AI Investor Insight

AWRE 2025 Q4 财报电话会议

Operator: Good afternoon, and welcome to Aware's Fourth Quarter and Full Year 2025 Conference Call. Joining us today are the company's CEO and President, Ajay Amlani; and CFO, David Traverse. [Operator Instructions] Before we begin today's call, I'd like to remind everyone that the presentation today contains forward-looking statements that are based on the current expectations of Aware's management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described. Listeners should please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in forward-looking statements that management will be making today. Aware wishes to caution you that there are factors that could cause actual results to differ materially from those results indicated by such statements. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of these factors. You are cautioned not to place undue reliance upon any forward-looking statements, which speak as only of the date made. Although it may voluntarily do so from time to time, Aware undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Additionally, the call contains certain non-GAAP financial measures that are -- that the term is defined by the SEC and Regulation G. Non-GAAP financial measures should be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, Aware has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release issued today. I would like to remind everyone that this presentation will be recorded and made available for replay via link available in the Investor Relations section of the company's website. Now I'd like to turn the call over to our CEO and President, Ajay Amlani. Ajay? Ajay Amlani: Thank you, Matt, and good afternoon, everyone. Fiscal 2025 was a foundational year for Aware. While revenue timing dynamics, particularly within the federal market, created variability in our financial results, the year was defined by meaningful strategic progress across our technology platform, leadership team, certifications and market positioning. We strengthened the foundation of the business, expanded our competitive reach and positioned Aware as a trusted biometric identity solutions provider. To reiterate, our efforts this year have focused on progressing our 3-pronged transformation. First, advancing our core biometric technology with a focus on liveness and biometric orchestration. Second, strengthening our science forward customer-obsessed approach go-to-market model. And third, deepening strategic partnerships and certifications that build trust and scale. Starting with our first strategic pillar, advancing core biometric technology. Liveness remains one of the most critical vulnerabilities in remote biometric systems today. Biometric injection attacks, deep fakes and presentation attacks continue to evolve rapidly. Throughout fiscal 2025, we invested significantly in our science and research teams to remain a leader in this domain. Our next-generation Intelligent Liveness combines deep biometric expertise with advanced spoof protection to deliver their verifiable proof of personhood. In the NIST IR 8491 evaluation, Aware achieved best-in-class gender and race parity, earning the lowest ratio bias rating in the market, and ensuring fair consistent performance across users at every high-risk touch point, critical for secure digital ecosystems. Aware Intelligent Liveness delivers subsecond capture speeds while materially reducing false negative rates and improving adaptability to emerging spoofing threats without introducing friction. We believe Liveness is not simply a feature. It is foundational infrastructure for secure digital identity. Innovation will continue to be at the heart of our progress in this area. At the same time, we have continued to evolve our biometric orchestration capabilities, which you may recognize as our Awareness Platform. Our orchestration framework is designed to maximize system uptime, enable modular integration of multiple biometric modalities and simplify deployment in complex customer environments. We are focused on building out our open architecture biometric infrastructure to bring civil and criminal identity management together in a single secure and highly scalable environment. By eliminating vendor lock-in and supporting a broad range of biometric systems, it gives organizations the flexibility to modernize on their own terms. We are working diligently to ensure enterprise-grade security, interoperability and scalability of our orchestration platform. Beyond orchestration, customer testing activity across our broader portfolio remains strong in both government and commercial sectors. Much of the demand is centered on defending against facial deepfakes, injection and presentation attacks and threats that are evolving in real time. Organizations are actively evaluating vendors capable of mitigating these risks at scale. Initial customer feedback has been encouraging, particularly around algorithm accuracy, ease of integration and flexibility of deployment. These evaluation cycles are often lengthy especially in government, but the depth and rigor of engagement signal, meaningful intent. We are also seeing continued engagement in fingerprint biometrics, where our long-standing expertise continues to differentiate us. A driving force behind our technology is the Aware team. Over the course of fiscal 2025, we strengthened leadership across engineering, product, sales and marketing. We recently welcomed a new Head of Engineering and a new Head of Product, both of whom brought immediate domain expertise and began implementing operational improvements from day one. These leaders are building upon Aware's strong scientific foundation while driving tighter alignment between product development and customer requirements. Our third pillar centers on building trust and scale through strategic relationships and certifications. Despite procurement delays stemming from the lasting effects of the government shutdown, including delayed appropriations and slower procurement cycles, we saw continued engagement across U.S. and international government and commercial markets. During Q4, we successfully deployed our first mobile biometric solution within a U.S. federal agency. Law enforcement customer growth also continued with the onboarding of additional U.S. agencies. While individually modest, these wins demonstrate growing international trust and institutional trust in our technology. We are expanding direct engagement with U.S. federal agencies at a time when Buy America priorities and supply chain considerations are increasingly relevant. As a U.S.-based biometric provider, we believe we are well positioned to compete both directly for federal buyers and indirectly through system integrator partners. Both channels remain core components of our federal strategy. While procurement timing remains dynamic, biometric modernization continues to be an area of focus within DHS and related agencies. Internationally, we continue to deepen relationships across both advanced and developing markets where digital identity systems are increasingly recognized as foundational national infrastructure. In the fourth quarter, we launched a pilot program with the Caribbean nation to deploy biometric time and attendance systems for government employees, further expanding our global footprint. We also are seeing expanding engagement in aviation and border-related use cases. During Q4, we successfully tested biometric boarding in Orlando International Airport, which now serves as a flagship reference or a direct travel and border strategy in partnership with the Greater Orlando Aviation Authority and U.S. Department of Homeland Security. Our technology supports contactless passenger processing under the Biometric Exit Program. This program demonstrates how biometric orchestration can improve throughput, reduce document handling and enhance traveler experience in one of the busiest airports in the United States. We also continued to expand our partner ecosystem through new strategic relationships, including integrations with digital workflow providers and collaborations with biometric hardware vendors. These initiatives remain in early stages, but we believe they strengthen our long-term go-to-market strategy and broaden our reach over time. We also continue to perform strongly in independent government-led evaluations, including DHS related biometric testing programs. Our face and fingerprint algorithms have improved meaningfully in accuracy, bias mitigation and scalability. During the year, we successfully completed DHS RIVR face matching evaluations and achieved ISO-30107 Level 3 certification for Presentation Attack Detection, placing us among a small group of global providers that meet the highest standards for liveness detection. In the Selfie-to-Document Match track, operating under the first alias MTDS1, Aware was 1 of only 5 vendors to meet all DHS high-performance benchmarks. We were also one of just 3 to achieve zero to failure -- zero failure to extract rates for both selfie and document images, and we delivered the lowest false match rate among that group, including against demographically similar imposters. These results highlight the accuracy, resilience and real-world readiness of our platform at scale. We also achieved ISO 27001 certification, a leading international standard for information security management. As enterprise and government customers increasingly require formal validation of security practices before engaging with vendors, this certification strengthens our ability to compete in larger and more regulated opportunities. We also completed independent biometric bias testing conducted by BixeLab, NVLAP accredited lab under the ISO/IEC 19795-10 standard. The full system evaluation covering both liveness and matching under real-world conditions delivered outstanding results. These results reinforce the accuracy, consistency and fairness of our technology across critical applications, including border control, national ID, financial onboarding, mobile authentication and enterprise access control. Finally, in addition to our biometric and liveness evaluations, where recently achieved FIDO2 Server Certification, validating our ability to support secure passkey-based authentication layered with biometric verification. This certification confirms compliance with FIDO Alliance standards for cryptographic authentication and interoperability, capabilities that are increasingly expected in regulated high assurance environments such as payments and financial services. When combined with our Intelligent Liveness technology, this approach helps verify real user presence, reduce phishing and automated attack risk and deliver fast, seamless identity experiences. These certifications are not simply badges. ISO 30107 Level 3 demonstrates our technology can defend against increasingly sophisticated presentation, deep fake and injection attacks. ISO 27001 validates our corporate security posture and operational rigor. Together, they materially strengthen our credibility with both enterprise and government buyers. More importantly, these validations are how Aware becomes a trusted provider for top Tier 1 enterprises and leading government agencies worldwide. The largest institutions require proven performance, independent verification and enterprise-grade security before they deploy biometric infrastructure at scale. Our certifications and evaluation results meaningfully expanded the universe of opportunities we could pursue and have already enabled us to compete in several large engagements that previously would not have been accessible. With that, I will turn the call over to David to review our financial results in more detail. Over to you, David. David Traverse: Thank you, Ajay. Let's review our financial results for the fourth quarter and full year, which ended on December 31, 2025. Starting with the fourth quarter. Revenue in the fourth quarter was $4.7 million compared to $4.8 million in the prior year period. The slight decrease reflects lower perpetual software license revenue, partially offset by higher maintenance and services and other revenue. Operating expenses for the quarter improved to $6.1 million compared to $6.3 million in the prior year quarter. The lower expenses largely reflects the onetime costs incurred in the prior year period related to the former CEO's transition, which includes severance and acceleration of stock-based compensation expense of $600,000. As we noted in our last earnings call, we continue to expect operating expenses to reflect the strategic investments we are making. Net loss for the quarter was $1.5 million or $0.07 per diluted share compared to a net loss of $1.2 million or $0.06 per diluted share in the prior year quarter. Adjusted EBITDA loss was $800,000 for both Q4 2025 and the prior year quarter. Turning to our results for the full year. For the full year, revenue was $17.3 million compared to $17.4 million in 2024. The slight year-over-year decrease was driven by lower perpetual license revenue, which was partially offset by increases in maintenance and services and other revenue. Net loss of $5.9 million or $0.28 per diluted share compared to a net loss of $4.4 million or $0.21 per diluted share in the same period last year. Adjusted EBITDA loss for the year was $4.6 million compared to adjusted EBITDA loss of $3.9 million in the prior year period. Ended the year with $22.3 million in cash, cash equivalents and marketable securities and no debt. Our balance sheet reflects the increased investments we've made throughout the year to enhance our team, advance our core technology and certifications and support go-to-market initiatives. We will continue to allocate capital to our strategic priorities and build a stronger, more competitive business. While we remain confident in our long-term positioning, we believe we will continue to experience quarterly results that remain uneven given the nature of our procurement cycles and customer conversion timing. This is particularly true in government and large enterprise markets, where funding and execution time lines can shift from quarter-to-quarter. As a result, quarterly results may not fully reflect the underlying progress we're making. For that reason, we believe performance is best evaluated over multiple quarters. With that, I'll hand it back over to Ajay for closing remarks. Ajay? Ajay Amlani: Thanks, David. As David noted, variability remains a feature of our business, particularly as we advance complex government and enterprise opportunities where procurement and funding timing can shift between quarters. During the fourth quarter, multiple large identity solution providers progressed into testing and evaluation phases. These processes can be lengthy and technically rigorous and not at all evaluations -- not all evaluations result in near-term deployments. While timing remains uncertain, continued participation in these evaluations, expands our relationships and informs future opportunities. Retention performance remained strong and well above industry benchmarks and approximately 3/4 of our current pipeline consists of new logos with the balance representing expansion within existing accounts. This year marked the beginning of a comprehensive revitalization of the Aware brand. We've launched a fully redesigned website, our digital storefront with a modern look and feel that reflects the strength and innovation of our technology. At the same time, we sharpened our market positioning to clearly align Aware as a biometric identity solutions company. We also restructured and repositioned our product suite to better align with buyer needs and decision-making priorities, supported by refreshed messaging that clearly communicates our differentiated value across biometric identity, liveness and authentication solutions. While still early, search visibility has improved meaningfully, and we are seeing increased inbound engagement. On the technology front, we continued advancing our intelligent liveness capabilities to defend against increasingly sophisticated presentation, deep fake and injection attacks. We also achieved ISO 30107 Level 3 certification for Presentation Attack Detection, and ISO 27001 certification for information security management, strengthening our credibility with enterprise and government customers that require independently validated performance and enterprise-grade security. Stepping back fiscal 2025 was about building the foundation and getting us out in front of key customers. We strengthened our core technology, expanded certifications, deepened partnerships and continued evolving toward a more integrated biometric solutions platform. Execution and conversion will take time, and we expect variability to remain part of the near-term landscape. However, we believe the structural progress achieved over the past year strengthens our competitive position and supports our long-term opportunity in biometric identity. As we move into 2026, our focus is disciplined execution, converting pilot programs, strengthening the awareness platform, scaling revenue and delivering durable long-term growth. We are building a more predictable and scalable biometric identity business, one that balances innovation with discipline and positions Aware to lead in the next era of digital identity. That concludes our prepared remarks. We'll now open the call for questions. Matt, please provide the instructions. Operator: [Operator Instructions] First question is for Ajay. Federal procurement timing has created some variability in results and 2025 revenue was essentially flat year-over-year. How should investors think about the drivers of potential growth going forward, particularly given the mix of federal, commercial and international opportunities? Ajay Amlani: Thank you very much for the question. In 2025, we did see some programs move slower than expected during the year. As you know, government procurement cycles can vary in timing from quarter-to-quarter. We also had a pretty significant slowdown in government shutdown that also impacted the responsiveness of [ the members of ] the federal government, public servants that we're going through a very difficult point in time in their careers and in their lives trying to suffer through what was one of the longest shutdowns in the history in the U.S. government. Coming out of that, we've seen increased activity in federal government meetings, which have resulted in significant pipeline acceleration and opportunities here in the U.S. federal government work. We continued working though, on the international front and in commercial markets to convert our pipeline, expand our pipeline and expand our brand to make sure that the business continues to stay in a growth path as we expand our product portfolio and our certifications. Operator: Our next question is for David. How should investors think about the mix between perpetual licenses, recurring software, services and maintenance going forward? David Traverse: What we're seeing is the mix will likely continue to evolve depending on the types of programs we're secure. As you know, historically, we've had a combination of perpetual license, maintenance and services and that's particularly in larger government deployments. Exact mix can vary from quarter-to-quarter depending on whether revenue is driven by platform licenses, recurring software sales or cloud-based solution-based programs. So rather than targeting a specific mix, what we're focused on is expanding our presence in these large programs where our software platform can be deployed and maintained over multiple years. Operator: Thanks, David. Our next question. You mentioned several evaluations and testing phases with potential partners. What is the process and time line from evaluation to production deployment? Ajay Amlani: Yes. I mean many of these opportunities start with an evaluation after we've included establishing ourselves as a reputable company to be able to participate. These evaluations can basically move on to pilot programs and then the customers will validate the technology within their environment to decide if they want to be able to move forward. The process typically moves into production deployments, which can expand over time depending upon the scope of the program. Well, our goal is to start small, honestly, with an onboarding a customer, keeping expectations in check and then continuously exceeding those expectations. And then from there, as long as we continue to exceed expectations, they'll grow the amount of work that they do with Aware and don't feel comfortable being able to feed more business and more opportunities our way, particularly in government and large enterprise environments. That's balanced obviously with procurement cycles, budget availability, but the focus is continuing to advance those evaluations and making sure that we can improve conversion and growth as our platform evolves and we end up in a land-and-expand strategy. Operator: Ajay, another one for you. How did the recent certifications and platform enhancements strengthen Aware's competitive position and support future opportunities with customers and partners? Ajay Amlani: So I really do applaud the amount of work that goes into the development of these new certifications around biometrics. We -- people globally are really pushing the envelope in terms of being able to make sure that the technology can keep up with current threats in the market. There are a lot of threats that are based in this market, especially with AI and AI generated identity that can basically trick systems. And so continuing to stay not just one step ahead of it, whereas you could potentially be breached, you need to stay 2 steps ahead of it. And that's where these certifications come into play and become very important. These certifications are typically listed within procurement from major customers, and it's very important to be able to meet these certifications. In a lot of ways, these are just basically ways to be able to make sure that Aware is qualified to be able to bid, but not all parties are usually qualified with these different types of certifications. So it is an ability and a strategic differentiator for us to be able to advocate on behalf of including these certifications in the customers' requests and then also being able to meet these certifications, puts us in a competitive set that's smaller than the more broader set of people that you would normally consider for a solution by proving who's better and who's been able to meet certifications that are available in the industry. Operator: Our next question. Why are deals not announced as they are signed? David Traverse: I can kind of break that down to 2 parts. One is from an SEC requirement standpoint and the other one is more from a customer standpoint. So the first one, the SEC, we make sure all our disclosures and we comply SEC disclosure requirements. Most of the contracts we do sign are within our ordinary core business and don't require a separate disclosure from -- on the SEC side. On the commercial side, many of our government and security-focused customers also have confidentiality provisions. And in addition, our business -- in our business, the signing of a contract is not always the most meaningful milestone as programs often progress through pilots and deployments over time. Operator: Another question received. Are you seeing any new AI native competitors or customers in-sourcing by building their own algorithms using LLMs? What moats or risks does your business have from an AI disruption relative to other SaaS companies? Ajay Amlani: Our company is actually really well positioned to be able to take advantage of the LLMs and the technology that's in place to be able to improve our efficacy, improve our productivity, and also decrease our costs. We look towards the development of these capabilities is a really big strategic differentiator for us. Our existing presence in the market with existing customers and data allows us to be able to work with that data to be able to train our models in a more effective fashion. And we can also utilize it to be able to work on better co-development, upgrading the code and being able to serve our customers in a more effective fashion. As you know, we have a blue-chip list of existing customers, including Department of Homeland Security, Department of Defense, and many others globally, that are really the who's who in terms of government agencies. So being able to expand the services that we actually do with our existing customers to be able to surprise and delight them with new capabilities and functionalities would typically take a lot of effort on our side to be able to invest behind that capability. Whereas with all of the different tools that are now existing in the marketplace, we can be able to do that more effectively because we have a lot of inherent knowledge in the market in terms of what the customers need. We're in constant communication with our customers in terms of what they would like and how they'd like to improve their systems. And we're in the right place to be able to ask the right questions to the tools to be able to develop capabilities, whereas most people don't even know what to ask. Operator: You described 2025 as foundational. What should investors look for in 2026 to measure success? Ajay Amlani: Sure. So 2025 was really about strengthening the foundation and our product platform and our go-to-market execution. We're now in front of most of the major customers for biometrics. They know of us. They have a positive opinion of us. We're being included in a lot of their evaluations. And as we move into 2026, the proof points that investors should look around or look for really around improving execution, stronger conversion of our pipeline into actual program wins, recurring software deployments, larger solution-based programs, particularly in government markets are definitely things that investors can look to. Progression from pilots and evaluations into production deployment is another one. And third, while results can be uneven quarter-to-quarter given the nature of government opportunities, especially, we expect to see greater consistency in bookings and revenue over time as those efforts begin to take hold. Operator: Thank you, Ajay and David. At this time, this concludes our question-and-answer session. If your question wasn't answered, please e-mail Aware's IR team at AWRE@gateway-grp.com. Before we conclude, I'd like to remind everyone that a replay of today's call will be available via link in the Investor Relations section of Aware's website. Thank you for joining us for Aware's Fourth Quarter 2025 Conference Call. You may now disconnect.

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AAALY 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, welcome to the Aareal Bank AG Full Year 2025 Investor and Analyst Conference. I'm [ Moritz, ] the Chorus Call operator. [Operator Instructions] And 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 Jurgen Junginger, Head of Debt IR. Please go ahead, sir. Jürgen Junginger: Agenda covers our results for 2025, our outlook for '26 and an update on our strategic plan, Aareal Ambition. I'm joined today by our Management Board, our CEO, Christian Ricken; Nina Babic, our CRO; CFO, Andrew Halford; and Chief Market Officer, Christof Winkelmann. Christian and Andy will take you through our presentation, which will be followed by a question-and-answer session. Now I'm pleased to hand over to Christian. Christian, the floor is yours. Christian Ricken: Yes. Thank you very much, Jurgen. Good morning to everyone, and thank you very much for attending today's call. Before turning to today's presentation, I would like to refer briefly to the recent events in the Middle East. There is no doubt that geopolitical uncertainties have increased, tensions have escalated, there is heightened caution across most business areas. We are aware of that. As a result, investment activity in many sectors may slow or become less predictable for some time. So far, Aareal has not been directly affected by the events of the last week nor more broadly by geopolitical events over the last year. However, we are, of course, monitoring the situation very closely. Now let me turn to our results for 2025 and our outlook for 2026. And I will also provide you an update on our strategic plan, Aareal Ambition. Starting with Slide 3. First, our results for 2025. And as you can imagine, this slide, this chart has become my actual favorite chart because it's a very well reflection of the delivery of the bank. We target an adjusted profit for the year of over EUR 375 million, which we comfortably achieved. On the basis of this good result, the management took action incurring an additional charge of EUR 55 million to support the repositioning of our U.S. business. The adjusted operating profit after the additional EUR 55 million charge was EUR 326 million, which is very similar to the equivalent profit in 2024. Turning to our 2 business segments, both achieved strong results for 2025. Banking & Digital Solutions made a significant contribution to group profits and Q4 average deposits, including retail rose to EUR 17.8 billion. New business in Structured Property Financing reached EUR 12.4 billion for the year, which was a record result. Much of this volume came from Europe, and I will say more about our regional approach later. By the end of 2025, we had reduced nonperforming loans to EUR 1.1 billion. We are planning to bring this balance below EUR 1 billion in the current year, and we are confident we can achieve this in the first half of the year. Our capital ratio continues to be solid with our CET1 fully-phased ratio at 15.5% at the end of 2025. At this conference last year, we introduced our new strategic plan, Aareal Ambition, and I'm pleased to report that we are well on track. As a result, we are well placed to reach our target of around 13% adjusted post-tax return on equity in 2027 still. Our increased focus on Banking & Digital Solutions and our repositioning in the U.S. in Structured Property Financing underpin this progress. I will further -- I will provide further comments on our Aareal Ambition plan later in this presentation. Before moving into the details of our results, I wanted to illustrate the importance of both of our business segments to the overall results. I'm on Slide 4 now. As you can see, Banking & Digital Solutions has contributed significantly to the group's operating profit in each of the last 3 years since the return of, as I would call it, normal interest rates. BDS deposits, including retail rose to an average of EUR 17.8 billion in the fourth quarter of 2025. The business has around 4,300 clients and currently executes payments transactions amounting to EUR 167 billion every year. I would like to thank the staff in this business for their efforts in 2025 and their continued commitment. In Structured Property Financing, the loan volume is over EUR 34 billion, spread across over more than 20 countries and 5 property types. I also would like to thank the staff in this business for their diligence and care as we have grown by taking a conservative approach to risk. I will now hand over to Andy, who will provide further details on our results for 2025. Andy, over to you. Andrew Halford: Thank you very much, Christian, and good morning to everybody. So Slide 6, let me just pick up some of the high-level numbers. So net interest income was down 12% to EUR 934 million, which was mainly the expected impact of lower interest rates. Loan impairment charges are down by 19% to EUR 322 million. As Christian just mentioned, this includes the additional charge of EUR 55 million to support the repositioning of the U.S. business, which includes a faster reduction in U.S. office loans. The efficiency measures that we put in place led to a reduction of 8% in adjusted administrative expenses, which fell to EUR 317 million. The cost-income ratio for 2025 was, therefore, 33%. The other components line includes a EUR 20 million positive one-off, which arose in the second quarter from the successful restructuring of a former legacy nonperforming loan. Overall, adjusted operating profit was EUR 381 million, excluding the additional EUR 55 million charge and EUR 326 million, including the charge. Nonrecurring items amounted to EUR 30 million compared to EUR 34 million the previous year and related to efficiency measures, IT infrastructure investments and other material nonrecurring items. The effective tax rate for the year was higher at 40%, which includes charges arising from the repositioning of the U.S. business. AT1 costs are up by EUR 8 million compared to 2024. This is because our new AT1 issue overlapped with the previous AT1 for about 3 months. Taken together, the adjusted post-tax return on equity was 7.5%, excluding the additional loan impairment and tax charges arising from the actions taken to support the repositioning of the U.S. business. Our solid CET1 ratio fully-phased increased to 15.5% at the end of the year compared to 15.2% at the end of the previous year. Now let's move to Slide 8 and the key profit and loss account items for Banking & Digital Solutions. As Christian has highlighted, BDS continues to make a significant contribution to the bank's overall profitability. In 2025, BDS contributed an adjusted operating profit of EUR 152 million, which is down by 7% compared to the previous year, but this is more than accounted for by the decrease in net interest income, which is down 9% to EUR 246 million. The impact of lower rates is fully in line with our expectations. However, it was offset in part by the strong growth in the housing industry deposits. In BDS, the customer base and share of wallet is constantly growing. Admin expenses are down by 4%, benefiting from tight control of costs and nonrecurring items reflects the investment in digitization that we are making to provide a seamless customer journey. On Slide 9, we look further into Banking & Digital Solutions' net interest income and admin expenses. Net interest income, although down compared with 2024, was above expectations. As I just explained, the impact of lower interest rates was as expected, but was partially offset by the growth in deposits. This growth was continuous during 2025, and therefore, net interest income increased throughout the year. I'll come back to deposits on the next slide. Admin expenses were tightly controlled with strict cost discipline maintained. Turning to Slide 10, which focuses on deposits. Our strong deposit franchise continues to reduce our dependence on the capital markets. As I've mentioned, deposits grew throughout the year. Housing industry and retail deposits in total rose to an average of EUR 17.8 billion in the fourth quarter of 2025. This is an increase of 4% since the fourth quarter of 2024 and an increase of 7% since the first quarter of 2025. Retail deposits have structurally improved and now have an average initial lifetime of around 4 years. The steady increase in housing industry deposits in 2025 reflects our successful sales efforts. These deposit volumes have gradually increased in recent years and reached an average of EUR 14.7 billion in the fourth quarter of 2025. Rental guarantee deposits and maintenance reserves have grown continuously. Sight and term deposits are largely stable. When interest rates returned in 2022, there was a shift from sight to term deposits as depositors sought to capture income. This transaction -- transition has now ceased and today's sight deposits only reflect clients' operating cash and therefore, are expected to be very sticky. Now let's turn to Structured Property Financing and to Slide 11. Net interest income is down 13%, reflecting the impact of lower interest rates and is in line with expectations. Loan impairment charges are significantly down, including the additional charges, admin costs are down benefiting from the efficiency measures that we have introduced. Overall, SPF contributed EUR 174 million to the group's adjusted operating profit. As noted earlier, the other components line includes the positive one-off effects of the restructuring of the former legacy nonperforming loan and the tax charge includes charges arising from the repositioning of the U.S. business. Turning to Slide 12. Let's look further at net interest income from SPF. As I've just said, net interest income was in line with expectations. The result was impacted by lower interest rates. For example, the euro short-term rate decreased from 3.8% at the end of 2024 to 2.3% at the end of 2025, a significant reduction. Net interest income was also affected by proactive strengthening of our subordinated funding and by the weakness of the U.S. dollar. Those factors were partially offset by the growth of our loan book. Turning to Slide 13 and to SPF's admin and loan impairment charges. The efficiency measures adopted across the group are also reflected in the admin expenses of this business segment, which are down 9% to EUR 222 million in 2025. Including the additional EUR 55 million charge, loan impairment charges are significantly down by 19% compared to 2024. Excluding this charge, the decrease would be 33%. Loan impairment charges are heavily biased towards the U.S. and U.S. office loans in particular. Risk costs for the rest of the business are at or below normal levels. At this point in the cycle, we are, therefore, freeing up capacity primarily from U.S. office to redeploy it into the European markets where the returns are presently very strong. I'd now like to hand back to Christian, who will talk about business developments in more detail. Christian Ricken: Thank you, Andy. Now let's turn to Structured Property Financing's new business on Slide 14. We achieved record new business, as I already said, of EUR 12.4 billion in 2025, which was well ahead of our target of EUR 9 billion to EUR 10 billion for the year. Newly acquired business amounted to EUR 8.1 billion, which was up EUR 1.8 billion compared to 2024. The average loan-to-value ratio for newly acquired business was still a conservative 57%, which provides a comfortable risk profile. Gross margins were also good, averaging 234 basis points. Renewals were around similar levels to the previous year. Those figures continue to demonstrate that we are actively identifying attractive market opportunities. Sustainability has been and continues to be an integral part of lending decisions. In 2025, we again supported the green transformation of commercial properties with EUR 5.1 billion of green loans included in our new business numbers. Looking at the geographical distribution of new business, 78% was in Europe, 15% in the U.S., 4% in Canada and 3% was in the Asia Pacific region. As planned, we have increased our focus on Europe and reduced activity in the U.S., concentrating on premium assets and long-standing trusted partners. Our strategy on asset classes has also evolved. Hotel finance continues to be our largest area of new business. However, we are currently taking a more selective approach to new office financing while maintaining our increasing conservative financing of Logistics and Residential, especially Alternative Living properties. Let's now turn to the next slide, which shows our current portfolio. We are at Slide 15. The portfolio totaled EUR 34.3 billion at the end of 2025. This is within the targeted range of EUR 34 billion to EUR 35 billion. As you can see from the 2 pie charts at the bottom of the slide, we are still highly diversified, both by region and property type. We continue to have a clear focus on properties in the major metropolitan areas. We are not financing new construction. Have exposure of only 10% in Germany and no exposure at all to Russia, China or the Middle East. In the U.S., we are focusing on our core strengths. For example, hospitality-related asset classes. We have significantly reduced the U.S. office portfolio, which is down by 1/3 compared to the balance at the end of 2024 and want to reduce this portfolio further. Green loans stood at EUR 11.3 billion at the end of 2025, representing around 1/3 of our total loan book. These loans include the financing of refurbishments as we continue to support commercial properties green transition. Turning to Slide 16 and to nonperforming loans. We are continuing a very active management of nonperforming loans and the balance stood at EUR 1.1 billion at the end of 2025. This is down by 29% compared to the balance at the end of 2023. U.S. office nonperforming loans are down by around 40% over the same period. The Stage 2 coverage ratio stood at 3.1% with the ratio -- sorry, with the Stage 3 ratio at 29% at the end of 2025. The nonperforming loan ratio stood at 3.2%. The U.S. office market remains challenging and U.S. office loans continue to represent over half of total nonperforming loans. More than 25% of the U.S. office loans is nonperforming compared to less than 2% for all other categories. Business outside the U.S. is performing significantly below our long-run average cost of risk. As we have explained, management has taken action to support the repositioning of U.S. loans. We are, therefore, confident that we can reduce total nonperforming loan balance below EUR 1 billion during the first half of 2026 already. Now let me hand over back to Andy for an update on our funding, liquidity and capital positions. Andrew Halford: Thank you, Christian. So on to funding, liquidity and capital. Slide 18 shows our broadly diversified funding mix, solid liquidity ratios and capital markets activity. Following a very active year, liability terms have been successfully extended. Deposits represent around 45% of our total funding volume. The largest part comes from the housing industry with an additional EUR 3 billion from retail deposits. As I mentioned earlier, these retail deposits now have an average initial lifetime of around 4 years. Our liquidity ratios are solid with a net stable funding ratio at 113% at the end of the year and the average liquidity coverage ratio at 209% for the fourth quarter. We're pleased to report that during the year, Fitch revised Aareal Bank's outlook to positive from stable and confirmed its senior preferred rating at BBB+. We demonstrated our full access to the capital markets during 2025. We increased our AT1 capacity by approximately EUR 100 million by replacing the former outstanding EUR 300 million issue with a new issue of USD 425 million, and we issued EUR 100 million of Tier 2 capital. In addition, we completed 3 benchmark Pfandbriefe transactions totaling EUR 2 billion and private placements totaling SEK 1.85 billion. Those were Aareal's first Swedish currency issues since 2006. We also completed our first Significant Risk Transfer or SRT transaction in the fourth quarter. Investors assumed a portion of the credit risk attached to a EUR 2 billion portfolio of European commercial real estate loans in return for a risk premium. This transaction strengthened our capital efficiency. Next, let's look at the Treasury portfolio, which is shown on Slide 19. The Treasury portfolio stood at EUR 9 billion at the end of 2025, up from EUR 8.2 billion the year previous. In terms of asset classes, the portfolio comprises public sector borrowers and covered bonds. It, therefore, has a strong liquidity profile. High credit quality requirements are reflected in the ratings breakdown. 100% of the portfolio has an investment-grade rating with 87% having a rating of AA or higher. Asset-swap purchases ensure that there is low-interest rate risk exposure. The portfolio is almost exclusively in euros and has a well-balanced maturity profile. Turning now to capital on Slide 20. Our ratios continue to be solid. Our CET1 ratio was up from 15.2% a year ago to 15.5% at the end of 2025 on the Basel IV fully-phased basis. Growth in the loan portfolio increased risk-weighted assets but was overcompensated by the reduction in risk-weighted assets that came from our first SRT transaction that I just referred to. This transaction had a total positive CET1 effect of around 0.5 percentage points. Both the Tier 1 ratio of 17.6% and the total capital ratio of 21.1% were further strengthened by the additions to our AT1 and Tier 2 capital during the year. Our leverage ratio at 7.2% at the end of the year is well above regulatory requirements. Now I'll hand back to Christian, who will cover our outlook for 2026 and provide an update on our strategic plan Aareal Ambition. Christian Ricken: Yes. Thank you, Andy. I'm turning now to the outlook on Slide 22. Macroeconomic and geopolitical uncertainty factors are, of course, difficult to predict, and we are monitoring developments closely. However, let me repeat that so far, we have not been affected by current geopolitical events. We are successfully reducing our exposure to U.S. offices. And more broadly, we see a slight improvement in sentiment towards the entire commercial property sector. As a result, Aareal has moved forward into 2026 with confidence. For 2026, we are targeting an adjusted operating profit approaching EUR 400 million. This level of adjusted operating profit would result in an increased adjusted post-tax ROE approaching 8%. In the Banking & Digital Solutions business segment, we expect total deposits to increase further to an annual average of around EUR 17.5 billion. In Structured Property Financing, we aim to keep the credit portfolio at around EUR 34 billion and reduce nonperforming loans below EUR 1 billion in the first half of 2026. Now moving on to Slide 24. I will provide an update on our strategic plan, the Aareal Ambition. We launched Aareal Ambition very successfully in 2025. Let me briefly remind you of the targets we showed you last year. We have 4 strategic targets. They are, first, to strengthen our core businesses; second, to expand our activities; third, to enhance efficiency; and fourth, to maintain a disciplined approach. We are applying these targets across the group. This means that we are continuing to grow our Structured Property Financing activities selectively. In Banking & Digital Solutions, we are targeting growth from existing housing market clients and by further -- by moving further to adjacent markets, for example, the Netherlands. We are also optimizing the scalability of our infrastructure. And on the risk, capital and funding side, we are maintaining discipline over our capital and liquidity ratios. So let's now look at each of these objectives in a little bit more detail. Moving on to Slide 25. The group is now positioned with 2 growth engines within one bank, and this is how we will move forward. In Structured Property Financing, we are sharpening our focus and emphasizing our key areas of competitive strength. This means that we are mainly concentrating on Europe and on hospitality-related asset types. In the U.S., we are actively adjusting the mix and size of our business. In Banking & Digital Solutions, we are accelerating growth. We are targeting an increase in deposit volumes by both nationally and internationally and introducing lending to the housing industry or I would better say, reintroducing lending to the housing industry. In addition, we are building an integrated deposit management platform to serve both our corporate and retail clients. On the risk funding -- sorry, risk, capital and fundings, our objective is strong capital generation and continuation of our solid capital ratios. We also intend to further reduce nonperforming assets. Our infrastructure objectives center on AI and cloud-led technology to create a resilient, efficient and modern platform for the group. In parallel, we will continue to execute our cost efficiency program. Turning to Slide 26 on Structured Property Financing. As I have said, we will grow our areas of competitive strength. And as always, we will continue to adopt a conservative approach to risk while seeking attractive returns. There will be greater emphasis on Europe and greater focus globally on hospitality-related asset types. In the U.S., business will continue to reduce office loans. As a result of these actions, we expect loan volumes to remain stable at around EUR 34 billion. We are also continuously leveraging and broadening our off-balance sheet financing business. We expect to continue to have a portfolio of around EUR 7 billion in these capital-light activities. Moving on to Slide 27 and to Banking & Digital Solutions. We are accelerating deposit growth and expanding our product range. We are currently focused on housing industry customers in Germany. Our first objective is to add new customers, new markets and new channels. We plan to add new groups, for example, small property managers. We plan to add new markets, for example, the Netherlands, France and Spain. And we plan to add a new channel for retail deposits, we plan to have our own platform in addition to the existing option of platforms like Raisin. We also aim to add new ERP partners. Our second objective is to expand beyond the housing industry and into other B2B segments and to do so in Germany and internationally. And thirdly, we are introducing lending services to the housing industry where we have a strong relationship, knowledge and expertise. To support these initiatives, we will continue to invest in digitized end-to-end bank processes and digital product offerings. As a result of these initiatives, we are now targeting combined housing industry and retail deposit volume of more than EUR 18 billion in 2027 compared to an annual average of around EUR 17 billion in 2025. We will also be targeting lending to the housing industry of around EUR 1 billion by 2027. Next, risk, funding and capital on Slide 28. Here, we continue to have 2 major KPIs. We are targeting a Basel IV CET1 fully-phased ratio of at least 13.5%, unchanged on the objective, which we introduced last year. Secondly, we aim to reduce nonperforming loans as a percentage of the loan portfolio to under 3%. To achieve this, we will continue with strong capital generation supported by capital management. We will also continue to optimize funding sources and the risk return from our treasury portfolio. We will, of course, maintain Aareal's conservative approach to risk, proactive credit risk management and our solid balance sheet. Turning now to Slide 29 and to infrastructure. Our objective is an AI and cloud-led transformation along with continued execution of our efficiency program. We aim to create a state-of-the-art platform to support the group's business in the future. As I said, our objective is a modern, resilient and efficient platform. We are also actively driving a technology and efficiency mindset across the bank while streamlining operations and digitizing processes as part of our efficiency program. Our new infrastructure-related KPIs are to achieve gross savings of an additional EUR 40 million in total and a cost-to-income ratio of around 30% by 2027. Moving on to Slide 30. We confirm our 2027 target for the adjusted post-tax return on equity at around 13%. As we have shown on earlier slides, management took action incurring an additional charge of EUR 55 million to support the repositioning of our U.S. business. Excluding the additional charge and the tax impact of repositioning in the U.S., the 2025 adjusted post-tax return on equity was 7.5%. Looking to the future, 2 main factors are expected to drive the increase in return. Firstly, an improved risk profile will reduce our cost of risk on an ongoing basis. And secondly, as I have just described, we are accelerating growth in Banking & Digital Solutions, assuming a normalized CET1 ratio of 13.5%, which takes us to the targeted adjusted post-tax return on equity of around 13%. Turning to Slide 31. Let me highlight our ambitious 2027 targets. As I have just demonstrated, we aim for an adjusted post-tax return on equity of around 13%, a CET1 fully-phased ratio of at least 13.5%, a cost/income ratio of around 30% and an NPL ratio of around 3%, a lot of 3s, but these are our targets. And we continue to be on track to meet those. Now moving to our closing slide, I want to round up with a few key takeaways. Both our business segments achieved a strong operating performance in 2025. We have significantly reduced loan impairment charges and costs. Management was able to take action to support the repositioning of our U.S. business. We have successfully launched our strategic plan Aareal Ambition, and we are well on track. We are sharpening our focus in both businesses. And we are confirming our adjusted post-tax return on equity target of around 13% in 2027. Andy, I and the team will now be pleased to take your questions. Operator: [Operator Instructions] And the first question comes from Corinne Cunningham from Autonomous. Corinne Cunningham: Three from me, please. First one, if you can give us a bit more background on what's happening with margin development. You've told us what's happening for new, and you said renewals. I think you said renewals were flat margins. So maybe just a bit more color on what's happening there and guidance on NII going forward. And on the SRT, can you explain the interaction between what's going on in the background in capital? You had a positive impact from the SRT, but your capital ratio was flat. Obviously, you made a loss, but any other moving parts in there with RWAs, please? And then last point, if you can give us a bit more background specifically on what the EUR 55 million, and you call it repositioning of the U.S. portfolio. But does that basically just mean additional provisioning to make assets easier to sell? If you could explain what that means in more detail, please? Christian Ricken: Okay. Thank you very much. So yes, I would like to allocate the question to my dear colleagues. So Christof will take the first one from the market's perspective; Andy, you would talk to the SRT and Nina, you cover the EUR 55 million. Christof Winkelmann: Yes. So also good morning from my side to everybody. To the question as to how the spread is between new versus existing business or prolongations, they are plus/minus within the average number that we've given you. We don't really publish the individual numbers, but you can take plus/minus 10 basis points from the published figure is where the range is for prolongations and new business for us. Andrew Halford: Let me just pick up on the CET1, the SRT question. So simple math, 15.2% a year ago, the SRT gave us about 0.5 percentage point benefit, 15.7%, and we ended the year at 15.5%. So 0.2% reduction from sort of trading, if you like. That is just primarily the impact of the slightly bigger loan book that we had over the year and hence the slightly higher RWAs. So that's the pretty simple composition of the movements of that number. Corinne Cunningham: Sorry. I was just going to ask Q-on-Q, I was looking more Q-on-Q. And is that literally the same, so higher loan book? Or were there other things specifically in Q4? Andrew Halford: No, it is exactly the same. There is nothing abnormal. Nina Babic: Cunningham, I will take the question on the EUR 55 million, the management action, which we have taken. So what is behind that? So in the end, it's a support for us going forward. So it's nothing on the year 2025. It's as an overlay booked for us, giving us a support on the U.S. repositioning going forward. It's not allocated on any kind of nonperforming loans, but gives us also leeway going forward to stay cautious and to follow up on our very cautious and conservative approach with regard especially to the U.S., as you have seen also on the NPL book, the main part of it is allocated on U.S. office. So that's why we want to stay active here and progress on the targets I've just described. Operator: Ladies and gentlemen, this was already the last question. So I would now like to turn the conference back over to Jurgen Junginger for any closing remarks. Jürgen Junginger: Thank you for joining us this morning. But as always, the IR team is happy to take follow-up calls if you have further questions. So have a good day, and thank you again for listening. Thanks. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

34天前Insight Analytics约5分钟阅读

BULL 2025 Q4 财报电话会议

Operator: Good afternoon, and welcome to the Webull Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Carlos Questell, Head of Investor Relations. Please go ahead. Carlos Questell: Good morning, good afternoon, and good evening, everyone. Welcome to Webull's Fourth Quarter and Full Year 2025 Conference Call. Earlier today, we issued a press release detailing our fourth quarter and full year results. A copy of the release can be found on our IR website at webullcorp.com under the Investor Relations tab. Please note that this call is being recorded and will be available for replay via our IR website. During the call, we'll be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to the cautionary statement and risk factors contained in our filings with the Securities and Exchange Commission and press release, both of which can be accessed via our website. Today's presentation will include a discussion on adjusted operating expenses, adjusted operating profit and adjusted net income, all non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to their most directly comparative GAAP measures are included in the press release that we issued today. It is important to note that although we believe that these non-GAAP measures provide useful information about operating results, they should not be considered in isolation or construed as an alternative to their directly comparative GAAP measures. Furthermore, other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. With me today is our Group President and U.S. CEO, Anthony Denier; and our Group CFO, H.C. Wang. We will begin with prepared remarks and then take questions at the end. With that, I would now like to turn it over to Anthony. Anthony Michael Denier: Thank you, Carlos, and hello, everyone. Thanks for joining us today. Webull's fourth quarter and full year results show strong progress and returns for our first full year as a public company. Our full year results reflect our success as we continue to enhance our offerings for our growing base of active traders and investors, expand our client base globally and extend our capabilities into new markets, including institutional investors. Following our public listing in April of last year, we have been executing on an ambitious plan to address the growing requirements of our user base of sophisticated, active investors looking for autonomy from traditional brokerages. We're proud to report that we offer that platform today, and it provides our users with a one-stop shop for securities trading as well as offering in crypto, futures, prediction markets and more. And what's more interesting is, it's all enhanced by AI. AI is dramatically changing the investing industry, and we at Webull are on the forefront of many of those changes. We're proud to be shaping the future of active self-directed trading through the integration of AI via Vega, our AI assistant for trading and platform guidance, delivering real-time insights and AI-generated trading ideas. Launched at the end of last year, Vega is already integral to our continued growth, providing our users with market data, information and associated analysis as well as real-time portfolio monitoring, with user-controlled management of positions and risk preferences. Since launching just a few months ago, Vega currently assists 1.2 million global users each week with 10% of weekly active users deploying the tool to answer over 10 million questions since creation. AI deployment across our platform also extends within our organization with AI implementation across customer service, R&D and internal operations. We're looking to integrate AI into every aspect of our internal business to optimize and scale a global business that provides a differentiated, sophisticated regulatory compliant trading platform to users across markets. I'm proud of the Webull team for a strong first year as a public company. I'm also proud of our leadership and the development of our AI capabilities over the past year. As we establish Webull as a leading investment platform for active traders, I want to be sure you understand how important the scale we have achieved is to our strategies going forward. We are poised to bring our solutions to brokerage firms, high-net-individuals, family offices and wealth advisers. I look forward to chatting with all of you about B2B opportunities in 2026. With that, let me now walk you through the key highlights from 2025 in more detail. Here on Slides 2, 3 and 4, I'll walk you through our 2025 highlights. We are proud of our performance in 2025, delivering record revenue and a solid operating profit margin improvement from the prior year. We recorded revenue of $571 million, representing 46% growth from 2024, driven by record trading volumes across all asset categories. First, customer assets reached $24.6 billion, inclusive of approximately $1 billion in assets from the acquisition of Webull Pay, representing an 81% increase from 2024. Second, equity trading volume increased by 59% year-over-year, to $732 billion, while options volume rose by 19%, to 550 million contracts. And our newer products, including futures, prediction markets and crypto, all delivered strong growth during 2025. We recorded an elevated but disciplined increase in adjusted operating expenses of $460.7 million, representing an annual increase of 24% as we continue to invest in strategic product offerings and market expansion to support long-term growth. Operating profitability was strong with a 14.6 percentage point increase in adjusted operating profit margin, on an annual basis, to 19.3%, representing an adjusted operating profit of $110.3 million for the year. As our industry undergoes structural changes, we will continue to invest proactively to capture outsized share over time. Turning now to Slide 5 and our 2025 road map. I'm really pleased with this progress. Webull Premium, our subscription-based service for active traders and long-term investors, has reached 102,000 subscribers by year-end, surpassing the 100,000 target we set for ourselves. Our premium subscribers contribute 30% of our AUM, 60% of overall margin debit balances and our most active customers. Looking ahead, we aim to double our premium subscriber base in the coming year while continuing to enhance the product with additional features, making it the best value product for active traders. One of our proudest moments of 2025 was the introduction of Vega, our AI tool that combines news, earnings and technical data to deliver a focused, intuitive experience that helps both new and seasoned investors navigate modern trading and make smarter decisions. Since its release, approximately 1 in 8 users have used the assistant before trading, and Vega continues to play a role in not only bringing people to our platform, but keeping them there as reflected in the 1.2 million users a week who utilize this exciting technology. We also launched BlackRock model portfolios, which provide a robo-advisor offering and allow users to access a range of diversified portfolios across various asset classes, including alternative and digital assets. In line with expanded digital asset offerings, 2025 marked the reintroduction of crypto trading for our U.S. customers with the acquisition of Webull Pay and the launch of crypto trading in Australia and Brazil. We are also actively exploring digital asset licenses in a number of other markets and expect to bring them online in the coming year. The introduction of prediction markets to our asset classes has also been an exciting innovation this year. This offering provides an engaging and accessible trading experience that lowers barriers to entry for users. This quarter, more than 162 million prediction contracts were traded, with 81 million in December alone. We're excited to continue the momentum around prediction markets with the introduction of sports prediction markets across all the major sports leagues. And while Webull has always been a global player, 2025 has been a year of further global expansion. We now have more than 760,000 funded accounts outside the U.S. APAC customer assets have surpassed $3 billion, and our partnership with Meritz Financial Group has increased access to the U.S. market for Korean investors. Canada is also on track to soon reach $1.5 billion in customer assets, fast on the heels of surpassing $1 billion only 4 months ago. Additionally, we launched our platform in the Netherlands and are now licensed in 4 additional EU markets: Germany, Italy, Spain and Portugal. We prioritize delivering U.S. products to international markets from the start, and it is just good business to have diversified revenue streams globally. Looking ahead to 2026. On Slide 6, you'll see that we have identified 3 main priorities for the year. First, we will sustain and grow our elite offerings for active traders, leveraging AI tools that enhance the trading experience and allow us to maintain price leadership across the market. Second, we will continue growing our global business by cementing our position in existing markets and continuing to add to our localized product offerings. Finally, as I noted earlier, we will be building on last year's partnership with Meritz to expand our B2B platform. On Slide 7, I'll discuss our growth in both users and funded accounts for Q4. During the fourth quarter, we added roughly 1 million registered users, bringing the platform to a total of 26.8 million registered users. We saw steady sequential growth throughout the year, posting a more than 3 million user increase year-over-year and representing a 15% increase. Our investments in marketing are yielding results and are indicative of a strong fit between our offerings and market demand. As previously mentioned, Webull's roots as a global market data platform mean there is a significant number of registered users in geographies where our trading platform is not yet available. We continue to offer best-in-class market data and information to all users regardless of their brokerage status, a feature of our platform that has only been bolstered by the introduction of Vega to all Webull accounts. On the right side of the slide, you can see funded account metrics. Funded accounts defined as accounts where customers have made an initial deposit that has remained above 0 for 45 consecutive calendar days as of the record date, showed steady growth. We added approximately 100,000 new funded accounts this quarter, bringing the total number of funded accounts to 5.03 million, an 8% year-over-year increase. As we continue to innovate and enhance our offerings, we're also happy to report that our quarterly retention rate remained high at approximately 97%. Turning to Slide 8. Legal customer assets reached an all-time high of $24.6 billion in the fourth quarter, representing an 81% increase on a year-over-year basis and a $3.4 billion sequential increase. You all know that trading volumes were high in the fourth quarter. Our growth in customer assets reflects this. Customers deposited over $3.9 billion during the quarter, an incredible 225% increase year-over-year and a sequential increase of $1.8 billion, bringing cumulative net deposits for the full year to $8.6 billion. Lastly, on Slide 9, you'll see trading volumes for the quarter. While we saw strong growth in our newer products, particularly prediction markets and crypto, equity and options remain our core offerings, and trading volumes continue to grow. Equity notional volume reached $239 billion, up 87% year-over-year and 17% sequentially, while options contract volume totaled 154 million this quarter, up 38% year-over-year and up 5% sequentially. These results underscore the strength and resilience of our active trader base, which remains highly engaged through periods of market volatility. Our customers continue to trade consistently across core asset classes, reflecting a disciplined long-term approach rather than short-term momentum-driven behavior. With that, I'll pass the call over to H.C. for a closer look at our financial results for the quarter. H. Wang: Thank you, Anthony, and thanks to everyone for joining us today. In the fourth quarter, Webull generated total revenue of $165.2 million, representing 50% year-over-year growth. This strong performance reflects continued strength across both trading and interest-related income streams. On the expense side, adjusted operating expenses were $143.6 million, up 62% year-over-year, primarily driven by increased marketing and branding investments. Let me take a moment to frame this clearly. The increase in marketing spend is intentional and strategic. We are capitalizing on a strong equity market backdrop, multiple industry catalysts and the branding tailwind from our recent listing to accelerate customer acquisition, AUM growth and international expansion. Over time, we remain confident in our ability to scale revenues ahead of the expenses, supported by the operating leverage in our model. I will now walk through profitability and then the key components of revenues and expenses in more detail. Turning to Slide 11. We continue to demonstrate consistent profitability. Webull has now delivered 5 consecutive quarters of operating profitability with each quarter generating over $20 million in adjusted operating profit. In Q4, adjusted operating profit was $21.6 million, representing a 13% adjusted operating profit margin. Adjusted net income was $14.6 million, or 8.8% of revenue. For the full year, we generated $84 million in adjusted net income in our first year as a public company. As we look ahead, our approach remains consistent. We will continue to balance disciplined execution, profitability with targeted investments to capture long-term growth. Turning to Slide 12. Our trading-related revenues continue to grow, supported by momentum from the third quarter and strong trading activity across asset classes. Trading-related revenues increased 56% year-over-year to $112.5 million and DARTs increased to 1.2 million (sic) [ 1,202 ] in the fourth quarter. We're seeing broad-based engagement across equities, options, futures, crypto and prediction markets. Importantly, our users continue to trade consistently across market conditions. This reflects the base of active traders who remain engaged through volatility rather than being driven by short-term momentum-based behavior. We believe this positions us well for sustained growth on trading revenues over time. Turning to Slide 13. Interest-related income continues to scale along with client assets. In the fourth quarter, interest-related income grew 31% year-over-year to $43.5 million, primarily driven by higher interest earned on client cash, margin lending and corporate cash. Specifically, customer margin balances increased 43% year-over-year to $689 million at the end of Q4, reflecting higher utilization from our premium customers. Sequentially, interest-related income was roughly flat as declines in fully paid stock lending revenues offset increases in other categories. This reflects the normalization of borrowing rates for certain hard-to-borrow securities, which had elevated stock lending revenues in the prior quarter. As I've mentioned on this call before, our business model is relatively resilient to interest rate changes. Over the long term, as we continue to grow client assets globally, we expect this revenue stream to continue to expand. Finally, let's turn to Slide 14 for a closer look at operating expenses. Adjusted operating expenses increased 62% year-over-year, with the majority of the increase driven by marketing and branding investments. These investments are focused on accelerating customer acquisition and AUM growth, and we are already seeing strong early returns as reflected in our record $3.9 billion of net deposits in the quarter. It's also important to note that excluding marketing, our cost base remains well controlled. We achieved our highest operating profit margin ex-marketing in the fourth quarter at 45%, demonstrating the strong operating leverage of our platform. We expect that our margins should continue to improve as we further scale and diversify our revenue base, which will give us the flexibility we need to invest opportunistically in customers and AUM growth, particularly during periods of market expansion. Now thank you, everyone. With that, I'll turn the call back to Anthony before we open the line for questions. Anthony Michael Denier: Thanks, H.C. Q4 was another record-breaking quarter for Webull on multiple fronts as we focus on growing revenue, growing AUM, all while maintaining fiscal responsibility. This is now our fourth reporting quarter as a publicly listed company, and Webull has delivered growth and profitability every quarter. As we mark a monumental milestone for the platform, I want to recognize our global team for an outstanding year. It's clear that the team's dedication has been central to the progress we've made as a company and will continue as we look forward to the next year of supporting our user base of active securities traders, expanding our platform for investors across existing and new markets and continually looking to expand our client base, including with B2B offerings. We look forward to engaging with you at several upcoming industry and investor conferences. On that note, we welcome any questions you may have, either here on the call or one-on-one. Operator: [Operator Instructions] Our first question is from Chris Brendler with Rosenblatt. Christopher Brendler: Congratulations on the strong results. I'm going to ask the most obvious question first, which is, just maybe dive into the marketing spend in the fourth quarter a little bit in terms of the sequential increase. How much of that went to new customer acquisition? How much of that went to incentives on folks bringing over balances? And if you could comment at all about the run rate from here? As we think about 2026, you expect this elevated level to continue? That would be great. Anthony Michael Denier: Chris, Anthony here. Thanks for the question. So the Q4 marketing expense was certainly higher, and that is -- that's actually illustrated in the success in the AUM growth we've had. The majority of the marketing spend we do -- you don't see Webull on Super Bowl Sunday. You don't see us on billboards around town. We focus a lot of our marketing spend on where it's most impactful for the customers that we are focused on acquiring, and those are high-net-worth active trading customers, right? And that's reflected in the net deposits we received in Q4, right? So record net deposits, $8.6 billion over the course of the whole year. $3.9 billion over the course of just Q4 alone. And that successful marketing campaign is the main driver for the higher marketing costs we see in Q4. Now going forward, we're going to be very conscious on maintaining a strong operating margin. So I do not expect that the marketing costs will be as high going forward. But again, we're opportunistic. Where we have an opportunity to grow and to invest in growth, we will take that opportunity. So Q1 is looking much lighter than Q4 was, but that was a lot because of the success of Q4. H. Wang: Chris, just something to add on top of Anthony. So if you look at our marketing expense, as a percentage of revenue, it was about 35% in 2024. And that as a percentage of revenue has actually come down to about 23% -- 24% in 2025. So as we continue into the new year, we will continue to obviously invest in customer acquisition and AUM growth, but we will also be keeping an eye on this ratio, percentage of revenue and spend on marketing. An important point, I think Anthony had alluded to is that we are -- the majority of our marketing spend is actually performance-based. So these are for successful deposits, for successful account openings, these are that we can track. These are not fixed branding investments that are committed early in the year. So we have a lot of flexibility to dynamically calibrate and adjust the marketing spend as we see where the market is going. Christopher Brendler: Makes total sense. I appreciate that color. Since we're already in March and markets have changed a little bit since last year, certainly seeing a lot of trading volume but also some volatility. Can you comment at all about 2026 year-to-date in terms of the trends in DARTs and equity versus option? That would be great. Anthony Michael Denier: Yes. No, no problem. I think the market is setting itself up for an interesting rest of the year. But looking back, we're almost at the end of the first quarter already. And I can say confidently now that, I mean, January is probably the second best month we've ever had as a company since inception. So Q1 is certainly looking strong. When there is volatility, especially with our customer base, there's a lot of activity and a lot of trading. When the markets start getting harder to read, whether there's geopolitical headlines that we're reading multiple times a day now, that could change the direction of the market at any time. We see a lot more concentration in our options business, and the margin in our options business is quite higher than our equities business. So that's actually a net positive for us. And I think in a volatile tape, which seems like it is going to be in the foreseeable future, I think we're extremely well positioned with just our core customer base, right? You see a lot of our competitors looking to target active traders. We have only targeted active traders since day 1. That is our core. That is our flywheel, right? And it will constantly help us when there is volatility in the market. And the activity between a casual retail trader and an active retail trader is very different. So the second part, I think, where we have an advantage is our global distribution, right? We're now operating in 14 different countries around the world, and it's great to have diversity of revenue streams with different product types, with a volatile market and a questionable outcome of which direction the market is going to go. And then lastly is our B2B business, which has done nothing but expand since we made our first announcement only 3 months ago. We'll continue to build on those partnerships. It is a long-term and slow growing business when you're dealing with B2B relationships, but they are consistent through different changing markets over time. Christopher Brendler: That's great color. One last one, if you don't mind, is the prediction markets here. Super exciting to see the success after such a late in the year launch, certainly it ramped very quickly. How should we think about prediction markets and contributing to earnings and profitability in 2026? Anthony Michael Denier: So prediction markets are exciting for our business. I think it opens up our TAM to a completely new demographic of customer. It is a great reengagement tool for customers that have gone dormant or have slowed their activity on the platform. It's a great calling card to come back and rediscover investing and trading. I do not believe that prediction markets are going to be any part of our core business going forward. I think our core business is in the active securities trader. And I think the prediction markets are a great tool that we can use to engage -- and keep clients engage with -- and keep clients engaged with their portfolio, allowing them to speculate, to hedge and allowing them to have access to new tools and a new on-ramp to gather a new customer base. Operator: The next question is from Mike Grondahl with Northland Securities. Mike Grondahl: I wanted to follow up on the $3.9 billion in net new deposits. You guys really called out the marketing spend, and we know what you've done there for people moving balances. But I didn't hear you mention crypto, that new offering or Meritz, that rollout. Do you want to attribute any of that big growth to crypto or Meritz? Or I guess, drill down a little bit deeper there, Anthony. Anthony Michael Denier: Yes. So firstly, any of the B2B relationships that we've onboarded, they're not attributable to net deposits. Those net deposits are purely coming from retail. Crypto, however, is included because our crypto business is only attributed to retail right now. To give you a little bit of color on how Meritz is going, we've been obviously quiet in terms of the revenue attributed to this new partnership because we still are growing it, and it's still very early. But we have, to date, traded north of $1 billion notional in equity for Korean customers through our relationship with Meritz. That number is growing on a week-to-week basis, and we expect them to be a very important partner for our B2B business in the longer term. On the crypto side, and we've talked about this before, the availability and the opportunity for us for crypto is a wide-open field. And I'm extremely excited about the ability to be best-in-class for active crypto trading, but it's still too early. The amount of trading that we're doing on crypto versus our securities business is still de minimis. We are still waiting to roll out a couple of key products towards the end of this quarter. And I think there'll be much more material conversations to have for Q2 in terms of crypto revenue contribution. Mike Grondahl: Got it. And just going back to Meritz, how ramped up is that relationship? Is it still early innings, middle innings? And then what does the pipeline look like for other international partnerships or opportunity? Anthony Michael Denier: So for the Meritz relationship, again, a very key one for one of the largest active trading regions in Korea, very, very early innings. I mean we're still not even out of the second inning yet. First inning was getting them onboarded. Second inning is where we are as we're still testing. And some of that test phase, we are working out the different trade flows that they want to send to us, and that number has been growing on a steady basis. I expect that -- I expect to be 10x at the end of this year where we are today, to give some context. And pipeline for B2B, that's where the B2B gets really exciting. As you guys know, onboarding institutional investors is not as quick as onboarding a retail customer. So these relationships do take time to build. But the pipeline is primed and ready. We have multiple businesses that are looking to connect with us on multiple reasons. We're beating our competition in price. We're beating our competition in technology. We're beating our competition on having boots on the ground where these B2B relationships are, and we're beating them on product diversification. There's very few competitors that we have in this space that can match us on all those fronts. So I expect the B2B business to be equal, if not greater, over the next several years than our current retail business. Operator: The next question is from Karim Assef with Bank of America. Karim Assef: Can you guys hear me okay? Anthony Michael Denier: Yes, sir. Karim Assef: Okay. Perfect. Congrats on a strong quarter. My first question is on capital priorities and M&A. So could you give us an update about your capital priorities for this year? And what are some of the key focus areas for M&A in terms of size and target markets? H. Wang: I'll take this one. I think our answer hasn't really changed. We'll continue to be very focused investing in growth, that means customer acquisition, AUM acquisition and continue to invest in technology, especially AI, to make us the best-in-class platform for active traders and also in geographical expansion where we're currently operating. So I would say it's primarily in organic growth as we see a lot of opportunities in our current space where we're gaining share across a number of markets. In terms of the M&A opportunities, I think it's something I think we'll be opportunistic. We don't have a strategy necessarily saying that we have to grow through acquisitions. But if something interesting that does come along, we'll obviously evaluate it from a risk-reward perspective. Karim Assef: Got it. And then for my follow-up, I wanted to know if there are any plans to publish monthly metrics such as DARTs, account growth, net deposits, similar to what some of your peers provide? And if so, could you share the timing or the context around when you might start? H. Wang: Well, thanks for the suggestion. I think -- we are listening, and we are evaluating and also balancing with, I guess, where we are in terms of the maturity of the business. So if you noted, we've actually disclosed more granular data in terms of DARTs and also the interest earning asset balances in this quarterly presentation. So we want to be transparent and give more information to our investors and research analysts. So when we're ready, we'll be releasing data probably on a more regular cadence. So thank you. Operator: The next question is from Ed Engel with Compass Point. Edward Engel: I wanted to kind of drill down on some of the success you're seeing on the performance marketing side. Is there any specific segment or segments that are kind of driving a lot of the growth there, whether it's U.S., international or kind of these new products, like crypto and prediction markets? Anthony Michael Denier: So what I've been most impressed with, especially over the course of '25, was the growth of the international contribution, meaning our non-U.S. broker-dealers that are contributing into our U.S. product flow, mainly in the form of equities and options business. We have more than doubled the amount of incoming flow over the course of '25. So a doubling effect, which I am very confident that, that trend will continue into '26 as we continue to export kind of the U.S. retail experience to retail investors outside the U.S., to all of our broker-dealer affiliates in the Webull Corporation umbrella. Looking at things like a retail customer sitting in another country, is still reading the same investment blogs, is still looking at the same Reddit channels, talking about using options to trade volatility or ahead of an earnings cycle, right? But that customer usually does not have access to that U.S. product where they live. And if they do have access to it, usually, they have to be some ultra-high-net-worth customer or they're going to pay some ridiculously high fees or have a very bad user experience. We are bringing that U.S. experience outside of the U.S. and been extremely successful in doing so. We're continuing to push that agenda. We are the first true zero-commission platform in Hong Kong. And when we went to zero commission in Hong Kong, I believe it was November of 2025. Our Hong Kong customer order flow nearly doubled immediately. We will continue to push pricing, price compression and better user experience everywhere globally. So that international cohort is really important for us. And then when we look at product types, you mentioned crypto, of course, crypto is extremely important for our demographic of customer. Like I mentioned earlier, we will be focusing on targeting active crypto traders with price compression here in the U.S. We have licenses and are offering crypto currently in Brazil and Australia. And I believe that we will have -- I want to be careful. I don't want to make too many promises. But we will have probably 2 more licenses to trade crypto before the next earnings call and continue to expand on that for expanding our user base for the products that we offer. And then lastly, I think prediction markets as a new product is something that's extremely interesting for our B2B business. In order to offer predictive markets, you have to have multiple licenses. And you have to have the ability to offer technology on a quick delivery schedule that you can then offer these products to other platforms that do not have the proper licenses and do not have the proper technology to offer it. So there's a huge queue of clients that we're building that will also expand our prediction market business that expands outside of retail alone. Edward Engel: Great. Appreciate all that color. And then just kind of get into the trading revenue segment within the platform and trading fees line item, a pretty big sequential increase in that. We can kind of back into prediction market revenue just given the volume you gave us, and it's some of that, but not really all of it. So just curious, of that kind of platform and trading fee line item, like what really drove that sequential increase? H. Wang: Well, there's -- it's actually a number of things. So outside of our core products, equities and options, all the other asset classes are -- the trading-related revenues go into the platform and trading fees. So that includes futures, crypto and prediction markets as well as the commissions that we do collect on some of our foreign affiliates. Yes, so Q4, there's a big jump, I think, for several reasons. One is that our -- like our futures business actually continues to grow. And also, we had consolidated Webull Pay, the crypto business, at the end of Q3. So Q4 was really the first time that we had ever presented crypto revenue in any of our results as well as prediction markets. So as you can see, we -- like, Q4 was a big quarter for prediction markets. And so for us, that also is a significant contributor to the results in Q4. Edward Engel: Great. And then just one last housekeeping one. I saw on the balance sheet that you -- it looks like the promissory note balance declined. Was that you paying this down [indiscernible]? H. Wang: Yes, we paid -- yes, that's correct. We had $100 million of promissory note on our balance sheet at the beginning of Q4. And then we paid off $35 million of the principal of the promissory note in Q4. Edward Engel: Okay. And I guess the interest payment steps up, correct, in about a month. Is it fair to assume that you would try to take it down relatively quick? Or are you okay with it out there? H. Wang: I think we're -- again, we're evaluating. We have time to pay down the promissory notes. So there's flexibility on when to pay it off. So I think it depends on the -- our cash flow and our balance sheet and also our strategic priorities in the coming quarters. So there is -- the goal is to eventually pay it off. So -- because we are -- we would like to maintain a healthy balance sheet and not to take on too much debt. And so the goal is definitely to pay it down over time. And then so hopefully, save on the interest costs. Brian Vieten: Great. Once again, congrats on the big growth. Operator: The next question is from Brian Vieten with Siebert. Brian Vieten: Just a question on, I guess, the customer funnel kind of driving new adds and keeping people engaged. Can you just talk about prediction markets versus crypto? Like what's been, I guess, a more compelling funnel for you and how you see that looking in '26? And then separately, just on price, it seems like for a number of products, the pricing is very competitive. But I do wonder if maybe you could come out at sort of a healthier price level and then the customer could kind of opt out versus you kind of immediately cut the price and then it's harder to maybe raise it down the road. Have you guys run through any of these analyses where maybe you do just have the normal fee structure and you could always sort of cut it down over time and kind of delight the customer from that standpoint. Is that an exercise you guys have worked through with prediction markets, crypto, kind of your newer markets? Anthony Michael Denier: Brian, so I think one of the big differences, though, when we talk about price compression for crypto, I think the biggest differentiator between our business and any of our competitor business in terms of trading of crypto and the spreads that are built in the pricing is that we're not reliant on any crypto revenue currently, right? So any revenue that we add, whether it's from a pricing spread that's 1/4 of the margin of our next competitor, that's still accretive revenue for us. And if any of our competitors were to match our pricing, they'd have to be cutting their crypto revenue significantly. So we think that, that puts us in a very good position. It almost reminds me of when we launched the platform in 2018, where there was us and 2 or 3 other digital platforms that were only offering zero commission, right, for equities. And the largest players, they were very, very slow to adapt and change because it was so cannibalistic to a very important revenue stream that they depended on. I see this as the same exact opportunity for us. And to get more detailed about your question when, I don't think we would have an across-the-board pricing compression for all clients because the majority of crypto investors are long-term investors, right? They're buying it to add to their portfolio. So the entry cost is not that important to them. We're targeting the active crypto traders, right? People that are day trading crypto multiple times a day, every day. That is the majority of our customer base, with active traders, and we want to cater a product specifically for them. So we do have a couple of different models in mind, and I will give you more details as we get closer to a launch date. Brian Vieten: Okay. Great. Okay. Perfect. And I guess just from a fee capture standpoint, it sounds like, near term, it's more about getting volume out there and driving more engagement and getting new customer adds? Is it -- are we right to think there's probably not a big revenue number coming from crypto prediction markets in '26? I might have missed that if you covered it earlier, but could you just walk through the fee structure a little bit for this year? Anthony Michael Denier: So for our prediction markets, we charge $0.01 commission per contract. We also do receive exchange rebates on top of that as part of the revenue stream for prediction markets. We did run an offering around the Super Bowl, where we announced no commission for prediction markets, for anything related to the Super Bowl, game winner, point spread, MVP, things like that. And that actually drove a significant amount of traffic without us actually having to advertise or pay for expensive advertising during the Super Bowl cycle. A very successful program for us. I think there's very little compression that's available for prediction markets. I think the prediction market game is strictly about volume and size at this point. And that could be run in a couple of ways. It could be a targeted audience, which, again, I'm not convinced that that's our audience. I think our audience are the active securities traders, not the pure spec traders, but that can change. Still kind of waiting to see some data and waiting to see which direction a lot of the kind of regulatory and political cultural oversight -- in which direction that wind is going before I want to commit to doubling down on a specific product. And obviously, crypto on-ramp is a natural progression for our demographic, and we'll continue to pursue the right product suite as we roll out -- like I mentioned, as we roll out the offering and get aggressive into Q2. Brian Vieten: Okay. Great. And then just lastly, I think for some of your competitors, one of them has 10, 11 businesses, I think that are $100 million or more in revenues. Prediction Markets was the fastest growing -- I'm sorry, the fastest to $100 million of all 11 businesses. And it's funny, we looked at a couple of years back, a lot of them didn't -- they launched 5 years ago. But even if you haircut the prediction market number by 80%, it's still the fastest to $100 million. And so I guess from my standpoint, it's I'm still a little bit, I guess, just confused why we wouldn't just have the full capture in such a sort of fast-growing market that's kind of wide open. But I'll hear your side as well. Anthony Michael Denier: No. So Brian, I mean, we do have the full suite of prediction markets that all of our competitors have. It's not that we don't offer them. We absolutely do offer them. However, we don't put our prediction markets front and center in our customer experience, right? And I think that's a great metric you mentioned, but another great metric is you look at our traditional securities products, we're probably $115 million in terms of AUM of the competitor you mentioned, yet we do 1/3 the amount of equity business they do on any given day. We do probably 20% to 25% of the options business that they do in any given day. So we understand who our core customer is, and we build our platform and we develop it around our core customer. Operator: This concludes our question-and-answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.

