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Operator: Good morning, ladies and gentlemen, and welcome to the International Airlines Group Full Year 2025 Results. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead, sir. Luis Martín: Thank you very much. Good morning, everyone, and welcome to the IAG 2025 Full Year Results. As usual, I'm joined today by Nicholas Cadbury, our CFO, as well as the other members of the IAG Management Committee. I'm pleased to be announcing a record set of results today, highlighting the excellence of IAG's performance in 2025. We are delivering for our customers as our investments in operational and customer-related performance have led to another year of improving punctuality and customer Net Promoter Scores. We are delivering record operating profit, operating margin and return on invested capital. And we are delivering for our shareholders through the increased dividend and the new excess cash returns of EUR 1.5 billion. This is a significant increase on the EUR 1 billion buyback we announced last year. We continue to see a supportive demand environment that encourage our positive outlook. And as a result, we are planning further excess cash returns in the future. And we look to the future with great confidence as we continue to leverage our business model and execute our strategy, which will create value for our shareholders in the long term. In 2025, we have delivered world-class financial performance in each of our key metrics, continuing our track record over the past few years. We continue to grow revenue with robust demand for travel in our markets. Our operating profit and operating margin are now both at record levels, and our earnings per share has increased by over 22% this year. Our balance sheet is now in a very strong position. This has benefited from the strong free cash flow that we are now consistently generating despite a big step-up in CapEx during the year. And for our shareholders, we are creating significant value by earning an excellent return on invested capital of 18.5%. The fact that we are delivering strong results is not an accident, starting with the fundamental premise of IAG. Our group structure promotes excellence and accountability whilst providing the group-level support and direction that individual businesses benefit from. Our portfolio contains a diversity of markets, brands and business models that continually increase the resilience and sustainability of our performance through the cycle. Bringing this together is the secret sauce of IAG and sets us apart from any other airline group. Moving on to our strategy and targets. We are sticking to what makes us best-in-class. Our 3 strategic imperatives are designed to make our business stronger, more resilient and less cyclical. We have set out margin and return on invested capital targets that are appropriate for the group through the cycle, and we believe support a more sustainable long-term future. We are pleased to be delivering results that are at or above the top of those ranges, and we will continue to target the full potential for all of our businesses through our transformation program and capital allocation process. Ultimately, we want to create value for shareholders by delivering sustainable profitability and accretive growth in the long term. Over the past couple of years, we have highlighted 3 major areas where we could create significant value, and we are delivering on our commitments. British Airways has already reached its 15% margin, but still has more to deliver on its transformation program, including the commercial platform and fleet deliveries. Iberia is well on the way to its EUR 1.4 billion profit target, with an exceptional margin last year of over 16%, and we will continue to grow profitably in its core markets. And we will tell you more about the Loyalty's exciting potential at our Investors Day in June, both as a business in its own right as a significant contributor of value to the overall group performance. And on that note, I will pass over to Nicholas. Nicholas Cadbury: Thanks, Luis, and hi, everybody. I'm pleased to share our full year results. This first slide shows our very strong operating profit and margin performance. We've delivered a record operating profit of EUR 5.024 billion, up EUR 581 million versus last year. This is driven by strong passenger revenue growth and also good other revenue growth from loyalty, maintenance and also sustainability incentives and supported by the lower fuel cost. Our cost performance was in line with expectations and with the guidance previously provided to the market. I'm pleased with our margin performance, which continues to rank among the best in the industry, at 15.1%. It sits at the top end of our target range at 1.3 points higher than last year. On the right side, you can see how our strong markets, hubs and brands drove this exceptional performance in all our businesses, which we will detail in the next slide. All our operating companies delivered excellent results this year, building on the strong performance also achieved last year. Aer Lingus delivered a strong improvement in 2025, increasing its operating margin to 11% with operating profits at its second best level on record. The airline was affected by industrial action in a base last year and managed to hold unit revenue flat while growing capacity. This was despite a very tough competitive environment in Dublin, particularly from U.S. carriers that is ongoing. Alongside this, Aer Lingus has delivered strong cost discipline, supported by its transformation program. British Airways delivered an excellent margin performance at the upper end of the group target range. This was supported by strong premium leisure and improving corporate demand with cost performance reflecting investments in the business alongside its transformation program. Iberia also had a tremendous year, reaching a record 16.2% operating margin. The airline made excellent progress against its Flight Plan 2030, delivering EUR 1.3 billion of operating profit this year towards its EUR 1.4 billion ambition, driven by the strong revenue performance, particularly in Latin America. Iberia's costs were particularly affected by engine availability on both long haul and short haul, extra disruption and resilience costs. The cost increase also includes the cost relating to its growing MRO business that was particularly strong in the first half of the year. Vueling delivered a robust set of results, generating an operating profit of EUR 393 million and a 12% margin, among the strongest in the European low-cost sector. Revenues reflected a softer summer travel environment in parts of Europe, particularly Northern Europe, partially offset by the continuing strength in the Spanish domestic market. What really stands out, however, is Vueling's strong cost performance that Luis will touch on later. And IAG Loyalty, including Holidays, continues to deliver high-quality, high-margin earnings. The business yet again delivered the 10% margin growth ambition we set for it, reporting GBP 469 million of profit and an 18% margin, excluding the impact of the VAT dispute with the HMRC, which is subject to ongoing litigation, and we -- and we still feel confident the operating profit would have reached over GBP 500 million. Turning now to our revenue performance in more detail. Overall demand for travel remains strong throughout the year, underpinned, as just mentioned, by the diversity of our network and of our strong brands. Capacity grew by 2.4%, in line with our guidance that we gave at Q3 results, and we delivered an increase of 1% in passenger unit revenue at constant currency and flat on a reported basis, a solid outcome against a record 2024. If we look at the performance by region, we are pleased with the North Atlantic performance, where we grew capacity by 1.4%, with unit revenues up 1.5% at constant currency and importantly, showed an improving trend as we went through the second half with Q4 unit revenues up 1.8% at constant currency. Underneath this trend, were consistent with what we highlighted throughout the year, with good premium demand, partially offset by some softness in U.S. point-of-sale economy leisure demand and continued impact from U.S. direct capacity growth into our hubs in Dublin and Madrid and secondary European markets. BA drove the Q4 performance with unit revenue at constant currency increasing strongly year-on-year, driven by strong premium cabin and business travel demand, particularly from the U.S. point of sale despite a tough comparator last year. Latin America and [ Caribbean ], strongest performer in the network. Our capacity increased 3.3%, with unit revenue at plus 3.3% as well at constant currency. Iberia delivered another excellent year and drove the Q4 performance with premium cabin, LatAm point of sale and business travel, all performing strongly. In Europe, we increased our capacity by 2.2% with unit revenue down 2.1% at constant currency. As mentioned earlier, this reflects the softer demand in parts of the summer and also the additional British Airways capacity. Domestic saw us growing capacity by 2.2% with unit revenues flat for the year, reflecting strong