asset sits within the existing portfolio. We are focused on the pure play. And certainly, our openness and willingness to transact with the hydro asset hasn't changed. We've made the point that it's not a fire sale circumstance where we're looking to jettison it at any cost. And to the extent that we have been -- have received or are in any stage of conversation with counterparties, we wouldn't be commenting on it unless we thought we were at a point where we'd have something to transact on. That being said, it is still very much an asset that we believe is -- would better serve us outside the portfolio, assuming we had reasonable terms. And that's all we're doing is pursuing reasonable terms, and we're sure not going to be distracted by any process that isn't from our vantage point, isn't creating some level of value on our end. So if Rob has anything to add there by all means, but it's on the dashboard, and we go through the normal processes around considering inbound from interested parties. But again, this will not be a fire sale. Operator: [Operator Instructions] We'll take our last question from Elias Jossen with JPMorgan. Elias Jossen: One more quick one. Can you just discuss your overall view on the California regulatory backdrop, maybe thinking about wildfire risk at CalPeco and whether the team would consider contributing to a wildfire fund there? Roderick West: How much time you got? Elias Jossen: I got all morning. Roderick West: No, it's -- listen, it's an ongoing effort for us as we're not at the same scale as some of my larger colleagues that operate in the state. And that dynamic influences how I think about the backdrop around wildfire. We're going through a process right now to get our wildfire mitigation plans approved. And it is a complex landscape that we are navigating. We expect to navigate it as is our charge and reduce the risk, both financially, operationally and otherwise to wildfires while managing certainly the cost, but from my vantage point, the recovery mechanisms that -- and access to insurance that reduces risk on our end. And I am spending a fair amount of time as is my team, both contributing to and tracking that process. But -- and it is a full-time endeavor. I will tell you. We are spending a fair amount of time and resources keeping up, but I am duty bound to reduce the risk of operating in California, and we're engaged with our stakeholders in Washington, D.C., and the state of California from the governor's office to our regulators and other counterparties. We're fully engaged just given the complexity of managing risk there. Operator: There are no further questions at this time. I will turn the call to Mr. Rod West. Roderick West: All right. Just a general thanks for your continued interest and our commitment to be transparent with you has been the undergirding of our disclosures today. And again, thanks for supporting our path to premium. Have a great day. Operator: This concludes today's conference call. You may now disconnect.
Jens Breu: So good morning, everyone, and thank you for joining us today for presenting the annual report of 2025. The following presentation of the 2025 annual results can be found on our website at www.sfs.com, under the Downloads section. Now it's not moving to the next slide. Somehow it's not moving to the next slide. Can you -- someone is on the braking pedal, most probably you. Sorry for that. Volker Dostmann and I are pleased to present the SFS Group results for the financial year 2025. It was yet another year characterized by a demanding market environment, geopolitical uncertainty and continued currency headwinds. Despite this, SFS delivered solid results. Our diversified positioning across end markets and regions once again proved to be a strength. At the same time, we initiated important structural measures that will strengthen our competitiveness for the years ahead. So next slide, I have to say. Let me briefly guide you through today's agenda. In the next roughly 45 minutes, Volker and myself will actively walk you through the highlights of the year. I will start with a short reminder of how SFS is positioned and how we create value for our customers. After that, I will summarize the key takeaways of 2025. Volker will then walk you through the key financial figures in more detail, and then I will return with a short overview of the segment developments before we conclude with our outlook for 2026, and open the floor for questions for the remainder until noon. Now we got kicked out. Okay. I'll start with the positioning of the SFS Group. SFS as a company is people throughout everyday life, often unnoticed 24 hours a day, 7 days a week. Our mission-critical precision components, fastening systems and quality tools are embedded in the products and processes of our customers. While our products are often small components within larger systems, they play an essential role in ensuring reliability, safety and performance by focusing on mission-critical applications. We help customers achieve efficiency and cost effectiveness across a wide range of applications. This positioning is built on a long-term customer relationship, engineering expertise and a deep understanding of our customers' applications. Our guiding principle is simple, inventing success together. In many cases, the direct cost of our products represents only a very small share of the overall cost of our customer products. The real value lies in optimizing the overall process. Through value engineering, we improved product performance, simplify installation processes and reduce supply chain complexity for our customers. This is where we, as value creators, create measurable gains. Our activities are structured in 3 segments. Engineered Components focuses on highly precise customer-specific components and assemblies. Fastening Systems develops and markets application-specific fastening solutions for the construction industry. And Distribution & Logistics provide tools, fasteners and C-part management solutions for industrial manufacturing customers. Optimizing the product. Let's now take a look at the specific end market with an aerospace application. This example illustrates how value engineering works in practice. Instead of simply supplying a standard component, SFS engineers analyze the entire application and redesign a new solution. By replacing the conventional bracket solution on the left side with a hybrid insulated pin fixation with bolts on the right side, we can reduce weight and operating cost. At the same time, customers benefit from easier installation and lower procurement complexity. The next success story as well in aerospace shows the engineering capabilities of our Engineered Components segment in the aerospace industry. From the initial customer idea to first flight, the development took only 16 months, which is very short for aerospace projects. The solution combines advanced plastics and metal processing technologies to create an ultra high-strength composite overhead compartment hinge for the refurbishment of existing aircraft cabins. It provides more space for passenger luggage, improves boarding and deboarding and contributes to both sustainability and cost efficiency for airlines. To give another example from the aerospace market. Many of the solutions developed by SFS are not visible to the passenger, yet they are essential for the performance and safety of the aircraft. Typical examples include cabin assemblies, assembled solutions, injection molding components and new also aerospace fasteners. These solutions require a very high precision and close cooperation with the customers already during the design phase. SFS supports customers from engineering and prototyping all the way to serial production, creating strong and long-term partnership. In the Fastening Systems segment, SFS combines products, tools and digital engineering solutions into integrated fastening systems. Our approach is not only to supply fasteners itself, but to optimize the entire fastening process. This includes specialized insulation tools and calculation software that ensures the correct application of the fastening solution. By combining these elements, we improve reliability, productivity and efficiency for our construction customers. In Distribution & Logistics, SFS focuses on optimizing the supply and the management of tools and C-parts for industrial customers. Through smart tool storage and digital issuing system, employees have immediate access to tools and consumables at any time. This improves availability while reducing inventory levels and administrative effort. At the same time, the generated data enables further optimization of procurement and production processes. Payback for the customer is usually less than 5 years. The concept can also be compared to a razorblade model. The system itself is the infrastructure, while the tools and consumables represent the continuously used blades. Through this system, we not only supply the tools but also generate transparency on consumption and usage patterns. This allows us to provide additional services such as cost optimization, inventory reduction and process improvements for our customers. To act as a true value engineering partner, it is essential for SFS to have a clear focus on specific end markets and customer applications. For this reason, the SFS Group implemented several organizational changes to sharpen its end market exposure and strengthen collaboration across the segments. As of January 1, 2026, the Engineered Components divisions were reorganized around applications, and the new region, Asia was created to further develop the important Asian growth markets. Urs Langenauer was appointed as Head of EC segment; Martin Reichenecker to go with the leadership of Region Asia; and Iso Raunjak became Head of D&L segment; while Christina Burri joined the Group Executive Board as Head of Corporate HR, Communications and ESG. These changes also reflect the generational transition in leadership and ensure continuity in the execution of our strategy. I'll start with the key takeaways of 2025 at a glance, resilience in turbulent times. The year 2025 proved to be another intense year against the backdrop of an adverse market environment. SFS realized solid results, thanks to its broad positioning across different end markets and regions. A program to streamline the global production and distribution network was proactively introduced with the goal of realigning production capacities with partially reduced customer demand and strengthening focus on core activities. Third party sales of CHF 3 billion was generated, plus 0.6% versus prior year. Organic sales growth of 2.9% demonstrates strong market positioning, currency effects again had a significant impact with minus 2.9%. And adjusted operating profit EBIT of CHF 371 million, in the prior year CHF 350.2 million was achieved, which resulted in an adjusted EBIT margin of 12.2%, in the prior year 11.6%. Reduced earnings per share of CHF 5.63, in the prior year CHF 6.21 were caused by the economic environment and the nonrecurring effects from our program to streamline global production and distribution network. Expenditure on plant equipment, hardware and software declined considerably to CHF 103.7 million, in the prior year CHF 148.9 due to the completion of several major projects. Organizational adjustments, as mentioned, were completed to support the generational transition and to strengthen customer focus. The key takeaways are clear. Consistent progress was achieved. In 2025, SFS achieved total sales growth of 0.6%, while organic growth reached 2.9%, demonstrating the solid underlying performance of the business. Currency effects had a negative impact on the reported figures. The main growth driver during the year was the electronics end market, which showed particularly strong demand. As a result, sales in electronics increased from around CHF 400 million to CHF 422 million, confirming the strong positioning of SFS in the targeted electronics applications. On the environmental side, interim targets were exceeded. Sustainability remains an important pillar of SFS' long-term strategy. In 2025, we made further progress in reducing our environmental footprint. Compared to the 2020 baseline, Scope 1 and Scope 2 emissions were reduced by 77.1% measured as CO2 emissions in metric tons relative to net sales. At the same time, we continue to increase the use of renewable energy, 81.5% of our total electricity demand is now covered by renewable sources, reflecting our continued efforts to decarbonize operations and move towards our long-term climate targets. On the social side, dual education goals were secured, progress in accident rate finally achieved. Alongside environmental progress, SFS has also made further advancements in the social dimension of sustainability. Our training and development targets were successfully confirmed, reflecting