34天前Insight Analytics约5分钟阅读

RTO.L 2025 Q4 财报电话会议

Operator: Hello, and welcome to the Rentokil Full Year Results 2025. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Andy Ransom, Chief Executive, to begin. Please go ahead when you're ready. Andrew Ransom: Good morning, everyone, and welcome to our full year results presentation for 2025. After my opening remarks, Paul will provide a review of our financial performance. I will then focus on the execution of our plan in North America as well as providing a brief update on our International region, our categories and our adoption of AI. We'll then open the floor for your questions. And as usual, details of how to ask a question can be found on the web portal. 2025 has been a year of encouraging progress with group revenues increasing by 3.8% and with organic revenue growth of 2.6%. Our H2 performance was particularly encouraging with group revenues increasing by 4.5% and with organic revenue growth being 3.5%. My main focus for today, however, will be on North America, looking at our performance in 2025 and how we're building on that platform in 2026. This time last year, we set out our plan for growth in North America, and it has been a year of encouraging progress with our performance, particularly in the second half, improving significantly. Whilst we're not there yet where we want to be, organic growth reached 2.6% in the fourth quarter. This was underpinned by strong execution, rolling out our new marketing plan, investing in our regional brands, opening 150 small local branches through our satellite program and delivering $25 million of in-year cost savings through our efficiency program. Our International business also saw improving organic revenue growth of 3.4% in the second half. This combination of improved growth and cost efficiencies delivered adjusted operating profit growth of 5.4% and positions us well to deliver our plans for 20% net operating margins in North America next year. Now looking to 2026, we have clear plans in place to build on the progress made last year. Our focus continues to be on growth, where we plan to expand our multi-brand strategy, deploying around 30 regional and local brands instead of the 9 we had previously indicated, and we'll continue to increase our local presence, taking our network of small local branches to around 220. As I'll explain in a little more detail later on, the team in North America has also used the pause in integration to develop a simpler plan for the creation of a single unified field operation. On systems, we've developed a new branch data portal, meaning we can maintain our existing systems for longer. And on pay plans, we're taking a more simplified approach to harmonizing pay policy where, in essence, service colleagues joining us next year will join our new plan, whereas existing colleagues will be given the choice of the new plan or to be grandfathered in their existing plan. So this combination of maintaining more brands and their branches, continuing to use our existing branch systems, whilst also simplifying the pay plan process means less change at the front line and more focus on the customer and indeed on growth. Fueling this growth and supporting our 2027 financial targets is our efficiency program, and Paul will now take you through this in more detail along with the rest of the financials. Paul Edgecliffe-Johnson: Thank you, Andy, and good morning, everyone. I will now walk you through our key financial highlights for 2025 and look at our regional performance in more detail before closing on cash flow and capital allocation. As a reminder, unless I state otherwise, all numbers are on a continuing operations basis following the sale of our France Workwear business, and any comparative performance is on a constant currency basis. Revenue was up 3.8% to $6.9 billion with organic revenue growth of 2.6%. Adjusted operating profit increased by 5.4% to just over $1 billion. This resulted in a group adjusted operating profit margin of 15.5%, a 30 basis point increase year-on-year. After an adjusted interest charge of $204 million, up $29 million due to the cost of additional bond debt issued in the year and an adjusted effective tax rate of 25.3%, adjusted basic EPS increased 2.4% to $0.2591. I have spoken previously about our focus on maximizing cash, and I'm particularly pleased with our free cash flow performance with 24.5% growth to $615 million and free cash flow conversion of 98%. This reflects disciplined working capital management and also some one-off benefits, including real estate sales. With the growth in profits and free cash flow and the proceeds from the sale of France Workwear, partly offset by an adverse foreign exchange impact of $181 million on year-end net debt, our leverage ratio improved to 2.6x, down from 2.9x a year ago and close to our target range of 2 to 2.5x. Reflecting this performance, the Board is recommending a full year dividend of $0.1239 per share, an increase of 3%, in line with our progressive dividend policy. Turning to North America. Revenue grew 3.2% to $4.3 billion with organic growth of 2.3%. Pest Control Services was up 1.1%, while Business Services grew 8.9%. I'll come back to talk about these performances in more detail shortly. Adjusted operating profit for the region was $749 million, up 5.1%, bringing our adjusted operating profit margin to 17.4%. This improvement reflects the early benefits of our cost efficiency program, which delivered $25 million of savings in the year. Operationally, we are seeing our strategic initiatives strengthen key KPIs with colleague retention up 2.8 percentage points to 82.2% and customer retention increasing to 80.5%. We also completed 12 bolt-on acquisitions in the region with combined revenues of approximately $27 million in the year prior to purchase. Looking at our performance in North America in more detail. Fourth quarter organic revenue growth in Pest Control Services improved to 2.6% from 1.8% in the third quarter and 0.1% in the first half. This sequential improvement demonstrates the results we're seeing from the strategic initiatives we put in place at the start of this year. Lead flow, a key metric to indicate future growth in our contract portfolio, grew over 7% across the second half of the year, driven by our revised sales and marketing strategy. This has included a shift towards a more targeted digital marketing approach with a bigger focus on driving organic leads and also increased investment in our regional brands to boost lead generation and brand awareness. The ongoing rollout of smaller local branches through the satellite program to bolster customer proximity and local presence is proving successful with branches with one of these localized hubs attached to it, generating more than double the lead flow of those without. We've also improved our execution by moving sales accountability directly back into the branches. In addition to winning new customers, we have retained more through a relentless focus on customer service, and we've been able to sustain strong pricing discipline through the year. Andy will talk more about these initiatives shortly and how we will continue to build into 2026. Turning to Business Services. We were pleased with fourth quarter organic growth of 7.8% against a strong prior year comparative, which included $6 million of emergency vector control revenue, which did not repeat in 2025. Across the year, Business Services organic revenue growth of almost 9% was supported by double-digit growth in both our distribution business and our brand standards business, with the latter benefiting from significant new business wins. Throughout the year, we have been executing against our plans to simplify the North American business, improving the efficiency of our cost base and creating fuel for growth. We are increasing discipline in our day-to-day operations with improvements in organizational design and simplification of processes. The streamlining of operations led to headcount reductions of over 500 roles by the end of 2025. We are also reducing cost in the business through outsourcing and moving non-core functions to lower-cost locations. This has allowed us to scale our back office operations more effectively while reducing our fixed cost base. To date, around 430 roles have successfully been offshored. We're using technology to automate manual processes and improve our overall efficiency while better leveraging the benefits of our purchasing scale through managing our third-party spend and consolidating spend with suppliers. As well as reducing costs, we continue to drive improvements in how we invest our sales and marketing spend to optimize ROI and have reallocated some $20 million of marketing spend away from suboptimal paid lead activity to higher efficiency channels and campaigns. We rapidly mobilized to deliver $25 million of savings in 2025, targeting the cost areas that were easiest to impact quickly. There remains very significant opportunities for us to create efficiency in our cost base. As we drive up efficiency in the business, we are also investing back in a targeted way to drive organic growth. In 2025, this has included incremental marketing investment and strategic initiatives such as the rollout of smaller local branches and enhancing our capabilities in areas from pricing to data insight. This is helping us to identify the levers to elevate performance and amplify the benefits of our strategic initiatives. Improving our data has been and will continue to be fundamental to our ability to optimize our marketing budgets to maximize our reach into available customer demand. We have already delivered a double-digit reduction in our cost per lead, and there is more to do. Balancing driving cost out with funding investments behind sustainable improvements in organic growth has been key to improving both top line growth and profit margin, and we will continue to balance this carefully as we progress towards our North America margin target of over 20% in 2027. Moving to our International business, which encompasses all regions outside North America. Revenue grew 4.8% to $2.6 billion with organic revenue up 3%. Organic revenue growth improved in the second half, up 3.4% compared to 2.6% in the first half. We saw our strongest performance in Europe, driven by healthy demand and solid pricing in Southern Europe, while growth in Asia was supported by the fast-growing economies of India and Indonesia. Adjusted operating profit increased 5.7% to $518 million, with margins increasing 20 basis points to 19.8%. The U.K. and Sub-Sahara Africa delivered double-digit growth, reflecting a strong revenue performance. Asia and MENAT also displayed margin resilience despite a backdrop of high wage inflation. Customer retention remained strong at 85.7%, and excellent colleague retention was seen throughout the year at 90.3%. We also completed 24 acquisitions in the region with combined annualized revenues of approximately $36 million. Turning now to central costs, which in the year were $191 million, up almost 7% and up 9% at actual rates with some 85% of our central costs in sterling. In addition to underlying inflation, this growth represents multiyear ongoing investments in proprietary technology, digital applications and AI capabilities to support colleague efficiency, customer satisfaction and to generate revenue. In 2026, we expect continued above inflation rates of growth in addition to an FX headwind. One-off and adjusting items, excluding termites, were $92 million in 2025, primarily incurred in North America as part of the overall cost efficiency program. Looking forward to 2026, we are expecting a similar level of spend. Moving now to the termite provision, which, across the year, we have increased by $201 million with an additional $122 million in the second half after the $79 million in half 1. The trends that we saw in the first half of the year have continued. These included an increase in the number of complex residential and commercial litigation claims compared to 2024, albeit at a lower level than at the time of acquisition. More detail on this is included in a slide in the appendix, and a continued increase in cost per claim as our proactive strategy to solve customer problems and reduce litigation continues. In addition, during the second half, we have resolved numerous large commercial legacy claims at a cost ahead of the historic average and increased the long-term inflation assumption in our provision model from 2% to 3.2% as a result of persistently high inflation in legal defense, housing and building materials costs. The cash cost of settling claims in 2025 was $95 million, and we expect a similar level of cash payments in 2026. Turning now to cash flow. We generated free cash flow from continuing operations of $615 million, representing an adjusted free cash flow conversion of 98%. This was ahead of our guidance of 80% and a further improvement from the half year. We reduced the working capital outflow by $67 million to an outflow of $59 million through our disciplined focus on debtor management and supplier harmonization, moving to more consistent credit terms across our supplier base. Although some of this improvement was one-off in nature, the underlying discipline remains, and we are focused on continuing to improve in this important area. Our overall free cash flow conversion also benefited from $20 million of real estate sales. Our gross CapEx of $196 million was in line with guidance, and we would expect a similar level of spend in 2026. Cash interest increased by $41 million to $222 million following our refinancing activities earlier in the year. Cash tax was $7 million lower at $100 million, mainly due to legislative changes in the U.S. Looking ahead, we continue to target a free cash flow conversion above 80%. Our strong operational cash generation, combined with strategic divestments, has allowed us to make progress in strengthening the balance sheet. Net debt at the end of the year was $3.65 billion compared to $4 billion at the start of the period. The key cash inflows in the year were $636 million of free cash flow and $391 million in net proceeds from the sale of our France Workwear business, which completed on the 30th of September 2025. Beyond the immediate cash influx, this disposal has simplified our International business, reduced our ongoing capital expenditure requirements and structurally improved our group cash conversion. We reinvested $121 million of cash in bolt-on M&A, which remains core to our growth strategy. This was less than originally planned with some slippage of deals into 2026. Our pipeline for 2026 remains strong, and we're targeting spend of around $200 million. The cash impact from one-off and adjusting items amounted to $100 million for the year. These costs were largely attributable to transformation costs in North America, which, combined with other cash one-off items, will be a further outflow of around $80 million to $85 million in 2026. Our closing net debt was impacted by $181 million adverse FX translation movement. Nonetheless, we are pleased to see progressive strengthening in our balance sheet with our net debt to adjusted EBITDA ratio reducing from 2.9x to 2.6x, bringing us close to our target range of 2 to 2.5x. Turning now to capital allocation, where our framework is built around 5 key priorities designed to balance growth, shareholder returns and financial resilience. Our primary focus is on organic investment as it drives the best ROI, deploying capital to support the long-term growth of our business. We will also continue to pursue targeted inorganic growth through bolt-on M&A. We have a strong track record of successfully integrating acquisitions to drive value creation, and we will remain selective and strategic in identifying opportunities that complement our existing portfolio, strengthen our market position and deliver long-term shareholder value. We remain committed to a progressive dividend policy, ensuring that dividends grow over time. Our approach reflects confidence in the underlying strength of our business and our ability to generate consistent cash flows while maintaining financial flexibility. We recognize the importance of returning excess capital to shareholders at the appropriate time. When we do have surplus capital beyond our reinvestment needs, we will evaluate opportunities to return it, always ensuring that such actions align with our broader financial strategy. Finally, we remain focused on maintaining a strong and resilient balance sheet. Overall, our capital allocation strategy is designed to strike the right balance between investing for the future, delivering long-term value to shareholders and maintaining financial strength. So in summary, we have delivered an in-line performance in 2025. We are encouraged by the clear signs that our revised North America strategy is working and the improvement in growth in the second half from our International businesses. Our focus on cash is improving our operational cash conversion and reducing leverage towards our target range. As we balance investing in sustainable organic growth and driving up the efficiency of the business, we remain firmly on track to achieve our $100 million cost reduction target and our goal of a North America margin above 20% in 2027. Although the first month of 2026 in the U.S. has seen some disruption from extreme weather, as we look forward, we have confidence in delivering in line with market expectations. Thank you. I will now hand you back to Andy. Andrew Ransom: Thank you, Paul. So over the next few minutes, I'm going to start by highlighting the strength of the pest control market, both in the U.S. and globally before diving into North America's performance. I'll then finish with brief updates on our international growth and emerging markets, on our 2 categories and on the good progress we are making with the use of generative AI across the business. As you can see, the global pest control market has demonstrated consistent, resilient growth, expanding from $15.4 billion a decade ago to an estimated $29 billion in 2025. This represents a robust 6.6% compound annual growth rate over the last 10 years. Looking ahead, the market forecast for growth in the pest control industry remains very healthy with a projected 6.2% CAGR through to 2035. This growth is driven by multiple consistent factors, including increasing urbanization and growing middle classes, which drive demand for professional pest services. Heightened demand for higher hygiene standards across all sectors and as you would expect, climate change are also contributing to a rise in pest activity, all combining to create a sustained need for our services. In Hygiene & Wellbeing, which accounted for 17% of group revenues in 2025, we are the leaders in an attractive global market, which is expected to grow at around 4% annually through to 2030. This is being driven by an aging global population and their increasing hygiene needs, social and demographic trends such as urbanization and increasing middle classes, so similar to pest control, a heightened focus on hygiene standards post the pandemic and greater environmental and regulatory compliance requirements. So we're operating in 2 very healthy global markets. Let's now get into the main focus of today's presentation, that's our plan for North America, where we're continuing on our journey to create an undisputed powerhouse in pest control. This is founded on a number of key themes. First, as I've just shown, we operate in an attractive noncyclical growth market with the U.S. accounting for approximately 50% of the world's pest control market and where we are now a leader for commercial, residential and termite services. Second, we are laser-focused on scale and on density. And this is not just about size. It's a fundamental understanding of how density unlocks significant economies of scale and efficiency opportunities. Third, we are building power brands like Terminix and other well-known regional brands such as Western Exterminator and Florida Pest Control, giving us strong brand equity in every city in the United States and, in turn, supporting other parts of the business' need for local digital leads, local sales, local pricing and recruitment. And finally, everything is powered by our proven, repeatable low-cost operating model, centered on being an employer of choice and maintaining an unwavering focus on customer service. Importantly, as you know, we are primarily a contract-based portfolio business with around 75% of Pest Control revenues in the U.S. being under contract. Now looking back, the integration of Terminix required 2 main thrusts: Firstly, to create a unified enterprise in the U.S.; and secondly, to create a single unified field operation. To date, at an enterprise level, we've successfully established a single leadership structure. We've completed the complex legal merger. We've aligned on our core back-office stack of systems, for example, for people management. We've introduced a single approach to procurement, and we've harmonized our management salary and benefit structure. Crucially, we've also made investments that will drive future performance. We've launched our first U.S. Pest Innovation Center, which is focused on residential pest control, termite and mosquitoes. We've placed an intense focus on being an employer of choice, making excellent progress in turning around colleague retention, particularly within Terminix. And we've also invested in new data and pricing capabilities. These are all important steps in unlocking the true long-term potential of the combined business. Now as you know, in 2024, we began pilot migrations to create a single unified field operation. And while these were very successful at delivering the expected cost synergies, and they did not negatively impact on the retention of our field-based colleagues, we did, however, experience a negative impact on our growth. The combination of fewer locations and a complex change agenda saw lower levels of inbound leads and some customers reacting negatively to the change in their technicians, eventually leading to lower customer retention in the migrated branches. Therefore, we made a decision to pause the full-scale migration throughout last year and to focus on returning the business to growth. This time last year, we outlined a new growth plan to address the root causes of the lead flow and customer retention reductions. And as you know, we saw encouraging signs of progress at the half year and again at Q3. And pleasingly, this has continued into the fourth quarter. The detailed plan that we set out in 2025 extended across a number of key areas, but was essentially focused on operational execution. For leads, we revised the marketing plan to add greater emphasis on organic leads on more local web content and on beginning to leverage AI optimization for local search. For 2025, we focused on 9 core regional brands alongside the Terminix brand, and a key part of the plan was to roll out our small branches under the satellite program to give us greater customer proximity. For sales, we moved ownership of field operations back into the branches, making the branch managers fully accountable for their local sales performance. This was coupled with a dedicated door-to-door pilot over the summer in around 25 territories. And as Paul has already highlighted, we also began driving business simplification, including the outsourcing of a number of key functional activities. Whilst this was all underway, our North America team has been working on plans to build on the successes of 2025 and to introduce a much simpler approach to branches, brands, systems and to pay. So let me provide a brief update. Our people, of course, are our greatest asset and our commitment to being an employer of choice is yielding excellent results. We've seen a 19% improvement in Terminix technician retention since the acquisition. And in 2025, North America colleague retention was up a further 2.8% to 82.2%. This is absolutely foundational to our future success. On the customer front, we delivered very encouraging improvements in customer satisfaction ratings, and we've continued our focus on the end-to-end customer experience, delivering a 0.4 percentage increase in customer retention now at 80.5%. And this will continue to be an area of maximum focus going forward. Our marketing focus shifted in 2025 to generate more organic leads through local brands and local content, where we optimize the content of around 1,200 individual web pages. And while only a very small part of the overall impact last year, we've also begun to leverage AI to optimize our local search presence so that when customers need pest control, Terminix is increasingly the AI cited domain to be shown in the search results. Critically, the successful rollout of our local network of new small branches under the successful satellite program brings us much closer to the neighborhoods where our target customers are living. By the end of last year, we had around 150 of these small branches open. In addition, our successful toe in the water with a dedicated door-to-door sales program in 25 territories last year will be expanded to around 40 territories this year. This local approach was reinforced with our focus on 9 regional and local brands alongside Terminix, which together drove a turnaround in residential lead flow, which was up 7.1% in the second half against the same period last year. As you've already heard from Paul, in addition to growth, efficiency was a big theme for 2025 and will continue to be so in 2026. Clearly, improving our marketing, our lead generation and our sales execution only matters if we're efficiently installing and subsequently billing our new customers. We continue to focus on increasing our speed to install rate. And in 2025, we introduced new KPIs to track the percentage of installs within 24 and 48 hours of signing. Overall, performance was good in '25, but this is another area where there is room for further improvement this year. By improving these operational performance areas, we have, in turn, improved our financial performance. Organic growth for Pest Control Services increased through the year, achieving 2.2% in H2 compared to 0.1% in the first half. This culminated in a strong fourth quarter, delivering organic growth of 2.6%. And importantly, the progress on contract revenue was particularly pleasing, up by 2.4% in Q4, alongside a healthy 5.6% increase in jobs. So an encouraging 2025 and one on which to build in 2026. Our brand strategy is a core lever for growth and the original plan focused primarily on both the core Terminix and Rentokil brands. The new plan outlined last year saw us add investment and focus on 9 highly recognized regional and local brands, which included the relaunch of their stand-alone websites and which delivered an encouraging increase in our inbound lead flow. And going forward, we will now invest in around 30 brands and support each of them with our best practice digital and marketing approaches. We'll have the Terminix brand as our national flagship, the 9 brands that we supported last year and a further 20 local and regional brands in key cities where their local brand equity is strong. Next, our focus is on the local branch network. And I've already highlighted the impact of the 2024 pilots and our pivot this time last year to focus on more branches. We've now added 150 small local branches, and the path forward is to continue that rollout, where we will open an additional 70 in 2026, taking our local network of branches to around 800 by the end of this year. This combination of keeping more local brands and their branches and by expanding our network of small branches as part of the satellite program gives us greater customer proximity and a stronger local brand presence. The most significant recent refinement to our plan involves our approach to data and branch systems harmonization. Our updated approach provides us with the immediate benefits of operational harmonization. We're launching Branch 360, which is a unified reporting and insight solution. It's been designed to provide a single pane of glass for our field leadership and our sales and marketing teams. By integrating data across our current branch infrastructure, this system-agnostic platform delivers consistent KPIs and daily accountability without being dependent on a single fully integrated back-end system. This ensures a standardized management experience across the entire organization regardless of the legacy platforms in place at the local level. Going forward, every branch manager will utilize a standardized performance interface that displays critical financial, operational, leads and sales metrics. Rather than requiring managers to manually extract and interpret data, Branch 360 will push actionable insights and reports directly to them on a daily basis. Finally, the team in North America has also developed a new approach for pay plans. The original plan required a branch-by-branch system harmonization to have been implemented before we could change the pay plans. Our new approach is to decouple pay plan implementation from systems harmonization. This year, we will harmonize branch manager pay, and then we'll focus on sales team pay in commercial pest control. This removes complexity and frustration of the different plans, and it's something that we expect to be well received. Finally, for our largest population, the technicians, we're taking a very pragmatic approach. New colleagues will be onboarded directly onto the new plan from 2027. However, we will give our current colleagues the choice to either opt into the new plan or to be grandfathered in their existing plan with no obligation to change. To conclude our dive into North America, we've continued to make good progress on employer of choice and on customer service. We've increased residential lead flow, underpinned by the rollout of 150 small local branches and our additional brands. This execution has led to an improved organic growth performance, which was particularly encouraging in the fourth quarter. Going forward, we're building on this growth platform with a focus on 30 brands and increasing the number of small local branches, which will continue to roll out at pace this year. And we now have a new simpler approach for branch data and systems and for pay plans. There is still a lot of work to be done, but clearly, we are seeing encouraging progress. So before we conclude and take any questions, a brief look at International and our categories as well as at generative AI, which I know will be of interest to you. As you saw earlier, our International businesses continue to operate in strong and resilient growth markets, with revenue in Pest Control up 5.4% in 2025 and increasing by 4% in Hygiene & Wellbeing. International growth markets delivered a solid financial performance with our revenue up 4.4% and profit up by 4.7%. Here, technology and innovation are our core competitive advantages. Our PestConnect deployment continues to progress well with around 100,000 additional devices installed in 2025, bringing our total to over 600,000. And in the Netherlands, for example, over 50% of our commercial pest control portfolio is now connected through technology. Our emerging markets continue to perform well, posting revenue growth of 6.2% and profit growth of 10.8%. And here, we are continuing to execute our cities of the future M&A strategy to capitalize on the development of the mega cities, which has resulted in 24 deals over the last 3 years and has secured leading market positions in key growth markets, including India and Indonesia, and this will be an outstanding platform for future long-term growth. I won't go into this slide in detail, but it's a summary of our overall Pest Control category performance globally and where organic revenue growth increased from 1.8% in the first half to 3.4% in the second. And similarly, in Hygiene & Wellbeing, which increased organic growth from 0.9% in the first half to 3.6% in the second and, as you can see, has delivered consistent revenue growth post pandemic. So this is my 50th and my last presentation to you. And looking ahead, if there's just one area in particular that I will be very excited to see develop, it's how the business adopts generative AI to enhance its productivity and efficiency as well as providing further service differentiation to our increasingly digital savvy customer base. Although clearly, it's still early days, we're making good progress. In 2025, we successfully launched Google Gemini AI to all 60,000 plus of our colleagues, and we had over 1 million users in just the first 6 months alone. On the service side, our innovations like PestConnect Optix, which was launched last year, uses AI to identify individual rodents from images sent from the field. And we've created our own in-house AI portal, lovingly named Rat-GPT, where over 100 dedicated AI agents are already in use or in development. The power of this focus on AI is perhaps best demonstrated by just a couple of brief examples of our Agentic AI solutions currently being piloted. Our prospect prioritization solution is a fully developed system, which uses multiple AI agents to analyze the wide range of leads that we receive. We receive Internet leads. We receive telephone leads, field-based leads, small leads, national account leads, jobs leads, contract leads, leads in high and low-density areas. And what this new agent will do is score each lead based on conversion likelihood, sales value and a range of other metrics, and then will nudge the salesperson to prioritize the best of the leads. Equally impactful is our on-the-go technician assistant. So if you can imagine a technician walking towards a customer site, this GenAI-powered tool will be speaking to the technician, giving them vital information; information about the site's history, the last infestation details, what the open recommendations are, what the bill payment status is and other important practical information. These are just 2 ways in which we are taking the power of AI and deploying it across the company. Clearly, there are many significant opportunities ahead of us, and we're really only just starting. So to wrap up, for the final time, I've included our RIGHT WAY scorecard in the appendix for you to read. But in short, as I prepare to hand over the baton to Mike, I personally feel very encouraged by the group's performance in 2025. Clearly, there is still much more to be done, but I'm very pleased to see our progress in North America, and I'm highly optimistic about the long-term prospects for the company where I will be cheering on from the sidelines in the future. Thank you very much. Paul and I will now be very happy to take your questions, and there will be a brief pause for the operator to line up any questions. Thank you. Operator: [Operator Instructions] And our first question comes from Andy Grobler with BNP Paribas. Andrew Grobler: Just a couple from me, if I may. Firstly, in America and operationally, as the strategy moves to kind of more branches, more systems, more brands and so forth, how would you balance the cost of doing that against and the visibility that you need from a central perspective. Is there a risk that some of these branches become somewhat independent through that process? And then secondly, just in terms of cash costs with termite costs going up in '25 and looking to '26, what are your expectations going in the longer term for those -- both for those termite costs and for the one-off integration costs over the next 2, 3, 4 years? Andrew Ransom: Thanks, Andy. I'll take the first one and hand it to Paul for the second. Look, I don't think so is the answer to your question in terms of risk either on the cost side or indeed on the risk of loss of control of lots and lots of small branches. If I take the second limb of that first. The Branch 360 single pane of glass, in particular, is going to give us the best visibility that we've ever had at branch level. At the moment, if you're a branch manager, across our suite of branches, you've got to have about 42 different tabs if you want to complete the full suite of KPI metrics and measures. And going forward, every single branch is going to have the same desktop open with the same KPIs, metrics, measures, dashboards and push reports going to them centrally. So I actually think we're going to have better control, visibility and consistency across our branches than we've ever had. And many of the smaller branches opened under the satellite program are really an extension of the larger local branch. So they're run by the same branch managers. So I don't think there's any risk there at all of loss of control, quite the opposite, I think. In terms of cost, the smaller branches are relatively cheap, if I can use that word, relatively inexpensive. The costs have been included in our plans, in our budgets, in our forward look on our numbers. So not a significant increase. And the majority of the increased investment on the brand side is actually on organic search. So it's not so much on the paid search, which is quite expensive. It's on organic, supporting their independent websites, web pages, et cetera. So I think the increased cost is modest. It's all factored into our forward-looking numbers. And I think it's going to give us great, great transparency and consistency on the branch level. So Paul? Paul Edgecliffe-Johnson: Look, on the cash side, I think the first thing that we should all remember is this is a very cash-generative business, and we've proven that in 2025. So we brought the leverage down. Cash conversion was at 98%, and we're going to keep pushing really hard on this. The working capital outflows were significantly lower in '25 than they were in 2024. In terms of the sort of one-off areas, the cost of the termite provision, $95 million in 2025 cash cost. We expect it will be about the same in 2026. Our strategy is to try and close off claims as quickly as we can, whether that's litigated claims or non-litigated claims. It's good to push them through, get them to resolution, and that's our plan so that we can put this behind us as quickly as possible. I can't tell you really exactly what the cash is going to be in '27 and 2028, how that will track down. Expectation is that it will track down because we are dealing with large complex claims now. That's what's put up the provision in the second half. And so we will see it ameliorating over time, but I can't tell you exactly the trajectory on that. In terms of the costs related to the transformation plan, the cost-out plan, we will continue to see those costs in 2026. I'm really pleased with how the plan has gone in 2025, how quickly we've managed to get cost out, but there's a lot more to do. The returns on this, obviously, though, are very, very good. So where we see an opportunity to take cost out of the business, yes, it will have a onetime cost for redundancies or restructuring, but we'll continue to pursue those. Thanks, Andy. Andrew Grobler: And just one further thing. Andy, thank you for however many years it's now been, and best of luck with whatever the future brings. Andrew Ransom: Appreciate it, Andy. Operator: The next question comes from Suhasini Varanasi with Goldman Sachs. Suhasini Varanasi: A couple for me, please. I just want to get some more color on the door-to-door pilot that you implemented in 2025. In the places where you implemented it, is it possible to understand the proportion of new sales that came from this new channel versus your traditional or digital channels? That's the first one. And the second one, I think Business Services has been delivering very strong growth despite the headwinds in vector control services in 4Q. Just wanted to understand the drivers behind this and your expectations for 2026. Andrew Ransom: Thanks, Suhasini. The door-to-door program, we're pleased with it. It did not make a major contribution to the revenue performance, relatively modest, but we were pleased with it. It's our first toe in the water for door-to-door. And as I've said before, it's become a big channel. I still think we're learning on the job with this. And I'm on the record of saying in the past, I've always had a slight concern about door-to-door that the customer retention rate on door-to-door isn't as strong as it is where a customer has reached out to find us. And that's proven to be the case. So retention rates have been lower in the door-to-door business, but absolutely in line with what we modeled. So we put a big tick against the program in 2025 as a success, but as a pilot. And we've included, I'd say, a relatively modest ambition in 2026. We're moving up from 25 territories to about 40 territories. If it continues to go well, and I don't see why it wouldn't, in '26. It will obviously be up to Mike and the team, but I wouldn't be surprised to see that getting potentially materially bigger in '27. So not a big contributor. We don't break it out separately. More to come for in '26. Let's see how we get on. If it continues to go well, I think that could be a much more material potential opportunity in the future. Business Services, yes, it's had a really good year actually off a less good year in '24. So you've got a little bit of comp benefit, I would say, '25 on '24. Just a reminder what's in Business Services, half of Business Services or just over half of Business Services is our distribution business, our products distribution business, which is really quite different from everything else. Everything else is a contract portfolio services business. The products business is selling pest products and turf and ornamental products to the industry and to individual consumers. That is a very lumpy business. It can go in waves, and we've had a very strong finish to the year in that business. But it's a good business. It's a good, well-run, solid business. So I don't see -- I'd be surprised if it grows as strongly in '26 as it did in '25, but I would say it's a good performing business, and it's going nicely. The other businesses are contract portfolio businesses. They are Business Service operations. So we have brand standards, which looks after franchise properties and goes and checks if they are living up to the standards that the franchise owner has set. That's a good business, running very nicely. We've won some big new recent accounts. So I would expect that business to perform pretty well in '26. We've got our plants business, Ambius, which is a nice business, doesn't grow at the sort of rates that Pest Control does. So that's a slower growth business, and I'd expect that to be similar in '26. So look, I think it's had a great year, slightly flattered by a poor year in '24, but solid businesses, well run, and I don't see why they shouldn't make a decent contribution in '26, but perhaps not at the stellar growth rates we've seen in '25 would be my best view. Operator: And the next question comes from Annelies Vermeulen with Morgan Stanley. Annelies Vermeulen: I had two questions, please. So firstly, on the rebranding of the retiring brands, I think you said a lot of those are one-branch businesses. So how many branches or brands does that involve? And what was the criteria for the decision on that segment specifically? Were there certain things that you look for in terms of signing those off? And then secondly, on the pay plans for the technicians, have you collected feedback on this from your existing technicians? And what was that based on? And if so, do you expect it to meaningfully continue to contribute to improving retention from here? And are there any additional costs associated with having to run 2 pay plans? Andrew Ransom: Thanks, Annelies. On the rebranding, those who've got a good and long memory will remember that we've got about 80 brands, give or take. So we're going to keep 30. So that means there's 50 -- I unfairly call them 1 horse towns. There are 50 brands. They're almost exclusively single city or single town brands. It doesn't mean to say we don't love them and like them, but it doesn't make economic sense to support those 50 individuals. So they are the 50 smallest. In aggregate, those 50 brands don't even represent 10% of the total revenues. So they will be retired quietly, slowly, gently over the next couple of years. And the criteria really was just based on scale. It's the ones that have got the least footprint, the smallest brands in small towns and smaller cities. And we tested brand equity as well. So we actually tried to work out how strong are these brands in the market. And the ones where we've got strong brand equity, we've retained and the ones where the brand equity is weak, we've taken a decision that it's better to migrate those to a strong brand equity local brand, whether that's Terminix or it might be one of the other 30. On the pay plans, no, look, there's not additional costs. There's the absence of some savings, but it's not material. And again, it's all fully costed in the plan. But as I said in the remarks, it's a very pragmatic decision. As I've explained several times over the last 2 or 3 years, we do have quite a distribution on a bell curve of pay for technicians and some have got legacy pay plans that look quite generous compared to the pay plans we've been operating across the business for some time now. And we've just taken a pragmatic decision that we will grandfather those. So if you want to stay on the pay plan that you're on because you like it, because you think it's generous, because you've worked out how to maximize your income, you can stay on it. So for the pay plan that we're moving to for the new people that joined from '27 onwards, we're essentially taking an existing pay plan that works quite well. We've modified it slightly. So there's absolutely no reason to believe it will be anything other than business as usual and a successful new pay plan. But it does mean we're running more than one pay plan for longer than we originally wanted. So there was some modest cost improvement originally planned to move to a single pay plan. We've foregone that saving. But as I say, relatively modest and included in our forward-looking plans. Annelies Vermeulen: Great. Thank you for the engagement, Andy. Best of luck. Andrew Ransom: Thank you. Cheers. Pleasure. . Operator: And the next question comes from Bill Kirkness with Bernstein Societe Generale Group. William Kirkness: I have two questions, please. Firstly, as organic growth rehabilitates, I assume there's some market share gains happening. And if so, can you just talk about where you see those? Are they quite broad-based? Or are they sort of focused with the smaller peers or larger operators? And then secondly, you mentioned the weather impact in Jan. I just wonder if that's so material as to disrupt this sort of improving momentum we're seeing in North America pest or whether actually you've got enough self-help to drive ongoing improvements regardless of the adverse weather? Andrew Ransom: Thanks, Bill. Look, market share in pest control is a notoriously difficult endeavor, there's about 18,000 to 19,000 pest control companies in the United States, and we're operating across hundreds of cities. So in any particular town, any particular city, customers have got massive choice. Typically, they've got a choice of 10 to 20 local players. And so trying to work out when we improve where the share improvement is coming from and vice versa is really, really difficult. You can only really see in a live dynamic way, whether you're winning or losing share on the big national account piece. And that isn't really what's driving our improvement in organic growth. I'd say it's broad-based, and it's coming essentially from improvement in our operations in residential and termite, and it's across multiple towns and cities. So really difficult to say where we're winning or where we're winning from. But most of it, I would say, is local movement as such. On the weather, look, the way it works in our North American business, the way the entire industry works in North America is you only get paid and you only recognize revenue once you have done the work. So if you get a weather event, as we saw for a few days in January and you can't get your colleagues out on the road to do their routines. If you're not visiting that customer, then you're not billing that customer and that revenue doesn't happen. But that doesn't mean that revenue has gone. What that means is you work like crazy in the month of February to catch up the visits that you missed in the month of January. And clearly, that's what we will have been doing in February to try and catch up that work as much as possible. February weather, we thought was going to be a bit wobbly as well. At one point, there was a couple of snow days. But in actual fact, the weather in Feb turned out fine in the end. So we draw attention to it simply because it happened. It was material. It wasn't just one day. It was a few days down the Eastern Seaboard. But we will be working very hard to catch it up through February and into March. So we're not flagging a major issue, but clearly some softness in the month of January. Operator: The next question comes from Nicole Manion with UBS. Nicole Manion: One on the price and volume split in North America piece. There are a few mentions in the release about the robust pricing environment. I think that's actually sort of fairly consistent with what you said earlier in the year. But is there anything to call out here in terms of the pricing piece still accelerating or just holding at a similar level? And then secondly, sorry if I've missed this, I think you can sort of back it out from the numbers on branches that you have given in the release and the presentation. But could you sort of just confirm the total sort of branch base number as of the end of 2025 in North America? Paul Edgecliffe-Johnson: Thanks, Nicole. So in terms of price and volume, we're still very encouraged by what we're seeing on price. We do manage to get inflation plus, which we've seen through the year. And as you've seen, the organic growth has been ticking up quarter by quarter. So we are continuing at a similar level on price and clearly doing better on volume. We're still losing a bit of volume if you look at that number that we printed in the fourth quarter, but it's improving sequentially. And in terms of the number of branches, well, we said that by the end of this year, we expect to get up to approximately 800, and that's going to include 220 of these sort of small local branches or satellite branches, which we're at 150 on. So the 70 delta is the change from 730-ish at the end of this year to 800-ish at the end of 2026. Nicole Manion: Got it. All the best, Andy. Andrew Ransom: Appreciate it. Cheers, Nicole. Thanks. Operator: And the next question comes from Jane Sparrow with JPMorgan. Jane Sparrow: Two questions, please. Just on the regional brands and the Terminix brand, it sounds like the improvement in lead generation is largely being driven by the reinvigorated regional brands. Can you perhaps comment on the main Terminix brand and how that is performing? And then secondly, of those branches where there's a high proportion of people sticking on the old plan, is there any noticeable divergence on KPIs on your new one pay scorecard versus the other branches where more people are on the new plan, please? Andrew Ransom: Jane. Yes. Look, the Terminix brand is doing well, but you're correct in your deduction that the regional brands must have done really well. They did do really well. Super pleased with the performance of quite a number of the 9 regional brands. And as I said in an earlier answer, a lot of that has come through really focusing on organic search performance, and that's what's given us the encouragement in part to go with the 30 brands. So that's excellent. But the big, big battleship brand, Terminix, is going well and has performed very nicely. We haven't seen as big percentage increases, but it is performing nicely. And there, we do things like market testing for brand recognition, unaided brand recognition. Can you name a pest control company in the United States? Can you name a pest control company that you would consider using if you had a pest control problem. And we've had a recent survey on that, and the data has come out very, very strong. It's a powerhouse brand, and it's got fantastic brand recognition. And so it's performing well, but we do support Terminix significantly with paid search as well as organic search. And over time, what we'll be looking to do, particularly as we get more into the AI generative search, we'll be looking to move further down the organic search for Terminix as well. So it's performing well, but a big part of the rebound in lead performance has come from those regional brands and the reason why we're supporting the 30 going forward. In the second question, that's way too early to say what that looks like in terms of branches with a high proportion of people on old pay plan, which is largely heritage Terminix brands and then performance of branches with people on newer pay plans. So it's too early to call that. What we have been doing, and Paul has made this observation a few times, we've been much more into the data than we've been before. We've got a Head of Data and Data Science. We've got a small data science team, actually not so small these days, analyzing data from branches and really trying to work out, well, where we've got fantastic performing branches versus poor performing branches, what are the factors that are contributing? Is it tenure? Is it pay? Is it geography? Is it commercial versus residential, all of those factors. And we're getting more insight into that, not ready to call it on that, but pay plan might be one element out of about a dozen, but there is no binary read across between old pay plan equals great performance, new pay plan doesn't. That doesn't exist. But the point of the question, what drives different branch level performances and what are those factors, that's really why we're super excited about the 360 single pane of glass. Mike and the team are going to have much better data over the next few years than we've certainly had for the last 2 or 3 years. But no correlation at this point to call out, Jane. Jane Sparrow: Okay. All the best for the future apart from the obvious foot front. Andrew Ransom: Yes. Well, I would say the same to you, Jane. I would say I hope Spurs don't get relegated, but I would be lying if I said that. So good luck, Jane. Operator: [Operator Instructions] And our next question comes from Allen Wells with Jefferies. Allen Wells: Most have been answered, but just two quick ones. Firstly, Paul, just on the $100 million cost saving plan. Obviously, we've had lots of moving parts over the last 12 to 18 months with the change in brand strategy, less closures, more satellites, changing brands, changing remunerations. As we sit here today, could you maybe take a step back and simplify down how we should think about the maiden building blocks of the $100 million and what will be delivered in 2026? That's the first question. And then maybe just secondly, just following up on the remuneration plan and the allowing of grandfathering, et cetera. Obviously, we're a couple of years into this process now. And what drove the need to change that at this stage? What have you seen? What were staff telling you? And why now? That would be my question. Paul Edgecliffe-Johnson: Thanks, Allen. So in terms of the cost plan, I'll happily take a step back and many of you will remember that we had our integration cost savings back in the day. That got a little bit difficult to track through. So when I came in, I said, take the 2024 cost base, there will still be inflation on that cost base, but we will take $100 million of that. And that's what we are tracking well against. So I've said that we've taken $25 million out of the cost base in 2025. We came sort of at that from a cold start. So most of the savings were manifested in the second half. So if you think about that, that means that on a run rate, it's more than double that, that we're achieving, we are investing back into the business. So whether it's the new capabilities we've talked about in pricing, in data, in many other areas of the business or the additional resources we're making available for marketing and for our additional branch network, that's all being funded. So it's a fuel for growth strategy, and we'll continue to do that. So we will tackle back-office costs, we'll tackle inefficiencies, we'll tackle spans and layers, all the normal opportunities that you would see in a very large-scale business to take cost out. There is significant opportunity. What we are doing is going after the right cost at the right time. Some we will leave a little because they might be a bit more disruptive to the business. So the focus at the moment has been on that back office cost, cost of finance of accounts payable, et cetera, et cetera, removing roles, offshoring roles, et cetera. But still lots to do, and we will get that $100 million out by the time we're reporting the 2027 results and to get the margin up to 20% plus. And look, in terms of the pay plans, the whole plan that we're coming up with in terms of how we simplify the go-forward integration is not to cause disruption. It's to settle people down. If there was some anxiety in technicians that perhaps they wouldn't like the new plan as much as their current plan, fine. They can just grandfather on to their current plan. We want people to get focused on doing their jobs well. We are an employer of choice in the industry, and that's the most important thing to make people go out and delight customers every day. And if there's something getting in the way of that, then we've removed that. So yes, that's our thinking. Operator: And the next question comes from James Beard with Deutsche Bank. James Beard: I've got two, please. Firstly, you noted the improvement in residential leads in the second half. I was wondering if you could talk through the time that you expect those to convert over and how that improvement in resi leads is splits between contract and jobbing. And then secondly, going back on to pay plans, again, you said no change to residential sales staff pay plans in '26. When should we expect any sort of change to residential sales staff pay plans, please? Andrew Ransom: Thanks, James. '27 is the answer to the second question. Sorry, I should have said that. In terms of the time it takes from lead into sale into install is a really good question. I mean, that's a proper pest control question, James, that's really down in the weeds, but it's really, really important. Because if it's residential, if you've got a mouse running around your kitchen, when do you want that solved? You want it solved immediately. So the speed from which we can take a residential lead, and the same is true of termite. You've just discovered termites munching away in your basement or your cellar, you want that sorted quickly. And what we've seen is why I mentioned the new KPIs, operational KPIs in terms of how quickly are we getting from the lead to the sale to the install and it only becomes revenue when you do the install. We've got to get faster and we've got to get more consistent at that. So we are now getting a good proportion of the leads converted, sold and installed within 24 to 48 hours. And that's the sort of time window we are giving ourselves because if customers are having to wait 3 days for their mouse running around the kitchen to be dealt with or for the worry of the fact that termites are in their house, for many customers, that's too long. On the commercial side, time is much less critical. Commercial customers, that's fine. You can come next week, you can come next month unless they've got an emergency. So yes, look, it's a really, really key part of the business. And if we look through 2025, what we saw, particularly in the second half was a -- if you go at the top of the funnel and come down, really good improvements in the leads coming into the business. So MQLs, which we track on a daily basis. We look forward to that. At 4:00 every afternoon, we get a daily report on MQLs. Really good progress on SQLs. So what percentage of MQLs turn into sales-qualified leads. So that's gone really, really well. Really good progress on sales. So the marketing leads are good leads. They're turning into sales leads. The sales colleagues are selling and then it gets less good in terms of how many of those sales actually get converted into revenue. So that's the critical thing that the team are now working on is the next challenge as they work from the top of the funnel and they're working through down into the middle and into the bottom of the funnel. So that's why these KPIs of what percentage of sales are getting turned into activity with the customer is super critical. So good, good progress, and I think that's where Mike will have the team focused this year is improving the conversion of actual sales into -- turning into revenue. In terms of the split between contract and jobs, I have explained many, many times, we're a portfolio business, portfolio, meaning a book of contract revenues, roughly 75% of the U.S. For group level, we're more about 80-20. But at North America, U.S. pest, it's 75% contract portfolio, 25% jobs. Really good performance on jobs, over 5% organic growth in jobs in the fourth quarter and improving performance on contract portfolio. But it's that contract portfolio that we've got to get into consistent, healthy positive quarter-on-quarter improvement. We've seen some of that now, but we've got to build on that. It's only when we get that and back to the question we had a while ago about price versus volume. We've got to get that volume growth consistently back into the portfolio. It feels like it's coming. It feels like it's building, but that's where we need to push on in 2026 and into 2027. Only when we get that plus the jobs, will we get the business back into industry levels of growth and beyond. But I'm really confident the team are all over this. But good performance on jobs and an improving performance on contracts as well. James Beard: And all the best in the future, Andy. Andrew Ransom: Appreciate it. Cheers. Thank you. Operator: [Operator Instructions] And our next question comes from James Rose with Barclays. James Rosenthal: I've got a few on commercial, please. In the release, this has been flagged as a particular growth area. I wonder can you expand on your growth plans there? Secondly, is it right that commercial branches will be running on new systems, so slightly different ones to resi and termite branches? And then finally, how progressed are you in bringing some of the innovations and technology you have in the international and European business into the U.S. And what's the opportunity there? Andrew Ransom: Thanks, James. Yes, look, good question. Rentokil is the undisputed global leader in commercial pest control. The Terminix acquisition brought with it a big business in residential and termite. But Rentokil, which operates in, what, 88, 89 countries is globally renowned for its commercial pest control business. So we should be punching above our weight in commercial in the United States. And we're not yet where we need to be in commercial. I think in part because we've had so much focus on getting the resi business right and getting the termite business right. We've recently taken the decision to give independent leadership of the commercial business to one person. We've got an individual who probably knows more about commercial pest control than just about anyone on the planet. He's an export from the United Kingdom. So we've given it dedicated leadership. In terms of the plan for the business, improving customer retention has to be at the first part of that plan. We still don't have retention where it should be. Customer retention in commercial should be very high typically. It needs to be higher. It is going to be -- the commercial business will all be on PestPac, which is the core system that Rentokil has been using for 3 or 4 years now in the United States. So there won't be any great surprises or drama there. So that should be relatively straightforward. And you're absolutely right to raise the question of innovation. I was chatting to Mike the other day, and he's been introduced to some of the really cool innovations that we've got in pest control and commercial pest control, in particular. And we've got some really interesting ones coming in the pipeline over the next year or 2. But we have manifestly been weakest at deployment of commercial pest control innovation, in particular, our connected solutions in the United States. And we're going to fix that. That needs to be a key priority for 2026. We need to see the U.S. really starting to adopt and drive innovation. That's why the individual that's in charge of the business has been chosen in part because he's got great experience with that innovation. So look, I think it's an area we should be punching above our weight given our global position. The systems are relatively straightforward in the innovation agenda. It just needs execution now. We've got the products. We've got the services. We've got the technology. We just have to execute. And it's easy for me to say, particularly as I'm about to walk out the door and say, over to you, Mike. It is easy to say, but that's what we do around the world. So I'm confident we will do that in the United States. Super. Thank you very much, James. I'm looking at Heather across the table here. Are we done with the questions? No more questions. Unbelievable. Thank you all very much. I can't believe that is it. As I said earlier, that was my 50th set of results, and I think quite a good one to sign off on. It has been an immense privilege to be CEO of this company for the last few years. We've gone from a reasonably unstructured conglomerate to a pretty focused world #1 in our chosen industries, which is a pretty cool thing, I feel. And it's been, as I say, a great privilege to be here, but the success we've made in the last decade or so is absolutely down to the people in the organization. I've always said if we get the colleague strategy right in Rentokil Initial, everything else follows. And I think we have got a wonderful culture in this company. So I do want to pay tribute to the 60-odd thousand colleagues and all the ones that went before them in creating the brilliant company that it is. And believe it or not, I do want to thank you a lot. It's been great dealing with you for such a long time, doing my best to answer your questions. Will I miss it? I think I probably will a little bit, but I'll get over it. So thank you all for your interest in the company. It's been great getting to know many of you. And for the next few weeks, I really look forward to handing over to Mike. We're having a great transition. He's having a lot of fun getting to know all the people around the business, and I'm sure he's going to be a great success. And personally, I think the company is set fair for long-term value creation, which is, at the end of the day, what it's all about. So thank you all for your support of the company, your questions and in many cases, your friendship as well. So thank you all very much indeed.

34天前Insight Analytics约5分钟阅读

FOXT.L 2025 Q4 财报电话会议

Guy Gittins: Good morning, everyone, and thank you for joining the Foxtons' 2025 Full Year Results Presentation. I'm joined, as always, by Chris Huff, our Group CFO, and we will answer any questions at the end of the call. This morning, I will take you through some of the highlights of 2025, provide an update on the London property market. Chris will then talk you through the financials, and I will finish with an update on our operational progress in the year, followed by some detail on the outlook for 2026. We delivered 5% revenue and EBITDA growth in the year, driven by incremental acquisitions revenue and operational progress in areas such as Lettings, cross-selling and financial services. These higher revenues offset the challenging operating environment, including a volatile sales market and cost headwinds to deliver flat operating profit. These results highlight the resilience of our business as a result of our strategy to position Foxtons firmly as a Lettings-led business. Our portfolio now exceeds 32,000 tenancies, which is up over 50% over the last 5 years, and these tenancies generate highly valuable reoccurring revenues. In 2025, these revenues generated over 2/3 of group revenue. We delivered 8% Lettings market share growth through improved landlord attraction, retention to build on our position as London's largest agent. And impressively, for a London-focused business, we are also the U.K.'s largest Lettings brand. We continue to execute our strategy on acquisitions. In 2024, our acquisitions in Reading and Watford made a significant contribution to revenue growth. Recent acquisitions in Milton Keynes and Birmingham create strong platforms in high-value markets that complement our London base. And operationally, we haven't stood still. The business has embraced a culture of continuous improvement and that mindset is cascading through the organization. We're focused on unlocking the next stage of growth by driving revenue and improving productivity and efficiency right across the business. On Slide 6, you can clearly see our strategy in action. The business has made great progress since I returned in 2022. Over that period, we've reset the strategy with a focus on Lettings-led growth, rebuilt our operational capabilities and delivered significant market share gains. The result is consistent year-on-year revenue growth with an 8% CAGR over the last 5 years. And with a sharp focus on costs, we've maximized operating leverage across the business. As a result, profit growth has outpaced revenue growth, delivering a 23% CAGR over the same period. So while profits were flat in 2025, I remain confident that we can return to our growth trajectory over the coming years. Turning now to Slide 8 and an update on the London Lettings market. On the chart on the left-hand side, you can see the number of renters per property back to 2021, highlighting supply and demand dynamics in the market. The market was resilient in 2025. Tenant demand remains strong and supply levels were healthy. We did see a softening in supply in the run-up to the autumn budget, reflecting speculation around potential tax changes for landlords. But with no major tax reforms announced, supply picked up in December and we delivered a record December for both deal volume and revenue. Rental prices were broadly flat as the market balanced flat supply and demand dynamics with affordability limits for tenants. Even so, the market has delivered a 7% CAGR since 2021. And over the medium term, we expect a return to inflation-linked rental growth. Over the next 2 slides, I will take you through an update on the Renters' Rights Act, one of the biggest changes in the Lettings industry over the last 25 years. On this slide, we've outlined the key provisions in the act. The Renters' Rights Act will come into effect on the 1st of May and brings England broadly in line with the rest of the U.K. There are several key changes. Fixed term tenancies will end, meaning all existing and new rental agreements will move to open-ended periodic agreements. Rent increases will become available to landlords annually, although will require evidence that any increase is in line with the market. This is a shift from the current system where rents are typically fixed for the duration of the contract. And local authorities will have stronger enforcement powers, including the ability to impose higher penalties for non-compliance. So what does this mean for landlords? The vast majority of landlords who provide good quality homes and want to keep good tenants in situ for as long as possible, very little changes to their investment. What does matter is staying on top of the new compliance requirements and working with an agent who can manage those requirements on their behalf. It's incredibly easy to fall foul of the legislation, which is fragmented across local authorities and often overly complex. Even the Chancellor was caught out last year, a reminder of just how difficult it is for ordinary people to navigate the rules. Slide 10. As these new requirements come into force, we expect to see some shifts in the market and opportunities for Foxtons. These fall across 4 main areas. The first is increasing the total addressable market for Foxtons as increasing numbers of DIY landlords opt to use an agent to let and manage their property. Over 50% of landlords fall into this DIY category today, highlighting the size of the opportunity ahead. The second is by increasing Foxton's market share of the Lettings market. We expect landlords will increasingly turn to high-quality agents who can protect their investments and navigate the growing compliance burden. And as the leading agent in our markets, this creates significant opportunity to grow share and also the cross-sell of high-margin property management services. Thirdly, we expect more portfolio stability. With fixed terms removed, we expect longer occupancy lengths as tenancies become more stable. Annual inflation-linked rent increases are also expected to become the norm, creating a more predictable income profile. And fourthly, we expect the estate agency sector to consolidate further. The industry is still highly fragmented with 66% of the market made up of small independent agents. The new regulation will place real pressure on these businesses requiring significant investment in people, training, technology and compliance. Many simply won't be able to make these investments, accelerating consolidation. This dynamic plays directly to our strengths. We are well positioned to lead consolidation in our markets and have a strong track record of delivering attractive returns on capital when we do so. Finally, structurally, we anticipate little change in the size of the sector to remain broadly stable over the medium term based on the experience of similar legislation in Scotland. Turning now to Slide 11 and an update on the London sales market. The sales market was highly volatile in 2025. Across the year, volumes in our London markets were up 2%, in line with our own performance. Q1 volumes were around 30% higher than Q1 2024, driven by a large number of first-time buyers competing ahead of the stamp duty deadline. As expected, Q2 volumes were materially lower, reflecting the pull forward of the transactions into Q1. In the second half, activity was impacted by the delayed autumn budget. The wider economic uncertainty and weak consumer confidence was compounded by the intense speculation around potential tax changes, including the abolition of stamp duty and the implementation of mansion taxes for most properties in London, which really dampened the market. You can clearly see the impact on buyer demand on the bottom chart. New offers agreed, ahead of the budget were subdued, sitting at levels similar to those seen in 2023 shortly after interest rates spiked following the September 2022 mini budget. And with the average transaction taking 4 to 5 months to complete, this slowdown in late 2025 will naturally impact volumes in the first half of this year. In the end, the actual policy changes were fairly limited. Stamp duty remains unchanged and continues to act as a major barrier to improving affordability for buyers. The new mansion tax coming into effect in 2028 only impacts properties over GBP 2 million. While this may create some drag at the very top end of the market, that segment represents only a small share of transactions. This change reinforces our strategic focus on the volume segment of the market, particularly properties priced below GBP 1 million where Foxtons is strongest and where volumes are more resilient. Looking further ahead, it's worth noting that buyer demand in early 2026 is still being held back. For vendors looking to sell in this environment, pricing is absolutely crucial. There are buyers in the market, but they are focused on the right properties at the right price. And when we see homes coming to market competitively priced, buyer interest and offer levels remain strong. I'll now pass over to Chris for a run-through of the financials. Christopher Hough: Thank you, Guy, and good morning, everyone. 2025 saw the group deliver revenue growth despite a challenging operating environment, highlighting the financial resilience we've built into the business over the last 4 years. Financial highlights are set out on Slide 13. Incremental revenues from acquisitions and improved cross-selling of high-value Lettings property management services drove a 5% or GBP 8.6 million increase in revenues to GBP 172.5 million. We delivered GBP 22.2 million of adjusted operating profit, which is flat on the prior year. This represented a robust performance in the context of a challenging operating environment due to a volatile sales market and external cost pressures, in particular, from employer national insurance and living wage increases. Adjusted operating profit margin decreased by 60 basis points to 12.9% as margin growth in Lettings partially mitigated some of these external cost pressures. I'll provide more detail in the segmental reviews. Adjusted EBITDA, which is defined on the same basis used to calculate the group's RCF covenants grew by 5% to GBP 25.3 million. Statutory profit before tax was GBP 16.9 million and net free cash flow grew by 14% to GBP 11.2 million. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, unchanged from the prior year. The group also bought back 5.5 million shares in the year via the buyback programs announced in April and September. Now turning to Slide 14, which provides an overview of the income statement and key changes. Group revenue increased by 5% to GBP 172.5 million, reflecting 5% growth in Lettings revenue, 6% growth in sales revenue and 10% growth in financial services revenue. Group revenue continues to be underpinned by Lettings revenue, which represented 64% in the year. Lettings revenue is non-cyclical and recurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were GBP 3 million higher, reflecting additional acquisition-related headcount, increased revenue-linked staff commissions and GBP 1.1 million of additional employment costs. Contribution margin was flat at 64%, including margin growth in Lettings. Overheads were GBP 4.2 million higher, primarily driven by incremental acquisition operating costs, targeted marketing investments, higher employment costs and GBP 1 million of non-recurring overhead costs. Depreciation, amortization of non-acquired intangibles and share-based payment charges were GBP 1.2 million higher. Together, these movements delivered adjusted operating profit of GBP 22.2 million. Profit before tax was GBP 0.6 million lower than the prior year, reflecting broadly flat adjusted operating profit and GBP 0.5 million higher amortization of acquired intangibles. Cost control continues to be high on our agenda. This included delivering a material cost saving by negotiating an early exit from the Chiswick Park head office lease and rightsizing head office space. This move unlocks GBP 1.5 million of operating cost savings from January 2026 onwards, providing some protection from cost pressures in 2026. Through 2026, we are redoubling our focus on costs to protect profitability in the context of current market conditions. Turning now to Slide 15 and performance in Lettings. Lettings revenue grew by GBP 5 million or 5% to GBP 111 million as a result of GBP 5.2 million of incremental revenues from Lettings acquisitions in Reading and Watford, GBP 0.6 million higher like-for-like revenues, which reflects property management revenue growth with a like-for-like increase in uptake of 7% delivered in the year. This progress will continue to benefit the group in 2026 as revenues annualize and GBP 0.9 million lower interest earned on client monies due to lower Bank of England rates. Revenue per transaction increased by 1%, reflecting the improved cross-sell of property management services, partially offset by the move into higher volume commuter markets and the lower interest on client monies. Contribution grew 6% to GBP 82.9 million off the back of revenue growth, whilst the contribution margin grew by 100 basis points, which is primarily due to margin accretive property management and cross-sell of related ancillary services. Adjusted operating profit grew 9% to GBP 29.8 million and adjusted operating profit margin grew 100 basis points to 26.9%, reflecting the strong contribution margin and the delivery of acquisition-related synergies. Moving to Slide 16, where we have presented detail on the returns from our Lettings-focused acquisition strategy. We have an industry-leading operating platform that delivers high levels of returns from acquisitions by delivering high levels of landlord retention, organic growth from acquired databases and cost synergies. Our operating platform is highly scalable and can power a significantly larger portfolio than we operate today for limited incremental cost. Historic acquisitions in London deliver EBITDA margins above 50% and return on invested capital above our 20% target rates as we maintain a tight focus on ensuring returns through a portfolio's life cycle. Acquisitions are our primary route into new geographies, combining acquired Lettings income to underpin profitability with organic Lettings and sales growth. Under our buy, build and bolt-on strategy, we focus on acquiring platform businesses in high-value markets and enhancing them through high ROI bolt-ons, targeting aggregate returns of at least 20%. In October 2024, we acquired 2 leading businesses in Reading and Watford, completing the group's first acquisitions outside London. Both have performed well, delivering organic revenue growth and first year returns on capital above the target level of at least the group's weighted average cost of capital. The Watford business was integrated onto Foxton's operating platform in 2025 with Reading planned for 2026. Returns are expected to grow as synergies are delivered in Reading and be annualized in Watford. In February 2025, we completed the bolt-on acquisition into the Watford platform. This bolt-on was rapidly integrated and is delivering annualized returns on capital above our 20% target, which highlights the growth we can rapidly deliver in new markets. In January 2026, we acquired leading businesses in Milton Keynes and Birmingham. Over the next 12 to 18 months, we will focus on integration, deploying the Foxtons toolkit to drive organic growth, deliver synergies and support further high ROI bolt-on acquisitions. Moving to Slide 17 and an update on the sales business. Sales revenue grew GBP 2.7 million or 6%, reflecting GBP 3.4 million of incremental revenue from our Reading and Watford acquisitions and GBP 0.8 million lower like-for-like revenues. On a like-for-like basis, revenue was 2% lower, reflecting 3% growth in transaction volumes, broadly in line with the market and 5% reduction in average revenue per transaction, primarily reflecting the higher proportion of lower value first-time buyer properties transacting in Q1 ahead of the March stamp duty deadline. In total, volumes were 19% higher and revenue per transaction was 11% lower. The reduction in revenue per transaction primarily reflects the expansion into commuter markets, which typically display lower revenue per transaction, but higher volumes. The acquisitions in Reading and Watford delivered 9% revenue growth in the first year of Foxtons' ownership, driven by market share growth. Average market share across Foxtons London markets was robust at 4.8%. The adjusted operating loss in sales increased to GBP 5.7 million as the profitable contribution from new commuter town acquisitions only partially mitigated increased operating costs and a strategic decision to maintain bench strength despite weaker H2 market conditions. Improving the profitability of sales remains a key priority for us, and Guy will provide more detail later in the presentation. Moving on to Slide 18 and Financial Services. Revenue in Financial Services was 10% higher at GBP 10.3 million. Specifically, volumes were 13% higher, reflecting the stronger refinance pipeline, higher estate agency cross-sell rates and improved adviser capacity and productivity. 2% reduction in average revenue per transaction, reflecting the change in product mix towards refinance activity. In the year, 42% of revenue was generated from non-cyclical refinance activity and 58% of revenue from purchase activity and other ancillary sources. Adjusted operating profit was broadly flat, primarily reflecting investment in fee earner headcount in H1 as we scale up the business. New fee earners supported revenue growth in the year and typically break even around the 12-month mark. Moving now to Slide 19 and cash flow. There was a 14% increase in net free cash flow to GBP 11.2 million. The operating cash to net free cash flow bridge on the left-hand side shows the key items of note. Operating cash before working capital movements was GBP 36.4 million, 3% higher than the prior year and including GBP 1.9 million of non-underlying cash outflows primarily relating to closed branch costs. There was a GBP 4.4 million working capital outflow, reflecting the ongoing transition to annual billing across the Lettings portfolio to improve competitiveness and landlord retention and position the business ahead of the Renters' Rights Act becoming effective. We expect the portfolio to be fully transitioned to annual billing by 2027 with an estimated GBP 10 million working capital investment across 2026 and 2027. The group paid GBP 4.3 million of corporation tax and made GBP 13 million of lease liability payments in the period. GBP 3.5 million of CapEx spend primarily relating to our new H2 fit-out costs and internally generated software development. Looking at the opening to closing net cash bridge on the right-hand side. Net debt at 31st December was GBP 16.9 million. This reflects GBP 11.2 million of net free cash flow, GBP 5.3 million of acquisition spend and GBP 9.1 million of total shareholder returns. In the year, we increased the RCF to GBP 40 million and extended it by 12 months to June 2028. The interest cover and leverage covenants have remained unchanged. And at the year-end, the leverage covenant ratio was 0.7x, which was below our covenant limit of 1.75x. And the interest cover ratio was 24x, which was above our 4x covenant. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, which is unchanged from the prior year. The proposed dividend will be paid on 15th of May, 2026 to shareholders on the register at 10th of April, 2026, subject to shareholder approval at the AGM. Moving to Slide 20 and an overview of the group's capital allocation framework. The framework aims to support long-term growth and deliver sustainable shareholder returns through organic growth, making accretive Lettings-focused acquisitions, paying a progressive dividend whilst maintaining strong dividend cover and delivering other shareholder returns, namely share buybacks. We continually evaluate the effective uses of capital, including comparing acquisition returns versus those achievable through share buybacks. We consider factors such as expected return on investment, earnings per share accretion, borrowing capacity and leverage. The group seeks to utilize its balance sheet and revolving credit facility to best effect and to maintain a leverage ratio of net debt to adjusted EBITDA of less than 1.25x at the year-end position. I'll now hand back to Guy, who will take us through the operational update. Guy Gittins: Thank you, Chris. Over the next 2 slides, I will lay out operational progress we've made in our business areas and our focus for 2026, followed by the operational upgrades we've delivered across the group. In Lettings, we continued to make progress with our organic growth strategy, delivering against our formula of growing the portfolio and driving the cross-sell of high-margin services. Over the year, we increased our London market share by 8% and maintained high levels of stability across our tenancy portfolio. Revenue and margin growth was supported by a 7% increase in cross-selling property management and the proportion of the portfolio that is actively managed now stands at 43%, up from 32% at the end of 2021. Our focus over 2026 is to continue delivery of our growth formula to continue to grow this highly valuable business. Organic growth is complemented by acquisitive Lettings growth. In the year, we delivered good returns from our Reading and Watford acquisitions with returns above our initial targets. In Watford, we have integrated the business into the operating platform, rebranded to Foxtons and boosted with a bolt-on acquisition that is delivering returns at our 20% target level. We are now the largest Lettings agent in Watford with more than 3x the market share of our nearest competitor. And in January 2026, we expanded into 2 new complementary high-growth markets in Milton Keynes and Birmingham. Milton Keynes is well connected to London, home to a large number of corporate headquarters and has one of the highest levels of GDP per capita in the U.K. Birmingham has undergone a significant regeneration and continues to attract major investments, including a growing number of banking and professional services roles, a trend set to accelerate with the opening of HS2. Both cities have strong pipelines of build-to-rent and new homes developments. And we have already linked these businesses with our corporate customer base. These acquisitions are not part of a plan to become a national agent. This is a targeted strategy focused on markets where Foxtons can create real value. Our priority over the next 12 to 18 months is maximizing returns from these deals through the delivery of organic growth, cost synergies and high return on investment acquisitions. Moving to sales. We operate through a highly volatile market last year, and our market share held broadly flat. In November, we appointed a new Managing Director, James Stevenson, who has a fantastic track record of delivering turnarounds over his 20-year career at Foxtons. And we now have an operational plan to reposition the business to reflect current market environment, and in doing so, improve profitability. It's worth remembering that whilst we are a Lettings-focused business, sales is an integral part of our full service proposition and is highly complementary with Lettings. Our offer is built around supporting customers through their entire property life cycle and sales plays a critical role in helping landlords expand or reposition their portfolios. By delivering this full service approach across sales and Lettings, we significantly strengthened landlord loyalty, enhanced revenue repeatability and increased customer lifetime value. And as Chris highlighted earlier, sales delivered a positive financial contribution before the allocation of shared costs. In Alexander Hall, our Financial Services business, we delivered a 10% revenue growth driven by increasing the operational productivity of our advisers and improving the efficiency of our processes. This included a 13% uplift in mortgage deals per adviser and a 5% improvement on the conversion of leads to mortgage applications. Continuing to build on these upgrades will support further growth. And underpinning all of this is a consistent focus on cost and productivity to maximize the operational leverage across the business. As Chris mentioned, we forensically review our cost base on an ongoing basis, taking costs out wherever we can, including our recent HQ move, which generated GBP 1.5 million of annualized savings. And we're focused on leveraging our technology stack and data capabilities to drive efficiency right across the organization. Turning now to Slide 23. Over this slide, I will present the key group-wide operational upgrades we're delivering to support our growth plan. Customer lifetime value is a key focus for the business. We aim to support customers through their property life cycle, becoming their trusted property partner. And in doing so, we can generate high-quality recurring revenues and earnings. To do this, we need to deliver best-in-class service. We've made significant progress in this area, and I'm pleased to say that we now achieve customer satisfaction scores of over 80%, a double-digit uplift since we launched these programs. In 2025, we continued to enhance the customer experience by further embedding our real-time feedback system across the full customer lifecycle, enabling us to measure service throughout the journey and resolve any issues quickly. Combined with AI-powered sentiment analysis, this allows us to identify the drivers of exceptional service. It embeds insights into training and delivers consistently high standards. Supporting this focus on service are our brand and marketing initiatives. Our focus this year was on strengthening customer attraction and retention in a competitive market. Foxtons has always had a distinctive level of brand awareness. We do things differently. And in 2025, we built on that by launching an exclusive partnership, which makes us the only U.K. estate agent where customers can earn Avios points. It's a differentiated position designed to attract new customers, reward loyalty and drive uptake of our higher-margin services. Turning now to our technology and data capabilities. Our in-house technology and data stack creates the flexibility to develop and deploy AI and data solutions at pace without the constraints of an off-the-shelf system. Our approach is very clear. We only invest in AI where it makes a meaningful difference to our financial results. It's not AI for AI's sake. In 2025, we made strong progress. We expanded our AI-driven sentiment analysis, giving us far deeper insight into customer interactions. We also advanced our data-led lead scoring models, ensuring our people focus their time on the highest value opportunities. And we introduced AI-powered training tools that help new agents reach their full performance faster. Together, these improve efficiency, drive higher productivity and ultimately, enhance profitability. We will continue to identify areas across the platform where embedding AI can deliver an operational and financial impact. These upgrades are a key part of the continuous improvement culture that now runs throughout the entire business. Finally, and most importantly, our people and culture. It is my fundamental belief that a state agency is a people business, having the right talent, developing great leaders and embedding and really demonstrating our core values is critical to our success. This year, we worked with external partners to assess our strengths and opportunities, enhance our employee proposition and introduced our Getting It Done. Together. framework to align recruitment, development and well-being across the organization. The response from our people has been really encouraging. 81% believe Foxtons is well positioned to succeed over the next 3 years, and 85% believe we truly value diversity and build diverse teams. We remain committed to building a collaborative culture that enables our people to deliver exceptional service for our customers. And finally to Slide 25 and the outlook for 2026. In Lettings, we expect the market dynamics we saw throughout '25 to continue with consistent levels of stock and strong tenant demand. The Renters' Rights Act represents a significant growth opportunity for Foxtons as landlords increasingly need professional support to navigate the new regulations. In addition, the 2 acquisitions we completed in January 2026 will generate incremental Lettings revenues. Our plan for 2026 is focused on maximizing the returns from the deals we have completed over the last 18 months, driving organic growth, delivering cost synergies and progressing targeted bolt-on acquisitions to strengthen our market positions. Turning to sales. Buyer activity continues to be held back by weak consumer confidence, macroeconomic concerns and policy decisions. In response, we are repositioning the business for the current market conditions to improve profitability. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and cost continued discipline. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and continued cost discipline. Importantly, profitability across the group remains underpinned by our substantial base of non-cyclical and reoccurring Lettings revenues, giving us confidence in our ability to deliver against our growth strategy. That concludes the formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks. I'll now pass to the operator for any questions you may have. Operator: [Operator Instructions] Your first telephone question today is from Robert Plant of H2 Radnor. Robert Plant: Three questions, please. Post the acquisition in Birmingham -- the acquisition is in the center of Birmingham. How much of the Birmingham market are you targeting geographically? Secondly, the period of repositioning in sales, how long do you think that will take? And lastly, what are the working capital implications of the Renters' Rights Act? You mentioned investment in working capital. I'm sure there's a difference between when you collect and when you bill for sales. So, can you just talk us through that, please? Guy Gittins: Well, thank you very much for those questions, and welcome, everybody. Thanks for tuning in. Firstly, if I talk about Birmingham, the business that we bought as we do when we're targeting new locations, we always use data to lead the decision and we look for high-volume, high-value rental markets. And obviously, Birmingham is a superb area for this. There's also still, we believe, good growth left in the Birmingham market, both for sales and for Lettings. So, really highlights the reasoning behind looking outside of London as well in conjunction with our continued focus on talking to businesses within London that would be bolt-on. The business that we bought is a Central Birmingham specialist with leading market share within the city center. And we are talking already to other agencies in the nearby vicinity that would allow us to continue our bolt-on strategy to quickly grow revenues and continue to grow that portfolio of Birmingham properties to give us a slightly larger geographic area. So yes, always, we look to buy the hub, which is the business that we bought FleetMilne, and we are wanting to add to that to turbocharge the growth as quickly as possible, and that helps us really drive those profits in the years after. Second question was around repositioning of sales and how quickly does that happen. We're fortunate, as you know, to have huge amounts of data, huge volumes of data and using the data platform that we've built over the last couple of years. Chris and I, and the rest of the senior leadership look at this data on a daily basis to really give us a view of where we think the sales market is heading and allows us to be able to dial up or dial down resource in certain areas. And last year is a great example of that. Prime Central London, the volumes were considerably subdued. However, in our Southwest offices, the market was actually really quite buoyant and that allowed us to be able to apply resource meaningfully to grasp the opportunity in those higher volume areas. And that's really what our plan will be across this year as we sit here looking at the outlook today for what we feel the rest of the sales market will look like in London is different to how it looked 6 months ago and different to how it looked 3 months ago. So, that is an always-on process, but we're perhaps a little bit less excited certainly looking with some of the things that are happening in the Middle East about what may happen around inflation and interest rates. So, we're just making sure that we're always ahead of that. I'll pass on the RRA -- the Renters' Reform Act question over to Chris. Christopher Hough: Yes. The question was around our working capital changes in this area. So, Renters' Rights Act, that will see the removal of fixed terms tenancies. And what we'd expect to see there is an average reduction in the billing period start those tenancies. So, we're making a change here to improve our competitiveness and indeed increase landlord retention. And we've been reducing our billing terms since 2023 as it happens. We estimate that over the course of 2026 and 2027, there's a GBP 10 million investment in working capital required as we fully transition our portfolio. Transitioning portfolio takes time, hence, why there's a 2-year period there. Operator: The next question is from the line of Greg Poulton from Singer Capital Markets. Gregory Poulton: Three questions from me, please. Firstly, obviously, the move to more fully managed tenancies has been an important trend for the Lettings business. Could you just talk about the level of uplift in fees you see from a fully managed versus a letting-only tenancy? And second, can you talk about the expected cadence of acquisitions for the rest of the year? I'm not asking for a forecast on that, but just to sort of guide as to what we could expect to see throughout the remainder of the year? And thirdly, linked to that, how much capital expenditure do you think you will allocate to acquisitions in the remainder of the year? Guy Gittins: All right, Greg. Thanks for those questions. Yes, look, we're really proud of the improvement that we've seen over the last 2 or 3 years with the upsell of our property management service, and that really has come from a fantastic cross-business effort, particularly driven by the Head of Letting working very closely with the Head of Property Management. And that means that we've seen a 7% uplift in that cross-sell of property management services, which ultimately delivers around about a 6% additional fee, which is charging for that premium fully managed service. And of course, as we extrapolate that over a longer period of time, that 7% uplift of the volume of services that we're transferring into that premium service for new deals over time massively helps us grow the overall number of properties that we have under management. And that really is a key KPI that we drive within the business and lots and lots of remuneration is linked to that, lots of the KPIs we talk about across the business is focused on it. So, we're proud of that movement, and it's certainly a very big focus across the business. And I think that as we've mentioned, the change into the Renters' Reform Act does, we believe, increase the likelihood of non-managed landlords wanting to take the fully managed service. As we saw and we mentioned in our presentation, it's really easy to fall foul of some of the rule changes and you need a very, very capable agency who's got large teams of compliance, making sure that your property is fully compliant and looked after at every stage along this journey. And that's why we are seeing more people choose that service through Foxtons. Acquisition cadence, look, we've made 2 great acquisitions at the start of this year. We're watching very carefully what the outlook looks like. And of course, our capital allocation is always very much under review, both with our Board and internally. I'll perhaps let Chris talk to that a little bit later. But acquisitions very much are a function of opportunity. We're talking to agencies both inside London and outside London. And really, we want to make sure that we make the right acquisitions, not just any acquisition. We're pleased with the 2 acquisitions outside of London in Milton Keynes and Birmingham that we've made at the start of this year in January. And really, I suppose my preference now is to try to make sure that those new acquisitions are settled in that we can drive the synergies, that we can make them more profitable and hopefully, find some bolt-on acquisitions to make in the near future. Christopher Hough: Finally, Greg, from a quantum perspective on CapEx and acquisitions, we've done 10 already, and I'd be thinking about that 15 number we put out there previously. So, I expect that additional quantum being the target and the ambition for the remainder of '26. Operator: [Operator Instructions] The next question comes from Adrian Kearsey from Panmure Liberum. Adrian Kearsey: I will say, thank Rob and Greg, for asking the questions I was initially going to ask. But in terms of sales, you've got an average property price last year of GBP 574,000. Can you perhaps sort of give us an indication of the range of the types of properties that you sell to give us a sense of how broad or how narrow your market focus is? Back to also to the second question. Back to Birmingham, currently one site. In order to take advantage of that huge opportunity in Birmingham, when you make further acquisitions, do you think you'll end up having multiple offices in Birmingham? Or will you have a single office in the center? Guy Gittins: I'll take the first question around sales. Our average price around GBP 574,000, look, we want to be in the volume market across the markets that we operate in. And the reason for that is we know that they're more resilient, and we are a volume efficiency machine at Foxtons in sales and particularly in Lettings as well. The spread of properties that we sell, we actually have a minimum fee of GBP 6,000 in London. Now, that means that we don't end up selling many short lease garage spaces, which we were doing a little bit of prior to my arrival. But we do across all price points. I mean, we've just agreed something, a bulk deal in an area in the east of London that's nearly GBP 10 million. And so we're operating in all markets. But absolutely, our sweet spot is that volume piece right in the middle of where the average pricing is across London, and that's really by design. Now, we have been making some efforts to try to increase over time the average. And when I say increase, just a very small increase in that average sales price does make a meaningful difference to us, but we don't want to ever turn our back on that volume market. And the second question was Birmingham one site or multi-sites. Well, I think certainly today, we view the value, the biggest opportunity is to continue to grow from the center to the more affluent areas of the residential areas around Birmingham. And as I've mentioned, we're talking to multiple agencies around those locations at the moment already. And we can also bring, of course, the Foxtons Operating Platform, which really does help grow the businesses. And we've seen fantastic examples of that in both Watford and Reading last year where we've actually delivered some really solid growth once we've layered in the kind of Foxtons' toolkit of marketing, brand productivity and operational excellence. And that doesn't happen overnight. That takes a little bit of time to bed in, and that's what we're very busy doing with both our business in Birmingham and in Milton Keynes at the moment. Operator: There are no more questions from the telephone anymore. We can now read the questions from the webcast. Unknown Executive: First question is from Robin Savage at Zeus. It says, the impact of the Renters' Reform Act this year is interesting. Are there any early market signals that we or any other lettings agencies are seeing that might indicate an uptick in DIY landlords moving towards professional lettings management? Guy Gittins: Great question. Thank you, Robin. Yes, absolutely. Look, we've seen this trend starting to kind of infiltrate the London market over the last 18 months really. We've seen obviously market share increases for Foxtons, and we've seen this increase in our property management cross-sell. And as I've mentioned at the start, that's been a major focus of what I wanted the business to deliver over the last 2 or 3 years, and I'm really proud of the delivery of that. And I don't see it slowing down. We really do offer and believe the offering of the service that we can give to our landlords is best-in-class. And what we are trying to do is deliver the very best service for our landlords, but also making sure that they remain fully compliant and clear of any issues that may be happening and being ahead of those legislation changes as we know they can come in very quickly and catch people out. So, very pleased with what that looks like and definitely are seeing that within London. Unknown Executive: Second question from Robin. Foxtons has built a significant competitive advantage through decades of structured proprietary data and a highly analytical approach. How do you see advances in artificial intelligence and large language models further strengthening that advantage, both in how Foxtons generates market insights and how it manages the business and delivers differentiated services relative to competitors with less developed data capabilities. Guy Gittins: Great question. Thanks, Robin. Well, you've been a beneficiary of coming and seeing the operation in-person here at Foxtons. And I'm sure that you'd agree that there isn't another data system, there isn't another database like Foxtons has across the London market and as far as we're aware, across the whole of the U.K. market. And we've been really utilizing that database, cross-referencing it already with early machine learning over the last 12 months and some AI functionality to help us improve productivity. Great example of that is we have 100 people who sit at Foxtons' head office who are calling into a huge database of nearly 4 million people to drive new listing opportunities. Now the old way of doing that would be just randomly picking a street and calling from A to Z, but our new system uses AI and has machine learning so that it filters up to the top and surfaces the most likely leads that we think we'll convert in the next 3 months. And that's had a meaningful impact on the productivity of that team. We're also using AI to help us improve the speed of new recruits under training to get them to be able to build for the business quicker by helping them through the training flow where we've got AI platforms that have really improved that speed of service during that initial training period. And we're using AI in other areas as well. And as we said in the presentation, we're not -- we are definitely not using AI for AI's sake. It has to have a meaningful impact to the bottom line. And we keep a very, very close eye on lots of technologies that lots of people are working very hard to try to deliver across the industry. And because of our structure of that data and the way that we've built the database, we're able to loop in these functionalities very, very, very quickly. Thanks for that question, Robin. Unknown Executive: One from Andy Murphy at Edison. Given the number of recent deals outside London, are you no longer focusing on London M&A? Guy Gittins: Great question. We absolutely are still very focused on London opportunities. But given where we've seen the growth in the marketplace when we were presented with the deals that we could have done this year and last year, it just totally made sense to look at the Birmingham and the opportunities in Milton Keynes. But it doesn't stop us from looking and continuing to speak to other agents as roll-ins within the London environment. But as I said before, they need to be the right deal for Foxtons, and we need to be paying the right prices for them. And yes, that search is still an always on. So, certainly not turning our back on London-focused acquisitions. Thanks, Andy. Unknown Executive: One from Robert Sanders at Shore Capital. What are the multiples in the market at the moment for Lettings portfolios? And how much consolidation do we see likely in the sector after RRA? Guy Gittins: Yes. I think the RRA opportunity is more likely to create even further consolidation. But actually, I'll let Chris take the questions on the multiples. Christopher Hough: Yes. The multiples really depends where we're buying, what we're buying, the balance of sales versus Lettings. But broadly speaking, a range from 2 to 3x Lettings revenue is a sort of multiple we're seeing, which is actually pretty consistent with what I see in both '24 and '25. So, there's been no significant change there. And for us, now we've got 2 new platforms, which we're building into, i.e., Milton Keynes and Birmingham. That gives the bandwidth and the opportunity to launch into new areas, which is really exciting for us. Unknown Executive: And a question on the sales market from [ Donald ]. How impactful is the lack of overseas buyers in London and the alleged exiting of high-net-worth individuals from the London sales market? Guy Gittins: We touched on earlier, our average sales price across London is GBP 574,000. The super prime market, we know very clearly, particularly last year, felt the pain of the exiting of high-net-worth individuals and certainly, lots of reports, as I'm sure you will have read from the super prime agents really having a torrid year last year. Did that impact our volume market? I mean, ultimately, it does have a very small effect on the movement up and down chain. But the reality is that's why we are in the high-volume market because we know that those transactions overall are less impacted by these big swings of where Netwealth may decide to spend their money this summer versus the next summer. So yes, we haven't been impacted by it. But certainly, super prime agencies, we know really felt the pinch last year. Unknown Executive: And the following question, what are the -- essentially, what's the catalysts that are required to drive volumes in the sales market? Guy Gittins: Well, ultimately, the biggest barrier to returning back to those 145,000 sales transactions that we historically used to see going back before the financial crisis is stamp duty. Last year, we think there were somewhere in the region of 90,000 sales transactions. The year before that, probably 85,000 sales transactions. We always believe that the market would return to its 5 or 6-year average of around about 100,000 sales transactions, but that looks very unlikely this year. And that's the reason that we are ahead of the market really thinking about what we want to do with the sales business this year so that we are rightsizing everything across all of the different regions that we're in. But if you also look at sales being agreed this year already, we know that year-to-date, the number of sales in London is circa down in total around about 6%, whereas pretty much the rest of the U.K. market is up year-on-year on sales agreed. So hopefully, another good reason to point to our acquisitions outside of these locations. Unknown Executive: And that's the end of the questions from the web. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Guy Gittins for any closing remarks. Guy Gittins: Firstly, thank you for joining us this morning. As you know, Chris and I will meet many of you over the coming weeks. We are really focused on continuing to deliver the medium-term targets that we set out in our CMD in last year. We've got a very good business. We've taken a lot of costs out last year, and we're laser-focused on making sure that we can continue to pull all of the different growth levers to achieve those targets in the medium term. I appreciate everybody joining the call this morning, and look forward to seeing you all soon.