demand, particularly in the Canary and Balearic Islands. In Africa, Middle East and South Asia, we increased capacity by 2.7%, with unit revenue up 0.8% at constant currency. And finally, Asia Pacific delivered a strong recovery with capacity up 6.4% and unit revenue up 4.2%, supported by a refocus of the network towards stronger performing markets such as Bangkok and Kuala Lumpur and the full year impact of Iberia's relaunched routes to Tokyo. Just turning to this year, we're planning to continue to grow the business in a disciplined way with capacity up around 3% in 2026. And briefly touching on what we're seeing so far this year, we're seeing a strong Q4 -- Q1, sorry, including the North and South Atlantic and some additional benefits from the shift to an earlier Easter. At this point, I'd just like to highlight the FX has a major factor. Over 2025, we saw the pound weakened against the euro and the dollar weakened against the pound and euro. At these current rates, you will know that there will be a significant FX headwind on revenue this year, particularly in the first half of the year, which we will be reducing progressively into the second half. And of course, this will apply to our cost base in the reverse with a favorable FX impact. Total unit costs improved 0.4% and non-unit fuel unit costs increased by 2.8% year-on-year, actually in line with our guidance. This full year cost performance benefited from FX movements of 1.3%, although it's worth noting that the increase in costs relating to the growth of other revenue to the MRO also drove around 1.3% of uplift as well. So both the FX and the other revenue costs neutralized each other out. Employee cost unit costs increased 3.8%, driven by operating investments, operational investments and payments linked to strong financial performance. Supplier unit costs rose by 0.8%, with transformation initiatives helping to offset inflation pressures and support investments in our customer experience. Ownership costs increased 10%, reflecting the new aircraft, cabin retrofits, lounge upgrades and digital platforms, all of which are for the benefit of our customers. Those impacts were partly offset by a 9.1% reduction in fuel costs driven by lower prices and partly offset by an increase in carbon-related costs, both ETS and CORSIA. We remain confident that our transformation program will continue to underpin cost benefits -- cost efficiencies as we move forward. For 2026, we expect nonfuel costs to be down around 1%, and that includes a benefit of around about 2%. So in other words, they're up 1% on a constant currency basis. Fuel prices have been very volatile. On the 31st of December, our fuel bill based on the forward curve then was estimated to be EUR 7 billion, including a 62% hedge that we have in place. Since then, jet prices have increased following the recent escalations and tensions in the Middle East. So based on the current forward curve, we can see an increase to around about EUR 7.4 billion. We'll have to see how this plays out over the next few weeks and months. This fuel scenario also includes a year-on-year increase from ETS and CORSIA of roughly EUR 150 million. Adjusted EPS increased by 22.4%, reflecting both the strong performance with the growth in adjusted profit after tax of 17% to EUR 3.3 billion and the share buyback program that reduced our weighted average shares count by 4.3%. Overall, this performance underscores the continued momentum in our earnings and our focus on delivering sustained value for all of our shareholders. We achieved a free cash flow of EUR 3.1 billion after investing EUR 3.4 billion of capital in the business. This was supported by the positive working capital movement, partly driven by IAG's loyalty and the Amex contract renewal as well as interest paid benefit from the early debt repayment. These benefits more than offset higher purchase of carbon assets ahead of the changes to free ETS allowances and the payment to HMRC relating to the IAG Loyalty tax appeal that were not settled until the earliest of 2027. I'm pleased to report that our balance sheet continues to be very strong, with net debt leverage of 0.8x and liquidity over EUR 10 billion, positioning us well for the years ahead. Our gross debt benefited from a EUR 1.3 billion favorable FX impact related to the U.S. dollar-denominated debt from the weakening of the U.S. dollar. We aim to keep our gross debt leverage between 1.5x and 2x. To this aim, we finished the year at 1.9x, having repaid EUR 1.6 billion of non-aircraft debt and taking 2/3 of our 25 aircraft deliveries as unencumbered. We remain committed to investing in our fleet, enhancing customer experience and building resilience. We've shown on this slide the phasing of CapEx over the coming years, which will put our CapEx allocation and balance sheet decisions into context. In 2025, CapEx was slightly lower than planned due to the timing differences and the phasing of some customer-related investments. This year, 2026, we expect CapEx to be around about EUR 3.6 billion with 17 aircraft deliveries, continued cabin retrofits, including British Airways, A380s and 787-9s and ongoing investments in property, especially the improvement to our lounges. Looking forward, we've been saying for a while now that our CapEx will increase in the coming years as delayed aircraft from the manufacturers start to get delivered and make up for the lower CapEx numbers we've seen over the last few years. For the last 4 years, this increase has continuously pushed to the right. However, we expect to start seeing this increase materialize in the next few years. In 2027 and 2028, we expect CapEx to average EUR 4.9 billion, mainly reflecting the delivery of the Boeing 737s for Vueling and the start of the 777-9 deliveries for British Airways in 2028. CapEx is then expected to increase further to an average of EUR 5.6 billion for 2029 to 2031 as the 71 wide-body aircraft we've ordered in 2025 and the previously delayed wide-body aircraft deliveries start to materialize, with around about 70% of these deliveries being replacement aircraft. Beyond this period, we'll return to our normalized CapEx run rate of around about EUR 4.5 billion from 2032 onwards. We're able to do this as we're making good returns on capital and have high disciplined approach to capital allocation to support our ambition to deliver focused capacity growth by 2% to 4% over the medium term. With this increase in future capital spend, we will still be strong cash-positive throughout these years, and we'll continue strong shareholder cash returns with a higher CapEx delivering higher profits. Given this confidence in our cash generation, the current very strong balance sheet and in preparation for this CapEx trajectory, we've decided to widen our guidance on distributing excess cash returns to 1 to 1.5x net debt leverage. And finally, our disciplined approach to capital allocation and how we manage our balance sheet, investments and shareholder returns. Firstly, we remain focused on balance sheet strength. Across the cycle, we maintain our net leverage aim of less than 1.8x. This being a proxy for investment-grade rating, which we are with both Moody's and S&P. And as I mentioned earlier, in the near term, we want our gross debt to be 1.5 to 2x, which puts our balance sheet in an extremely strong position. Secondly, as I've just described, how we'll continue to invest in the business, and we'll be doing so at high rates of return on capital. Thirdly, we're committed to a sustainable dividend through the cycle. For 2025, this equates to a total dividend of EUR 448 million, and our intention is to grow this broadly in line with inflation, while dividend per share will grow faster as we buy back shares. And lastly, we'll continue to return excess cash to shareholders as we've just announced a further EUR 1.5 billion of excess cash returns over the next year. This represents around about 6.5% of today's market capital. And over the 3 years since 2024, we will have distributed just under EUR 3 billion of excess cash, around 13% of today's market cap. Given our financial framework and ambitions, will still allow us to continue significant excess shareholder returns over the coming years while also reinforcing the balance sheet in anticipation of higher CapEx. Overall, this disciplined approach ensures that our balance sheet remains a source of strength, supporting the business through the cycle, giving us the flexibility to allocate capital where it creates the most value and positioning us to continue investing for the long term while delivering attractive returns to our shareholders. Thank you. I'll now hand back to Luis to continue with the strategic update about our business. Luis Martín: Thank you, Nicholas. I will now spend a few moments going through the strategy, which has worked successfully for us for a long time now. This will demonstrate how we can sustain this level of performance. Firstly, the backdrop is compelling. Demand for travel is and has been a long-term secular trend, which, if anything, has increased in recent years. And as Nicholas indicated in his preview of our deliveries over the next 6 years, supply is constrained by the aircraft and engine