our strong commitment to education and continuous employee development. A significant number of employees are engaged in education and training programs, reinforcing the importance we place on developing skills and future talents. At the same time, we achieved a significant improvement in workplace safety. The accident rate measured as the number of accidents per million hours worked, declined noticeably, reflecting the continued focus on safety initiatives across the group. With that, I'm now handing over to Volker for the presentation of the key financials. Volker Dostmann: Thank you very much, Jens, and a warm welcome also from my side. The financial year 2025, as said, was to be seen in the front of a backdrop mixed with geopolitical and economic challenges, distinct FX development and instability of international trade. We may report good results and satisfactory development in such difficult environment. The team showed great dedication to their end markets to their customers and found opportunities despite all of that. We thank all of the 30,646 employees for their dedication. And I summarize the performance as a consistent progress. We grow, we optimize ourselves, namely the production and distribution network. We drive profitability and we generate with that significant levels of cash. But let me go into the details, starting with sales. We show sales of CHF 3.056 billion, which is 0.6% growth adversely affected, as you see, by the FX environment, CHF 88 million up to the tune of 2.9% that is lost against the appreciation of the Swiss francs. Sales dynamics during 2025 have been challenging, as said, but after a muted first half year by geopolitics and hesitations in order patterns globally, we report a pickup in Q4 especially versus prior year, and our organic growth is despite the adverse conditions at 2.9%, just shy of our midterm guidance. This is largely based on the positive developments in Engineered Components where we see, especially in the electronics end market, replacement cycles in mobile phones. Additionally, the increase of stamped parts that we deliver to the respective customers successfully support our top line. In parallel, we continue to ramp up the known brake systems in the automotive end market. That's happening in Switzerland, in China, in India and in the U.S. We are on track to see good progress there. Distribution & Logistics shows very solid development in an end market where especially machine builders and manufacturers restricted their demand painfully and kept their priorities on operational necessities. Still, the team has managed to achieve organic growth of 2.4%. With construction activities in Central Europe being very sluggish versus a more dynamic North American market, the segment Fastening Systems saw headwinds from the weakening of the U.S. dollar. Gradual improvements during the year were dampened towards year-end again. Overall, we see a slight negative performance throughout the year for the Fastening Systems segment. As said, FX development, again, mainly against Swiss franc, dollar, euro, Swiss franc, melted off a significant portion of the locally made progress 29% up to the tune of CHF 88 million. Looking into breakdown by geography and industries. I would like to highlight that we stay very solid in Europe at 56.8% and the share. But also we'd like to point out the shift in North America and Asia, where we gradually gain footprint to Asia 14.3%, and the Americas 17.8%. Sales breakdown by industry shows a stable situation as well. Industrial manufacturing at 27%, just losing a wee bit in an extremely competitive market environment. We managed to keep the footprint almost stable. Construction and automotive, both at the 20% reach. Our local for local approach remains a strategic pillar. And with that setup, we see ourselves well positioned against tariffs and customs discussed. And also the unilateral measures taken by the respective countries. The uncertainty and the volatility from the end market demand is more of a concern to us at these days as the tariffs itself. Operating profitability is at the CHF 371 million or 12.2% or EBITDA, CHF 505.8 million, 16.6%, which is a normalized figure. Reported, we are at CHF 324.3 million, 10.6% or EBITDA of CHF 466.6 million, 15.3% of sales. We adjusted to CHF 46.7 million one-time nonrecurring cost in the program of streamlining our production and distribution footprint, and this shows the results. We have managed to lower our personnel expense quota by 0.5 percentage points, and OpEx by 0.4 percentage points in a sustainable way. Based on a stronger second half year top line versus prior year and the improved performance, we record an emphasized pickup in profitability towards year-end. As mentioned before, we tie that to significant part to the favorable economic environment in electronics, where we see this replacement -- the replacement cycle and also to the dynamics as such. We expect that to flatten out slightly during the coming months. And 2026 should not be such a distinct difference between first half year, second half year. Being on an adjusted basis back in the target of 12% to 15% EBIT range was possible due to the progress in the streamlining of the footprint of production and distribution networks. And I would like to give a bit more detail on what we are doing at the moment and where we are on the next slide. We said that we are going to reduce top line by CHF 110 million, phasing out technologies and legacy products. We are, at this point of time, at the range of 20% that we actually phased out. Individual discussions with customers are ongoing, and we are confident to reach the target. As a nature of the topic, this is going to take longer. 650 FTEs were announced that we want to reduce overall. We implemented actions affecting more than 330 FTEs by year-end. 50% of the workforce is therefore roughly targeted. And again, this is a topic where we take our time in order to find the best possible solution for the businesses, but also for the individuals. And we are working towards finishing all these measures by end of 2027. Reducing these 650 FTEs does and will involve closing as well as selling of individual sites. Divestiture is clearly there in the realm, and we would, in any case, prefer that as we can grant these people in the future in a different environment. Should you be looking at the overall FTEs on the group level, you will not find the 650. We have 2 counter effects that we would like to mention here, which have absolutely nothing to do with the streamlining of the profit -- of the production footprint. But you see the distinct workforce up in electronics, which usually is a temporary workforce, that is temporarily higher, as well as the ramp-up in India where we are expanding our product portfolio. The total cost for the adaptation program was targeted at CHF 75 million, which still is our total target. At the moment, we are more than 60% through the measures from a cost perspective, one-time cost perspective, as I said, the CHF 46.7 million. We are striving to improve 0.8 percentage points on EBIT. We've seen first minor effect in 2025. We'll see roughly shy half of that in 2026. So we are here on good track. If we look at what we did in a chronological order, then you see these different sites that are and will be affected. And I'll summarize as follows. We have places where we are through, sites where we are through like Brunn am Gebirge in Austria, like Olpe in Germany or Mocksville in the U.S. These sites are closed. The measures are fully implemented. On the other hand, we have sold Allchemet to the management in Emmenbrücke. That is one of these divestitures I mentioned. And we are lastly in implementation in Torbali in Turkey, in Turnov in Czech and also in Flawil, in Switzerland, where we are on track. And all measures as said shall be implemented by year-end of 2027, which brings me to earnings per share. And as already mentioned, we have earnings per share of CHF 5.63, which is CHF 0.58 down versus prior year. We have impact from the streamlining program and the one-time cost, which obviously are reflected in our earnings per share. On the other hand, we have a pickup in profitability and mix, which works counter this. We have no or minor impacts from the financial result this year. And we have a bit of a pickup as we pay nominally less taxes in the year 2025. Based on that result, the Board of Directors will propose to the general assembly of 22nd of April, a dividend of CHF 2.5. As in prior year, we will distribute part of that CHF 0.50 out of privileged capital reserves, which is an advantage to the individual shareholders in Switzerland. The rest, the CHF 2.0 will be distributed as a genuine dividend. With that, we stay in a payout ratio of below 50%, which is a clear signal that we will continue to deleverage our balance sheet. Dividend yield is at 2.3% measured with the share price end of the year. Net working capital development remained flat, which was quite of a challenge in a situation where we had tariffs and uncertainty from a logistics point of view. We managed to keep that flat, especially focusing on inventories. Overall, we stay at 28%. Clearly, it remains a topic to come down on these levels again. Brings me to capital expenditure, where we say with 3.4% of sales, we are reaching a historical low which is clearly down and below D&A ratio of 4.7%. This is clearly the outcome of the streamlining of the production floor print and the increase of utilization of existed installed capacity. Additionally, of course, we have the trends from the ending of the investments in Heerbrugg, which were large. And in China, in Nantong, where we had larger investment cycles during the last 2 years. We keep the rigid view on CapEx, and we will reconfirm here the bracket of 4% to 6% of sales going forward in investment into CapEx as we take the positive cash flow from that element. We go to the operation free cash flow, which is a very strong signal at CHF 274 million. And therefore, at 57% of EBITDA or 124% of net income, which we deem as a strong signal and a clear document of the good ability to generate cash. As I said, whilst we optimize ourselves whilst we grow and therefore, also deleverage our balance sheet, and we will strive for that further. Net working capital management, diligent CapEx decisions and profitable growth are cornerstones in our decision-making. We see ourselves positioned to keep the cash generation up and reconfirm the target bandwidth of [ 40 to 50 ] of EBITDA going forward. As said, balance sheet ratios come back steadily and the equity ratio that we lowered deliberately in 2022, acquiring Hoffmann Group and expanding distribution and logistics has come back to 64.4%. Meanwhile, good, in the range and above the targeted 60% threshold. Our first outstanding bond has been reimbursed against the revolving credit facility and we strive, as said, to go that path further as we go along. Return on capital is fluctuating or moving exactly in parallel with our profitability and comparable levels to prior year along those performance indicators. Effective tax rate, to our dismay, did raise again. We were aiming to reverse the trend and fighting against it, but we have some elements to line out here. One is the closure of sites made us write-off deferred tax assets as we lose them, which drives the tax rate. Secondly, we have a distinct hunger of the economies to generate tax income and the creativity in Germany, France, Italy and Hungary, with new taxes drives our tax rate and our ability to counter react was somewhat limited. And lastly, the continued moving out of our tax shield in the U.S. is counter affecting our other measure. If we look at tax rate on strict statutory rate, we would end up at 23% as we are positioned today. So there is a potential, and we will implement measures to drive that down and/or keep it flat. That brings me to the KPI summary. I conclude my detailing on the performance. Thank you very much for your attention, and hand back to Jens. Jens Breu: Thank you very much, Volker, and I'm happy to continue with the presentation of the segment development. I'll start as usual with the headlines of the Engineered Components segment. The Engineered Components segment delivered good growth in both sales and profitability supported by several end markets and application areas. Within this segment, the electronics division was a key growth driver, particularly through stamped components used in mobile devices and components for nearline HDD applications. The aerospace business showed a very encouraging performance throughout the entire year, reflecting strong demand and successful project execution has proven through the introduction. In contrast, demand in the medical device industry developed somewhat below expectation during the year. Despite excess capacity in the European market, the automotive