34天前Insight Analytics约5分钟阅读

HRPMF 2025 Q4 财报电话会议

Antti Vuolanto: Good morning, and welcome to Herantis Pharma's Full Year 2025 Results Webcast and Business Update. My name is Antti Vuolanto, I'm the CEO. And together with me, I have here CFO, Tone Kvale. During the webcast, we will review the key highlights of the past year and provide you an update of the business and R&D. After the presentation, we have a Q&A session, and you are welcome to submit questions throughout the webcast. With that, let's get started. And first, the necessary forward-looking statements and then a short reminder of what Herantis Pharma is and then we go into the last year's highlights. So Herantis Pharma, we are a clinical-stage public company listed here in Nasdaq First North Growth Market, Finland. And with our lead asset, HER-096, we aim to stop the progression of Parkinson's disease by protecting dopamine neurons from further degeneration and also support their functional restoration. We have just also announced that we have completed a Phase I program. We have solid safety data. We have shown efficient brain penetration. We have strong biomarker data, showing biological response in Parkinson's patients. And basically, we are ready to start a Phase II efficacy signal finding trial. So just a reminder what HER-096 is. It is a first-in-class peptide targeting key drivers of Parkinson's disease, specifically modulation of the unfolded protein response pathway, so proteostasis. And we have also shown a robust impact on mitochondrial function as well. HER-096 design is based on a protein, a neurotrophic factor called CDNF or cerebral dopamine neurotrophic factor. And we have shown in preclinical settings that, yes, we capture the full activity of the CDNF protein in terms of protection of the neurons and supporting the neurons for functional recovery. So if we think about the clinical and therapeutic profile of HER-096, we do have a disease modifying and symptomatic potential based on preclinical studies and earlier studies with the CDNF protein, so we can slow or even halt the neuron degeneration in midbrain, which is relevant for Parkinson's disease. As already mentioned, we have a biological validation with the biomarker data from Parkinson's patients. We have robustly confirmed the brain penetration after the subcutaneous administration. So we believe that we have all the ingredients that HER-096 can really be a game changing therapy that could really stop the progression of the Parkinson's disease, which currently is not possible. So there is an unmet clinical need in the disease. The current treatments can treat the symptoms, but not the disease itself. And many patients don't get a symptomatic benefit or they might have significant side effects. And also the effectiveness of the current treatments declined over time when the disease progresses on the background, always regardless of the current treatments. And of course, as a consequence of that, there is a huge market potential for HER-096. Parkinson's News Today is an organization who has evaluated that the estimated economic impact of Parkinson's disease globally is around USD 277 billion annually. So it's a huge impact on societies. It's forecasted that therapeutic market in PD will grow to USD 13 billion by 2033 (sic) [ 2034 ], and this is from global data. And we -- there are also estimates that from the currently approximately 10 million patients until 2050, there will be 25 million patients. So we are in the middle of a very large unmet clinical need, and we want to be among the first ones to really address this. So this was the short introduction to Herantis, and let's go into the highlights of 2025. So I'll start this with the business highlights. So a year ago, in February '25, we announced that we successfully completed a directed share issue. We raised EUR 5.2 million, and that was obviously used for finalizing the Phase Ib and being able to deliver the great data. We announced the top line data from the Phase Ib trial with Parkinson's disease patients in October. The trial met its all primary and secondary endpoints. So we demonstrated very nice safety profile and also the robust brain penetration in the Parkinson's patient's brain. In November, we announced that we have completed a 6 months preclinical toxicology study with HER-096, and this is, of course, a major milestone towards to be ready for Phase II trial as this kind of a long-term preclinical tox study is a prerequisite for starting a long Phase II efficacy trial. And right after the reporting period, we also have provided, actually, a lot of good news. So in early days in January, we reported the biomarker data showing that we have a very clear evidence of biological response to HER-096 exposure in Parkinson's disease patients. In early February, we announced a directed share issue. We raised EUR 4.2 million. And further in February, we announced that we have been selected for EUR 8 million Horizon Europe grant that will be used for supporting the conduct of the Phase II clinical trial. But let's go into the financial figures, and Tone will go through those. Tone Kvale: Yes. Thank you. So full year 2025 compared to last year, the total operating expenses, they went to the same level, but the difference you can see on the loss side is that, in 2024, we had the EIC Accelerator grant program, which ended now in 2025. So we got more grant in 2024 compared to 2025. We are spending the money on -- most of the money goes directly to the science. We spent it on finalizing the Phase Ib trial. We're also preparing for the Phase II and the development of biomarkers is also a big part of the costs. And then last year, we raised money in February 2025, and we had finance expenses relating to that. And we are continuing the focus on investor relations and partnering activities. So when it comes to the cash, we ended the year with EUR 2.6 million in the bank compared to EUR 2.1 million in 2024. Right after we closed the books, we had a successful fundraising and raised gross EUR 4.2 million. With the cash we have as of today, it takes us into Q1 2027. So to be able to start the Phase II clinical trial, we need to raise more money. So for the financial position, just going through the kind of -- some of the balance items for 2025. If you look into the balance sheet, you see that the long-term debt increased from EUR 2.1 million in 2024 to EUR 3.4 million in 2025 million, and that is due to the research funding, which we are receiving from Michael J. Fox and Parkinson's U.K. This is very good money that we have spent now on the Phase Ib. We had a temporary negative equity by the end of the year of EUR 1.7 million, but that went positive when we raised the money in February. And as Antti mentioned, for the financial events, we had the successful fundraising, and also we was selected for the EUR 8 million grant from Horizon, which is going to be spent on running the Phase II trial. So that's really good that we have the cash coming in. Antti Vuolanto: Very good. Thank you. And let's move on with the short business update. So as mentioned, we have a completed Phase I program, just a small short recap of what the Phase I program told us and what will be the next steps. So the Phase Ia clinical trial that we completed a couple of years ago was a single ascending dose study in healthy individuals. And we also had elderly individuals there to take cerebrospinal fluid samples to show the brain penetration profile of HER-096. And the main findings were very good safety and tolerability profile of the single dose. We demonstrated efficient brain penetration in elderly healthy individuals, and the brain penetration was, in a way, very much aligned with the preclinical findings we had reported earlier. And we also have very favorable pharmacokinetic profile considering the administration. And now we completed a Phase Ib clinical trial where we first had a couple of additional elderly individuals for single administration to complete the -- some of the pharmacokinetic work, and then we had Parkinson's patients in 2 cohorts or 2 dose levels, 200- and 300-milligram doses and placebo patients as well. And these patients received active -- they received HER-096 or placebo treatment for 4 weeks, 2 administrations per week. And the main findings, we continue to see good safety and tolerability profile in Parkinson's patients. We established the pharmacokinetics in the cerebrospinal fluid in these patients. And of course, then we have this biological response in biomarker analysis, which I will also provide some more insights here and recap of the webinar that we held early January. About the safety profile, here is a very high-level summary of the systemic safety findings from patients or healthy individuals receiving HER-096 dosing. So basically, on the systemic level, we didn't see any treatment emerged adverse events, no serious adverse events, no dose-limiting toxicities, and we didn't reach, obviously, the maximum tolerated dose. And this was very much aligned with the preclinical studies. The main incidence that we saw was related to the injection site. They were mild and transient and self-resolving. So exactly aligned with preclinical findings. And this is, of course, very good. And then the second part of the results is obviously the HER-096 presence in the cerebrospinal fluid. And this data summarizes what we learned from the Parkinson's patients in the Phase Ib with 200-milligram dose, we ended up close to 100 nanograms per ml, with 300-milligram dose, close to 150-nanograms per ml. And again, this is very much aligned with the preclinical data, and these levels are comparable to those levels that we have seen in preclinical settings to provide the maximum efficacy in those models. So we believe that 300-milligram dose will be a very good dose for going forward with Phase II, and this is also supported by the biomarker data. And just a short recap of what did we see in the biomarker data. And just a reminder that we analyzed different sample types with different technologies, but the main comparison was the change that we observed when we compared the before dosing sample of the last dose compared to the before dosing sample of the first dose. So a cumulative effect of 4 weeks exposure to HER-096. So we had samples from CSF, so demonstrating what happens in the CNS, central nervous system, and there, we showed an effect on proteostasis and oxidative stress and inflammation. So basically, really closely related to unfolded protein response pathway and then mitochondrial function as well. Then we had samples that is called Neuronal-enriched extracellular vesicles. So particles that comes from the central nervous system, the sample is taken from the blood. So we can't, for sure, say that all the signals come from the CNS, but maybe majority of that. And again, we see changes in mitochondrial functions and also inflammation, very much aligned with the mechanism of action. And then from plasma and blood, we also saw changes in proteostasis and in mitochondrial functions. So this multiple layers of data showing very concordant results across different sample types, different location or where we derive the samples shows that there is a very clear biological response, and this is a true response in Parkinson's patients, and the response is aligned with the mechanism of action. So if I summarize on one slide what we see. So at the baseline, Parkinson's patients, they have chronically activated unfolded protein response pathway. So there is a dysfunction of proteostasis, there is also lower activity of mitochondrial function. So mitochondria are the energy factors of the cell, and there is elevated oxidative stress. So overall, the stress level is high and the viability functionality is low. After HER-096 dosing, we see elevation of proteostasis activity. We see elevation of mitochondrial function activity. We see a decrease in oxidative stress. So we have decreased the stress and increased the viability functionality. And then, of course, the very good question is, as this is the data from the first month, what happens after a longer treatment period. And we, of course, believe and hope that it will result in symptomatic improvement and disease modification. And this is, of course, the purpose of running the Phase II trial to demonstrate this in Parkinson's patients, which would then allow going forward with the commercialization path. So if I summarize where we are with HER-096, we believe that we have reduced development risk based on the very successful Phase Ib trial. We have established very nice safety profile, confirmed brain penetration. We have biomarker-confirmed biological activity. So we believe that we have much reduced translational risk. We are ready for Phase II. So we are planning a signal-seeking proof-of-concept efficacy trial in approximately 100 early-stage Parkinson's patients. It will be a multicenter European study if we run that ourselves. And we are currently nearing the confirmation of the study design. It's not completely ready yet, but we, of course, will inform the market when we are ready to do so. HER-096 is very much differentiated asset. So it's a first-in-class molecule. We are addressing unfolded protein response pathway as the only company in clinical development. With that, we target the core drivers of Parkinson's pathology. And we really have designed from the beginning the asset to really modify or stop the progression of the disease. And of course, what we are currently doing, we are looking at the different routes and options, how we can execute the Phase II, and we are in discussions with strategic partners. We are in discussions with investors. We also confirmed the EUR 8 million EU Horizon grant that will support the conduct of the study. And we are also looking at different non-dilutive opportunities there might also be. But of course, we will inform the market as soon as we have anything material on this resourcing of the Phase II efficacy trial. I want to highlight the strong external validation and financial support that we have for HER-096. Parkinson's U.K., the Michael J. Fox Foundation, they have -- or they did finance the majority of the Phase Ib clinical trial with almost EUR 4 million research financing, and we obviously continue to discuss with them how they could support the conduct of the Phase II. We have also had very strong support from the European Union. We completed one -- a biomarker development program of EUR 2.5 million grant that was completed a year ago -- approximately a year ago. We have secured EUR 15 million investment commitment from EIC fund from which we have now utilized EUR 4.2 million. So over EUR 10 million still exist in that commitment. And we just announced EUR 8 million support for the Phase II trial. So we have been quite successful in achieving this validation. And I have to highlight that all of these financiers and the financing, it's like really competitive vehicles and opportunities. So we have been really happy that we -- our science and the commercial potential has been evaluated to be really strong among these organizations. So as a summary, we believe that HER-096 is a potentially game-changing therapy that could become the first disease-modifying treatment for Parkinson's disease. We have huge market opportunity. We are backed by a long research, robust external validation. And one thing that I didn't address yet is that the broad functionality of HER-096 in the basic biology of aging cells, improving the tolerance against different stress factors, may open wide therapeutic opportunities in other neurodegenerative disorders or even beyond CNS indications. By these words, I think we will end the business update, and we are ready to start the Q&A session. Tone Kvale: Yes. And we have received questions and you can just continue sending in questions via the webcast. The first one is, can you provide an update of your Phase II plans? And when do you expect to initiate it? Antti Vuolanto: Yes. So as I mentioned, we are currently in a way, finalizing the study design. So we are also, in addition to that, considering regulatory preparation, should we have regulatory discussions on the protocol. What we can say is that we are planning a double-blind, placebo-controlled, randomized efficacy and safety trial in early-stage Parkinson's patients. And we are engaged with several European really top-notch investigators, also within that EU consortium that won the grant. And also, of course, the recent fundraise, EUR 4 million helps us to prepare for the Phase II and also gives us the freedom to really find out the right financial ways of resourcing the Phase II. And as mentioned, the trial will be most likely conducted within Europe if we run that ourselves. However, we are making sure that we are also open regulatory wise to be able to open trial sites elsewhere, for example, in the U.S., if there is a need, for example, if there is a partner or there is an investor who would have an incentive to open up a site also elsewhere than in Europe. Tone Kvale: Good. Next one is regarding the Horizon grant and congratulations with that. How will this impact the company on a strategic point of view and also from a financial point of view? Antti Vuolanto: Yes, of course, EUR 8 million for conduct of Phase II. It decreases the capital need for running the Phase II with full amount. It is, of course, also very beneficial for our shareholders as that's non-dilutive. So I think that's great. But in addition to that, of course, Horizon EU grants, they are really competitive grants vehicles and being selected for the grant shows that, first of all, we have great science, but we also have great commercial opportunities there. And that, in a way, brings a quality stamp as we were winning this grant. Tone Kvale: Good. Next one is based on your current cash position and the benefit from the grant, what additional capital do you need and will be required to be able to start the Phase II trial? And maybe I can just take that one. As you know, we raised EUR 4.2 million in February, and that will help us now kind of continuing the preparation for the Phase II. We got the Horizon grant of EUR 8 million, and that is earmarked the Phase II. So of course, that is helping us a lot for that one. But in addition, we think we need -- of course, we haven't -- the final design of the trial is not ready yet, but we think in the range between EUR 20 million and EUR 25 million is needed as an additional capital on top of this to fully fund the trial and also the ongoing operation during the trial period. Next one. Is the Phase Ib biomarker data good enough to secure a partnering agreement? Antti Vuolanto: Well, that's a very good question. Of course, the full Phase I like data package that we have, the safety data, the pharmacokinetic data and also the biomarker data, it's a great package. And when we have discussed this package within the partnering discussions or with other stakeholders like the patient organizations or informed investors, everybody congratulate that you could not get much more within a Phase I clinical program. However, it might not be appropriate to start speculating about exactly whether this could trigger a partnering agreement or not because there are many different kinds of pharmaceutical companies. They have different objectives and there might be different like deal structures that we investigate. So of course, we will inform the market as soon as there is something material. But before we have anything material, we can't speculate too much. Tone Kvale: Yes. Next question. Congratulations with the 2025 progress. The Phase Ib biomarker analysis showed modulation of various PD-related pathways. How will these biomarker findings inform endpoint selection and patient certification for the Phase II? Antti Vuolanto: Yes, of course, we are really happy that we have seen changes in the core pathways, including the proteostasis and mitochondrial function. Maybe for patient selection, the challenge is that how we can exploit that data when we are screening the patients. And we believe that we need to select early-stage patients. And in Phase II, we need to carefully design what is the primary endpoint and then select patients in such a way that they show characteristics that are measured by the primary endpoint. So that's the focus there. Tone Kvale: Good. I think there was no more questions. So maybe some closing remarks. I think just from my side, we see that we have a really strong external validation of our science during 2025. So I think the future looks good. What do you think? Antti Vuolanto: Yes, I fully agree. So I think 2025 was a very successful year. We were able to complete a fairly large clinical trial within the time and the budget, which is not for certain in clinical development. The data is great. We have a very good momentum. We have got really good feedback. And now we just need to go forward and beyond and ensure that we can run the Phase II clinical trial. And of course, within Phase II trial, providing the first efficacy signal. That's the trial where potentially the value creation is quickest among the, let's say, clinical studies. So we look really forward -- positively forward for this year and what this year will bring. And we hope to be able to update the market about the future development related to finalizing the Phase II clinical plan and then also how we resource the trial within due course. So thank you for joining us today. Thank you for submitting the questions. And I hope you will follow us intimately going forward. Thank you.

34天前Insight Analytics约5分钟阅读

LNR.TO 2025 Q4 财报电话会议

Operator: Good afternoon, ladies and gentlemen, and welcome to the Linamar Q4 2025 Earnings Call. [Operator Instructions] This call is being recorded on Wednesday, March 4, 2026. I would now like to turn the conference over to Linda Hasenfratz, Executive Chair. Please go ahead. Linda Hasenfratz: Thank you, and good afternoon, everyone, and welcome to our fourth quarter conference call. Before I begin, I'll draw your attention to the disclaimer that is currently being broadcast. Joining me this afternoon, as usual, are Jim Jarrell, our CEO and President; and Dale Schneider, our CFO, both of whom will be addressing the call formally shortly. Also available for questions are Mark Stoddart and other members of our corporate IR, marketing, finance team. Okay. I'll start us off with some highlights of the quarter. I think a good place to start is always a quick reminder of the key value drivers that make Linamar such a great investment and how they played out over this past year. First, Linamar has a long track record of consistent, sustainable results driving out of our diverse business. Q4 and 2025 was another great example with exceptional earnings growth in our Mobility business more than offsetting soft markets in our Agricultural business. Being invested in both businesses helps trim big swings up and down in individual markets and leaves us with a more consistent, sustainable level of performance. The second key point is our flexibility to mitigate risk. Our equipment is programmable, flexible equipment that can be used on a large variety of types of products across different vehicle platforms as well as types of propulsion. This flexibility is allowing us to reallocate equipment from programs running under capacity to new launches, helping keep our capital build down, as you saw again in 2025 with CapEx down 24% despite a significant backlog of launches that we are actively investing in. Third, we have always run a prudent conservative balance sheet. We target keeping net debt-to-EBITDA under 1.5x. 2025 saw net debt-to-EBITDA at 0.77x despite significant investment in new businesses, such as the Aludyne acquisition as well as CapEx for new programs. Our peers are much more heavily indebted with net debt to EBITDA more than 2.5x. This creates financial stress and risk for them in times of soft markets and limits their flexibility, limits which Linamar is not restricted by. This gives us a huge advantage in the market. Lastly, returning cash to shareholders is a key value creation driver at Linamar as well. You saw that play out this quarter with our continued repurchase of shares in the market, which we have been steadily doing since November of 2024. Okay. Turning to highlights for the quarter and 2025. I would say it has been a really strong year that I feel like really well represents Linamar as an entrepreneurial, opportunistic, technology-driven business that is delivering growth for today and for tomorrow. We saw another record year of record earnings despite every market being down and a world devolved into a minefield of tariffs, an environment defined by uncertainty, volatility and profound structural change across the global economy. Those record earnings included outstanding growth for our Mobility segment earnings, which were up 47% in the quarter and 34% for the year. We saw great success in growing our technology portfolio with strategically important acquisitions, such as the Aludyne aluminum casting technology business as well as the GF Leipzig ductile iron casting facility. These businesses are bringing great new process capabilities to us that are already resulting in significant new business wins and quoting opportunities. Having more products and processes to sell, notably proprietary technologies that our customers are looking for absolutely expands the pathways of growth potential for us significantly. Not only is our team delivering on earnings growth again for the 13th year out of the last 16, that's 81% of the year, by the way, but also are delivering excellent free cash flow, almost $1 billion worth in 2025. Careful cash management is absolutely key in challenging economies, keeping us strong and flexible to jump on those opportunities out there. And finally, we are managing that tariff mine field very well indeed with a manageable level of tariffs that we are actively mitigating the impact of. I'll review the tariff situation in more detail in just a minute. Turning to the numbers. We saw sales at $2.5 billion, up 5.9% over last year despite tough industrial markets. Sales were down 13% in our Industrial business with both Ag and Access sales impacted. Sales, on the other hand, were up 13% in our much larger Mobility segment with 1.5 months of Aludyne and launching business offsetting soft markets that we saw in both North America and Europe. Normalized net earnings were $136.4 million or 5.4% of sales, up 22% over last year and normalized earnings per share was $2.28, up 25.3% over last year on the back of a very strong Mobility segment performance. I would summarize our results this quarter as being most impacted by launches and strong production sales on the Mobility side, of course, our Aludyne acquisition and that being partially offset by those weak industrial markets. Cash flow was very strong at $362 million. For the full year, our results were very strong as well. We saw sales of $10.2 billion, moderately softer than 2024 on those Industrial segment declines. But despite such, we delivered record earnings of $622.1 million or 6.1% of sales, another year of earnings growth and margin growth at Linamar. EPS hit $10.36, up 5.6% over prior year, driving out a strong Mobility segment performance. And as noted, nearly $1 billion of free cash flow to finance growth opportunities. Finally, let's have a look at an update on tariffs. Despite the myriad of tariffs put in place over the last couple of months, Linamar continues to have a manageable level of bottom line impact. The 232 metal derivative tariffs continue to be the only area of any reasonable impact to us and almost all that impact is for our industrial businesses. But the level is manageable, and we're actively working to mitigate the impact of these tariffs. New in the quarter were Section 122 and 301 tariffs established to replace the IEEPA tariffs deemed illegal. The good news is these tariffs have little to no impact on us. So there's 3 key reasons for all of this. Number one, we followed for a long time a strategy of producing product in the same continent as our customers, not chasing low-cost labor around the world. As a result, we're not making product in Asia or Europe that ships to the U.S., which would have triggered tariffs. For products that we're producing in Canada and Mexico and shipping to the U.S., our products are USMCA compliant for virtually everything that we're shipping in, meaning no tariffs for our customers on the Mobility side, where, of course, they are the importer of record or us on our Industrial products where we are the importer of record ourselves, unless caught, of course, by the 232 derivative tariffs that I just mentioned. Our largest business is our automotive business where our customers, as noted, are the importer of record and would, therefore, be responsible for paying tariffs in the event any become applicable. I do worry about the growing impact of tariffs on our automaker customers. However, as they continue to build up, whether they be metal tariffs, vehicle tariffs, price tariffs for offshore purchases, the cost to our customers as we have seen are in the billions, and there is concern about potential impact to vehicle pricing and therefore, demand longer term. A reality, unfortunately, we are already seeing play out. On the positive side, we are seeing customers looking at onshoring parts and systems. They are currently buying from Asia or Europe in this uncertain environment. We're building up a significant list of new business opportunities and business wins for our North American plants in all of Canada, the U.S. and Mexico. New business win and quoting activity is quite strong and actually in all of those regions. The U.S. is still respecting the USMCA agreement, meaning these parts can be supplied from the U.S., Canada or Mexico, tariff-free as long as they're USMCA compliant. Where the job goes will depend on where we have capacity, where we have experience and teams available to take on the work as well, of course, the customer preference. We're seeing great opportunities for our U.S. plants, particularly our newest acquisition, Aludyne. And we also saw a very strong year in 2025 for new business wins for our Canadian plants. In fact, we won more dollars of new business in 2025 for our Canadian mobility plants than we've seen in 3 years, and we are at a 5-year high in terms of Canadian plant wins as a percentage of global mobility business wins. Our strong, highly capable Canadian plants are really punching above their weight in terms of wins compared to their slice of our global footprint, which is great to see. I think it's key to note as well that our portfolio expansion, notably into additional structural components as a result of our acquisitions is dramatically increasing RFQ activity. This strategy has really played out positively for us. The tariff situation is also adding stress to an already stressed supply base, notably in the U.S. and Europe. This is leading to acquisition opportunities for us as you've seen us act on and the pipeline of distressed companies seems to just continue to grow. Finally, I want to emphasize that our strong results and positive outlook is very much a result of what I think is an excellent and unique business culture at Linamar. It's a culture that we've fine-tuned over nearly 60 years to be opportunistic, to be entrepreneurial, find something positive and actionable to grow our business regardless of circumstances. We are naturally responsive. We're nimble. We're fast. We're innovative. We're creative in dealmaking and mitigating challenging situations, and we get things done. These are critical elements to not just survive, but to thrive in a challenging time. So with that, I'm going to turn it over to our CEO, Jim Jarrell, to review industry and operations updates in more detail. Over to you, Jim. Jim Jarrell: Great. Thank you, Linda, and great to be with everyone listening tonight. First, we are proud of our performance in 2025. As Linda mentioned, we generated excellent free cash flow, record normalized EPS and saw another year of strong Mobility margin expansion, all while positioning the business for the future expansion. These results reflect disciplined execution in a very challenging environment. There's a great thing people often forget what you say, what you do, but we'll never forget how you make them feel. In '25, we made our employees, our customers and our shareholders feel valued, respected and supported, which to achieve our mission to be supplier, employer and investment of choice. So I want to personally thank our employees across the organization for their GRIT, which stands for using our guts, resilience, integrity and teamwork to grow, grow our revenue, grow our income and grow our team. This was our focus in 2025 and remains our focus in 2026. Continued volatility, limited visibility and macroeconomic headwinds are testing companies globally, ever-changing tariffs, shifting consumer demand, disruptive technologies, cost pressures, talent shortages and regulatory changes are all part of the puzzle. But tough times don't last, tough teams do. And of course, Linamar is one tough team. What sets us apart is our entrepreneurial mindset. We just don't react. We attack every challenge and opportunity with purpose. We stay true to our long-term vision, operate with lean discipline and make agile, decisive moves. And I think we all witnessed last year, a great example of this in Linamar, 2 exciting and strategic acquisitions. Both Aludyne and Leipzig add over $1 billion of growth to Linamar. These businesses not only strengthen our technology base, but also expand our CPV, enhance our ability to serve global customers in key markets. So let's move over to our operating segments. Let's start with the auto industry. When we first started the year, lots of uncertainty surrounded our automotive business, consistent changes to tariffs cast a fog over our industry and led to significant negative assumptions. If I look back to market expectations for the year in terms of production, North America was expected to be down 9.3% for the full year, but ended up only down 1%. Similarly, Europe was much stronger than expected in '25 being down only 1.2% versus the original expectation of 3.1%. In Asia Pacific, originally expected to be up only 0.7%, ended up 6.9%, a region where Linamar is growing at an exceptional pace. Overall, global production was up 3.7% versus the original expectation being down almost 2%, a great resilient year across the auto sector. Looking at the most recent forecast for '26, North America is expected to be down 2.2% on fears of increased pricing pressure. Europe is expected to be down 0.4% as domestic demand is expected to grow, but will be offset by increased imports from Greater China. And Asia Pacific is expected to be flat as industry experts growth will slow as aggressive pricing in domestic market is met with marginal increase in end customer demand. Globally, this leads to a slight decline of 0.4% versus the prior 2% projected increase. Turning to Linamar's CPV performance for the quarter. Once again, we saw growth in all 3 of our regions. North America CPV was up 19.2% to $329. Europe was up 5.9% to $92.82, and Asia continues to see growth with an increase of 0.4% to $10.43. Globally, for the year, our CPV remained flat over '24, totaling close to $80. In Q4 and through the whole year, our commercial teams continue to deliver on our core goal, keep winning business. We secured a grand total of $1.5 billion, again, $1.5 billion in new Mobility business wins. One of our key internal sales program was coined MCMAGA, Make Canada, Mexico and America Great Again sales program. Pictured, you will see our most recent onshoring successes with structural engine components and 2 other key wins with Asian OEMs. As I've said through the past few slides, Linamar's Asian operations chase with key OEMs overseas has been a great success through '25 and will continue through '26. Linamar's long-standing strength in structural components supported by recent acquisitions, positions us well for continued growth. Turning to our Industrial segment, starting with Skyjack and AWP market. '25 was a market facing strong headwinds, sticky interest rates, tariff pressures and delayed infrastructure projects. There were many elements stacked against our Skyjack business. Despite these challenges, Skyjack delivered an outstanding Q4, growing unit volumes by 15.9% in a market that was down 1.5% globally. If we look at the full year, Skyjack demonstrated its GRIT and exceptional product quality with total unit volumes up 12.1% versus a market that was down 19% globally, an exceptional year of performance amid a negative environment. This success was driven by exceptional market share gains, especially in scissor lift globally and booms in Europe, '25 is a clear signal that Skyjack is winning with our innovation and customer connectivity. As I mentioned last quarter, it's important to note that volume growth doesn't always equate directly to revenue as product mix plays a key role with booms and telehandlers commanding higher prices than scissors. The real story, though, is Skyjack's ability to gain the market share and strengthen its position in a tough market. Looking at the expectations for this year, North America and Europe are expected to start to rebound with a growth of about 1.4% and 1%, respectively, and a sign that some of the recovery is coming when comparing to our Q3 outlook. Asia Pacific and Rest of World is expected to be softer in '26 with a decrease of 5.3% and an overall pretty well flat market outlook globally. For '25, our Skyjack team was recognized by the largest rental player, United as the Supplier of the Year recipient. This is a huge accomplishment, and I would like to congratulate our Skyjack team for demonstrating its exceptional performance, consistent quality delivery, reliability and partnership. On the innovation side, we're very excited to say that our new SJ28 All Electric Telescopic Boom has been launched specifically designed for China and Southeast Asia markets. Turning to the Ag business. '25 was a challenging year globally due to a multitude of factors. In North America, markets were pressured due to trade issues surrounding U.S. soybeans and Canadian canola, which has recently eased as China is now buying both again. Dealer inventories and credit lines have receded, though they are still elevated. There is a reluctance to stock whole goods and dealers are still remaining cautious about their inventory levels given farmer buying intentions. This is impacted by the large federal stimulus package, which was expected in 2025 that did not materialize. It was announced very late in '25, but will only begin to flow now in early spring of '26. And the benefits of that is expected really only to help the working capital and operating lines required to support spring crop inputs. Our Linamar Ag divisions, MacDon, Salford and Bourgault, all tracked largely in line with the North American market in '25. Being down 27%, although for the year, we saw market share improvements in key segments like combined drapers in the U.S. and Europe, tillage market share in the U.S. and air seeder market share also in the U.S. With a view to the coming year in the Ag cycle overall, some peers have stated that '25 was a trough, while others are saying later '26 before the industry turns positive again in '27. We will continue to monitor global trade tensions, government bridge payments and channel inventories to react to those market signals. As always, our focus at Linamar Agriculture will be on maintain market-leading positions, solution that drive technology, productivity improvements and global growth. Turning to some industry recognition. What an accomplishment by each of our brands, all of them, yes, all of them received 2026 AE50 Awards for top innovative Ag products released to the market in the past year. This is an incredible feat. And again, congratulate each and every one of our employees from these groups. We continue to deliver innovation across all of our groups, and I know our teams will continue to build and offer exceptional products to our end customers. Before I hand this over to Dale, I want to put our diversification in perspective. Linamar is not just an automotive or even a mobility company. We're an advanced manufacturing and product development company participating in a multiple global mega markets you see here on the screen. That distinction matters. It gives us access to a much larger opportunity set than a traditional auto supplier and allows us to apply our capabilities to scale, precision, quality and execution where the world is going next. Diversification is not a side strategy for it. It is a growth multiplier. And it positions Linamar to win across industries that matter for the future. '26 is shaping up to be an exciting year for Linamar as we take diversification to another level to build the next chapters of our growth story. A few areas in particular, defense, robotics and power energy are becoming more relevant platforms for our future. Defense is not new to Linamar. It's a return to our roots. With today's global environment and NATO commitments, our ability to deliver is a powerful advantage. We have made many inroads with prime manufacturers who are seeking Canadian and global partners to help safeguard the world. At the same time, our robotics business is gaining momentum. By leveraging our strength in precision metallic parts, electromechanical assembly, actuators and smart manufacturing systems, we have engaged global partners to position Linamar at the center of automation, collaborative robots and humanoid platforms. The technology foundation is out there and the opportunity is real. It's up to us to figure out how to capitalize on it. We're also expanding into power energy, highlighted by our new strategic partnership with Regen Resource Recovery to commercialize battery-grade graphite and strengthen the domestic supply chain, another example of Linamar moving with purpose in growth future-focused markets. The takeaway here is simple. Linamar is not defined by one industry. Automotive is proof of our capabilities, not the limit of them. We're a global advanced manufacturing and product development technology partner. So with that, I'll turn it over to Dale to walk you through the financial overview for the quarter and outlook for the year. Dale Schneider: Thank you, Jim, and good afternoon, everyone. [indiscernible] covered at a high level the financial performance in the quarter. I'll jump directly into the business segment review, starting with Mobility. Mobility sales increased by $223.6 million or 12.9% over Q4 last year to $2 billion. The increase was driven primarily by several factors. First, we saw higher sales related to our Linamar Structures acquisitions, which contributed meaningfully to the quarter. Second, there was a favorable impact from changes in FX rates compared to last year. In addition, sales benefited from launching programs and higher volumes on programs where we have substantial content. These positive factors are partially offset by lower production on certain ending programs as well as reduced volumes on certain electric vehicle programs, which continue to be impacted by softer volume demand. Q4 normalized operating earnings for Mobility were up 47.3% over last year to $132.1 million. The improvement reflected earnings contributions from the Linamar Structures acquisition, benefits from launching programs and higher volumes of programs where we have substantial content. These positive factors were partially offset by lower production on certain ending programs and EV programs. In addition, executive management bonuses were reinstated in Q4 '25, whereas no bonuses were awarded in Q4 2024 due to the impairment losses in that period. Turning to Industrial. Sales decreased by 13.2% or $84 million to $553.1 million in Q4. The decrease reflects softer demand across both of our end markets in Access, lower overall market demand weighed on sales, although this was partially mitigated by continued market share gains in scissors globally. In Agriculture, sales declined in line with the market and was significantly down despite market share gains in both U.S. and Europe. These items were partially offset by a favorable foreign exchange impact compared to Q4 last year. Normalized Industrial operating earnings in Q4 decreased $23.5 million or 25.7% over last year to $67.9 million. The earnings decline reflects the continued pressure across both the Access and Agricultural end markets, resulting in lower sales volumes despite market share gains achieved in each. In addition, the quarter included a moderate impact from tariffs on certain Industrial products. These impacts were partially offset by favorable FX rates compared to prior year. Starting with our overall cash position, which came in at $911.1 million on December 31, a decrease of $143.5 million compared to December '24. During the fourth quarter, we generated $471.4 million in cash from operating activities, which was partially used to fund CapEx and debt repayments. Turning to leverage. Net debt to EBITDA was 0.8x at the quarter, an improvement of from 1x a year ago. The non-available credit on our credit facilities was $1.2 billion at the end of the quarter. Our liquidity at the end of Q4 significantly increased to $2.1 billion. Our 2025 NCIB program launched in Q3 will expire on November 16. This program authorized the purchase and cancellation of 3.9 million shares. To date, we have returned nearly $39 million to shareholders through the repurchase of approximately 462,000 shares. This brings our total cash return to shareholders since November 24 to nearly $139 million with the purchase and cancellation of approximately 2.2 million shares. This reflects our disciplined capital allocation strategy, which is maintaining a strong balance sheet, investing in growth and returning excess cash to shareholders. Turning to the outlook. I will outline Linamar's expectations for 2026, focusing on our Mobility and Industrial segments for Q1. Our guidance for 2026 is unchanged from what was announced at our last earnings call. Please note, we are not providing segment level guidance for the full year '26 at this time due to the elevated volatility in the global markets and ongoing geopolitical uncertainty, which makes longer-term segment forecast less reliable. Turning first to Mobility segment. Our outlook for the first quarter remains very strong. We expect double-digit growth in sales and double-digit growth in normalized operating earnings, supported by ongoing program launches, contribution from recent acquisitions and continued operational improvements across the business. Margins in the first quarter are expected to continue to expand and move further into our normal range, reflecting the improved mix, strong launch execution and sustained cost discipline. For our Industrial segment, market conditions remain challenging as we enter into the first quarter. We expect lower year-over-year sales and normalized operating earnings, driven primarily by double-digit declines in both Ag and Access equipment end markets. Margins in the first quarter are expected to be within our normal range though. Overall, we expect year-over-year growth in normalized earnings driven by Mobility performance, while Industrial remains pressured by significantly weaker Agricultural and Access equipment markets. Free cash flow generation in the quarter is expected to be positive, supporting our very strong balance sheet and low leverage. Capital expenditures will continue to reflect our disciplined approach with spending focused on launch activity while remaining below our normal range as a percent of sales. Looking ahead at 2026, we continue to expect normalized earnings and margins -- sorry, expect growth in normalized earnings and margins supported by our strong Mobility performance and disciplined execution across Linamar, partially offset by continuing pressure by the Industrial end markets. In Mobility, strong top and bottom line growth is expected to be driven by ongoing launches and full year contribution from the recent acquisitions of the Aludyne North American operations and the Leipzig casting facility, which will support both sales and earnings. Importantly, this growth is expected despite the vehicle market forecast to decline by 0.4% globally in '26 with North America to be down roughly 2.2%, underscoring the strength of our content growth, launch execution and operational performance. In Industrial, market conditions remain mixed. Agricultural equipment markets are expected to remain down year-over-year in '26 with global volumes down mid-single digits and North America experiencing a more pronounced double-digit decline. That said, the rate of decline is moderating, and we expect stabilization in the second half versus 2025. Access equipment markets are expected to be relatively stable and steady with modest global declines, partially offset by low single-digit growth in both North America and Europe. Free cash flow generation is expected to remain strongly positive, supporting our very strong balance sheet, low leverage and disciplined capital allocation approach. Capital expenditures are expected to increase from prior year levels, reflecting ongoing launch activity while remaining below our normal range as a percent of sales, consistent with our continued focus on capital efficiency. Overall, while the market conditions remain mixed and visibility remains limited, Linamar enters 2026 with strong financial flexibility and operational resilience, positioning the company well for continually delivering earnings growth. In summary, Linamar delivered a strong quarter and exit '25 with record normalized earnings, a very strong balance sheet and excellent liquidity. We are well positioned to invest in growth, navigate volatility and continue to return capital to our shareholders. Thank you, and I'd like to open up for questions. Operator: [Operator Instructions] Your first question comes from Ty Collin with CIBC. Ty Collin: Maybe the first one, just on the quarter. Mobility margins came in a little bit lighter than I was expecting despite some pretty strong top line performance in the segment. I guess is there anything specific to call out there apart from the bonuses that you already mentioned? Or should we really be looking at things on a full year basis as a starting point for thinking about 2026? Linda Hasenfratz: I mean I think Mobility margins always soften up a little in the fourth quarter. That's not unusual at all. And frankly, reaching 7.5% for the full year, which is our normal range, I think, is pretty fantastic. So pretty happy with our performance in the quarter. Jim Jarrell: Yes. I think the -- a couple of the issues that, as Dale mentioned, the bonus, obviously, one thing. There was some impact of Novelis, JLR and a little bit of next period. But again, that was offset with some upside with the Aludyne, which we closed in mid-November -- I guess we closed mid-November. So that would have had a few weeks in there before shutdown. Ty Collin: Okay. Got it. Got it. And I appreciate you didn't really want to give specific guidance by segment for 2026, given some of the uncertainty. But I mean can you give any sort of high-level color on how we should think about operating margins in each segment compared to 2025 or any sort of puts and takes that we should keep in mind there? Linda Hasenfratz: I mean we're a little hesitant to provide segmented outlook as Dale, I think, perfectly stated due to some of the uncertainties around markets. I mean I think the good news is our outlook for this year is absolutely unchanged. I mean we are looking for growth, top line growth on the bottom line. We're going to expand our margins. And I think that's a real positive. If you take a look at the Q1 guidance, obviously, the trends are continuing from last year with strong Mobility Group performance. And as Dale also mentioned, it's a tougher start to the year for Industrial, but we do see the market declines moderating through the year. So that should give you a bit of a sense. And we'll have a better -- a little bit more clarity for you next quarter as we can see the year shaping up a little more clearly. Ty Collin: Okay. Great. And if I could just sneak one more in. Just wondering if you could share some updated thoughts on Aludyne now that you've been under the hood for a few months there. How has that been performing compared to your expectations? And what sort of opportunities do you see for that platform going forward? Jim Jarrell: Yes. I would say it's going to plan and probably a little bit better than planned. And I would say the amount of business opportunity that it has created with the structural segment that we're now in a deeper way and having some U.S. facilities has created a lot of opportunities and new business wins, quite frankly, I'm pretty pumped up about our new business wins year-to-date based off of the structural casting side, which has been super [ marked ], right? I mean that's been probably out of the gate for the first couple of months, the best we've ever had. And so I think it's creating a lot of opportunities and having a new good trusted operator is probably the key for that reason of getting growth. Operator: [Operator Instructions] Your next question comes from Brian Morrison with TD. Brian Morrison: Congratulations on the quarter. It looks like free cash flow was insane yet again, positive outlook for next year. When you talk about the highlights or the distressed global asset opportunities, do you need to digest the current acquisitions before potential more M&A and we should think about NCIB near term? Or both really remain at the forefront or both are equally top of mind right now? Linda Hasenfratz: I mean we're continuing with the NCIB. As I stated in my comments, I think we've been pretty consistent with our buyback, and we remain committed to that. As noted, we -- there's lots of opportunities out there, certainly on the distressed or otherwise side. So like anything, you look at what have I got the cash for, what do I have the people for. And one thing I know is we've got a lot of cash, and we've got a lot of super strong and talented people. So there's a time when you need to be opportunistic if the deal is right. Jim Jarrell: Yes. And I would just add, Brian, to the distress side, as Linda mentioned in her comments, like there's no shortage of that. And I would particularly point you to Europe as a real key area for that distress because, again, capacitization and they probably don't work as fast on consolidation or making decisions. So I think there's a real catalyst over there that we continue to work on. But one key underlying thing for us to ever do a distress, you need to have the backing of the customer, right? The customer group has to be engaged. And it just takes -- again, in North America, probably a little easier to do that than it is in Europe. So we find that it takes probably a little longer in Europe. Mark Stoddart: I'd also add, Brian, that the integration of Aludyne has gone very well. And so it's not like we have lack of resources if we were to look at other M&A activities right now. Brian Morrison: Okay. And just when you mentioned defense and robotics, is that organic growth that you're looking for? Or are we going to be talking about M&A for critical mass? Jim Jarrell: Basically organic. I mean again, these prime defense contractors, if you think about us now talking about 5%, right, of GDP being pushed through, they need to have manufacturing partners in North America or Canada, I should say, directly. And so when we connect with those prime manufacturers and provide them our experience and history around defense, they get pretty excited. And I think the condition of a prime to get a contract out of the Canadian government, we'll be having partners as well. And then on the robotics side, the partnering, I was in China and just connecting with good technology partners that have advanced robotics in collaborative robots and humanoids, and they obviously need a support of a company to distribute or make things in North America. So that's how we're doing it. So really not on an acquisitive side, more on an organic growth side. Brian Morrison: Okay. And maybe one more for me. Just last question. Jim, last quarter, when you and I spoke, we talked about the Mobility margin. It was just asked previously, but I just want to drill down a bit more on it. You did imply that Q4, it should be consistent with what it was in Q3, maybe a bit softer because of seasonality, I get it. But when I strip out Aludyne, it doesn't seem like that should have any impact. So it does seem a bit softer. Is that just -- were you expecting the bonuses to be in Q4? Or is there any other factors that may have weighed on the margin? Jim Jarrell: Yes, Brian, not really that I can come up with. It could be some mix issues, some higher margin issues maybe dropped off earlier or something like that. But really, there would be no real big cost changes or anything like that other than the bonus that Dale you mentioned, right? Brian Morrison: And sorry, just to be clear, was that anticipated when you made your Q3 commentary or no? Jim Jarrell: Yes, I would say we would have had that factored in for sure. Brian Morrison: Okay. But steady as she goes, building up to 7.5%. Linda Hasenfratz: Let me just add to this margin discussion as well. You would have noticed in the MD&A that we mentioned that FX was a factor on the sales side, but not a factor on the earnings side. I mean as you know, we have formal and informal hedges. So that has a real impact on margins as well, right? If your top line is getting beefed up by FX and you're not seeing bottom line flow through at the same level, then that's also going to be impactful. So I think that's worthwhile noting. Operator: We now have a question from Jonathan Goldman with Scotiabank. Jonathan Goldman: Maybe just another one on margins with this time on Industrial. I think you were talking about contraction below the normal range in Industrial for the entire year. It looks like you beat that a bit. And if you were to take the guidance for the full year previously, it would imply a margin in Q4 about 10.5% at best. It looks like you beat that by 200 bps. So I'm just trying to find out maybe what are the drivers of that beat, if anything kind of differed versus your expectations? Linda Hasenfratz: Yes. I mean I would say in the Industrial segment, mix is a big factor. So how much is Agriculture versus how much is Access because the margin profile is different. So to me, the bigger impact for Q4 was a strong quarter for the Ag guides, stronger than we would have expected. So margins did come in a little stronger than we thought. Jonathan Goldman: Okay. That's good color. I appreciate that. And I guess another one, another strong quarter for Access, material outperformance versus your end markets. You did talk about how it wouldn't be 1:1 volume to revenue growth because of mix and pricing. But how should we think about outperformance being sustained into 2026? And could you remind us of the different drivers that are supporting the outperformance? Jim Jarrell: Yes. I mean for 2026 on the Access side, overall, the global, we're looking at flat in North America, up a little bit, Europe up a little bit and then rest of world down. So again, from that perspective of the market, if you track the market, we should have a little bit of an uptick on the Access market for our [indiscernible]. Jonathan Goldman: Okay. That's good color. And then maybe one more on capital allocation. And you obviously have your priorities listed in the presentation. But if you were given a menu of only 2 options here between a buyback and M&A, what's more attractive? Linda Hasenfratz: Well, I mean obviously, growing your business is -- from an M&A perspective, is going to be more attractive. I mean our first priority, we have been very clear when it comes to capital allocation is growth. We want to invest in a business that's going to generate earnings year after year and create growth in itself. So 100% is our first priority is always to invest in growth. Sorry, but just to finish, we're also committed to returning cash to shareholders. That's why we put our capital allocation framework in place last year to say, number one, strong balance sheet; number two, growth; and number three, we're going to return cash to shareholders. And we've been pretty consistent with that over the last couple of years with NCIB and a good track record of continued increase in dividend. Jim Jarrell: Yes. And just to add, and this is just this maybe subjective comment, but you saw out of the gate, GRIT. So we have a major focus in the company, grow your revenue, your income margin and your team. And we believe strongly that it's up to us to keep growth on the top line and bottom line and add teammates for our employees to be satisfied. So really a strong focus and a very strong entrepreneurial culture, too, and it really is important to keep people motivated for the growth side. Jonathan Goldman: Definitely. It's nice to see the results reflected in the share price as well. Operator: As there are no further questions at this time, I will now turn the call over to Linda Hasenfratz for closing remarks. Please continue. Linda Hasenfratz: Great. Thanks so much. Well, to wrap it up, I'd like to leave you with our key message for the quarter, which is identical to what I started out with. Linamar is continuing to deliver on earnings growth with now 81% of the last 16 years, registering bottom line growth. Notably, almost every one of those years, double-digit growth. That is an outstanding performance and really the definition of consistent sustainable growth. Number two, strong growth in our product and process offering, largely through acquired technologies is dramatically increasing our addressable market in our Mobility business and leading to exciting new growth opportunities. Number three, we are generating exceptional levels of free cash flow to fund those acquisition opportunities and organic growth while keeping our strong balance sheet intact. And finally, not only is the tariff situation manageable, but we are actively leveraging such to find new opportunities for growth successfully. So thanks very much, everybody, and have a great evening. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