manufacturers. We have strong positions in highly attractive markets, which are served by more than one airline brand in every market. This diversity is a key component of the group's resilience and helped to deliver such a strong performance in 2025, even whilst the macroeconomic backdrop is not particularly supportive. Nevertheless, we grew passenger revenue in each of our core markets, with all of our airlines contributing to that growth. We are investing in our brands, which is delivering a better experience for our customers, and you can see in our NPS improvement across the last 3 years. The investment is across the customer journey, so includes on the ground and in the air. We are currently excited about our partnership with Starlink, which will provide high-speed connectivity across the group on every one of our airlines and the first Starlink-enabled aircraft will be operated by British Airways in a few weeks' time. On this slide, we have highlighted some examples of how transformation underpins our margin delivery, supporting both revenues and cost control. At British Airways, the improvement in on-time performance has been a fundamental driver of margin improvement over the last couple of years. It drives productivity, increases revenue and reduce cost of disruption. It is also the biggest driver of customer satisfaction. In 2025, they delivered OTP of over 80%, the best performance since 2014 and a 20-point increase over 2023. In the meantime, Iberia remains as one of the most punctual airlines in the world. Also at Iberia, they have focused on transforming their proposition over the last few years, reflecting the more valuable demographic of their customer base, particularly in the South American market. As a result, they have grown the premium customer base, and this has helped to drive their yields in the premium cabins. Vueling has delivered the best cost control of any low-cost carrier in Europe since pre-COVID. In particular, they have driven lower supply unit cost, which includes both maintenance and airports, which is an exceptional situation in the current operating environment. I will also mention at this point that Aer Lingus delivered a record NPS score and their best OTP since 2016, highlighting their customer focus point of difference in Dublin. All these improvements have been supported by collaboration and sharing best practices across the group, one of the core benefits of our structure and business model. IAG Loyalty continues to grow strongly as a higher growth, higher margin and capital-light business. Based on the earn and burn model where we incentivized the awarding of Avios by also increasing opportunities to spend them, it increased revenue by issuing 200 billion Avios up to 30%. And at British Airways Holidays, they benefited significantly from the changes to the BA Club with revenue from elite members increasing more than 15x faster than other customers. As I mentioned earlier, Loyalty expects to grow earnings by at least 10% each year and grew profit by GBP 49 million to GBP 469 million in 2025. This profit growth was even higher growth if you put to one side the disputed HMRC tax treatment at over 20%. The second major strength to our capital-light development is through our airline partnerships, which deliver accretive value without the need for investment in aircraft. We access 3,000 additional aircraft through our partners, which then unlock 2,600 additional markets through a one-stop journey. This allows us to cover 97% of all passenger demand from our home markets, with loyalty scheme benefits, a key factor. This powerful network, the world's largest delivers significant partner-enabled revenue to the group every year. We made progress with our sustainability road map in 2025. We increased our SAF usage to 3.3% of our total fuel volumes, up from 1.9% in 2024. This also helped to deliver carbon intensity of 77.5 grams of CO2 per passenger kilometer ahead of our target alongside our investment in more than 15 aircraft. As always, this was all delivered by our people. We are committed to supporting our employees through their careers at IAG. We recruited over 10,000 people in 2025, continue to recruit and train pilots and our dedicated airline academies and continue to develop pay structures with all our collective groups that benefit both parties. This includes an agreement 2 weeks ago with Iberia's ground staff. I would like to take the opportunity at this point to thank all of our employees for their hard work during the year. Over the last 3 years, we have created significant value for shareholders. Firstly, we have a portfolio of markets and brands that is unrivaled anywhere in the world and is valued by our customers. This drives attractive revenue growth. Secondly, our execution every day is delivering best-in-class margins and earnings growth, significant free cash flow and high return on invested capital. And thirdly, this creates value for our shareholders through the dividend and our program of historical and prospective buybacks. This is world-class shareholder value creation. So in summary, the market remains compelling. We will continue to execute on our strategy and deliver world-class margins and return on capital. We are rewarding our shareholders with a strong earnings per share and dividend per share growth as well as EUR 1.5 billion in excess cash returns. We plan to continue to return more excess cash to shareholders. And we are confident that we will create significant value for our shareholders in the long term. And now we open the line to your questions. Operator: [Operator Instructions] Your first question comes from the line of Jaime Rowbotham of Deutsche Bank. Jaime Rowbotham: Two questions from me. Firstly, the transatlantic unit revenues at constant currency were negative 3-point-something percent in Q3 but back to positive. I think it was 1.8% in Q4. So very encouraging. Could you talk a bit about the outlook for the transatlantic in summer '26? It feels like there's quite a few moving parts. Those economy cabin weaker trends in '25 become a soft comp, but at the same time, I don't know if you anticipate any disruption from the Football World Cup. And to what extent do you expect the premium cabin trends to remain strong? Any comments, please, on summer transatlantic unit revenue progression in 2026? Second question, Slide 17, very helpful in terms of laying out the medium-term vision on the CapEx. Could you just help us in terms of actual aircraft deliveries? Is there a particular year, 2029, 2030, when you expect to be at peak deliveries? And could you just tell us roughly what that might look like? Is it 40, 50 aircraft? What's the split between narrow-body, wide-body in a sort of peak delivery year, please? Luis Martín: Thank you very much. So North Atlantic, as you said, since the third quarter last year, we saw a rebound. We had a positive increase of unit revenue in the last quarter of the year at constant currency. And now what we see is an improvement in the trend over the last few months, in particular, in the case of British Airways, where even the non-premium leisure revenue has been booking well, U.S. point of sale, in particular, strong. And this is in contrast with what we saw in the third quarter of 2025. Business demand is also booking really well, both U.S. and U.K. point of sale. And premium leisure continues strong. So in Iberia and Aer Lingus, we also expect demand to remain strong, but they are having more increased competition in their hubs. But maybe, Sean, you can add some comment about British Airways. Sean Doyle: Yes. I think we've got a couple of things which have been very encouraging in Q4 and in Q1 as well as the business demand. So we're seeing strong demand out of the U.S. point of sale and pretty robust demand out of U.K. point of sale. And I think we've seen recently as well the kind of market out of U.S. point of sale to Europe more broadly is resilient. Like one example, to be honest, was the Winter Olympics, where we saw really strong demand out of the U.S. into markets like Italy, and we were able to capitalize on that over our hubs. So we're seeing that in the fourth quarter, and we see it in the first quarter as well. Luis Martín: Marco, do you want to comment? Marco Sansavini: Well, in terms of the performance in Iberia, also, we have seen very strong business evolution there. And it's true that in terms of our yields in economy, we have seen some pressure related to the increased competition, but that has applied primarily in Q3 that you saw reflected in last year, that you saw reflected also in the overall performance of the group. But in Q4, that strong increase has softened. And as a result, also, we saw an improvement of performance. Nicholas Cadbury: Just on the CapEx numbers, we'll come back to Jamie at a later date and give you kind of more kind of precise kind of delivery time, what's been delivered by little bit later. I mean what I would say is, in 2027, we're, of course -- at the back end of this year and into next year, we're, of course, starting the refleeting of Vueling into the 737. So that starts ramping up from '27 onwards. And that takes around about 6 years to do as well. And then in '28, you