division achieved solid results, demonstrating the competitiveness of its product portfolio. In addition, several ramp-up projects in Switzerland, China, India and the United States are progressing. Finally, George Poh and Walter Kobler retired from the Group Executive Board, and Urs Langenauer assumed the role of Head of Engineered Components segment. The Fastening Systems segment was impacted by the economic environment, particularly in Europe. In the context or in this context, the segment recorded a slightly negative sales development and weakening currencies further reduced operating profit in this sluggish market environment. At the same time, the North American construction industry proved more dynamic than its European counterpart. In addition, regionally cold and unusually long winter conditions at the beginning and the end of 2025 had a temporary negative effect on construction activities. Nevertheless, demand recovered slightly over the course of the financial year. And finally, market access in North America was further expanded through the acquisition of DB Building Fasteners in the United States on August 1, 2025. The Distribution & Logistics segment showed subdued market momentum during the year. Nevertheless, the segment delivered solid results in this challenging environment, supported by prudent cost management, the onboarding of partners and a comprehensive range of products and services. The planned acquisitions of the partner companies, Gödde, Oltrogge and Perschmann will further strengthen the platform. These acquisitions will enable the further internationalization of the trading business. They will also allow us to pull resources and realize advantages in terms of expertise and costs. Furthermore, the purchase of a 51% stake of the 3D-printing platform, Jellypipe AG now renamed Hoffmann Additive Manufacturing expands our technology offering. Since January 1, 2026, Iso Raunjak has been leading the Distribution & Logistics segment. Looking ahead to the financial year 2026. The outlook is still characterized by considerable uncertainty. Against this backdrop, the group will continue to focus on its rigorous customer orientation, pushing ahead with innovation projects and ensuring efficient and profitable business processes. We will steadfastly continue to pursue and implement the global production and distribution network, streamlining programs introduced in the year 2025. For the 2026 financial year, the SFS Group is focusing on the midterm guidance and expect organic growth of 3% to 6% in local currencies as well as in our adjusted EBIT margin of 12% to 15%. Looking ahead, we continue to focus on our main strengths and opportunities with a clear emphasis on disciplined strategy execution, our key priority is building a fit-for-purpose global manufacturing and disposition network that reflects the current economic environment and includes targeted site-specific optimization measures. At the same time, we remain committed to maintaining a strong financial foundation supported by operational cost discipline in response to the challenging market conditions. In addition, we'll continue to pursue selective bolt-on M&A opportunities that strengthen our technology portfolio, market access and distribution capabilities. Alongside these initiatives, we aim to further increase the equity ratio, ensuring that SFS remains financially robust and well positioned for sustainable long-term growth. At this point, I would like to thank all employees of the SFS Group for their commitment, expertise and innovative energy, which were essential for the good results and development achieved during the year. I also extend my sincere thanks to our customers, business partners and shareholders for their trust, loyalty and constructive collaborations, which supports the long-term success of SFS. Thank you for your attention. And now Volker and myself are happy to answer your questions you may have. We'll start first here in the room. [Operator Instructions] Alessandro Foletti: Alessandro Foletti from Octavian. I have a couple. Maybe starting with the top line guidance for 2026. You had 2.9% organic in '25, and now you're guiding for a little bit less than that for '26. So I wonder what was special in '25 that is not repeating and what are the risks and chances for '26? Jens Breu: Last year, we also guided 3% to 6% in local currency, same as we do. This year, Volker will give us a little bit of the breakdown then in detail on where we expect this growth happening. Overall, I think when we go back a year from now, at that time, we also clearly said we have innovation projects and in general, initiatives in the organization to grow 3% to 4%. And this is roughly where we also ended up. And so also this year, we have a range of initiatives, which we are implementing as we discussed, so ramp-ups, which we expect to have in the year '26, also probably in that range of around 3% to 4% overall. I don't know whether you want to? Volker Dostmann: Maybe it's important, in that mix, we will see roughly CHF 50 million that go out as we streamline our production and distribution network, right? So from this CHF 110 million that we overall target, we expect roughly CHF 50 million in 2026 to materialize. So that is a headwind that you need to factor into your calculation. Alessandro Foletti: Right. But then you have -- I don't know if this works, but then you have about CHF 100 million plus/minus, if I calculate correctly from M&A, right? And this is 3%. So you have CHF 50 million going out, that's 1.5%. So you have a 1.5% tailwind only from M&A or scope of consolidation, right? So looking at organic, it doesn't seem to be very dynamic, what you are indicating, at least the bottom of the range. So I wonder what are the moving parts? And where are the challenges? Volker Dostmann: I mean moving is -- the volatility, I think we mentioned earlier, we do not see yet a clear trend of recovery, right? We do see first sparks. We do see good months in some end markets. We see lower months in the same end markets. It's not a consistent trend that we have at the moment that signals recovery. That's the volatility that we alluded to, right? And yes, we are, from that point of view, we take our reservations. I think that's clear. Jens Breu: And I think if we go back to the numbers, as you mentioned, the Gödde, Perschmann, Oltrogge is around 3%. Then we had other acquisitions last year, smaller ones, which will give us an additional 0.3% to 0.5% effect on that one. And then we expect roughly around 1% to 2% from projects. And when we go through the segments and take a look at the opportunities and start with the Engineered Components segment, we have a ramp-up ahead of us in aerospace fasteners that's one specific direction we take. Secondly, we have new programs also in the electronics area, where we add and increase value-added on the smartphone side. Then in automotive, we still have ramp-ups ahead of us with braking systems. These are more or less the main growth drivers broadly in Engineered Components, especially in China and India, we see that automotive demand is good and solid. We have roughly around 70% market share in China with ABS Valve components and see new customers coming. And we're also working on ball screw drive technology customers in China. Besides that, we also have ball screw drive technology customer in India, which we acquired, low volume, low momentum, not a large market, only 6 million cars being produced in India. So maybe that's to be taken a little bit more on the cautious side. Then we have also to realize that most of the ramp-up projects, which we have seen over the last 2 years have not yielded yet the full top line impact as we expected. This is naturally given because the market environment has been a little bit more challenging. And we have also seen that some of the customers overestimated the change in technology. But sooner or later, we also expect that this will be happening and maybe this will take a little bit more time, and that's growth opportunity which we have in the back end. Then in the segment Fastening Systems, we have seen that we had good organic growth in North America, a little bit challenging environment in Europe. And here, we have to say that in North America, we are gaining new customers. Our competitors have supply chain issues. So we expect here to also make further inroads on the construction market side. And then in Europe, it's more or less, it's a matter of recovery of confidence because the mega trend is clear. There are not enough apartments. There are not enough buildings out there. We have seen a substantial better performance against our competitors in Europe with our numbers as we have shown. So also we believe, we gained market share in general in Fastening Systems. And then in Distribution & Logistics, which is mainly the industry environment in which we are. We have seen, I would say, a sharp correction over the last 2 years in Europe. We believe this correction is almost through. And we should see slightly improvement in the European environment. We see new applications like defense, for instance, is giving momentum to the industry in Europe and the general industry, the automotive is maybe more challenged on that side. But we also see that, I would say, the adjustment cycle, we believe, is gone, is through. And now the demand cycle will slowly start to build up, not quickly but slowly. Volker Dostmann: Just one small addition to that. Acquisition of the partners in D&L will yield only 3 quarters of the year. That might affect your... Alessandro Foletti: Okay. 130 times 3 divided by 4. Volker Dostmann: Yes, it's still, given on the CHF 3 billion, it's still an impact. Alessandro Foletti: One question then I'll pass on the mic. Maybe can you give a little bit more precise guidance on the CapEx? Because we really hit historic lows. Volker Dostmann: We're not going to be consistently below depreciation, right? I mean we are not going to stay consistently for a longer period below depreciation. We said 4% to 6%, we'll stay for this year rather to the lower end. But we will see, we will see eventually other expansion projects coming. We are, at the moment, building out India. We will have -- during this year, we will have machinery being added there. That's not going to change it significantly, but we will see that figure coming up. That's why we say 4% to 6%. For 2026, you can expect us to the lower of that range. But we will not stay consistently below this 4%. That's not going to fly. Alessandro Foletti: Well, what I wonder is, we look at the past, you had very often like sort of normal CapEx and then a couple of bursts where it really went above the 6%, et cetera. Is it just not possible to keep it less volatile and more sort of kind of preparing today, future ramps? Or you really have to do it this way? And you will always have this sort of big chunks? Jens Breu: The big chunks, as you write out properly has a lot to do with technology and changes, shifts usually require that. Then as we know, I mean, positions are usually occupied on the supply side within applications. I mean a door is opening, you need to go in full force. And this is where we usually then see a peak. We have seen quite a few peaks in automotive due to the braking systems, for instance, then also in electronics due to stamped products and such things. So that's very much a characteristic of the Engineered Components segment. In FS and D&L, it's more as we go. We need initial CapEx on a smaller basis. So we cannot promise it depends more or less on bigger opportunities. And the profile of SFS is clear. We need to go in early when the technology is new and fresh and form and shape, then the design so that we are specified in then for the rest of lifetime. And that usually requires that we do a leap forward. Otherwise, we leave the room and the space to others, and following usually is not as attractive on the margin side. Operator: Christian Bader from Zürcher Kantonalbank. I have a question regarding your capital allocation. Now that your equity ratio is so high and net gearing is lower than everybody was expecting. So can we expect an acceleration of M&A activity in the short term? Or will it take a breath now having done a few deals in Europe? Jens Breu: Overall, we are not afraid of heavy cash around us, and it gives us an opportunity then to maybe also be a little bit more flexible and a little bit more constructive in -- on the M&A side, what we do with it. So I believe first priority for us is that we take a look at the quality of the M&A opportunities, which are out there in the market. That's key besides adhering to our strategy on the M&A side. Secondly, having more firing power is usually not a disadvantage. So we will be patient. And I think when we go back in history in time, SFS, we had quite a few years where we got asked a lot. When do you do a step