34天前Insight Analytics约5分钟阅读

STG.CO 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Scandinavian Tobacco Group Full Year 2025 Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Torben Sand. Please go ahead. Torben Sand: Thank you, and good morning, and welcome to Scandinavian Tobacco Group's webcast for the Full Year and Fourth Quarter 2025 results. My name is, as said, Torben Sand, and I'm Director of Investor Relations and External Communications. And I am today, as usual, joined by our CEO, Niels Frederiksen; and our CFO, Marianne Rorslev Bock. Please turn to the next slide for today's webcast agenda. Niels will start the presentation by giving you a brief overview of the highlights, including a snapshot of the key financial data. Niels will also summarize a few of the highlights from our new strategy that we launched last year, Focus2030. Then Niels will move on to share more details on the performance of our product categories before Marianne takes over and give you an update on the financial performance in our 3 reporting divisions. Marianne will also give more details about the financial performance, including comments on cash flow, leverage and capital allocation. Niels will conclude the call by giving some insights into the expectations for the full year 2026. After the pre-prepared presentation, we will conduct a Q&A session where we will be pleased to take any questions you might have. Before we start, I ask you to pay special attention to our disclaimer on forward-looking statements, which can be found on Page #3 in this slide deck. Now please turn to Slide #5, and I leave the word to our CEO, Niels Frederiksen. Niels Frederiksen: Thank you, Torben, and welcome to the call. 2025 became a challenging year for Scandinavian Tobacco Group with a combination of external disruptions and internal operational issues. Tariffs and lower consumer sentiment in the U.S. directly impacted our handmade cigar business and the category experienced fierce price competition, both in retail and in the online distribution channels. Our machine-rolled cigar business continued to be under pressure, while our investment in our nicotine pouch business delivered good contributions to the group's financial performance. Throughout the year, we have concentrated our efforts on protecting our market positions, integrating Mac Baren and growing our handmade and nicotine pouch businesses. And given the difficult circumstances, I am satisfied with our results for the year despite having to reduce our full year expectations in May as a consequence of the increased tariffs. 2025 was a year where we launched our new strategy, Focus2030, and we released new financial ambitions, and we adapted a new more flexible shareholder return policy. At our Capital Markets Day on November 20 last year, we unfolded the new strategy but today, we will also provide a few highlights on this later in the call. We expect 2026 to be a year where geopolitical uncertainty will remain a market condition and economic growth will be challenging. For Scandinavian Tobacco Group, this means that our main priorities in the year will be to stabilize earnings in our machine-rolled cigar and smoking tobacco business and inject new energy and growth into our strong handmade cigar business. We will also continue to grow our promising nicotine pouch business. Now please turn to Slide #6. Let me now share a few financial highlights for the year. Marianne will give more details about the financial performance and the quarterly development later in the presentation. But reported net sales were DKK 9.36 billion compared with our guidance of DKK 9.1 billion to DKK 9.2 billion, and the EBITDA margin before special items was 19.8% compared with our guidance of 19.5% to 20.5%. Overall, this results in an EBITDA before special items in line with our expectations. The free cash flow before acquisition came in more than DKK 200 million below our guidance due to a delay in the collection of certain receivables due to the SAP implementation in Europe. The issue has been solved and as the deviation is a phasing issue, the free cash flow will be equally positively impacting 2026. Marianne will give you more details in her part of the call. Adjusted earnings per share were DKK 10.8, in line with our guidance of DKK 10 to DKK 12 per share. Please turn to Slide #7. On 20th November, we launched our new 5-year strategy in connection with the Capital Markets Day, and you can find a recorded version of the event on our website. The purpose of Focus2030 is not only to create value by executing the strategy but also to develop a company that is even better positioned to deliver value beyond 2030 and we are confident that we can do so. We've defined 3 strategic priorities, each important for us to deliver on the ambitions for Focus2030. Firstly, to create a sustainable and stable machine-rolled cigar and smoking tobacco business, primarily focused on Europe. Secondly, to grow our attractive handmade cigar business anchored in the U.S. but with a stronger global footprint. And thirdly, to build a larger nicotine pouch business with even more upside in an attractive category. And in the process, we intend to turn the declining earnings trend around and we have -- sorry, in the process, we intend to turn the declining earnings trend around that we've seen over the past 3 years and create value for consumers, employees and shareholders. The new strategy is anchored in our strong brands and strong market positions across our diversified portfolio. However, the market conditions and the strategy call for us to allocate resources differently going forward to ensure that we focus on and capture what we see as the largest growth opportunities. And our power brands strategy is tailored to facilitate this. The strategy addresses the areas that we need to fix because they are not performing up to expectations, but also the areas where we do well and where we need to push further to deliver even better results, all with a combined ambition to build a sustainable and growing company with more potential beyond 2030. We also introduced new financial ambitions, which are to significantly improve the return on invested capital from about 7.9% in 2025 to more than 11% in 2030, to deliver an incremental increase in EBIT and a free cash flow generation exceeding DKK 1.2 billion in 2030. Acquisitions as well as divestments of less core assets will continuously be evaluated, assuming these potential transactions support our strategy as well as our financial ambitions. The shareholder return policy has been adapted to be more -- to a more flexible dividend payout ratio policy based on 40% to 60% payout ratio against adjusted earnings per share, supplemented by share repurchases when the projected leverage ratio allows. Please now turn slide to Slide #8. To meet our financial ambition and the objectives in Focus2030, we need to deliver on 3 strategic priorities. Growing handmade cigars will be defined as growing net sales as well as delivering incremental profit growth to the group. The key growth drivers are expected to -- the key growth drivers are expected to be delivered by a combination of increasing our market share of own brands in the U.S. from approximately 13% to more than 15% in 2030 as well as through an expansion in our retail network. This expansion will be driven by our power brands, which in 2025 have 5% overall market share. Stabilizing the machine-rolled cigar business requires a focus on protecting profits and cash flow. The path to success is offsetting the structural volume decline in the categories through price management and market share gains. Mitigating structural market trends through intensified market share focus is reflected in the ambition to increase volume market share in key European markets from 26.8% in 2025 to more than 29% in 2030. And a key component to the profit growth will also be through simplification of our portfolio by almost 50%. Finally, accelerating our nicotine pouch business is expected to deliver important contributions to the group's growth in net sales and profits in Europe. We expect to build on existing market share positions in Sweden and in the U.K. but also in other markets where our capabilities within distribution and access to the market provide us with an advantage. Now let's turn 2 slides -- to Slide #10. Machine-rolled cigars and smoking tobacco comprised 50% of group net sales in 2025 with handmade 35%, nicotine pouches at 5% and others at 10%. Others include accessories and bar sales, amongst others. For the full year, organic net sales growth was minus 3%, where handmade cigars delivered flat organic net sales, machine-rolled cigars and smoking tobacco minus 1% and nicotine pouches a negative 17% growth. However, the organic growth for nicotine pouches does not reflect the underlying progress of our power brand, XQS, which delivered a high double-digit organic growth. The negative growth for the category was significantly impacted by the discontinued online distribution of ZYN from the second half of 2024. For the first time, we are giving details on the gross margin structure for our product categories. For the group, the gross margin before special items was 44% for the full year of 2025. The product category machine-rolled cigars and smoking tobacco delivered a 51% margin, handmade cigars, 41% and our nicotine pouch business, 36%. Going forward, we intend to share these details in order for you to get a sense of the progress we make in our strategic priorities. Now let's move on to each of the categories, and please turn to Slide #11. The market for handmade cigars in the U.S. continued to contract in 2025 by an estimated mid-single-digit percentage. For 2026, we expect a 4% total market volume decline rate. We still estimate the underlying longer-term decline rate to be a lower single-digit number. For the full year 2025, reported net sales decreased by 4% for the category with organic net sales being broadly unchanged. Reported growth was impacted by the development in currencies. Increasing organic net sales in retail and pricing were offset by underlying volume declines in the U.S. market and by international sales. Gross margin before special items have been on a declining trend for the past 2 years. For 2025, the margin was 41.4%, with the main drivers for the decline being fierce competition in our online distribution channel, and negative impact from increasing tariffs and consumers trading down. The data illustrated in the chart show the development in the last 12 months data, not the specific quarterly data. For the fourth quarter, our category performance was 1% organic net sales growth and was positively impacted by business-to-business sales in the U.S. and continued growth in our retail stores. The sales of handmade cigars to U.S. wholesalers and distributors, the business-to-business market continued to recover in the fourth quarter and delivered a 6% increase following a low single-digit growth in the third quarter. Sales in our retail stores continued to increase, driven by new store openings, although the same-store sales were slightly down due to a temporary rebuild of our largest store in Dallas, Texas. And finally, our online sales of handmade cigars were broadly unchanged, where sales to our international markets decreased during the quarter. Now please turn to Slide #12, and we'll talk about machine-rolled cigars and smoking tobacco. For machine-rolled cigars and smoking tobacco reported growth in net sales was 2% for the full year. The growth was impacted by the acquisition of Mac Baren from the second half of 2024, while organic growth in net sales was slightly negative by 0.5%. The gross margin before special items was 50.8%, broadly in line with the full year of 2024. But as the graph also indicates the last 12 months margin declined -- sorry, the last 12 months margin declined significantly throughout 2024, primarily as a result of the high volume decline rates we experienced in machine-rolled cigars throughout 2024. In that context, the stabilization of the category margin is encouraging, although still not satisfactory. The current margin level remains negatively impacted by changes in product and market mix as well as disruptions caused by our SAP rollout in Europe. With the financial ambitions we have communicated, we need to protect and improve the margin, not only for machine-rolled cigars but also for smoking tobacco. For the fourth quarter, organic net sales for the category were unchanged, comprised by a low single-digit growth in machine-rolled cigars and a low single-digit decline in smoking tobacco. Now let me give you an update on the market share development in our machine-rolled cigars. The total market for machine-rolled cigars in Europe is estimated to have declined by 1.2% in the full year of 2025 based on preliminary data for our 7 key markets and with the decline rate for the fourth quarter estimated to be 2.8%. The data can deviate somewhat quarter-by-quarter and year-by-year from the underlying trends, and we don't regard 2025 market development as an indication of a sustainable improvement. Our base scenario of 2% to 3% structural decline rate is maintained, and for 2026, we expect a 3% market decline in Europe. Measured by our market share, we experienced a stabilization in the fourth quarter compared with the third quarter. The market share index was 26.3% for the fourth quarter and 26.8% for the full year of 2025. As mentioned with the Focus2030 strategy, we will invest in strengthening our positions as stronger market share positions are crucial to deliver long-term value in the category. With this, please turn to the next slide. So moving on to next-generation products, which comprises our nicotine pouch business and currently accounts for 5% of group net sales and slightly less of gross profits. For the full year 2025, reported net sales growth was 2% and organic growth was minus 17%. However, these data points do not give the full picture of the positive development we experienced for the category. The full year growth was significantly impacted by the discontinued distribution of ZYN in the U.S. but the reported growth rates were also impacted by the nicotine pouch portfolio we acquired from Mac Baren in the middle of 2024 and the ongoing streamlining of the brands, ACE and GRITT now being sold in fewer markets. Importantly, our brand XQS delivered 55% organic net sales growth and the market share in Sweden increased from 7.8% in 2024 to 12.3% in 2025. And by the end of 2025, the market share was above 13%. Our market share in the U.K. also improved during the year, although it is still only close to 1%. The category gross margin before special items was broadly unchanged at the level of 35% for the full year 2025 compared to 2024. As a result of the continued expansion of XQS to new markets and with investments to increase market positions, the EBITDA margin was only slightly positive for the year. During the fourth quarter, our nicotine pouch business delivered 42% reported net sales growth and 37% organic net sales growth. XQS -- the XQS brand delivering 87% organic growth, driven by a strong performance in the U.K. and Sweden. With this, I will now leave the word to Marianne for more details on the financial performance, please turn 2 slides to Slide #15. Marianne Bock: Thank you, Niels. In 2025, the commercial division Europe Branded comprised 36% of group net sales, North America Branded & Rest of the World, 33% and North America Online & Retail 31%. For the full year, organic net sales growth for the group was minus 3%. Europe Branded delivered minus 1%; North America Branded & Rest of the World, minus 5%; and Online & Retail, minus 4%. For Online & Retail, growth was impacted by the discontinued distribution of ZYN from the second half of 2024. In the table, we have shared an overview of the margin structure for each of the divisions measured by gross margin before special items as well as EBITDA before special items. For Europe Branded, the gross margin before special items was 48%. North America Branded & Rest of the World delivered 46% and Online & Retail, 38%. These differences in margin by division reflect product and market mix and for Online & Retail business being a direct-to-consumer business, whereas the 2 other divisions are business to business. The group margin was, as already mentioned, at 44%. Measured by EBITDA, the margin differences are even wider with Online & Retail delivering the lowest margins, while North America Branded & Rest of the World delivered the highest margin, primarily as these markets do not have own sales organizations. We'll now move to each of the divisions. So please turn to Slide #16. I will begin with Europe Branded. For the full year, reported net sales grew by 6%, largely due to the acquisition of Mac Baren in the third quarter of 2024. Organic net sales growth was slightly negative as increased sales of nicotine pouches were offset by declines in machine-rolled cigars and smoking tobacco. During the year, our gross margin before special items decreased from nearly 49% in '24 to 48% in '25. The decline was driven by changes in product mix with a strong growth in net sales of our nicotine pouch brand, XQS and lower sales of smoking tobacco. The same factors contributed to a decrease in the EBITDA margin, which fell from 21% in '24 to 19.8% in '25. Overall, profit margins for Europe Branded are affected by shifts in product and market mix as well as disruption in product availability. Reported and organic net sales growth for the fourth quarter was 6%, driven by both nicotine pouches and machine-rolled cigars. However, declines in both gross margin and EBITDA margin were due to the rapid growth of nicotine pouches compared to other product categories. Now please turn to Slide #17. For the full year, reported net sales decreased by 4% and organic growth declined by 5%. The acquisition of Mac Baren contributed positively to reported growth, while the weakening of U.S. dollar against the Danish krone has a nearly equal negative impact. The full year gross margin before special items decreased from almost 51% in '24 to 46% in '25, primarily due to changes in product and market mix. This was most notably affected by lower sales of high-margin machine-rolled cigars and smoking tobacco products. For the fourth quarter, reported net sales for North America Branded & Rest of the World fell by 12%. Organic growth was negative by 7% as growth in handmade cigars could not offset a high single-digit decline in machine-rolled cigars and smoking tobacco. The category other, which includes sales of accessories and similar items, also experienced negative growth during the quarter. The decline in the gross margin during the fourth quarter was even steeper compared to the full year decrease as the quarter was compared to a particularly strong fourth quarter in 2024. Additionally, lower sales of machine-rolled cigars were primarily driven by reduced sales in our high-margin markets in Australia and Canada. These dynamics were also the main factor behind the significantly lower EBITDA margin before special items during the fourth quarter, impacting not only North America Branded division but also the group margin for the period. Now please turn to Slide #18. For the full year, North America Online & Retail reported growth in net sales decreased by 8%. Organic growth was down 4% but excluding the discontinued distribution was slightly positive. Underlying organic growth included gains in our retail stores, while our online business experienced a slight decrease. In retail, we are seeing the benefits of opening new stores over the past year. However, same-store sales were marginally lower due to a renovation of our largest store in Fort Worth, Texas, as Niels mentioned earlier. Competitive pressure remains strong in the online channel but our pricing strategies are gradually improving our market share. Throughout the year, both gross margin and EBITDA margin were affected by the intensified promotional activities aimed at expanding our market position. For the fourth quarter, reported net sales decreased by 8.6%, primarily due to currency fluctuation. Organic growth was down 0.5%, with retail achieving 7% growth and online business showing a slight decline. Gross margin and EBITDA margin before special items in the fourth quarter were impacted by the high level of promotional activities, which have continued into 2026. I'll now move to an update on group financial performance. Please turn 2 slides to Slide #20. Throughout the presentation, details regarding developments in net sales, gross margin, EBITDA margin have already been given. Now I would like to provide a few additional comments on select financial details and key metrics. In 2025, special items amounted to negative DKK 200 million compared to DKK 279 million in '24. These costs can be divided into DKK 130 million for the SAP implementation and DKK 70 million for reorganizations and the integration of Mac Baren. We expect special costs in '26 will total approximately DKK 275 million before gradually tapering off in '27. Higher net financial costs were driven by both increased net debt and the refinancing of our corporate bond, which took place in September '24. We refinanced our existing EUR 300 million bond, which matured in '24 with a new facility of similar DKK 300 million. However, the new bonds were issued with a coupon interest that was almost 3.5 percentage points higher, reflecting the prevailing market rates at that time. Financial costs, including exchange losses, increased by nearly DKK 100 million compared to 2024. We have already addressed the effect of the discontinued distribution of the ZYN nicotine pouch product, which negatively impacted group organic net sales by 1.3%. This implies that the underlying decline for the year was 1.8%. Finally, I'd like to address the decline in return on invested capital, which is a key KPI for us as we strive to meet our new financial ambition. Return on invested capital decreased to 7.9% from 9.4% in '24, while our ambition is to achieve a return on invested capital above 11% in 2030. Excluding the impact of special items, which are included in the calculation, return on invested capital was 9.3% in 2025, almost similar to '24. The decline in return on invested capital for the year was primarily due to lower EBIT as invested capital remained broadly unchanged at DKK 14.5 billion. Please turn to Slide #21. Niels mentioned in his opening remarks, the free cash flow before acquisitions was approximately DKK 200 million below our guidance. The free cash flow was DKK 595 million compared to DKK 931 million in '24, and our guidance range was DKK 800 million to DKK 1 billion. In the fourth quarter, free cash flow before acquisitions was DKK 147 million compared to DKK 604 million in the fourth quarter of '24. The lower cash flow during the quarter relative to our expectation was due to delays in collecting of receivables associated with our ERP implementation in Europe. This issue has now been resolved. Payments are beginning to be recovered, and we anticipate working capital will return to normal levels during the coming months. The delayed payments are expected to have a positive effect on cash flow during the first half of 2026. The effect on working capital during the fourth quarter resulted in an unusually negative contribution from changes in working capital with a reduction of DKK 17 million in the quarter, which was DKK 180 million lower than the positive contribution during the fourth quarter of '24. Typically, working capital changes are positive in the fourth quarter of the financial year. Other factors contributing to the lower cash flow in the fourth quarter included a reduced EBITDA and higher taxes paid, which in the illustration is included in investments and other. Now please turn one slide to Slide #22. In the fourth quarter, the leverage ratio increased from 2.9x by the end of third quarter to 3x by the end of 2025. The increase is due to a decline in EBITDA before special items compared to the fourth quarter of last year. Compared to '24, the leverage increased from 2.6x. Throughout '26, we remain fully committed to lowering the leverage ratio and working towards our target ratio of 2.5x. This is a top priority for us this year, and if our earnings come under greater pressure than anticipated, we will take necessary steps to ensure the leverage ratio is reduced. Now please turn to Slide #23. In November, we announced our capital -- new capital allocation policy, which is guided by a leverage target of 2.5x. This target determines the level of investments and shareholder payout, giving us the financial flexibility to pursue growth opportunities while delivering shareholder returns. It also emphasizes our commitment to maintaining an investment-grade credit rating. We transitioned to a payout ratio-based dividend policy, ensuring dividend distributions are closely aligned with our underlying financial performance. The dividend payout ratio is set between 40% to 60% of adjusted earnings per share. This approach will take effect with dividend allocation related to the '25 financial results and will impact the dividend proposal for the upcoming Annual General Meeting in April. Since our listing in 2016, we have consistently delivered on our shareholder returns and intend to continue doing so. Given the current leverage ratio, we believe it is prudent to propose a dividend payment of 2025 in the low end of the payout range. The Board of Directors plan to propose a dividend payout per share of DKK 4.5 corresponding to a payout ratio of 42%. As we normalize our leverage in the coming years, we intend to create greater capacity for share buybacks, which continue to be an essential component in our overall capital allocation policy. With this, I will now hand the presentation back to Niels. Please turn 2 slides to Slide #25. Niels Frederiksen: Thank you, Marianne. For 2026, we expect the consumer trends to be unchanged for most of our product categories and markets and broadly similar to historic trends. We do appreciate that uncertainties are elevated and the risk for external disruptions remain high. However, we believe we have established good control of our internal processes and operations following the implementation of the SAP solution throughout Europe, and we are now well prepared to execute on our new strategy. For 2026, we expect group net sales growth at constant currencies to be in the range of minus 2% to plus 2%. The expectation reflects that total market volumes for machine-rolled cigars in Europe will decline by 3% and consumption of handmade cigars in the U.S. will decline by 4%. Improving our market shares, growing our U.S. retail and nicotine pouch businesses are expected to offset the volume declines in our core combustible categories. For 2026, we expect the EBIT margin before special items to be in the range of 13% to 14.5% compared with the 14.9% in 2025. The expectation reflects that 2026 will be a year of stabilization and where we will continue investing to facilitate our long-term ambitions in Focus2030. Pricing is not expected to fully offset the impact from cost increases, changes in product and market mix as well as our increased promotional activities to protect and improve our market share positions. On a more technical note, an increase in the amortization of trademarks of approximately 1 percentage point on the EBIT margin before special items is expected to be largely offset by an expected higher income from certain duty refunds. The increase in amortization reflects the group's new strategic direction with stronger focus on power brands, implying that brands outside the scope of power brands going forward are classified with a finite useful lifetime. For 2026, the free cash flow before acquisitions is expected in the range of DKK 950 million to DKK 1.2 billion, reflecting the expectations for net sales and margins as well as the delayed payments from trade receivables, which Marianne talked to, impacting cash flow positively in 2026 with an expected effect on cash flow during the first half of this year. Now this concludes our presentation for today's call. I'll now hand the word back to the operator, and we are ready to take questions. Thank you. Operator: [Operator Instructions] And now we're going to take our first question over the audio lines. And the question comes from the line of Niklas Ekman from DNB Carnegie. Niklas Ekman: First question is regarding the guidance for 2026 because at the Capital Markets Day in late November, you talked about an ambition for a low single-digit growth of EBIT. And it looks now like even the upper end of the full year guidance suggests a decline and the low end, a quite significant decline. So can you elaborate a little bit on this? Is there anything that has worsened since the Capital Markets Day in November? Marianne Bock: Thanks for the question. So when we talk about a low single-digit increase in EBITDA, it is over the strategy period. We are believing that 2026, which we also said at the Capital Markets Day is what we call a year of stabilization. We need not only to stabilize the internal disruption that we have seen in '25 but we also need to stabilize both our handmade cigar business and our machine-rolled cigar business. And that will entail investments into regaining market share but also in promotions. So we still believe that over the strategy period, we will see low single-digit growth in EBIT. But in '26, we could see a decline. Niklas Ekman: Can I also ask about your view on margins and potential cost reductions and particularly given the quite steep margin decline we've seen in recent years. You've now have margins that have dropped below pre-COVID levels and the guidance for '26 suggests a further decline. Are you in a stage now where you are looking more actively at your cost base again and maybe at initiating more significant cost reductions in order to curb the margin decline? Or what's your view on that? Marianne Bock: Yes. Thanks again, Niklas. So if we talk margins in '26, margins in '26 will also be impacted by mix, which means that our nicotine pouch business, we expect to grow but we are also seeing declines in our fine-cut business that has very high margins. When we talk about cost programs, we announced at the Capital Markets Day a cost program of DKK 200 million over the coming years. We are, as we speak, executing on these cost programs. We have full plans in place for those DKK 200 million, and we will see that coming in, during '26 and also '27. I would also say that if we see markets are worsening compared to our expectations, we will, of course, look at our cost levels. Niklas Ekman: Okay. Very clear. I'm also curious, when I look through the report, you used to talk a lot about the growth enablers. And now you talk more specifically about next-generation products and the retail stores. Is this a definition that you have removed? And is this because you don't -- you no longer see the international handmade business as a major growth driver? Niels Frederiksen: Yes, it's a good question, Niklas. I think that with the new strategy, you can say that retail expansion and nicotine pouches still play a central role. But the growth in international handmade cigars is still important to us, but we have prioritized doing well in handmade cigars in the U.S. more. So referring to the growth enablers as we originally defined them makes less sense. We now want to be more focused on stabilizing earnings in the machine-rolled cigars, smoking tobacco, growing the handmade with a focus on the U.S. and growing nicotine pouches. So we will try to articulate the degree to which we succeed with these things in a different way than referring to the growth enablers. Niklas Ekman: Very clear. And just a final question. Am I right to assume that buybacks are quite unlikely in '26. When I look at your leverage ratio and your aim to get net debt below 2.5x EBITDA, I guess the only way to get there is if you stick to dividends and not buybacks. So buybacks are unlikely in '26. Is that a right assumption? Marianne Bock: I think the short answer is yes. Operator: Now we are going take our next question, and the question comes from the line of Sebastian Grave from Nordea. Peter Grave: I apologize for those being broadly in the same line of Niklas. But I'll start off with a question on the margin here. So for the guidance of '26, you're guiding for quite steep margin declines compared to '25, even from a fairly low starting point in '25. And I know you talked about increased investments in market shares. But I mean, on the flip side, I would assume that you should see some tailwind from Mac Baren synergies. There should also be some SAP efficiencies and cost takeouts as highlighted in the Capital Markets Day. So at least in my view, it looks like underlying the margin pressure here is way more pronounced than what is -- we can see from the highlighted numbers here. So could you maybe help me understand how this works and how exactly this aligns with your articulated ambitions of protecting earnings in the short term? Marianne Bock: Yes. Yes. Let me start out, Sebastian. And first of all, thank you for asking questions, and then Niels can also elaborate. But if you look at our guidance range, both when we look at top line and also margins, it is quite wide ranges if you compare to our business. And it is a signal of uncertainty on our total markets, how they're going to develop but also uncertainties in the external world. So we are anticipating a slight decline in margins in '26 due to the reasons that I mentioned to Niklas. We are on track on the synergies for Mac Baren. You talk about SAP synergies. There will also come synergies in on the SAP implementation. But as we are still rolling out, we're focusing on that rather than executing on those synergies for now. Niels Frederiksen: Yes. I can add, Sebastian. I think when you look at Europe and machine-rolled cigars, you have the area where you have a lot of mix of product and market. The thing that is, let's say, not new but is more sustained and we can also see it continuing into 2026 is the promotion pressure applied across all sales channels in the U.S. So even though we take price increases and we continue to have a high focus on that, margins are under pressure simply to stay competitive, both on a, let's say, a brand level to regular retail and on an online level competing in the U.S. So these are some of the key dynamics that are in play and which we are obviously working very closely to improve but that is what is reflecting the margin pressure that Marianne also referred to. Peter Grave: Okay. So what I'm hearing you saying, Niels, is that you are in a difficult consumer environment in a structurally declining category with fierce competition. And hence, is there any reason to believe that invest in these currently elevated investments in market shares that they should taper off in the near term, i.e., in '27, '28? Niels Frederiksen: Yes. I think that the way to think about this is that market conditions have intensified, if I can put it like that. And our strategy aims at protecting and enhancing market shares, and that comes with a higher promotion pressure. Our job over time is to let's say, improve or lower that promotion pressure and still do well on market shares but it requires the market conditions to improve. So you can see the combination of total market declines and the -- let's call it, the fight for market share is what is putting the pressure on the market. And we have, of course, an expectation that over time, that will normalize. We've not seen promotion pressure like this and downtrading on this for some time. Peter Grave: Okay. That is fair. And my last question is going back to the ambitions of harvesting some DKK 200 million efficiency gains as you talked about in the I understand that some of these ambitions have already translated to initiatives but can you maybe help explaining how much of the DKK 200 million is already reflected in the '26 guidance and how much we should expect beyond that? Marianne Bock: Yes. So I would -- for the '26, I would think it in the level of around DKK 100 million. Peter Grave: Okay. Okay. So half of the efficiency gains... Marianne Bock: Sorry, Sebastian, then going into '27, we'll be closer to DKK 200 million but probably not fully, and we'll see the last part coming in, in '28. Operator: [Operator Instructions] And we're going to take our next question on the audio line. And it comes from the line of Damian McNeela from Deutsche Numis. Damian McNeela: The first one is on Canada and Australia because I think in the press release last night, you called out challenging conditions there and the impact that, that's had on the business. You did mention in the presentation. Can you talk a little bit about what's happening in those markets and what the outlook for this year is, please? That's my first question. Niels Frederiksen: Thank you, Damian. And if I start with Australia, for those that follow the industry closely, it's maybe no surprise that we have seen an explosion in illicit trade. So a lot of tobacco companies, including ours, have seen earnings decline by quite a bit in Australia. And this is, let's say, increased for us in the sense that we had because of regulatory changes, a relatively higher sales in 2024 than in 2025. So the net impact of Australia on our profitability is quite distinct. So Australia is very much about a total market that is going illicit. And we are not losing market share, but basically losing volume simply because the legitimate market is lower, and it's a high profit market as we debate that will be discussed. For Canada, the situation is a little different. Also here, our market share position is strong and broadly unchanged. But in Canada, there is a -- from time to time, a larger sales into the Indian districts and the government have restricted some of those licenses they issue for selling in Indian districts, and that has affected our sales in Canada in 2025. So those are the 2 main explanations around Canada and Australia and them being among our highest margin markets does affect the average margin and total costs. Damian McNeela: Yes. And just as a follow-up on that Canada point, that's likely to remain the case for the medium term, is it? Niels Frederiksen: It's been -- over the years, this has been an on and off issue. So there's nothing wrong with selling in the Indian districts but they need licenses and sometimes the government takes it away from them and then a period passes and they get reinstated. So we are still of the view that they may come back but there's no guarantees around it. Damian McNeela: Yes. And so the guidance assumes no return for those... Niels Frederiksen: Yes. Yes. Damian McNeela: Yes. Okay. And then in MRC Europe, it looks like margins have stabilized, but market share losses have continued. I was just wondering whether you could sort of call out some of the competitive dynamics in your -- a couple of the bigger markets that you operate in. Just to give us a sense of how the business is performing now that the sort of ERP system is up and running and fully implemented? Niels Frederiksen: Yes. Let me try to give a few examples. So 2 of the key markets in our strategy is France and Spain. And as we have been resolving the inventory availability issues up until the end of 2025, we are seeing that market share is responding positively into 2026 but it's also us recovering from a low level. So we are still saying we have to be patient around how fast we can regain market share into 2026. But at least in these 2 markets, you can say that we have inventory availability back to where we would like to have it. When you look at other key markets in Europe, the situation is a little different. We have markets like the U.K. where there is a higher decline rate of machine-rolled cigars, and there's also a shift from regular machine-rolled cigars where we are strong to increasingly small cigars where we are competing up against some of the larger tobacco companies. So even though those categories grow, the mix in margin become again a net negative. When you then look to the Central European markets of Benelux and Germany. Here, we are, again, still concentrating on getting customer service levels back to where they need to be. And also here, you have in certain markets, this new dynamic of consumers shifting between what we call mainstream small cigars and little cigars, which are also cigars but sold at a lower price and typically in 10-pack cigarette type packaging formats. So it's -- what I'm really saying is it's quite a complicated picture when you look across the markets. What's important to remember is we have really strong market positions in many of these places, France, Spain, Benelux, U.K., and that's what we're trying to leverage to get the market share back. Marianne Bock: And then you were also asking about the competitive situation. And here, we are seeing -- which we've also seen over the years that our competitors are reluctant to take the same level of price increases, which we think is necessary to cover both volume decline and cost increases. Damian McNeela: Okay. So that hasn't changed at all. Marianne Bock: No. Niels Frederiksen: No. Damian McNeela: No. Okay. And then just on -- I guess this is a slightly more philosophical one. You've changed guidance from EBITDA to EBIT margins. I was just wondering if there was anything behind that decision to do that. Torben Sand: Yes, maybe I can answer that. First of all, we believe also now where we have a more distinct and clear focus on return on invested capital, it goes more in line with giving a guidance on EBIT. Secondly, the EBIT level also includes what we have seen in the past few years, increased investments and therefore, depreciation in especially our retail business. And then we have also noticed from kind of studies we have made with the market that it's a more common practice to guide on the EBIT level. So that's the key reasons for us changing that. Damian McNeela: Yes. Okay. That's clear. And then perhaps if I may, one last one, just on the XQS brand. Can you just sort of give a sense of the areas of focus for growth? I mean, obviously, Sweden is pretty strong already. Do you see increased investment behind the brand through the course of '26? Niels Frederiksen: We are seeing increased investments behind the brand, Damian. If you look at the geography, we talk a lot about Sweden. We talk a lot about the U.K., which are 2 important markets for us but we also consider, let's say, Scandinavia at large, and we are opening a new subsidiary in Norway later in the year. They will, of course, also include nicotine pouches in their portfolio. Finland is also in the focus area and certain Eastern European countries. So we are focusing on the European geography to build momentum also outside of Sweden. Operator: Thank you. Dear speakers, I have no further questions. Please continue. Torben Sand: Okay. Yes. Thank you. And I was simply just going to close off the call now. Thank you for listening in. Thank you for the questions. And yes, we will meet again in May after our first quarter results. Thank you, and have a good day. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

34天前Insight Analytics约5分钟阅读

STUB 2025 Q4 财报电话会议

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to StubHub's Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, March 4, 2026. I will now turn the call over to Clinton Hooks with StubHub. Please go ahead. Clinton Hooks: Thank you, operator, and thank you for joining us to discuss StubHub's fourth quarter and year-end 2025 results. For reference, our fourth quarter and year-end 2025 earnings release, shareholder letter and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore, you should exercise caution when interpreting and relying on them. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless otherwise required by law. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings, including the annual report on Form 10-K for the year ended December 31, 2025, when it is filed with the SEC. During today's call, we will also be discussing non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings release, shareholder letter and investor presentation as applicable, available on the StubHub Investor Relations website. Please note that unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric. Eric Baker: Good afternoon, everyone, and thank you for joining us today. 2025 was a pivotal year for StubHub. We grew our marketplace, further strengthened our competitive position, transformed our balance sheet and became a public company. As we enter 2026, StubHub remains a leading global ticketing marketplace for live events with durable advantages, scale and liquidity, structurally strong financial fundamentals and a diversified global footprint. These fundamentals are built on our core strengths, which continue to drive our competitive advantage. First, our leading marketplace position with a category-defining brand and approximately 50% share of the secondary ticketing market in North America. Second, our proven network effects that create durable competitive advantages. As we attract more buyers through our leading distribution and global reach, sellers add more inventory and selection to our platform, which in turn draws more buyers and further expands our distribution. Third, our asset-light online marketplace model, which delivers consistent take rates, over 80% adjusted gross margins and strong free cash flow conversion. As an online marketplace, we generally do not take inventory risk and incur limited variable costs with each transaction, allowing us to reach large global audiences and generate substantial revenue with modest ongoing capital requirements. Fourth, our extensive data set across millions of global events. Our data on supply, demand, pricing and user behavior enables differentiated product innovation, marketing optimization and pricing intelligence that reinforce our market leadership. Fifth, scale is the defining advantage in our category. As the scale leader in secondary ticketing, our superior liquidity, trusted brand and operational excellence creates sustainable competitive advantages. And finally, an exceptional team with leadership experience built through decades of building and operating our business. I'm grateful to work alongside a group of high-caliber employees who show up every day for our customers, improving the product, strengthening trust and delivering operational excellence at scale. We're also fortunate to have a deeply experienced management team, leaders who helped build this company from the ground up, raising the bar for StubHub year after year. Together, these strengths position us to capitalize on the expanding live event industry. We sit in a unique position at the intersection of technology and live events as we pursue our vision to be the global destination for fans to access live entertainment. We remain relentlessly focused on improving every part of the StubHub experience from discovery and pricing transparency to fulfillment and support because a better fan experience strengthens trust, drives conversion and reinforces the marketplace flywheel. Before I touch on longer-term initiatives, I want to be clear about what is driving our business today. Our results and outlook are driven by our resale marketplace, which constitutes the vast majority of our revenue. In 2025, we delivered $9.2 billion of GMS, continued to grow, gained share and strengthened our competitive position. We expect that in 2026, StubHub's financial performance will continue to be driven by this core resale marketplace. Building on this foundation, our first several months as a public company have provided valuable perspective on our strategy to unlock new market opportunities. We believe direct issuance, non-exclusive, open distribution of originally issued tickets remains a transformational long-term opportunity for StubHub and the broader live event ecosystem. We have made progress through business development with marquee content rights holders across sports and music in multiple geographies, and we believe demand for this distribution model has been validated. Our experience has reinforced that the largest market potential will come from making direct issuance frictionless to adopt across a much broader range of rights holders. That requires reducing operational friction for partners with varying levels of technological sophistication and advances in artificial intelligence are materially expanding what is now practical to build on the supply side. By leveraging these advancements, we believe we can bring capabilities to market that would have been difficult to deliver even a year ago, including AI-assisted tools that automate workflows and simplify inventory management. For 2026, we are prioritizing building the product foundation required to scale direct issuance broadly. Accordingly, we are shifting from a primarily business development-led strategy to a more product-led strategy, building an AI-enabled technology-driven ecosystem that enables inventory to be contributed and managed with minimal operational burden. Development is underway to bring these supply-side products to market. We believe this approach positions direct issuance to become a durable growth engine when the self-serve capability is in place. This strategy shift means we will not be optimizing for immediate revenue growth, but for maximizing our revenue opportunity over the long term. Similarly, our efforts to build our advertising business are showing promising early results as we leverage our unique advantages. Early partnerships have helped validate the opportunity and are helping inform how we will scale advertising in a way that is truly additive by enhancing relevance and utility for customers. Our advertising business is generating modest revenue today, and we are continuing to iterate toward a model that enhances the seller and buyer experience. We are taking a disciplined approach to both initiatives, prioritizing scalable execution. This measured path forward reflects our commitment to maintaining the marketplace experience that defines our competitive advantage while compounding shareholder value over the long term. Finally, a quick note on the regulatory environment. We continue to operate within a generally favorable status quo that supports open functioning resale markets across jurisdictions. That said, public discussion around ticketing has increased in recent months, and we want to be clear about why we believe the secondary ticketing market and StubHub as a scale leader are defensible and durable over the long term. The secondary market solves durable ecosystem needs across a broad diversity of live event content. It is not dependent on any single event type or a narrow set of behaviors. A liquid resale market supports the ecosystem in foundational ways by: one, improving the category experience for consumers through trusted, fraud-protected ways to buy and sell tickets with ease and providing flexibility when plans change. Two, improving sell-through and pricing confidence in the primary market as consumers are more willing to buy earlier when they know they have a trusted option to resell. Three, enabling risk and cash flow management for content rights holders, teams, promoters and event organizers by providing liquidity and a pathway for inventory to be redistributed through power sellers and season ticket holders. And lastly, improving attendance utilization and venue economics by helping ensure tickets end up with someone who will attend, driving meaningful ancillary revenue through concessions, parking, merchandise and a better in-venue experience. Even if well-intentioned, we believe altering this vital link in the live event value chain ultimately harms the fan experience and the live event ecosystem overall. Regulatory change in live events is inherently complex. The live events ecosystem is a vast global surface of content and demand profiles, spanning everything from lower demand community events, small club shows to global music tours and the world's largest sporting moments across countless jurisdictions and market structures. Any framework that seeks to broadly reshape the resale market would need to account for a wide range of event types, seller profiles, consumer use cases and enforcement realities and would need to be implemented across many jurisdictions where live events occur. With that context, we believe public discussion tends to focus on a certain subset of the resale market, resellers that list large quantities of inventory on marketplaces for very high-demand concerts at high prices significantly above the original sale price. Based on our internal data, we estimate that approximately 10% of our GMS in 2025 was attributable to these types of high-demand concert ticket sales by resellers. Importantly, we believe that StubHub's durability is reinforced by our diversification and lack of concentration across sellers, content rights holders, buyers, event types and geographies. providing a level of insulation from potential regulatory changes that may affect any single subset of the market or any single jurisdiction. Finally, we have a responsibility to continue educating policymakers on the consumer protections and structural benefits that our marketplace provides and are continuing to bolster our government relations efforts to support this. We intend to engage constructively while operating responsibly to best serve fans around the globe. We are entering 2026 with a scaled, resilient core resale business, an improved competitive position that supports growth and scaling margins and a transformed balance sheet. We are also continuing to progress towards longer-term upside opportunities. Our commitment is straightforward, set expectations we can deliver upon and execute consistently. We intend to deliver results that reflect the strength and durability of the business. With that, I'll turn the call over to Connie to discuss our financial results and guidance. Constance James: Thanks, Eric. In 2025, we delivered $9.2 billion of GMS, up 6% year-over-year. Excluding the Eras Tour, our GMS grew 18% year-over-year, reflecting the underlying performance of the business. Our growth was driven by continued market share gains in North America, where we expanded our share in North America to approximately 50% of the secondary market. Internationally, our expansion outpaced growth in North America. Turning to our income statement. As a reminder, I'll discuss our financials on an adjusted basis, excluding stock-based compensation and other onetime items. Full reconciliations are available in our earnings release. First, on the fourth quarter. Beginning with the fourth quarter 2025, we generated $2.3 billion of GMS, down 8% year-over-year. This reflected lapping an unusually strong fourth quarter 2024, which benefited from several favorable dynamics, including the conclusion of the Eras Tour, a particularly strong MLB World Series and the timing of major concert on sales shifting across quarters. Excluding Eras-related comparability, fourth quarter GMS growth was approximately 6%. Revenue was $449 million or 19% of GMS, down 16% year-over-year. The change was primarily due to lower GMS, partially offset by lapping prior year direct issuance-related minimum guarantee structures that were treated as principal revenue and that we have since reduced. Additionally, our revenue as a percentage of GMS of 19% reflects our deliberate market share investments through take rate adjustments, consistent with our full year 2025 operating strategy to prioritize competitive positioning. Adjusted gross margin was 83%, up from 76% in the prior year period, reflecting the lapping of those minimum guarantee structures. Adjusted sales and marketing expenses were $234 million or 52% of revenue compared to $221 million in the prior year period or 41% of revenue. The change reflects our investments to accelerate market share in core resale. Adjusted EBITDA was $63 million, representing a 14% margin. This reflects the impact of our market share investments as we deliberately prioritize capturing market share and our continued investment in direct issuance capabilities during their early partnership development phase. For the full year 2025, revenue for the year was $1.7 billion, 19% of GMS compared to $1.8 billion in 2024. The performance was impacted primarily due to direct issuance-related minimum guarantee structures in the prior period and the impact of our market share investments on take rates. Adjusted gross margin for the year was 83%, up 200 basis points from 2024. The improvement reflects the lapping of the costs associated with minimum guarantee structures. The full year gross margin is representative of our current operational profile and demonstrates the structural advantages of our asset-light marketplace model where we facilitate transactions. Adjusted sales and marketing expenses were $943 million or 54% of revenues compared to $828 million or 47% of revenues in 2024. The increase reflected 2 primary drivers. First, our investments to accelerate market share in core resale where we deliberately prioritized market share capture. Second, our continued investment in building direct issuance capabilities during the early partnership development phase. Adjusted ops and support costs were $57 million, down from $59 million, flat as a percentage of revenue at 3%, reflecting improved operating efficiency. Adjusted G&A costs were $223 million, 13% of revenue, down from $250 million or 14% of revenue in 2024. The reduction reflects improved operating leverage as we continue to scale the business, including a reduction in professional service fees. Adjusted EBITDA was $232 million, equal to 13% of revenue. This result reflects 2 primary factors: First, the deliberate investments we made during the year, both in market share acceleration and in building longer-term initiatives. These investments successfully positioned us to achieve approximately 50% of North American secondary ticketing market share, establishing a foundation that supports fiscal '26 margin expansion. Finally, I want to highlight 2 factors impacting our net income. Our GAAP results for the full year include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted awards when their IPO-related performance conditions are satisfied. In addition, we incurred a nonrecurring noncash income tax expense of approximately $480 million related to the establishment of a valuation allowance on the deferred tax assets. Both stock-based compensation and valuation allowance expenses are excluded from our adjusted EBITDA calculations and have no impact on our cash flow or cash position. Turning to cash flow. I want to spend a minute on how cash is generated in our marketplace model. First, our cash conversion cycle benefits from the timing mechanics of ticketing. We collect funds from buyers at checkout while seller payouts occur later, often closer to or after the event date. This timing difference creates a recurring balance of seller proceeds on our balance sheet and contributes to our cash generation. Our business is also structurally asset-light. We don't generally take inventory risk and capital expenditures remain modest relative to the size of our business. We also benefit from net operating losses that reduce cash taxes in the medium term. Finally, because of the seasonality of live events and the timing of major tours and sports calendars, free cash flow can be variable quarter-to-quarter. For this reason, we evaluate free cash flow on full year and trailing 12-month periods rather than any single quarter. In 2025, our free cash flow represented nearly 70% conversion of adjusted EBITDA. This figure also includes interest costs during the period, which has since been reduced as a result of our debt repayment. Turning to the balance sheet. In 2025, we reduced our total debt by approximately 35% through the repayment of approximately $900 million of our U.S.-denominated term loan, bringing our total debt down to $1.5 billion at year-end. We also ended the year with approximately $1.2 billion of cash and cash equivalents or $494 million, net of payments due to sellers. As we scale, we expect the business to continue generating strong cash flow, and our priority remains maintaining a strong balance sheet and reducing leverage over time. Turning to our fiscal year '26 guidance. Before I discuss the specifics, I want to address why we are providing annual rather than quarterly guidance. The live event market is seasonal and can be variable quarter-to-quarter where the timing of major concert on sales and event schedules can shift across quarters from year-to-year. This can create lumpiness in quarterly growth rates even when underlying business momentum is steady. Fourth quarter '24 and fourth quarter '25 GMS illustrate this dynamic clearly. Fourth quarter '24 benefited from unusually favorable timing, including the finale of the Eras Tour and a concentrated set of major concert on sales, contributing to an exceptionally strong period and year-over-year GMS growth of 47%. Fourth quarter '25 reflected the inverse. Our GMS was down 8% year-over-year, driven by the lapping of this unusually strong comparison and by major concert on sales being more spread across quarters. Neither quarter on its own provides a representative view of the business. In fact, our market share was higher in the period GMS declined than in the period GMS grew significantly. For these reasons, we believe our business is best evaluated on an annual and last 12 months basis. Our guidance is grounded in what we control and what we believe we can execute with high confidence. For 2026, this reflects the earnings power of our core resale marketplace and includes disciplined operating expenses to support direct issuance and advertising without assuming any material revenue contribution from either initiative. For 2026, we expect to grow GMS to between $9.9 billion and $10.1 billion, representing 9% growth at the midpoint and expand adjusted EBITDA to between $400 million and $420 million as our marketplace flywheel strengthen and operating leverage increases at scale. Our GMS growth formula is straightforward: North American market growth, incremental market share gains plus international growth. Let me dive into each of these segments. First, North American secondary market growth. This market has historically grown at low double-digit rates. While there will continue to be a comparability impact from the all-in pricing transition until we lap its implementation in May, we believe underlying growth in the market remains strong. Second, market share gains in North America. We have a demonstrated track record of outgrowing the market in recent years. For 2026, we expect to continue gaining share while reducing these investments and increasing customer acquisition efficiency. Last, international growth. International markets account for approximately 15% of our GMS. We expect GMS in international markets to grow at an accelerated rate, benefiting from earlier-stage market development. Overall, our adjusted EBITDA guidance assumes the economic engine that has long defined StubHub remains consistent. Take rates in the 20% range, over 80% adjusted gross margin and improving operating efficiency as we scale. Given the structural strength of our unit economics, an important driver of earnings power is how efficiently we scale operating expenses, particularly adjusted sales and marketing, our largest expense line. To that end, our 2026 plan reflects 2 key strategic refinements. First, we are evolving our direct issuance strategy towards a more scalable technology-enabled model, which naturally reduces investment intensity. And second, we are raising customer acquisition efficiency in core resale. Acquisition efficiency is an input we control and our improved scale and conversion allows us to earn higher returns on marketing spend while growing. In 2025, we deliberately lowered acquisition efficiency, spending more per transaction to accelerate market share gains. The goal was to strengthen the marketplace in durable ways. As our share of transactions increased, our competitive position improved, and we created advantages that continue to compound through improved conversion. Higher conversion means each marketing dollar generates more transactions and more gross profit than it did previously. As a result, in 2026, we believe that we can raise acquisition efficiency while continuing to grow and take share. Together, these refinements reflect how a scaled marketplace model inflects. As conversion improves and our competitive position strengthens, we can allocate marketing dollars more efficiently while growing, expanding EBITDA through operating leverage and generating strong free cash flow. With that, we will now open the call to Q&A. Operator? Operator: [Operator Instructions] the first question comes from Doug Anmuth with JPMorgan. Douglas Anmuth: You're gaining share in retail, you talked about hitting kind of around the 50% level. Does the 9% growth in GMS just in the core retail market is growing slower than you initially expected in '26? Or is there something else going on? Eric Baker: Sure. Doug, thank you for the question. Appreciate it around growth. And let me revisit just sort of the general framework around growth and how we think about it, and then I'll hand it to Connie to get into some of the specifics. So again, as we've sort of said, we're very -- our market has been very strong. More people are going to live events. They're going to a greater breadth of events. They're doing it all across the world. So the North American market has been strong. As we've said, too, we continue to gain share in the market as we're inflecting margins. So that's happening. And then we're seeing increased throughput internationally, these global events that are taking place and people traveling. So there's a lot of great tailwinds in the market, which is allowing us to grow and grow while we take share. But with that, let me throw it over to Connie for the details. Constance James: Yes. Thanks, Doug. Good to be with you. And I'll just touch on the GMS drivers, and there's really 3 key ones, which you've picked up on a couple of them. So first, the market growth, as Eric mentioned, we benefit from operating in a really healthy overall North America secondary market that has consistently grown low double digits. That said, what we know to be true is we're going to continue to have this all-in pricing overhang for the first 5 months. We do anticipate continuing to accrete some modest share gains and then layer on top of that international growth. So all of that, call it, ladders up to the 8% to 10% GMS. And what I would also add is, again, it's anchored in what we're seeing today. The good news is quarter-to-date, we're seeing really healthy top line growth, expanding margins, all supportive of our full year guide. Douglas Anmuth: And then if I could just follow up on direct issuance, you've kind of talked in the past about like '26 being a potentially industry inflection point. And now obviously, there's a strategy shift that's taking place. I guess what has changed most here in your view on the outlook and progress for direct issuance? Eric Baker: Sure. Thank you for the question, Doug. And let me walk you through what's evolved on direct issuance and what we've seen and why we've made this deliberate decision to shift to the product development for this year. So just for everyone again, to set the context, direct issuance for us is this belief in this open distribution. Content is going to want to come, sell their tickets directly over StubHub and use our data and distribution to do so. We've had great success we had with folks like the Yankees, Ambassador Theater Group and others to prove this out. And as in the past 6 months, as we've gone out and we've been excited about it, there's a lot of, we believe, demand and enthusiasm for it. And quite frankly, we've been very excited about how broad and deep that is, by which I mean there's a long tail of different types of events and a great breadth of them. What we have found, Doug, in going through it with the team is that really, we think one of the key unlocks to unlock it even faster is eliminating friction on the product side, make it easy for people to use the product and technology because the will is there, everything makes sense. And that really unlocks more of what we talked about with a number of customers we had seen where you have this like self-serve ecosystem, which is a great solution for the customer. It's also a great business model that scales very nicely. And so as we looked at and we sat down, we said really with what's going on, we should focus in '26 on developing that product, particularly with the fact that given everything going on with AI, there's a real chance to advance those tools quickly and to get them to a good place. As a result, that does mean that we are deliberately shifting to a longer-term focus. We think we will create more value in the long term rather than focusing on the short-term revenue creation this year. Operator: Your next question is from Eric Sheridan from Goldman Sachs. Eric Sheridan: Maybe a 2-parter, if I can. In terms of learning on some of the key dynamics from ramping marketing and gaining market share in '25, can you talk a little bit about what the key lessons learned from that were? And how it informs the theme you're talking about tonight with respect to being more effective with acquisition and growth investments in '26? And if possible, a way to frame sort of that effectiveness either quantitatively or qualitatively '26 relative to maybe some of the return profile in '25? Eric Baker: Sure, Eric. Thank you for the question. Appreciate it. Let me give you an overview about some what you're asking about what are -- how do we think about this core secondary engine and what does that mean in terms of getting these inflections. And I'll give you my sense of that, and then Connie can give you more of the financial detail as well. So I think as you recall, our whole fundamental thesis that was from our lived experience is that we saw that if you can get -- if you have the StubHub asset and you run it the right way and you can get the market share back and hit the right point of relative market share, you accelerate all these different flywheels that you get and network effects because you're in a marketplace business. So whether that's you've got more data, the conversion goes up, the liquidity flywheel, all these good things happen. Therefore, what we've seen and what you see in marketplace businesses is that you're able to hit a point where you get this beautiful thing, you're able to grow and take share while increasing your margins, which is why it's such a great business to be in. That's not just something that we've observed about marketplaces, be it the Airbnbs and others of the world. That's our lived experience that we've seen in building these businesses and what we saw at viagogo. And so to your point, what we said is in 2025, we really were focused on finishing off and pushing this concept of the market share and doing some of those things. And we really believe and as our thesis was that we would see we would get to this relative market share, be 3x greater than other people and start seeing this virtuous cycle occur. As Connie, I'm sure, will walk you through, not to steal her thunder, you can see what we're now saying in our guidance, we're seeing that we will be able to grow, continue to take share and inflect the margins. And I think as Connie will tell you, we sit here now, whatever it is in March, observing that this is, in fact, happening. So with that, let me turn it over to Connie. Constance James: Yes. I think that's exactly right, Eric. And also thanks, Eric, for joining the call today. If you step back and really think about it, we were explicit that '25 would be a period of accelerated investment in particular into these relative market share, and we were really pleased with the outcome having secured about half of the market. So what you would have seen is an elevated period of sales and marketing. Late December, we decided to call it turn the dials given the flywheels and the benefits that Eric explained that started to show up, and that has continued. So we are seeing better efficiency coming through, which is resulting in these expanded margins, which Eric mentioned, we're seeing as we sit here, 2/3 the way for the first quarter. So all of that, again, gives us confidence of the stickiness and the benefits that we've seen and supports the full year guide. Operator: We'll now go to Justin Post from Bank of America. Justin Post: Great. Just wondering what you're thinking about for the concert season this year? You mentioned you had some comments on that in November and also the World Cup impact and then I have a follow-up. And how that's incorporated in your guidance? Eric Baker: Sure. I'll just give you a couple of comments generally, Justin, and thank you for the question for being on the call, and then Connie can talk. So obviously, as we said, in terms of the concert season, we've seen a number of very exciting concerts going on sale in January and whatnot, and that's been great. Obviously, the World Cup is a wonderful event that sort of epitomizes the fact that we have this global platform. I do think as Connie will walk you through some of the guidance slots, I think she'll probably also touch on why we guide annually. And I think it's sort of key in what we hope to articulate before because there's sometimes a little bit of lumpiness of when things go on sale. But with that, let me turn it over to Connie. Constance James: Yes. Thanks, Eric, and I appreciate jumping on the call, Justin. I think as we sit here today, things look really healthy. We typically look at the overall opportunity for the year and call it, Tier 1, Tier 2, Tier 3 events. In relation to your question specifically around World Cup, what we have seen in terms of our forecast assumptions is that we've decided to include that as a Tier 1 category. To be explicit, the Eras Tour was in a league of itself. As and when the World Cup continues to progress, we'll continue to keep you updated. In addition, I think you had a question just around how does perhaps some seasonality or as Eric talked, lumpiness occur from a concerts perspective and perhaps that just relates to what we saw in the fourth quarter. You're absolutely right. There can be movement. But again, the good news is when you look at it on an annualized basis, it tends to normalize. So where we sit from today, the overall market looks really healthy. Justin Post: Great. And then I'd love to hear any updates on the U.S. secondary regulatory environment? And/or have you learned anything so far from the Ticketmaster trial and opening arguments? Anything you might have learned from that? Eric Baker: Yes. Thank you for the question, Justin. And let me walk you through how we think about regulatory, and then I can touch on the trial that's going on. So the first thing is that from -- just to give people sort of our orientation is, started this business 25 years ago basically to give consumers a safe, secure way to buy tickets. And so that you wouldn't have fraud, you wouldn't have problems. And so we are, by definition, sort of we serve the consumer, we serve the fan, and that's what we do. And what I would say is we try and work as cooperatively with legislators and regulators because I believe, certainly, that in good faith, they have the same thing. They work for their citizens. They want people to have a good experience. They're working for the fan to make sure they can get into their events and get in there without having any problems. And so that makes sense. And obviously, we mentioned all-in pricing earlier. That's a great example where we worked and lobbied for that because we believe it's great for the fan and the consumer, even if it was a short-term headwind, as Connie said, because in the long term, anything that's good for the fan and the consumer is good for StubHub, and that's how we think about it. Now let me talk about the general regulatory environment today as it stands and some of the chatter that's out there. We generally -- first thing for people to understand is that we're in a very positive environment. It's legal to resell tickets. People are enthused about it. There's no issue going on today that is sort of hindering that in any meaningful way. What we are talking about now is why is that the case? And why has it been the case for decades. And I think there's two things that people need to understand. One is that, as I said, we're providing a service that's great for fans to give them access and eliminate fraud. And two is that it's actually very good for the content ecosystem. So in 2 ways. One is that if they're selling tickets and people have a safe, secure way to resell what they can't use, it's going to make it easier to sell the ticket in the first place. Secondly, is if you can unload tickets and put it in the hands of someone who can use it, you're more likely to fill the seats in the arena. So for all those reasons, that's why it has looked this way. Now let me get to your question twofold. One is, well, what is the regulatory -- what's the chatter? Are there concerns? What could they be? How do we think about it? So when we look at it today, Justin, all the real public discussion is really focused on what we see as a very narrow set of the market, which is for very high demand concerts where people are concerned or there are people who buy up tickets for those concerts in bulk and then sell them at a markup in bulk. They sell a number of tickets. So that's really where the focus has been. To give you a sense of how we -- because we think about this a lot, just what that surface is for our company as we approximate it to the best of our belief, you look at it that, that's about 10% of our global GMS. And that's 10% of our -- when I say global GMS for those types of events, that's across everything, across jurisdictions, across locations, across types of concerts, across different primary ticketing companies. So we have a very diverse catalog. That's just to give people a sense of surface. I know that's important to them and so forth. Finally, in terms of the Live Nation trial that's going on, I think it's important for people to hopefully understand, let me give you context for that. The DOJ going to trial with them is talking about Ticketmaster being a monopoly in primary tickets primarily. They've also talked about whether or not they tie things together, but let's stick with the monopoly power, I think, is the main focus. To us, that's really fundamentally, if you listen to what they're talking about, is the need for more open distribution. So they're basically talking about what we've called direct issuance and open distribution, which is that isn't the best outcome for any consumer and quite frankly, for content to allow them to take a ticket and distribute it ubiquitously, non-exclusively and have the outlets compete to give the best service to the fan. We're all for that. We support that. We're obviously working for the fan the same way other people do. All that being said, what we've also said is we do not bake in or anticipate any changes to what the status quo. I'm in no position to predict what may or may not happen in a courtroom or between the governments and Live Nation. We'll see how it plays out. If anything was to come to pass that was to push forward more of this open distribution agenda, that would only be great for fans and therefore, great for StubHub, but we will see. Operator: And next up is Mark Mahaney from Evercore ISI. Mark Stephen Mahaney: I'll just ask one question. On the advertising initiatives that you've had that is in advertising revenue. So you started rolling that out in the fourth quarter. Can you talk about what kind of traction -- you just mentioned it briefly in your opening remarks? How much revenue you've been able to generate so far, what the demand looks like in '26, how much you're baking into your outlook for '26? I know it's helpful on the top line, but particularly on the bottom line, too. So just how much contribution you expect from there? And when do you think you'll have a fully rolled out, the way you'd like it to be, advertising option? Is that this year? Or is that still -- is that more like a '27 event? Eric Baker: Thank you, Mark. Appreciate the question. Thanks for being on the call. Let me give you first on the advertising piece, what has evolved and how we've made some deliberate decisions in terms of how we're thinking about the strategy and timing there. I'll walk you through that, and then Connie can address sort of how that fits into guidance. So advertising, big opportunity for us. We know that we have a great group of users and folks on the site that have a very passionate and clear intent that people want to reach. We also know we have a bunch of sellers on the platform who have a perishable item and they want to get their ticket in front of the right buyer. So there's a lot of demand and interest for that. We always said that we have to get that right in terms of the customer experience, the experience for the buyer and the seller and then how it fits in our business before we're going to scale it up. And therefore, we did what we said we were going to do, which is in the fourth quarter, we started rolling out the ad product, sponsored listings as well. And we saw a good reaction from sellers to that. We started generating revenue and testing. What we realized in our thinking is we said, gosh, it's very important that we get this right to maximize the experience for the long term and maximize the business model for the long term so that we create maximum value for the participants in our ecosystem as well as for our shareholders. And in doing that, we've come to the determination that we want to spend more time working that through, working the product through and experimenting with it in this coming year. And that's the conscious decision we made, which we think will drive more value over the long term, even at the sacrifice of near-term revenue. With that backdrop, I'll turn it over to Connie, who can more specifically address your question about how that filters through guidance. Constance James: Thanks, Eric, and I appreciate you jumping on the line, Mark. In relation to how much revenue did we have in the fourth quarter, again, a very small modest amount. As Eric mentioned, we're still in testing mode on a small portion of the surface, albeit, again, super excited about the longer-term opportunity. And then we've been really explicit about ensuring that our guide is anchored in what we see in relation to today. And so we've taken the approach to have a very modest amount of revenue flowing through. You can think, call it, tens of millions for this year. That being said, as that continues to progress and change, we'll provide you with updates. Operator: John Blackledge from TD Cowen is up next. Logan Whalley: It's Logan Whalley on for John. A question around agentic commerce. Could you discuss your early learnings from your partnership with OpenAI and ChatGPT? And then looking forward, how do you expect to compete with other marketplaces in a world where people could be using chatbots to purchase tickets and other goods? Eric Baker: Thank you for the question. Logan, appreciate it. Let me -- I think you're asking about AI and how we think about that, what our experience has been in different ways. So let me start by sort of just setting the table for how we're thinking about that, how we think we're positioned. So the first thing is, obviously, AI is a transformational technological development across the world, across society. It's a big thing. There'll be a lot of, I'm sure, disruption. And with disruption comes risk and opportunity. So we spend a lot of time thinking about this and how we mitigate risks and how we see those opportunities. And I think as we've looked at and thought about it, I'll tell you how we think about it. We think we're very well positioned for what's going on if we execute and innovate appropriately. The first thing that is important to note is we are in the live event end market. So that is a pretty good end market to be in. We're very optimistic that it will be a long time before you're watching AI robots participate in the Super Bowl and people want to go to live events. So that's a good thing. The second thing is that we are a marketplace business, and we think it's a marketplace business with the complexity that we have operationally, that is also a good place to be. But let me be more specific to probably some of the questions you had about how we think about it. There's what we call the marketplace operations layer and then there's an experience layer to it. And I'll tell you how we think about each. So on the marketplace operations of our business, we think, is not something that's easily replicable, so to speak, just by an agent in terms of you've got very fragmented supply. You've got to have trusted fulfillment, payments, fraud prevention, customer support, financial protections. And quite frankly, AI will help us as the largest player with the most data excel at providing the best experience for customers in that. So we think that's good. On the experience side and as you note, there are people who are going to be making purchases through chat and agent-based interfaces with us. And we've been at the forefront of doing a number of things, as you mentioned, with some of our partners. What we're excited about is that by having the most data on our platform about you as a user, if we are able to -- what we're working on is weaving AI into the product, we can create that great experience for you at StubHub that's unmatched anywhere else. We also think that it is a unique emotive experience where humans relative to other things are more likely to want to have the experience of even looking at what event they want to go to, discovering those things. It's not like finding the cheapest toilet paper, so to speak. So for all those reasons, we think there's a lot of opportunity. I'd also say on that discovery layer, it's creating more demand at the top of the funnel. So you're adding more ways to get people in, in a great fashion. And so we think that's great. And we think that at the top of the funnel, what we found is they want to make sure they're directing people to a trusted brand that has the customer service and execution, which is key because it's not just driving someone to content, where if you get the content, you're done and there's nothing else to it. So we think there are a lot of tailwinds. The last thing I would say, and Connie may add something here, as with everyone, I'm sure everyone knows, there's tremendous cost efficiencies and productivity gains for anyone who applies this the right way, which we're very focused on. And that's why it's very important to us to be taking advantage of AI every way we can in what we do. We take it, as I say, extremely seriously because any time there's a big disruption, there's big opportunity. But if you don't work with purpose and with innovation, of course, there's risk. And so we're working hard every day to do that. But maybe on the efficiency side, I'll let Connie add a couple of things if she has it. Constance James: Yes, absolutely. And just happy to build on what Eric said, which is, again, we're excited about the technology, a huge number of benefits across the board. One of them clearly being cost efficiency. The team has already done a phenomenal job in terms of ops of support, really thinking about how we can create a level of efficiency, but perhaps even more importantly, how can we continue to delight the customer with a better way to interact. So seeing some really early traction there and obviously more to come. And then more broadly, even just from an engineering perspective, we know there's a huge opportunity. So again, a tremendous number of benefits, excited about the technology and how it plays out. Operator: Next question is from Brian Pitz, BMO Capital Markets. Brian Pitz: Eric, maybe more broadly, with primary ticketers pushing initial prices ever higher via dynamic pricing, can you comment on whether this is squeezing the volumes or margin spreads historically available to you in the secondary market? And then maybe number two, apologies if I missed this, but can you quantify the GMS growth and progress made in international markets during the fourth quarter? And are there any specific remaining regulatory hurdles regarding viagogo's global presence? Eric Baker: Sure. So thank you. Thank you for the question. So a couple of different things in there. So let me try and make sure I address or give you a sense on the different things you're talking about. So I think a question there about primary ticketers and sort of how they use dynamic pricing and how that may impact the business. And then you had some specific questions on international specifically. So let me try to answer those as best I can and then flip it over to Connie for more of the nitty gritty. So I think in terms of the primary companies and these different policies they've talked about with dynamic pricing and other things that they're doing, I just want to set the context for everyone. Again, doing this for 25 years. We've been competing with the Ticketmaster and other primary companies for many, many years, for decades. And they obviously have always had an interest in trying to control more of that system and capture things. Again, they don't work for the fan, the same way that we do, and there's nothing wrong with that. They just have a different business in terms of what they want to do. And so this concept of dynamically pricing and doing things has been around for a long, long time. So I would just put that into that context. And therefore, both historically and today, we have not seen any impact from those types of policies on our business. It continues again. We've got a broad and deep catalog. We're serving a real need for consumers, and we think a real need for the ecosystem. So we haven't -- and that's just to give you the historical take of that not only today, but on decades of experience of something that has been around. Internationally, I'll just -- before going over to Connie, what I would say is that international is just a phenomenal opportunity for us. One thing also getting back into sort of the history of it is that viagogo, which I started, it was an international company. And so we have a heritage in our DNA is servicing things internationally. We had to be able to service the languages, the jurisdictions, the payments. And so as events become more and more international, it's phenomenal as things move to Asia and Latin America, it's phenomenal. I think there's definitely a lot of speaking about our friends who are in the promotion business as they always talk about, there's tremendous opportunity in those markets, and we think that's great. So we're bullish on it. In terms of any more specifics that we can or can't comment on, I will throw it over to Connie. Constance James: Great. Thanks. And just to address your question in relation to what was the fourth quarter growth rate in the international business. We don't break it out specifically, but what I can tell you is that it was growing at multiples of the North America. As Eric mentioned, we have a phenomenal footprint operating in over 200 countries and really continue to be excited about the opportunity. Operator: And everyone, we have time for one final question. It comes from Andrew Boone, Citizens. Andrew Boone: I wanted to go back to the marketing efficiency. As we think about the EBITDA guide for 2026, should we compare marketing levels for 2026 to 2024? Is that the right level of normalization? Or can you provide us with any others [indiscernible] as we think about that expense normalizing? And then you guys made gains in 2025 with ReachPro. Can you help us better understand what are the benefits of that? And then how do you approach making additional gains? Or how aggressive do you want to be with that product this year? Eric Baker: Thank you for the question. It sounds like you had some questions about the guide around some of the marketing stuff and some questions around ReachPro. So let me try and address the level of the product stuff in ReachPro a little bit, and then I'll give it over to Connie to tie out on some other things. So yes, just so everyone understands, ReachPro is a point-of-sale system that sellers can use to manage their tickets and manage their flow. It's just basically like software tools. It's not anything that we're selling or whatnot, but it becomes a default for people to use. When you get that default in the operating system, it has tremendous benefits data-wise. People make you the first quarter call. So it's very helpful in terms of getting some permanent benefit in terms of share and whatnot. We basically, as part of the share gains we got, we're able to deploy ReachPro, and I think Connie will talk about how we've accreted tremendous share in that and have a great trajectory. That is also in a good place where, again, one of the benefits of the flywheels is once you become 3x larger than someone else and more efficient and this -- and you have a superior tool, you can get continued acceleration of people adopting it, which has continued benefits for our system and for our customers. But let me throw it over to Connie because I think you had some questions about marketing. Constance James: Yes. I think before we go into the details on marketing, it's probably worthwhile just to step back and think about the broader building blocks of the guide that just might help provide a bit more context. We did touch on growth, which we know we have 3 drivers, again, operating in a really healthy overall North America secondary market, but noting again, the overhang of all in pricing in those first 5 months. In addition, we do anticipate continuing to accrete modest share gains. And then as we just discussed, we've got a tremendous international business that you can layer on top. What's also important to recall is if you step back and you think about last year, we were explicit about taking a point uptake and investing it in order to accelerate market share. Again, incredibly pleased with the progress we made in capturing nearly half of the market. But as we move forward, we would expect take to -- be more consistent with what we've seen historically, call it, in that 20% range. And then specifically, I think you were touching on, well, what should we expect in relation to marketing efficiency. Again, last year, it was a period where we had a deliberate decision to invest, which ran sales and marketing as a percentage of revenue at a bit of an elevated rate. You would have seen in the first quarter, we were at 55%. By the end of Q4, we're about 52% normalized. And what I would say is you should continue to see increased benefit flowing through. So all of that, call it, ladders up into expanding margins at the bottom line. Operator: Thank you, everyone, that does conclude our question-and-answer session. I'd like to hand the call back to Eric Baker for any additional or closing remarks. Eric Baker: Yes. I just want to say thank you to everyone. I appreciate folks making the time and taking the interest, and we appreciate it greatly. So thank you very much. Operator: And again, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