get -- start getting the deliveries of the 777-9s into British Airways. And then you get -- the planes that we ordered in March, really start to get delivered from '29 onwards over those kind of 4, 5 years. So we'll come back and probably give you a bit more detail later. Operator: Your next question comes from the line of Alex Irving of Bernstein. Alexander Irving: Two for me, please. The first one is on distribution. Specifically, how are you approaching the decision about whether and how to sell through large language models? Would you plan to engage directly with LLMs through an API or to rely on existing structures, GDSs, travel agents, continue to pay commissions? When do you think you will sell your first trip and ticket through an LLM? Second question, also on tech, specifically for BA. You're about 2 years into the implementation of Nevio. We've seen Finnair suggesting they're seeing a 4% uplift in pricing, 10%, 15% uplift in ancillary sales from its implementation. Is that sort of result achievable at British Airways? Or more broadly, how do you see the RASK impact of your IT transformation from a move to a modern retailing platform? Luis Martín: You want to comment, Sean? Sean Doyle: Yes. We are seeing -- we are now selling the vast, vast majority of our direct sales through our new platform. In fact, 95% of our volume went through new ba.com in the January sale. And I think the numbers we're seeing are encouraging. One is CSAT is much higher. I think two, things like look-to-book conversion has improved and we've also seen better trade-up and better average unit revenues coming through. That's kind of the first real sort of significant test that we've put the volumes through, but the numbers are encouraging. I think Finnair may be a little bit more advanced in adoption of Nevio compared to where we are. So we work with them across the joint business, and we do see some significant improvements that they're demonstrating on ancillaries. And that would have been part of the kind of business case that we would have put together a couple of years ago when we embarked on this journey. So encouraging signs both on CSAT and revenue conversion trade-up and ancillaries. Operator: Moving on. Your next question comes from the line of Stephen Furlong of Davy. Stephen Furlong: I guess 2 questions. Can you just talk about why the -- again, the excess cash below net leverage target has been widened. Is it to do with just the delivery or the CapEx step-up? Or is it to do with one eye on TAP? That's the first question. And maybe for Sean, just on -- I mean, obviously, BA is performing well in terms of margins. But I know from the Insight Day, I thought it was 2027 maybe when some of the investments come through that the underlying business probably feel that the, let's say, more resilient by then, maybe just the market is good right now or the way the dollar has gone and stuff like that. So just talk about more the resilience of BA and when do you think it's kind of in full bloom, as a word, that would be great. Nicholas Cadbury: Just starting on the kind of guidance on the distribution of excess cash, we widened the guidance to 1x net leverage to 1.5x. We've had fantastic results last year, really strong cash generation, and that gives us real flexibility to both distribute what we think has been a good return on capital in a 9% yield this year in terms of what we're returning to shareholders at the same time and strengthen our balance sheet further and invest heavily in the business. I guess the main thing for that, though, is we've got our eye on the increase in CapEx that comes in the next kind of -- next few years overall. So it's really making sure that we lock in the benefit we've had of the really strong year this year to really make sure that, that continues and that we're in a strong place to make sure we continue to give good shareholder returns and distribute excess cash. So we've used this kind of really strong opportunity to set the balance sheet for the increasing cash and those future shareholder returns. Sean Doyle: If I pick up on the BA question, Stephen. Yes, look, I think we have delivered the 15% 2 years earlier than we set out about 14 months ago. I think, as you said, some of the dynamics have probably worked in our favor, but I think we are seeing the benefits of transformation already. I think Luis mentioned the operational performance transformation, the benefits that gives to Net Promoter Scores and CSAT, but also the benefits it gives in terms of reducing nonperformance-related costs such as disruption. So we expect that to kind of flow through and carry on. Number two, I suppose, is the investment we've made in technology and new platforms. I think we are very excited about the new digital capability. It's performing well, but we have more to come in the coming months as we roll out more of that functionality. We have a new revenue management system, again, which is showing encouraging results. We have a new payments platform, which is increasing optionality and also increasing conversion. So I think we will see more value accretion coming from those levers as we look into '26 and '27. I think the other angle, I suppose, which we're excited about is growth. Nicholas mentioned CapEx, but we will see more long-haul aircraft come back into BA. Today, we're still a bit smaller than we were in 2019, and we feel we have a lot of opportunities to grow long haul, which again helps with margin growth and also helps with things like seasonality because it works very well in winter with a number of markets that we could serve. And finally is the onboard product. We will complete the rollout of the club suite. We're about 76% now at Heathrow. The 789s are going in this year, the A380 start, and we see really strong commercial and customer performance on the back of completing those reconfigurations. So I think we've made a lot of progress on what we said we would deliver on 15 months ago. But I'd agree there is still a lot of transformation that we will unlock in the next couple of years. Operator: Your next question comes from the line of Savi Syth of Raymond James. Savanthi Syth: Two questions from me. Just first, I was wondering if you could give a bit more detail on what you're seeing on -- in terms of engine durability, maybe supply chain and cost escalation. Just wondering across those 3 things, are things improving or not much changing or getting worse? And then second, I know you mentioned it was strong, but I was wondering if you could give -- please give a little bit more color on like corporate and premium trends across the airlines. Luis Martín: Okay. The first question about the supply chain. I think we talk about aircraft, the plan is that we are going to receive 17 aircraft this year. And we are pretty sure that the manufacturers, they are going to comply with this plan. In any case, we'll have some buffers in case -- we could have some delay. We continue with the issue that everybody has with the engines. We are having problems with the GE engines, in particular, in Iberia, where they are suffering the lack of spare engines in the 330s. We are having the problems with the GTF in Vueling. As you know, they have on average like 16 aircraft grounded because of this situation. And also in the case of BA, they still have 787 grounded because of the growth issue. We hope that in the case of BA, this situation is going to be recovered in May, but that's the plan that we have right now that we continue working with the different OEMs to try to improve the situation. But I would say it's improving, but slowly. Nicholas Cadbury: Yes. The second question was about corporate demand. We're trying to move away from comparing ourselves to 2019. We think that's kind of ancient history now. So all we can just say is actually, we've seen corporate demand be strong in Q4, and in the first early days into Q1, it's been good as well. Of course, that helps the yield curve, which is -- so it's been good. It's been strong across all kind of sectors, not just finance. So been good so far. Marco Sansavini: And in particular, let's say, the Latin American premium market has evolved, came very, very strongly. For instance, comparing to last year, the business market has increased in revenue 7% versus last year. And it's a bit like what we have been sharing with you when presenting our Flight Plan 2030. So there is, Madrid converting into the new Miami, seems not only to indicate an increase in overall traffic, but particularly, premium traffic from Latin American countries. Operator: Your next question comes from the line of James Hollins of BNP Paribas. James Hollins: Nicholas, one for you. On the unit cost guidance of minus 1% in 2026. If we reference Slide 13, you give a little bit of detail on the puts and takes across employees, suppliers, ownership. I was wondering if you would be willing to flag maybe how you expect those to move in 2026, if there's anything particular that you would see nicely down? Obviously, FX is the big help. And seasonally, I assume H1 better than H2 because of FX. Any other seasonality you might want to flag? And secondly, on Vueling, please. I know that IAG obviously has a policy of asking