forward, and we were patient to wait and then do the right move forward, for instance, with the Hoffmann Group or with Tegra Medical later on. Same as we speak now. We certainly see more opportunities in the market. You see every year, we do usually 2 to 3 acquisitions. But once again, we are patient. We are in there for the mid and the long term and quality is key. We do not want to distract ourselves, management and the operations from customers and innovation by having to solve problems, which we cause by rushing into maybe M&As, which are not beneficial maybe there on that side. Christian Bader: And maybe a question on your supply chain. I mean given what's ongoing with the war in Iran. Are you affected at all by any supply chain constraint or maybe increase in the freight cost? Jens Breu: The questions are mounting as soon as it started, the telephones are running hot, everyone is calling and asking this question. And as we have experienced also from the past, when you know early on, the ships get rerouted and maybe it takes 2 weeks longer. And in terms of inventory management, that's not much of a challenge. So we expect that we deliver to our customers on time and as promised. We do not expect that this will leave a mark on the top and on the bottom line. Besides that, we have, I would say, in terms of total sales, on the marginal volumes, which we ship from Asia to Europe, it's specific products. Usually, we source locally very strongly. And from that point of view, we do not expect an impact. We expect an impact that this is a further dampening of the sentiment overall that maybe consumers but also industrial customers will probably remain more on the cautious side and maybe on the opportunistic and aggressive side, that's probably the effect we will be seeing. On the capital allocation side, the M&A side, certainly high focus on Fastening Systems, construction market. That's the key. But we have also seen that when there are opportunities around in the D&L segment, that will also act there. If we could wish probably, we would ask for more opportunities maybe in the Americas and Asia. But that's on the wish list. Then we had a question here. Tobias Fahrenholz: Tobias Fahrenholz from ODDO BHF. Can we speak a little bit about Germany? I mean it's an important region for you. Do you see some signs of improvement there? When would you see at the earliest some benefits from the bigger programs there? So thinking about D&L then maybe a little bit later cyclical, the Fastening Systems business. And how is your expansion of the product portfolio with the new fastening high runners going on? Volker Dostmann: I mean, alluding a bit to that, that we are all waiting for these big investment programs to happen, right? I said it before, until it drizzles through the supply chain and really creates orders at our sites, we mentioned we expect 24 months. What we would have hoped for was increase in sentiment, improvement in sentiment in the respective end markets, and that would kick in much faster than we would see the genuine money distributed to come our way. We don't see that sentiment changing significantly. The pessimistic view in the market is persisting and that keeps that sluggish situation in construction, in Distribution & Logistics. And I think in the general industries, automotive area, it's widely discussed. So from that point of view, we see there a pocket of improvement. But as I said before, not a consistent trend where we say the market as such is showing maybe signs of one or the other direction. Jens Breu: And I think the pocket is the key. As you mentioned, the opportunities are out there as we talk defense and aerospace, for instance, is on the positive side and general machine building, mainly companies which had a major export to India, China, those are challenged overall. But I think fast key besides understanding the market key is then what is the need in the market. And there, we deliver good solutions. Everyone needs improvements on the cost side, needs to become competitive, needs to have a partner at the site, which we believe we are, who tells him there is room for improvement for potential to become more efficient. And I believe that's the opportunity now. We lay the groundwork for the next leap in growth. Now you specify yourself into situations with new tools, new solutions, which then scale later on when the environment will improve again. Tobias Fahrenholz: Maybe one more on the outlook, especially the profit margin. I mean we managed to get to the 12% at the lower end. As you said, well, you expect some savings from the program, let's say, maybe 30, 40 basis points. So you mentioned the wide range was 12% to 15%. Is this year's range somewhere between 12.5% and 13% or? Volker Dostmann: If that's your calculation. I'm not going to counter that one. I mean we said we want to see roughly half of the improvements until end of 2026, and that would go into that direction, yes. The range is rather wide. But we stick to it with our with our capital tied in and with our end markets and the respective risk. We belong into a bracket of 12% to 15%. And we just wanted to signal also that is where we are committed to be. Jens Breu: So next question. Yes. Right here. Unknown Analyst: I would have a question on the big topic of AI. There will be potentially a big improvement in labor productivity, especially the white collar labor productivity. Have you tried to quantify that? Or can you give us a kind of tangible forecast, what that means for you? What you do in order to implement these new technologies in the company? Jens Breu: Yes, yes. That's a very good topic. And I think we are full force on the AI side, committed to use it as a tool to improve productivity, but also to develop new solutions for our customers, increase efficiency. Last year, we had our international management conference exactly under the theme of AI, the next step opportunity. We have around 100 use cases in the organization on AI, where we work on to be implemented besides that we have many opportunities already implemented. So if we start in the operations, we have a tool in place, which we call [indiscernible], that's our own developed manufacturing visualization and improvement system where year-by-year, we expect to improve productivity just by the system, 2% to 3%. The system captures data from all the working centers and brings them up, visualized in a good way so that the operator understands what are the main levers he or she has to improve productivity. In the background, we collect all the data, analyze it and also further improve. So from that point of view, if we go back 5 years when we had an issue on an operating center, maybe it took you 3 to 5 days to fix the problem and solve it. Today, it's a matter of half a day because you have the data, and you can, from there, derive the root cause of the problem. So that's maybe on the operational side. And certainly, we have also on the white collar side, as you say, expectation is when you go out there and take a look at white papers that you can improve productivity by around 15%. Our ambition is that we said we want to improve productivity annually between 3% to 5% on the white collar side. So that's a clear ambition we have given to the organization and we budget year-by-year, the main initiatives and improvements going forward. And thirdly, also on the market side, use AI tools and the e-shop, for instance, to lead customers easier, better and faster to their specific needs and products, which we have available to them. So overall, holistically, we clearly see this as a big opportunity. It's innovative. It's increasing productivity. And especially us, we see ourselves between the customer and usually a hardware product. But in between, it's all about digitization. That's the main enabler. And maybe on the IT side. Volker Dostmann: I mean we have formed a dedicated team that is administrating and realizing implementing selected initiatives out of this funnel of 100-plus initiatives, which gives also the organization tools at hand and environments where they can safely test their options. We deem it as very important that employees start working with the tools, right? And we felt like it was also -- there was a hesitation around in respect of security, of what am I allowed to do, how can I, right? We gave there, meanwhile, a very good platform that is heavily used. And we see adoption is being really fast. And it sparks new ideas. And I think that is not to be underestimating the element in the AI environment is that you have dynamic from areas you never would have targeted before, right, because we have spread it out now. And that is working very well. And we'll look forward to realize some major steps where we also have then actually a reduction in workforce at certain process steps. Tobias Fahrenholz: Okay. Maybe a second one. If I look at volume-wise, I mean you don't report the numbers, but given the organic growth that you report volume-wise, the group hasn't really grown that much in the last years. This year again with FX against you reported growth going to be flat, most probably you're closing or divesting 8 sites in these 3 years. So basically in front of this backdrop of sideways or shrinking kind of overall development. There are two other big topics out there. One is defense. Second one is robotics. I understand that your exposure to these 2 sectors is not significant or not that great at this point in time. What do you do in order to jump on this bandwagon, so to speak, in order to capture part of the growth that is probably coming from the 2 sectors? Jens Breu: We are certainly exposed to those areas. Defense has been quiet for many decades, we can say, in Europe mainly. But we are certainly active in North America where we have specific applications for instance. But it never has been truly a focus area where we say we want to set the future strategy and group on per se because when you take a look at the SFS Group, we have a sharp focus for consumables. And in defense, it's the cycles that can be quite intensive. And in consumables, like ammunition, we do not want to go. That's not our expertise. That's not our focus. So we are mainly with the indirect enablement in defense. That means if new production is opening up, if someone is producing specific defense products and solutions, then we help this organization in equipping a manufacturing site with the needed tools and the needed infrastructure to do so, but we are not spacing ourselves into specific defense applications. So from that side, we have seen good growth. I think, top of my head, around 20% growth in the defense applications we are focusing on. Last year, this has been some of the pockets and niches where we have seen growth also in Germany, in the DACH region, for instance, that's essential to us. And secondly, I believe also part of the DNA of the SFS Group is that its consumables so that we have a steady continuous ongoing growth and not too much variation because, especially us with our DNA of automation and CapEx and investment, it always provides then the risk that you are maybe underutilized for quite a few years and maybe invested in specific applications you then cannot take to other end markets. That's the challenge. So the nature also of our Engineered Components business and D&L business is very much that we go into applications where we are flexible and reallocate and reuse the investments into maybe new applications, and that's somewhat limited in defense, in aerospace also somewhat limited. So we need to make sure we stay close to our DNA, and that's the path going forward. Torsten Sauter: Torsten Sauter from Kepler Cheuvreux. I'm not quite sure I understood your comments on the tax development, which is kind of higher than the statutory tax rate 26% versus 23% or something. Can I take the 23% as an indication of some sort of a guidance for the medium term? And what sort of tax can we expect for the year ahead? Volker Dostmann: Okay. So I was a bit fast on that, rather imprecise. 