34天前Insight Analytics约5分钟阅读

AEO 2025 Q4 财报电话会议

Operator: Good afternoon, everyone. Welcome to the AEO, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Judy Meehan, Head of Investor Relations and Corporate Communications. Please go ahead. Judy Meehan: Good afternoon, everyone. Today, we issued our fourth quarter and fiscal year 2025 press release. Note that included in the release and during this call, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here, you can also find our fourth quarter investor presentation. During today's call, we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. Today, we have a change to our conference call format. Due to the passing of Jay's mother, he is unable to join the question-and-answer section of the call. We extend our deepest condolences to Jay and the Schottenstein family. Today's call will include Jay's overview and highlights, which were prerecorded. Joining me for the call are Jen Foyle, President, Executive Creative Director for American Eagle and Aerie and Mike Mathias, Chief Financial Officer. And now we will begin the call. Jay Schottenstein: Thanks to the hard work of the team, we made meaningful progress this year and delivered a strong fourth quarter. Following a tough start to the year, I'm extremely proud of how the team course corrected with a deliberate action plan that ignited growth, improved profitability and cash flow, fueling a strong finish to 2025. Initiatives across merchandising, operations and marketing, continue to strengthen our company and position our brands for long-term success. We remain committed to driving enduring profitable growth and strong cash flow for our shareholders. Let me walk you through the highlights of the quarter, and Mike will go through the numbers in detail. We delivered double-digit sales growth in the fourth quarter ahead of plan. This represented an acceleration from the third quarter to produce our best quarter of the year. We also achieved record-breaking results through the Thanksgiving and holiday season, building on the approved trends that began last summer. Margin performance was solid and drove enhanced operating efficiencies. We were thrilled to see the remarkable momentum at Aerie and OFFLINE, which delivered 23% comp growth. Robust demand was broad-based across categories and channels. By leveraging our stronger market position and heightened demand, we exited the quarter with record brand awareness. And customer acquisition was up in the double digits. With successful expansion underway across a number of categories, we see significant runway to continue to build Aerie and OFFLINE and capture new audiences in the years ahead. I'm also pleased by the consistent and steady progress we've seen at American Eagle. Comps grew 2%, accelerating from the third quarter with growth across genders. Product initiatives are delivering more newness and fresh trends right collections. Following impactful partnerships with Sydney Sweeny and Travis Kelce, Martha Stewart's holiday campaign, reinforce AE's cross-generational appeal as the ultimate gift-giving destination. Customer counts and retention rates are proof points of success. This year, we look forward to creating more culture defining moments with newly announced partnerships with Lamine Yamal, Ella Langley and Bailey Zimmerman and more to come. In terms of the numbers, total revenue hit an all-time high for the fourth quarter, increasing 10% to $1.8 billion. Overall comp sales grew 8%. Adjusted operating income of $180 million was up 27% from the $142 million last year. Notably, we achieved these results despite significant tariff pressure. Successful tariff mitigation efforts centered on cost savings, greater efficiencies and strategic management across our sourcing operations. Full year 2025 annual revenue reached a record $5.5 billion, up 3% to last year, and adjusted operating income was $328 million. We ended 2025 in a strong financial position with nearly $240 million in cash and no debt. Our capital allocation strategy remains focused on investing in the business while returning cash to shareholders. We completed $256 million in share buybacks while paying $85 million in dividends last year. Now looking ahead, we remain confident in our strategy and our ability to build on our second half. As part of the continued effort to drive efficiencies and prioritize initiatives with the highest impact and strongest returns, we made the decision to exit Quiet Logistics during the quarter. This move keeps our focus and investment dollars on our core brands. As we exit the third-party business, we are left with a significantly enhanced logistics function, including much improved warehousing systems and technology, regionalized distribution capabilities, excellent speed to customer at a network that will support growth for several years. We entered 2026 from a position of strength and positive sales trends continuing. We have significant opportunities ahead and our teams are energized and committed to executing on our plans. I am fully confident in our path forward and our strategy to drive long-term profitable growth and free cash generation, which in turn will create value for shareholders. Jennifer Foyle: Good afternoon, everyone. I want to begin by underscoring how pleased I am with the fourth quarter performance. Our commitment to product leadership continues to be a key engine that's driving our business, and that's true across all brands. As I'll share, we saw a widespread improvement in the majority of our categories. There has been a clear acceleration in demand in certain segments as our customers respond to newness, color and trend-right fashion. Compelling new collections in fleece, tees and knits, coupled with the growing accessories business within AE and Aerie are together supporting our layering and outfitting strategy. As you've heard, following the first quarter 2025, we initiated a number of process changes and the reorganization of the teams and talent. We began to see the results of this work mid-year. I'm proud of the quick execution, and we are excited to carry this momentum forward. I'm confident that we remain very well positioned for profitable growth in 2026 and beyond. Now let's review our wins and opportunities by brand. Turning to Aerie first, where we have experienced strong acceleration in demand, strength has been broad-based across all categories, including intimate, soft dressing and OFFLINE activewear. Fresh flows of new and exciting collections, coupled with category expansions in areas like sleepwear kept the customer engaged throughout the season. We grabbed our community’s attention with must-have products and position them in the most relevant ways. Aerie apparel was strong across both tops and bottoms as a result of great fabrication, on-trend fun prints and winning color stories. I am particularly encouraged by the continued momentum in intimates recording some of our best ever results in the quarter with matchback sets fueling demand. OFFLINE had another incredible quarter with steady sales in active bottoms and double-digit growth in sports bras, tops and fashion bottoms. OFFLINE signature cloud fleece remains a customer favorite, and we continue to have significant opportunities to leverage the success of this key franchise. Our focus on new fashion silhouettes and fresh color drops are also contributing to strong growth across categories. As we look to accelerate the OFFLINE business in 2026, we will be focused on expanding our footprint engaging more customers and delivering great product. OFFLINE's brand awareness is rising and the brand has a long runway ahead. Our share is still small, but growing, and I'm confident that we have only just begun to scratch the surface of this brand's massive and long-term potential. The powerful reacceleration of the Aerie brand coupled with the explosive trajectory of OFFLINE is cementing our position as a leader in the space. And with our brand positioning as relevant and strong as ever, we look to continue to expand our reach to more customers. New Aerie customers grew 14% and brand awareness climbed 12% year-over-year. We know these customers are sticky, and we are focused on maintaining this healthy and engaged customer base. As we kick off 2026, expect to see significant increase in buzz for Aerie as we launch a highly visible brand campaign, rooted in purpose and mission. And as you've heard, we're just getting started here, and I'm excited for what's ahead. Now moving on to American Eagle, which achieved a solid 2% increase in the quarter. Positive results were driven by men's, women's tops and our signature AE jeans across genders. The men's business continued to improve in the fourth quarter, delivering the third consecutive quarter of growth. Positive results were seen across nearly every category, with sweaters, shirts and tees and sweatshirts emerging as favorites and graphics leading the way as the hero. Our strategy to recapture the men's business is on track as we gain market share and expand our customer base. AE women's comp was flat in the quarter, strength in jeans and tops, including knits, sweaters and fleece was offset by a slower demand in dresses and non-denim bottoms. Driving ongoing progress is a top priority, and we are working to ensure that we have the best styles and quality together with more frequent flows to support growth. Work is underway, and we are focused on investing in depth of key items and size integrity to drive sales. We expect to see continued improvements as we move through 2026. As Jay reviewed, AE brand marketing has been a clear strategic focus and is expanding brand awareness and driving purchase intent. In addition to talent-focused campaigns, we recently relaunched AE's creator community to bring together a network of passionate trendsetters and brand advocates to drive revenue and digital content. And just last week, we announced our partnership with Stagecoach, joining country music's biggest stage and connecting with a new generation of artists and fans as we continue to show up at the intersection of culture and fashion. The intention behind these initiatives is to maintain and drive our industry-leading position. Before turning the call over to Mike, I want to recognize the team for a strong finish to 2025. Their ability to drive improvement across multiple processes and to deliver results was impressive. We are incredibly optimistic about the profitable growth potential of our portfolio. We are moving forward decisively and we know that our brands are uniquely positioned to win, scale and deliver sustained long-term growth. And with that, I'll turn the call over to Mike. Mike Mathias: Thanks, Jen, and good afternoon, everyone. 2025 results reflect the actions we took to strengthen the fundamentals of the business, make operational improvements, introduce new compelling product collections and launch strategic marketing initiatives. These steps strengthened our foundation for long-term success and drove a sharp improvement in trends throughout the year across brands and channels, even as we navigated a dynamic retail industry in an unprecedented tariff backdrop. Our strong performance in the fourth quarter is a testament to this work with results coming in ahead of expectations across margins and profitability. In the quarter, consolidated revenue of $1.8 billion increased 10% to last year, fueled by comparable sales growth of 8% with Aerie up 23% and American Eagle up 2%. We saw across-the-board improvement in trends with an acceleration from the prior quarter. KPIs were favorable with growth in transactions across brands driven by higher traffic. The average unit retail price was flat to last year. Gross profit dollars of $651 million increased 9%. Gross margin declined 30 basis points to 37% from 37.3% last year, which included net tariff pressure of approximately $50 million. On the positive side, the leverage from strong revenue growth, lower costs, favorable currency and overall operational efficiencies partially offset tariffs and higher markdowns. Buying, occupancy and warehousing leveraged 50 basis points due to higher sales and a continued focus on operational improvements. SG&A increased 4% to $418 million and as a rate leveraged 120 basis points to last year, driven by strong revenue growth. Planned investments in advertising were offset by our continued focus on disciplined cost management and lower incentives. Adjusted operating income of $180 million was above our recent guidance of $167 million to $170 million, driven largely by very robust sales and margins at Aerie and OFFLINE. The adjusted operating margin of 10.2% increased from 8.9% last year. During the quarter, we recognized restructuring charges totaling approximately $85 million, of which $13 million was cash, primarily related to severance. These charges relate to discontinuation of quiet platforms, third-party logistics, store impairments and a corporate restructuring. Net annual savings from these actions is estimated at about $20 million annually, with a portion of that expected to be realized in 2026. We ended the year with a strong balance sheet with cash of $239 million after returning $341 million to shareholders. At year-end, total liquidity was approximately $930 million. Consolidated inventory cost was up 10% with units up 3%. Cost inventory reflects the impact of tariffs. Fourth quarter CapEx totaled $59 million, bringing year-to-date spend to just over $260 million. As we look ahead to next year, we expect similar levels of CapEx in the range of $250 million to $260 million, reflecting investments in technology upgrades, general corporate maintenance as well as 35 new Aerie, OFFLINE store openings and about 60 store remodels. In 2026, we expect to close another 25 to 30 lower productivity AE stores. Turning to our 2026 outlook. The first quarter is off to a good start. Comp sales are positive across brands with notable strong performance continuing at Aerie and OFFLINE. For the first quarter, we expect comparable sales growth in the high single digits, with American Eagle comps in the positive low single digits and Aerie OFFLINE comps in the double digits. Our operating income expectation is in the range of $20 million to $25 million, which includes tariff headwinds of approximately $30 million and incremental advertising investment, which will drive total SG&A expense up approximately 10% versus last year. For the full year, we expect operating profit in the range of $390 million to $410 million based on consolidated comparable sales growth in the mid-single digits. Guidance reflects the incremental tariffs that were put in place in 2025, which primarily impacts the first half of the year. Our outlook does not incorporate developments related to the recent Supreme Court decisions and subsequent actions. Modeling purposes, please note that we expect approximately 80% of our annual operating profit to be generated in the second half of the year. This weighting reflects pressures from tariffs and incremental advertising spend, which will impact the first and second quarters. In the second half of the year, we will cycle tariffs and investments in advertising, which began midyear 2025. To wrap it up, we ended the year on a strong note and remain confident in our forward trajectory. In 2026, we look forward to building on the significant progress we made last year to generate continued growth and enhanced value for our shareholders. With that, we'll open up for questions. Operator: [Operator Instructions] Our first question today comes from Paul Lejuez with Citi. Paul Lejuez: Two quick ones. Gross margin, can you talk about what you expect once you move past the first quarter where obviously you've got the comparisons. Maybe you could talk 2Q through 4Q. And then you mentioned increased markdowns again this quarter. I'm curious if you could talk more about which brand you saw the higher markdowns, maybe which category is needed to be promoted to drive sales, and how you think about the promotional outlook for the rest of the year? Mike Mathias: Paul, on gross margin, yes, I think we know that last year was a little different with where we broke down inventory in the first quarter and pulled markdowns forward. So I think as we talked a little bit different points that if you really look at kind of 2024 gross margin cadence and then the impact of tariffs around that $30 million each quarter, we're looking at gross margin sort of in that mid- to high 30% range in the first quarter, a little lower than that in the second quarter. And actually, 24 less tariffs would get you pretty close to what we're expecting for the first half of the year. Second half then, we're looking to expand our gross margin performance, anniversarying tariffs as is, I mean we're guiding tariffs to essentially the same thing we've been talking about really the IEEPA impact of that $130 million plus per year. We'll know a lot more come May of really what that's going to look like by quarter. But if you start with that as what should be a worst case then we'd look to expand upon the gross margin results we just saw in the third and fourth quarter of this year at, call it, like a mid-single-digit comp results. We've got some early indications on costing for the third quarter time frame at this point. The team is doing a great job there. And controlling costs, all the other costs within gross margin, we've been very successful with that to date and expect to continue that. So we'd look to expand upon gross margin improvement -- on gross margin in the back half. At markdown front, I think you talked about in the January time frame after at ICR and after our holiday sales release around being well controlled across categories for the most part. We talked about bottoms in the jeans business and the jeans category being promoted a little deeper to compete. And that was having kind of a mix impact in the AE brand, where markdowns were up a bit in total. Aerie, on the other hand, the AUR was up in the quarter. With the growth trajectory of the business, they've been able to really control or even reduce promotions a bit, AUR was up mid-single digits in the fourth quarter and markdowns are actually down favorable for Aerie. So the mix of the business is very favorable for us with really a couple of bottoms categories, especially jeans being promoted a little deeper. Paul Lejuez: Should we expect that to continue, the markdowns to be higher at AE and lower at Aerie? Jennifer Foyle: We -- it's Jen, by the way, Paul. We do expect some pressure in denim. And we feel good about our positioning, though, as we bring in other bottoms. That's what we're really excited about. So there's new bottoms that we've been testing, not only just in long legs, but skirts and shorts, early reads have been positive. As you know, we have a huge spring break customer, and we're just on the cusp of this right now. In fact, we're in Miami right now, and we can see them coming into shops. So we're excited about the way we're positioning. And the beauty about these brands, Paul, is that we have a portfolio of brands, right? We can pulse and throttle categories that we need to, but also get into new categories that are trending. So we feel really good about where we're headed as we get into peak spring break in all brands and some of the new categories that you'll see us introducing more and also just to lean on to Aerie, Mike said it, we've been pulling back on promotions. They've been doing a nice job balancing out competing and pulling back promotions. And it's only just begun here in Aerie. We have a spring break again. I mentioned it already for all brands. It's coming our way and swim, early reads on swim have been strong, but that's a category that we're looking to build margin and not just unit-based promotions. Operator: The next question comes from Jay Sole with UBS. Jay Sole: A few questions for me. Just number one, Mike, how are you thinking about store openings this year? And sort of you gave us comp sales guidance for the first quarter of the year, but how you think about total sales? And then the Middle East business, can you just give us an update on how you're thinking about that business given what's going on? And then can you also explain lastly, the impact of the quiet, the changes to the quiet logistics, what impact is that having on EBIT dollars? Those are my 3 questions, to start. Mike Mathias: Sure, Jay. Store openings, we're looking at 35 to 40 openings for Aerie and OFFLINE this year. Just to reiterate, we're probably expecting somewhere in the 25 to 35 in terms of net closings for AE as we continue just to refine and optimize the AE store fleet so you can model that or assume those plans for the year. Total sales then, we do have total sales to comp actually would be pretty similar. So we gave high single-digit comp guidance for the first quarter. Total revenue will be similar to that. Just based on the fact we do have a bit of a comp spread in our brand sales, but then with the disposition or the closing of Quiet, you'll see a reduction in total revenue because of that third-party revenue. So the net-net is that comp result in total revenue should be similar. And yes, I mean, just to expand upon that guidance a bit. We -- high single-digit comp for the first quarter. We're looking at sort of mid- to high in the second quarter and then mid for the back half, so you get to kind of a mid- to high comp expectation for the full year then. And then again, with total revenue and comp being similar for the year. Middle East, our team is doing a nice job just connecting with our business partners there, really Alshaya in the Middle East and then our JV partner with Fox in Israel, definitely some disruption to the business -- their businesses at the moment. Alshaya stores are actually mostly open at this point after some initial disruption, but the stores in Israel are still closed. Reminder that the license business on one hand and a JV on the other. So the EBIT impact to us would be -- quantified what we think assuming that this -- the war wraps up in the first quarter for now that the impact of the first quarter will be very minimal to us from an income or EBIT perspective just based on the structure or the relationships there being kind of licensed and JV. And then for Quiet, again, you'll see some quarterly revenue reduction from what was about a -- probably about a $60 million total number in our 2025 results. So that will wind down here at the beginning of the year and go to zero as we get to end of the year here. And then we talked about the restructuring in total, which Quiet as a part of being around a $20 million benefit annually. Again, we're in a bit of a wind down mode but with the other kind of corporate restructuring and store impairments, we're expecting probably at least 50% of that, maybe a little more to benefit this year, but we'll provide some updated guidance with especially how the cadence of the Quiet business shutting down here in the next several months. Operator: The next comes from Matthew Boss with JPMorgan. Matthew Boss: Congrats on another nice quarter. So Jen, with Aerie comps up high teens in the back half of the year, could you break down the inflection in the business if -- maybe if we looked at it by customer file or key category performance? And then so far in the first quarter, have you seen any slowing relative to the low 20s comps that you saw in the fourth quarter? Jennifer Foyle: Very similar, Matt. We're seeing nice momentum headed into Q1. Look, back in Q1 last year, we knew it was the time for all brands, not just Aerie for us to pivot, focus on our product, deliver and gain momentum going into the back half, which is typically our Super Bowl. We have all brands. It's our big quarter, Q3. And I think the team is really -- that's what we did, right? We focused on our product. So if you look at Aerie, certainly, what was really exciting in Aerie, not only new categories, i.e., sleep, which delivered a lot of growth for the brand. OFFLINE is moving faster. Honestly, it's one of our fastest-growing brands in the total portfolio that I've seen in history. So OFFLINE is very exciting. And then, of course, AE. But going back to Aerie, the most important thing is that all categories really worked. And I think that's important as we look forward, Matt, because when you think about just the newer trends and trends are moving faster, I think Aerie then can throttle on either, let's just say that more hard lines become trending, whether it's suiting or more straight line is what I can say. If Aerie is a softer business, we have all the layering pieces. We can support those businesses. And I think that's why we're expanding our offerings in Aerie so that we can lean into other categories when trends change. And I think it's really working. And there's new things to come, too. We have new businesses that we're developing, new ideas. The team is running very flexible. I mean, we're really trying to work on flexibility, newness, and I think that's what's winning, just delivering these new product offerings when it's not expected, seems to be really working for the Aerie brand. So more to come here, but we've seen nice momentum into Q1, and we're going to focus and continue to deliver. Matthew Boss: That's great color. And then, Mike, on the expense side, with reinvestments, I think you cited marketing this year. How best to think about the leverage point in the business for SG&A? Or any changes relative to historical flow-through to consider? Mike Mathias: Yes. We have another 2 quarters here of this intentional and strategic increase in elevation of our advertising spend. So you're going to see in the first quarter -- or first 2 quarters here, like over 50% increase in advertising dollars, which is, again, is intentional. So I think that's driving SG&A in the first half, up in the low double-digit range with all other expense categories being managed as we have successfully for a few years now, kind of low to mid-single digit and leveraging nicely on the sales expectations. So it's really advertising, driving the dollar increase and advertising is going to drive some deleverage in the first and second quarter. When we get to the back, at this point looking to -- at least our initial plans is for advertising dollars to be relatively flat, maybe a slight increase. So we plan to leverage advertising in the back half of the year, once we're anniversarying the elevated spend that started last year in the third quarter. And then the rest of the -- again, the rest of the SG&A lines being well controlled, may have a little bit of incentive comp increase compared to this year in both the third and fourth quarter, a little more in the fourth quarter. But we're looking to leverage SG&A though, across the back half even with that. So we'll get back into a cycle Matt, then starting in the back half of the year and forward 12 months into '27 that we want to leverage this expense based on a mid- to high single -- sorry, a low to mid-single-digit comp. The plans at the moment and the guidance we're providing, we're looking to expand upon some healthy operating rates in the back half once we anniversary tariffs and this elevated advertising spend, and we want to carry that into '27 on a 12-month basis going forward to get this operating rate back -- going back to the high single digits. Jennifer Foyle: Mike, I think that's a great point, too. When you think about marketing and our strategy, really, it was about relevancy for American Eagle for the American Eagle brand. And I'm sure you've seen many of the tactics that have gone viral out there for American Eagle. And then Aerie, it's really been awareness. And boy, has that strategy worked. We've grown our brand awareness over end points, it's huge. It's a huge number. I'm really proud of the team there. And now the teams are up because keep in mind, we share a platform. Now what we want to do is get that customer shopping back. Coming back to us. We want peak performance from these customers. We want them to come back through our doors or onto the site, and those are the tactics that we're working on. Mike Mathias: It's great, Jen. We are 5% this year and our teams work very closely on a week-to-week basis on -- there's a campaign pieces of it, and then there's the week-to-week spend on kind of digital media performance marketing that we're managing very closely. And our teams are doing it very well together and come to Jen and I on those fronts on kind of managing that week-to-week. The intent, as we talked about then is kind of maintain that 5% spend into the sale increase, maintaining that. We think this elevated level, all the metrics Jen just said, moving in the right direction. We like what we're seeing, it's why we're continuing it. We think it's the right new baseline to run the company. We'll make some changes based on what we see, rebalancing some of the spend between kind advertising strategies, maybe across tactics around talent versus media performance spend, just trying to find efficiencies in other line items like content creation, or relooking at some plans into '27 around rebalancing some of those things, and we're continuing to manage it that way. But this kind of 5% new baseline is working for us. Operator: The next question comes from Jonna Kim with TD Cowen. Jungwon Kim: As you think about American Eagle's brand positioning, what are key opportunities that you see for improvement over time? And then could you just speak to the intimates business performance during the quarter and just quarter-to-date, what you're seeing there? And how do you think that business will evolve over time as well? Jennifer Foyle: Yes. For American Eagle, Mike mentioned it, number one, Street -- our fleet rationalization. We're still working through some lower-tier stores that we need to optimize and actually give back to our best stores. So just so you know, our new remodels in the American Eagle brand are really resonating with the customer. We're seeing nice upticks versus the average base. And so we're working on the remodels where we can justify, and where it make sense depending on the mall. So excited about that. Our new SoHo store has been outperforming, and it's a great visualization to where we're headed for our entire portfolio of brands, but a great representation of the American Eagle brand. So number one, fleet optimization; number two, product, product, product, we focus on product. We're focusing on new innovation, delivering new products, delivering excitement on top of our incredible marketing campaigns that, again are developed -- we have relevancy now, like we needed to get back on the map. That's what American Eagle is up to. We're a more mature brand, and we needed to turn heads. And certainly, the team really has stood out there, and I think some of these new campaigns and getting up to snuff on our marketing spend and competing because we were a little -- we underperformed there versus our competition. And I think yes, we're ready to compete a little bit more. We're building our new franchise businesses. We're excited about men's. Men's has turned around, and now it's just women's and really looking at women's dollar per square foot by store and making sure that we're really optimizing the women's business in our best stores and online. Let's not forget about the direct business. Our direct business has been outperforming last year on the back half and going into Q1, we're seeing really nice momentum on the direct business. It's in way of getting new acquired customers. And again, this is where we're working on how do we get them to repeat shop either on site or going into stores. And that is a new -- I would say it's a new initiative for us. We're talking a little bit more about omni customer. I'm not a huge fan of the word omni, but there certainly is opportunity in this new world to understand where the customer is going to be leveraging some of our new capabilities and understand where they are and being there for the customer with what he or she wants. So most -- those are really our tactics. And again, like I said, product, we have new product categories. We have new talent that we're launching in American Eagle. We're excited about that. You've heard some of the -- you've seen it already, Ella Langley, by the way, we just launched her. She's the #1 song in the U.S. right now, her song, Choosin' Texas. So we're just excited about continuing to gain that relevancy in American Eagle. And keep in mind, it's our Americas 250th anniversary this year and next year's AE's 50th anniversary. So lots of excitement around American Eagle. On the intimates side, I think intimates is just getting going. We're leveraging undies to bundle and to get new customers into our brand. We're considering it the lipstick of our brand. But also, we're launching new bra silhouette, bralettes are back and these layering pieces. So we have lots of categories now on the intimate side, again, that we can lean into and pulse depending on the trends and where the trends are going. But we're feeling good about intimates. Again, they saw a great success in Q4, and we're continuing that momentum into Q1. Operator: The next question comes from Dana Telsey with Telsey Advisory Group. Dana Telsey: As you think about the advertising, which has been so successful. Obviously, Stagecoach now being the next thing. How do you think of it for the balance of the year? And how do you see lapping whether it's Sydney Sweeney or the others? And then on the refreshes in stores, how many store refreshes are you doing? And what kind of productivity gains have you seen from these refreshes? Jennifer Foyle: Sure. So I didn't mention this before, but also not only are we leveraging talent, more so on the AE side of the business. But in both brands, AE and Aerie, we're really leaning into our community and our customer base, and we're really -- I mean both brands right now are starting new tactics to gain new customers as far as -- well, there's some I can't tell you. There's some I can't share with you, but this creator community that I think we are just encroaching on for both brands, it's real. And that is the difference, okay? So there's a lot of our competitions out there. They're getting -- they're finding tactics, but I think our tactics for our brands are about real and authentic and getting our community that believes in our brands to celebrate our brands, and that's -- and so these influencers that we're leveraging across all brands, I think we're going to really lean into both -- we're excited about it, and we're already starting to see some momentum gaining with this influencer program that we're starting. And again, it's more innate. We own it, and we're excited about it. So the tactics are slightly different than some of what we see our competition doing. Mike Mathias: On the store remodels, refreshes, Dana, we've got -- as I said in prepared remarks, we'll do at least around 60, maybe a few more than that this year. We're, I think, in our third to fourth year of that program, where we still have about a 350 to 400 store in total. We're working towards probably about another year away from that. I think we'll get over the 300 mark, close to that with these next 60. Again, the average age of the fleet before we started this was about 12 years. We were behind a little bit due to COVID and in our intentions of refreshing the fleet. The stores we know we want to sign leases for the longer term. And I think once we'll get into a rhythm of keeping the average age more in that 6- to 7-year sweet spot, which we think is the right thing to do. So -- and then on a performance basis, we are seeing a comp result or an increase in these stores that's above the chain average. So we like what we're seeing in terms of payback on that cash. It's a bit of a kind of maintenance/some payback by doing this. We have refined the cost of these down from where we started in the first year. So we're kind of the elements of the store that we need to touch and the biggest bang for our buck is the average has come down on the spend since we started. So we're kind of maybe more than halfway through the program. We like what we're seeing in terms of performance and with the intent on an ongoing basis to kind of maintain the age of the fleet more in that 6-, 7-year range. Operator: The next question comes from Janine Stichter with BTIG. Janine Hoffman Stichter: Just on the tariffs, can you remind us what you've done on pricing in response? Have you raised tickets at all and any thoughts on pricing for the rest of the year? Mike Mathias: Yes. I think we've talked about really business as usual. We've approach kind of tickets and pricing, just like we always have, where we -- what's the right price value equation for the customer, where are we not seeing price resistance across items, some strategic intent of increasing tickets a bit, so we can kind of provide that right value equation from a promotion perspective to the customer. . So no specific intent around tariff pass-through. It's really what we've been -- what we've always done from a pricing perspective and maintaining. Again, AUR for the fourth quarter was relatively flat, like down a little bit in AE and up in Aerie. From a margin perspective, it's not a bad place to be with some mix benefits in there, aside from the tariff impact. So we'll continue down that path with whether the opportunistic and kind of opportunities to raise tickets a bit. But just based on customer reaction, and what's right for the price value equation. Janine Hoffman Stichter: Great. And then maybe just back on Quiet Logistics with the $20 million in annualized savings. Are you thinking about reinvesting any of that? Are there areas you potentially spend more, or is that flowing all the way through the bottom line? Mike Mathias: No. I think we're looking at reinvesting other than probably advertising. I mean, a lot of what we've been doing with the management of our expense base for several years was to find some funding to do what we're doing on the advertising line. And actually, if you -- we've been measuring that ourselves and just looking at our own sort of internal scorecard over the last several years. We've done a nice job at kind of reducing the rate of sale on the majority of the expense base, the bigger line items that we've -- the project we had a few years ago where we kind of addressed 85% of our overall OpEx base. We've been continued success there to kind of knock that down as a rate of sale, and we have sort of funding that back to advertising right now in total. Again, we anniversary that and start to leverage again starting in the back half of the year. So no reinvestment of those dollars specifically. It's sort of an ongoing program to improve our operating rate, short term here, we're investing some dollars back in advertising, for sure, at least 12 months, but nothing else specific from that savings that we're intending to do. Operator: The next question comes from Jon Keypour with Goldman Sachs. Jonathan Keypour: I just had a question about the low single-digit AE comp in 1Q. Just noticing that the -- if you go from 4Q '24 to 1Q '25, the sequential comparable gets 3 points easier, but the low single digit sort of implies that on a 2-year stack basis, there's a slowdown. So just any commentary around that? And then I have a follow-up. Mike Mathias: Yes. And Jon, I think if you look at the improvement to that point, I mean I think we've seen a 5-point improvement from kind of the second quarter of last year through the fourth -- to this fourth quarter result of plus 2%. And the guidance we're providing now is based on what we've seen to date, we know there's been some weather disruptions, some serious storms and things like that in this February this year that we didn't really see that dramatically last year, especially the Northeast getting pounded a bit. And we have obviously our store base is a nice concentration in that area, but we're pleased to see the kind of trend continue from fourth quarter. That being said, Jen said the spring break time is ahead of us, short season is coming. The mark whole time frame is more like 75% of our total first quarter. So we've got a long way to go. But the continuation of the trend we saw and the teams are working hard to capture these next 2 months, and we'll see how the quarter pans out, but it's the right place to be at the moment. Jonathan Keypour: Got it. Okay. And then just in terms of the Aerie comp, which was very impressive, just any way that we can get a sense of buckets that contributed to that 23%. Like I guess, there was a different question to try to get at this, but you mentioned like 14% new customer addition. Just any ways we can piece together the building blocks to get to the 23%? Jennifer Foyle: Yes. That was actually branded witness. I just wanted to let you know. We were roughly at 55% as we increase that, but we do have a new customer base to solidly growing our customer base. In Aerie, I have to say this. Literally, all categories worked, whether it was set dressing, fleece, knit, tees, sweater, sleep really was unbelievable and intimate and layering. We have this new layering business that we're pretty excited about, so, so far so good. And that continues into Q1. And again, we still have some categories that we actually lean on more as we head into the spring break time period. So strategically, we didn't pull swim in as hard as we used to in the past because we believe that there's a different strategy for swim where we can lean on. It's a great margin category. And I think that's what we're looking to do. And we're going to bring in newness monthly, more so than we did in the past, past just like that girl. So I think there's still more to come here because we still have some new category introductions or seasonal introductions that I think are still in play. Early reads on these seasonal categories, including in AE, are strong. Last year, if you remember, we had weather and shorts are really tough across the board. So that's a huge category for us. In Aerie, OFFLINE and in American Eagle. So there's still a lot of volume in front of us, and we're going to set ourselves up for success here. Operator: The next question comes from Corey Tarlowe with Jefferies. Corey Tarlowe: Yes. Mike, on tariff, could you remind us again what the impact is that you're expecting? And then I asked that in the vein that you guided with IEEPA in, how much upside is there to the current guide if that is struck down? Mike Mathias: Yes. So just the quarterly impact of how we laid things out with IEEPA tariffs that were in place. So about a $30 million impact each of the first and second quarter. So kind of $60 million total for the spring season. We incurred $20 million of impact in Q3 of '25, but probably more like a $30 million, $35 million on a full quarter basis because of the timing of the effective tariff rates last year. And then we incurred $50 million of impact this past fourth quarter. So that gets you to your $130 million plus number for -- on an annual basis. Obviously, we left that guidance or left the approach to guidance in place because to your second question, I don't think any of us know what's about to happen. We've got this 10% Section 122 in place, all indication is that's going to go to 15% based on kind of recent communication. We know there's things happening on the 301 front that this administration intends to do. So the impact to the total year, we believe the guidance we just gave should be the worst case, knock on wood. I hope I didn't distinct ourselves in the entire industry with that comment. But there would be upside, we've done some back of the envelope math of what it could look like based on the cadence of when we think the Section 122 tariffs expiring after 150 days and if 301 take effect, but it's all guesstimates at this point. So I think we'll know a lot more by the first quarter call at the end of May. I expect to provide a bit of upside to this guidance at that point, but better off to quantify that over the next couple of months once we actually know more than kind of put numbers out there that we're not 100% sure of at the moment. Corey Tarlowe: Got it. That's super helpful. And then just as a quick follow-up, it looks like there's no buyback embedded in the outlook. So I was just curious how you're thinking about that specifically. Mike Mathias: Yes. We repurchased about 1 million shares there before the end of the year. Share count in our projection right now would be about 177 million versus -- for the year versus 176 million last year. We are going to look at -- again, we always talk about capital allocation being investing back in the business first. We're committed to our $0.50 per share dividend. And then looking at buybacks to offset dilution minimally. So the January buyback was part of that, if you look at the full year last year, we returned, again, $341 million to shareholders, $85 million in dividends and over $250 million in share repurchases. So we'll continue to look at it, Corey. Minimally offset kind of dilution from internal grants in general. So we kind of prioritize that. Look at anything above and beyond that as we kind of get into the year and see how cash flow is trending? Operator: The next question comes from Marni Shapiro with The Retail Tracker. Marni Shapiro: Congratulations, and please extend my condolences to Jay. Jen, the stores look fantastic. So I have a couple of quick questions for you. Following on the denim conversation, I'm curious if part of the denim is a shift in what's working in denim from higher rises to lower from very baggy to boot and the customer is a little slower to move. Or is it something else that you're thinking? And then on your collaborations, which have been incredibly successful, and I love the 2 new ones, are you thinking about expanding this into Aerie at all to do something there, along the similar vein, now that Aerie is kind of like, Aerie is back, so are you kind of thinking along the lines there in Aerie? Jennifer Foyle: I like that thinking, Marni. First and foremost, Aerie has great things in store. But again, Aerie has many different tactics, and I just mentioned, we do a little bit more grassroots, the community, and it's just -- they vote for us, and it's a winning recipe. But I will say, Marni, we do have some fun things in store. And as you know, back in October, we leaned into not using AI on our models. And it's a nice uptick to where we were when we launched Aerie Real, I think it's just -- it's a great -- it actually addresses the new generation. I'm quite excited about it, and we've only just begun here. So really, that's what we're up to in Aerie. And again, Marni, with all these new customers, we've got to get them to come back more often. You can't imagine the dollars on the table, if we could just get them to come back one more time annually. So those will be some of our focuses. And can we go back to your first question? I'm sorry, I got so excited about Aerie for a minute. Marni Shapiro: It was just, I'm curious there are changes happening in denim rises to lower, the baggy is going -- giving way to a cleaner, a little more narrow boot cut. So is that kind of -- I thought there's a confusion with the customers right now because you're not the only ones talking about this, all my peeps are talking about this. Jennifer Foyle: I think you're right. I think definitely, the rises are getting lower. You're seeing more midriffs being shown. But I also think it is about these other bottoms, including skirts, shorts and other clothes, khaki, chino, utility, those ideas, I think, are here. And I think it is about pivoting into those. But you're right, definitely the lower rise is something that we are addressing. And we do have, and that is working for us. So now it's about just moving the business. This business has changed drastically, Marni. There's so many new fits to your point. We are seeing with Ella, we're seeing the boot work for us. For sure. That makes a lot of sense. So right now, we're in the process of our test and scale for back-to-school. So I'll learn more in a couple of weeks as far as -- and we have all these fits out there that we test and learn from, and where we want to place our bets. So there's more to come here, and the team is ready to execute. Marni Shapiro: Well, the stores look fantastic. Your denim shorts look absolutely fantastic. Congratulations. Best of luck. Jennifer Foyle: Thanks, Marni. Operator, we have time for one more question. Operator: That question will be coming from Janet Kloppenburg with JJK Research Associates, Inc. Janet Kloppenburg: I was a little surprised to hear that denim bottoms were not performing. I don't know, maybe I'm misinterpreting it, Jen. Are they performing to your expectations and because you've made investments in other denim areas or maybe denim isn't where you think the brand should be right now. So... Jennifer Foyle: No, no, no. Yes, denim is at the center of everything we do in American Eagle. Like we have maintained our market share, like our positioning, everything we do. That is our core recipe for that business. And those men's and women's did comp on the quarter. It was just, in some cases, what price are they willing to pay for some fashion. So that's some of the pressure that we saw. But we learn that lesson, and we're trying to take that forward, particularly the most important quarter, obviously, is Q3 for this business. So applying those learnings, but denim, it's at the core of everything we do. It's just -- it was more about us leaning into some fits that didn't work at successfully as we were hoping to and learning from that and reapplying those lessons. Janet Kloppenburg: Okay, great. And then just for Mike, I think you said AUR was flat. Can you just talk a little bit more about the traffic and unit terms in the quarter? And what -- how we should think about that going forward? Mike Mathias: Yes, Janet. So AUR overall at a company level was flat. AE was down slightly, kind of low single and Aerie was up in the mid-single digits. So it kind of ties to the margin color we were providing earlier as well. And what Jen just mentioned about, we've been talking about jeans specifically as being positive, but then a little pressure, a little kind of more promotional to drive those results. We're expecting something similar as we continue, like right now in the beginning of the first -- early in the year here. Again, the Aerie team on the current trajectory is being able to kind of manage intelligently and pull back and be more targeted and then AE is really still probably in the same game we just talked about. So we're expecting something similar in the short term, and we'll see how the rest of the season progresses. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Jennifer Foyle: Thank you.

34天前Insight Analytics约5分钟阅读

FXTGY 2025 Q4 财报电话会议

Guy Gittins: Good morning, everyone, and thank you for joining the Foxtons' 2025 Full Year Results Presentation. I'm joined, as always, by Chris Huff, our Group CFO, and we will answer any questions at the end of the call. This morning, I will take you through some of the highlights of 2025, provide an update on the London property market. Chris will then talk you through the financials, and I will finish with an update on our operational progress in the year, followed by some detail on the outlook for 2026. We delivered 5% revenue and EBITDA growth in the year, driven by incremental acquisitions revenue and operational progress in areas such as Lettings, cross-selling and financial services. These higher revenues offset the challenging operating environment, including a volatile sales market and cost headwinds to deliver flat operating profit. These results highlight the resilience of our business as a result of our strategy to position Foxtons firmly as a Lettings-led business. Our portfolio now exceeds 32,000 tenancies, which is up over 50% over the last 5 years, and these tenancies generate highly valuable reoccurring revenues. In 2025, these revenues generated over 2/3 of group revenue. We delivered 8% Lettings market share growth through improved landlord attraction, retention to build on our position as London's largest agent. And impressively, for a London-focused business, we are also the U.K.'s largest Lettings brand. We continue to execute our strategy on acquisitions. In 2024, our acquisitions in Reading and Watford made a significant contribution to revenue growth. Recent acquisitions in Milton Keynes and Birmingham create strong platforms in high-value markets that complement our London base. And operationally, we haven't stood still. The business has embraced a culture of continuous improvement and that mindset is cascading through the organization. We're focused on unlocking the next stage of growth by driving revenue and improving productivity and efficiency right across the business. On Slide 6, you can clearly see our strategy in action. The business has made great progress since I returned in 2022. Over that period, we've reset the strategy with a focus on Lettings-led growth, rebuilt our operational capabilities and delivered significant market share gains. The result is consistent year-on-year revenue growth with an 8% CAGR over the last 5 years. And with a sharp focus on costs, we've maximized operating leverage across the business. As a result, profit growth has outpaced revenue growth, delivering a 23% CAGR over the same period. So while profits were flat in 2025, I remain confident that we can return to our growth trajectory over the coming years. Turning now to Slide 8 and an update on the London Lettings market. On the chart on the left-hand side, you can see the number of renters per property back to 2021, highlighting supply and demand dynamics in the market. The market was resilient in 2025. Tenant demand remains strong and supply levels were healthy. We did see a softening in supply in the run-up to the autumn budget, reflecting speculation around potential tax changes for landlords. But with no major tax reforms announced, supply picked up in December and we delivered a record December for both deal volume and revenue. Rental prices were broadly flat as the market balanced flat supply and demand dynamics with affordability limits for tenants. Even so, the market has delivered a 7% CAGR since 2021. And over the medium term, we expect a return to inflation-linked rental growth. Over the next 2 slides, I will take you through an update on the Renters' Rights Act, one of the biggest changes in the Lettings industry over the last 25 years. On this slide, we've outlined the key provisions in the act. The Renters' Rights Act will come into effect on the 1st of May and brings England broadly in line with the rest of the U.K. There are several key changes. Fixed term tenancies will end, meaning all existing and new rental agreements will move to open-ended periodic agreements. Rent increases will become available to landlords annually, although will require evidence that any increase is in line with the market. This is a shift from the current system where rents are typically fixed for the duration of the contract. And local authorities will have stronger enforcement powers, including the ability to impose higher penalties for non-compliance. So what does this mean for landlords? The vast majority of landlords who provide good quality homes and want to keep good tenants in situ for as long as possible, very little changes to their investment. What does matter is staying on top of the new compliance requirements and working with an agent who can manage those requirements on their behalf. It's incredibly easy to fall foul of the legislation, which is fragmented across local authorities and often overly complex. Even the Chancellor was caught out last year, a reminder of just how difficult it is for ordinary people to navigate the rules. Slide 10. As these new requirements come into force, we expect to see some shifts in the market and opportunities for Foxtons. These fall across 4 main areas. The first is increasing the total addressable market for Foxtons as increasing numbers of DIY landlords opt to use an agent to let and manage their property. Over 50% of landlords fall into this DIY category today, highlighting the size of the opportunity ahead. The second is by increasing Foxton's market share of the Lettings market. We expect landlords will increasingly turn to high-quality agents who can protect their investments and navigate the growing compliance burden. And as the leading agent in our markets, this creates significant opportunity to grow share and also the cross-sell of high-margin property management services. Thirdly, we expect more portfolio stability. With fixed terms removed, we expect longer occupancy lengths as tenancies become more stable. Annual inflation-linked rent increases are also expected to become the norm, creating a more predictable income profile. And fourthly, we expect the estate agency sector to consolidate further. The industry is still highly fragmented with 66% of the market made up of small independent agents. The new regulation will place real pressure on these businesses requiring significant investment in people, training, technology and compliance. Many simply won't be able to make these investments, accelerating consolidation. This dynamic plays directly to our strengths. We are well positioned to lead consolidation in our markets and have a strong track record of delivering attractive returns on capital when we do so. Finally, structurally, we anticipate little change in the size of the sector to remain broadly stable over the medium term based on the experience of similar legislation in Scotland. Turning now to Slide 11 and an update on the London sales market. The sales market was highly volatile in 2025. Across the year, volumes in our London markets were up 2%, in line with our own performance. Q1 volumes were around 30% higher than Q1 2024, driven by a large number of first-time buyers competing ahead of the stamp duty deadline. As expected, Q2 volumes were materially lower, reflecting the pull forward of the transactions into Q1. In the second half, activity was impacted by the delayed autumn budget. The wider economic uncertainty and weak consumer confidence was compounded by the intense speculation around potential tax changes, including the abolition of stamp duty and the implementation of mansion taxes for most properties in London, which really dampened the market. You can clearly see the impact on buyer demand on the bottom chart. New offers agreed, ahead of the budget were subdued, sitting at levels similar to those seen in 2023 shortly after interest rates spiked following the September 2022 mini budget. And with the average transaction taking 4 to 5 months to complete, this slowdown in late 2025 will naturally impact volumes in the first half of this year. In the end, the actual policy changes were fairly limited. Stamp duty remains unchanged and continues to act as a major barrier to improving affordability for buyers. The new mansion tax coming into effect in 2028 only impacts properties over GBP 2 million. While this may create some drag at the very top end of the market, that segment represents only a small share of transactions. This change reinforces our strategic focus on the volume segment of the market, particularly properties priced below GBP 1 million where Foxtons is strongest and where volumes are more resilient. Looking further ahead, it's worth noting that buyer demand in early 2026 is still being held back. For vendors looking to sell in this environment, pricing is absolutely crucial. There are buyers in the market, but they are focused on the right properties at the right price. And when we see homes coming to market competitively priced, buyer interest and offer levels remain strong. I'll now pass over to Chris for a run-through of the financials. Christopher Hough: Thank you, Guy, and good morning, everyone. 2025 saw the group deliver revenue growth despite a challenging operating environment, highlighting the financial resilience we've built into the business over the last 4 years. Financial highlights are set out on Slide 13. Incremental revenues from acquisitions and improved cross-selling of high-value Lettings property management services drove a 5% or GBP 8.6 million increase in revenues to GBP 172.5 million. We delivered GBP 22.2 million of adjusted operating profit, which is flat on the prior year. This represented a robust performance in the context of a challenging operating environment due to a volatile sales market and external cost pressures, in particular, from employer national insurance and living wage increases. Adjusted operating profit margin decreased by 60 basis points to 12.9% as margin growth in Lettings partially mitigated some of these external cost pressures. I'll provide more detail in the segmental reviews. Adjusted EBITDA, which is defined on the same basis used to calculate the group's RCF covenants grew by 5% to GBP 25.3 million. Statutory profit before tax was GBP 16.9 million and net free cash flow grew by 14% to GBP 11.2 million. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, unchanged from the prior year. The group also bought back 5.5 million shares in the year via the buyback programs announced in April and September. Now turning to Slide 14, which provides an overview of the income statement and key changes. Group revenue increased by 5% to GBP 172.5 million, reflecting 5% growth in Lettings revenue, 6% growth in sales revenue and 10% growth in financial services revenue. Group revenue continues to be underpinned by Lettings revenue, which represented 64% in the year. Lettings revenue is non-cyclical and recurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were GBP 3 million higher, reflecting additional acquisition-related headcount, increased revenue-linked staff commissions and GBP 1.1 million of additional employment costs. Contribution margin was flat at 64%, including margin growth in Lettings. Overheads were GBP 4.2 million higher, primarily driven by incremental acquisition operating costs, targeted marketing investments, higher employment costs and GBP 1 million of non-recurring overhead costs. Depreciation, amortization of non-acquired intangibles and share-based payment charges were GBP 1.2 million higher. Together, these movements delivered adjusted operating profit of GBP 22.2 million. Profit before tax was GBP 0.6 million lower than the prior year, reflecting broadly flat adjusted operating profit and GBP 0.5 million higher amortization of acquired intangibles. Cost control continues to be high on our agenda. This included delivering a material cost saving by negotiating an early exit from the Chiswick Park head office lease and rightsizing head office space. This move unlocks GBP 1.5 million of operating cost savings from January 2026 onwards, providing some protection from cost pressures in 2026. Through 2026, we are redoubling our focus on costs to protect profitability in the context of current market conditions. Turning now to Slide 15 and performance in Lettings. Lettings revenue grew by GBP 5 million or 5% to GBP 111 million as a result of GBP 5.2 million of incremental revenues from Lettings acquisitions in Reading and Watford, GBP 0.6 million higher like-for-like revenues, which reflects property management revenue growth with a like-for-like increase in uptake of 7% delivered in the year. This progress will continue to benefit the group in 2026 as revenues annualize and GBP 0.9 million lower interest earned on client monies due to lower Bank of England rates. Revenue per transaction increased by 1%, reflecting the improved cross-sell of property management services, partially offset by the move into higher volume commuter markets and the lower interest on client monies. Contribution grew 6% to GBP 82.9 million off the back of revenue growth, whilst the contribution margin grew by 100 basis points, which is primarily due to margin accretive property management and cross-sell of related ancillary services. Adjusted operating profit grew 9% to GBP 29.8 million and adjusted operating profit margin grew 100 basis points to 26.9%, reflecting the strong contribution margin and the delivery of acquisition-related synergies. Moving to Slide 16, where we have presented detail on the returns from our Lettings-focused acquisition strategy. We have an industry-leading operating platform that delivers high levels of returns from acquisitions by delivering high levels of landlord retention, organic growth from acquired databases and cost synergies. Our operating platform is highly scalable and can power a significantly larger portfolio than we operate today for limited incremental cost. Historic acquisitions in London deliver EBITDA margins above 50% and return on invested capital above our 20% target rates as we maintain a tight focus on ensuring returns through a portfolio's life cycle. Acquisitions are our primary route into new geographies, combining acquired Lettings income to underpin profitability with organic Lettings and sales growth. Under our buy, build and bolt-on strategy, we focus on acquiring platform businesses in high-value markets and enhancing them through high ROI bolt-ons, targeting aggregate returns of at least 20%. In October 2024, we acquired 2 leading businesses in Reading and Watford, completing the group's first acquisitions outside London. Both have performed well, delivering organic revenue growth and first year returns on capital above the target level of at least the group's weighted average cost of capital. The Watford business was integrated onto Foxton's operating platform in 2025 with Reading planned for 2026. Returns are expected to grow as synergies are delivered in Reading and be annualized in Watford. In February 2025, we completed the bolt-on acquisition into the Watford platform. This bolt-on was rapidly integrated and is delivering annualized returns on capital above our 20% target, which highlights the growth we can rapidly deliver in new markets. In January 2026, we acquired leading businesses in Milton Keynes and Birmingham. Over the next 12 to 18 months, we will focus on integration, deploying the Foxtons toolkit to drive organic growth, deliver synergies and support further high ROI bolt-on acquisitions. Moving to Slide 17 and an update on the sales business. Sales revenue grew GBP 2.7 million or 6%, reflecting GBP 3.4 million of incremental revenue from our Reading and Watford acquisitions and GBP 0.8 million lower like-for-like revenues. On a like-for-like basis, revenue was 2% lower, reflecting 3% growth in transaction volumes, broadly in line with the market and 5% reduction in average revenue per transaction, primarily reflecting the higher proportion of lower value first-time buyer properties transacting in Q1 ahead of the March stamp duty deadline. In total, volumes were 19% higher and revenue per transaction was 11% lower. The reduction in revenue per transaction primarily reflects the expansion into commuter markets, which typically display lower revenue per transaction, but higher volumes. The acquisitions in Reading and Watford delivered 9% revenue growth in the first year of Foxtons' ownership, driven by market share growth. Average market share across Foxtons London markets was robust at 4.8%. The adjusted operating loss in sales increased to GBP 5.7 million as the profitable contribution from new commuter town acquisitions only partially mitigated increased operating costs and a strategic decision to maintain bench strength despite weaker H2 market conditions. Improving the profitability of sales remains a key priority for us, and Guy will provide more detail later in the presentation. Moving on to Slide 18 and Financial Services. Revenue in Financial Services was 10% higher at GBP 10.3 million. Specifically, volumes were 13% higher, reflecting the stronger refinance pipeline, higher estate agency cross-sell rates and improved adviser capacity and productivity. 2% reduction in average revenue per transaction, reflecting the change in product mix towards refinance activity. In the year, 42% of revenue was generated from non-cyclical refinance activity and 58% of revenue from purchase activity and other ancillary sources. Adjusted operating profit was broadly flat, primarily reflecting investment in fee earner headcount in H1 as we scale up the business. New fee earners supported revenue growth in the year and typically break even around the 12-month mark. Moving now to Slide 19 and cash flow. There was a 14% increase in net free cash flow to GBP 11.2 million. The operating cash to net free cash flow bridge on the left-hand side shows the key items of note. Operating cash before working capital movements was GBP 36.4 million, 3% higher than the prior year and including GBP 1.9 million of non-underlying cash outflows primarily relating to closed branch costs. There was a GBP 4.4 million working capital outflow, reflecting the ongoing transition to annual billing across the Lettings portfolio to improve competitiveness and landlord retention and position the business ahead of the Renters' Rights Act becoming effective. We expect the portfolio to be fully transitioned to annual billing by 2027 with an estimated GBP 10 million working capital investment across 2026 and 2027. The group paid GBP 4.3 million of corporation tax and made GBP 13 million of lease liability payments in the period. GBP 3.5 million of CapEx spend primarily relating to our new H2 fit-out costs and internally generated software development. Looking at the opening to closing net cash bridge on the right-hand side. Net debt at 31st December was GBP 16.9 million. This reflects GBP 11.2 million of net free cash flow, GBP 5.3 million of acquisition spend and GBP 9.1 million of total shareholder returns. In the year, we increased the RCF to GBP 40 million and extended it by 12 months to June 2028. The interest cover and leverage covenants have remained unchanged. And at the year-end, the leverage covenant ratio was 0.7x, which was below our covenant limit of 1.75x. And the interest cover ratio was 24x, which was above our 4x covenant. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, which is unchanged from the prior year. The proposed dividend will be paid on 15th of May, 2026 to shareholders on the register at 10th of April, 2026, subject to shareholder approval at the AGM. Moving to Slide 20 and an overview of the group's capital allocation framework. The framework aims to support long-term growth and deliver sustainable shareholder returns through organic growth, making accretive Lettings-focused acquisitions, paying a progressive dividend whilst maintaining strong dividend cover and delivering other shareholder returns, namely share buybacks. We continually evaluate the effective uses of capital, including comparing acquisition returns versus those achievable through share buybacks. We consider factors such as expected return on investment, earnings per share accretion, borrowing capacity and leverage. The group seeks to utilize its balance sheet and revolving credit facility to best effect and to maintain a leverage ratio of net debt to adjusted EBITDA of less than 1.25x at the year-end position. I'll now hand back to Guy, who will take us through the operational update. Guy Gittins: Thank you, Chris. Over the next 2 slides, I will lay out operational progress we've made in our business areas and our focus for 2026, followed by the operational upgrades we've delivered across the group. In Lettings, we continued to make progress with our organic growth strategy, delivering against our formula of growing the portfolio and driving the cross-sell of high-margin services. Over the year, we increased our London market share by 8% and maintained high levels of stability across our tenancy portfolio. Revenue and margin growth was supported by a 7% increase in cross-selling property management and the proportion of the portfolio that is actively managed now stands at 43%, up from 32% at the end of 2021. Our focus over 2026 is to continue delivery of our growth formula to continue to grow this highly valuable business. Organic growth is complemented by acquisitive Lettings growth. In the year, we delivered good returns from our Reading and Watford acquisitions with returns above our initial targets. In Watford, we have integrated the business into the operating platform, rebranded to Foxtons and boosted with a bolt-on acquisition that is delivering returns at our 20% target level. We are now the largest Lettings agent in Watford with more than 3x the market share of our nearest competitor. And in January 2026, we expanded into 2 new complementary high-growth markets in Milton Keynes and Birmingham. Milton Keynes is well connected to London, home to a large number of corporate headquarters and has one of the highest levels of GDP per capita in the U.K. Birmingham has undergone a significant regeneration and continues to attract major investments, including a growing number of banking and professional services roles, a trend set to accelerate with the opening of HS2. Both cities have strong pipelines of build-to-rent and new homes developments. And we have already linked these businesses with our corporate customer base. These acquisitions are not part of a plan to become a national agent. This is a targeted strategy focused on markets where Foxtons can create real value. Our priority over the next 12 to 18 months is maximizing returns from these deals through the delivery of organic growth, cost synergies and high return on investment acquisitions. Moving to sales. We operate through a highly volatile market last year, and our market share held broadly flat. In November, we appointed a new Managing Director, James Stevenson, who has a fantastic track record of delivering turnarounds over his 20-year career at Foxtons. And we now have an operational plan to reposition the business to reflect current market environment, and in doing so, improve profitability. It's worth remembering that whilst we are a Lettings-focused business, sales is an integral part of our full service proposition and is highly complementary with Lettings. Our offer is built around supporting customers through their entire property life cycle and sales plays a critical role in helping landlords expand or reposition their portfolios. By delivering this full service approach across sales and Lettings, we significantly strengthened landlord loyalty, enhanced revenue repeatability and increased customer lifetime value. And as Chris highlighted earlier, sales delivered a positive financial contribution before the allocation of shared costs. In Alexander Hall, our Financial Services business, we delivered a 10% revenue growth driven by increasing the operational productivity of our advisers and improving the efficiency of our processes. This included a 13% uplift in mortgage deals per adviser and a 5% improvement on the conversion of leads to mortgage applications. Continuing to build on these upgrades will support further growth. And underpinning all of this is a consistent focus on cost and productivity to maximize the operational leverage across the business. As Chris mentioned, we forensically review our cost base on an ongoing basis, taking costs out wherever we can, including our recent HQ move, which generated GBP 1.5 million of annualized savings. And we're focused on leveraging our technology stack and data capabilities to drive efficiency right across the organization. Turning now to Slide 23. Over this slide, I will present the key group-wide operational upgrades we're delivering to support our growth plan. Customer lifetime value is a key focus for the business. We aim to support customers through their property life cycle, becoming their trusted property partner. And in doing so, we can generate high-quality recurring revenues and earnings. To do this, we need to deliver best-in-class service. We've made significant progress in this area, and I'm pleased to say that we now achieve customer satisfaction scores of over 80%, a double-digit uplift since we launched these programs. In 2025, we continued to enhance the customer experience by further embedding our real-time feedback system across the full customer lifecycle, enabling us to measure service throughout the journey and resolve any issues quickly. Combined with AI-powered sentiment analysis, this allows us to identify the drivers of exceptional service. It embeds insights into training and delivers consistently high standards. Supporting this focus on service are our brand and marketing initiatives. Our focus this year was on strengthening customer attraction and retention in a competitive market. Foxtons has always had a distinctive level of brand awareness. We do things differently. And in 2025, we built on that by launching an exclusive partnership, which makes us the only U.K. estate agent where customers can earn Avios points. It's a differentiated position designed to attract new customers, reward loyalty and drive uptake of our higher-margin services. Turning now to our technology and data capabilities. Our in-house technology and data stack creates the flexibility to develop and deploy AI and data solutions at pace without the constraints of an off-the-shelf system. Our approach is very clear. We only invest in AI where it makes a meaningful difference to our financial results. It's not AI for AI's sake. In 2025, we made strong progress. We expanded our AI-driven sentiment analysis, giving us far deeper insight into customer interactions. We also advanced our data-led lead scoring models, ensuring our people focus their time on the highest value opportunities. And we introduced AI-powered training tools that help new agents reach their full performance faster. Together, these improve efficiency, drive higher productivity and ultimately, enhance profitability. We will continue to identify areas across the platform where embedding AI can deliver an operational and financial impact. These upgrades are a key part of the continuous improvement culture that now runs throughout the entire business. Finally, and most importantly, our people and culture. It is my fundamental belief that a state agency is a people business, having the right talent, developing great leaders and embedding and really demonstrating our core values is critical to our success. This year, we worked with external partners to assess our strengths and opportunities, enhance our employee proposition and introduced our Getting It Done. Together. framework to align recruitment, development and well-being across the organization. The response from our people has been really encouraging. 81% believe Foxtons is well positioned to succeed over the next 3 years, and 85% believe we truly value diversity and build diverse teams. We remain committed to building a collaborative culture that enables our people to deliver exceptional service for our customers. And finally to Slide 25 and the outlook for 2026. In Lettings, we expect the market dynamics we saw throughout '25 to continue with consistent levels of stock and strong tenant demand. The Renters' Rights Act represents a significant growth opportunity for Foxtons as landlords increasingly need professional support to navigate the new regulations. In addition, the 2 acquisitions we completed in January 2026 will generate incremental Lettings revenues. Our plan for 2026 is focused on maximizing the returns from the deals we have completed over the last 18 months, driving organic growth, delivering cost synergies and progressing targeted bolt-on acquisitions to strengthen our market positions. Turning to sales. Buyer activity continues to be held back by weak consumer confidence, macroeconomic concerns and policy decisions. In response, we are repositioning the business for the current market conditions to improve profitability. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and cost continued discipline. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and continued cost discipline. Importantly, profitability across the group remains underpinned by our substantial base of non-cyclical and reoccurring Lettings revenues, giving us confidence in our ability to deliver against our growth strategy. That concludes the formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks. I'll now pass to the operator for any questions you may have. Operator: [Operator Instructions] Your first telephone question today is from Robert Plant of H2 Radnor. Robert Plant: Three questions, please. Post the acquisition in Birmingham -- the acquisition is in the center of Birmingham. How much of the Birmingham market are you targeting geographically? Secondly, the period of repositioning in sales, how long do you think that will take? And lastly, what are the working capital implications of the Renters' Rights Act? You mentioned investment in working capital. I'm sure there's a difference between when you collect and when you bill for sales. So, can you just talk us through that, please? Guy Gittins: Well, thank you very much for those questions, and welcome, everybody. Thanks for tuning in. Firstly, if I talk about Birmingham, the business that we bought as we do when we're targeting new locations, we always use data to lead the decision and we look for high-volume, high-value rental markets. And obviously, Birmingham is a superb area for this. There's also still, we believe, good growth left in the Birmingham market, both for sales and for Lettings. So, really highlights the reasoning behind looking outside of London as well in conjunction with our continued focus on talking to businesses within London that would be bolt-on. The business that we bought is a Central Birmingham specialist with leading market share within the city center. And we are talking already to other agencies in the nearby vicinity that would allow us to continue our bolt-on strategy to quickly grow revenues and continue to grow that portfolio of Birmingham properties to give us a slightly larger geographic area. So yes, always, we look to buy the hub, which is the business that we bought FleetMilne, and we are wanting to add to that to turbocharge the growth as quickly as possible, and that helps us really drive those profits in the years after. Second question was around repositioning of sales and how quickly does that happen. We're fortunate, as you know, to have huge amounts of data, huge volumes of data and using the data platform that we've built over the last couple of years. Chris and I, and the rest of the senior leadership look at this data on a daily basis to really give us a view of where we think the sales market is heading and allows us to be able to dial up or dial down resource in certain areas. And last year is a great example of that. Prime Central London, the volumes were considerably subdued. However, in our Southwest offices, the market was actually really quite buoyant and that allowed us to be able to apply resource meaningfully to grasp the opportunity in those higher volume areas. And that's really what our plan will be across this year as we sit here looking at the outlook today for what we feel the rest of the sales market will look like in London is different to how it looked 6 months ago and different to how it looked 3 months ago. So, that is an always-on process, but we're perhaps a little bit less excited certainly looking with some of the things that are happening in the Middle East about what may happen around inflation and interest rates. So, we're just making sure that we're always ahead of that. I'll pass on the RRA -- the Renters' Reform Act question over to Chris. Christopher Hough: Yes. The question was around our working capital changes in this area. So, Renters' Rights Act, that will see the removal of fixed terms tenancies. And what we'd expect to see there is an average reduction in the billing period start those tenancies. So, we're making a change here to improve our competitiveness and indeed increase landlord retention. And we've been reducing our billing terms since 2023 as it happens. We estimate that over the course of 2026 and 2027, there's a GBP 10 million investment in working capital required as we fully transition our portfolio. Transitioning portfolio takes time, hence, why there's a 2-year period there. Operator: The next question is from the line of Greg Poulton from Singer Capital Markets. Gregory Poulton: Three questions from me, please. Firstly, obviously, the move to more fully managed tenancies has been an important trend for the Lettings business. Could you just talk about the level of uplift in fees you see from a fully managed versus a letting-only tenancy? And second, can you talk about the expected cadence of acquisitions for the rest of the year? I'm not asking for a forecast on that, but just to sort of guide as to what we could expect to see throughout the remainder of the year? And thirdly, linked to that, how much capital expenditure do you think you will allocate to acquisitions in the remainder of the year? Guy Gittins: All right, Greg. Thanks for those questions. Yes, look, we're really proud of the improvement that we've seen over the last 2 or 3 years with the upsell of our property management service, and that really has come from a fantastic cross-business effort, particularly driven by the Head of Letting working very closely with the Head of Property Management. And that means that we've seen a 7% uplift in that cross-sell of property management services, which ultimately delivers around about a 6% additional fee, which is charging for that premium fully managed service. And of course, as we extrapolate that over a longer period of time, that 7% uplift of the volume of services that we're transferring into that premium service for new deals over time massively helps us grow the overall number of properties that we have under management. And that really is a key KPI that we drive within the business and lots and lots of remuneration is linked to that, lots of the KPIs we talk about across the business is focused on it. So, we're proud of that movement, and it's certainly a very big focus across the business. And I think that as we've mentioned, the change into the Renters' Reform Act does, we believe, increase the likelihood of non-managed landlords wanting to take the fully managed service. As we saw and we mentioned in our presentation, it's really easy to fall foul of some of the rule changes and you need a very, very capable agency who's got large teams of compliance, making sure that your property is fully compliant and looked after at every stage along this journey. And that's why we are seeing more people choose that service through Foxtons. Acquisition cadence, look, we've made 2 great acquisitions at the start of this year. We're watching very carefully what the outlook looks like. And of course, our capital allocation is always very much under review, both with our Board and internally. I'll perhaps let Chris talk to that a little bit later. But acquisitions very much are a function of opportunity. We're talking to agencies both inside London and outside London. And really, we want to make sure that we make the right acquisitions, not just any acquisition. We're pleased with the 2 acquisitions outside of London in Milton Keynes and Birmingham that we've made at the start of this year in January. And really, I suppose my preference now is to try to make sure that those new acquisitions are settled in that we can drive the synergies, that we can make them more profitable and hopefully, find some bolt-on acquisitions to make in the near future. Christopher Hough: Finally, Greg, from a quantum perspective on CapEx and acquisitions, we've done 10 already, and I'd be thinking about that 15 number we put out there previously. So, I expect that additional quantum being the target and the ambition for the remainder of '26. Operator: [Operator Instructions] The next question comes from Adrian Kearsey from Panmure Liberum. Adrian Kearsey: I will say, thank Rob and Greg, for asking the questions I was initially going to ask. But in terms of sales, you've got an average property price last year of GBP 574,000. Can you perhaps sort of give us an indication of the range of the types of properties that you sell to give us a sense of how broad or how narrow your market focus is? Back to also to the second question. Back to Birmingham, currently one site. In order to take advantage of that huge opportunity in Birmingham, when you make further acquisitions, do you think you'll end up having multiple offices in Birmingham? Or will you have a single office in the center? Guy Gittins: I'll take the first question around sales. Our average price around GBP 574,000, look, we want to be in the volume market across the markets that we operate in. And the reason for that is we know that they're more resilient, and we are a volume efficiency machine at Foxtons in sales and particularly in Lettings as well. The spread of properties that we sell, we actually have a minimum fee of GBP 6,000 in London. Now, that means that we don't end up selling many short lease garage spaces, which we were doing a little bit of prior to my arrival. But we do across all price points. I mean, we've just agreed something, a bulk deal in an area in the east of London that's nearly GBP 10 million. And so we're operating in all markets. But absolutely, our sweet spot is that volume piece right in the middle of where the average pricing is across London, and that's really by design. Now, we have been making some efforts to try to increase over time the average. And when I say increase, just a very small increase in that average sales price does make a meaningful difference to us, but we don't want to ever turn our back on that volume market. And the second question was Birmingham one site or multi-sites. Well, I think certainly today, we view the value, the biggest opportunity is to continue to grow from the center to the more affluent areas of the residential areas around Birmingham. And as I've mentioned, we're talking to multiple agencies around those locations at the moment already. And we can also bring, of course, the Foxtons Operating Platform, which really does help grow the businesses. And we've seen fantastic examples of that in both Watford and Reading last year where we've actually delivered some really solid growth once we've layered in the kind of Foxtons' toolkit of marketing, brand productivity and operational excellence. And that doesn't happen overnight. That takes a little bit of time to bed in, and that's what we're very busy doing with both our business in Birmingham and in Milton Keynes at the moment. Operator: There are no more questions from the telephone anymore. We can now read the questions from the webcast. Unknown Executive: First question is from Robin Savage at Zeus. It says, the impact of the Renters' Reform Act this year is interesting. Are there any early market signals that we or any other lettings agencies are seeing that might indicate an uptick in DIY landlords moving towards professional lettings management? Guy Gittins: Great question. Thank you, Robin. Yes, absolutely. Look, we've seen this trend starting to kind of infiltrate the London market over the last 18 months really. We've seen obviously market share increases for Foxtons, and we've seen this increase in our property management cross-sell. And as I've mentioned at the start, that's been a major focus of what I wanted the business to deliver over the last 2 or 3 years, and I'm really proud of the delivery of that. And I don't see it slowing down. We really do offer and believe the offering of the service that we can give to our landlords is best-in-class. And what we are trying to do is deliver the very best service for our landlords, but also making sure that they remain fully compliant and clear of any issues that may be happening and being ahead of those legislation changes as we know they can come in very quickly and catch people out. So, very pleased with what that looks like and definitely are seeing that within London. Unknown Executive: Second question from Robin. Foxtons has built a significant competitive advantage through decades of structured proprietary data and a highly analytical approach. How do you see advances in artificial intelligence and large language models further strengthening that advantage, both in how Foxtons generates market insights and how it manages the business and delivers differentiated services relative to competitors with less developed data capabilities. Guy Gittins: Great question. Thanks, Robin. Well, you've been a beneficiary of coming and seeing the operation in-person here at Foxtons. And I'm sure that you'd agree that there isn't another data system, there isn't another database like Foxtons has across the London market and as far as we're aware, across the whole of the U.K. market. And we've been really utilizing that database, cross-referencing it already with early machine learning over the last 12 months and some AI functionality to help us improve productivity. Great example of that is we have 100 people who sit at Foxtons' head office who are calling into a huge database of nearly 4 million people to drive new listing opportunities. Now the old way of doing that would be just randomly picking a street and calling from A to Z, but our new system uses AI and has machine learning so that it filters up to the top and surfaces the most likely leads that we think we'll convert in the next 3 months. And that's had a meaningful impact on the productivity of that team. We're also using AI to help us improve the speed of new recruits under training to get them to be able to build for the business quicker by helping them through the training flow where we've got AI platforms that have really improved that speed of service during that initial training period. And we're using AI in other areas as well. And as we said in the presentation, we're not -- we are definitely not using AI for AI's sake. It has to have a meaningful impact to the bottom line. And we keep a very, very close eye on lots of technologies that lots of people are working very hard to try to deliver across the industry. And because of our structure of that data and the way that we've built the database, we're able to loop in these functionalities very, very, very quickly. Thanks for that question, Robin. Unknown Executive: One from Andy Murphy at Edison. Given the number of recent deals outside London, are you no longer focusing on London M&A? Guy Gittins: Great question. We absolutely are still very focused on London opportunities. But given where we've seen the growth in the marketplace when we were presented with the deals that we could have done this year and last year, it just totally made sense to look at the Birmingham and the opportunities in Milton Keynes. But it doesn't stop us from looking and continuing to speak to other agents as roll-ins within the London environment. But as I said before, they need to be the right deal for Foxtons, and we need to be paying the right prices for them. And yes, that search is still an always on. So, certainly not turning our back on London-focused acquisitions. Thanks, Andy. Unknown Executive: One from Robert Sanders at Shore Capital. What are the multiples in the market at the moment for Lettings portfolios? And how much consolidation do we see likely in the sector after RRA? Guy Gittins: Yes. I think the RRA opportunity is more likely to create even further consolidation. But actually, I'll let Chris take the questions on the multiples. Christopher Hough: Yes. The multiples really depends where we're buying, what we're buying, the balance of sales versus Lettings. But broadly speaking, a range from 2 to 3x Lettings revenue is a sort of multiple we're seeing, which is actually pretty consistent with what I see in both '24 and '25. So, there's been no significant change there. And for us, now we've got 2 new platforms, which we're building into, i.e., Milton Keynes and Birmingham. That gives the bandwidth and the opportunity to launch into new areas, which is really exciting for us. Unknown Executive: And a question on the sales market from [ Donald ]. How impactful is the lack of overseas buyers in London and the alleged exiting of high-net-worth individuals from the London sales market? Guy Gittins: We touched on earlier, our average sales price across London is GBP 574,000. The super prime market, we know very clearly, particularly last year, felt the pain of the exiting of high-net-worth individuals and certainly, lots of reports, as I'm sure you will have read from the super prime agents really having a torrid year last year. Did that impact our volume market? I mean, ultimately, it does have a very small effect on the movement up and down chain. But the reality is that's why we are in the high-volume market because we know that those transactions overall are less impacted by these big swings of where Netwealth may decide to spend their money this summer versus the next summer. So yes, we haven't been impacted by it. But certainly, super prime agencies, we know really felt the pinch last year. Unknown Executive: And the following question, what are the -- essentially, what's the catalysts that are required to drive volumes in the sales market? Guy Gittins: Well, ultimately, the biggest barrier to returning back to those 145,000 sales transactions that we historically used to see going back before the financial crisis is stamp duty. Last year, we think there were somewhere in the region of 90,000 sales transactions. The year before that, probably 85,000 sales transactions. We always believe that the market would return to its 5 or 6-year average of around about 100,000 sales transactions, but that looks very unlikely this year. And that's the reason that we are ahead of the market really thinking about what we want to do with the sales business this year so that we are rightsizing everything across all of the different regions that we're in. But if you also look at sales being agreed this year already, we know that year-to-date, the number of sales in London is circa down in total around about 6%, whereas pretty much the rest of the U.K. market is up year-on-year on sales agreed. So hopefully, another good reason to point to our acquisitions outside of these locations. Unknown Executive: And that's the end of the questions from the web. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Guy Gittins for any closing remarks. Guy Gittins: Firstly, thank you for joining us this morning. As you know, Chris and I will meet many of you over the coming weeks. We are really focused on continuing to deliver the medium-term targets that we set out in our CMD in last year. We've got a very good business. We've taken a lot of costs out last year, and we're laser-focused on making sure that we can continue to pull all of the different growth levers to achieve those targets in the medium term. I appreciate everybody joining the call this morning, and look forward to seeing you all soon.

34天前Insight Analytics约5分钟阅读

RDVT 2025 Q4 财报电话会议

Operator: Good day, ladies and gentlemen, and welcome to the Red Violet's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Now I would like to introduce your host for today's conference call, Camilo Ramirez, Senior Vice President, Finance and Investor Relations. Please go ahead. Camilo Ramirez: Good afternoon, and welcome. Thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer; and Dan MacLachlan, our Chief Financial Officer. Our call today will begin with comments from Derek and Dan, followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our Investors page on our website, www.redviolet.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. The company undertakes no obligation to update the information provided on this call. For a discussion of the risks and uncertainties associated with Red Violet's business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share and free cash flow. Reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure are provided in the earnings press release issued earlier today. In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amounts may be discussed, and these metrics and their definitions can also be found in the earnings press release issued earlier today. With that, I am pleased to introduce Red Violet's Chairman and Chief Executive Officer, Derek Dubner. Derek Dubner: Good afternoon, and thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. We are pleased to report a record fourth quarter and a strong finish to 2025. The year was defined by disciplined execution, sustained momentum and broad-based demand across our markets. Adoption of our solutions remained robust, driven by the strength of our cloud-native intelligence platform and the expanding integration of our identity graph within customer workflows. Our team executed at a high level, and the strategic investments we have made over the past 2 years are translating into measurable operating performance. We entered 2026 from a position of strength with confidence in our architecture, our trajectory and the opportunity ahead. Let's briefly run through the numbers. Revenue for the quarter was up 20% to a record $23.4 million, producing record adjusted gross profit of $19.5 million, translating to adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 33% to $5.9 million, producing an adjusted EBITDA margin of 25%. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. We generated free cash flow of $3.7 million during the quarter. For the second consecutive year, we bucked the fourth quarter seasonality we had traditionally experienced, delivering sequential revenue growth and establishing a new record quarter. Our IDI billable customer base grew by 169 customers sequentially from the third quarter, ending the fourth quarter at 10,022 customers. FOREWARN added 17,809 users during the fourth quarter, ending the quarter at 390,018 users. Over 620 REALTOR Associations are now contracted to use FOREWARN. For the year, revenue increased 20% to $90.3 million, producing adjusted gross profit of $75.4 million and adjusted EBITDA of $31 million. Adjusted EBITDA margin was 34% for the year. We saw continued growth in the onboarding of top-tier customers, with 127 customers contributing over $100,000 of revenue in 2025 compared to 96 customers in 2024. We generated $18.2 million in free cash flow in 2025 compared to generating $14.4 million in 2024. The momentum we generated in the first 3 quarters extended through the fourth quarter and capped a strong year overall. Demand was well balanced across our verticals, underscoring the versatility of our platform and its growing integration into regulated and mission-critical environments. We continue to see expanding enterprise adoption as customers embed our intelligence more deeply into core operational workflows, further strengthening the durability and visibility of our revenue base. Throughout the year, we continued to execute against a robust product road map, advancing capabilities across our cloud-native AI-enabled platform. We made targeted investments in data science, product development and go-to-market resources to support innovation and long-term growth. At the same time, we executed upon our strategic plan announced last year of increased automation across key areas of the organization, enhancing efficiency and productivity while maintaining operating discipline. We believe there remains meaningful opportunities to further automate and optimize workflows across the business, which we expect will continue to improve performance and scalability over time. On the pervasive topic of AI, there has been significant discussion in the market about artificial intelligence potentially commoditizing software. We believe it's important to distinguish between AI as a capability and the infrastructure required to deliver mission-critical intelligence at scale. Our platform is not a front-end application layered on top of a model. It is a full technology stack, a purpose-built cloud infrastructure, distributed and parallel computing architecture, proprietary data ingestion and normalization systems, rigorous validation frameworks, governance and security controls, API layers and embedded machine learning workflows, all integrated to create and continuously refine a longitudinal identity graph developed and validated over many years. Our management team has been building platforms and companies in this sector for nearly 3 decades. This is our third platform in the identity and analytics space. And throughout that time, we've repeatedly been asked how we compete with larger incumbents or what prevents new entrants from replicating what we build? The answer has never been a single model or a single data set. It has been the integration of architectural design, proprietary engineering, accumulated data intelligence, regulatory alignment and disciplined execution over time. From the earliest days of our first company in the late '90s, we recognized that solving identity at scale required parallel computing and proprietary processing frameworks. We developed our own internal language and systems to ingest, normalize, validate and unify large volumes of structured and unstructured data. IRON is our proprietary entity resolution, data processing and machine learning framework, purpose-built to resolve identities with precision, scalability and computational efficiency that generic frameworks cannot easily replicate. It serves as the core intelligence layer within our architecture, enabling high confidence identity resolution across complex and fragmented data environments. Our AI-assisted development capabilities operate natively within this framework, allowing us to further optimize performance and accelerate innovation. This intellectual property is not publicly available and remains foundational to the construction and continuous refinement of our identity graph. These capabilities were not developed in response to the current AI cycle. They've been embedded in our architecture and our operating philosophy from inception. Artificial intelligence, including generative AI, is a powerful accelerator. It can shorten development cycles, enhance automation and improve analytical precision, but AI alone does not create a durable platform, a unified longitudinal identity graph or the regulatory-grade workflows that our customers depend on, environments where accuracy, consistency and auditability are essential. As AI capabilities continue to evolve, we believe the platforms that will benefit most are those already architected with embedded AI, deep analytical frameworks and secure cloud-native infrastructure. In that respect, AI strengthens and extends the advantages we have built. It does not replace them. Moreover, certain competitors continue to operate on legacy on-premises or hybrid architectures that were not designed for modern cloud-native deployment or deeply embedded machine learning. Because our platform was architected from inception as a cloud-native system with AI integrated directly into core workflows, we believe we are structurally better positioned to incorporate new advancements rapidly and continue widening our competitive moat. Much of the current AI discussion has centered on agent-based automation and what that could mean for traditional per seat software models. It's important to understand that our revenue model is and always has been usage-based, supported by contractual minimums. Approximately 90% of our revenue is volume-driven. The limited portion that is seat-based exists primarily in regulated environments, including law enforcement and collections, where seats are limited to direct human interaction and any automated use is converted to volume-based pricing. Importantly, we view increasing AI adoption by our customers, including agent-based automation and workflow augmentation, as a productivity enhancer. As automation reduces manual effort and accelerates decision-making, we expect transaction volumes and data velocity across our platform to increase. In that context, AI is not a substitute for our solutions. It's a catalyst for greater utilization of them. Expanding the depth and breadth of data within our intelligence engine to serve additional use cases and industries has long been a core element of our strategy. We have consistently enriched our identity graph with new data attributes and analytical capabilities to broaden its applicability across verticals. As AI reduces the cost and time required to build application layers and orchestration tools, we believe competitive advantage increasingly shifts toward platforms that control the intelligence engine. Because we control that engine via our cloud-native platform and longitudinal identity graph, we are now positioned not only to continue expanding horizontally across industries, but also to expand vertically by building and integrating more workflow, case management and application layer capabilities directly on top of our platform, allowing us to internalize key orchestration layers and further embed our intelligence at the center of customer operations. At the same time, we continue to deploy AI-enabled capabilities to aggregate and contextualize fragmented data across our identity graph, uncover deeper relational linkages between entities, identify and surface risk signals with greater precision and deliver more intuitive workflow-driven interfaces. Advancements in AI-assisted development are accelerating our road map, compressing development cycles and broadening the solutions we can deliver. In that respect, AI is not simply enhancing our existing capabilities, it is expanding the strategic scope of our platform and deepening our integration within customer workflows. Now I'll turn it over to Dan to discuss the financials. Daniel MacLachlan: Thank you, Derek, and good afternoon, everyone. The fourth quarter marked a record finish to an exceptional year for Red Violet, defined by strong revenue growth, expanding margins and meaningful cash generation. Importantly, we accomplished this while continuing to invest in the business for the long term, adding more than 30 team members during the year, with a focus on product development and go-to-market expansion. These investments were deliberate and strategic, expanding our AI-driven capabilities and broadening our market reach, all without compromising financial performance. We continue to scale the business both vertically, deepening adoption across existing markets, customers and use cases and horizontally, by introducing new products and expanding into new industries. That strategy is translating into larger and more valuable customer relationships, with 127 customers now contributing over $100,000 in annual revenue in 2025, up 31 customers from the prior year. It is also expanding the reach of our platform as we surpassed 10,000 customers on IDI and more than 620 REALTOR Associations contracted to use FOREWARN. Collectively, these results position us with strong momentum as we enter 2026, supported by a larger and more diversified customer base, expanding platform adoption and continued operating leverage. Turning now to our fourth quarter results. For clarity, all the comparisons I will discuss today will be against the fourth quarter of 2024, unless noted otherwise. Total revenue was a record $23.4 million, up 20% over the prior year. We generated a record $19.5 million in adjusted gross profit, delivering adjusted gross margin of 83%, up 1 percentage point. As is typical in the fourth quarter, personnel costs include year-end incentive compensation tied to annual performance. Even with this seasonal expense, adjusted EBITDA increased 33% to $5.9 million, producing adjusted EBITDA margin of 25%, up 2 percentage points. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Turning to the details of our P&L. Revenue for the fourth quarter was a record $23.4 million. For the second consecutive year, we outperformed the typical fourth quarter seasonality, delivering sequential revenue growth and establishing a new quarterly high. Within IDI, we continue to see strong demand for our solutions and healthy customer expansion, adding 169 billable customers sequentially to end the quarter with 10,022 customers. Our financial and corporate risk vertical continues to deliver consistent strong revenue performance, driven by solid results across our core financial services customers, including banking, insurance and broader corporate risk. The background screening industry also continues to perform exceptionally well, supported by the introduction of additional products, enhanced functionality and new integrations over the past year, driving meaningful growth and momentum in the fourth quarter. Our investigative vertical delivered another strong quarter, supported by continued demand across state and local law enforcement agencies as well as broader investigative customers. We added approximately 200 law enforcement customers in 2025, reflecting the growing reliance on our platform within the public safety community. Performance in the quarter was driven by increased transaction volumes, new agency wins and the further embedding of our solutions into day-to-day investigative workflows. Our emerging markets vertical was an important contributor to revenue growth in the fourth quarter, generating meaningful expansion across a broad and diverse set of customer segments. While we remain in the early stages of penetration within many of these markets, adoption continues to build, providing clear runway for sustained growth. Collections maintained its positive trajectory in the quarter, delivering another period of high teens revenue growth. The continued recovery in this vertical is translating into sustained demand and improved activity levels, reinforcing our competitive position and long-term opportunity in the market. Lastly, IDI's real estate vertical, excluding FOREWARN, declined modestly year-over-year as elevated home prices and interest rates continue to constrain affordability and dampen overall housing activity. Turning to FOREWARN. Revenue growth remained robust in the fourth quarter, driven by the platform's increasing adoption within the daily workflows of real estate professionals. We ended the year with over 620 REALTOR Associations under contract and more than 390,000 users on the platform. Contractual revenue represented 77% of total revenue in the quarter, consistent with the prior year. Gross revenue retention remained strong at 95%, down 1 percentage point. Moving back to the P&L. Our cost of revenue, exclusive of depreciation and amortization increased $0.4 million, or 12% to $3.9 million. Adjusted gross profit increased 21% to a record $19.5 million, resulting in an adjusted gross margin of 83%, up 1 percentage point from the prior year. Our sales and marketing expenses increased $0.4 million or 9% to $5.3 million for the quarter, driven primarily by higher personnel-related expenses. General and administrative expenses increased $1.5 million or 18% to $9.8 million, primarily reflecting higher personnel-related costs. Personnel expenses are typically elevated in the fourth quarter due to year-end incentive compensation and bonus accruals tied to annual performance for the executive leadership team. Depreciation and amortization increased $0.3 million or 12% to $2.8 million for the quarter. Net income increased $1.9 million or 226% to $2.8 million for the quarter. Adjusted net income increased $1.1 million or 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Moving on to the balance sheet. Cash and cash equivalents were $43.6 million at December 31, 2025, compared to $36.5 million at December 31, 2024. Current assets totaled $56.5 million compared to $46.2 million, while current liabilities were $7.9 million, down from $10.3 million. We generated $6.7 million in cash from operating activities in the fourth quarter, unchanged over prior year. Free cash flow for the quarter was $3.7 million compared to $4.4 million in the same period last year. In the fourth quarter and through February 27, 2026, we purchased 57,812 shares of company stock at an average price of $44.01 per share. In total, we have purchased 611,733 shares at an average price of $22.26 per share under our stock repurchase program. As of February 27, 2026, we had $16.4 million remaining under the repurchase program. In closing, 2025 marked another year of disciplined execution and record financial performance for Red Violet. We delivered 20% revenue growth, expanded adjusted gross margin to 84%, adjusted EBITDA margin to 34% and generated $18.2 million in free cash flow. This performance reflects the consistent execution of our team and the increasing efficiency of the business. We believe the scale and financial strength we have built provide a durable base for continued profitable growth. With that, our operator will now open the line for Q&A. Operator: [Operator Instructions] Our first question for today will be coming from the line of Josh Nichols of B. Riley Securities. Josh Nichols: Great to see the company bucking the 4Q seasonality trend yet again. Looking at the enterprise pipeline, I know you secured a couple of wins. You mentioned like a toll authority and payroll processor, I think, the other quarter. Just any update on how that's progressing or generally, what you're seeing in terms of like the enterprise customer pipeline when we look at 2026? Daniel MacLachlan: Yes. Thanks, Josh. This is Dan, and I'll take that question. So yes, I mean, when we look at that enterprise pipeline and specifically kind of that higher-tier customer, we've been excited, and we've given some color on some recent wins. Obviously, we just announced a record number of customers in excess of $100,000 a year, almost a 30% increase -- just over a 30% increase in that customer cohort. And that's really representative of how that pipeline has developed and how that pipeline continues to develop. So we're excited about the investments we've made, the continued execution to move from lower to medium to higher-tier customers, and it's reflected in the cohort as announced today, 127 customers in excess of $100,000 in revenue a year. And so that pipeline continues to develop well, and we're converting into real meaningful customer wins. Josh Nichols: And then just a follow-up. A lot of additions continue to see in like the law enforcement agency vertical, 200 plus this year. When you look at like the 2026 growth trajectory. Like what are the top 1 or 2 opportunities that you think are going to move the needle specifically in those end markets because you serve so many? Derek Dubner: Yes. Thanks, Josh. Derek here. Great to talk to you. The end markets that I think that today, at least, we are most excited about, continue to be public sector and background screening support. And I think as Dan mentioned, we announced we won the largest payroll processor in Q3 last year. That contract kicks in this year. And so we're very excited about that. That proves our differentiation in the marketplace, testing and winning against very strong competition out there. And then in public sector, we continue to make very nice traction, as Dan talked about and you talked about in law enforcement. And we are seeing some great progress at the state level as well with a number of use cases in the way of eligibility requirements and identity verification. And those use cases really are so broad. They capture so many of various state agencies, if you will, use cases. So we continue to see progress there, and we continue to win those. And again, I think we've got a model that's very replicable, and we can replicate it across every state given the uptake there. Operator: Our next question is coming from the line of Eric Martinuzzi of Lake Street Capital Markets. Eric Martinuzzi: I also wanted to focus on the higher-tier customers. That is very substantial growth there in those accounts that are doing over $100,000 annually. I know you've talked when you were asked the question about, hey, where can the business go, that there are, let's call them, whale-sized accounts in the $5 million to $10 million annually. Are there any of those prospects, those types of whale prospects in the pipeline that you guys feel are closer, could happen in 2026? Or is it still too soon to consider them in the funnel? Daniel MacLachlan: Eric, this is Dan. I appreciate the question. And yes, I mean, we have those opportunities now in the pipeline. We also have those opportunities as customers. The third quarter reference we made to one of the largest payroll processors in the country that we won, ultimately, the volume of that customer over time as we continue to expand that relationship can be a multimillion dollar a year customer. The minimum commitment is probably around low to mid-6 figures starting in 2026, which is great. But we think the opportunity to expand that relationship goes into the 7 figures and plus. So yes, we're really excited about the pipeline, but we're also excited about some of these recent large wins that are really representative of those type of customers you're talking about. Eric Martinuzzi: Okay. And I know it was probably -- last summer, you had a pretty substantial data rights agreement that you're able to renew on favorable terms. As far as 2026 goes, do we have anything of that nature, a substantial data rights exposure that we're working on? Or is it all relatively small in comparison? Daniel MacLachlan: Yes. There's really no material licensing renewal agreement that is coming up. I mean we structure these agreements, as you know, long-term, unlimited use, fixed fee structures. We have obviously entered into a renewal for another 6 years at the time, which would bring us past 2030 of our largest data provider, and we announced that, of course, midyear this year, which was great. But no, at this time, in the near term, there really is no material license agreements that are coming up for renewal. Eric Martinuzzi: Okay. And then as far as the 2026 outlook goes, you just finished the year where you grew 20% a quarter where you grew 20%. I know you're not in the guidance business. But right now, I've got kind of a mid-teens growth rate for 2026. Is that a good place to start out? Or are you confident that it's going to be 20% plus? Daniel MacLachlan: Yes, Eric. No, look, I appreciate the question. And as you know, we don't provide formal guidance. Going back to the start of 2024, our goal really, and we publicly disclosed, was to reaccelerate revenue growth and sustain that momentum over the next several years. 2024 was a great year of growth. As you mentioned, 2025 was a strong 20% growth. And we would expect 2026 to continue to deliver healthy top line expansion. So yes, I mean, our goal for the business is to continue to accelerate and drive the business and what you've seen consistently the last couple of years, but we're not going to provide any formal guidance as it sits today. Eric Martinuzzi: All right. And then you generated cash in the quarter. You did put some cash to work on your share repurchase program. A number of different levers you can pull there. You've done things like a onetime dividend in the past. You've used it to invest in data rights, M&A. What's the -- just here in the next 6 months, what's the likely use of cash? Derek Dubner: Thanks, Eric. It's Derek. The likely use of cash is, definitely going to be investing in this business. There are just, as I mentioned in my commentary, so much opportunity and the AI-enabled development that's occurring, which is accelerating deployments and creating such opportunities across everybody's environment, it's especially true for us. So that horizontal expansion I talked about, that was always part of our key strategic plan, has now become also a vertical expansion where we know how our customers interact with us, and we can provide them better tools. And we can do that, we believe, in rather fast fashion in the development world as far as time goes so that we can get even further ingrained in their workflows. So that is our priority #1. Operator: Our next question will come from the line of David Polansky of Immersion Investments. David Polansky: Just to put a finer point on it. I think, Dan, you mentioned payroll processor. There was none of that in Q4. What about the toll authority? Was there any of that revenue in the Q4 number? Daniel MacLachlan: So there was some revenue from the payroll processor in Q4. The contractual minimum commitment of that processor, which is a multiyear agreement, does not start into 2026. So we did see some of that revenue but just early stages, nothing meaningful. And the toll authority at this point has been working on integration and some volume expansion. So very minimal revenue as a result of that win in Q4. David Polansky: Great. And I was hoping it was nice to see the growth in high-spending customers. But -- could you help us understand, is that coming from new customer wins at high initial commitments? Or is that from growth in existing customer spend? Daniel MacLachlan: So it's a combination of both, which is great. And it's not only just growth in that cohort. We're seeing that growth across other cohorts, not just moving from one to the other, but expanding in each, right? So whether it's the $10,000 to $25,000 a year customer, the $25,000 to $100,000 a year customer or the $100,000-plus customer. Each of those cohorts are expanding nicely as we look at them. But it's a combination of both. It's some customers increasing volume, right? So when we win a big customer, they don't necessarily move all their volume at once. But slowly over time, we get the majority of their volume. Or it's a new customer win that happens to be a large, 6-figure plus year customer that we initially win. So it's been a good combination of both existing customer and new higher-tier customers. David Polansky: So when I think about -- I know you don't provide a breakdown of FOREWARN revenue versus IDI revenue. But if I were to say revenue per IDI customer were to grow -- I mean, I have it growing at a high single-digit rate, but then I'm also mixing in some new high initial commitment customers in there. Are you -- is it safe to assume that existing customers are growing spend at sort of a mid-single-digit rate, like 5% to 6%, maybe a little bit more? Daniel MacLachlan: It's safe to assume a little bit more than that, yes. David Polansky: Okay. Great. And then on headcount, I was a little bit surprised to see the sales and marketing headcount come down. I think we had initially discussed you'd be hiring a little bit more aggressively. So I don't know if there was some shuffling there or maybe phasing out less productive salespeople. Can you discuss that a little bit? And then what should we think about hiring and overall headcount for '26? Daniel MacLachlan: Yes. You're absolutely right in pointing out. It's kind of a little bit of end of the year, right? You're going to see a little ebb and flow. We always, as an organization, has focused on doing a really good job of bringing what I would say the C and D players up to A and B levels. And unfortunately, if those C and D players are not able to kind of get to that level, to churn out the bottom, so to speak. So we had a little bit of that at the end of the year. It makes sense, especially as you're kind of ending the year looking at final MBOs and then looking into next year and what your growth model and expectations should be for reps. So we had a little bit of that, but you'll see, I'm assuming here after we report the first quarter, kind of the reversion back in that sales and marketing line for some of those employees that just kind of we netted out at the end of the year. I think as we look at 2026 from an overall growth perspective, I think it would be very consistent with what we saw in 2025. In 2025, we added just over 30 new team members, mostly around product development and then go-to-market. The expectation would be very similar to that in 2026, a focus on product development, AI as well as go-to-market initiatives. So I think it'd be consistent with prior year. David Polansky: All right. Great. And could you just highlight because you mentioned AI. I know it's embedded in the core engine, but just in terms of operational things, whether it's back office, finance, sales function, are you utilizing AI to help the business at all maybe to keep headcount growth less than where it's been? Derek Dubner: Absolutely, David. Yes, this is Derek. And what I would say is that we announced in 2025, our strategic initiative to automate more. And so we've been doing that since. We've been looking across the enterprise to understand where we can automate using AI. There are so many tools that we could be using. And so we've been making good progress. But as I stated in my comments, that we would expect there is a lot more to do there. We're not a mature company. We didn't hire heavily during the pandemic. We're not looking to cut back. We're not citing AI for that. We are growing very quickly, and we're investing in the business, and that investment is for growth. And so as we continue to increase automation by hiring to do that and increase productivity, then we would expect the out years, if you will, or at least later that you're going to see all of that efficiency and productivity. So right now, it's a little bit more investment, but then we will bear the fruit of that investment. Operator: Thank you. And that concludes today's Q&A session. I would like to turn the call back over to Derek Dubner for closing remarks. Please go ahead. Derek Dubner: Thank you. As we look ahead, we're still in the early innings of a much larger opportunity. The digital transformation of identity, risk and decisioning continues to accelerate, and we've built the infrastructure and intelligence engine to serve as a foundational platform in that evolution. Our momentum, expanding enterprise relationships and continued innovation around AI-enabled capabilities position us to extend our reach, both horizontally, across industries and vertically, within customer workflows. We're building for scale, deepening our integration in mission-critical environments and strengthening the long-term economics of the business. We are excited about where we stand today and even more excited about where this platform can go. Operator: Thank you for joining today's program. You may all now disconnect. This does conclude today's conference call.