CEOs to beg for growth. And clearly, Carolina has won the battle. I don't know if Carolina is on, but I'd love to hear a bit more about the planned 50% passenger growth over the next decade in Vueling, whether it's -- where it is outside Barcelona? If there is, I assume there must be. Clearly, what happened internally to secure that investment? And maybe a bit more detail on what I think is called Rumbo 2035? Nicholas Cadbury: Yes. So this last year, we finished with nonfuel unit cost up 2.8%. We've always said that, that would moderate. And actually under a constant currency, it's up 1%. So it's doing exactly what we said it'll do. It's moderating. We have got a benefit, though, as you say, of around about 2% benefit from FX. So that's why it's down 1% overall. I think if you just -- just for information for everyone, if you look at the FX impact through this year coming, you're going to get a benefit in nonfuel CASK and you're going to get a headwind on revenue of around about -- in Q4, of around about 4%; in Q2, about 3%; and in Q3, of about 1%, and that should be -- hopefully should be flat in Q4. So that's the kind of shape of it. If you look at the nonfuel CASK, just the way it's phasing, you'll see there's a bit more of a kind of headwind in Q1 and probably Q3 overall, if you go to phase it across the year on a constant currency basis. Carolina Martinoli: Vueling? Okay. On Vueling plan, what we have presented is a plan for the next 10 years, with 20 million passenger growth. So the geographical focus is clearly Barcelona, domestic Spain, where we are leaders, we have over 1/3 of the market of Spain domestic and connecting Europe with Spain fundamentally through the 11 bases we have, Barcelona and plus other 10. This plan is very linked to the refleeting, which will restructure our cost base. Also, it will give us more gauge, and this is extremely important, especially in the case of Barcelona. You know Barcelona is a constrained airport with expansion plans in '31 and '32, but we will have a 14% gauge increase with the new fleet in average. Operator: Your next question comes from the line of Jarrod Castle of UBS. Jarrod Castle: I just want to come back to AI, but now more on the opportunity for taking out costs because obviously, we're starting to see companies at least announce large job cuts, today, it was Block. But I'm just wondering what are your plans to achieve efficiencies through AI adoption? And kind of related to headcount, are there any staff negotiations outstanding as well? And then secondly, just on the 3% capacity deployment, obviously, very useful Slide 36. But can you give some just regional color in big pictures where that 3% gets deployed? Luis Martín: Okay. So artificial intelligence, you know that in our transformation, 80% of the projects are linked to technology and artificial intelligence for sure, is critical. So we have projects, for example, in the area of maintenance where artificial intelligence is going to help us to be much more efficient. We have developed some tools, for example, in order to improve the planning that we do with our engines or our fleet. Artificial intelligence is going to help and is helping us also in the customer experience. And also, we are analyzing ways to be more efficient, but the objective is not to reduce the headcount, it's more how we can use artificial intelligence to improve customer experience and to improve also the efficiency of all of our workforce. So again, all the plants are based in technology. Artificial intelligence opens a big range of opportunity, and we are exploring all of them. Nicholas Cadbury: Just on the capacity 3%, you've got -- we've given you in the appendix where it's going to be by airline overall, so you can take a view on that. But if you look at North America, it's roughly in line with that, better than 3% overall. It's a bit better that even again on Latin America, where we're looking at kind of 4.5% plus capacity on South Atlantic, and it's pretty flat across Europe. It's up in Asia Pacific and base, but of course, it's a low base so. Jarrod Castle: And labor negotiations? Sorry. Nicholas Cadbury: We're in a relatively good position on labor negotiations. Operator: Your next question comes from... Nicholas Cadbury: We're in a relatively good position on labor negotiations. Operator: Your next question comes from the line of... Nicholas Cadbury: Could you introduce the question again, please? Operator: Apologies. Your next question comes from the line of Harry Gowers of JPMorgan. Harry Gowers: First question... hello? Can you hear me? Nicholas Cadbury: Yes. Harry Gowers: Hello? Can you hear me? Nicholas Cadbury: Yes, we can hear you. Harry Gowers: Yes, yes. Okay. Sorry. So first question, I mean, you talked about strong bookings in the Q1 in your outlook. So maybe like a little bit more color on what that might mean in terms of booked revenue or pricing? I mean, can we see the same group ex-currency RASK in Q1 that we saw in Q4? And then just second question on EBIT margins by airline. Just wondering what's the full potential for some of these businesses? I mean when I look at your Slide 11, the margins are already very high. Aer Lingus is at 11%; BA, 15%; Iberia, 16%; and Vueling, 12%. So maybe where do you see the margin upside by individual airline going forward? Luis Martín: Okay. So I think what we see now for a year, I think we have a lot of visibility for the first quarter. We are, for the first half, in line with the plan. It's true that the first quarter, we are going to have the benefit of the Easter that is helping. But when we look at the summer, Q2 and Q3, we only have about 30% book. So what we see is, in general, positive. Business traffic is growing and is helping the near-term bookings. And when we look at the different geographies, we talked before about North Atlantic, but LatAm also remains strong for Iberia. And also, we see a healthy performance in the Caribbean for BA. Europe also booked well. We see also a strong business demand in the case of BA. And the only region where we see some softness is Africa and Middle East. So I think in general, we are on plan, and we are confident for this year. Nicholas Cadbury: Yes. Just in terms of kind of full potential, of course, if very strong demand, you get low fuel price, of course, you can maybe go higher. I guess where we're focused on is delivering in the range we've already set out, the 12% to 15%. Our view is if we can keep towards the top end of that range and keep delivering at 15%, grow at 2% to 4% ASK that is incredibly strong performance overall generates huge amounts of cash, great shareholder returns overall and allows us to invest in the business. So that's where we're going. If the benefits go move in our favor and we get above that, that's great. But that's our aim, is to be kind of keep delivering out at that top end of the range. Operator: Your next question comes from the line of Conor Dwyer of Citi. Conor Dwyer: First question is around that margin question. Obviously, last couple of years, you've been at the upper end of that 12% to 15% range. We're obviously still talking about more transformation at BA, Loyalty will be growing above the rest of the group, and obviously, the trends in Iberia are very strong. So just wondering is there any scope for that kind of 12% to 15% to be moved up or even the lower end of that to be moved up? And then on the second side, just around free cash. Obviously, at the moment, the outlook for that looks super strong, but CapEx is rising towards the end of the decade. And obviously, you'll be intending to grow your top line. I'm just kind of wondering, do you envisage a scenario that in that higher CapEx environment, free cash is still able to be in and around the current level. Obviously, some investors will be somewhat worried that we have a couple of years here of super strong free cash generation in the 5, 6 years out, maybe that kind of normalizes. Nicholas Cadbury: Just in terms of the margin targets, we've got -- we're very comfortable where our margin targets are through the cycle at the moment. As I said earlier, kind of if we keep growing at 2% to 4% ASKs and hit 15% margin, I can't think of any other airline that's going to be able to do that as well over time. So that's a really great performance overall. So we're very comfortable with that as well overall. Just in terms of the free cash flow, I mean, we kind of said -- I said in my script, actually that you've got the kind of CapEx going up over time. Higher CapEx when you're delivering good margins, means higher profits at good returns. So it should continue to be strong cash generation overall. So actually, with the higher CapEx, actually should give you, over the longer term, even more confidence in our cash generation. Operator: Your next question comes from the line of Muneeba Kayani of Bank of America. Muneeba Kayani: Actually, I just wanted to talk about your range again. Like maybe I don't understand how -- what do you really mean by through cycle? Like what's the definition of that? And ROIC is clearly well above your target at this point. So both on margin and ROIC, if you can talk about what you mean through cycle? And into your