23% would be if we are in each and every jurisdiction optimally structured, right, which you never are, as you have adverse effects. And we need to work on that delta, number one, right, between 23% and 26.5%. But that's number one. Number two, we need to squeeze out the 1x effect from giving up legal entities, namely that's going to be the case in Turkey, and in Czech, right? And we need to dampen that out. And lastly, the question is how we work on our legal structure and how we, within the given jurisdictions, kind of optimize the overall flow of values. Now your question is towards where do we go? We would like to bring that towards '23, of course, not being in a position to give you precise date by when. But I would say we should see a first step this and next year, right? We must work on that. Yes. Torsten Sauter: Can I have a follow-up? Totally different topic. I understand that the European Commission has recently proposed this Made in EU framework. With your current setup and the products and verticals that you're shipping to, to what extent do you see SFS affected? Volker Dostmann: As we said and with local for local, we -- let's -- your shift of topic, let's come back with a completely different view on that. When we looked at tariffs and trade, we looked at streams that we really have crossing countries and delivering of one country to another, we ended up at roughly CHF 50 million for the group, right? So it is very limited where we really produce out of another country for a respective end market. From that point of view, I'm not very alarmed. I was alarmed when Switzerland was considered non-EU, which seems not to be the case anymore. That would have affected our trade between Switzerland and Europe in the long term, right? And that would have been a headache, but that's gone by now. Jens Breu: I believe it's even a huge opportunity since we -- on the D&L side source around 90% of the products within Europe, which we distribute in Europe. We are certainly one of the partners to be with, especially when we then talk about, for instance, on the defense side, 70% of the value added needs to come from within Europe in such applications we can support, we can be a partner, we can help to achieve that. So since there are no more questions in the room, we -- there's a question. Yes, last one, and then we go to the questions on -- that side, yes. Unknown Analyst: The question is actually quite simple. I've seen 2 multiyear trends. One of them is the ForEx, which everybody in the room knows. And the second one is your share of Swiss sales is also a multiyear decline. My question is you talked about Americas and Asia as a source of M&A. Have you ever looked at Switzerland with generational changes in small to medium companies that you would do acquisitions in Switzerland because you would no longer have the currency problem? Jens Breu: Absolutely. We do not exclude Switzerland as an M&A market. As a matter of fact, especially on the construction side, we have the clear intention to become stronger in Switzerland. We believe we are not well represented with our Fastening Systems segment in Switzerland. And so if there are opportunities, we would certainly go after that and take a close look at it. So now we have the questions from online, yes. Unknown Executive: So we start now with questions from the chat. We will unmute Jörn Iffert for questions. Joern Iffert: A couple of questions, if I may. The first one is, please, on the EBIT margin, on the core EBIT margin development in the second half 2025, which was, I think, a very strong improvement in D&L. Can you please tell us what exactly were the key moving parts here? Why it was so strong in the second half versus the first half? Because I think in absolute terms, revenues are not too different. And then the same for Engineered Components, if this was mainly product mix with HCV and smartphones? This would be the first question. If it's okay, I would take them one by one. Volker Dostmann: Yes. Thanks for the question. So the distinct shift in D&L and Engineered Components, Engineered Components, pickup in electronics. So really mix and dynamics in the end market underpinned there the EBIT margin. Second effect within the Engineered Components is also the phase of the ramp-up. The ramp-up as they continue reaped more on better profitability as in the first year. So both of that plays into Engineered Components. When you look at D&L, it is truly not a shift in dynamic from a top line point of view. But there, we see clearly effects from the distribution network adaptations that we did and which kicked in, in the second half year. So there, we see really, I would say, a productivity improvement sales per employee. That would be the factors. If that helps you with your question, Jörn. Joern Iffert: Yes. And then maybe to follow up on the second question then on the margin outlook for 2026. First of all, to clarify, did you say organic sales growth, 3% plus? Or is this including these complementary M&A to double check on the operating leverage? But then additionally, I mean, like my colleague was stripping out, you have the efficiency gains on the margins from the [indiscernible] you are doing overall having contributions on total EBITDA, which I think is quite profitable from recent M&A. If I set this into context to the revenues, you have some operating leverage. So isn't this 13% run rate you have achieved in the second half the starting point to think about 2026? And if not, what are really in absence of macro risk, et cetera, the cost blocks we need to consider or reinvestments we need to consider on the margin bridge? Volker Dostmann: Okay. I think first, the question on the guidance. The guidance is clearly in local currencies, including scope effect, right? That's what we -- that's how we used to state it and how we keep it up, right? So no change from that point of view. And your question about the margin dynamics going into 2026. Now electronics replacement cycle that we saw -- we've seen in Q4 2025 as well as the ramp-up in automotive and engineered components. As I said, we expect to flatten out slightly, right? So we do not -- I mean you said, is that now at the beginning of the new level. It will come down slightly as we see electronics in its seasonality coming down, and it will also volume-wise kind of be a more muted situation quarter 1, quarter 2, 2026 as today, right? I would see no considerable cost blocks that we are adding. At the moment, we're working more or less to the other side. Of course, we are building up capacity here and there, but this is capacity that is mainly utilized and engaged already. So from a profitability point of view, not a game changer. And on the other hand, our streamlining of the production footprint will continue. As I said, adding a bit to the EBIT first half, we would expect to see by end of 2026 in the margin, right? Joern Iffert: Okay. And the last question, just a technical one. Sorry when I missed this. You talked about your defense exposure was growing 20%, if I understood this correctly. Can you tell us what is the absolute amount you think you have as exposure to the defense sector when you were able to quantify the growth to it? Jens Breu: Yes, yes. Internally, we have a number which we usually say it's around CHF 30 million to CHF 36 million in defense. But question is always what do you count into defense and whatnot. It's somewhat not a black and white and a little bit of grayish area. That's roughly the basis. Unknown Executive: Good. Then we continue with another question from the chat from Vitushan Vijayakumar from Baader Helvea. Vitushan Vijayakumar: So I would just have a question on -- so the growth drivers that are coming for '26 and even ahead. So I heard that there was a good momentum for the electronic markets with replacement cycles in mobile phones, as you mentioned. I wanted to know if this was rather a one-off effect? Or is it something that would be sustained in the future? And also, if you can just touch a word on -- about the footprint gaining in Americas and Asia as well, it would be good, yes. Jens Breu: First off, in electronics, that's unusual development replacement cycle we have seen in '25 for '26. We do not bet on it in the same amount and the same development, '26 is more about new value-added, meaning new components, new designs where we are able to participate and specify or being specified into new devices and solutions, which come to the market in '26. So we expect that the current base will continue in '26 with a number of smartphones and solutions being sold. And secondly, we expect them to have more value added in there. Then to the question on the footprint expansion we have seen in the United States that we, in the Fastening Systems segment, acquired DB Fasteners. So our ambition is clear to continue that also in the year '26 that we maybe have smaller bolt-on acquisitions on the construction-related or end market related smaller companies with that growing geographically in the United States and gaining access to new customers, which we do not have. Same in distribution on logistics and engineered components probably in the Americas and Asia, we would wish for -- so that means on the M&A side, strategically, we look sharper, more focused on Americas and Asia since we believe the opportunities are there. That's part of the strategy going into 2026. Also with Martin Reichenecker having now the Region Asia more in the focus, we also expect to hopefully create there more momentum. I hope this did I answer your question. Vitushan Vijayakumar: Just another one on the competition and the pricing one. So I just wanted to know if you see any changes compared to 2025 or 2026 in terms of competition, but also in terms of pricing? Jens Breu: Yes. The competitive environment is fairly stable, we have to say in the end markets, some of the applications in which we are. I would need to think very, very hard to give you even a name of a new entrant, usually in our core applications, very steady, very stable overall. Clearly, in an environment like we have seen in '25, prices become more flexible, maybe a little bit more aggressive to defend market. So we usually then have the strategy to defend our pricing levels and secondly, go in with new solutions, innovations, maybe new product lines to offset and not needing -- need to give too much away and rather focus on new solutions, which then yield a good margin profile. That's usually our strategy as we are not the one to go to focus on commodities, for instance, and a low price strategy. We are more on the innovation side, on the solution side, on educating the customer what to do and giving strong advice. That's our position. So life maybe became a little bit more challenging in '25, a little bit more on the defensive side. '26, we expect not too much change to that. We expect that the environment remains, I would say, with a high focus on cost and efficiency improvement on the customer side, and this is what we need to deliver. Good. Since there are no more questions online and are there any more questions. Yes here. Yes. Sure. Always. Alessandro Foletti: Just yesterday, there were [indiscernible] reporting numbers, sort of similar, maybe a tick lower than you, but in general, comparable. What I kind of liked -- one of the things that I like about what they said was their strategy to follow their global clients, right, where they supply them like you do with [indiscernible] in Switzerland, but these clients are global, and they're really -- can you do the same? Are you doing the same? Should be a big opportunity for D&L? Jens Breu: Yes, yes, absolutely. That's the big opportunity. And historically, as the Hoffmann and D&L segment, is focused very much, I would say, on customers in Germany, Austria, but also rest of Europe. We see that they have very strong key account management, which we are also expanding to our Swiss customer base, and this key account management exactly does that strategically. We focus following customers as customers shift value added to different countries and regions maybe for various reasons. We are clearly there to their site to help them and support them. That's initiative number one, which is a given. Initiative number two is that we also are progressing in defining more local assortments, meaning that besides the global need and the global support, having them in China, Chinese assortment, which is more tailored to the Chinese needs and demands and characteristics, same we do in India and the same we do in the U.S. So we go into the future with a twofolded strategy following customers, but also local enablement with local solutions, which is key. Alessandro Foletti: And is this kind of sort of already baked in, in what you're doing in the current growth rate of the company? Or is that, at some point, a change in the trend towards the upside? Volker Dostmann: That is baked in. Alessandro Foletti: For '26, I imagine it is. Volker Dostmann: But also going forward because we see -- we must not underestimate, we see also the other way around. We also see global manufacturers building their automotive manufacturing sites or other manufacturing sites in Eastern Europe, in Mexico, in the U.S. And what they're doing, they bring their customer and they bring their supply chain with them wherever they come from, right? So we see also there quite a fierce environment. And as we showed last year once in a presentation, this switching costs for the relevant customer to switch between their current D&L provider and us as incumbent, that needs quite a bit of power and sales force until we can enter a new ground. Jens Breu: I think that's a very good point you make. In Engineered Components, we are already a little bit further there. We have customers we pick up in China, and they now come here to Hungary, for instance, or Serbia, and have a demand which we cover here even though we picked them up in China. In D&L, that would be the wish to be also at that point in the future. Not yet there. I believe that this local assortment initiative is starting and developing. We need to build it out more solidly. Good. And we are right on time, 12:00. That's great. So Swiss precision also on your end with your questions you had right on time. So thank you all, and we wish you a good lunch and happy to invite you for lunch. Thank you. All the best to you.