34天前Insight Analytics约5分钟阅读

ANDR.VI 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, welcome to the ANDRITZ's Full Year 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir. Matthias Pfeifenberger: Good morning, and a warm welcome from ANDRITZ out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO, Dr. Joachim Schonbeck; and our CFO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session. [Operator Instructions]. And now I'd like to pass on to Dr. Joachim Schonbeck for his elaborations. Joachim Schönbeck: Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's result. If you look back to the year 2025, we can say the world has been cautious on investments, but rich in geopolitical surprises. For ANDRITZ, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us. We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower and by -- but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And in metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part. If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year. Revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in ANDRITZ's history, EUR 10.5 billion at year-end, never had that, 7% up from last year. EBITA margin in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that will are prepared for this year. Net income is at 6.6% and EUR 154 million. If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 billion, up 8%. Revenue, EUR 7.9 billion, so very positive book-to-bill ratio. Order backlog, as I said, 10.5% (sic) [ EUR 10.5 billion ] and the comparable EBITA margin for the full year was at 8.9%, exactly where it has been last year, EUR 698 million. The reported EBITA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are -- that we have done in the year '25 and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million. The Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all 3 quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project Cahora Bassa in the fourth quarter of 2024. So that's, I would say, more a onetime effect. If we look to the business areas, you can see a very nice increase in Pulp & Paper and Hydropower; 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals, it's down by 13% for the full year. Environment & Energy, basically 3% down. So I would say, Pulp & Paper, very happy to have -- to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very, very huge success showing that we are really well positioned in the market itself, but also technological-wise. In Hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand and in particular, the demand in electrical energy is really supporting us. In metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for the steel as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture but we did not see investment decisions in the markets where we are in, namely Europe and North America. Regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we ANDRITZ, we seem to be a trusted partner for these endeavors. Looking to the revenue. We see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there. You could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year; on Environment & Energy, dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now, and it will prevail. One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog, as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from Hydropower. And therefore, we can drive the revenues out of that very effectively over time. Looking to the EBITA. Comparable EBITA margin remained stable. The absolute EBITA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution. And there, I can specifically name Metals on the one side and Hydropower on the other side, we really made a strong improvement on that discipline. I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come. In Metals, we will continue the restructuring this year because we see the markets will demand it. And we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that. Turning to ESG. We have finished our ESG program, which was targeted for 2025, I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly. The one we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still, it's a record high level for ANDRITZ. And I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so -- but in total, we are not on 1/3. So we wanted to be at 20%. We ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition, and we still believe there is demand, and we will -- we can cope with that. We want to support people to grow, people in ANDRITZ and outside ANDRITZ, and we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one of one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focused on excellent frequency rate because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below 1 ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15%, and we want to keep the voluntary turnover below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with ANDRITZ. On the governance, we put a focus on supply chain as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audit, supplier prequalification, supplier rating on sustainability by third parties. So that's the area we are focusing on. In the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based targets. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow. 2 acquisitions that completed our portfolio. The one was the Salico Group, in metals, basically being fundamental closing of the gap between the metals processing and the Schuler part of our metals business. We have a portfolio completion done on the paper side. We acquired A.Celli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology that was one of the key technologies we were missing. On decarbonization, we acquired LDX Solutions in the United States. That's an engineering company offering a clean air technology, ideal addition to our product portfolio technology-wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Sanzheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our metals processing group. We know them from -- already from several projects we have done together with them inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single-source solution from us. On the customer service, we have made 2 acquisitions, both acquired from Babcock & Wilcox in the United States. The one is Diamond Power, sootblower company for boiler cleaning. And the other is a material handling company, taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit not only that we know them from the industry, but also culture wise. So we are very confident all 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level, and that is very exciting, especially if we know about the decline we have in the -- on the paper side in the paper business and with the paper machine utilization around the globe, not above 60%. Also the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all-time high in the service revenue. We also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you. Vanessa Hellwing: Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So ANDRITZ has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow in the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially. Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating net working capital and return on -- sorry, and our ROIC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year '24. IFRS 3 amortization increased to EUR 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25. Our recent acquisitions, on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial result, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we had seen the negative impact of EUR 24 million from the deconsolidation of OTORIO already in 2024. I hope you remember that. In the meantime, we have sold OTORIO to Armis and received a consideration in Armis equity. We have now divested our Armis shares, which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25. And just to recall, ANDRITZ has sold its stake in OTORIO to Armis, which is a leading supplier of cyber exposure management and security. For ANDRITZ, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by Joachim, remained solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year and changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for pensions and severance payments. Also to mention provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million, we arrive at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And this spend was well covered and digested by our free cash flow in 2025. Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters coming from a level 3 years ago where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in service business where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25 after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components. Trade working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4. And as mentioned on the last call, on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion, we actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital. So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at ANDRITZ remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. As you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect and this also on liquidity, of course, with roughly EUR 50 million, which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, ROIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands at a substantial margin in our -- at our cost of capital. So the ROIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is, in fact, still an industry-leading level considering it is post tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITA decline. But more importantly, this is because of our recent acquisitions with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, ANDRITZ's balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong. And also important to keep in mind that EBITA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by a plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in '24, our revenue trajectory is still pointing downwards, but we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in Pulp & Paper and Metals, our reported EBITA decreased, but we were able to maintain our comparable EBITA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from March. And also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas. Joachim Schönbeck: Very well, Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So Pulp & Paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China in the paper industry to backward integrate into pulp mills. As mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead with a good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically, these are not only boilers, these are small power plants, a sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants, very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started, and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we gone through the valley, and we can grow that. The good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%. So I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total revenue. In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany. So really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITA margin, the first time in our profitability target for 2027. So we're very proud how that develops in difficult times. Hydropower, I would say we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have set. We see this trend continuing. Environment & Energy. Here, we, I would say, faced a surprisingly subdued market, which, frankly speaking, we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done. On the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed, a lot of exposure to the mining business and also here, uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effect. So -- but I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year increasing over the year -- now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served. So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth on service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and a comparable EBITA margin between 8.7% and 9.1%. The midterm targets basically have been confirmed. And in looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range. We have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know, we have not told you so far. Now we are ready for questions and answers. Thank you very much. Operator: [Operator Instructions] And we have the first question coming from Akash Gupta from JPMorgan. Akash Gupta: I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half? And also, you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance? And then the second part of the first question is that if we then take the midpoint of EUR 8.15 billion, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year? Joachim Schönbeck: Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say, as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. with, I would say, with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but that's, I would say, only that's more marginal. We are working and we are preparing ourselves to continue the growth on the service side as we did even in the last difficult year. So we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we do not have the growth exactly in our hand because we also depend -- we depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking. Akash Gupta: And second one is on automotive in metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end? Joachim Schönbeck: For sure, this will help our customers. And usually, if it helps our customers, it at the end helps us. as I have explained, we see both in automotive and in metals. We see now 3 years in a row, a shrinking market, which means that basically, the industry is overrunning their equipment a bit. It's a traditional business. If you run it 24/7, there is a lot of where you only -- you come to end of lifetime. You can always push it a bit. So from being in these industries long enough, we are quite confident that the market will increase, and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that Act in detail. Akash Gupta: And last one is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower? And would that have any impact on total CapEx for the year? Joachim Schönbeck: The majority of our manufacturing CapEx for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. And -- but it will not exceed our natural cash flow. So we will invest, and I think it's wise to invest because for you, as you know, it's still the cheapest way to spend our money into growth. Akash Gupta: And the overall CapEx level last year, it was around EUR 200 million. Do we expect it to increase or stable in 2026? Joachim Schönbeck: Increase. Operator: The next question comes from Sven Weier from UBS. Sven Weier: The first one is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on Pulp & Paper because you also alluded to China. Joachim Schönbeck: Yes. What's the question? We cannot hear you. Matthias Pfeifenberger: I think we lost Sven Weier. Could you turn to the next question, please? Operator: Yes, of course. The next question comes from Patrick Steiner from ODDO BHF. Patrick Steiner: Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on the previous question basically. Could you provide us a bit of a bridge for -- regarding your revenue guidance to '26 and '27? I mean what are the major drivers behind the less dynamic expected revenue development to '26, including M&A effects and the expected better dynamic from '26 to 2027? Joachim Schönbeck: It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower on the one side. And from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a buildup more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy. And this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and in Environment & Energy to protect the profitability. Patrick Steiner: Okay. That's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for full year basically? And also how this would change with -- if you receive a larger project? Vanessa Hellwing: Well, the acquisitions are already in fully fledged on the net working capital, as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in '25. So it's just that the percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would, of course, have a positive impact on the overall net working capital. Patrick Steiner: Okay. Last one for now. Capital allocation has not been fully funded by operating cash flow in the last 2 years. Should we expect this to change in '26 and '27? Or are you comfortable increasing net debt if favorable opportunities to deploy capital occur? Vanessa Hellwing: Well, so we will continue our capital allocation on quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not value accretive to ANDRITZ overall. But furthermore, as mentioned, CapEx spend will continue even slightly increased. And yes, I mean, the dividends, of course, we will keep also our path here. So we actually see that we continue the picture that you saw the last 2 years or 3 years to really spend our capital -- spend in capital to further manage our net liquidity well, but still keep, of course, a substance for ANDRITZ as this is part of our DNA and necessary for dealing with large projects in an engineering company like we are. Patrick Steiner: So if we think about CapEx maybe slightly increasing, dividends increasing and in terms of M&A and share buybacks, more of an opportunistic stance for 2026, this would make sense, right? Vanessa Hellwing: Yes, exactly. Operator: The next question comes from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic. But would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwind that is comparable to last year? Vanessa Hellwing: That's what we do. Lars Vom Cleff: Okay. Perfect. And then you already mentioned order intake rather driven by midsized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in Pulp & Paper currently, but in Hydro. Is that still the case? Or could we hope for a large greenfield order in Pulp & Paper this year? Joachim Schönbeck: The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues, it also impacts a potential greenfield new pulp mill in South America because that's one of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible]. Lars Vom Cleff: Perfect. And then quickly staying with the order intake, order backlog at records or at least close to record levels, nice book-to-bill in '25. We could also hope for a book-to-bill exceeding 1 again for '26 if momentum continues. or am I wrong here? Joachim Schönbeck: If momentum continues, you are right. Yes. Lars Vom Cleff: Okay. Perfect. And then maybe ending with -- you also said on one of the recent calls that you're seeing increasing pricing pressure from pulp and paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects. Joachim Schönbeck: Yes, you are right on that. Operator: The next question comes from Daniel Lion from Erste Group. Daniel Lion: I would -- could you maybe elaborate a little bit on the adjustments planned now in '26? How far are we actually in the Metals division? And what would you expect to come in the E&E division? Maybe overall, how much should we include in our models for adjustments? Joachim Schönbeck: So we expect in total, I believe we are talking about 700 to 800 people. Daniel Lion: And this is already provisioned to some extent or... Joachim Schönbeck: To some, but not fully. Vanessa Hellwing: So for the NOI in '25, about 50% were accruals for this year. So we will cover a lot with what we have digested already in '25, maybe some more to come. Daniel Lion: And how long would you expect to have this impact the figures? Will this be done in the first half already? Or will we have to expect some impacts in the second half year as well? Joachim Schönbeck: Second half year as well, it's 700, 800 people, you don't do overnight. It's a process you need to negotiate. And depending on which country, majority is Germany, takes long time. And so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track. Daniel Lion: Okay. And then maybe also, again, slightly focusing on '27, what kind of revenue -- what kind of order intake or backlog would you expect roughly that is required in order to reach EUR 9 billion in revenues next year? Joachim Schönbeck: I have not made the calculation, but we do not step back from the targets we have for '27. Daniel Lion: So anything that would need to happen on the way there, something sizable or like, I don't know, big picture greenfield contract in Pulp & Paper or in order to make the guidance happen? Joachim Schönbeck: It would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets. Operator: [Operator Instructions] We now have Sven Weier again from UBS. Sven Weier: I hope you can hear me now. Joachim Schönbeck: Yes. Perfect. Sven Weier: So going back to the Hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is? What kind of growth rates you see? So any color on the turbocharger business you can give? Would be appreciated. That's the first one. Joachim Schönbeck: So turbogenerator business is, I would say, medium-sized 3-digit million business. Growth rates double digit at the moment. We do not -- of course, we do not know how this will continue. That's a business we are selling to energy engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently, that's the volume we can report. And this is why it definitely supports the Hydro business. Sven Weier: And when you say 3 digit, is it like in the low 3 digits or get a better feeling? Joachim Schönbeck: It's in the mid-3 digits. Sven Weier: Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole project. Joachim Schönbeck: No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities, not... Sven Weier: And those are kind of the known names like Siemens Energy and GE or... Joachim Schönbeck: Potentially. Sven Weier: Okay. And then, I mean, the pipeline in Hydro in general, I guess, probably also looks pretty promising based on what you said for 2026. Joachim Schönbeck: Yes. I can only confirm that. Yes. Sven Weier: And then you said you had some spillover into Q2 from Q4, if I understood you correctly on orders. Does it mean that you think Q1 orders should be higher than Q4 overall because of that spillover? Joachim Schönbeck: Could be. We definitely had some decisions that have been pushed over the year-end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not -- with what we see on the project side, we are not pessimistic. Sven Weier: So it won't be lower, let's put it this way in Q4. Joachim Schönbeck: Yes. We can agree on that. Sven Weier: Frank but good. The final question I had was just on the M&A because obviously, you kindly provided the revenue details, the money you paid, so I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average profitability across those targets that you bought? Are we talking like average 10% margin roughly. Joachim Schönbeck: I don't have the figure in my head, but in average, higher than what you see from ANDRITZ in total. Operator: There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger. Matthias Pfeifenberger: Okay. Thanks a lot. Thanks for the presentations of the Executive Board and the extended interest in ANDRITZ and in this call. And we wish you a good day and see you next time. Thanks a lot. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.

34天前Insight Analytics约5分钟阅读

ITV.L 2025 Q4 财报电话会议

Dame Carolyn McCall: Good morning, everyone, and welcome to ITV's 2025 Full Year Results. As always, I'm here with Chris Kennedy, our CFO and COO. I'm going to start this morning with a brief summary of the 2025 highlights and then Chris will talk you through our financial and operating performance in a bit more detail. ITV delivered a good performance in 2025 outperforming market expectations despite the challenging market backdrop. We have transformed ITV and are demonstrably a much leaner and more agile business with a strong digital platform. We have capitalized on numerous growth opportunities as a result and are generating strong levels of cash. We've created 2 attractive and resilient businesses in ITV Studios and Media & Entertainment. We have successfully changed the shape of ITV and achieved a key strategic target. 2/3 of our total revenue now comes from Studios and M&E digital and that really demonstrates the scale of ITV's transformation. Before discussing our results, I wanted to mention the leak in November about potential transaction. As you know, we confirmed that we were in preliminary discussions with Sky regarding the possible sale of our M&E business. We are actively engaged with Sky and we will provide an update to you when we can. The effectiveness of our strategy to diversify ITV's revenue streams is clear in our results with the growth in ITV Studios and our digital M&E business combined with our disciplined cost management largely offsetting a difficult linear advertising segment. In line with our dividend policy, the Board has proposed a final dividend of 3.3p giving an unchanged full year dividend of 5p, a total payment of around GBP 190 million. I'll now hand over to Chris to go through the numbers in more detail. Chris Kennedy: Thank you, Carolyn. Good morning, everyone. ITV Studios continues to demonstrate strong momentum with total revenue climbing 5% to GBP 2.13 billion. This performance highlights our ability to consistently outperform the broader market. Notably, external revenue rose by 10% reflecting our successful move toward global streaming partners and the rapid scaling of our digital distribution via Zoo 55. The U.S. unscripted business had a good year with a strong slate of deliveries. Love Island U.S. was the most watched streaming TV original season of 2025 in America, greatly increasing the value of the format. Overall performance in the U.S. was down year-on-year due to the phasing of deliveries and some short-term market softness. We're already seeing good momentum in 2026 and are confident that this year will be much stronger. Our U.K. and international arms saw 14% revenue growth driven by high demand from both streamers and broadcasters. Adjusted EBITA for Studios was GBP 297 million and EBITA margin was 13.9%. The year-on-year change in the margin reflects a lower proportion of catalog sales in our revenue mix as we previously guided. We remain highly efficient. We delivered GBP 31 million in cost savings this year and continue to leverage our world-class talent and unique IP to drive recurring value. Turning to Media & Entertainment. The highlight is the continued evolution of our digital business. Digital advertising revenue grew 12% to GBP 540 million and total digital revenues were up 10% to GBP 614 million. This strong trajectory is a testament to the success of ITVX, Planet V and our data-driven ad products. Total advertising revenue fell 5%, better than guidance with our digital growth providing an important and profitable hedge against double-digit linear advertising decline. We've been incredibly disciplined on costs within M&E. Content costs were down 5% reflecting an ever more optimized investment strategy. Noncontent costs fell by 6% with permanent cost savings of GBP 32 million and temporary savings of GBP 15 million. This ensured that our M&E adjusted EBITA margin remained steady at 11.8% despite the decline in advertising revenue. The balance sheet remains robust. We ended the year with net debt of GBP 566 million and a leverage ratio of 1x. Our cash generation remains good with a profit to cash conversion of 65% as expected and over the 3 years from 2023 to 2025, cash conversion averaged around 80%, in line with our target. This provides us with the flexibility to reinvest in our growth drivers and provide meaningful cash returns to shareholders. Our capital allocation is clear. We reinvest for profitable growth, maintain an investment-grade balance sheet and return surplus cash to shareholders. We've maintained an ordinary dividend of 5p and continue to keep our capital structure under review. A core pillar of our strategy is reshaping our cost base to better reflect viewer dynamics and enhance productivity and profitability. In 2025, we accelerated our efficiency efforts delivering GBP 63 million in permanent noncontent savings across the business. This brings our cumulative permanent savings since 2019 to GBP 253 million. Looking forward to 2026 taking the year as a whole, Studios will show good revenue growth with margin at the lower end of our target range. As is usual, revenue, profit and margin will be weighted to the second half with momentum continuing into 2027. In M&E, digital revenue is predicted to continue its strong trajectory in 2026. We anticipate Q1 TAR to be down around 2%, which is better than we expected. And looking forward to the rest of the year, we have a strong schedule of sports being the only commercial broadcaster of the expanded FIFA Men's Football World Cup and the new Men's Rugby Nations Championship, both of which will boost ad revenue from Q2 onwards. Finally, you can find detailed planning assumptions in the appendices in the slide deck. Thank you. Carolyn, back to you. Dame Carolyn McCall: Thank you, Chris. As you know, our strategic vision is to be a leader in U.K. advertiser-funded streaming and a diversified and expanding global force in content. Our strategy is familiar to you. Just to summarize it in 3 key pillars: expanding Studios, supercharging streaming and optimizing broadcast. So let's turn first to expanding Studios. ITV Studios has built a unique and leading position in the global content market. It has 3 core competitive advantages and value drivers. Its world-class talent who are producing some of the most successful shows around the world; second, its global scale and diversification are creating a strong platform for further growth; and three, its unique and valuable IP library, which combined with Zoo 55, its digital studio, maximizes the monetization of our IP globally and this is underpinned by a culture of cost discipline. All of this ensures the business is well positioned to continue to grow ahead of the market and drive attractive margins. So let's take these value drivers in turn. First, ITV Studios culture. It's entrepreneurial and offers creative autonomy and it's backed by global distribution and resource and that attracts and retains industry-leading talent. This is a position we continue to enhance through strategic acquisitions, talent deals and partnerships and that delivers both creative scale and revenue synergies. Most recently in 2025, we acquired Moonage Pictures in the U.K. They're the producers of The Gentleman for Netflix and also Plano a Plano in Spain, the producers of Suspicious Minds for Disney+. So the success of this strategy is really clear I think from the creative output and other recently acquired labels also demonstrate the success of this strategy. So Rivals by Happy Prince for Disney+ is returning for a Season 2. Skyscraper Live for Netflix by Plimsoll, which saw Alex Honnold's free solo quite terrifying ascent of one of the world's largest tallest skyscrapers in Taipei. Our track record on retention is really, really strong. In the U.K. where we do the majority of talent deals, about 75% of our label MDs and creative leaders stay with the business post earn-out. ITV Studios also has a formidable portfolio of world-leading brands and formats through our established scripted and unscripted labels. Love Island is now in 28 markets. It continues to expand with successful spinoffs such as Love Island Games and Beyond the Villa. Squid Game: The Challenge was Netflix's biggest reality competition and has been recommissioned for a third series. ITV Studios is constantly refreshing its portfolio with new formats like Nobody s Fool and Celebrity Sabotage, both of which launched on ITV this year and have already started to sell really well internationally. They're original shows. ITV Studios also has a strong slate of high quality returnable scripted brands that demonstrate incredible longevity. Line of Duty is an example, Gomorrah is another example and there are newer brands like Ludwig and Vigil, which have all been recommissioned. So the global content market remains large and attractive. It's expected to grow about 1.5% to 2% this year. ITV's resilience though comes from having a diversified portfolio by geography with 59% of revenue generated internationally, by genre with 32% of revenue from the scripted and by customer with 28% of revenue from the growing streamers where we have a proven track record of success now. We have deep strategic relationships with every major global content buyer, which combined with a very strong pipeline of new and returning hits, ensures that we capture further share of the key growth areas, which are scripted and unscripted commissions for streamers and IP distribution. Now a significant driver of our long-term value is our unique IP library, which now exceeds 100,000 hours of content. ITV Studios adds thousands of hours of content every single year and licenses this to over 350 customers globally. That scale allows ITV Studios to maximize the monetization of its IP and we already generate GBP 400 million of high margin revenue through our global partnerships business. Most recently this is through Zoo 55, a key area of incremental growth. Zoo 55 distributes ITV Studios IP across 3 areas. Social video where we had over 24 billion views across 200-plus social channels globally last year; FAST enabled platforms where we have partnerships with multiple partners such as Samsung, Tubi, Xumo and viewing here has been up 28% year-on-year; and the third is games and gaming where we've got 40 games live at the moment across 19 of our brands and that is going to continue to expand. And some of the key brands we distribute include Hell's Kitchen, River Monsters, the Graham Norton Show, Come Dine With Me, Love Island and there are hundreds more. So as you'd expect, we are leveraging AI to deliver content more effectively and efficiently. For example using it for subtitling, content selection and curation. Overall in 2025, Zoo 55 generated over 47 billion global views, which was up over 30% year-on-year and that drives double-digit revenue growth. ITV Studios is on track to achieve GBP 120 million of high-margin digital revenue from Zoo 55 by the end of 2027. So the combination -- this particular combination of talent, scale and quality IP ensures that ITV Studios remains a very attractive and resilient business and it delivers high quality earnings. As a creator, owner, producer and distributor of IP; ITV Studios captures the full value of its world-class content from initial idea to global delivery. Around 60% of its revenues are recurring. This is coupled with Studios diversified revenue streams and low-risk production model, remember, where we only produce programs once they have actually been commissioned. Together, this ensures ITV Studios drives growth ahead of the market at attractive margins and delivers strong cash flow. I'm now going to turn to Media & Entertainment, which includes our pillars of Supercharge Streaming and Optimise Broadcast. We have completely transformed M&E into a strong and resilient streamer and broadcaster with a very disciplined cost base, well positioned to deliver profitable digital revenue growth and strong cash generation. It leverages its compelling position and value drivers, which include wide reach in the U.K., leading platforms in ITVX and Planet V, an extensive first-party data set and deep and established relationships with advertisers and commercial partners. We are really pleased with the success of ITVX and Planet V. Since its launch in 2022, ITVX has built incredible momentum delivering 25% CAGR in total streaming hours and 16% CAGR in digital advertising revenues. Planet V, our first-class addressable advertising platform, allows brands to target audiences by leveraging an extensive first-party data set of over 40 million registered users. Now that can be augmented of course with third-party data from our partners like Tesco and Mastercard for really granular targeting. It is a powerful engine for growth bringing in over 1,500 new advertisers to ITV since its launch. Digital advertising now represents 31% of our total advertising revenues. With this momentum, digital advertising revenue is outperforming our original plan when we launched ITVX, which is fantastic news. And given the strong performance of ad-funded streaming and our focus on profitable growth, we have, as you know, pivoted our digital strategy by doubling down on AVOD and deprioritizing subscription video on demand. Therefore, it's going to take slightly longer than initially anticipated to reach the overall GBP 750 million digital revenue target. Importantly, this has saved significant incremental content and marketing spend. As a result, as this slide shows, we reached breakeven 2 years earlier than planned recouping our entire investment in ITVX 4 years earlier than projected. In doing so, we've created a profitable ITVX platform with attractive growth prospects. So building on the foundations of our strategic investments in ITVX and Planet V, we are now competing effectively for a greater share of the GBP 9.5 billion online video advertising segment and attracting new ITV advertisers. We're expanding our digital reach through strategic partnerships, the SME strategy and through commercial innovations. Our YouTube partnership for example is successfully extending reach with over 40% of ITV's content viewed on the platform coming from under 35s. Our YouTube sales team continues to grow from partnering with 8 brands at launch to 800 today. We've recently agreed a major deal with Banijay to sell all their advertising around their YouTube content. We've also added new partnerships with TikTok and expanded our relationship with Disney+ to include their content on ITV1's peak schedule. With our SME strategy, we're removing barriers to entry for TV advertising, simplifying the buying process and leveraging AI to produce cost-effective advertising. We're making good progress towards the launch of our self-serve advertising platform in collaboration with Sky, Channel 4 and Comcast's Universal Ads, which we will be testing later this year. And in a first of its kind in the U.K., we launched picture-in-picture adds, which you might have seen in the 6 Nations. This drives incremental reach and value with sensitivity to the viewer experience. We're also increasing our inventory and can now do targeted advertising on our linear channels on the Sky and Freely platforms. And if that weren't enough, in addition, we're leveraging our brand, IP and first-party data to drive profitable non-advertising digital revenue. We've just launched the Birthday Draw. You might have heard the ads for that all across Global Radio and it's a partnership with Global for GBP 1 million cash price. We're also evolving ITV Win into a premium destination, bringing scaled competitions to audiences with new games. So it's early days for both of those, but we expect these 2 initiatives to drive double-digit growth in interactive revenues. Now finally, to our third pillar, which is Optimise Broadcast. We continue to demonstrate our strength and resilience in delivering mass audiences. In 2025, ITV delivered 91% of the Top 1,000 commercial audiences. To reinforce this value, we're collaborating with Channel 4 and Sky on Lantern, an outcomes program to clearly measure the effectiveness of TV advertising. We have a fantastic slate for the year focusing on drama, entertainment, reality and sport and we optimize our spend and deliver the most valuable audiences for advertisers. We're significantly increasing live sports. We are the only commercial broadcaster with the rights to the Men's Football World Cup, as Chris said, which includes 19 more matches on ITV, a 60% increase. In addition, we have the rights to all England Men's rugby games this year. In summary, we're really confident we will continue to create value for shareholders. With the profitable growth of ITV Studios and the M&E digital business underpinned by strong cash generation, we will continue to deliver attractive returns to shareholders. None of this of course would be possible without ITV's unique blend of creativity and commercialism, which is fueled by the talent and commitment of our people. And I just want to take a minute to say how proud we all are of what we do, the work that's done in ITV, but especially how proud we are of our colleagues and we're incredibly grateful to them for their hard work and achievements. Thank you. We're now ready to take your questions. Operator: [Operator Instructions] The first question today comes from Annick Maas of Bernstein. Annick Maas: The first one is on the advertising market. I mean your Q4 was better than anticipated. Your guide for Q1 is better. Can you tell us a bit more what the sentiment is in the ad market? Is this coming from across the board? Is it just certain campaigns or advertisers? That's the first one. The second one is on programming costs, which I guess also the guide is better than what was expected despite owning actually the World Cup rights. So is there something in there that is AI cost savings or what is really explaining the program cost savings? Just thinking also ahead how we should therefore think about program costs going forward? And same question for Studios. You're guiding to the bottom end of your margin guide because of the revenue mix. I thought production would probably be within your whole industry, the 1 segment where you can put through AI savings the quickest. So is that so or if not, why not? And then maybe just 1 last one, which is on studio growth more generally. If you look to the midterm, I guess some of your competitors have been saying that the sort of growth level that you've seen for the last 5 years or so in the production world are slightly coming down. Is this something you are seeing or is it that you are taking share of the others and therefore, you can consistently grow better? Dame Carolyn McCall: Okay. On the ad market, I think Q4 was largely down as a result of a pause by advertisers while they waited to see what the budget was going to be and so it was down year-on-year and we had expected it not to be like that. So that was the story behind Q4. Q1 is definitely trading better than we thought because the run rate from Q4 feeds into Q1 if that makes sense. Thus, February was really improved on January and March has improved further not just on February, but on March. So you're right, it's definitely better. I think that the fact that we have the World Cup in Q2 and Q3 means that we're having very, very active conversations with many, many advertisers. So I mean just to give you an example of that. We have more inventory because we've got 19 more matches, that's 60% more than we had at the World Cup in Qatar. We're talking to about 100 advertisers at the moment and that is spanning 20 different categories. So we're very actively engaged with a huge number really of advertisers. And where we would say the trend really was, the Q4 was down on virtually all categories except 1 or 2. Q1, you'd have seen supermarkets doing well. You'd have seen travel was actually doing very well, let's wait and see on that one. But there's no discernible trend on categories in Q4 and Q1 whereas I think now with Q2 and Q3, the range of advertisers we're talking to would kind of indicate that all categories should be quite active in those quarters. So that is very good news. And I think the other really interesting thing is we're getting a lot more interest in the World Cup from very big global brands and they're looking really to create high quality content and very bespoke creative advertising around kind of high-end content. So using players, using teams, et cetera. That's all brilliant for TV because it's the thing TV does best. You can't really do that in any other medium. So that's I think really good and we've agreed to sponsor and that will be announced. So I think the advertising market certainly, because the World Cup will lift it, should be a strong year for us. Your second question was costs I think. Chris Kennedy: I think specifically content costs. So you're right. Last year we didn't have one of the big mens events and we've obviously got the FIFA World Cup, as Carolyn said, and we've also got the new Rugby Nations Championship as well, which runs Q3 and then into Q4. So really a strong slate of sport all the way through from Q2 to Q4 and we have managed that within the overall envelope of content and that happens in several ways. There's some self-help in there. We did a reorganization of daytime soaps, which completed at the end of the year. The new schedule started 1st of January. That saved us some money on those shows while maintaining exactly the viewer experience as we had before. In fact with the power hour in the soaps, that was viewer led. People were saying we don't want to watch an hour of the same soap, we'd like 2 half hour episodes and that's worked really, really successfully. So we've saved some money there and that's enabled us to reinvest elsewhere in the schedule as well as affording the World Cup. And longer term, the team have just got -- they get better and better and better every year using the really granular viewer data that we've got through ITVX now to inform windowing decisions, acquisition decisions, commissions, we can see how a show grows and also making the marketing a lot more effective as well. So all of that means that -- I think you asked about where do we think that content cost will go longer term. We're really pleased that we've held it at plus or minus the same level ever since the launch of ITVX. Dame Carolyn McCall: Yes, because we've absorbed a lot of inflation in that. Chris Kennedy: Yes, exactly. And so that's what we're looking to do going forward whilst continuing to grow that viewing on ITVX. Dame Carolyn McCall: And then on your Studios question, I'm just going to -- we'll take it in 3 parts because you asked a margin question, you asked AI question, you asked a growth question. Let me kick off on the AI question because I think you're right. I think AI obviously lends itself very well to Studios. And I think the first thing to say is our fundamental belief is that we use AI on creativity only to enhance and augment it, but we then use it in a very, very strategic way where we integrate it in everything we do end-to-end. So it's a very integrated way of working in Studios. And we've had quite a lot of experience already now because we've been doing this probably for the last 18 months to 2 years where we started with having what we call the Skunk Works and now actually it's kind of embedded in all the labels. So whether that is tools for R&D, research and development or preproduction or postproduction or editing or production planning and indeed marketing, we're kind of using it for the whole end-to-end process in Studios. And what we try and do there is that of course there's efficiency gains, we use that to offset inflation and then try and bank some of that. And then we use productivity gains to get people to do more interesting things for instance in development to try and get more shows in. So the more resource we free up, we actually reuse that in a higher value kind of function if that makes sense. So that's what we're doing on AI. Chris Kennedy: And then Studios, you talked about the margin guidance and we've guided for bottom end. Our Studios business has industry-leading margins. We are the best in the business and the team have to work really hard at that. Last year they made GBP 31 million of cost savings. That came from some quite difficult decisions around label reorganizations in some geographies. At the same time, we're refilling the pipe. So we've made 4 bolt-on acquisitions and those take some time to integrate the back office. So the whole strategy is around maintaining the margin within that 13% to 15% range. It will go up and down depending on the mix of business we do in the year and where we are in the cycle, but very pleased with the level they're at. And the whole point about Studios is we want profitable growth and that means maintain the margins within that range. Dame Carolyn McCall: And in terms of growth, we see the market growing. So it's a very big market, it's GBP 230 billion market. It's growing at about 1.5% to 2.5% according to Ampere. And our goal really is to be ahead of market growth and to take share. So that continues. That continues to be part of our strategy. Chris Kennedy: And you'll have seen that we've done that consistently over the last 8 years, consistent growth. And from a compound average basis over the course of that period, we've outgrown the market and we'll continue to take share. Operator: Our last question today comes from Julien Roch of Barclays. Julien Roch: My first question is on the World Cup. Based on previous additions, can you give us an indication of the impact either millions of pounds or percentage? Second question is impact of AI on a cost basis, I know it's early days. But Stroer who reported this morning said that within 5 years they thought they could save EUR 50 million thanks to AI, which is about 3.5% of their operating cost. So any indication there? And then the last question is on your linear inventory, where are you in terms of that inventory being sold digitally or programmatically so it can be included in the kind of new AI platform that all the agencies are developing? Chris Kennedy: Okay. So on the World Cup, we don't guide for the uplift for individual tournaments. But you'll have seen performance on '25 versus '24 where we had the FIFA Men's World Cup. You can see the categories that outperformed when we have those. So as Carolyn said, we're really looking forward to the rest of the year with sport. It should give us an uplift and it should bring the whole advertising market in the U.K. up with it. But we don't give the exact tournament by tournament guide on that. Dame Carolyn McCall: No. I mean just as a little fact on sports. The reason we really focused on live sport is in '25 when there wasn't a Euros or a World Cup, our reach of sport on ITV1 was 46.2 million people, which is fantastic and we would expect to exceed that in terms of our reach obviously this year because of the rugby and the football. We've got all the racing. It's an unprecedented year for sport for us. Chris Kennedy: And then, Julien, on the AI question, could you repeat it? I didn't quite pick up what the question was there. Julien Roch: So everybody is saying that AI is going to transform our lives. Every company is going to generate more revenue and they're also going to save a lot of cost. And Stroer who reported this morning said that in their view, AI would allow them to save EUR 50 million within 5 years, which is 3.5% of their operating cost. So I was wondering whether you already have sized the potential efficiency gain from all those wonderful AI things we're all going to do all the time. Chris Kennedy: The way we look at AI is exactly how you described it, where can we use it to augment creativity? Where can we use it to increase revenue and create new revenue streams? And on the flip side, how can we use it to create efficiency so that same number of people can do more with the AI tools? On the efficiency side, it absolutely fits into our long-term cost saving program. We've demonstrated that we are relentless about the efficiency within the organization. We've taken out a huge amount of cost over the last 6 years. We'll continue to do that. It's a multiyear program and within that, AI will obviously help with the next leg of that program. Dame Carolyn McCall: Because we integrate it. We build it into the continuous cost improvement program. So it's something that we task ourselves with, but it's not always about -- there's a net cost saving, but then there's also an offset against inflation. There's an offset against other costs because cost of production is going up. So we just look at it in a much more integrated way than that. And I missed the company actually, Julien. Did you hear who the company was? No. Who was saying that they would do the EUR 50 million, it's just interesting for us. Julien Roch: Stroer, the German outdoor company. Dame Carolyn McCall: I mean there will be significant savings. But in Studios in particular, we're very focused on how we can release resource to do more stuff that will generate more hits. I mean that's the kind of philosophy in Studios, which is why we will gain efficiencies and we will net off inflation, but we also want to reinvest in, say, making sure development is stronger. Chris Kennedy: Yes. I mean I think it really is -- I hate to use the phrase, but it really is in the DNA of ITV, this everyday efficiency. If you look at M&E, noncontent costs were down 5% last year and that is a lot of hard work by a lot of people across a whole range of initiatives. There aren't big set piece efficiency programs. It's baked into people's every day. Dame Carolyn McCall: I think the third question was linear inventory. Chris Kennedy: Yes. So last year we finished the year, 30% of the linear inventory could be -- was capable of having a targeted ad within it. By the end of '26, we're looking to bring that up to 50%. Obviously we will not be using anywhere near 50% for the targeted industry -- targeted advertising because we can now make the choice both for advertisers and for ITV about what is the best use of that inventory? Is it better to use it for a targeted ad or is it better in a mass reach campaign. One of the reasons we've doubled down on sport is that those big live audiences are more valuable than ever. So we would not be doing a targeted ad in the World Cup because that is the only place an advertiser can get the huge audiences that we attract. So over the course of this coming year, you will see coming out of ITV commercial a few more ad products where they will be -- they've already developed them in conjunction with advertisers and they're releasing those to do that targeted advertising in the live streams. Julien Roch: My question was not about targeted advertising. It's more being able to buy linear advertising on a digital platform, right? Because all the agencies are developing those AI platforms that they're going to give to their clients where clients can buy across media at a click of a button. And so if TV is not on those platforms, some clients will be lazy and maybe deemphasize TV. So it's more on whether you can buy digitally the linear advertising. Chris Kennedy: Yes. Understood. And absolutely, the commercial teams are really engaged with the agencies both on the buy side in terms of buying linear inventory, but also doing the outcomes work, launching Lantern in conjunction with Sky and Channel 4 to give measurability. All of the work we're doing to demonstrate the value of TV because if those models are rational, TV should benefit because we have the highest ROI of any media. So absolutely, we're working with them. Dame Carolyn McCall: Is that what you meant, Julien? Julien Roch: Yes. But only working with agencies, you can have many reasons. You can do both at a click of a button on those platform alongside Hugo and Meta and not only ITVX or targeted, the whole inventory. Dame Carolyn McCall: So I suppose that goes to the distribution strategy and our distribution strategy is to be in as many places. I mean I think we've got something like 98% coverage now of all platforms with ITVX and then a bit lower than that for channels. But our strategy is to be in as many places as possible on the right commercial terms, which then allows us to benefit from their reach and our inventory. Operator: We have no further questions at this time. So I'd like to hand back to Carolyn for closing remarks. Dame Carolyn McCall: Just want to say thanks very much for joining us today. We know it's a very busy day out there so thanks for your time. Bye for now.

34天前Insight Analytics约5分钟阅读

ADRZY 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, welcome to the ANDRITZ's Full Year 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir. Matthias Pfeifenberger: Good morning, and a warm welcome from ANDRITZ out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO, Dr. Joachim Schonbeck; and our CFO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session. [Operator Instructions]. And now I'd like to pass on to Dr. Joachim Schonbeck for his elaborations. Joachim Schönbeck: Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's result. If you look back to the year 2025, we can say the world has been cautious on investments, but rich in geopolitical surprises. For ANDRITZ, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us. We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower and by -- but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And in metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part. If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year. Revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in ANDRITZ's history, EUR 10.5 billion at year-end, never had that, 7% up from last year. EBITA margin in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that will are prepared for this year. Net income is at 6.6% and EUR 154 million. If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 billion, up 8%. Revenue, EUR 7.9 billion, so very positive book-to-bill ratio. Order backlog, as I said, 10.5% (sic) [ EUR 10.5 billion ] and the comparable EBITA margin for the full year was at 8.9%, exactly where it has been last year, EUR 698 million. The reported EBITA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are -- that we have done in the year '25 and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million. The Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all 3 quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project Cahora Bassa in the fourth quarter of 2024. So that's, I would say, more a onetime effect. If we look to the business areas, you can see a very nice increase in Pulp & Paper and Hydropower; 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals, it's down by 13% for the full year. Environment & Energy, basically 3% down. So I would say, Pulp & Paper, very happy to have -- to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very, very huge success showing that we are really well positioned in the market itself, but also technological-wise. In Hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand and in particular, the demand in electrical energy is really supporting us. In metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for the steel as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture but we did not see investment decisions in the markets where we are in, namely Europe and North America. Regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we ANDRITZ, we seem to be a trusted partner for these endeavors. Looking to the revenue. We see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there. You could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year; on Environment & Energy, dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now, and it will prevail. One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog, as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from Hydropower. And therefore, we can drive the revenues out of that very effectively over time. Looking to the EBITA. Comparable EBITA margin remained stable. The absolute EBITA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution. And there, I can specifically name Metals on the one side and Hydropower on the other side, we really made a strong improvement on that discipline. I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come. In Metals, we will continue the restructuring this year because we see the markets will demand it. And we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that. Turning to ESG. We have finished our ESG program, which was targeted for 2025, I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly. The one we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still, it's a record high level for ANDRITZ. And I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so -- but in total, we are not on 1/3. So we wanted to be at 20%. We ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition, and we still believe there is demand, and we will -- we can cope with that. We want to support people to grow, people in ANDRITZ and outside ANDRITZ, and we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one of one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focused on excellent frequency rate because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below 1 ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15%, and we want to keep the voluntary turnover below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with ANDRITZ. On the governance, we put a focus on supply chain as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audit, supplier prequalification, supplier rating on sustainability by third parties. So that's the area we are focusing on. In the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based targets. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow. 2 acquisitions that completed our portfolio. The one was the Salico Group, in metals, basically being fundamental closing of the gap between the metals processing and the Schuler part of our metals business. We have a portfolio completion done on the paper side. We acquired A.Celli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology that was one of the key technologies we were missing. On decarbonization, we acquired LDX Solutions in the United States. That's an engineering company offering a clean air technology, ideal addition to our product portfolio technology-wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Sanzheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our metals processing group. We know them from -- already from several projects we have done together with them inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single-source solution from us. On the customer service, we have made 2 acquisitions, both acquired from Babcock & Wilcox in the United States. The one is Diamond Power, sootblower company for boiler cleaning. And the other is a material handling company, taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit not only that we know them from the industry, but also culture wise. So we are very confident all 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level, and that is very exciting, especially if we know about the decline we have in the -- on the paper side in the paper business and with the paper machine utilization around the globe, not above 60%. Also the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all-time high in the service revenue. We also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you. Vanessa Hellwing: Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So ANDRITZ has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow in the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially. Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating net working capital and return on -- sorry, and our ROIC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year '24. IFRS 3 amortization increased to EUR 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25. Our recent acquisitions, on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial result, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we had seen the negative impact of EUR 24 million from the deconsolidation of OTORIO already in 2024. I hope you remember that. In the meantime, we have sold OTORIO to Armis and received a consideration in Armis equity. We have now divested our Armis shares, which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25. And just to recall, ANDRITZ has sold its stake in OTORIO to Armis, which is a leading supplier of cyber exposure management and security. For ANDRITZ, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by Joachim, remained solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year and changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for pensions and severance payments. Also to mention provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million, we arrive at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And this spend was well covered and digested by our free cash flow in 2025. Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters coming from a level 3 years ago where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in service business where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25 after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components. Trade working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4. And as mentioned on the last call, on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion, we actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital. So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at ANDRITZ remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. As you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect and this also on liquidity, of course, with roughly EUR 50 million, which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, ROIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands at a substantial margin in our -- at our cost of capital. So the ROIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is, in fact, still an industry-leading level considering it is post tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITA decline. But more importantly, this is because of our recent acquisitions with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, ANDRITZ's balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong. And also important to keep in mind that EBITA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by a plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in '24, our revenue trajectory is still pointing downwards, but we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in Pulp & Paper and Metals, our reported EBITA decreased, but we were able to maintain our comparable EBITA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from March. And also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas. Joachim Schönbeck: Very well, Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So Pulp & Paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China in the paper industry to backward integrate into pulp mills. As mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead with a good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically, these are not only boilers, these are small power plants, a sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants, very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started, and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we gone through the valley, and we can grow that. The good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%. So I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total revenue. In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany. So really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITA margin, the first time in our profitability target for 2027. So we're very proud how that develops in difficult times. Hydropower, I would say we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have set. We see this trend continuing. Environment & Energy. Here, we, I would say, faced a surprisingly subdued market, which, frankly speaking, we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done. On the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed, a lot of exposure to the mining business and also here, uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effect. So -- but I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year increasing over the year -- now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served. So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth on service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and a comparable EBITA margin between 8.7% and 9.1%. The midterm targets basically have been confirmed. And in looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range. We have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know, we have not told you so far. Now we are ready for questions and answers. Thank you very much. Operator: [Operator Instructions] And we have the first question coming from Akash Gupta from JPMorgan. Akash Gupta: I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half? And also, you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance? And then the second part of the first question is that if we then take the midpoint of EUR 8.15 billion, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year? Joachim Schönbeck: Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say, as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. with, I would say, with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but that's, I would say, only that's more marginal. We are working and we are preparing ourselves to continue the growth on the service side as we did even in the last difficult year. So we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we do not have the growth exactly in our hand because we also depend -- we depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking. Akash Gupta: And second one is on automotive in metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end? Joachim Schönbeck: For sure, this will help our customers. And usually, if it helps our customers, it at the end helps us. as I have explained, we see both in automotive and in metals. We see now 3 years in a row, a shrinking market, which means that basically, the industry is overrunning their equipment a bit. It's a traditional business. If you run it 24/7, there is a lot of where you only -- you come to end of lifetime. You can always push it a bit. So from being in these industries long enough, we are quite confident that the market will increase, and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that Act in detail. Akash Gupta: And last one is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower? And would that have any impact on total CapEx for the year? Joachim Schönbeck: The majority of our manufacturing CapEx for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. And -- but it will not exceed our natural cash flow. So we will invest, and I think it's wise to invest because for you, as you know, it's still the cheapest way to spend our money into growth. Akash Gupta: And the overall CapEx level last year, it was around EUR 200 million. Do we expect it to increase or stable in 2026? Joachim Schönbeck: Increase. Operator: The next question comes from Sven Weier from UBS. Sven Weier: The first one is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on Pulp & Paper because you also alluded to China. Joachim Schönbeck: Yes. What's the question? We cannot hear you. Matthias Pfeifenberger: I think we lost Sven Weier. Could you turn to the next question, please? Operator: Yes, of course. The next question comes from Patrick Steiner from ODDO BHF. Patrick Steiner: Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on the previous question basically. Could you provide us a bit of a bridge for -- regarding your revenue guidance to '26 and '27? I mean what are the major drivers behind the less dynamic expected revenue development to '26, including M&A effects and the expected better dynamic from '26 to 2027? Joachim Schönbeck: It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower on the one side. And from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a buildup more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy. And this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and in Environment & Energy to protect the profitability. Patrick Steiner: Okay. That's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for full year basically? And also how this would change with -- if you receive a larger project? Vanessa Hellwing: Well, the acquisitions are already in fully fledged on the net working capital, as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in '25. So it's just that the percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would, of course, have a positive impact on the overall net working capital. Patrick Steiner: Okay. Last one for now. Capital allocation has not been fully funded by operating cash flow in the last 2 years. Should we expect this to change in '26 and '27? Or are you comfortable increasing net debt if favorable opportunities to deploy capital occur? Vanessa Hellwing: Well, so we will continue our capital allocation on quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not value accretive to ANDRITZ overall. But furthermore, as mentioned, CapEx spend will continue even slightly increased. And yes, I mean, the dividends, of course, we will keep also our path here. So we actually see that we continue the picture that you saw the last 2 years or 3 years to really spend our capital -- spend in capital to further manage our net liquidity well, but still keep, of course, a substance for ANDRITZ as this is part of our DNA and necessary for dealing with large projects in an engineering company like we are. Patrick Steiner: So if we think about CapEx maybe slightly increasing, dividends increasing and in terms of M&A and share buybacks, more of an opportunistic stance for 2026, this would make sense, right? Vanessa Hellwing: Yes, exactly. Operator: The next question comes from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic. But would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwind that is comparable to last year? Vanessa Hellwing: That's what we do. Lars Vom Cleff: Okay. Perfect. And then you already mentioned order intake rather driven by midsized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in Pulp & Paper currently, but in Hydro. Is that still the case? Or could we hope for a large greenfield order in Pulp & Paper this year? Joachim Schönbeck: The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues, it also impacts a potential greenfield new pulp mill in South America because that's one of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible]. Lars Vom Cleff: Perfect. And then quickly staying with the order intake, order backlog at records or at least close to record levels, nice book-to-bill in '25. We could also hope for a book-to-bill exceeding 1 again for '26 if momentum continues. or am I wrong here? Joachim Schönbeck: If momentum continues, you are right. Yes. Lars Vom Cleff: Okay. Perfect. And then maybe ending with -- you also said on one of the recent calls that you're seeing increasing pricing pressure from pulp and paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects. Joachim Schönbeck: Yes, you are right on that. Operator: The next question comes from Daniel Lion from Erste Group. Daniel Lion: I would -- could you maybe elaborate a little bit on the adjustments planned now in '26? How far are we actually in the Metals division? And what would you expect to come in the E&E division? Maybe overall, how much should we include in our models for adjustments? Joachim Schönbeck: So we expect in total, I believe we are talking about 700 to 800 people. Daniel Lion: And this is already provisioned to some extent or... Joachim Schönbeck: To some, but not fully. Vanessa Hellwing: So for the NOI in '25, about 50% were accruals for this year. So we will cover a lot with what we have digested already in '25, maybe some more to come. Daniel Lion: And how long would you expect to have this impact the figures? Will this be done in the first half already? Or will we have to expect some impacts in the second half year as well? Joachim Schönbeck: Second half year as well, it's 700, 800 people, you don't do overnight. It's a process you need to negotiate. And depending on which country, majority is Germany, takes long time. And so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track. Daniel Lion: Okay. And then maybe also, again, slightly focusing on '27, what kind of revenue -- what kind of order intake or backlog would you expect roughly that is required in order to reach EUR 9 billion in revenues next year? Joachim Schönbeck: I have not made the calculation, but we do not step back from the targets we have for '27. Daniel Lion: So anything that would need to happen on the way there, something sizable or like, I don't know, big picture greenfield contract in Pulp & Paper or in order to make the guidance happen? Joachim Schönbeck: It would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets. Operator: [Operator Instructions] We now have Sven Weier again from UBS. Sven Weier: I hope you can hear me now. Joachim Schönbeck: Yes. Perfect. Sven Weier: So going back to the Hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is? What kind of growth rates you see? So any color on the turbocharger business you can give? Would be appreciated. That's the first one. Joachim Schönbeck: So turbogenerator business is, I would say, medium-sized 3-digit million business. Growth rates double digit at the moment. We do not -- of course, we do not know how this will continue. That's a business we are selling to energy engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently, that's the volume we can report. And this is why it definitely supports the Hydro business. Sven Weier: And when you say 3 digit, is it like in the low 3 digits or get a better feeling? Joachim Schönbeck: It's in the mid-3 digits. Sven Weier: Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole project. Joachim Schönbeck: No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities, not... Sven Weier: And those are kind of the known names like Siemens Energy and GE or... Joachim Schönbeck: Potentially. Sven Weier: Okay. And then, I mean, the pipeline in Hydro in general, I guess, probably also looks pretty promising based on what you said for 2026. Joachim Schönbeck: Yes. I can only confirm that. Yes. Sven Weier: And then you said you had some spillover into Q2 from Q4, if I understood you correctly on orders. Does it mean that you think Q1 orders should be higher than Q4 overall because of that spillover? Joachim Schönbeck: Could be. We definitely had some decisions that have been pushed over the year-end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not -- with what we see on the project side, we are not pessimistic. Sven Weier: So it won't be lower, let's put it this way in Q4. Joachim Schönbeck: Yes. We can agree on that. Sven Weier: Frank but good. The final question I had was just on the M&A because obviously, you kindly provided the revenue details, the money you paid, so I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average profitability across those targets that you bought? Are we talking like average 10% margin roughly. Joachim Schönbeck: I don't have the figure in my head, but in average, higher than what you see from ANDRITZ in total. Operator: There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger. Matthias Pfeifenberger: Okay. Thanks a lot. Thanks for the presentations of the Executive Board and the extended interest in ANDRITZ and in this call. And we wish you a good day and see you next time. Thanks a lot. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.