growth algorithm, which you touched on in the slide, historically has been strong, but how do you think about that growth algorithm into the medium term? That's the first question. And then secondly, just going back on Loyalty. You talked about the Amex contract renewal had a positive impact on working capital. Can you give a little bit more details on what this renewal was? And how do you think about getting to that 10% growth? Nicholas Cadbury: Yes. I'll start with the Loyalty-Amex question. Yes, we're really pleased that we've signed it [indiscernible], which really underpins the profitability of our Loyalty business overall, and that's been one of the great sources of growth, is our partnerships, particularly on the kind of financial partnerships. And we'll talk a little bit more about that on the 3rd of June overall. We've got -- it's commercially sensitive in terms of how much -- how much it benefited our working capital, but we just thought it was worth calling it out overall. Definitions of through the cycle, good question. I guess it mean -- through the cycle just means that we think with normal kind of cycles of ups and downs in the economies and GDPs, of course, it doesn't mean if you get another COVID event or something like that. But we just think through that kind of normal GDP fluctuations that you get over a kind of 10-year cycle. That's what we're trying to aim our targets to be. Muneeba Kayani: And the growth algorithm? Nicholas Cadbury: I didn't quite follow your question on the growth algorithm, sorry. Muneeba Kayani: So as you think about the growth algorithm in the medium term, so you talk about the 2% to 4% ASK growth and margins kind of remaining at that stable level. So that drives kind of 2% to 4% EBIT growth, is how to think about it? And then you get the strong cash generation and buybacks driving EPS growth of high single digits. Is that the way to think about it? Nicholas Cadbury: That's a nice way of thinking about it. Operator: Your next question comes from the line of Ruairi Cullinane of RBC Capital Markets. Ruairi Cullinane: Congrats on the strong year. So firstly, how do you view the capacity backdrop on IG routes this summer? It looks pretty constrained to me on the Atlantic overall, but I think Nicholas also commented on elevated capacity growth from Dublin. And then secondly, domestic RASK was up over 8% in Q4 after declining in Q3 on trimmed capacity. So what drove that? Luis Martín: So the plan that we have for this year is to increase capacity by 3%. When we look at the capacity that we are going to have in the different markets, for example, North Atlantic, the capacity that we see out of London is going to continue benign, and we are going to have a flat environment. Madrid is going to be different. We expect significant increases, although it's true that part of this is driven by Iberia because they are adding capacity in North Atlantic. Also, they have now the new 321 Extra Long Range, and they are putting capacity there. Dublin is going to be a competitive market also, and they are going to have a growth close to 10% during the summer. South Atlantic, a little different. Capacity out of Madrid, we expect growth between 5% and 6% for the summer. If we look at intra-Europe, for example, the capacity out of London on IAG route is expected to be down in the first quarter but up to between 2% and 3% in the second and third quarter. Barcelona is also a place where we see we are going to have growth in the summer, around 5%, 6%. And where we see more capacity is in places out of Madrid and Barcelona in Spain. But this is the global picture that we see. Marco Sansavini: And talking about the domestic and in particular, domestic Spain, it's true, it has been very strong along the past years. And it's true that you have seen in Q4, in particular, an additional increase which is relating to the fact that both with Iberia Express and with Vueling, we have strengthened our relative position into the islands in particular. And at the same time, Ryanair in the winter reduced capacity to the island. So the combination of these 2 factors made our position even stronger. And that will continue. You will see it continue in 2026. In Q1, for instance, is already producing itself with an additional element, which is that you have seen the very -- the tragedy of the train accident in Spain, and that has led some corporations, for instance, to change their travel policy in domestic traffic and in general, consumers to shift more to train -- to flights. Therefore, you will see an underlying very strong demand throughout 2026 in domestic. Operator: Next question comes from the line of Gerald Khoo of Panmure Liberum. Gerald Khoo: If I could start with the sustainability of margins and return on invested capital. How sustainable do you think they are at these levels? It sounds like you are very comfortable about that. But what pushes you towards the middle of that sort of through-the-cycle range? Is it just an economic downturn? Should we expect return on invested capital to moderate as the CapEx ramps up? What impact does that CapEx ramp-up have on margin? And Secondly, you talked about the strength of premium leisure. I was just wondering how does the booking profile of premium leisure differ to sort of the network average and to non-premium leisure in particular? Does it book earlier? Does it look later? Is the sort of duration of stay longer or shorter? Nicholas Cadbury: Yes. I mean the sustainability of the margin, good question. I think there's lots of areas. You could say the short-term downturn in the market. You can say if there's increasing tension across the Middle East, what happens then as well. I mean just the example we called out on the call though as well that I think most of you consensus at EUR 5.2 billion, and that includes a kind of EUR 7.1 billion of fuel in there, and the fuel has got up to EUR 7.4 billion in the last few weeks as well. Now hopefully, we can pass some of that on to investors. I think we'll still retain our strong margins, but you got lots of kind of external variables that kind of impact that overall. But I think we're focused on making sure we commit to our transformation, commit to our growth plan, our disciplined growth plan as well and that kind of all, whatever circumstance just towards the most competitive margins that we can get overall. Luis Martín: And the second question, premium leisure, usually, they book in advance. So as we said before that business traffic is recovering. So -- and the pattern of booking of business traffic, usually bookings are late. So in some cases, we are holding the nerve because we know that demand is coming. And in some way, we are trading between premium leisure and business. But maybe Sean, you can comment with the... Sean Doyle: Yes. I think what we have been seeing is strong late in business leisure or business bookings certainly in Q1, and we try and protect inventory to capitalize on that. I think we've done some analysis and interestingly enough, people from our executive who are traveling for premium leisure will be booking 60 days plus in terms of travel plans. Your business traveler will be more like 40 days. So there's kind of a 2- to 3-week difference in the booking profile between one segment and the other. But as Luis said, it's one of the things that we look into next year to try and optimize because we see that late booking business demand has been pretty robust in Q4, and we're seeing it in Q1 as well. Gerald Khoo: Sorry. How does premium leisure book relative to non-premium? Is it earlier or later? Sean Doyle: I think it has a similar profile actually. I think when people are planning a holiday and they're planning a hotel and planning an itinerary, they'll tend to plan further out. So we don't see that marked a difference between the premium leisure and the non-premium leisure side. We do see premium leisure actually tends to book more directly through our channels. We do work with sort of online travel agents more for the non-premium side. Operator: Next question for today comes from the line of Axel Stasse of Morgan Stanley. Axel Stasse: The first one is on the BA and Iberia cost improvement and efficiency program that you guys have announced in the last couple of years. Can you maybe quantify the improvements heading into 2026? What -- are the other improvements done? Is it just about efficiency and therefore, depend on the aircraft delivery? Or is there something else we should be aware of? So that's the first one. And then the second one, coming back to the working cap effect from the Loyalty, should we expect this to reverse heading into 2026? I understand you're about to tell us more specifics, but how should we model this going forward? Nicholas Cadbury: So I think your question -- just on the working capital one. So there were 2 things that happened on the cash flow this year to Loyalty. One is we did benefit from some Amex, the signing of the Amex. We can't quantify that over time. So that gets smoothed across the P&L over the next x years that we signed the contracts for. So it doesn't reverse. You just don't get it again. We did though pay kind of EUR 450 million to the HMRC for this VAT case