Operator: Good afternoon. Thank you for joining Tetragon's 2025 Annual Report Investor Call. [Operator Instructions]. The call will be accompanied by a live presentation, which can be viewed online by registering at the link provided in the company's conference call press release. This press release can be found on the shareholder page of the company's website, www.tetragoninv.com/shareholders. [Operator Instructions]. As a reminder, this call is being recorded. I will now turn you over to Paddy Dear to commence the presentation. Patrick Giles Dear: As one of the principals and founders of the Investment Manager of Tetragon Financial Group Limited, I'd like to welcome you to our investor call, which we will focus on the company's 2025 annual results. Paul Gannon, our CFO and COO, will review the company's financial performance for the period. Steve Prince and I will talk through some of the detail of the portfolio and performance. And as usual, we will conclude with questions, those taken electronically via our web-based system at the end of the presentation as well as those received since the last update. The PDF of the slides are now available to download on our website. And if you are on the webcast, directly from the webcast portal. Before I go into the presentation, some reminders. First, Tetragon's shares are subject to restrictions on ownership by U.S. persons and are not intended for European retail investors. These are described in detail on our website. Tetragon anticipates that its typical investors will be institutional and professional investors who wish to invest for the long term and who have experience in investing in financial markets and collective investment undertakings who are capable themselves of evaluating the merits and risks of Tetragon shares and who have sufficient resources both to invest in potentially illiquid securities and to be able to bear any losses that may result from the investment, which may equal the whole amount invested. I would like to remind everyone that the following may contain forward-looking comments, including statements regarding the intentions, beliefs or current expectations concerning performance and financial condition on the products and markets in which Tetragon invests. Our performance may change materially as a result of various possible events or factors. So with that introduction, let me hand over to Paul. Thank you, Paddy. Paul Gannon: Tetragon continues to focus on 3 key metrics when assessing how value is being created for and delivered to Tetragon shareholders. Firstly, how value is being created by an NAV per share total return. Secondly, how investment returns are contributing to value creation measured as a return on equity or ROE. And finally, how value is being returned to shareholders through distributions, mainly in the form of dividends. The fully diluted NAV per share was $41.88 at the 31st of December '25. NAV per share total return was 19.6% for the year. And since the IPO in 2007, Tetragon has now achieved an annualized NAV per share total return of 11.2%. For monitoring investment returns, we use an ROE calculation. This was 23.4% for 2025 full year, net of all fees and expenses. The average annual ROE achieved since IPO is now standing at 12.1%, which is within the target range of 10% to 15%. On to the final key metric, Tetragon declared a dividend of $0.12 for the fourth quarter 2025. That's an increase from $0.11 in Q3 and represents a dividend of $0.45 for the full year. Based on the year-end share price of $17.35, the last 4 quarters dividend represents a yield of approximately 2.6%. This next slide shows a NAV bridge breaking down into its component parts, the change in Tetragon's fully diluted NAV per share, starting at $35.43 at the end of 2024 to $41.88 per share at the end of 2025. Investment income increased NAV per share by $11.24 per share. Operating expenses, management and incentive fees reduced NAV per share by $2.78 with a further $0.29 per share reduction due to interest expense incurred on the revolving credit facility. On the capital side, gross dividends reduced NAV per share by $0.44. There was a net dilution of $1.28 per share, which is labeled as other share dilution in the bridge. This bucket primarily reflects the impact of dilution from stock dividends plus the additional recognition of equity-based compensation shares. I will now hand it back over to Paddy. Patrick Giles Dear: Thanks, Paul. As on previous calls, before we delve into the details of our performance for the year, I'd like to put the company's performance in the context of the long term. Tetragon began trading in 2005 and became a public company in April 2007. So the fund has almost 21 years of trading history. What this chart does is show the NAV per share total return, which is that thick green line and the share price total return, which is the dash green line and shows them since IPO. The chart also includes equity indices, the MSCI, ACWI and the [ FTSE ] all share and also includes the Tetragon hurdle rate, which is SOFR plus 2.75% approximately. As you can see in the graph, over the time that Tetragon has been trading as a publicly listed company, our NAV per share total return is 631%. We believe that our somewhat idiosyncratic structure of a listed fund owning alternative assets and a diversified alternative asset management platform has enabled us to create an alpha-driven ecosystem of ideas, expertise, insights and connections that helps us to generate investment returns. Continuing the theme of looking at the long term, here are some more performance metrics. Our ROE or investment return for the year, as Paul said, is plus 23.4%. Our target is 10% to 15% per year over the cycles, and our average since IPO is 12.1% per annum. So to date, we are achieving that target. Thus, this year's performance is an outlier, but on the positive side. The table also shows that over 39% of the public shares are owned by principals of the investment manager and employees of Tetragon Partners. We believe this is very important as it demonstrates a strong belief in what we do as well as a strong alignment of interest between the manager, our employees and Tetragon's shareholders. This next slide shows the breakdown of the $3.9 billion of net asset value by asset class. Now over the year, we've reorganized the asset classes from prior reporting periods, and it reflects the current mix of our portfolio based on the underlying assets and fund structures. So to give you some color on that, Westbourne River Event fund and other funds have been reclassified to equity funds from event-driven equities. Acasta funds have been reclassified to credit funds previously under the event-driven equities, convertible bonds and other hedge funds. U.S. CLOs and Tetragon Credit Partners funds have been reclassified to credit funds, and that's from previously bank loans. Contingency capital funds have been reclassified to credit funds from legal assets. Hawke's Point funds have been reclassified to equity funds from private equity and venture capital. And lastly, the new Tetragon Life Sciences Fund has been classified to equity funds from other equities. So these colored disks show the percentage breakdown of the asset classes and strategies as at year-end 2025, and that is on the left and compares them with where they were the previous year at the end of 2024 on the right. So a couple of points to highlight. Tetragon's investment in private equity stakes in asset management companies, so this is collectively known as Tetragon Partners, is now 45% -- sorry, 42%, down from 45%, and that is mainly driven by the partial sale of Equitix during the year. Private equity and venture capital grew to 21% from 17%, and that is mainly driven by the gains in Ripple. Equity funds, which comprise investments managed by Hawke's Point, Westbourne River, Tetragon Life Sciences, et cetera, are at 22% from 20%, and that's driven by gains primarily in Hawke's Point. And the credit funds, which now comprise investments managed by contingency and Acasta as well as CLOs are 5% of NAV versus 9% in the previous year, and that is driven predominantly by declines in CLOs, but also a redemption in Acasta. It's worth a slight pause to reiterate that last point. Many people have thought of Tetragon as a CLO business, but to reiterate, bank loans in total as an asset class are now down to less than 5% of the portfolio. And so I think those of you who have long memories will remember the IPO nearly 20 years ago, and we were probably about 96% in CLOs. So a dramatic change over the years in terms of our portfolio allocation. Now let's move on to discuss the performance in more detail. The NAV bridge that Paul showed was a high-level overview of NAV per share. And this table shows a breakdown of the composition of Tetragon's NAV at the end of 2024 versus the end of 2025 by asset classes and the factors contributing to the changes in NAV. Thus this table shows the investment performance plus capital flows and so tying back to that change in NAV. As you can see from the bottom row of the table, the aggregate investment performance during 2025 was mainly driven by the same 3 investments, which were the strongest performance in 2024. First, Tetragon Partners ownership or GP stake in Equitix. Equitix is a leading international investor, developer and fund manager in infrastructure, and it was the strongest positive contributor in 2025 with a gain of $432 million. During the year, Hunter Point Capital, HPC, acquired a 16.1% stake in Equitix at an enterprise value of GBP 1.3 billion, excluding net debt. Post transaction, Equitix remains Tetragon's largest position. Equitix is a leader in a sector where we continue to see significant runway for innovation and growth. Second, Tetragon's investment in Ripple Labs contributed $333 million of gains in 2025. Ripple Labs is a top U.S. enterprise blockchain company, underpinned by the XRP token and XRPL cryptocurrency ledger. In 2025, the company benefited from various tailwinds, including the final resolution of the SEC's lawsuit, significant platform expansion, U.S. cryptocurrency policy developments. And the shares also benefited from multiple share tender offers. In the fourth quarter, Ripple followed a tender offer, valuing the company at $40 billion with a strategic investment round at the same valuation backed by Citadel, Fortress, Brevan Howard and Galaxy. And the third big mover, investments in funds managed by Hawke's Point which is Tetragon Partners resource finance business. These generated gains of $260 million, led by their largest strategic investment, Ora Banda Mining Limited, an Australian gold mining exploration and development company. On the negative side, investments with exposure to bank loans via collateralized loan obligations or CLOs, led losses in 2025. This includes $117 million decline in LCM, our CLO manager, owned within Tetragon Partners, where AUM continued to fall through the year. Indeed, separate equity investments in older vintage CLOs contributed an additional $32 million to losses, including vehicles managed by Tetragon Credit Partners. As I've said before, but I'm very happy to reiterate, it's hard to imagine 3 less intrinsically correlated investments. These 3 investments exemplify our diversified approach, our focus on identifying attractive alternative investment strategies that may be hopefully more likely to have low correlation to markets and indeed to each other. Now to take you through the asset classes in more detail. Firstly, our private equity holdings and asset management companies had gains of $355 million. And these asset management businesses continue to grow and perform well, and this was the best performing segment and obviously includes Equitix that I've mentioned. Secondly, equity funds gained $296 million on the year. And again, as I've mentioned, that includes the Hawke's Point funds. Thirdly, the credit funds had losses of $19 million, the losses mainly generated through CLOs -- and through CLOs. Real estate had a loss of $10 million. And lastly -- sorry, and private equity and venture capital had a gain of $342 million, and this includes Ripple as a direct private equity investment. Lastly, other equities and credit had a gain of $63 million. So now what