34天前Insight Analytics约5分钟阅读

RBGLY 2025 Q4 财报电话会议

Nicholas Ashworth: So good morning, everybody, and thank you for joining us for Reckitt's full year 2025 results presentation. I'm Nick Ashworth, I head Investor Relations here at Reckitt. So before we start, can I draw your attention to the usual disclaimers in respect to forward-looking information. So presenting today, we have our CEO, Kris Licht; and our CFO, Shannon Eisenhardt. Following the presentation will be the usual Q&A session. We're going to take questions from the room first, as we always do, and then followed by the written questions via the webcast. For those of you who have joined online, please feel free to submit your questions via the questions tab, which I think is at the top of the screen, and I will read them out. And if you've got further questions after the event, please feel free to reach out to me or the team, and we'll be happy to help. So with that said, I'm going to hand over to our CEO, Kris Licht, to start the presentation. Kris Licht: Thank you, Nick, and good morning to everyone in the room and those who have dialed in. I'll start with an overview of our 2025 results and some of the key highlights from the year, and then Shannon will take you through our financial performance. I'll then come back and provide an update on our key priorities for 2026 and some of the elements of our winning playbook. After that, we'll both be happy to take your questions. 2025 was a year of strong financial delivery as we continue to deliver on our strategy. Core record net revenue grew 5.2%, ahead of our improved half year guidance of above 4%. Group net revenue increased 5%, including Mead Johnson growth at 3.8%. This was driven by Emerging Markets, with China and India growing double digits in the fourth quarter. In our developed markets, a weaker season held back growth and the consumer environment in Europe remains tough. However, this was more than offset by a strong nonseasonal performance in North America. Adjusted operating profit increased 5.3%, underpinned by the benefits of the Fuel for Growth program. Core Reckitt margins expanded 90 basis points to 26.7%, with Emerging Markets margins growing 210 basis points to 20.9%. We are delivering profitable growth at scale. EPS grew 1.1% and was supported by our ongoing share buyback program, offset by a higher year-on-year effective tax rate, in line with our guidance. And we delivered another year of strong cash returns with GBP 2.3 billion returned to shareholders through dividends and our share buyback program. Looking at our noncore businesses, we completed the divestment of Essential Home to Advent in December, and we returned a further GBP 1.6 billion to shareholders via a special dividend in February. Mead Johnson Nutrition grew net revenues by 3.8% as trading normalized. We continue to consider all strategic options for that business. So we made strong progress delivering against all our strategic priorities during the year. We simplified and sharpened the portfolio, supported by the divestment of Essential Home. And this has allowed us to focus exclusively on 11 high-growth power brands with increased investment, increased accountability, faster decision-making showing through in our results, in particular, in Emerging Markets. We delivered superior innovation with launches across all our categories. Some were new products with the power to disrupt such as our Durex Intensity condom, which we've rolled out to 18 countries in 2025. And many others are extensions and improvements helping us to grow loyalty and win new consumers. They included new fragrances for Lysol air sanitizer for Dettol antiseptic liquid as well as Nurofen mini liquid caps and dual-action cough and sore throat products from Strepsils. We've generated significant benefits from our Fuel for Growth program. This has supported increased investment in our brands to drive revenue, expand margins and deliver our ambition of sustained earnings growth. We feel good about the program, and we believe we can go further. Shannon will come to this later. And finally, improved execution has strengthened our competitive position. In China, strong e-commerce growth has enabled us to capture more digital-first consumers. And in North America, our omnichannel partnerships and quick commerce are accelerating and widening access to our portfolio, for example, by bringing Mucinex to consumers in 30 minutes with 68% of buyers new to the brand. Building on this final point, executional excellence can only happen with a strong supply chain. This has been a big focus of mine since becoming the CEO. It's critical to have a supply chain that reflects the quality of the brands and the products that we make. Historically, modest investment in our supply chain created risk and led to inconsistent performance. We have started to address that by investing in greater levels of localization, automation and digitization, building a supply chain that is more scalable and resilient as we continue to grow. You can see this in the actions we're taking. On the manufacturing side, there is a lot going on. For example, we're rationalizing and improving our China footprint, installing new Durex lines in our state-of-the-art Taicang factory with a new China Science and Innovation Center due to open this summer in Shanghai. We're increasing our North America footprint with our new factory in Wilson, North Carolina, which is on track to open next year. And we've also enhanced our Lysol toilet bowl cleaner capacity and capability at our Belle Mead plant. We're adding a new generation of lines at our Polish factory to support innovation behind Finish. And we're investing in new Gaviscon capacity in Thailand, initially to support growth in Europe and Australia and ASEAN in the longer term. And as part of Fuel for Growth, digital and AI and GBS will enable greater effectiveness and efficiency right across the supply chain. We've stepped up investment in CapEx to GBP 592 million in 2025. And this is starting to deliver results across the portfolio with a few examples shown here on the slide. Our service levels have increased across Europe and North America, and we're driving improved factory operational performance with good early results, in particular, in Emerging Markets. There's more to do, but we have made great progress on the supply chain over the past 18 months. So in summary, I'm proud of what our teams have achieved in 2025. Our actions have repositioned Reckitt as a world-class health and hygiene company. Our focused portfolio of power brands are in the right categories, driving premiumization and benefiting from geographic diversity. We have a proven playbook for how to grow and expand our brands, and we're executing more consistently against it. Our foundations are strong, and we're making them stronger. There is much more to do, and I will come back to you to talk about our priorities for the year ahead shortly. But let me stop now and hand over to Shannon for more detail on our financial performance. Shannon Eisenhardt: Thanks, Chris, and good morning, everyone. Let me start by running through the key financial highlights and the strong progress we made in 2025. Core Reckitt like-for-like net revenue grew 5.2% with volume growth of 1.5% and price/mix of 3.7%. Excluding seasonal OTC, Core Reckitt grew 7% year-on-year. Core Reckitt's growth was led by Emerging Markets, up 14.6%. Group like-for-like net revenue increased 5%. We held Core Reckitt gross margin flat at 62.2% with group gross margin above 60%, expanding 10 basis points year-on-year as productivity efficiencies more than offset the impact of tariffs. Adjusted operating profit margin for Core Reckitt increased 90 basis points, helped by our Fuel for Growth program, with group adjusted operating profit margin up 40 basis points to 24.9%. At constant currency, group adjusted operating profit grew 5.3% year-on-year with adjusted diluted EPS up 1.1%. Looking now at volumes for the year, where Core Reckitt volumes grew 1.5%. In Emerging Markets, we delivered broadly balanced growth with volumes up 6.7%, led by online launches and increased penetration in China as well as expanded distribution reach in India. In Europe, volumes declined 3.1%, reflecting category growth rates slowing throughout the year. This was compounded by a weaker cold and flu season in Q4. In North America, volumes were flat. Encouragingly, volumes improved sequentially in the second half, driven by the performance of our nonseasonal brands. Turning next to performance across each of our areas and starting with Emerging Markets. Growth was broad-based across all categories and all regions. China delivered its 10th sequential quarter and another year of double-digit growth, driven by strong performance in Dettol with innovations and extensions such as Activ Botany, ongoing strength in VMS and sustained market leadership in Intimate Wellness across both Durex and Intima. India delivered high single-digit growth for the year, driven by our offline execution as we continued to increase distribution points. We have also seen double-digit growth across a number of our smaller markets, including Indonesia, Colombia and Malaysia. We're pleased that we're driving this growth while expanding our adjusted operating profit margins 210 basis points on the prior year to 20.9%. This has been driven by continued gross margin expansion, which includes mix benefits from continued outperformance in Self Care and Intimate Wellness. Moving on to Europe, where net revenue declined 1.4% for the year. During the year, category growth rates slowed to being broadly flat. We saw increasing promotional activity across the area as well as a softer season in Q4. However, our premiumization strategy continued to deliver price/mix benefits. We continue to focus on our power brands and showing up competitively on shelf for our consumers every day, which enabled us to maintain market leadership positions. Finish declined low single digit, but remained the category leader in Europe, supported by continued premiumization. In Self Care, nonseasonal OTC grew low single digit, led by strong performance from Gaviscon, partially offset by a mid-single-digit decline in seasonal OTC brands. Durex delivered low single-digit growth, driven by the successful launch of Durex Intensity, our new nitrile condom, enhancing our category leadership. Adjusted operating profit margin was 31.4%, up 130 basis points on the prior year, with strong delivery from cost savings and efficiencies, offsetting stable gross margins and volume declines. Now in North America. Like-for-like net revenue growth was broadly flat at 0.2%. Our nonseasonal brands, which represent around 70% of our portfolio performed well with low single-digit growth against a soft category backdrop. Lysol grew low single digits, supported by strong core business execution, particularly in wipes and the continued momentum of recent innovations with laundry sanitizer and air sanitizer, both growing double digits year-on-year. And while our seasonal OTC business declined mid-single digit, reflecting the soft season, our nonseasonal Self Care business grew double digits in 2025, driven by successful innovation launches across Neuriva, Move Free and Biofreeze. Adjusted operating profit margin at 30.1% was down 30 basis points year-on-year with cost savings partially offsetting a decrease in gross margins driven by category mix. Now turning to our categories. Self Care net revenue increased 3% on a like-for-like basis. Seasonal OTC declined mid-single digits, more than offset by high single-digit growth in our nonseasonal Self Care business. Gaviscon grew high single digits, and we delivered double-digit VMS growth for the year. For Germ Protection, net revenue increased 8.4% on a like-for-like basis. This was led by double-digit growth in Dettol across emerging markets, including high single-digit growth in India and double-digit growth in ASEAN and China behind the launch of new innovations. Harpic grew mid-single digits with emerging markets offsetting a softer consumer environment in Europe. Moving on to Household Care. Like-for-like net revenue declined 0.4%. Finish was broadly flat year-on-year with double-digit growth in emerging markets, offset by softness in both Europe and North America. Vanish was flat with strength in China, offsetting softness in LatAm and mid-single-digit declines in Europe. Finally, Intimate Wellness was our fastest-growing category with net revenue up 12.5% on a like-for-like basis. Durex delivered double-digit growth, supported by ongoing product innovation, notably the successful launch of Intensity in Europe and additional Durex launches in China and India. Veet also delivered double-digit growth in 2025 and Intima's like-for-like net revenue almost doubled as brand adoption in China accelerated. Looking at our market share data. As expected, our seasonal business has some share weakness given the soft season. So 51% of Core Reckitt's top CMUs were in gain or hold territory for the year. Turning to our noncore business. Mead Johnson Nutrition delivered like-for-like net revenue growth of 3.8% in 2025, driven by our specialty brands, particularly Nutramigen in the North America business with favorable price/mix. The business also benefited from rebuilding retail inventories following the Mount Vernon Tornado in July of 2024. Mead Johnson Nutrition international grew low single digits. Adjusted operating profit margin increased by 150 basis points to 20.4%, reflecting favorable gross margin progression on higher-than-normal production volumes as well as insurance proceeds. Essential Home is excluded from like-for-like net revenue growth following the disposal completion before year-end. Operating profit is included until the disposal on December 31, 2025. Our Fuel for Growth program continues to drive meaningful simplification and improved effectiveness across our business. We've made strong progress against each of our focus areas, and our actions are enabling us to deliver savings faster and more efficiently than originally planned. Our investments in digital and AI are creating value, particularly in marketing with automation and shared services also progressing well. The larger impact from these areas will build progressively over time. In 2025, group fixed costs were 19.4% of net revenue, a 150 basis point improvement year-over-year. As expected, this ratio will rise in 2026 before declining again in 2027, driven by 2 factors: first, the mitigation of stranded costs following the sale of Essential Home; and second, a smaller net revenue denominator resulting from the transaction. Program delivery costs in 2025 were below our GBP 500 million guide due to pacing and phasing of costs and around GBP 200 million of restructuring and separation costs that were offset against Essential Home proceeds. With this progress and disciplined execution, we remain on track to deliver within the GBP 1 billion investment envelope and now expect to exit 2027 with a fixed cost base below 19%. Reviewing our progress shows the benefits this program is delivering. We delivered 90 basis points of savings in 2024. 30 basis points went back into increased BEI investment. In 2025, we've driven 150 basis points of savings, which enabled 120 basis point step-up in BEI investment. We're investing more behind our brands to fuel our top line growth while also growing our margins. And importantly, we're enhancing our functional capabilities to enable sustainable growth going forward. In 2025, consistent with our guidance, we grew group adjusted operating profits ahead of net revenues, up 5.3% at constant currency. Our Fuel for Growth savings enabled us to step up investment behind our brands and also drove group operating profit margins up 40 basis points to 24.9%. Turning now to earnings. EPS grew 1.1% over the year to 352.8p. This was driven by net revenue and profit growth and further supported by a lower share count resulting from our share buyback program. These benefits were partially offset by a higher effective tax rate and adverse foreign exchange impacts, both totaling a 7% headwind to EPS. In total, we returned GBP 2.3 billion to shareholders through dividends and share buybacks. This included GBP 900 million of share repurchases, and we will shortly commence the final tranche of our current buyback program, which was announced at the half year. We delivered free cash flow of GBP 1.7 billion with a conversion rate of 71%, including one-off cash costs associated with transformation and restructuring. Net debt to adjusted EBITDA closed the year at 1.6x, reflecting the proceeds received on December 31, 2025, from the Essential Home divestment. Adjusting for the GBP 1.6 billion that was returned to shareholders last month via a special dividend, our net debt-to-EBITDA ratio would have been roughly 2x at the end of 2025. As we move through 2026, we expect leverage to rise towards 2.5x by half year, given continued investment in the group and the lower EBITDA denominator post divestment before starting to trend back down through 2027. The Board is proposing an increase to our full year dividend of 5%, consistent with our aim of delivering sustainable dividend growth. Our disciplined capital allocation framework remains unchanged. Our priority continues to be investing in organic growth as we've done in 2025 with a step-up in investment behind our supply chain and R&D capabilities. We aim to continue to pay a progressive dividend, and we will manage the portfolio for value creation, continuing to return excess cash to shareholders through our share buyback program as well as any excess proceeds from future transactions as we look to continue to deliver attractive total shareholder returns. Now turning to guidance for 2026. First, Core Reckitt. In 2026, we expect to deliver 4% to 5% net revenue growth, in line with our medium-term guidance. This again will be led by emerging markets growth. We expect the challenging environment in Europe to remain where we're taking actions that are already having an impact. And similar to the fourth quarter, Q1 will be negatively impacted by the softer season. Given these factors, in Q1, we expect Core Reckitt net revenue growth to be below our full year guide. In our noncore Mead Johnson Nutrition business, we expect low single-digit like-for-like growth in 2026 with a mid-single-digit net revenue decline in Q1 as we lap retailer inventory build from Q1 2025 post the tornado. At the group adjusted operating profit level, we aim to largely offset stranded costs associated with the Essential Home divestment through our Fuel for Growth program. Finally, looking at EPS. We'll receive income from our participation in Vestacy, the Essential Home vehicle in 3 different ways: noncash interest income from our USD 300 million vendor loan note, which is part of our net interest guide; associate income from our 30% equity stake; and around GBP 25 million of pretax income from service and other agreements we're providing. The share consolidation and ongoing share buyback will reduce share count, and we'll provide updates on foreign exchange impacts as we progress through the year. Our ambition remains to deliver long-term sustainable EPS growth, acknowledging in 2026, the dilution headwind resulting from the divestment of Essential Home. I'll now hand back to Chris to talk about our strategic priorities for the year ahead. Kris Licht: Thank you, Shannon. I want to spend the last part of the presentation taking you through our key priorities for 2026 as we continue to strengthen Core Reckitt's foundations for long-term sustainable growth. Before I go through each of our areas, I want to revisit a chart that you may have seen me use recently. It's a great chart because it marks an important inflection point. For the first time, emerging markets have more households with $25,000 disposable incomes than developed markets. That's a big shift in terms of where global purchasing power lies and Reckitt is in a strong position to benefit. As our results show, we're capturing these consumers through category penetration and category creation. But it's not just about emerging markets. The opportunities across developed markets also remain exciting. Our power brands are at the premium end of the market where consumer loyalty is high. We're building that premium position with new launches and by expanding our categories. We have the portfolio to win in both developed and emerging markets. So turning to our areas and starting with Emerging Markets. As we said at our December event, we expect the strong trajectory to continue with high single-digit growth over many years. The number of consumers able to buy our products increases every day. And in many ways, we're only just touching the surface. Consumption patterns are changing fast, supported by the growth of households that own dishwashers and an increasing number of consumers paying much more attention to their health. We have 3 clear priorities for the year ahead. First, to increase penetration in mature categories, driving our distribution strength to reach more consumers through efficient and digitized execution in India and Sub-Saharan Africa and to continue our success of expanding into new categories in China. Second, to develop nascent categories. In December, our Emerging Markets President, Nitish Kapoor, spoke about growing levels of dishwasher penetration and our focus on rolling out our self-care portfolio across many parts of the area. This is working well with Finish and Gaviscon both growing double digits in 2025. Finally, to scale up the next tier of countries. We're already seeing very strong double-digit growth across a number of markets that are small today, but they have very high potential. We will continue to drive executional excellence by increasing OTC medical expertise in Latin America, making our sales teams in Africa more digitally enabled and modernizing our go-to-market capabilities in ASEAN. Next, turning to Europe. Our performance in 2025 was impacted by the challenging market backdrop, a slowdown in our categories throughout the region and weak seasons. We expect consumer sentiment to remain weak, and we've already taken actions to improve our competitive position with early positive share results. And while the season has continued to be soft in Q1, we have maintained our market share, and so we're well positioned looking forward. Our priorities in Europe are, therefore, to capture trade-up and premiumization, and we're doing this. Our highest tier dishwasher tab, Finish Ultimate Plus all-in-one grew double digits across Europe in 2025, driven by the formula upgrade. Competition will remain tough, but the mix opportunity for us remains. Next, we will drive category expansion through innovation. We will continue to successfully roll out Durex Intensity as well as launching Nurofen mini liquid caps into a number of new markets. And finally, we'll take steps to strengthen our competitive position. A big focus will be on the pharmacy channel, working with pharmacists on product education and by better equipping our sales force with improved technology. We will also strengthen e-commerce and tailor our North America omnichannel best practices for Europe. And then finally, North America. I believe this area has great opportunity for us. 2025 saw good progress, and we're encouraged by the momentum we saw through the second half. Our nonseasonal business is strong, outperforming low single-digit category growth, offset by the weaker seasonal OTC. The investments we're making in our supply chain and in our iconic brands are strengthening our platform for further growth in 2026. Our priorities will be to expand our premium categories. We built a strong track record of category expansion, moving into laundry and air sanitizer with Lysol into lozenges and pediatrics with Mucinex, and there is much more to come in 2026. We will work closely with our partners to deliver customer-centric growth. This means greater online and omnichannel focus and continued focus on winning in the club channel. Innovation and digital execution are helping us do this, whether it's through exclusive SKUs, pack sizes and variants for specific retailers or working together with quick commerce partners to accelerate and broaden access to our brands. And finally, we want to deliver consistent operational excellence. We've seen improved performance in Lysol wipes in 2025 as we invested in our largest U.S. factory in St. Peter's, and this will support greater consistency in 2026. We will also continue to invest in our supply chain in North America with our Wilson, North Carolina site moving towards operational readiness by 2027. And there's more work to do, but the future is an exciting one in North America. Moving to our seasonal business, which represents right around 12% of our core portfolio. The past few years, we've seen the natural volatility that we all associate with this category, but it doesn't change the attractiveness or strategic importance of the portfolio. Even after a couple of weak seasons, the upper respiratory category has still grown at a 5% CAGR from 2019 to 2025, supported by strong macro tailwinds from an increasingly health-conscious consumer base. When viewed through a longer-term lens rather than just a 1-year basis, the trajectory is good. Strepsils delivered a 7% CAGR between 2019 to 2025, while Mucinex grew 5% in the same period. These are 2 of the highest gross margin brands in the portfolio. The strength of these brands is underpinned by leading brand equity, superior claims and a consistent track record of innovation. Part of our excitement for 2026 in North America is around Mucinex. This is a brand with a great history of innovation, powering growth. This slide shows you that it has delivered a number of firsts over a number of years, and I'm proud to say that we're going to continue this strong track record in 2026. Mucinex 12-hour Cold and Fever will be launched later this year. It is the first and only 12-hour cold and fever multisymptom remedy in the market. This is a real breakthrough. It lasts 3x longer than other cold medicines from just a single dose. It took us 15 years to develop. It's the first FDA-approved new drug application in the upper respiratory category in over 15 years, and it's our first approved NDA. So when I talk about superior innovation, this really is an excellent example of our teams delivering, and we're doing this right across our portfolio and all around the world. This slide shows some of the other launches we've delivered in 2025. Innovation is integral to our ongoing success because it enables us to grow our categories, it strengthens further loyalty to our brands. It captures more consumers, and it drives pricing and ongoing premiumization. The investment that we've been making in R&D will ensure that our pipeline remains strong to underpin a steady stream of launches in 2026 and the years ahead. As many of you know, we started our series focus on educational events last spring. For 2026, I'm pleased to announce our next 2 events. On the 14th of May, we will showcase digital science with our first virtual event where our digital and R&D teams will come together to show how we're applying new digital and AI technology to innovate faster and better. And then on November 19, at our new office in New Jersey, we will host our first event in the U.S., showcasing our North America business. So there's a lot to look forward to in 2026. Shannon took you through our guidance for 2026, and I want to reiterate our confidence in delivering on our medium-term ambitions. Our strategy is focused on positioning Core Reckitt to consistently deliver 4% to 5% like-for-like net revenue growth alongside annual EPS growth. Last year, we saw a tough consumer backdrop, and 2026 doesn't show much sign of improvement, especially in Europe. However, I'm confident that our portfolio, geographic footprint, executional excellence, combined with continued investment and innovation puts us in a strong position to deliver our targets. So in summary, we achieved a lot in 2025. The transformation of Reckitt is well underway. We've simplified the portfolio. We've reduced costs. We've expanded margins, and we've invested behind our brands to accelerate growth. We have iconic brands in categories with decades of runway for growth. We have the innovation pipeline, the executional capabilities and the financial model to win. Core Reckitt is built to deliver sustainable profitable growth year in and year out, and that's what we're focused on doing in the year ahead. Thank you for listening. Shannon and I will now be happy to take your questions. Nicholas Ashworth: Thank you very much. And yes, so as we said at the beginning, we'll take questions in the room first and then we'll go online. And if you're watching through the webcast or listening through the webcast, then there's Ask a Question box. So please put the questions in there and they'll come through to me and I can read them out. To start in the room. James got the first. Wait for the mics as well, I should say, if you can introduce yourselves. James Jones: It's James Edwardes Jones from RBC. Two questions, if I may. Obviously, you're not giving explicit margin guidance for 2026. Can we interpret your comments as being that margins for Core Reckitt are likely to decline in 2026? And within that, can you give any indication on brand equity investment sales whether that will go up to support all those innovations you're talking about? Secondly, you said 51% of your top CMUs are gaining or holding share. I'm not sure if that was Q4 or full year. So clearly, 49% are losing share. Is that something we should be concerned about? Is there any intensification in the competitive environment? Kris Licht: Do you want to handle margins? I can do the share. Shannon Eisenhardt: Yes. I'll start. Okay. So from a margin standpoint, we exited the current year at 24.9%, which is what we shared in the release this morning. Obviously, when you think about it from the group level with the Essential Home divestiture, that will be a positive tailwind to our operating margins in 2026 just because it's a lower profit business that we're divesting. We will, however, be facing the stranded costs coming from Essential Home. And so what we outlined was that we expect to largely offset those stranded costs with the Fuel for Growth program in 2026. So the expectation would be that operating margins will increase. However, the amount of increase is obviously dependent on how much of those stranded costs we offset within 2026. We're confident as we then head into 2027 that will more than offset those costs, and that's why we also changed the guidance for the Fuel for Growth program to now get below 19% as we move forward. James Jones: Shannon, just to check, so operating margins for the group, you expect to increase, but not necessarily for Core Reckitt. Shannon Eisenhardt: For Core Reckitt, I think it will be the same dependence around exactly how much of those fixed costs we offset because we have to metabolize that within Core Reckitt, obviously, going forward without Essential Home. From a BEI standpoint, we remain very consistent in the fact that our intention is to be growing BEI as a percent of net revenue year-on-year. We believe it's important to be investing behind innovation. So we'll continue to focus on that in 2026 as with any other year. Kris Licht: On your question on market share. So 51% it's a full year number for the CMUs. One of the things that happens when we have a weaker season is some of our self-care brands that are highly efficacious and medicated and premium lose a bit of share. Conversely, when we have strong seasons, they gain a bit of share. So we did see Mucinex suffer some share loss during the year because of that weaker season. Mucinex is a really big CMU. If you consider that effect, how we're running is okay. Obviously, I'm not happy unless that number is 60% or higher. But with a weaker season, we know and expect that that's a headwind on share, and it's temporary. Jeremy Fialko: Jeremy Fialko, HSBC. So a couple from me. First one is, can you delve a little bit more into Europe and what's going on there? Because you talked about the markets being broadly flattish at the end of the year. Obviously, you were down somewhat more than that. So talk about why there's that difference in the market, what the sort of the seasonal bit there is and how you think you can get at least that back to, let's say, around flattish or into positive territory during '26, your confidence in that? And then secondly, maybe we have a bit of a follow-up on this margin question. If we think about some of the other components of margin. So for example, would you expect some -- any progress in gross margins over the course of the year? Would there be any leverage as other factors beside this sort of fixed cost versus this -- fixed cost versus stranded overheads point? Kris Licht: Let me tackle Europe first, and I'll hand it to you. Look, the first thing I'll say is we had a tough quarter in Q4 in Europe. A part of that was the season being weak, as we talked about. And so that's sort of quite understandable. And obviously, we hope that the next season will not mirror that. The other part of it is a very competitive environment, slowing category growth to broadly flat growth in our categories in Europe and a more competitive environment. So more promotional activity, deeper promotional activity. In that environment, we need to stay focused on being competitive, but we also have to strike the right balance. And some of the promotional activity in Europe at the moment, we feel is excessive. So we saw a return to what we would say was normal promotional activity last year after the period of time when there was almost no promotions when we were all passing on the COGS increases, the unprecedented COGS increases. But now the promo has gotten to a level that we think is probably not sustainable. However, we are very focused on being competitive. We're very focused on striking that balance, and we have taken some actions, and we're seeing some good early share results as a consequence of that. However, I would say that Europe will likely remain tough. Everything that we see in terms of consumer behavior, category dynamics and really the outlook for growth in Europe is not particularly strong. So that's why we were clear and even in -- when we discussed our guide. We're setting that guide knowing that Europe will be a tough marketplace to operate in and will be highly competitive. But we have a portfolio that can handle that. I think the point of really the 2025 results that we're showing is, yes, Europe was tough. Yes, we had a weaker season, but look at what we delivered in terms of top line growth. So I think that speaks to the strength of our company. Shannon Eisenhardt: Yes. Do you want me to answer the second? Look at that Nick was not going to answer your second question. So the other components from operating margin, I think I'd call out -- I mean, gross margins, we've been pretty consistent in discussing over the past 2 years that we have sector-leading gross margins. We're not looking to drive significant expansion there, particularly given the increased investments we want to be making in supply chain. You saw in the current year, we did end up expanding gross margins by 10 bps. But if I think looking forward, I wouldn't change the general theme that we're not looking to drive expansion in gross margins. I think the only other driver I would call out is obviously geography mix plays a role. You can see the various profitability levels across our geographies. And so we've talked a fair amount around the fact that we do expect to see developing markets deliver more in 2026. And so that would obviously roll through as well from an operating margin standpoint. Jean-Olivier Nicolai: Olivier Nicolai from Goldman Sachs. Two questions for you. First, a quick follow-up on Europe, perhaps on auto dish specifically, since you mentioned high promotional activity in end of '25. How much room do you see for premiumization in the category there? And do you think you've reached somehow the end of the journey in terms of how much you can premiumize that category auto dish? And then secondly, perhaps for Shannon, on free cash flow delivery, it was down year-on-year, reaching GBP 1.7 billion. You mentioned the higher cash costs associated with Fuel for Growth and the CapEx that led to about 70% free cash flow conversion. What are the building blocks for 2026? And how can we expect the free cash flow conversion to improve from there? Kris Licht: So just on Europe, I mean, I said a few things already, but auto dish is actually the category that's most promotionally intense to your point. Premiumization is entirely doable. In fact, we did really well with Finish and our ultimate all-in-one range, which is the most premium offering we have, and that grew really strongly in the year, and we will continue to fuel that. The tiering that we run and moving consumers up that ladder, that's absolutely critical in our playbook, and we'll continue to run it. And we're seeing no signs that, that can't work. I think the promotional intensity is really more on sort of base products, and that's where we're seeing that. And again, I hope that we can return to a more rational environment. I think right now, the consumer is under a lot of pressure. Retailers are wanting to provide great value, and some of our competitors are promoting in very deep rates, and we're just trying to strike that balance. The thing about Finish that's also important to remember is we have a good, strong business. We're market leaders in Europe, and obviously, we'll defend that position. But at the same time, the runway for growth for Finish in emerging markets is the exciting part for this franchise. So we'll continue to premiumize and innovate in Europe, and I think that will deliver good results in a tough environment, but I'm really very focused on making sure that we win in emerging markets because that is the future growth for the franchise. Shannon Eisenhardt: So for free cash flow, the impacts you referenced in 2026 around the one-off restructuring costs as well as the heightened CapEx spend, I would expect those to continue in '26 and '27. And so we'll exit that restructuring program at the end of 2027. From a CapEx standpoint, I'm sure you saw the guide for '26 was around 4%. And so a higher guide than last year, but consistent with how we ended up spending last year. I would expect the restructuring costs, as I said, roll off when we enter '28. The CapEx, I think we intend to continue to be investing for the foreseeable future at that higher level of CapEx. From a free cash flow conversion then, I think you'd see it around similar levels in '26, '27. And then we would expect once we're through the restructuring program that free cash flow conversion would get back to more normalized historical levels. Tom Sykes: Tom Sykes from Deutsche Bank. Just one question, firstly, on Russia. How much is Russia now of your sales and I guess the ecosystem that supports into Russia? And how much would that be of Intimate Wellness, please, which is obviously growing quite quickly? And then just sort of further on that CapEx point, could you give a feeling for what the geographic split between EMs and DMs on the CapEx is because your D&A to sales that you give in the release for the EM business is relatively low, it looks like. So I was wondering how hot are you actually running the EM businesses? And how quickly can the CapEx actually give you more capacity in EM to continue that growth, please? Kris Licht: Okay. Just on Russia. So what I can share with you, we've shared this before is Russia today is part of our MENARP business. It's about 15% of sales for Core Reckitt. It's -- for Emerging Markets and Core Reckitt. Russia is not a driver of growth. It's not a place where we're investing, and this is what we've shared before. And so the growth performance you're seeing is not -- there's no contribution to that from Russia. So it's not significant, including for Intimate Wellness. Shannon Eisenhardt: Yes. Then on CapEx. So expect to spend around 4% of net revenue on CapEx. Within that, when you think about it, the majority of that is supply chain CapEx, manufacturing CapEx. When we look at how that splits across our geographies, I'd say it splits I'm not going to say evenly, but it's across all of our geographies. So we've talked around the Taicang facility in China has been a place within developing markets where we've been investing CapEx. We've just overtaken or Harald, our Chief Supply Chain Officer, overtook an entire review of our manufacturing footprint around the globe, and we'll be spending across all 3 geographies to support growth. So we've talked about the Wilson facility in North America, which will be a significant source of CapEx spend, but it will be spread across both developed and developing markets. Edward Lewis: Edward Lewis from Rothschild & Co. Redburn. A couple of questions. I guess just on the first year that you've done the change in the organizational structure. And clearly, that benefited the emerging market business with the strong results there. Can you just talk about the impact that's had on the developed market business, Europe and North America, where obviously contrasting performance is relative to the emerging markets. And then, Kris, you mentioned about bringing omnichannel capabilities in North America into Europe. What sort of opportunity is that? Could you elaborate further, please? Kris Licht: Sure. So let me start with the organization. Look, I'm very pleased with the way the new organization is functioning, but it's also year 1. So I think it's important to know that there's more benefits that will come from the simpler organization that we have now. And obviously, we have more scale in our markets when we are not split into GBUs, and that's a benefit that will keep paying off for us. Emerging Markets was one of the main reasons why we changed the structure because they were -- they didn't receive the level of focus that I think is important for them to receive. And obviously, we can see what happens when we set them up for success like we've done in China and India, but we want to do that in many more markets. This organization facilitates that. So very pleased with that. Europe went through a lot of change last year. And obviously, going through a lot of organizational change takes up some time, some capacity of the organization, but that's behind us now. And so therefore, one of the reasons why we believe Europe will be able to demonstrate improving performances because they have that stability and they have greater scale in what they're doing in a number of markets. In North America, we're actually quite pleased with how the business is doing. So I mean, recognize that it's not quite the growth rate we're realizing in Emerging Markets, but it probably won't be, but actually, we're outpacing our categories. And as we shared, the nonseasonal business, 70% of the business is doing really well and I expect it to do really well this year. And then with the innovation behind Mucinex, I think we'll see a strong year from North America. That's my expectation. They are an energized organization at this moment. We were actually just with them and spent a lot of time with the team there, and they're fired up. And I'm very pleased with what I'm seeing there. And I think we're laying the foundation for very good performance. So North America will definitely also benefit and is benefiting. And as you said, now we have to see the benefits come through in Europe, too. Omnichannel. So omnichannel is really the name of the game in terms of how increasingly our business operates. Obviously, we have very sophisticated capabilities in China, and the business there has really moved quite heavily online. The vast majority of the business is now online. In North America, it's been a more measured evolution, I would say, and the majority of the business is certainly still offline in the U.S. But leading retailers are now operating in an omnichannel way, right? So you're seeing many of the retailers that are succeeding are really running multiple fulfillment models and relatively seamlessly moving across the screen in the store and combining these 2. So that means that we have to work with them in that way, too. So we can't do the traditional thing that we did where we had a separate team doing e-commerce and separate investments and separate P&Ls. And now we have to unite it and we have to run optimization and growth initiatives across these platforms seamlessly. So we have to activate online, offline in a very cohesive manner. And the U.S. is ahead of Europe on this dimension. So European retailers are certainly investing in this space, but they're not as advanced as the leading retailers in the U.S. And so that's why we can take what we do well in the U.S. because we really are quite successful with the leading retailers in the U.S. on this dimension. And so we want to move those best practices to Europe. And we'll do that gradually as the trade landscape in Europe evolves and gets more advanced. Unknown Analyst: It's [indiscernible] from RBC. It's a question for you, Shannon. So Reckitt's share is not very cheap anymore. And with the level of leverage at the moment and the planned spending on CapEx, what's your view on share buyback going forward? Shannon Eisenhardt: I won't address the not very cheap comment. But on the share buyback, look, we view the share buyback program as a really important lever in how we return value to shareholders. And we've talked pretty consistently since that started in October of '23 around the fact that we view it to be an ongoing component of how we think about capital allocation and of how we return value to our shareholders. And so we mentioned today the fact that the next tranche of our already announced program will be announced imminently to finish up that program. And then my expectation would be that it will be an ongoing program. Now we've also talked that the magnitude of the program can vary. And so that can be impacted in line with our capital allocation principles around our net debt ratio and other uses of cash, but we view it to be an important component. Nicholas Ashworth: Great. So we have a number coming online. [Operator Instructions]. I'm just going to work through an order. So starting with Feng at Jefferies. She's got 3 questions. The first one was around operating margins for Core Reckitt. I think you've already answered that one, Shannon. So I'm going to move on to, can you talk about the price/mix for Core and/or Emerging Markets, specifically, how much of EM price contribution reflects underlying pricing versus the VAT increase on contraceptives? And have you secured the California WIC contract? And if so, when should it start contributing to Mead volumes and revenue? Shannon Eisenhardt: All right. I'll do emerging markets price/mix. So we've talked around the fact that our ambition is that price/mix, we want to drive balanced growth. So we want our growth across all of our geographies to be balanced across volume and across price/mix. Specific to emerging markets, if you look at the first 3 quarters of the year, our results were very balanced across volume and price. When you look at the Q4 number, it's important to note a couple of things. One of them is the fact that we did have a realignment of some of our marketing investments where we moved that from an accounting standpoint out of trade spend and down into BEI. And so that was a onetime contributor of seeing more price/mix driving growth. We did also, and I think she mentioned it, we had condom pricing in China ahead of the new VAT policy. And so we took that pricing a little bit early. And so that influenced. And then we had some positive mix coming through India as we look at the Dettol products that have been driving growth for us in India. And then California WIC. Kris Licht: California WIC. So that's a contract we secured last year, and it is contributing. I think that's all we can say about that. Nicholas Ashworth: Okay. So the next, I've got a couple from Callum at Bernstein. The first one, I think we've already answered, it was around the free cash flow conversion, a step down to 71% this year. And what's the outlook? And I think you've already talked about that, Shannon. So then the second one, strong progress of Fuel for Growth in 2025. Can you help us understand the 19.4% fixed cost in 2025, what does it look like if you adjust for the Essential Home divestiture? Shannon Eisenhardt: I mean I think the answer is that we haven't been sharing a specific number around stranded costs for Essential Home. What we're really focused on is getting to the target we set out, I guess, 18 months ago around getting to 19%, which we're seeing strong progress. It's coming in faster than expected. It's coming in more efficiently than expected. And I think a reflection of our confidence came through today and the fact that we've now increased our ambition that as we exit 2027, we'll be below 19%, which obviously reflects more than offsetting any stranded costs from the Essential Home transaction. Nicholas Ashworth: Thank you. Next up from Guillaume, UBS. And Guillaume, I can see that you've sent me through a few. So thank you. I'm going to start with the -- I'll start with the first 2 and then come back to some of the other ones later. The first one then on Latin America. Region's like-for-like was down mid-single digits in Q4. Can you shed some light on the main drivers behind this decline? And what do you expect for the year? Is it going to be similar challenging trading conditions or some gradual improvement? And then second, on the tax rate, you're guiding to around 27% this year. This is the second year in a row where tax is increased. What's driving the uptick? And how should we think about it over the medium term? Kris Licht: So let me answer on Latin America. So obviously, we run a seasonal OTC business in Latin America, too. So some of that weakness is directly impacted by a weaker season. The other thing is it is a subdued trading environment, and it is highly competitive in some of our categories. We're also changing a couple of things about how we enhance our go-to-market system. And so I fully expect Latin America to get back to growth, but those are some of the drivers why we've seen the weakness. Shannon Eisenhardt: Then from a tax rate standpoint, so it's important to remember, we exited 2024 with what we had called out as an abnormally low tax rate. I think we were around 22%. So for 2025, we'd guided that we'd be 25% to 26%. We came in a bit under that with 24.7%. 2026, guiding the tax rate at around 27% is just reflecting that we're getting -- returning back to our more structural tax rate. And so there's no specific driver other than the fact that we're coming off of an abnormally low base in 2024. Nicholas Ashworth: Perfect. Thank you. Diana Gomes at Bloomberg. This is a question around the current geopolitical events and the impact on gas and oil prices. So have you talked about hedging levels for 2026? How should we think about gross margins as we move through the year? Kris Licht: So I think the first thing I'll just say on that, and maybe you want to talk about hedging. I think the most important thing for us to say on current events is we're watching it very closely, but our overwhelming focus right now is the safety and well-being of our team members in these markets and their families and anyone that's impacted by it in our organization. And obviously, we hope for a resolution soon. Shannon Eisenhardt: Yes. I mean I would just say we obviously have an active hedging program to try and mitigate risk and to provide some level of consistency or ability to forecast gross margins. As we head into 2026, we hedge out 12 months, and we have about 55% of exposures hedged at this point in time. And so we'll continue to run that program and to manage volatility as much as possible. Nicholas Ashworth: Thank you. So next up from Warren at Barclays. A couple of questions. So the first one, I actually think has 2 parts. On the modeling for 2026, what associate contribution would you expect from Essential Home? And on 2026 fixed costs, I assume they go up before they go down to below 19% in 2027. So can fixed costs be above 20% in 2026? And then how much more below 19% could they get to in 2027? So I actually apologize, I'm not sure that was 2 questions. I think there's a few more. Shannon Eisenhardt: Yes. I would say 5 questions from Warren. Okay. I'll do my best here. So on the associate contribution to EPS, we're not providing a specific figure. I think the variables that would be important to think through as you model that would be, we obviously shared last year the profitability of Essential Home. That level of profitability will change as that comes under new ownership. I think it's important to remember that it will be highly leveraged, and that will have an impact. And then that we're a 30% shareholder in that business. And so to reflect that as you think through the modeling. From a fixed cost standpoint, the question was fixed costs, will they go up before they go down. And so I think the answer is yes, consistent with the language around Fuel for Growth largely offsetting, which would imply it doesn't fully offset. From a number standpoint, I'm not going to provide a specific number of guidance on fixed costs for 2026. But I will say that we'll be below 19% as we exit 2027. Nicholas Ashworth: And then a second one from Warren sort of. It's on the volume price mix. And so some of our peers put mix into volume. Can you, therefore, try to give us a feel for what mix is versus pricing in Q4, given volume was a little bit weaker. But then, as I said, others put mix into volume. So is there an argument that we should be doing likewise? Shannon Eisenhardt: I saw Warren's request bolded and underlined in his note this morning. So it's on my list of things to talk to Nick about. I mean I don't think we have a specific mix number to share. We've talked around the fact that we want to drive balanced top line growth that we would expect that to look like a point or 2 a year from volume, a point or 2 a year from price and a positive impact from mix. Kris Licht: I think the only thing to add is in emerging markets, we are seeing really good mix benefits. And that's a function of the innovation. It's a function of the fact that we're driving growth in categories that have better structural economics than the base business. So there's sort of a benign trend there that we think will continue, and it's significant. Nicholas Ashworth: And coming back to Guillaume again, a couple more. Thank you, Guillaume. So on condoms in China, do you expect a material impact from the recent change in VAT on category growth? And so how could this affect Durex's momentum in 2026? And then on brand equity investments, it increased 120 bps as a percentage of sales last year. Which brands and geographies got the lion's share of this increase? And are you satisfied that you're getting the right returns on that incremental investment? Kris Licht: So on the VAT change and the sort of outlook for Durex, I fully expect Durex to have a good year in China. Durex has been growing really well in China for a very long time. I mean it's a very steady pattern. And so obviously, when you have changes flowing through like the change you're asking about, it can have short-term impacts and a little bit of upside and a little bit of downside in the next quarter, but it's not going to change the trajectory of Durex performance. And I think Durex will do well in China in '26. Shannon Eisenhardt: Yes. From a BEI standpoint, I mean, I think the best way to think about where are we putting incremental BEI is we always want to prioritize innovations and making sure that as we launch new innovations that those are fully funded and that we're really driving to make sure those launches are as successful as possible. Beyond that, we look across all 3 geographies and really go sort of think of it as going brand by brand, country by country to understand where are we investing in line with what we view as the minimum levels of BEI that we'd want to be spending and where are we below that and then deciding where it makes the most sense to put the incremental investment each quarter, if not more frequently. And again, our intention is that, that BEI as a percent of net revenue should be increasing year-on-year. Nicholas Ashworth: So just a couple left. [Operator Instructions]. So a couple from Celine at JPMorgan. Firstly, on China, I'm not sure whether we might have answered this already. Have you seen higher orders ahead of the VAT implementation in condoms? And what has been the impact on pricing that you mentioned? And then on Mead, you mentioned you were looking at all strategic options for Mead. Can you help us understand what those are and any time expectations around litigation? Kris Licht: So China, I mean, yes, we saw a little bit. But again, like I just said, we're not expecting this to be a significant headwind for Durex in 2026. For Mead, I would say that we've been very clear. We're looking at all strategic options, and we've been consistent about not setting a time line for that so as to give ourselves the flexibility to do what's best for shareholders. And of course, as you know, we're working to resolve the litigation. So the -- today, we don't have a lot of new news on that. I think the thing to maybe just focus on is that Mead Johnson is trading well. And Mead Johnson had a good year, and we expect them to have another good year this year, and that's a positive. Nicholas Ashworth: And this is the -- for now, the final one I have online. So it's from Juan Rios at Santander. Again, a couple of questions. Firstly, on Mead. There's been some turbulence in infant nutrition market recently. Could you comment on whether this has any knock-on implications for the Mead Johnson brands operationally and from brand perception? And secondly, regarding issues in the Middle East, can you provide some color on how you're thinking about the potential impact on your business? Kris Licht: So I think it's easy to answer the first one because it had no impact on us. So we were not involved in it, and we haven't seen any commercial impact because we don't operate in the markets in question in any significant way. The geopolitical events, look, it's too early for us to really assess where this is going. The range of possible outcomes, as you know, the uncertainty is extremely high. It's developing live, and we're just paying a lot of attention to what's going on, obviously, mostly focusing right now, as I said before, on the safety and well-being of our employees and of course, protecting our assets, our business. But it's too early for us to quantify any impacts. Nicholas Ashworth: That was everything online. Anymore in the room? We've got through a lot. Perfect. So look, with that, we will call it the end. Thank you very much for all the questions and interest. And I will just highlight the next slide, which is going to come up on the screen as if by magic. The next focus on events. The next one will be May 14. And hopefully, we will see many of you then. Thank you very much.

34天前Insight Analytics约5分钟阅读

GO 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the Grocery Outlet Fourth Quarter 2025 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian Ferry, Vice President of Strategic Finance and Investor Relations. Please go ahead. Ian Ferry: Good afternoon, and welcome to Grocery Outlet call to discuss financial results for the fourth quarter ended January 3, 2026. Speaking for management on today's call will be Jason Potter, President and Chief Executive Officer; and Chris Miller, Chief Financial Officer. Following prepared remarks from Jason and Chris, we will open the call for questions. Please note that this conference call is being webcast live, and a recording will be available via playback on the Investor Relations section of the company's website. Participants on this call may make forward-looking statements within the meaning of the federal securities laws. All statements that address future operating, financial or business performance or the company's strategies or expectations are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from these statements. Description of these factors can be found in this afternoon's press release as well as in the company's periodic reports filed with the SEC, all of which may be found on the Investor Relations section of the company's website or on sec.gov. The company takes no obligation to revise or update any forward-looking statements or information. These statements are estimates only and not a guarantee of future performance. Additionally, during today's call, the company will reference certain non-GAAP financial information, including adjusted items. Reconciliation of GAAP to non-GAAP measures as well as the description, limitations and rationale for using each measure may be found in the supplemental financial tables included in this afternoon's press release on the Investors section of the company's website under News and releases and in the company's SEC filings. And now I would like to turn it over to Jason. Jason Potter: Thanks, Ian, and thank you all for joining our call today. I joined Grocery Outlet because I believe in what makes this business special, a uniquely differentiated model that provides tremendous value to customers with opportunities to scale. One year into my time here I believe in those things more than ever, but I want to be direct with you today. Our fourth quarter results were unacceptable, and our outlook for 2026 reflects a business that has more work to do than we expected. I own this and own fixing the issues. Today, we plan to provide an explanation of how we got here, where we are and what we're doing about it. First, how we got here. For context, I'd like to walk you through the sequence of events over the last 6 months. This is important because I want you to understand not just what happened, but where our thinking was at each stage, where we have had the course correct and why we remain confident in our ability to achieve the potential we see in our business. When we reported Q2 earnings in August, we had several reasons for cautious optimism. We delivered 3 consecutive months of comp improvement. We've been focused on improving value by sharpening our KPI based pricing, reversing missteps that occurred in '24 and believe that this had been a key driver in holding value back for our customers. Through the same period, we're able to maintain gross margin stability through shrink improvement. Our '25 cohort of new stores was performing ahead of plan, and we've modulated the '26 growth plans to prioritize returns on capital. And finally, we believe that restoring key operator tools from our systems work like the real-time order guide and new arrival guide would create an immediate tailwind to store productivity. However, as we discussed in our last earnings call, beginning in late September, comp performance began to deteriorate. We shared that some of this was a direct result of decisions we made on marketing that were net negative and we responded by recalibrating our marketing mix and doubling down on in-store execution. With new leaders across store ops, merchandising and supply chain, we began accelerating our store refresh program based on encouraging early results. Following our Q3 call, November comps were weak driven in part by the timing of EBT distributions that negatively impacted our SNAP business and affordability pressure on our core customer increased more than we'd expected. Despite finishing Q4 with positive traffic, basket pressure intensified, resulting in a negative comp for Q4. Comp sales continued to decelerate in January, driven by declining units per transactions and slowing traffic growth. At that point, we took a hard look at the business from end to end, buying and supply chain, pricing and promotions, the customer experience and our store network. We also sourced feedback from our customers and our operators. This deep review surfaced 3 fundamental drivers of comp deceleration. First, the environment has shifted meaningfully as store and industry data validated that consumer pressure had intensified through the fourth quarter and now into the first quarter. Second, customer survey and third-party research showed that while our base pricing was competitive, our leadership position on value perception had eroded. While we made progress by addressing KPIs, we needed to address value more holistically. Third, our push to improve in-stocks and add assortment to ensure the availability of everyday items squeezed our supply chain impacting our ability to deliver high-quality opportunistic product that drives value in this business. Shoppers came in looking for the value and the treasure hunt experience they expect from Grocery Outlet but left with fewer items per trip because we didn't deliver the weight of WOW! items and the breadth of assortment that drives basket size and value. While we made progress over the past year commercially, we've had to take decisive action to drive near-term improvement, and we have more work to do to improve our value proposition for our customers. Now let me turn to share what we're doing about it. First, on restoring Op mix. Grocery Outlet has historically delivered extreme savings by providing tremendous deals on opportunistic product. Our customers' perception of value is driven by our opportunistic product and they describe these products as great deals or promotions, but discounts up to 60% across an ever-changing and wide breadth of branded high-quality assortment. Before I dive into what we're doing differently, let me just say, first off, that we're convinced that ample opportunistic supply exists. We're in constant contact with our major suppliers, and it's clear to us that many of the drivers of constant supply remain intact. Over the next several months, our team is intensely focused on ensuring we have the right weight and depth of quality opportunistic branded product flowing into our mix to restore a winning position on value with our customer. To support this, we've made several important changes to how we buy and merchandise. First, we added DC capacity and improved the flow of goods by reducing inventories across nonproductive categories to ensure we have room for opportunistic product. Second, we've also made improvements to our internal forecasting to maximize opportunistic buying. Third, we've improved communication and our internal planning horizon to give our operators more time to plan effective op product execution. And in January, we unified our merchandising and purchasing functions under a strong and experienced leader, Matt Delly, who is focused on delivering stronger collaboration and organizational agility with a specific focus on opportunistic offerings and supplier engagement. These changes are designed to ensure we're consistently doing what we do best, providing extreme value for customers across a wide range, quality branded product that drives comp sales and strong margins. Our opportunistic pipeline is building. Over the past few weeks, we've seen roughly a 200 basis point increase in the opportunistic sales mix and roughly 150 basis point increase in opportunistic shipment volume driving value with promotion as a bridge. Over the near term, as we build back our opportunistic product levels to what we believe is necessary to win, we're bridging that gap by investing in promotions on branded and fresh product to generate excitement. We anticipate roughly $20 million of incremental promotional investment this year or approximately 40 basis points of gross margin, the majority of which will be front-loaded in the first half of this year. We began these investments in early February and comp performance has improved by roughly 100 basis points month-over-month relative to January. That's an early data point, not a declaration of victory, but it tells us the customer is responding positively. Now expanding our store refresh program. Value is clearly our #1 commercial focus. In the mid and long term, we intend to sharpen our customer experience as well. Our store refresh program is designed to achieve this important goal. Operators and customer feedback in recently refreshed stores have been consistently positive and early data from these stores shows encouraging comp lifts versus our control group. As we've scaled our understanding of what's working commercially and operationally is helping us continue to strengthen execution as we expand our rollout. These results give us confidence and conviction to move forward with the 150 store target by the end of this year, making our stores easier to run with tools and support for operators. With much of the system stabilization now behind us, we're supporting our operators by removing barriers and are delivering more effective tools, removing friction in our operations, creating opportunities to drive results. Improvements in item-level inventory management have now been embedded into our proprietary order guide for produce and meat, and we're supporting our operators to better align fresh inventory with demand. We intend to continue to expand these types of capabilities across categories later this year. Reporting is also improving, and we've made progress in providing our operators with improved comparability and exception reporting to accelerate the identification of opportunities to improve specific underlying business performance. Supporting our operators also means we're making investments in field personnel and support to improve forward planning and communication. While these efforts have driven recent improvement in operator engagement, we are yet to see this translate into increased comp growth. However, we remain convinced that as we fine-tune our value perception with customers and our opportunistic mix, improved operator tools and support will serve as a tailwind. Store closures. In addition to the commercial components that are essential to the core business turnaround I just reviewed, we've also taken a hard look at our store portfolio. Following a rigorous analysis of the fleet, we identified 36 stores in the network that we concluded did not have a viable path to sustained profitability regardless of the operational support we could provide. We've made the difficult decision to close 36 locations, 24 of which are located in the East, representing roughly 30% of that region's fleet. We are not fully exiting any state, and we believe we have a meaningful opportunity to grow in the East over the long term. However, it's clear now that we expanded too quickly, and these closures are a direct correction. It's important to note that the remaining 51 stores in the East are profitable on a 4-wall basis and delivered a positive 3.3% comp in the fourth quarter, which gives us confidence in the core health of the go-forward portfolio. We expect these closures will result in an annualized adjusted EBITDA improvement of roughly $12 million and will enable us to operate profitably across each of our markets. Just as importantly, closing these stores will free operational capacity and focus that we will redirect toward our model refresh rollout of the 150 stores this year. These closures do not change our long-term view that ample white space remains ahead of us. And we continue to plan to open another 30 to 33 net new stores in 2026, but they do reflect a more disciplined approach. Going forward, we plan to expand with a more clustered model to improve supply chain efficiency and marketing leverage. We're also adjusting how we go to market. We're piloting new approaches to store openings to strengthen returns on capital. For example, as we launch our stores in Virginia in '26, these locations will start as company run with the intent of bringing them up to profitability before handing them over to independent operators. Once proven, we believe this approach could be applied in more markets as we continue to grow this business. The decisions we've already made earlier this year to underwrite stricter standards has also strengthened our outlook for our '26 cohort of new stores, which are now projected to deliver an IRR in the 25% range and the '27 cohort is now projected to deliver an IRR of up to 30%, up significantly from our projections just a year ago. A strategic review of UGO. Finally, we're scrutinizing every aspect of the business to remove distractions and improve shareholder value. To that end, we've made the decision to implement a strategic review of UGO. In an effort to focus on what's important to returning this business to sustainable growth, we are reevaluating the organizational impact that would be required from a full integration of that business relative to the anticipated benefit. I want to close by being straightforward about where we stand. We haven't delivered the results that our shareholders, our operators or our customers deserve, and I take responsibility for that. What I can tell you is that we have a clear understanding of the commercial challenge, and we're taking decisive action. We're prioritizing restoring value perception for our customers, we're rebuilding the opportunistic pipeline that defines this brand and we're reinvigorating the shopping experience in our stores. We're seeing early tangible signs of progress. And at the same time, we're eliminating distractions, including closing underperforming stores, and reallocating resources to deliver stronger operating results and return on capital. The road ahead will require patience, and we understand this is difficult given the recent results. We will be measured by what we deliver, not by what we promise and we intend to earn back your confidence through execution. We're confident that we have the right plans in place and the right team to execute them, and I look forward to sharing more about the progress we're making in the months ahead. Thank you, and I appreciate your time today. I'll now turn it over to Chris to walk through the financials in detail. Christopher Miller: Thanks, Jason. In 2025, we made important progress against our key strategic initiatives. However, as Jason shared, in the fourth quarter, we encountered headwinds which impacted our financial results. I will walk you through our Q4 financials before sharing details about our outlook for the year ahead. Please note that the comparisons I will provide are on a year-over-year basis, unless otherwise indicated. Starting with the top line. Fourth quarter net sales increased 10.7% to $1.22 billion and included an incremental $82.4 million from a 53rd week in 2025. Excluding the extra week, net revenue increased 3.2%, driven by the addition of net new stores, partially offset by an 80 basis point decline in comparable store sales. The decline in comp, which excludes sales from the extra week, was owed to a 170 basis point decline in average transaction size, offset partially by a 90 basis point increase in traffic. As Jason discussed, we believe several factors contributed to the comp decline, including our emphasis on driving better in-stocks for everyday items, which came at the expense of delivering the compelling value items our customers expect as well as macro factors, including the impact of the U.S. government shutdown on federally funded benefits as well as a more promotional environment. In the fourth quarter, we opened 7 new stores on both a net and gross basis. In 2025, we added 42 new stores and closed 5, ending the year with 570 stores across 16 states. Gross profit increased 11.5% to $361 million, representing a gross margin of 29.7%. Gross margin expanded 20 basis points year-to-year but came in below our outlook as a result of higher seasonal promotions and additional markdowns to clear excess inventory. While those markdowns impacted Q4 margins, they have helped us start the new year and a healthier inventory position. SG&A was $337.1 million and grew 13.6% in the quarter. As a percentage of net sales, SG&A represented 27.7%, representing a 70 basis point year-to-year increase. The increase was due to lapping a substantial decrease in performance achievement adjustments last year as well as growth in our store network, partially offset by lower severance costs. Jason mentioned our plans to close 36 underperforming stores, which I will touch on in a moment. Related to these closures, we incurred $109.8 million of noncash impairment charges for long-lived assets in Q4. Also in Q4, we performed our required annual impairment testing of goodwill, which resulted in the recognition of $149 million noncash goodwill impairment charge. Below the operating line, net interest expense was $7.7 million, up $0.7 million from last year as the average principal debt outstanding increased but was partially offset by a decrease in average borrowing rates. Our effective tax rate for the quarter was 10% compared with 47.4% last year. The year-to-year change was primarily due to the nondeductible goodwill impairment. Net loss was $218.2 million or negative $2.22 per fully diluted share compared to net income of $2.3 million or $0.02 per fully diluted share in the prior year. Adjusted net income increased 28.8% to $18.7 million or $0.19 per share. Adjusted EBITDA was $68 million for the quarter, up from $57.2 million last year, driven in large part by the benefit of the 53rd week. This also contributed to incremental 40 basis points to adjusted EBITDA margin, which was 5.6% for the quarter compared with 5.2% last year. Turning to the balance sheet and cash flow statement. We ended the year with $69.6 million in cash and approximately $175 million in available capacity on our revolver. Our net cash provided by operating activities during 2025, increased by $110 million to $222.1 million, driven primarily by tighter inventory management and other working capital improvements. CapEx for fiscal 2025 before tenant improvement allowances was $220.3 million, an increase of $13.4 million over fiscal 2024, driven primarily by higher number of net new stores opened in 2025. CapEx, net of tenant improvement allowance for fiscal 2025 was approximately $192 million, $18 million below our outlook of $210 million. Total debt, net of issuance costs was $492.9 million at the end of the fourth quarter, up $15.4 million from the beginning of the year with net leverage of 1.7x adjusted EBITDA. Before turning to guidance, I want to share a little more detail about store closures that Jason discussed. Prudent, disciplined capital management and improved return on investment capital are core priorities for us. We approached the store closure process with rigor. We began by evaluating all stores with negative 4-wall adjusted EBITDA, inclusive of TCAP burden. We developed a rating system based on real estate quality, competitive dynamics, operational execution and recent trends and applied those ratings across the portfolio. From there, we modeled store-level NPVs and compared those to estimated lease breakage costs. We also ensured that any closures align with our long-term strategic plans. After that thorough review, we decided to close 36 stores that were not meeting our performance standards. Once completed, we expect these closures will result in annualized adjusted EBITDA improvement of approximately $12 million. This should enable us to operate more profitably across our markets going forward while focusing our financial and operating resources where they can earn the strongest returns. We expect to complete these store closures during the second quarter and anticipate that we will incur cash charges of approximately $57 million, bad debt expense of approximately $12 million, partially offset by net noncash write-offs of lease liabilities of approximately $52 million over the course of this year as we exit the leases associated with these stores. As Jason noted, we've established stringent underwriting standards for 2026 and 2027 new store cohorts and the relative performance of our refreshed stores gives us confidence in the stores we plan to open moving forward. Now on to our outlook. We are starting the year by taking deliberate actions that are designed to strengthen operating performance and position the company to deliver improved financial results. However, as you might expect, some of these actions will impact our 2026 results. The store closures will moderate revenue growth and the promotional investments we're making will be reflected in near-term gross margins. Specifically, with respect to the store closures, we expect to see roughly 40 basis points or approximately $4 million of gross margin pressure in the first quarter this year from the inventory liquidation impact from the closures. It's also important to note that 2025's 53rd week contributed $82.4 million in sales and $9 million in adjusted EBITDA. These benefits will not carry over into 2026. For the full year, we expect comp store sales growth to be between negative 2% to flat. For the first quarter, we expect comparable store sales to be between negative 2.5% to negative 1.5%. Aside from the store optimization plan closures, we expect to add between 30 and 33 net new stores for this year, fairly evenly distributed across the quarters. We expect total net sales for our fiscal 2026 of between $4.6 billion to $4.72 billion. We expect the closure of the 36 stores will impact top line growth by approximately 2%. For the full year, we expect gross margins to be in the range of 29.7% to 30%, reflecting promotional investment to drive sales in the first half and the inventory liquidation impact from the closures. We expect first quarter gross margins in the range of 29.6% to 29.8% or 30% to 30.2%, excluding the previously mentioned inventory liquidation impact from our store closure plan. For the full fiscal year, we expect adjusted EBITDA to be in the range of $220 million to $235 million, and we expect first quarter adjusted EBITDA to be between $39 million to $43 million. For the year, we expect depreciation and amortization of about $136 million driven primarily by CapEx spending, net of tenant allowances of approximately $170 million. This includes investments in store openings and remodels, our distribution centers and systems as well as store maintenance projects. For the year, we expect net interest expense to be approximately $27 million. We expect to generate meaningful cash flow from operations in 2026, which will be used to grow and maintain the business and fund cash requirements related to the store closures between $51 million and $63 million. We expect share-based compensation of approximately $18 million, a normalized tax rate of 28% and average fully diluted shares outstanding for the year of approximately 99 million. Thus, we expect full year adjusted EPS to be in the range of $0.45 to $0.55 per fully diluted share and first quarter adjusted EPS of approximately $0.01 to $0. 04. In conclusion, while we're disappointed with our Q4 results, we're clear and confident on the steps to return the business to a position of strength, and we are taking decisive action to deliver on the promise and potential of our business. This work will take time, but by driving our key strategic priorities and focusing on execution, we believe we will strengthen our value proposition and store experience in support of sustainably stronger results for years to come. And with that, we'll open it up for questions. Operator: [Operator Instructions] Our first question is from Jeremy Hamblin with Craig Hallum. Jeremy Hamblin: I thought I would just start with getting an understanding of the same-store sales trends. And you noted that you've seen a 100 basis point improvement in February versus January. I wanted to see if you could put some context behind that. And how both traffic and basket have kind of shifted here as we've entered 2026? Christopher Miller: Jeremy, it's Chris. So yes, so in the third quarter last year, as you may recall, we started to see a little bit of a softening as we exited the quarter. And then when we went into the fourth quarter, of course, we had the government shutdown, which we talked about and the impact of that on SNAP and EBT, which impacted both October and November, and we were expecting to see December come back and be more normal comp. However, we didn't quite see that. We actually -- it continued to decelerate into December. It was highly promotional and really the environment, we feel got a little bit worse externally. And then that flowed into January where we kind of bottomed out. But all along the way, their customer count remained positive. It did decel as well, but it was positive all the way through into January. And then as we -- as Jason pointed out, in February when we started to invest in doing some promotions, we did see some recovery of about 100 basis points in February and expect that to improve in March as well as we continue to promote. Jeremy Hamblin: Got it. So fair to assume that you're kind of solidly negative here in the March quarter? Christopher Miller: Yes. I mean that's our guidance, right? It was minus 2.5% to minus 1.5 million. Jeremy Hamblin: Yes. Okay. And just coming back to understanding the core issue, where you've identified the value and kind of value proposition because it sounds like you're struggling with basket. Is it that you don't have the right goods that your customer set is looking for? Or is this really about competition and competition that has just been a lot more aggressive or closer in value to your price points? Jason Potter: It's Jason here. I'll answer the question. We can see clearly that value slipped because of the gap that was created in December, January time period on the weight -- the breadth and weight of our op mix, in particular and we know that restoring that will drive improved perception ultimately, comps. Customer -- our customers talk about op as great deals or promotions, and that's absolutely critical for us to drive value perception. In this time period, we've been looking at, obviously, we're monitoring this closely. Momentum is building. Our op mix is now up about 200 bps month-on-month over the last month from January and shipments up about 150 bps. And we can see that your question about basket, it directly relates to op. And so the drop in our units per transaction there are addressable based on our plan. And we've got the whole team focused on supporting on driving improvements on the buy side to drive that supply chain on opportunistic product. Operator: Our next question is from Kylie Cohu with Jefferies. Kylie Cohu: I'm on for Corey Tarlowe today. I was curious about SNAP benefit specifically, I wanted to ask about the February reductions that kind of just rolled out? And then any other color you could give around what you're seeing to consumer responses to the step changes? Jason Potter: Yes. Maybe I'll just take you back to November. I know there was a lot of conversation about that at that time. What we eventually did experience in November was a double-digit decrease and EBT sales, given the SNAP benefit being interrupted that created some noise for us. We did see a recovery in December, but not to the level we were perhaps expecting and it's something we continue to monitor. But in Q4, that's basically what happened. So November disruption and that roughly just under 10% of our sales with a double-digit increase during that period. Kylie Cohu: Got you. So nothing -- I guess I'm kind of curious, is there anything baked in for the recent. Is that reflected in the guidance? Jason Potter: Yes. February has recovered if that was something just to mention. And yes, it's in the guide. Operator: Our next question is from Oliver Chen with TD Cowen. Oliver Chen: On your opening comments, what would you say as earlier or faster in terms of fixing an opportunity versus longer term? And then you do have a lot of new leaders as you mentioned, across ops, merchandising and supply chain. How could you get us comfortable in terms of that new leadership and the right testing to make sure that things are optimized for go forward. And lastly, it's probably related, but the value perception the consumer is perceiving value versus what you're going to correct opportunistic. Like in other words, will it take a while for consumers to come back? Or how are you thinking about customers' perception versus what you're offering and timing around that? Jason Potter: Yes. Thanks, Oliver. Maybe I'll answer the second question first. So when we're looking at the business, we can see clearly that opportunistic is -- we have a gap right now internally and what we've delivered for supply and mix and value is directly related to the weight of that category of products, if you will, you can think of it like promotional weight. We think that restoring that pipeline is a 3- to 6-month piece. The promotions that we're implementing, the synthetic promotions we're creating are basically a bridge in the time period it's going to take for us to get that in the right place. And value is definitely driven -- perception is driven in our business by the depth and breadth of opportunistic product. And we're still comfortable there's plenty of supply. We don't think it's a gating factor to ambition, but we have some work to do there to deliver that. We've got a number of things that we've put in place to make sure that, that happens. Number one, we've unified the buying team under 1 leader, Matt Delly. He's got experience in that business. We feel good about the support we're providing for that team. We've added some resources there. We've got momentum, as I mentioned, on shipments and mix. We've made some changes in our supply chain with new leadership to create capacity to ensure that as op becomes available, we can flow that product through the system. We did burn off some less productive inventory in GM and HAB, that we think is going to be very helpful. And there's lots of opportunity for us to continue to expand on what we're doing there on the upfront. So that's the value perception piece. On the piece with new leadership, clearly, there's always a learning curve in any business. I mean, I'm still learning. I think I've learned a lot in this business in the first year. We're going to apply those learnings to improve the business at every stage we go. I'm highly confident in the team we've brought on. They're very confident. We've got a lot of great feedback from peers as well as operators on their level of engagement and understanding of the business and what they're going to deliver here over time. Operator: Our next question is from Simeon Gutman with Morgan Stanley. Pedro Gil Garcia Alejo: This is Pedro Gil on for Simeon. For the first question, I wanted to ask you about the $40 million in promotional investments that you've talked about for the year. Can I ask you, is there any specific categories or types of merchandise that they're touching. Do they stay in place? Do they become permanent? Or can you get some of it back over time? And are there any offsets? Can you lean on vendors or work with vendors, suppliers, look for efficiencies to try to mitigate some of the impact on the bottom line? Jason Potter: Thanks for the question. It's a quantum of about $20 million, just to clarify. And what we're doing is we're using fresh products, in some cases, direct-to-store branded quality product as a bridge. This is not a permanent part of our P&L. We think that the way we've approached this is by waiting the promotions based on the gap we have with opportunistic product is how we've sized what we think is necessary. And so not a permanent part. Part of what makes op such an important part of our business is it drives margins as well as value. And on the flip side, we are not a traditional promotional company, nor do we intend to be a traditional promotional company. And so when you promote those kinds of products, the margins are typically lower, but we are endeavoring to make sure that we are providing value for our customers in the short term as we work to close that gap. Pedro Gil Garcia Alejo: Great. As a follow-up, if I could ask you about the marketing mix is one of the elements you mentioned last quarter that sort of drove some of the weakness towards the end of the third quarter. Could you give us an update how that developed over the fourth quarter and how you're thinking about it into 2026? Jason Potter: No, that's a great question. We did calibrate our marketing post that September time period both in weight and channel. We've seen a nice result in the -- especially in Q1 so far year-to-date in the way we're executing our marketing spend. We reoriented more to outdoor and search and a little less on some of the smaller items as well as some broad-based marketing that we were doing that we didn't think was hitting the right target groups nor had the spend per value that we were looking for. So that, we think we've dialed in the right location at this point. Operator: Our next question is from John Heinbockel with Guggenheim Partners. John Heinbockel: Jason, I wanted to start with -- can you talk about the connection between the everyday product and opportunistic, right, and every -- the focus on everyday hurting opportunistic. Is that just capacity in the warehouse? And then does it take -- you referenced 3 to 6 months pipeline. I'm curious how long you think it takes to get opportunistic bought again. I would think that would be fairly quick, right, to buy that, get it in warehouse and into stores. Maybe talk about why it takes that long to get where you want to get to? Jason Potter: Yes. I think what I'm looking for, John, what I expect to see in the next 90 days is 2 or 3 things. By creating this bridge as well as what we're working on an opportunistic product, we expect to see a 200 basis point improvement in flow, a 200 basis point improvement in our mix on op. I also expect to see some value perception scores improving and then on the sales line, a traffic number that's north of 2 and stability in our basket on UPT. And when we're looking at the business at the tail end of Q4 and into the first part of Q1 that UPT piece is under pressure comes really all from op. On your question about every day, every day is for us, we're just trying to meet a minimum standard. So that is not the main event. The majority of our product is opportunistic in our stores and will remain that way. I think that what we're doing right now is calibrating those assortments to make sure that treasure hunt is the main event. That's what our customers care about, and that's our differentiator, and that's our future. John Heinbockel: And then as a follow-up, the 24 closures in the East, at least, maybe I'm wrong, do not include I mean how do you think about that review? Do you think there'll be UGO closings? And UGO op is company-owned, sort of your thought process on -- do they stay company-owned? Do you transition them? Where do you think that review ends up? Jason Potter: Yes. I mean our effort to execute a turnaround here and narrow our focus as we come to the conclusion we'd like to conduct a strategic review of that business. A couple of things to say. We have confidence in the business, the team there, the market, it continues to be profitable and stable. But given our priorities and the trend in the core business, we want to make sure we're evaluating our options. I don't know what the outcome of that will be at this point, John, but we're -- there's a range of possible outcomes there from full integration to a potential sale, but we're going to evaluate each one of those on its individual merits and we'll keep you up to date on that progress over time. Operator: Our next question is from Edward Kelly with Wells Fargo. Edward Kelly: So taking a step back, if we sort of think about the business before you got there and where things are moving currently, there's been the systems issues, which have been disruptive and then some of the things you mentioned about marketing and the SNAP stuff and then obviously, the environment seems to be more promotional. You're adjusting to this, but how does this impact the way that you're thinking about the long-term margin structure of the business? And then as you think about things like store growth, you're still opening stores next year, those leases probably signed. Are you still signing leases beyond that? Just how do we think about what all this means for the business bigger picture and longer term? Jason Potter: Yes. I mean, bigger picture on the margin structure, confident that we're going to be able to expand margins over time. What we're doing right now, as I mentioned, is a temporary bridge. Op is a driver. Accretive margins, attractive on the value front for customers. I think when you talk about systems, we're only going to get better at running the business as we extract ourselves from that period. There's a whole host of things that we're going to be able to do there, including something I mentioned in my opening remarks, which is giving support to our operators to get even better at what they do best. And then on the store closure front, just a couple of things I just want to take a minute to talk about because I think it's really important given where the company has come from. First of all, we're not going through another restructure. This is it. If you kind of play back the last year on that front, Q1, the company made the decision to slow unit growth. The past practice, I guess, of really promoting a high unit growth -- high single-digit unit growth created some challenges and some dysfunction. Clearly, there's white space for us there, but we need to make sure we have the winning conditions in place for sustainable growth. I think that's really important. And as we kind of entered the new year in January, we wanted to make sure that we spent time reviewing every part of the business and the store network was part of that. So we did come to the conclusion to close 36 locations that didn't have a viable path of profitability. And we want to make sure that resources are focused on the key priorities of the business. So those are some of the things that we had thought through. Our process over the last year on the network and growing is very much focused on sustainable growth and returns on invested capital. And key ingredients to that include site selection quality, making sure sales productivity potential is there. Those things, I think, there's a lot of real estate in the 36 that's very challenged. We're underwriting stores now, locations that have more potential. We spent time on lowering our CapEx costs. The conversations we've had over the last couple of quarters include clustering, waiting to core markets, leveraging marketing, brand strength, supply chain and obviously, the operators are key. And so we look at our outlook for the underwriting we have this year on the 30 to 33, we made decisions last year as well on that portfolio and feeling much better about the 25% IRR and the following year with that cohort of stores in the 30% range. So clearly, we -- growth is important, but we want to make sure that we're improving the strength of the company as we do that. Edward Kelly: Okay. And then just a follow-up. You mentioned the highly promotional external environment that began in December. Could you maybe provide a little bit more color there in terms of where that promotional activity has been coming from and how broad that is? Jason Potter: Yes. We cover a lot of different states in the country, and we saw pick your promotion far deeper promotions starting actually around the Thanksgiving time period that ran right through December, early January with some pretty aggressive high low out in the marketplace. And we just see continued aggression across a host of commodities crossover competition that we have. So we would just describe it as more promotional. And our customers in store and so on, we're seeing challenges with affordability there. And I think that our gap there on up through December and the New Year has obviously affected the business, and we need to double down and make sure that we're able to deliver there in a significant way. Operator: Our next question is from Joe Feldman with Telsey Advisory Group. Joseph Feldman: I guess my first one, I also wanted to ask on stores. Can you -- I guess why would you open 30 new stores or so this year before you get the format right for the existing stores. It feels like we're not fully there yet on the format, and maybe I'm wrong, but that's my interpretation of what I'm hearing. And yet we're going to keep opening stores without knowing what's the right and best format. So maybe you could address that first. Jason Potter: Sure, Joe. I think that the stores that we have in the portfolio for this year, first of all, are highly weighted to core markets. So I think West Coast -- and that's a big part of what we've calibrated to. The -- we've cut some of the locations out that we didn't feel were high potential, and we're confident that, that approach is a much more attractive way to open stores. The following year, we have a smaller cohort of stores that we've obviously signed leases for. There's -- but after scrutinizing and going through the network work that we did, it was quite rigorous, we still feel comfortable that, that is the right thing to do for the business. Joseph Feldman: Okay. Got it. And then if I heard you guys correctly, I think in your prepared remarks, Jason, you mentioned you're going to open stores -- new company-owned stores, I guess, and then you'll come back later within IO. That seems like a pretty big change in strategy. And maybe you could help us understand that. Jason Potter: Sure. Yes. Maybe I'll talk about the company has done in the past, which has been successful. So in places like California where we've opened a lot of stores over a long period of time. Operators -- strong operators would typically open new locations. And there is a competency, a skill set, and understanding of the business. It's very extremely important in a new store. New stores are generally difficult to run, volumes tend to be lower as you're ramping up. And so when we look to places like the east, where we have much fewer stores, the network is relatively new. The experience of the team is obviously at a different place than it is in a place like California. We think that number, obviously, site selection, strength of the site is key, but that first year sales productivity number is critical. We do want all of our operators to have an opportunity to make money. And attracting highly skilled people to the business is a very important part of what we're doing. And so we're taking some of the risk by driving that year 1 sales productivity with the idea that we'll hand that off in a more stable way to our operators post year 1. And we think that, that approach might be an interesting thing for us to understand in a place like the east part of the country. Joseph Feldman: And just one quick on that one, sorry. But does that mean you're going to have, like, say, a really successful IO in the West Coast go and run an East Coast store for you? Jason Potter: Yes, we have had that happen. So that's not -- it's happened before, but it's not -- clearly, as you think about moving across country there's only a handful of individuals that are sort of up for that kind of challenge. So you typically are recruiting from a geography, right? And that's also helpful. So as we build that team and as we build that market, that will get easier. But we do think that it's essential to get stores up to speed, so to speak, on a sales productivity standpoint. And we'd like to see if this is one of the ways we can improve our performance long term. Operator: Our next question is from Mark Carden with UBS. Mark Carden: So I want to start with the IOs. Going forward, what steps can you take to help re-ensure your IOs is the long-term opportunity of the company, just especially when considering the exits you guys are making. You guys talked about support. Are you planning to offer additional incentives in the near term? Or has IO demand and retention been pretty consistent with what you guys have seen in the past? Jason Potter: Yes, that's a great question. So a couple of points here. The restructuring with the 36 locations closing is a result of these operations not having a viable path to profit, as we talked about. We do want to make sure -- ensure that our operators are healthy and they have a legitimate opportunity to profit from the skill and effort they bring to our business and their community. We're very focused on providing improving levels of support for our operators in terms of tools, reporting and reducing friction in the business to help them build sales, improve their profit, make the business easier to run and obviously, together strengthen the brand. And so where we are right now, comps are critical, as they accelerate the P&L follows and our operators are -- we've obviously spent quite a bit of time over the last number of weeks before this call sharing this plan with them, decided about it, they're supportive. And people are -- we're all rolling in the boat here together. So one of the things that we brought to operators to help with some of this, call it, profit potential in the business is there's some real opportunity for them to improve bottom line, their bottom lines with some of the things we've recently rolled out, including the inventory management system that's now embedded for fresh meat and produce in our order guide. We've also introduced peer group comparability and exception reporting on things like shrink. All of these things provide immediate and obvious opportunity for them to address improving their profits and health right now. So that's the way we thought about it is -- but we haven't considered anything else at this point, but the whole company, including our operators are focused on driving comps. Mark Carden: That's helpful. And then as a follow-up, you talked about the 36 closures being more heavily weighted towards the East, but that you remain committed to the region and aren't fully exiting any state. How do you think about the pace of growth in that region going forward? Just as growth gets deemphasized over the next few years, given store densities will presumably be lower out East? Just how are you thinking about that? Jason Potter: Yes. No, it's a great point. The -- a couple of things to say there. We believe that growth will be extendable in those kinds of areas where returns are disappointed in the East in particular. We're, as I mentioned, putting winning conditions in place for that business, including the way we launch. We just talked about in Virginia, how we underwrite in select locations is important. We've modulated already the kind of mix of stores in core markets versus new, and we've done that over the last couple of quarters, which reflects some of the returns that we've indicated. In the East, in particular, the 51 stores that we have remain are all four-wall profitable, and they were comping over 3% in the last quarter. We think that the DC we just opened in the East, which was opened flawlessly by the team will greatly support the improved product availability that we need for those stores. And the work will continue there, but we're probably going to go in a more measured pace in a place like the East than for sure what's happened over the last 5 years. Operator: Our next question is from Robby Ohmes with Bank of America. Robert Ohmes: I wanted to follow up on the IO questions. Just are the IOs -- are they still having any lingering execution issues related to systems? And is that part of the headwind here? And another question is just on the promotions you're doing, are the IOs sharing in the promotional funding? And is that going to be sort of a headwind for them and was any of the value slipping that's been going on related to IO decisions on what they're highlighting in their stores or what they're buying from an off-price basket? Any thoughts on that would be really helpful. Jason Potter: Sure, Robby, thanks. Good to talk to you. So on the systems piece, our orientation this year is there's 4 buckets that we want to support our operators with. First is when we interact with them in any way, shape or form, we want to add value by helping them improve their sales. We want to help them improve their profits. We want to make the business easier to run. And obviously, all of this work together is to improve the brand strength, which creates loyalty for customers. On your question on systems, we had a, I'd say, a very long laundry list of things that we're getting in their way, making -- creating friction in the stores. We still have some work to do that we're going to clean up kind of right around the end of Q1. We've made progress there. It's not perfect, but we clearly -- when we talk to the operators, we've restored tools. We've made changes, and we continue to make progress there. I'd like -- and I've told the operators this we want to make the stores as easy to run as humanly possible. We want them focused on their customer and improving their business and working with their teams. And they had -- as you kind of noted, a fair amount of distraction over the last couple of years related to that. On the promotion front, there is some sharing that goes on. Obviously, the model here is to share profitability, but we've also made some decisions about what that looks like in the short term. We obviously are always keeping a very close eye on the margins and making sure that we're doing everything possible to ensure that the operators are profitable and healthy. Those are 2 of the questions. Maybe Robby, if you had the third point that... Robert Ohmes: Yes, maybe a way to phrase it me. So for example, the percent of opportunistic product declining, I guess, a bit in the stores. Was that something that happened because IO has lost flexibility? Or was it sort of aggregate decisions by IOs to reduce opportunistic product? Or was that something centrally done? Jason Potter: No. The operators are very, very focused on opportunistic product. They are absolutely motivated to grow sales and drive margins, and that's one of the first things they review, look at, try to understand. I think that if you kind of go back in time, one of the things that happened here was with the implementation of the new systems in '23, we did see a substantial reduction in the mix on op just generally. And some of that we thought was related to tools and visibility. Some of it is related to work of expanding things like made-to-order products or, in some cases, some of own brands implementation. But operators are game to drive that. And what we're doing now is just making sure we've done everything possible to increase the supply and the quality of those choices for our operators to make sure that they can fully take advantage of that. And the customer wins and so do we, on the margin side and sales. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. And again, we thank you for your participation.