that we've got with HMRC that we feel very confident on. Actually, that comes into court later this year, but it probably won't get settled until 2027 probably. So you should get a reversal, but it might take a number of years before it does reverse overall. So just -- I think hopefully that answers your question on that one overall. Just in terms of the cost improvements, we don't give kind of specific guidance on the kind of transformation savings that we're doing. And we only do that because there's lots of moving parts, both the kind of inflation, the investments we're making, the growth we're having and the kind of transformation. And so it's all moving parts. But you can see that actually, if we're growing our kind of constant currency nonfuel CASK by kind of 1% and if you think kind of inflation is well above that as well and we're making kind of good investments in the company at the same time, you can see there's a high level of transformational benefits that we're putting through the P&L at the same time. Marco Sansavini: And maybe to give a bit of color of what is to come still in our efficiency programs. Clearly, supplier cost is one where through the strength of the group purchasing, for instance, we are having a lot of value creation in the coming months and years in our transformation plans that you will see coming through. And another key area of value creation there and efficiency is utilization. As you see, we've been evolving a lot through the years in reaching very high utilizations, and we still see room for improvement there. For instance, now we're taking new fleet, we are progressively introducing them, and we could not, of course, maximize the utilization of the new fleet in the first year with all the XLRs. And in 2026, you will see a very significant improvement there in our utilization and productivity. Operator: Our last question comes from the line of Andrew Lobbenberg of Barclays. Andrew Lobbenberg: I have 2 questions. One on competition on the South Atlantic. Clearly, premium goes really well for Iberia. Can you talk about how competitive that is against the Latin American carriers who are emerging from Chapter 11 and getting their mojo and yet Air Europa is wherever Air Europa is. So how does that go? And actually, in Latin America, you don't have a very wide footprint of partnerships locally. So does that impact your -- the power of loyalty and your ability to attract LatAm Latin originating premium passengers? And then the second question, at the risk of lighting, an obvious blue touch paper, do you want to talk around the relations with the airports, Aena and their airport charges Heathrow in their third runway and Dublin and its cap, which is on/off, on/off, I struggle to keep up. Nicholas Cadbury: That was 3 questions there, Andrew, but -- Marco? Marco Sansavini: And starting from the first... Andrew Lobbenberg: I'm not very good with numbers. Nicholas Cadbury: No comment. Marco Sansavini: If you look at our Flight Plan 2030, you would see that our starting point is to have a structural and maintain and foster a structural competitive advantage in cost versus our European competitors. We indicated that we have a 30% almost unit cost advantage versus the Air France and KLM and Lufthansa in Europe. But at the same time, in LatAm, in fact, LatAm carriers are -- have a much more competitive cost position. They have a cost position that is similar to ours. In some cases, even some corridors slightly better than ours. But we have a structural revenue advantage over there. We are the only carrier to Latin America that has, for instance, business class with full-flat position and doors. So we are the only one having 4-Stars Skytrax, all the others are 3-Star Skytrax. And we have, therefore, a premium revenue advantage that is also reflected by the fact that we've been building that through network coverage. We are the largest operator to Latin America by far and the one that has the most spread network, 18 countries are covered. Therefore, that competitive advantage in product and network spread is reflected into a premium advantage that is remaining. And in fact, we're building -- or what we are sharing is that our RASK in premium, you saw the comparison of our RASK in premium in 2019 and today is 34% higher. So this is a competitive advantage that we are building, strengthening and making stronger in time. Now certainly, as you mentioned, the Loyalty program is a key driver of that. We have mentioned, for instance, how much our top tier customers have increased in the year. So maybe, Adam, you can give some color there. Adam Daniels: Yes, sure. I think it's interesting that South America is particularly strong in the Loyalty space in terms of Loyalty businesses, and we are seeing significant growth, not only in terms of the membership, both in British Airways and Iberia, but also in terms of the deals that we're doing now there on the currency side, with financial services and elsewhere. So definitely, South America is a very bright spot in terms of the loyalty business and in terms of the collection of the currency and the drive to deliver or achieve the tiers. So we're very pleased with what we're seeing down there. Luis Martín: And about your third question about airports. So in general, I think that the approach is the same with the different airports that -- where we operate. So Heathrow, I think we don't want to have a debate about the cost of the project. So what we are saying is that we need to look at the facts, and the facts are that Heathrow is the most expensive airport in the world. You need to pay 2x or 3x more than what you have to pay in other big European hubs. So Heathrow has announced, it's not our number, they have in their web page, an expansion plan of GBP 49 billion. And we think that if that plan goes ahead, the passengers are going to pay double of what they are paying today. So we have done our internal analysis of the maximum level of investment that we think with the right facing, we can afford, in order to have flat charges for the passenger, and we have reached GBP 30 billion, is our number. And we can be wrong, but that's a reduction of 40% in the investment they are proposing. But in any case, what we are saying is if Heathrow is sure about what they are proposing and the extra passengers that we are going to have, I'm sure they don't have any problem to put a cap in the passenger charges. That, at the end, is the objective that we have. We have a cap in what they are going to pay, and we don't increase what they are paying today. That I think is enough. Then we support any project. Aena. Aena, we are working with -- also with the DORA III and it's similar situation. So we support the investment, not at any price. And for sure, the investment brings associated more passengers and more revenues. We hope more efficiencies. And because of that, we are defending that the charges for the passengers cannot rise so much. And in the case of Dublin, good news that the cap has been removed. What we are waiting is for an urgent progress of the legislation. And that's all. And I think that was the last question? Carolina Martinoli: That was the question. Luis Martín: Okay. So thank you, everyone, for listening today. We are very pleased that we have delivered another great set of results, and we are looking forward in a very positive way for 2026. Thank you very much.
Cristina Fernandez: Hello, everyone. We're delighted to be here. Thank you for coming. Welcome to our 2025 results presentation. Our CEO, Luis Maroto; and our CFO, Carol Borg, are going to be presenting on our performance, our key developments, our outlook, and we will follow this with a Q&A session. We have invited Decius Valmorbida, President of Travel Unit; and Nikolaus Samberger, Senior VP in Technology and Engineering, to join us for the Q&A session. [Operator Instructions] And finally, today, we're going to be making forward-looking statements that may differ materially from actual results. So we ask that you please review the legal disclaimer that we have inserted in our presentation. The presentation has been uploaded to our corporate website. On this note, I'd like to ask Mr. Luis Maroto, to please join us. Luis Camino: So good afternoon. Thank you very much for joining us in person and here at the London Stock Exchange and for those of you online. A pleasure to see you interest in Amadeus and for us to present the progress we are making on our strategy, our solid '25 results and our midterm outlook. I would like to start with a few key takeaways. Fourth quarter revenues expanded 10%, adjusted EBIT 15% at constant currency. This result was largely due to acceleration in both our Air IT and Hospitality and Other Solutions segments. Full year '25 group revenue and adjusted EBIT grew 9% and 10%, respectively, at constant currency. Our free cash flow generation in '25 amounted to EUR 1.3 billion, 7% above '24, excluding positive nonrecurring impacts, and we completed the EUR 1.3 billion share buyback program in quarter 4 '25. So despite that challenging and evolving macro and geopolitical environment, we ended '25 strongly with revenue growth and profitability accelerating and successfully delivered