we're going to do is go through more detail on each category. And to do that, we'll start at the top with Tetragon Partners, our private equity investments business in asset management companies, and I'll pass over to Steve. Stephen Prince: Thanks, Paddy. Before I review the performance of the constituent businesses of Tetragon Partners, I wanted to discuss the renaming of the business from TFG Asset Management that occurred at year-end. Over the last several months, we have been taking steps to simplify the way we present Tetragon Financial Group, both on our website and in our annual report, refining the description of the company's investment strategy and the ways that we invest. Initially, as Paddy mentioned earlier, Tetragon focused on CLO equity and invested exclusively with external managers. However, even during its initial public offering in 2007, Tetragon was built with the capability to invest in alternative assets and strategies, both partnering with asset managers who offer differentiated expertise and by making direct idiosyncratic investments. Beginning in 2010, when we acquired Loan Manager LTM, Tetragon began that journey of building asset management businesses. This first transaction was followed by our real estate joint venture, GreenOak, which eventually became BentallGreenOak or BGO. That was followed by the acquisitions of hedge fund specialist Polygon and our infrastructure manager, Equitix. More recently, we launched Hawke's Point and Banyan Square and Contingency Capital. Our asset management businesses give Tetragon the capability to invest as an LP in the underlying strategies and to benefit from the growth in the value of our GP stakes. In renaming our asset management platform, Tetragon Partners, we have sought to emphasize that an important part of Tetragon's growth has been our success in Tetragon Financial Group and TFG Asset Management, now Tetragon Partners, partnering with asset managers who offer us this differentiated expertise. Through the combination of these partnerships and Tetragon's direct idiosyncratic investing, the diversification of our exposure now ranges from event-driven arbitrage to legal assets from life sciences to AI and machine learning from GP stakes in asset management businesses to digital assets and from mining and resource finance to infrastructure, venture capital co-investments and beyond. I would now like to move on to the performance of the Tetragon Partners segment during 2025. Our private equity investments in asset management companies through this group, Tetragon Partners, recorded an investment gain of $355 million during 2025 driven by our investment in Equitix. Equitix is a leading international investor, developer and fund manager in infrastructure. Tetragon's investment in Equitix was the strongest positive contributor in the portfolio for the year. Tetragon's investment made a gain of $432.2 million in 2025, driven by a combination of: a, a higher valuation as the valuation approaches were calibrated towards the transaction that I will talk about in a moment, where we sold a minority stake, foreign exchange gains as the pound gained 8% against the U.S. dollar, approximately 50% of the value of Equitix is hedged; and lastly, dividend income of $9.4 million received from Equitix during the year. So let me spend a moment on the minority stake transaction we consummated with Hunter Point. In October 2025, Tetragon completed a sale of a minority stake in Equitix to Hunter Point or HPC, an independent investment firm providing capital solutions and strategic support to alternative asset managers. HPC acquired a 16.1% stake in the business at an implied enterprise value of GBP 1.3 billion before accounting for net debt. HPC's stake was acquired from existing investors, approximately 14.6% from us, Tetragon Partners and 1.5% from Equitix Management. Today, Tetragon holds 66.4% of Equitix. Our investment in BGO, a real estate-focused principal investing lending and advisory firm generated an investment gain in 2025 of GBP 54.8 million. Distributions to Tetragon from BGO totaled $19.9 million during the year, reflecting a combination of fixed quarterly contractual payments and variable payments. The valuation of BGO, I should point out, is on a discounted cash flow basis with an assumed exit upon the exercise of the call option in 2026, which I'll talk about in a moment. The exercise price is determined based on the average EBITDA of BGO during the 2 years prior to the exercise of that option. So the main driver of the gain in BGO during the year was an increase in the value of the put/call option due to a higher EBITDA achieved than was previously forecast and an unwinding of the discount at which we hold that -- the value of that option as we got closer to the exercise date. As discussed previously, as I have been discussing, the put call is exercisable in 2026, 2027. And that was put in place in 2018 when Sun Life Financial acquired GreenOak and formed BGL. So I now want to talk about a subsequent events after the year-end. In February '27, Sun Life Financial exercised its option to call our position in BGO, and that transaction is settling in this month in March. Tetragon Partners also agreed as part of that transaction to relinquish certain ongoing rights it has held in the business. We will be retaining -- Tetragon Partners will be retaining its ownership of carried interest in all existing GreenOak and BGO real estate funds as well as its LP interest in a number of those funds. However, going forward, given that Tetragon Partners has monetized its 13% stake in BGO, we will no longer be including BGO as one of our partners on the platform. Moving on to LCM. LCM is a bank loan asset management company that manages loans through collateralized loan obligations, or CLOs. That business generated a loss of $116.5 million during the year as the valuation of LCM decreased for the following reasons: First of all, LCM's AUM fell to $6.6 billion at the end of 2025, which was 25% lower than the prior year's AUM of $8.8 billion. That was due both to the amortization of LCM's existing deals and the fact that LCM did not issue any new deals during 2025. Due to the current issuance volumes that we're seeing from LCM, the future capital raising assumptions in the model were reduced by the valuation agent, which lowered the value of the business. These factors also led to lower EBITDA and the market multiple approach, lower cash flows used in the DCF valuation and a lower discount rate by about 150 points and a lower EBITDA multiple in valuing the business. The EBITDA multiple was reduced from 12.5x to 10.9x. Tetragon Partners' other asset managers consist of 8 diversified alternative asset managers, Westbourne River Partners, Acasta Partners, Tetragon Global Equities, Tetragon Credit Partners, Hawke's Point, Banyan Square, Contingency Capital and Tetragon Life Sciences. Details of each of those businesses can be found in Tetragon's annual report and most of them on Tetragon's website. The collective loss on Tetragon's investments in these managers and the platform was $15.3 million during the year. That's primarily owed to the working capital support that we're providing to these relatively nascent businesses. Paddy is now going to go over our fund investments. Patrick Giles Dear: Thanks, Steve. Tetragon invests in equities, primarily through funds managed by Hawke's Point, Westbourne River Partners, Tetragon Life Sciences and Tetragon Global Equities, so all part of Tetragon Partners. These investments generated a gain of approximately $300 million for the year of 2025, and that was driven by gains in Hawke's Point funds and co-investments that we've discussed. But a little bit more color. Tetragon's resource finance investments managed by Hawke's Point generated a gain of $260 million during '25, primarily driven by the investment in Ora Banda Mining Limited, an Australian gold mining project. This company had a strong 2025 with positive developments in a number of its mines, leading to its stock performing well. In addition, its shares were added to the ASX 300, the ASX 200 and the MVIS Global Junior Miners Index. Tetragon invested an additional $15.1 million into Hawke's Point as it added an investment in an Australian copper producer and increased its investments in another Australian gold mining project. A partial liquidation of investments in Ora Banda produced distributions of $108.4 million during the year. And additionally, Tetragon committed $9.9 million to Hawke's Point Critical Metals Fund. Our investments in Westbourne River European event-driven strategies were flat in 2025. For context, the net performance for the fund was plus 10.3% for its [indiscernible] share class and down 1.6% in its low net share class. Gains in M&A and corporate restructuring trades were offset by weakness in dislocation names and in the no net class, the portfolio hedge. The new Tetragon Life Sciences Fund invests in both public and private equities, targeting opportunities throughout the drug development cycle. The investment strategy is focused on high-impact therapeutic areas such as immune-mediated diseases, cardiometabolic and renal conditions, neurological disorders, rare diseases and precision oncology. In 2025, Tetragon invested just over $100 million of capital and received $62.6 million from sales and had a gain to the NAV of $30.5 million. Other equity funds, investments in other equity funds had a gain of $6.1 million during 2025. Now moving on to credit funds. Tetragon invests in credit primarily through contingency capital funds, Acasta Partner funds, Tetragon Credit Partners funds and LCM managed CLOs. This segment in aggregate had a loss of $18.5 million. First, contingency capital. These funds combine credit structuring and legal underwriting to create pools of legal assets and lend against them in a manner consistent with how a traditional asset-based lender would lend against receivables or inventory. Tetragon has committed capital of $74.5 million to contingency capital vehicles, [ 55.2 ] million of which has been called to date, and a gain of $5.5 million was generated from this investment during the year. Second, Acasta Partner Funds. The Acasta Global Fund invests opportunistically across the credit universe with a particular emphasis on convertible securities, distressed instruments, metals and mining and volatility-driven strategies. Acasta Partners also manages the Acasta Energy Evolution Fund for portfolio targeted opportunities driven by the transition of energy to renewable resources. Tetragon's investment in Acasta funds generated a gain of $8.3 million during the year, and Tetragon reduced its holding in Acasta Global Fund by $50 million during the year. Thirdly, Tetragon Credit Partners Funds. Tetragon invests in bank loans indirectly through Tetragon Credit Partners Funds, TCI II, TCI II, TCI IV and TCI V, a CLO investment vehicles established by Tetragon Credit Partners. During 2025, Tetragon's investment in funds generated $26.3 million in cash distributions and had a P&L loss of $8.7 million. Performance was negatively impacted by both realized and unrealized losses on older vintage loan exposures. And finally, U.S. CLOs. Tetragon invests in bank loans through CLOs managed by LCM, primarily by taking the majority positions in the equity tranches. Directly owned U.S. CLOs generated a loss of $23.6 million in 2025, and this performance was driven by realized and unrealized losses. During the year, investments in this segment generated $24.7 million in cash proceeds. Next is real estate. Tetragon's real estate investments are primarily through principal investment vehicles managed by BGO. And these investments are geographically focused and include investments in the U.S., Canada, Europe and Asia and generally take an opportunistic private equity style investment. BGO funds and co-investments had a net loss of $13.6 million in 2025 and due to losses mainly in the U.S. investments. And as Steve mentioned earlier, we will continue to hold these investments to fruition. Other real estate, Tetragon holds investments in commercial farmland in Paraguay, managed by a specialist third-party manager in South American farmland. And this investment generated an unrealized gain of $3.4 million after third-party revaluation in 2025. And with that, let me hand back to Steve. Stephen Prince: Thanks, Paddy. Tetragon's private equity and venture capital investments were a significant driver of performance during the year, generating gains of over $340 million. Investments in this category are split into the following subcategories: the largest contributor to investment gains was in the direct private equity bucket, which produced a gain of $326 million during the year. This related to Tetragon's investment in the Series A and Series B preferred stock of Ripple Labs. Paddy touched on this investment earlier, but