34天前Insight Analytics约5分钟阅读

EKTAY 2026 Q3 财报电话会议

Peter Nyquist: Hi, and good morning, everyone. My name is Peter Nyquist, I'm heading up Investor Relations here at Elekta. With me here in Stockholm, I have our CEO, Jakob Just-Bomholt. I have our CFO, Tobias Hagglov, who's doing his last quarter as well as our incoming CFO, Klara Eiritz, who will not present today, but she will be available here in the studio. Tobias and Jakob will present the result, as always, for the fiscal third quarter -- fiscal year 2025-2026, third quarter. We will start the presentation with Jakob giving away the takeaways from the third quarter as well as an update where we are in the strategic execution and the change of operating model and the cost savings related to that as well. Tobias then will talk about the financials and the Elekta's outlook. After presentation, as always, we will have time for questions and answers. But before we start, I would like to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenue, operating result, cash flow as well as product and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. With that said, I would like to give the word to you, Jakob. Please, Jakob. Jakob Just-Bomholt: Thank you, Peter. Thanks, and welcome to all of you. So before I get into the quarter, let me just share some overall reflections. It's a solid quarter, but Elekta, we still are not trading at what I believe is the long-term potential of the company. So that calls for a clear strategy. It calls for decisiveness. It calls for execution, bias to action, bold decisions. And I would say we are on that journey. I would say, specifically related to the change in our operating model, I really appreciate the support from leaders within Elekta, Elekta colleagues. We're changing a lot. We are changing the structure. We are changing layers. We are letting go of people who are highly valued and deeply competent. But we had to change coming back to my point that we are not trading at full potential. But the support in getting there has been spectacular. And as I'll outline, essentially by the end of this week, we are running consultations in U.K. We will be concluded with the change we outlined end of November. That's very good. And then big thanks to you, Tobias. You have ensured that we have had a very orderly transition in leadership within the finance function. To you, Klara, and welcome to you at this call, and we look forward to you presenting the numbers at our Q4 and annual accounts. But let me then turn into what this call is really about our Q3. As I said, it's a solid quarter. We have to recognize significant impact from FX, and we will also see impact coming into Q4. And then clearly, also in line with the guidance we gave at Q2, a significant impact in reported EBIT from a restructuring charge of a bit more than SEK 400 million. We stand by the guidance that it will be less than SEK 500 million. On orders, I would say good, a book-to-bill of 1.17, it was 1.15 last year. Keep in mind that typically, Q3 is a good order intake quarter because we roll on a lot of the service contracts, particularly in Europe, that given quarter. And then we saw -- and I'll come back to China, we did see order growth. We did see revenue growth. So that's pleasing, but it was also expected. On U.S., I'll come back to. But there year-to-date, we have seen good orders coming in. It was also much needed, and then we continued the momentum on Europe. So all in all, when I look at the book-to-bill rolling 12 months of 1.09, I think it's healthy. We would like to see it higher, but it's healthy. In terms of organic growth, we are at 2%, continue to see good momentum in Europe. And as I said, China returning to growth. And we stand by the view that we expect both on orders and revenue double-digit growth, probably around 10% in China for second half of the year. And then what our Chinese General Manager, Anming outlined in the strategy update, we do see the market bouncing back almost to pre-anticorruption levels in terms of units. Gross margin at 38.3% supported by product launches. And also pricing, we actually do see a bit of tailwind on that mix and pricing, but a headwind on the cost, and that's a big focus area. I'll come back to that later on. But of course, it's going to be a significant focus area for us going forward. EBIT margin at 11.9%, a bit higher than last year. But just keep in mind, on a comparable basis, we get headwind from less capitalization, more amortization, relatively speaking. So adjusting for it, the EBIT cash margin that we look a lot at, at Elekta is significantly higher, and you will outline that, Tobias, on rolling 12-month basis is really good news. I can say my sincere hope is that coming into next year, the EBIT cash and the reported EBIT will be roughly the same number, meaning that our amortization and capitalization will be a match. Let's see if we get there. In terms of cash flow, less good than last quarter -- same quarter last year, but we should keep in mind that overall, year-to-date, we see good cash flow improvement, and we have paid out roughly SEK 100 million in the quarter linked to restructuring charge. So if we move on to the next page on commercial development, Americas, a decrease of 6%, fundamentally, of course, not attractive. That's why we have a must-win battle to address it. We did outline last time that we were positive on getting Evo approval. I think it's important as part of our commitment that we have a good say-do ratio, and we were, of course, pleased to see that on 16th of January, we could announce Evo approval. Year-to-date, as I said, we have double-digit order growth, substantial double-digit order growth in the U.S. alone. That's also needed because our decrease in revenue reflects a depleted order backlog. So we have a lot of work ahead of us. But of course, every quarter that goes well and is growing is a good quarter. And year-to-date, we have been doing well. We have sold 2 customers on the promise of Evo upgrade. That's now happening. And we are building our funnel going forward. But you shouldn't expect that it's just going to be a huge splash going forward because a lot of the orders have been already taking year-to-date. But of course, the customer interest is good going forward, and we will look at commercializing Elekta Evo the way we have done in Europe. We continue to see growth in South America linked to very strong order intake prior years. On APAC, as I said, and as expected, China is returning to growth. We do see a little bit slowdown in other large countries, notably Japan, also Indonesia, where there's a big tender. So the market is really awaiting what will happen there. And then on EMEA, we see a good increase, continued strong momentum in Europe. And of course, we need to sustain that going forward. And then I'll just flag here, Middle East could potentially impact timing of installation. It's way too early to indicate how many we have a sense for what are the installations at risk, and it's not going to be material, and it will just be a time delay if that happens from Q4 to Q1. So all in all, I would say a solid quarter commercially. But of course, we would like to see that number go up. And that's what our strategy is all about, yes. So if we take the next slide and look at our must-win battles, this is what we outlined end of January. We feel very good about them. They have been working through. Some we are far on, some we are less far on. And I'll give you more details on simplifying power speed. But we did this. I'll just remind you, not to save cost. Of course, we take that in, but we did it to increase velocity of our decision-making within operations, within commercial and most notably also within our innovation department. We are delayering. We are empowering. We are driving culture. It's part of performance management. I think it's going to deliver a lot of good results. And I actually start to feel that the puzzle is getting assembled. We are moving on from having it as an initiative that we needed to execute on to kind of things are settling down. And as I started out by saying, thanks to great work by the leaders and colleagues at Elekta. It's a lot of change. We have asked people to come back to the office because we feel being an innovation-driven company, we can really benefit from problem solving together rather than at a distance. Two focused innovation. There are a lot I could say, but there's also a lot that could be used against us commercially. But I would highlight that we continue to invest in innovation. We believe there is significant need for our solutions going forward. Our current product portfolio will become even better going forward linked to what we have in our pipeline, but we will do it more focused. We will have a stronger commercial lens on it, and we will unfold more of that thought process when we meet at the Capital Market Day in June. Then our third initiative, expand in China, win in the U.S. China is important for Elekta. We are market leaders. We did unfold what does that mean, but it really goes into localizing Elekta in China. We are both from a product point of view, we have a very, very strong organization. We are localizing our supply chain, and then we also continue -- we have both local products, and we are saying should we have even a broader made in China for China product portfolio. So we actually feel good about our China position, not least also because what we said is that the market is going to recover. And then with Elekta Evo, it's now about competing in the U.S. This is Elekta's biggest opportunity because this is the market where our relative share is the lowest compared to other places. And I believe we have every right to compete in the market. That's what I hear from our customers, there is systemic demand for having strong competition, and we are ready. And then lastly, the fourth on continuous COGS reduction. I would really say in today's quite volatile world, it has 2 dimensions. And one is to continually address our bill of material, our ability to install and service our installed base. So that's on cost. A lot of focus will be on continuous engineering to update our tech stack and work with our vendors to continuously increase quality, lower cost. But we also focus a lot on pricing to ensure that we can mitigate certain cost increases in today's volatile world. So we are establishing a pricing desk here in Stockholm. I feel good about that, and we certainly have potential to become more dynamic in how we approach that top line part of our business. So that's where we are. If we then go into our operating model, I have to say, actually, I think we have done well. And by the end of this week, we will almost have executed all the changes that we outlined to you end of November. So that's in 3 months. And we are now at 83%, but the remaining 17% is due to a consultation in U.K., which is happening this week. Of course, it's been tough for us within Elekta, but it will serve the company very, very well to clarify roles, responsibilities who are accountable for what, reduce layers, decentralize, push decision-makings to those who has the best knowledge and then move with a bias to action. So we stand by what we state that we will have a run rate savings without jeopardizing commercial or innovation of more than SEK 500 million, full impact Q1 next year, i.e., from 1st of May. The mix is 30% COGS, 70% OpEx. We're still simulating, but that's our best evaluation. Restructuring charge to be taken this year between SEK 450 million and SEK 500 million. We have taken SEK 417 million here in Q3. And then as I said, we are moving well. And then in parallel, we are now linked to budget and also, Klara, with your support, we are now assessing all the discretionary spend because I do think there is a potential for Elekta to just be very, very, very prudent in terms of where we allocate resource and cost and that should also support us into next year. So that's where we are. And then with that, over to you, Tobias. Tobias Hagglov: Thank you, Jakob, and good morning, everyone. So let's look into the third quarter then a little bit more in detail. And I think you, Jakob alluded to several of the points here on the slide. Net sales in the quarter increased by 2%, and we had a growth here in Solutions by 1% and Service by 3%. We can see a continued strong momentum in Europe, supported by our product launches, Elekta Evo, Elekta ONE. And also when looking into our Chinese operations, as you know, this has been impacted by the anticorruption campaign here over the last years. It's actually returning here to growth in the quarter after 2 years, which is a very positive signal. Then moving down in the P&L, looking into the gross margin, we have an improvement here of 120 basis points. In the quarter, we have a negative impact from tariffs of 100 basis points and then furthermore from FX of 130 basis points. But including this, we are improving our gross margin. It is supported by the product launches. It's also, as you heard Jakob mentioned, supported by general price improvements that we see across our products. If we then look at the operating margin, we have an improvement here of 20 basis points, amounting to 11.9 percentage points in the quarter. This is driven by the improved gross margin. We also can see that we have lower R&D investments and also lower admin costs here year-over-year in the quarter. And what also Jakob mentioned here is that we do have lower capitalization of R&D and higher amortizations. And if you actually would look at the cash EBIT margin, adjusted cash EBIT margin is actually up 170 basis points in the quarter year-over-year. And then also here, we do have restructuring charges here of SEK 417 million reported as items affecting comparability, which is also then reflected in the earnings per share. What we have seen in the quarter is a quite a rapid move of the currencies. And here, we have outlined the effect here both from operations and then also sorted out the currency impact. So what we see in our P&L is that our net sales are impacted by more than SEK 500 million negative in the quarter from the FX moves. And in terms of growth, this corresponds to minus 12%. This is predominantly driven by a stronger Swedish krona versus our main revenue currencies, the U.S. dollar and the euro. When you then look further down in the P&L, we have a negative impact on our gross margin of 130 basis points, which I just mentioned, and furthermore here on the operating margin of 180 basis points. And in addition to the translational currency impact, which I just mentioned, this is also driven then by the dollar depreciation versus our main cost currencies in euro and pound. If we then look at the cash flow, and Jakob also mentioned this, we do have a lower cash flow year-over-year in the third quarter. Still though that year-to-date, our cash flow is more than SEK 400 million better than last year. We have also had a more smooth development of our working capital in the inventory development, especially. In this slide here, we have sorted out the effect of restructuring provisions and then here stated more solely the working capital development in the quarter, which was stable. Then investments are lower than last year, both here in the quarter as well as year-to-date. And taxes, interest, net and other are on the same level as Q3 last year. The cash flow generation this year has led to that we have a net debt decrease of more than SEK 200 million compared to Q3 last year. Then looking at the trends here, I was talking about the currency impact and in nominal terms, we have seen a bit of a slight decline of the revenues, although currency adjusted growth here in the quarters. But when you look at it, and I was talking about the improved gross margin, there is a steady trend here, strongly supported by the product launches and price improvements and also which, of course, then with the must-win battles that Jakob was on will be further supported by the gross -- to the gross margin development. So a steady improvement here over the quarters on the gross margin. We have also an improvement here on a 12-month rolling basis on the operating margin improvement. And if you then would look again at the cash operating margin, it's a strong improvement here, which has been ongoing here quarter-by-quarter sequentially. Then looking at the cash flow. We have a lower cash flow in Q3. But if you look at the -- as well as the year-to-date, you look at the 12-month rolling, it's a significant stronger cash flow over the last 12 months than what we had here a year ago. And if we then look at the outlook, we reiterate our '25, '26 outlook. We expect net sales in constant currency to grow year-over-year. And we also expect a negative impact here on earnings and from tariffs in Q4 as well. And the midterm targets, no change there, and they are confirmed. So by that, I would like to, before the Q&A session, say a big thank you to all here over the years here. Working with you has been a pleasure. And I then hand over the word to you, Jakob. Jakob Just-Bomholt: So the closing remarks should reflect what you just heard. So solid quarter, solid performance. We have launched Evo now in the U.S. also. We are building up the funnel, good order growth year-to-date. Obviously, we have strong currency headwind and also increased tariff headwind despite gross margin is at 38.3%. And as you outlined, Tobias, with an improving trend, and we need to sustain that. And then we focus a lot on what we can control as part of our must-win battles, super important, and we are well on the way of resetting how we operate and how we think and how we execute within Elekta. And by the way, it will also lead to cost reduction of more than SEK 500 million. And then we focus obviously on cash flow generation also. That's also why we can report here year-to-date an increase of almost SEK 0.5 billion. Peter Nyquist: Great. Thanks. And before we start with the Q&A, I just want to remind you that we have the Capital Markets Day here in Stockholm set for June 17. So it will be here in Stockholm. More information will be distributed later on. And with that, I think we have -- yes, and this is the calendar for the following report. So the next one comes in May 28, our Q4 earnings report. So with that, I would like to open up for questions, operator. Peter Nyquist: And I think the first question comes from UBS and Kavya Deshpande, please. Kavya Deshpande: Can you hear me? Peter Nyquist: Yes, we can hear you, perfect. Kavya Deshpande: Two, please, both on China. The first was, would you be able to share how much China order growth actually was in the quarter and remind us how this compared to Q2 and Q1, please? Just because you've been quite specific about the target to grow orders around 10% in H2. So it would be a bit helpful to get some more specificity on the year-to-date trend. And then just more generally, would you be able to remind us, please, why you think the radiotherapy category in China differs to other capital equipment markets where we've obviously seen this acceleration in share shift towards Chinese players over the past year and a bit. Specifically to United Imaging, you look like they're getting good traction with their new O-ring linac and adaptive radiotherapy product as well, please? Jakob Just-Bomholt: Yes. Thanks, Kavya. Good questions, of course. So we'll stick to second half, we say double-digit growth on orders, but we have positive both on revenue and orders here in Q3. So that's good. And it is linked to market recovery. Of course, we have also asked ourselves why are we an outlier on China versus other MedTech companies. But I think the short answer is the market is heavily underpenetrated. You have 1.8 linac accelerator per capita, and there is a growing cancer burden in the country. So there has now been pent-up demand, and we used to have 300 linacs, it dropped to 170 and now it could very well be 260, 270 linacs going forward. So we are not entirely back. Then in terms of competitive situation, we also outlined, there are a lot of local ring-based competitors, but there's really one who has traction, that's United Imaging. Despite, I would say, and also because of we have localized our products and our market presence, we remain the market leader. We have lost a bit of share, but we remain in the high 30s in terms of market share, and that's also our aspiration going forward. Peter Nyquist: And we'll move to the next question, Kepler Cheuvreux, and that's Oliver Reinberg. Oliver Reinberg: Quick questions from my side, if I may. Firstly, can you just provide us a bit of color on the order intake composition? I would assume that a large part is driven by Evo. Can you just confirm that ideally quantified? And if that's the case, what kind of product categories you have seen any kind of declines? That's question number one. Secondly, just looking forward into Q4, we had a very strong comparison in terms of gross margin. I just wondered if you can share any kind of thoughts on that, what to expect going forward now? And lastly, just on strategy, Jakob, I just wondered, can you just discuss how you think about the critical size of Elekta overall and obviously, you have to pay for your marketing installation service infrastructure. How easy is that? And related to that, how do you think about the role of partnerships in the past, there was always a discussion of the importance of independence. It would be helpful to get your thoughts on that. Jakob Just-Bomholt: All right. I'll take the very easy one first. Gross margin Q4, we don't give that guidance, I'm sorry. We will stay with our guidance. We believe in organic growth positive for this year. So I hope you understand that. In terms of order intake, what I will share is that, of course, we just got the approval in U.S. mid-January and our quarter ended January. But we have seen a very substantial order growth in the U.S. It's still too low, but very substantial relative to prior years linked to the expectation of Evo getting approved. And as we got more certain, then we saw that pick up. We are now converting that order backlog from Versa HD into Evo. So that's working. We are, by the way, also upgrading to Iris. And then we can just see the funnel opportunity. I would dare to say, quite rapidly expanding in terms of prospective customers having interest. And of course, we hope to see the same commercial traction in U.S. And why shouldn't we, as we have seen in Europe, and there are roughly 2/3 of what we sell of new solutions are Evo related. So that gives you a good indication. And it's also a nice system, I have to say it's versatile, it's adaptive, it's competitive. So we'll continue to build from that. Then the last one in terms of Elekta's critical side, I would almost say I would love to answer it. It will probably also take 10 minutes, and it's certainly a worthwhile topic for our Capital Market Day. But if you will get my helicopter perspective, then relative to our main competitor, of course, we are smaller. But I would just dare to say that we are the focused radiation therapy market, and that comes with a lot of benefits. Then we have assessed our product portfolio. The product portfolio logic is absolutely sound from Brachy to Neuro to linear accelerator, CT, MR to supporting software suite. So the logic stands, and we believe we can build that ecosystem that is relevant. And then there will be a choice. You can have Elekta. We are a little bit more open, not fully open, but a little bit more open than others or you can go for a more closed system. And that's good. We want to give customers choice, and then we want to compete for our fair market share. Peter Nyquist: We'll move to Handelsbanken and Ludwig Germunder. Ludwig Germunder: I have a few. I want to start with the cost savings program, please. And you've been talking about it, of course. But would you say that the underlying impact from savings during this quarter has been in line with your own expectations? Or would you say that the -- for the quarter has been above your own expectations in terms of how fast you've been able to get the impact from it? That's my first one. Jakob Just-Bomholt: As expected, very little impact this quarter. It will have a significant impact in Q4. But the model we did was really focused on Q1 and there we are, I would say, on par with maybe a little bit above our expectations. Ludwig Germunder: Okay. And just to make sure regarding this restructuring charge of SEK 417 million in the P&L, is it fair to assume that most of this was a cash expense in the quarter as well? Tobias Hagglov: No. Most of it is actually a provision, but you also have a certain degree of payments in the quarter cash cost. Jakob Just-Bomholt: Yes. So what we guide is roughly SEK 100 million was paid out in the quarter. That means remaining SEK 300 million remains to be paid out and that's in line with the expectation. And then we will have some further provisions to be made. So the guidance we have given is SEK 450 million to SEK 500 million, of which we have paid out, if you will, SEK 100 million. Ludwig Germunder: Great. Very helpful. And then just one final on the Middle East situation you mentioned. I know you said it's too early to quantify, but would you be willing to give us any context here, like how much of sales or orders are related to the region where you see a risk of any delayed installations? Just to get some sense on how to think about it. Jakob Just-Bomholt: Sure, sure. So -- but take it with a grain of salt because, as you all know, the situation is fluid. But in terms of potentially impacted installations and thereby sale would be 2% of Q4 sales. So I would say it's a very manageable amount, and then we follow in real time those installations. That number may change given where we are and what we see, but I would still dare to say it's manageable. Then our perspective may look different in a week's time. Peter Nyquist: So we'll move to Mattias Vadsten at SEB. Mattias Vadsten: Can you hear me? Peter Nyquist: Yes, we can hear you perfect. Mattias Vadsten: First question, maybe another one that takes 10 minutes to answer, but you talked about commercially driven innovation in the presentation. So if you could give just some examples on what this statement really means, focus on software vis-a-vis hardware, new platforms versus refining current platforms, et cetera, et cetera? That's the first one. Jakob Just-Bomholt: Yes. It's also a fundamental question, and we outlined a little bit in the strategy outlook. We'll outline more, of course, and find the boundary between what we want to say and what we can say and so forth. But yes, commercially driven means a little bit less big platform, more modular-driven innovation. It's deliberately vague. Sorry about that, Mattias. But I would say we reduce the risk profile in our innovation. We increase the traction. And I would say when I -- and we spent a lot of time over the last 4 months in assessing our innovation pipeline. I'm also hands-on involved in it. I have to say. We put a customer lens on and a commercial lens on. And you should expect that over the next 24 months, we will significantly enhance the portfolio of our CM linac portfolio, and that goes both for hardware and software. So I feel very good. That's also why we are willing to fund continued investment. As I said, we are not asking our investors to underwrite, an increase in gross R&D, it will come down a little bit, but we should be able to see more output. And then let's not forget, it's not only resources put in, it's also how efficient you are. So we are also structurally addressing the efficiency within our R&D engine, if you will. Mattias Vadsten: And then you talked a little bit about Evo and the comparison to Europe and so on. But from what you've heard and seen now in terms of customer behavior, customer feedback, what conclusions can be drawn if you compare sort of what you've seen in Europe since sort of late 2024? And also, if you could give an update on sort of upgrade versus new linac? Jakob Just-Bomholt: Yes. If I take the latter first, then given that we have sold quite a few units this year with the promise of upgrading technical obsolescence against the fee, then you can say we have essentially already sold Evos in the U.S. and we'll continue to sell Evo. Then we are now upgrading. We will build reference sites. We will prove -- provide clinical evidence. And it matters a lot that we shouldn't ask U.S.-based customers. I met some of them here 3 weeks ago in Holland, but then they had to fly to Europe. That's not very efficient. So we are now building our reference sites with Evo so we can demonstrate the value. And then we look at our funnel and so far, so good. But I'm not going to commit to a number. I think it's too early days, but why -- I would just say why wouldn't we see the same demand in U.S. as we have seen in Europe. And there, we have just seen a good traction. But I would rather demonstrate it through actions and promise here for the future. But so far, so good, I would say. Mattias Vadsten: Perfect. And then I will squeeze in one final quick one. So you said book-to-bill was 1.3 first half in the Q2 report for China. Could you give that year-to-date figure now, book-to-bill for China? Jakob Just-Bomholt: Yes, it's above 1.1 for China. And so we will end up with a book-to-bill. I'll just do the math here, but it will be above 1.1. And that's an important milestone because we have seen a depletion in our China backlog. So we actually had a good revenue year after the anticorruption, but we were depleting the backlog and now we are building the backlog again. And that's why we essentially feel pretty okay about our China position, recognizing everything that is said in terms of competing. And we're also using it, I would say, we very often, as Europeans, we are a bit defensive. I look at it differently, how can we tap into China speed? How can we build competitiveness in China? And if we can compete in China, when we can, we can also take that know-how elsewhere in the world. Peter Nyquist: We'll move to Veronika Dubajova from Citi. Veronika Dubajova: I'm going to keep it to 2, please. My first one is just to understand the sort of process of converting some of the older orders in U.S. to Evo. Can you sort of maybe talk through from a customer perspective, how that works? And also just from an accounting perspective, when you do trigger that conversion, does that show up in the gross order number? Or is it just because it's a conversion of an older order, there is no incremental impact on that? If you could just touch upon how that works. That's the first one. And then obviously, you guys are pushing ahead with the restructuring with the strategic changes. And so it would be great to sort of just get a little bit of a pulse on the organization and what's the feedback? Where does morale sit? Anything that sort of is worrying you in terms of how the organization is dealing with the changes that you put into place? Jakob Just-Bomholt: Yes, I can do that. So if we talk about upgrades to Evo, that will now happen and there will be incremental charges. I don't want to share the specifics, but it's substantial, and then it will be triggered from a revenue recognition point of view when we install the units. That's typically when we recognize the revenue. So that's how it's going to go. In terms of restructuring, as I started out by saying, I have to say, I've just been super impressed all around with the behaviors from, I would say, owners to leadership to employees. We knew we needed to change. And then at the same time, we empathize because the change is tough. And it is not only in terms of fewer people, it's also the way of working. And I have to say, I've just seen so many people who work, including a few here in this room until very last day, and it's massively impressive. I think the morale is good, where we -- you can say, biggest impact on morale is actually we have implemented a 4-day in the office policy. But we do that because Elekta, our purpose is so important. We need to innovate for customers and patients around the world. There's more than 2 million patients being treated on our ecosystem, you can say. And we feel that we need to increase momentum and velocity. And part of that is inspiring each other. But all in all, I have to say I'm very pleased with where we are. We haven't lost focus on commercial, on customer and cost and so forth. But I have to say there's a lot more to do. So the must-win battles we have outlined is really meant for the next 24 months. And as I said, as part of that must-win battle 1, we are now addressing our discretionary spend, and we are just going through line by line. And that's important because we only want to spend money where it adds value either for our customers, patients and investors. Veronika Dubajova: And just to clarify, so when you upgrade, I don't know, Versa from to Evo. What's the impact on the order backlog? Do you recognize the whole order, the price uplift? How does that work? Jakob Just-Bomholt: Yes. Then we -- once we upgrade, we recognize it in the order backlog. And when we install it, we recognize it in revenue. And obviously, it's quite good margin perspective. Yes. Veronika Dubajova: Yes. But from an order perspective? Jakob Just-Bomholt: Yes. So when we then commit to the order, then there is an order backlog increase. But the way you should think about it, you will not see it in the -- yes, you will see it, but it's not going to be that significant in the total order backlog number. Tobias Hagglov: And it's the upgrade value. It's not like we double counted here, Veronika, if that's your question. Veronika Dubajova: Okay. Perfect. That's just what I was trying to get at. Peter Nyquist: The next question will come from Kristofer Liljeberg at Carnegie. Kristofer Liljeberg-Svensson: Three questions. The first one is you said that you're looking at other costs here besides the restructuring program. So should we interpret that as you expect or that you see potential for more savings than the SEK 500 million in the next fiscal year? Jakob Just-Bomholt: Kristofer, you should interpret what we have said is we are committed to run rate of more than SEK 500 million. And now we'll just -- we are running through the machine and then let's see where we get to. Kristofer Liljeberg-Svensson: Okay. And I don't -- I understand you don't want to be specific, but just to clarify, do you expect China and U.S. sales growth to be positive now in the fourth quarter, given what's happening with better order momentum? Jakob Just-Bomholt: I think the only thing I'll say on China is we have guided towards second half growth, right, double-digit growth, probably around 10%. On U.S., I will put that under the overall group umbrella and say we guide at a positive organic growth for the year. I know we are vague, I hope we can be more precise, but I'll stick to the guidance here now. Kristofer Liljeberg-Svensson: Okay. But when you say 10% in China, is that for orders or sales? Jakob Just-Bomholt: Both. Kristofer Liljeberg-Svensson: Both. Okay. That makes sense. And then my final question, I noticed you said here that you would like cash EBIT to be in line with reported EBIT, i.e., a much less positive effect from capitalized R&D. In such a scenario, would you say that this midterm EBIT margin target of 14% is still valid, i.e. that cash EBIT improvement would be even bigger. Jakob Just-Bomholt: Let's get back to at our Capital Markets Day. But if I just address in isolation, and I think many of you on this call will agree, if we look a couple of years ago, difference between reported and cash-based EBIT was 4%. Last year, it was 3%. This year, it's 1.3%. And it's complex. And I personally like to keep things simple. So within Elekta, we look at gross R&D spend. And why not then take the next step in the simplification and match capitalization with amortization. How that will be executed, we are evaluating. But I do think I said that we are committed to improving the quality of earnings, and I think this is an important part of it. Peter Nyquist: So next question, we'll go to Sten Gustafsson at ABG. Sten Gustafsson: Two questions. And the first one is a follow-up. Did I hear you correctly when you said that you expect to see a substantial part of the cost saving program to materialize in Q4? I think previously, you talked about it to come in Q1 next fiscal year. But do you expect to see it already now in Q4? Jakob Just-Bomholt: Not full amount, but substantial. So you heard correctly, Sten. Sten Gustafsson: Very positive to hear. My second question is related to China. Obviously, you book orders there now for Evo, but have you also started to book sales? Or when will you start installations of Evo in China? Jakob Just-Bomholt: So it goes into what I outlined here that we expect in second half, both from orders and revenue growth of around 10%. Specifically on Evo in China, yes, we got approval. We also see it's a relatively smaller part of the overall portfolio from a commercial point of view. We sell Harmony Pro also with adaptive treatment possibility. Sten Gustafsson: Okay. I mean, but you are allowed to make installations of Evo in China now? Jakob Just-Bomholt: Yes. That's right. Correct. Peter Nyquist: And I would like to welcome in David Adlington at JPMorgan into the call to ask question. David Adlington: Just on the U.S., please. So firstly, I assume you saw some pent-up demand on orders with the approval of the Evo. I just wondered if you could sort of quantify how much of that was pent-up demand and how you're expecting orders to develop in the U.S. in the coming quarter? And then secondly, I just wonder if you've seen any customer reaction to the Varian announcement that they're launching a new platform in the late summer. Jakob Just-Bomholt: Yes. So if I take Varian first, David, I don't comment on competitors' product. We are very well aware, both from an IP point of view and in the market performance. I think it's actually fundamentally good because it's more adaptive, and we are just very early on in the S-curve of making adaptive radiation therapy treatment the main product. So I think for more options to a customer will expand that piece of the market. And then we look at our own innovation road map and feel actually good about our relative strength today, tomorrow and in 2 years. Specifically on U.S., I mean, obviously, it's helpful to have your best product available for commercialization. As I said, part of that pent-up demand was taking in the quarters up to. So we also had a good Q3 and some of the orders we had prior to FDA approval because we included a provision in the contract that they would be upgraded once we got the approval. And now we have the work ahead of us in building the funnel, building the reference sites and really get into the track of what we have seen in Europe. I would say -- so I don't want to give specific guidance. I don't think that's appropriate for Q4. I would say that overall, we are not getting our fair market share in U.S. That's why we have it as a must-win battle. We now have the product portfolio, I would say, to compete. We have set the organization. We know what we need to do. Now we just need to do it and demonstrate it in actions actually. David Adlington: Maybe just a quick follow-up... Peter Nyquist: Go ahead. David Adlington: A quick follow-up? Peter Nyquist: Yes, absolutely. David Adlington: Just wondering, with the announcement that they are launching in September, has that seen any customers who were potentially looking at Evo just sort of pause and wait to see what's coming in September? Jakob Just-Bomholt: It's not the feedback I'm getting. I mean, I look at our funnel and how it develops and that part looks okay. Peter Nyquist: Next question will go to Richard Felton at Goldman Sachs. Richard Felton: Two for me, please. First one is on one of the must-win battles winning in the U.S. So obviously, having Evo in the market is an important part of that. But can you talk about what you're potentially doing differently from a commercial execution perspective in that market going forward? And then the second question, just coming back to China, you alluded to a little bit of market share losses, but there's still a market share in the high 30s in that market. Could you just clarify, are those comments based on the installed base overall or share of new placements? Jakob Just-Bomholt: China share of new placements. Basically, we look at how many linacs been purchased, and it's very transparent in the China market and then what has been our share. On U.S., yes, I can share a bit. I mean, it, of course, always starts with suitable product, but then commercial execution matters a lot. And that's going back into our decentralized model. So we are pushing P&L responsibility to our 5 regions. We report here 3, but we have 5 reporting directly to me. We have delayered the organization. We are centralizing part of the pricing, strategic pricing framework, but otherwise, we are out there. Then we have spent a lot of time mapping our existing installed base, what our retention strategy. We look at aging profile, we look at flips, we look at greenfields. We are mapping out the market. And then we really -- and I have to say, I'm pushing a lot on let's build the funnel because funnel should be a predictor for order intake, which is -- should be a predictor for revenue generation. I'm not saying we are there yet, but we are doing quite some swings, I would say, in structured commercial execution, but that goes for all regions. And then maybe I'll just say -- and then at the same time and very, very importantly, we recognize we are on a burning platform, and we are deeply frustrated about where we are in U.S., not least because I think it's good for our customers and our patients or their patients to have a strong competitive alternative. We think we have that now. They are part of our portfolio. We want to do even better, and that's what we are addressing in focused innovation, and we need to address it fast. Peter Nyquist: Great. Thanks, Richard, for those questions. We move to SB1 Markets with Johan Unn rus has the next question. We lost you there, Johan or maybe you. Can you hear us? Johan Unn rus: Can you? Peter Nyquist: Yes. Now we can hear you. Good. Johan Unn rus: Can you hear me? Yes. I think we will double [ command ] to that. Yes. A follow-up on the funnel in the U.S. Evo is, of course, extremely important in the U.S. and clearly a very important bit of that win -- must-win battle. What about the funnel so far? Can you see any new Elekta? Any orders coming from centers and accounts which are new to Elekta? Or is this Elekta users already? Jakob Just-Bomholt: Yes. So if we look at it, funnel is important. Let's not forget funnel on service and our TPS OIS software is extremely important. We have Brachy and Neuro also important. But if we get to linac, I mean, quite pleasing, we have done some flips taken from competitors. I think that's very important. When they flip us, we flip them. And then it's less a greenfield market actually because it's so mature. If we look at the funnel, I would say I think we are on track in building it. I still -- before I commit to saying that we are at the same track as Europe, I want to see that converted in execution. But as I said, we just got the approval. So I think it's also okay. But so far, so good. So far, so good. Johan Unn rus: Yes. And a follow-up to that, obviously very important to have centers and reference sites. You referred to that earlier. What -- how long will it take to get that in place, 3 to 6 months? Jakob Just-Bomholt: It will happen very quickly. It will happen very quickly. Some of them here in Q4 also. Johan Unn rus: Good. And what about the sense of time from order to installation in the funnel? Are most of them fairly sort of imminent orders, so to speak? Jakob Just-Bomholt: I don't want to give the specific here in terms of maturity from funnel to orders. And then the way you should think about it is from order to revenue, it's typically 12 months, but with significant variations from order to order. But it's, of course, important if you look at U.S., we have a very favorable working capital. I mean people pay upfront and so forth. So I think it's not only from a revenue and EBIT, it's also from a cash perspective, favorable that we get our fair market share. Johan Unn rus: Is it fair to say that, that dynamic is in line with what to be expected in the linac hardware market in general? Or could it be [ offset ]? Jakob Just-Bomholt: I think if it relates to Evo, we are on expectations, but I still would say we need a bit more time. We got approval mid-January. We have received quite a few orders. You saw order intake Q3 linked to Evo. So that's good. I look at year-to-date, and I can see a substantial, substantial increase in U.S.-based, not Americas-based, but U.S.-based orders. I like that. Let's see how we sustain it over the next couple of quarters and our ability to then convert funnel into actual wins. That's what I'm looking at. Peter Nyquist: We will now move to the last question for this session, and that will be Ludvig Lundgren at Nordea. Ludvig Lundgren: So a bit of a follow-up to the Evo and the U.S. So I think in Europe, you actually initially saw sales being driven by Iris upgrades for like previous Versa installations. And as these have shorter lead times than new installations, so I just wonder if you will expect to see a similar pattern in the U.S. And then also, if you can remind us of the margins of these type of installations. Jakob Just-Bomholt: Yes. So the margins, I think, let me put it this way, 80% plus. So they're obviously attractive. And we are looking at upgrade. It will be less than in Europe from that point of view. But we will do Iris upgrades here in Q4. And -- but we also did that last year. So when you look at the comp, we look at Q4 that is a tough comparable quarter last year, but we still stand by, of course, the guidance we have given in terms of organic growth for the year. Ludvig Lundgren: Okay. Understood. And then my final one, just on -- if you have any updates on the Section 232 investigation. And also, if you can comment on this recent U.S. tariff changes and how you expect that to affect? Jakob Just-Bomholt: Yes. We are evaluating it. We actually report here this quarter a bit higher tariff impact, but it's also linked to selling more in U.S. So in a way, it's a positive problem, but we are still evaluating and understanding. So I think we need a bit more time with everything that's going on. Peter Nyquist: Maybe before we close the call, any final remarks from your side, Jakob? Jakob Just-Bomholt: Solid quarter. We are busy. We execute a lot. We have to continue the momentum, bias to action, clear strategy, then we look forward to Capital Market Day where -- so with your support, Klara, I hope and endorsed by the Board, we can outline a financial plan that management stands behind. Peter Nyquist: Thanks. Jakob Just-Bomholt: Thank you very much. Peter Nyquist: Thank you.

34天前Insight Analytics约5分钟阅读

GOTU 2025 Q4 财报电话会议

Operator: Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Gaotu Techedu Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Catherine Chen, Head of Investor Relations. Please go ahead, Catherine. Catherine Chen: Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. My name is Catherine, and I'll help host the earnings call today. Gaotu's earnings release for the quarter was distributed earlier and is available on the company's IR website at ir.gaotu.cn as well as through PR Newswire services. Joining the call with me tonight from Gaotu's senior management is Mr. Larry Chen, Gaotu's Founder, Chairman and Chief Executive Officer; and Ms. Shannon Shen, Gaotu's Chief Financial Officer. Larry will first provide the business highlights for the quarter. And then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, we will open the floor to questions from analysts. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current beliefs and expectations as well as the current market and operating conditions, and they involve known and unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control and may cause the company's actual results, performance or achievements to differ materially from those contained in any forward-looking statements. Further information regarding this and other risks is included in the company's public filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements, except as required under applicable law. During today's call, management will also discuss certain non-GAAP measures for comparison purpose only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our fourth quarter and fiscal year 2025 earnings release published earlier today. As a reminder, this conference is being recorded. In addition, a live and archived webcast of this conference call will be available on Gaotu's IR website. It is now my pleasure to introduce our Founder, Chairman and Chief Executive Officer, Larry. Larry, please? Larry Chen: Good evening, and good morning, everyone. Thank you for joining us on Gaotu's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. I would like to take this opportunity to express my gratitude to each of you for your interest in and support for Gaotu. Before I start, I would like to remind everyone that all financial figures discussed today are in RMB unless stated otherwise. 2025 marked a year of exceptional resilience for Gaotu. We delivered a high-quality operating performance amid a rapidly evolving environment. If I were to summarize the year's achievements in one word, it would be refinement, representing not just a sharpening of our teaching quality, but a systematic elevation of our operational granularity. Throughout the year, we not only exceeded our growth targets, but more importantly, reinforced our organizational foundation, strengthening our core capabilities while continuing to scale rapidly. As we enter 2026, our approach to growth continues to evolve and mature. We are intentionally refining the way we grow, prioritizing profitable growth with the advancement of AI capabilities at the core of our operations, All with AI, always AI. This is how we are driving improvements in business health, operational efficiency and long-term viability. Our fourth quarter performance represents an early validation of this strategic focus at the operational level. In the fourth quarter, we maintained steady top line expansion while realizing meaningful operating leverage. Revenue increased by 21.4% year-over-year to RMB 1.7 billion and the bottom line improved by 38.0%, driven by continued efficiency gains. For the full year of 2025, revenue grew by 35.0% to RMB 6.1 billion, exceeding our initial expectations at the beginning of 2025. Net operating cash inflow reached RMB 416 million, a net increase of RMB 158 million year-over-year, reflecting continued improvement in operational quality and efficiency. After excluding the impact of share repurchases, our cash position increased by RMB 221 million year-over-year, providing strong support for our ongoing investments in products, technology and talent underpinning sustainable long-term growth. We remain firmly committed to enhancing long-term shareholder value. Under our aggregated share repurchase authorization, we have repurchased a total of RMB 670 million of shares, representing 12.8% of our total outstanding shares, including RMB 343 million in buybacks in 2025. As our business fundamentals continue to strengthen, we are well positioned to balance long-term strategic investments with a stable, predictable shareholder return framework. Through consistent and prudent capital allocation, we seek to build durable value, enabling investors who grew alongside Gaotu to benefit from both our capital returns and the intrinsic value we generate. Most encouragingly, our operational gains are increasingly translating into tangible financial performance. We are shaping a more resilient, sustainable and profitable business model, a virtuous growth flywheel anchored in healthy unit economics driven by strong operational excellence and steered by our unwavering commitment to long-term user value. Guided by this framework in 2026, we will focus on advancing strategic priorities across 5 fronts. First, in calibrating growth pace, profitability will remain a core strategic priority. Over the past year, we have comprehensively optimized our cost structure, resource allocation and operating processes to fortify our business models and reinforce its economic foundation. Throughout 2025, our core business delivered a stable profitability, validating the strategic direction we set in the prior period. Meanwhile, our strategic initiatives have progressed well and are steadily emerging as new growth engines. While near-term revenue trends may not fully capture our underlying momentum, we assess performance based on the quality, structure and the sustainability of our growth, which are the pillars of lasting value creation. Second, in product development, we remain relentlessly user-centric, driving continuous innovation in educational products and learning services. The [indiscernible] help learners make real progress rather than merely completing cost delivery. We will continue deepening our understanding of users' real learning needs and pathways, systematically embedding these insights into curriculum design, teaching methods and service experiences. We firmly believe that truly valuable growth stems from superior learning outcomes, higher user satisfaction and stronger brand trust. Third, with respect to technology, we are integrating innovation across our business operations and organization, making it a structural driver for enhancing operational efficiency and user experience. Technology must enable teaching effectiveness, service excellence and operational preceding. In teaching scenarios, we are proactively combining high-quality instructor resources with AI-powered tools to make learning more engaging and effective. On the operations side, we are leveraging technology and data analysis to optimize resource education and enable more informed data-driven decision-making. At the organizational level, we are fostering more seamless collaboration through technology, empowering our team to focus on high-impact initiatives that drive meaningful value creation. Fourth, in terms of talent strategy, we continue to reinforce our competitive moat built around the high-caliber educators. Educators are our most valuable asset and central to sustaining our long-term competitive advantage. We will keep refining our talent selection, development and incentive mechanisms, building a robust pipeline of educators and fostering an environment that supports educators, professional growth and long-term careers. A stable, high-caliber teaching team is a cornerstone for successfully scaling product innovation and technology upgrades. Fifth, to enhance our business portfolio, we are architecting a comprehensive lifelong learning service platform. Personal development is an ongoing journey and learning needs at different stages are inherently connected rather than isolated. Through systematic integration of product formats and delivery models, we ensure learners have access to tailored solutions within Gaotu's ecosystem during every critical development stage. By cultivating deep connections with users, we further strengthen our cross business synergies and extend the user life cycle, significantly enhancing our operating models resilience and long-term return potential. After nearly a decade of development and achievement, Gaotu will celebrate its 12th anniversary in 2026. Standing at this important milestone, we feel immense pride and a strong sense of responsibility. Through an ever-deepening understanding of our users, we have cultivated a core leadership team with a strong sense of ownership and long-term vision, assembled an outstanding well-trained talent pool, distilled a set of cultural principles that shape our direction and most importantly, earned the invaluable trust of tens of millions of students and parents. Since day 1, Gaotu's original aspiration has remained unchanged to build a truly exceptional technology education enterprise. One, where every team member can achieve both material and spiritual productivity, where every student enjoys an exceptional learning experience and accelerated personal growth and where we accompany learners on a lifelong journey of progress while contributing enduring value to the development of education industry and society. Looking ahead, we will remain committed to disciplined prudent management, strictly control risk and continuously strengthen our organizational and cultural foundation through unwavering strategic focus and powerful execution. I firmly believe that as long as we uphold the long-termism, insist on value creation and remain true to the essence of education, Gaotu will advance steadily, generating lasting value for our shareholders, employees, users and society at large. Thank you very much, everyone. This concludes my prepared remarks. I will now pass the call over to our CFO, Shannon, to walk you through this quarter's financial and operational details. Nan Shen: Thank you, Larry, and thank you, everyone, for joining our call today. I will now walk you through our operating and financial performance for the fourth quarter and fiscal year 2025. Please note that all financial data are in RMB terms, unless otherwise stated. In 2025, we systematically optimized our product portfolio and channel mix, filling constant improvements in our revenue quality. We remain firmly committed to advancing our deep integration strategy of AI plus education, substantially enhancing both our educational products and end-to-end operational efficiency through the systematic optimization of our product portfolio and channel structure, leveraging AI as our foundation, learning solutions as our core value and AI-powered digitalization as our operational support. From a structural perspective, after years of focused investments and refinements, we have established a staged growth road map that provides great visibility into future development. Our core businesses delivered solid growth with higher enrollments, optimized unit economics and ongoing profitability improvement, serving as the fundamental pillar supporting the company's profit expansion. At the same time, our strategic initiatives are gaining traction and demonstrating upward momentum, serving as new engines for our scale expansion and profitable growth. In 2026, we will sharpen our focus on user experience and learning outcomes, advancing from scale-oriented growth toward a more efficiency-led model, driven by both revenue scale expansion and operating efficiency gains, we have realized operating leverage for 5 consecutive quarters, continuously elevating our bottom line. In particular, on the user acquisition front, we leveraged AI-driven capabilities and a dynamic resource allocation mechanism to boost user acquisition efficiency. Measured as gross billings divided by selling expenses, user acquisition efficiency improved by 10.8% year-over-year in 2025. Turning to our fourth quarter performance. Revenue grew by 21.4% year-over-year to RMB 1.7 billion. Operating expenses as a percentage of revenue declined by 4.1 percentage points year-over-year, contributing to a 20.9% reduction in our operating loss. As of December 31, 2025, our deferred revenue balance rose by 23.0% year-over-year to RMB 2.6 billion, providing solid visibility for our future revenue growth. Meanwhile, our cash, cash equivalents, restricted cash, short-term and long-term investments totaled RMB 4.0 billion. With this robust cash reserves, we are well funded to deepen our organizational capabilities and improve shareholders' interest throughout 2026. Next, an overview of this quarter's process by business segment. Learning services contributed over 95% of net revenues. Nonacademic tutoring services and traditional learning services as our core segment contributed over 80% of our total revenues. Our new initiatives focused on online and offline nonacademic tutoring services sustained strong growth momentum. In the fourth quarter, gross billings increased by over 30% year-over-year, while revenue grew by 45%. On a full year basis, revenue rose by 9% year-over-year. Within this segment, as our online business benefited from expanding enrollment and enhanced product competitiveness, it demonstrated a constant margin expansion, attaining a middle single-digit margin for the full year. Through ongoing educational content innovation and refined operations, we elevated both product value and the learning experience, driving the retention rate of existing students, which exceed 75% this quarter. Meanwhile, we continued to step up investment in content development centered on cultivating learners' comprehensive capabilities and core competencies. Our latest offerings, including AI-related courses have further enriched and refined our product and content portfolio, enabling us to more effectively address the evolving demand for holistic long-term development. In the fourth quarter, our traditional business maintained stable growth in enrollments while continuing to enhance service quality and efficiency to boost ongoing operational gains. We comprehensively upgraded tutor service standards, deepening our focus on learning process management and learner engagement through clearly defined key procedures and measurable performance indicators, which further reinforced our systematic service delivery capabilities. On the product front, we focused on optimizing our courses to better align with students' learning process and proficiency levels while strengthening our modular needs-based content to enable more targeted and effective instruction. The parallel strengthening of our teaching services and educational products contributed to continued improvement in the overall learning experience at Gaotu. The retention rate for new students also rose meaningfully year-over-year this quarter, reflecting stronger user stickiness. For the full year 2025, revenue from our traditional business grew nearly 15% year-over-year, driven by operational efficiency gains and enhanced organizational capabilities. Profitability for both online large classes and one-on-one tutoring improved year-over-year. Our ongoing refinement of product competitiveness and optimization of operational quality has laid a strong foundation supporting our traditional business sustainable growth. Another key component of our learning services is educational services for college students and adults, where gross billings grew over 15% year-over-year in the fourth quarter, contributing over 15% of total revenues. By prioritizing user needs, optimizing the product mix and sharpening our refined management capabilities, this segment has entered a consecutive growth trajectory and achieved full year profitability across its online offerings in 2025. In our educational services for college students, by leveraging deeper insights into students' life cycle, we have pivoted from selling standard-alone products to developing innovative stage-aligned solutions. These offerings are integrated with adaptive learning pathways that can adjust based on real-time feedback and performance, effectively extending the user learning cycle. Meanwhile, we continued deepening the integration of online courses and AI technologies, fostering personalized learning support and planning capabilities, simultaneously improving both learning experience and outcome. For the full year, our educational services for college students delivered mid-double-digit growth in both [indiscernible] revenue, while reaching profitability at the business line level. Lastly, I will walk you through our financial data. Our cost of revenue this quarter was RMB 540.9 million. Gross profit increased 20.7% year-over-year to over RMB 1.1 billion with a gross margin of 67.9%. Total operating expenses during the quarter increased 15.0% year-over-year to nearly RMB 1.3 billion. Breaking it down, selling expenses increased 20.3% year-over-year this quarter to RMB 885.3 million, accounting for 52.5% of net revenues. Research and development expenses increased 14.0% year-over-year to RMB 165.4 million, accounting for 1.8% of net revenues. General and administrative expenses decreased 2.1% year-over-year to RMB 211.8 million, accounting for 12.6% of net revenues. Loss from operations was RMB 118.0 million and operating loss margin was 7.0%. Non-GAAP loss from operations was RMB 110.7 million, and non-GAAP operating loss margin was 6.6%. Net loss was RMB 84.2 million, and net loss margin was 5.0%. Non-GAAP net loss was RMB 76.8 million and non-GAAP net loss margin was 4.6%. Our net operating cash inflow increased 23.1% year-over-year to RMB 964.8 million. Now turning to our balance sheet. As of December 31, 2025, we held RMB 712 million in cash, cash equivalents and restricted cash, along with RMB 2.7 billion in short-term investments and RMB 551.6 million in long-term investments. This comes to a total of nearly RMB 4.0 billion. As of December 31, 2025, our deferred revenue balance was around RMB 2.6 billion, primarily consisting of tuition received in advance. As of March 4, 2026, we have repurchased an aggregate of around 30.6 million ADS on the open market for nearly RMB 670 million. Before I provide our business outlook for the next quarter, please allow me to remind everyone that this contains forward-looking statements, which include risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on our current estimates, total net revenue for the first quarter of 2026 are expected to be between RMB 1,578 million and RMB 1,598 million, representing an increase of 5.7% to 7.0% on a year-over-year basis. This single-digit increase rate is due to seasonality. We expect the increased rate to return to double digits in the second quarter in 2026. This concludes my prepared remarks. Operator, we are now ready for the Q&A section. Thank you, everyone, for listening. Operator: [Operator Instructions] The first question comes from Crystal Li with CMS. Crystal Li: Congratulations on the strong results. So I just want you to maybe add more color on the development of your off-line business and maybe elaborate more on the -- your future plan on this off-line business. Nan Shen: Thanks, Crystal, for your question. We launched the expansion of our off-line learning centers back in 2023. First, from a strategic perspective, our off-line business represents a clear second growth curve for us and one of the top strategic priority at the group level. The integration of online and off-line is a highly effective approach to enhancing learning efficiency and the overall learning experience and also makes our product metrics more holistic. And it is also a critical step in building our long-term competitive advantages. This initiative is led directly by our founder with prioritization in resource allocation, decision-making efficiency and cross-sector collaboration. By capturing a favorable window of strong user demand in 2023, we have moved quickly to scale our footprint over the past 3 years. We have attracted outstanding industry professionals with deep expertise in local operations, educational product design and teacher sourcing and cultivation, et cetera. Building a professional team is truly important for offline operations and also can execute effectively and also support scalable growth. This has already laid a very solid foundation for our offline businesses. In terms of the current progress and results, our off-line business has achieved clear economies of scale. Since 2023, with continuous investment and operational refinement, our off-line learning center network and revenue scale has grown steadily and rapidly. Based on our current expansion pace and operating plan, we expect the overall scale, I mean, the top line -- the revenue of our off-line business to surpass that of several independently listed peers in the coming year. This is not just a single increase in the number of learning centers. It also represents healthy growth driven by proven unit economics, strong brand reputation and a well-developed supply chain for high-quality teachers. After nearly 3 years of market penetration, our brand has established a solid credibility and influence among students in regional markets. User satisfaction and retention rates continue to improve. And our brand mode is gradually taking shape. Put simply, we have evolved from a pure online service provider to a fully integrated platform, and this is the fundamental and the most definitive outcome of our transformation. That being said, the off-line business has relatively high barriers to entry, including those related to management effectiveness, organizational alignment and also system processes and most importantly, the supply of top-tier teachers. We still have some areas that we need to further optimize and integrate. We are systematically reviewing and refining and continually building up the system to support the growth of this segment. Our upfront investments are focused on strengthening our network footprint, brand reputation and operational capabilities. And we are committed to capturing greater long-term market space and value and progressing steadily towards sustainable profitability. So we foresee at the school level, we can achieve a profitability at this year. And also in the next year, we will foresee our offline business to be profitable, including the headquarter over had. I hope that address your question, Crystal. Operator: As there are no further questions now, I'd like to turn the call back over to the company for closing remarks. Nan Shen: Thank you, operator, and thank you, everyone, for joining the call today. If you have any further questions, please don't hesitate to contact our Investor Relations department or our management via email at ir@gaotu.cn directly. You are also welcome to subscribe to our news alert on the company's IR website. Thank you very much again for your time. Have a great night. Operator: This concludes today's conference call. You may disconnect your line. Thank you.

34天前Insight Analytics约5分钟阅读

CBRL 2026 Q2 财报电话会议

Operator: Good day, and welcome to the Cracker Barrel Fiscal 2026 Second Quarter Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead. Adam Hannon: Thank you. Good afternoon, and welcome to Cracker Barrel's Second Quarter Fiscal 2026 Conference Call and Webcast. This afternoon, we issued a press release announcing our second quarter results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the second quarter ended January 30, 2026. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, Julie Masino; and Senior Vice President and CFO, Craig Pommells. Julie and Craig will provide a review of the business, financials and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that, in many cases, are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect our results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnished to the SEC. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Julie Masino. Julie? Julie Masino: Good afternoon, and thank you for joining us. Q2 total sales were $874.8 million and adjusted EBITDA was $38.2 million. Our entire team is executing our plan to: one, improve our operations; two, connect with guests through our menu, marketing and value proposition; and three, deliver cost savings to improve profitability. We're gaining traction and are encouraged by some important guest metrics and green shoots around traffic, and we're energized in terms of driving improved performance. I'd like to start by thanking our store teams for their hard work every day. Operationally, we're pleased with the improvements we are seeing following the leadership changes we made in October. Our Google star rating, which over the long run is strongly correlated with traffic, was 4.28 in Q2. This represents the highest quarterly score since Q2 in fiscal year '20. We've also seen gains in food taste, service and value scores, all of which increased 4% to 5% in Q2 compared to the prior year, and these positive trends have continued into Q3. Additionally, we're making progress with turnover as we saw improvements in both our hourly and manager turnover trends, including a 10% improvement in management turnover in Q2 year-over-year. We view all of these metrics as important leading indicators and are confident that these gains will translate into improved traffic over time. Turning to our menu. Our multipronged strategy continues to include bringing back guest favorites, introducing new offerings, enhancing quality and leaning into value. We are incorporating elements from these tactics with each of our seasonal menus and all of this is being done with the overarching goal of improving guest satisfaction and driving traffic. We're continuing to reintroduce favorites, both to our core menu and as part of our limited time-only promotions. Our holiday menu promotion featured our Country Fried Turkey. This fan favorite continues to resonate with guests, and we again sold out of product. In January, we reintroduced hamburger steak and eggs in a basket. Then with our spring menu that launched in mid-February, sugar-cured and country ham dinners returned to the core menu. We also brought back carrot cake as an LTO. We continue to use Front Porch Feedback, our guest feedback mechanism, and there are more returning favorites in the pipeline. And as we bring back items, we are doing so through the lens of improving taste, consistency and ease of execution. We also continue to innovate and close menu gaps with the introduction of new items. In the fall, we added the breakfast burger. Topped with our signature Hashbrown Casserole, this delicious burger is the ultimate combination of country cooking and a breakfast for dinner entree. Our spring menu provides additional examples. Guests have been asking for omelets and scrambles for years, and we recently debuted our new Garden and Farmhouse Scrambles. We also added Smoky Southern Salmon, and this LTO offering provides a more premium, lighter fish option. Collectively, these items, both the new offerings and returning favorites have been well received, and we've been particularly pleased with the breakfast burger and carrot cake, both of which have outperformed our expectations on preference. In addition to introducing items, we're also evaluating food quality improvements to existing offerings as part of our targeted efforts to drive greater guest satisfaction across the menu. We're testing improvements to several signature items and have additional tests planned in the coming months. Finally, as it relates to our menu, we're also leaning into value. We already have a strong everyday value foundation, which we've strengthened with our barbell pricing strategy, and we've been layering in new constructs and targeted promotional offers. This has allowed us to evolve the way that we talk about value by amplifying our communications around compelling price points to drive traffic while reinforcing affordability as a hallmark of the brand. This fall, we launched meals for 2 starting at $19.99. This offer available for dine-in on weekdays, includes 2 full-size entrees and choice of shareable or desserts. We continue to evolve this platform, and we've seen a meaningful lift in guest preference since launch. Our approach to value also includes pulsing short window offers to create urgency and trial. In the weeks leading up to Christmas, we ran a promotion for our free toy up to $5 with the purchase of a kids meal. We were pleased with the results and impressed by the team's agility in quickly creating and implementing this offer. It delivered incremental margin dollars and contributed to outperformance of the toys category during the promo window. Our ability to connect restaurant and retail in a single experience is a real point of differentiation. We're exploring additional ways to capitalize on this advantage and believe that by lengthening the lead times for planning and execution, we can make these integrated promotions even more impactful. In fiscal '25, we were pleased with the positive mix we delivered, and the team has been focused on developing menu enhancements to build margin while reinforcing our value proposition. We introduced several changes in January. For example, guests can now upgrade to 3 sides for a modest upcharge and add a soup and salad to their meal for just $5. They could also choose bundled shareable duos and trios. Early results from these actions are encouraging as we've seen an improvement in our mix trend following these additions. Another important way we are driving traffic and delivering value is through our loyalty program, Cracker Barrel Rewards. After a little over 2 years since the program launched, we now have over 11 million members, and they account for over 40% of tracked sales. That scale gives us a meaningful way to understand guest behavior and directly engage with guests to reinforce value and drive frequency. It's a tremendous benefit for guests and an increasingly important tool in improving traffic. Engagement in the program remains strong and traffic among loyalty members has held up better than nonmembers since August. From a marketing perspective, our guest connection strategy remains centered on food, value and the heritage that makes Cracker Barrel distinct. And every campaign is designed with a clear objective, drive traffic and strengthen brand affinity. We are seeing early signs this is working as evidenced by our improving traffic trend and the fact that our brand sentiment scores improved 2% over Q2 compared to Q1. As part of this, we have deepened our storytelling and leveraged key partnerships to reinforce emotional connection, expand reach and drive visitation. We continue to highlight our scratch cooked food made with care through the Our Country Friends series on social media. We are emphasizing and expanding our long-standing commitment to the military community. We again offered a complimentary Sunrise Pancake Special for military members on Veterans Day. This contributed to a strong traffic comp performance for the day, and we also helped support 30 worthy veterans organizations throughout November. Most significantly, we launched an ongoing 10% military discount available all day, every day in both restaurant and retail. This discount is available through Cracker Barrel Rewards and is helping to drive continued growth in loyalty membership, while also recognizing this important group. We are building on our efforts from the past year and continuing our successful partnership with Speedway Motorsports. We are once again sponsoring the Cracker Barrel 400 in May as well as increasing our on-site activations at races across the country, which kicked off at Daytona last month. Last year, our partnership with Speedway Motorsports gave us cultural moments to amplify our story in ways that guests loved and that supported traffic and brand trust. We are looking forward to leveraging similar opportunities this year. We're also excited to feature our Campfire Meals platform again this summer. Campfire is one of our strongest nostalgia anchors and a clear expression of Cracker Barrel, Americana, Travel and gathering. Turning to retail. As a reminder, Q2 is our biggest quarter for retail sales due to the holidays. Overall, our retail results remain pressured due to traffic, but we were encouraged by the guest response to our seasonal holiday assortment. We were also encouraged that retail attachment was flat versus prior year, given that it has generally declined in recent quarters and that our average order value increased slightly. We're excited about our upcoming assortment. Looking ahead, the team remains focused on effectively managing inventories, mitigating tariffs and enhancing the shopping experience. Finally, in addition to our efforts to drive traffic by improving consistency of food and the guest experience, we are also focused on cost savings. In Q2, we continued the restructuring of our corporate office that began in Q1. We remain committed to returning G&A closer to historical levels as a percentage of sales and are continuing to closely manage our expense structure to protect our balance sheet. As we look ahead to the back half of our fiscal year, we are encouraged that we continue to welcome back more guests. Our #1 focus is serving delicious food and delivering experiences guests love. We have a number of tactics to support this, and we're confident in our team's ability to execute. We're engaging our guests through our menu, messaging and continued commitment to value. We're committed to operating with excellence, and we're implementing actions to improve profitability, all to strengthen the business and to return to positive momentum. I'll now turn it over to Craig to review our results and discuss our outlook. Craig Pommells: Thank you, Julie, and good afternoon, everyone. For Q2, we reported total revenue of $874.8 million, which was down 7.9% from the prior year quarter. Restaurant revenue decreased 7.5% to $694.3 million. Comparable store restaurant sales decreased by 7.1%, which included a traffic decline of 10.1%. From a monthly perspective, November and December traffic both declined between 10% and 11%. We were encouraged by the improvement in January, which declined 9%, including an approximately 50 basis point net year-over-year unfavorable impact from weather. Restaurant average check increased 3.4% and included pricing of 4.2%. Menu mix was negative, driven primarily by higher discounts. Off-premise sales were 23.6% of restaurant sales, which increased modestly over prior year. Total retail revenue decreased 9.3% to $180.5 million, and comparable store retail sales decreased by 9.2%. Moving on to our quarterly expenses. Total cost of goods sold in the quarter was 33.5% of total revenue versus 32.6% in the prior year. Restaurant cost of goods sold was 27.4% of restaurant sales versus 27.1% in the prior year. This 30 basis point increase was driven by higher waste, increased discounts and commodity inflation, partially offset by menu pricing. Commodity inflation was approximately 1.3%, driven principally by higher beef, pork and coffee prices, partially offset by lower poultry and dairy prices. Retail cost of goods sold was 56.8% of retail sales versus 53.4% in the prior year. This 340 basis point increase was primarily driven by higher tariffs and increased discounts, partially offset by pricing. Quarter end inventories were $180.3 million compared to $173 million in the prior year. Labor and related expenses were 36.1% of revenue compared to 34.4% in the prior year. This 170 basis point increase was primarily driven by sales deleverage and lower productivity. Wage inflation was approximately 2%. Other operating expenses were 24.8% of revenue compared to 23.2% in the prior year. This 160 basis point increase was primarily driven by sales deleverage and higher store occupancy costs, including increased maintenance spending, which was in part due to elevated snow removal costs. Adjusted general and administrative expenses were 4.9% of revenue and exclude $2.6 million in expenses related to the proxy contest, and a $2.6 million corporate restructuring charge related to organizational and leadership structure changes. Compared to the prior year, adjusted general and administrative expenses improved 60 basis points, primarily driven by lower incentive compensation and cost savings initiatives, including the corporate restructuring. Our GAAP financial results include a noncash store impairment charge of $400,000 related to Maple Street stores. Net interest expense was $4 million compared to net interest expense of $5 million in the prior year. This decrease was primarily the result of a lower revolver balance and a higher convertible debt balance. Our GAAP income taxes were a $4.9 million credit and adjusted income taxes were a $3.5 million credit. GAAP earnings per diluted share were $0.06 and adjusted earnings per diluted share were $0.25. Adjusted EBITDA was $38.2 million or 4.4% of total revenue compared to $74.6 million or 7.9% of total revenue in the prior year. Now turning to capital allocation and the balance sheet. Our balance sheet remains strong, and we continue to have ample access to liquidity. We ended the quarter with $531.5 million in debt compared to $471.5 million in the prior year. At quarter end, our consolidated senior debt to adjusted EBITDA leverage ratio was 0.3, which is below the maximum allowed of 3.0. In the second quarter, we invested $26.6 million in capital expenditures. I also want to note that in our third quarter, we expect to record a net cash benefit of approximately $46 million following the settlement of certain litigation matters. This amount will be included in the calculation of EBITDA as defined by the credit agreement for purposes of calculating applicable ratios for debt compliance and borrowing capacity. However, we expect that it will be excluded from the calculation of reported adjusted EBITDA to enhance comparability to our adjusted EBITDA results across periods. Before sharing our annual outlook, I want to provide some context on current trends and how variability between last year's third and fourth quarters are expected to affect comparisons for the remainder of fiscal 2026. If you recall, in the third quarter of fiscal '25, traffic declined 5.6%, in large part due to weather and macroeconomic factors. That was our lowest traffic performance of the year. As a result, we have an easier comparison in this year's Q3. Having said that, we are pleased that our traffic trend in February further improved on January's results. Regarding Q4, traffic in fiscal ' 25 declined 1%, a significant step up from our third quarter. As a result, we will have a more challenging lap in the fourth quarter. Turning to our fiscal '26 outlook. Our guidance reflects our best estimate as of today. The rate and level of our traffic recovery as well as the level of investment required remain key drivers of our fiscal '26 EBITDA performance. As outlined in our press release, we anticipate the following for fiscal 2026. Total revenue of $3.24 billion to $3.27 billion, pricing of approximately 4% and lower menu mix resulting from higher discounts, commodity inflation of 2% to 2.5%, and hourly inflation of 2.5% to 3%. As discussed on the last call, we've implemented a number of cost savings measures. We executed a corporate restructuring that began in Q1 and continued in Q2, which we expect will result in annualized G&A savings of $20 million to $25 million. Additionally, we have reduced our advertising spend and anticipate that our aggregate advertising spend in the second half of the year will be $13 million to $17 million lower than the same period in the prior year, reflecting a more targeted approach to our advertising. Taking all of the above into account, we now anticipate full year adjusted EBITDA of approximately $85 million to $100 million. Finally, we are now planning for lower capital expenditures of $105 million to $115 million, and this reduction is part of our comprehensive efforts to manage cash flow and the balance sheet. With that, I'll now turn the call back over to Julie for a few closing remarks. Julie Masino: Thanks, Craig. I want to wrap up by reiterating that all of the initiatives I described across operations, menu and marketing are part of our focus on consistently delivering delicious, flawless food, improving guest satisfaction and driving traffic. We're highly encouraged by the green shoots we're seeing, particularly the strong gains in the guest experience metrics I mentioned. Looking ahead, we know that consistently executing at a high level is imperative for our recovery, and the entire organization is aligned to support this. Before we go to Q&A, I want to thank our team members around the country. I'm so proud of their hard work and commitment to the guest experience. I'm confident that our continued focus on food and the guest experience will enable us to return to positive momentum. Operator, we can now hand it over for Q&A. Operator: [Operator Instructions] The first question comes from Dennis Geiger with UBS. Dennis Geiger: I wanted to start off by asking a bit more about the quarter-to-date commentary, just given all the moving pieces and the importance of traction against the plans that you have in place. I think specifically the comment was improvement quarter-to-date. So I was curious if that was sort of, Craig, on a 1-year basis, you were referring to that? If you are seeing continued traction and an underlying trend improvement? Anything else on kind of the latest and greatest as it relates to where traffic trends are and how you'd kind of size up traction against plan so far? Craig Pommells: Dennis, we do believe the underlying trend is gradually improving. As we shared, January did better than November and December, and that included some weather, as you know, at the end of the month, and we're encouraged by an even better start to February. We did try to kind of balance all of that, just recognizing that February in the prior year was a bit softer due to some weather as well as some macro issues, but we feel like the underlying trend of the business is gradually improving. Dennis Geiger: Great. And then as a follow-up, encouraging to hear about the improvement in the brand sentiment scores as well as the strength in that Google Stars rating. Perhaps, Julie, using those metrics and any others that are relevant, can you give us any better sense for how those metrics sort of help you assess where you are in the recovery process as we try and get a better sense for sort of the leading indicators sort of ahead of further traffic improvement? Julie Masino: Yes. Thanks, Dennis. Again, we are really encouraged by the improvement in everything you mentioned, Google Star rating and the brand sentiment, our food and value scores as well as just the way the teams are really executing. Being in our restaurants is just -- they feel so good right now. I'm in a lot and talking to guests, talking to our team members, and I feel like we are just at our best, more than we have been in a while. So that said, we're moving in the right direction. As I've said to you guys in the past, I don't have a crystal ball, and we don't have a correlation that says when scores improve by X, traffic follows by Y, weeks or months. We don't know that, but we know these are leading indicators. We've checked all correlations. They still correlate to same-store sales growth and improvement. So we know we're headed in the right direction, and everybody is working hard to make that a reality. Operator: The next question comes from Jon Tower with Citi. Jon Tower: Great. Julie, you had mentioned earlier that you're starting to do things a little bit differently, it sounds like on the marketing front. And I know, Craig, you had mentioned that in the back half of the year, you're expecting a lower spend in terms of advertising. So I'm curious what tools you're using to ensure that consumer awareness remains high as the advertising spend drops lower in the back half of the year? And can you maybe dig into the exact tactics that you're going into, particularly on social and digital, to kind of draw in either new or lapsed guests back to the brand? Julie Masino: Sure. Jon, I'm probably not going to lay everything out the way you asked specifically. But as you know, driving traffic is about much more than just advertising. And we have really spent the last year building out audiences, really going after the specific ways to reach them in the channels that are most relevant to them. And we have a holistic plan to really reach them in those channels to bring them back and build their trust. So it is targeted, it is nuanced. And then there is some broad-based media that really just gives us reach across that. And as Craig has shared, we have been disciplined about our marketing spend given the current environment because, as you know, we spent a lot more in Q1 and Q2, and that really hasn't manifested in traffic. So we're actively testing messaging. We're testing offers, campaign constructs really through our loyalty member base to really make sure that they're going to work and get after the right people. That's really the last thing I'd leave you with is loyalty is a great way for us to reach guests. And so we've been using that to really refine messaging, try out offers, test some different messaging constructs with different -- we've got different segments within our loyalty population and making sure that we're really talking to them about what they want to hear from us. Some people want to hear more about food. Some people want to hear more about retail. Some people want to hear about the holidays. So we've really tried to dial that in an effort to meet them where they are and welcome them back. Jon Tower: Got it. And maybe, Craig, this one on the tariff outlook. I know there's quite a bit of fluidity in terms of what's happening now. I believe in the last call, you had mentioned about fiscal '26, there was about a $24 million or so incremental impact on the business from tariffs. Has that changed? Craig Pommells: Jon, well, you said it right. It is dynamic and the tariff environment is changing. As you know, there's relatively new news out there. Maybe just a couple of things on the dollar impact. In part, there's a component there of traffic and retail sales that will impact the absolute dollar impact. I think the team continues to do a really good job here. But it is also kind of late breaking and evolving. We do expect it to be a smaller tariff impact, a little bit this year, but there are a couple of things. The rate change is not actually as big as it might seem in theory, Additionally, the impact to us really needs to flow through the supply chain. So we have to receive the product, warehouse it, send it to our stores and then ultimately sell it. So there is a lag with all of that, and the rate change is a bit more modest. So more to come in the future on that one. Operator: The next question comes from Jake Bartlett with Truist Securities. Jake Bartlett: My first question was just to make sure I understand the guidance for traffic. Before you had talked about 8% to 10%, negative 8% to 10% for the year. I'm wondering if that's still the case. Maybe if you could be a little more specific about what you expect in the back half and what that implies. Maybe you'd share whether you expect to be on the higher or the low end of that range or something like that? And then I have a follow-up. Craig Pommells: Jake, in terms of the back half, I think the key takeaway for us here is we're thinking about what we're comping on and what happened in the prior year. As we shared, Q3 was a bit of a challenge last year. We had some kind of broad-based macro issues to start out the quarter. And then Q4 picked up a lot. We had positive dinner traffic in Q4. We were very pleased with that, with the bring back of the Campfire campaign. So as we comp over a relatively easier Q3, we expect that to be a little bit of an assist. And then as we comp over what we expect to be a bit more challenging of a Q4, we expect that to be a little bit of a headwind. In terms of traffic, not a lot of movement there. That Q4 dynamic is still pretty unknown. I mean we've shared what we think there. But our thinking right now is in the full year, we would expect traffic to be somewhere in the neighborhood of negative 8.5% to negative 9.5%. Jake Bartlett: Got it. Great. And it was encouraging to see the brand sentiment improvement versus pre-August. I'm wondering if you can share how far you are from what it was pre -- maybe how much you have to go to kind of get back to normal or kind of pre-August, pre-rebranding. And I'm also wondering whether you can share whether there's different sentiment from cohorts of your customers. And I'm wondering about local versus nonlocal travelers and maybe some of the implications that could have as the summer travel business becomes a larger part of your business in the fourth quarter. Julie Masino: Yes. Jake, I'll start with that one, and then maybe Craig will have an assist. I don't know, we'll see. There's a lot in there. So let's see. We have not shared where we were prior to August. So I think that is probably not a place I can go right now. We are seeing improvements there. We are a little bit below sort of the average for casual at the moment, and so really working to claw that back and improve our trends there. But again, we are pleased with the progress that we're making. And you kind of hit the nail on the head a little bit. The way we're doing that, and it's a little bit in my answer to Jon's question as well, we are really segmenting our loyalty audiences by what we know about them, how they shop with us, what they want to hear from us. And we've done a lot of research, as you can imagine, in the last 6 months, talking to them about their feelings and what they want to hear from us and what they want to see from us. And so we're really using that learning to welcome them back. And so those messages are different based on who you are in our loyalty program and what you have said matters to you and how you shop with us and whether you're a breakfast customer, whether you're a dinner customer and whether you're a retail customer, all of those things we're using, again, to meet you where you are and to welcome you back with open arms. So we're really pleased with the progress we're making. We've got some ways to go, but we're starting to unlock that and feel good about that. Craig Pommells: In terms of the traffic composition, maybe the only thing I would add is that the traffic coming from our loyalty program is holding up well. So we're pleased with that, and that's encouraging because we have such a large base there, and we've been investing behind that for a long time. So we're going to continue to utilize and leverage those capabilities. Jake Bartlett: Got it. And if I could just sneak one more in, and I apologize for this. But your guidance for EBITDA and the margins, you've taken down your inflation guidance for commodities and for labor. You're talking about lowering the spend much less in marketing year-over-year. You beat in the second quarter, but your overall annual guidance didn't change very much. So I guess, are there some offsets that some costs that you hadn't anticipated that you think you're going to incur? Or I guess I'm trying to kind of get at to what level -- to what degree this might be conservative? Craig Pommells: Yes, Jake, we did move up the bottom end of the range a fair bit, and the Q4 dynamic is a bit of an open question mark. So I think all of that factors into our thinking. Operator: Next question comes from Sara Senatore with Bank of America. Sara Senatore: I have a question and then maybe a couple of follow-ups or clarifications. First, on the kind of demand environment, obviously, hearing a lot about gas prices potentially spiking. I know in the past, we've talked about Cracker Barrel having some relatively high perhaps exposure to people who are traveling or coming from other ZIP codes. I was just curious if you could speak to that and perhaps any kind of historical correlation? And then like I said, just maybe one quick clarification. Craig Pommells: Sara, on the gas prices, in particular, we've looked at this a couple of different times. Pre-COVID, gas prices did have a really strong relationship to traffic. More recently, we focused more on disposable income, because that has been a little bit more impacted with all of the other moving pieces in people's spending. So gas prices are obviously one input into that. So potentially if gas prices are up, that could be a negative. But as an example, going the other direction is tax refunds are expected to be higher this year than they were in the prior year and the retirees also have a larger deduction this year. So there are multiple moving pieces that flow into the disposable income. We have a bit more exposure to travel, which exposes us to gas, but we also have more exposure to folks that are over 65, and they are likely to have a benefit as well from the tax changes. Sara Senatore: Okay. And I'll actually ask a clarification on this and then I'll follow up later with the other questions. Just in terms of, to your point, I guess, tax refunds also, though those typically benefit kind of upper or higher income consumers. I guess, have you maybe talked about your income exposure? I guess there's the perception that perhaps your customer base maybe skews a little bit lower income. But I guess, as I think about the puts and takes, you make a good point, but just from an income perspective? Craig Pommells: Yes, it's a good question. Our income exposure is pretty close to average, maybe a little bit lower than average, but not dramatic. And in this case, I do think this particular tax environment is different. And the folks that are retirees, they do get a larger benefit. So there are a lot of moving pieces as you think about disposable income this year a little bit more so than in the past. Operator: [Operator Instructions] The next question comes from Todd Brooks with Benchmark StoneX. Todd Brooks: Congrats on a nice quarter. It was good to see. I wanted to dig in. I mean, we all see kind of the weekly sales and traffic data. And if I look across like the last 8 to 10 weeks, you've seen a pretty material step-up in traffic as far as the drag kind of post August was in that down 10% range, give or take. And recently, it feels like it's more in the down mid-single-digit range. I'm wondering, with your data and how well you can track and measure your customers, do you sense this is the displaced customer coming back that's causing most of this lift? Or is it a function of what you're doing against loyalty and promoting to those customers that maybe you didn't really lose post August and just getting them in the restaurant more frequently? I guess, what's the data telling you, Julie, for where this traffic lift is coming from? Julie Masino: Sure. Todd, and thank you for the congrats. We're proud of the quarter. We're working hard. We've got a ways to go, but we're getting after it. With respect to your question about the lapsed guests, what I think is probably the best thing to share with you is that we've really been working on those loyalty guests. And we are encouraged that a percentage of our highest value loyalty guests, the percentage of those people who visited us in Q2 was consistent with our historical levels. So we're retaining that and that's really, really important to us. We also were able to capture a meaningful percentage of lapsed guests that we hadn't seen in Q1 that came back in Q2. So that, again, sort of to Jon's question and Jake's question, how we're really targeting some of those people. We're seeing movement there, and that feels good to us because, obviously, increasing frequency with people that know us and are already in our ecosystem is really important to us. We're using Front Porch Feedback. Again, I told you we've done some research to really reach out to them and figure out what's meaningful to them and make sure that we're delivering on that. So and again, just executing really well. You're an operator. When we're operating well and getting great experiences in delicious hot foods, like that's really the key thing there. In terms of people that we've lost, we did see a lot of new people come into the business with Campfire last Q4. Some of those people have not returned back to us. And so we're working on casting a net to get those people back into the business. Todd Brooks: That's great. And if I can squeeze one more in. It wouldn't be... Julie Masino: Of course, not. I mean everybody else did, too. You might as well. Yes. Todd Brooks: Okay. If we can talk about holiday meal performance. I know the strategy has maybe even changed to better balance profitability versus sales. But I guess if you could review how Holiday Meal performed during the quarter. Is that behind any of the improvement or maybe less bad restaurant COGS than maybe what some of us were expecting and just how that overall offering resonated at Holiday? Julie Masino: Sure. We did a little bit on the last call because it was right after Thanksgiving. But look, gosh, November feels like a long time ago, but really, we built on the learnings from last year, because if you remember, Q2 of '25 was a really strong performance for us, and we had spent a lot of time really restructuring that business, especially from an operations standpoint to make sure that we were delivering great experiences for our guests as well as our team members and making sure that we weren't overspending on labor and all of those things. So we took those learnings into this year, really simplified the operations, make sure we had great guest experience. We were proud of the metrics, and we did almost $110 million in sales on Thanksgiving week, which was a big week for us. Thanksgiving traffic was in line with the rest of the month. So it didn't crazily outperform or anything like that. We were pleased with the performance. We were pleased that people invited us into their homes for Thanksgiving and that they celebrated with us in the restaurants, all leading to that $110 million in that week. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Julie Masino for any closing remarks. Please go ahead. Julie Masino: Thank you for joining us today. We're encouraged by the improvements we've seen in key guest experience metrics and in our traffic trend, and we remain confident that the plan we are executing will drive improved performance. Lastly, I want to again express my gratitude to our over 70,000 team members who remain focused on delivering an exceptional guest experience every shift, every day. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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