as a reminder, Ripple is a U.S. enterprise blockchain company underpinned by the XRP token and the XRPL cryptocurrency ledger. The gain in this investment was driven by an increase in the price of Ripple shares observed in the private market from $64.50 at the end of 2024 to $150 per share by the end of 2025. During the year, Ripple conducted 3 tender offers, one at a price of $125 a share, one at $175 a share; and lastly, one at $250 per share. Tetragon participated in these tender offers and received $65.7 million in cash receipts during the year. Secondly, I'll cover PE investments in externally managed private equity funds and co-investment vehicles. Those investments are in Europe and North America. They're spread across 41 different positions, and they generated gains of $11 million during the year. Lastly, investments in Banyan Square's portfolio companies generated a gain of $5 million. Banyan Square has 17 positions across its 2 funds, and those investments are across application software, infrastructure software and cybersecurity. Now I'm going to cover our other equity and credit segments. We make direct investments from our balance sheet, and they target idiosyncratic opportunities. And they're typically single strategy ideas, they're opportunistic and they're catalyst-driven. These investments range from listed instruments to private investments, and they cover a broad range of assets. The breadth and diversity of our LP investments in managed funds, including through Tetragon Partners managers and our relationships with the managers on and off the Tetragon Partners platform create co-investment opportunities and ideas, which we may develop in as direct investments. This segment generated a gain of $63 million during the year and at the end of the year, comprised 15 positions. Over half the value of these positions is in shares of UiPath, which is an equity position and is our seventh largest holding at the end of the year. UiPath is a global leader in Agentic automation, which -- and they focus on helping enterprises harness the full potential of AI agents to autonomously execute and optimize complex business processes. I want to lastly cover Tetragon's cash. At the end of the year, cash at the bank was $27.1 million. The net cash balance, let me go through, however, $27 million cash at the bank, $350 million drawn on our credit facility, $0.6 million net due to brokers, $7.1 million positive in receivables and payables gives us a net cash position of $316.4 million negative -- negative $316.4 million. During the year, Tetragon increased the size of its credit facility from $500 million -- or to $500 million, I'm sorry, from $400 million, and we extended the maturity date out to 2034. At the end of the year, as I just mentioned, going through the net cash position, $350 million of our facility was drawn. And of course, this liability is incorporated into the net cash balance calculation. We actively manage our cash to cover future commitments and enable us to capitalize on opportunistic investments and new business opportunities. During the year, Tetragon used $380.8 million of cash to make investments $23.7 million to pay dividends. We received $711.6 million of cash from distributions and proceeds from the sale of investments. And finally, our future cash commitments are just under $100 million, $99.9 million. Those include investment commitments to private equity funds of $35 million, a commitment to contingency capital of $19.3 million, BGO funds of $20.7 million, a commitment to Tetragon Partners, their latest fund of $15 million and a commitment to Hawke's Point of $9.9 million. I now want to hand the call back to Paddy. Patrick Giles Dear: Most of the questions actually fit into 3 very specific areas. So rather than read each question, which might get a little dull, I've decided to amalgamate them. Apologies if I don't read out your questions word for word, therefore. But the 3 areas are, first, lots of questions about the discount to NAV and what management are doing about it. Second theme is several questions about buybacks and what we're doing and what we might be likely to do. And the third on a thematic basis is questions surrounding the sale of BGO and just asking for more clarity in various different ways. So what I'd like to do is start by answering the third question first because it does have impact on the others. And that is BentallGreenOak. So the relevance of this is it's an update post year-end. So the annual report stands for the year-end, but the very detailed minded amongst you will have seen on Page 87 of the annual report, and there is a line item for subsequent events. It's a small item, so easily missed, but an important one to refer to. And so although Steve and Paul have given you some detail, I'd like to give you a little bit more detail on that. So on the 27th of February this year, the call to buy Tetragon's stake in BGO was exercised by Sun Life of Canada. And that call will settle in March, so this month. And what it means, just to reiterate what Steve was saying, is that Tetragon has sold its total ownership in the BGO management entities and any associated ongoing rights that Tetragon had. Tetragon remains an investor in several BGO funds as an LP, and Tetragon still retains its existing participation and carried interest in the [indiscernible], GreenOak and BGO funds. So that is no change. But Tetragon no longer has any financial interest in the equity of the management companies. And thus, BGO will no longer be referred or referenced as a line item within Tetragon Partners. So I think the important point or mediacy is what does that mean for the effect on the NAV for Tetragon and Tetragon's cash. So let's start with the first of those. In addition to the call exercise, Tetragon agreed to relinquish all its ongoing rights for a payment of $155 million. This $155 million is accretive to the year-end NAV, and we expect that to be reflected in the February NAV when that is released. Separately, the call proceeds net of tax are expected to be in line to a little bit above what was in the December NAV. So just to reiterate, the $155 million, we believe will be accretive to the year-end NAV and the call proceeds will be in line with our December NAV or possibly a little bit above. Second theme here is cash. So when these transactions settle in March, we will receive approximately $475 million gross in proceeds in cash, but we will need to pay tax on some of this. So really, that brings me to the second question, which is about the cash position and how that leads into dividends and buybacks. So to update on cash, which is a little bit of an update from year-end, I'm going to start with the January fact sheet that everyone has hopefully seen. The cash position for the company at the end of January was minus $413 million. As Steve says, we have a capacity on a revolver of $500 million. And we also have capacity from lending from our prime brokers on liquid securities. So that is how the $413 million is funded is a combination of those 2. So when we receive $475 million from the sale, we will put that cash first to pay taxes. We're unsure the exact amount right at the moment. The second thing, as we've announced this morning, is we plan to spend $50 million on buying back Tetragon shares in the market. And then the immediate use for the others will be to pay down the existing debt. So that's the immediate use. It's worth just reiterating that longer-term cash usage remains a continued balance between investments, buybacks and dividends. And I would say that if we're looking at the balance between just buybacks and dividends, we currently have a preference for buybacks rather than dividends. The reason for that is partly the noncash flowing nature of the portfolio. And therefore, it's easier to spend lump sums of cash rather than dividends, which are an ongoing source of cash. And secondly, we have a preference for buybacks when there's a large discount to NAV because obviously, a large discount to NAV means that buybacks are accretive to NAV per share. And indeed, at the current share price, we believe this buyback that we are talking about today will be accretive to the NAV per share. So the third theme here is a very important one. It's a common theme, and that is what our management doing about the discount to NAV. And I'm afraid there is no simple answer to the solution. And everyone within the industry is aware of that fact. There's certainly no silver bullet. And I think followers of the U.K. closed-end market will know that this, in particular, is a market-wide issue currently. That's not a reason not to address it, but it's an important one to take into account. And forgive me if some of you or many of you have heard me on this topic before, but I don't think the answers are different. In fact, they remain the same and probably will broadly remain the same for anyone in the closed-end fund industry. And that is if one starts at the most sort of simplistic approach to address the issue, you need to find more buyers and sellers of the shares. And we believe the single most important objective to achieve that is performance. And over the years, it's compounding that performance. So driving value through increase in the NAV per share. But also, I think we have to come to a point where shareholders believe in the future performance because obviously, that is what drives the NAV going forward. So to that end, and we alluded to this in the presentation, it's not only the performance that we try and focus on, but what we think of as, call it, the engine that drives that performance. And what do I mean by that, but really is the -- our ability to generate future performance. So it's improving idea sourcing, idea generation, how we underwrite those ideas, how we risk manage those ideas, et cetera. Now if we're good at that, we then need to get people to understand what we do. We need to explain why. We need to give people confidence in the process. And sometimes that's difficult given the complex nature of some of our investments, whether it be crypto or technology or legal assets, structured credit. A lot of these are not mainstream investment assets or strategies. So we look to educate the market, and we look to our joint brokers or JPMorgan and Jefferies to help in that process, but -- and others. We're always looking to improve the quality and transparency of our reporting. I think you'll see a lot of changes in the annual report, hopefully, for the better. And indeed, that goes to monthly and websites, et cetera. We've talked a bit about dividends and buybacks, but I think they are the most tangible results of performance. If we are generating good returns and cash, that gives us the ability not only to pay ongoing dividends, but also to do one-off buybacks that can help returning capital to shareholders. But I would stress on this last point, our belief is that whilst buybacks can be very accretive to NAV per share, they don't solve the issue of a persistent discount. Indeed, there's evidence not only from the 20 years of observing the performance of our shares, there are plenty of other closed-end funds that have wide discounts that have not been affected by buybacks either. So it's not just our own information on that point. And to put some numbers to that, Tetragon's buybacks to date, not including today's announcement, we've spent $860 million on buybacks, and that's in addition to just under $1 billion in dividends. And as we're all painfully aware, that has had minimal impact on the discount. So to sum up there, we believe those buybacks are accretive. We like doing them, but we don't think they solve the problem of the discount. So those are the sort of 3 large thematic questions we received. There is one rather more specific question, and that is on Ripple. And the question is, can you tell us a bit more about how you value your investment in Ripple Labs. And for that, I'm just going to hand over to Paul, as CFO. Paul Gannon: Thanks, Paddy. So as a reminder, Tetragon holds approximately 3.4 million of the Series A and B preferred stock. This is unlisted, but does trade on private platforms, and we have access to more than one of these. In addition, we also have direct relationships with some brokers who trade the stock. And so in arriving at a valuation, we're looking to both of these sources. At the 31st of December, the position was valued at $150 per share. And we also utilized the services of an independent valuation agent who determined a fair value range for the stock and $150 per share was within that range. Back over to you, Paddy. Patrick Giles Dear: Great. Thanks, Paul. That completes the Q&A session. So just leaves me to thank you once again for participating and wishing you all a very good weekend. Thank you. Operator: This now concludes your presentation. Thank you all for attending. You may now disconnect.