on our '25 outlook. In terms of commercial activities, we continue to see a strong momentum in the fourth quarter. I will go into details a little later, but we are proud that Lufthansa Group plans to adopt Amadeus Nevio. TUI Airlines and Volotea have selected Navitaire Stratos. We delivered strong volume growth supported by market share gains and new customer implementations across our businesses. Progress continued in our industry transforming Hotel IT, ACRS, implementations, and we signed a strategic agreement are Direct Travel, one of the top 10 travel management companies globally. And finally, we continue to see good growth in our Professional Services, Airport IT and Payment Businesses. We continue to invest with conviction for the long-term future. We deployed over EUR 1.4 billion in R&D investment across our businesses and technology in '25 and expect to continue this level of investment to underpin long-term growth. As a leader in the travel and technology space, our objective is to be the orchestrator in an AI-enabled travel ecosystem, connecting suppliers, sellers and AI assistance to trusted dynamic travel data to scale in a neutral, secure and responsible way. Our decades of expertise in travel technology, deep integration within the travel ecosystem and unique competitive advantages give us a continued right to win. As AI assistance may gain a space with the primary interface in travel, we believe Amadeus will capture value as the essential infrastructure powering them, expanding our role and gaining further relevance. We remain committed to deliver against our strategy, continuing to build on our proven track record. We have confidence in our solid growth prospects for the coming years. And today, we are also announcing our midterm outlook. We are focused on driving value creation for our customers, employees and shareholders, delivering strong operating and financial performance into the midterm. We are targeting high single-digit group revenue growth, low double-digit adjusted diluted EPS growth and high single-digit free cash flow generation growth. Now let's turn to our quarter 4 highlights demonstrating how this fits into our overall strategic position. Amadeus is leading the airline industries retailing transformation with Nevio, our AI native next-generation Airline IT platform. As I mentioned earlier, we are pleased to announce that 9 airlines within the Lufthansa Group plan to adopt Amadeus Nevio. With this, British Airways, Air France-KLM and Lufthansa Group are all engaging with Nevio to advance model retailing. We have reached a tipping point. Today, 25% of Altéa PBs are engaged in Nevio program. And looking forward, we continue to see a strong engagement across all regions and expect momentum to build on Europe. Our Nevio implementations continue to progress, and I am pleased to say that Fin Air, an early Nevio customer, following its implementation of Amadeus product catalog and dynamic pricing reported new benefits, including increased ancillary revenues and optimized ticket pricing. Additionally, TUI Airlines and Volotea in Europe have selected Navitaire Stratos, our next-generation retailing portfolio for low cost and hybrid airlines. Navitaire Stratos is aligned with IATA offer and order standards and is being developed on an AI-powered flexible and cloud-native technology stack. In the airport space, Melbourne Airport will become the first airport to deploy new Amadeus seamless backdrop solutions. This incorporates the latest advances in self-service, making it easier to load backs and maneuver large items, thus reducing manual intervention and improving the passenger experience. In Hospitality and Other Solutions, revenue growth continued to accelerate as we anticipated through the fourth quarter, largely due to customer implementations and continued commercial momentum. Amadeus Hospitality platform offers the most comprehensive AI-powered portfolio of core capabilities to the hotel industry and is the most broadly connected ecosystem of partners. We are creating a global community platform of world-leading hotels on a mission to transform relationships with guests. We are advancing with Marriott International, Accor and The Ascot Limited to join Amadeus Hospitality Platform. We are pleased to say that the first Marriott International properties are now live on CRS with implementation plan going as expected and a meaningful number of Marriott properties scheduled to migrate gradually throughout '26. Also leveraging our e-money license, we have renewed and expanded our partnership with Mastercard, allowing Amadeus to operate as full scheme member with self-issuing capabilities. As for the Amadeus travel platform, which enables travel providers to retail through third parties worldwide, we continue to see steady volume growth and strong revenue per booking growth through the platform in quarter 4. We enriched our low-cost carrier content with the addition of West China and with expansion of Transavia content, the local airline of the Air France-KLM Group. At year-end, Amadeus had over 75 signed NDC airline distribution agreements. We also signed a strategic multiyear agreement with Direct Travel, one of the top 10 travel management companies globally under which Amadeus will provide direct travel with seamless access to the most comprehensive air hotel and ground transportation content through the Amadeus Travel platform. I would also like to point out that we have deployed advanced airline profile on Amadeus Travel Platform, a smart machine learning power solution to manage search traffic at scale. This solution significantly reduces unproductive traffic and make airlines and travel agents see a significantly lower look-to-book ratio in their systems as well as reduce infrastructure strain. Air France-KLM has reported major gains by implementing our solution as well as lastminute.com, who now has a significantly improved pull to book ratio and optimized search performance. And finally, regarding our technological capabilities, including AI, we have completed our cloud migration and continue to advance our partnerships with Google and Microsoft. Partnering with leading companies to transform travel, leveraging AI gives us confidence that the biggest and most advanced technology companies have chosen Amadeus as one of their strategic partners for travel. We all know there is a lot of sentiment in the market around AI. Agentic AI promises to transform travel in very positive ways, bringing increased personalization to travelers as well as productivity and efficiency gains across the value chain. Amadeus is uniquely placed to deliver Agentic AI functionality into products and solutions, supporting our customers on their own journey and to be the orchestrator in an AI-enabled travel ecosystem. I will elaborate more on this later. With this, I will now pass on to Carol to review our financial performance. Caroline Borg: Thank you, Luis. Let me just drop this a bit. I'm a bit shorter than Luis. We are good. Okay, great. Great to see so many of you in the room today. So thank you, and I'm delighted to communicate that we've delivered a strong Q4 to achieve a solid financial performance in 2025. We delivered high single-digit revenue growth and double-digit adjusted EBIT growth at constant currency, coupled with good free cash flow generation, achieving our 2025 guidance across all metrics. We display our performance of revenue and adjusted EBIT versus previous year also at constant currency to facilitate your understanding of Amadeus' underlying financial performance. More details on our foreign currency exposure and on our constant currency calculations as well as the complete information on our IFRS figures and their evolution are available in the appendix of this presentation and also in the Amadeus 2025 management review. So in 2025, we successfully delivered our 2025 constant currency outlook, reporting strong growth across our key financial metrics. Revenue of EUR 6,517 million, 9% growth at constant currency, 6% reported growth. Adjusted EBIT of EUR 1,894 million at 10% growth at constant currency or 9% reported growth. Profit of EUR 1,336 million, 7% growth. Adjusted diluted EPS growth of 9% at constant currency. Free cash flow of EUR 1,302 million, which is 7% growth, excluding nonrecurring flows in 2024. R&D investment of EUR 1,434 million, representing 22% of revenue. Pretax operating cash flow conversion of 94%, leverage at 0.9x net debt to the last 12 months EBITDA at the end of the year and our EUR 2 billion that was returned to shareholders in the year through both dividends and share repurchase programs. So in 2025, our group revenue grew by 8.5% at constant currency. Group revenue growth resulted from high single-digit revenue expansion across each of our segments, supported by volume expansion and customer implementations across our segments. Air IT Solutions revenue grew by 8.7%, the Hospitality and Other Solutions segment revenue delivered 9.6% growth and Air Distribution revenue expanded by 8%. Group revenue accelerated to 10% in Q4 at constant currency supported by double-digit revenue growth in both Air IT Solutions and Hospitality and Other Solutions and high single-digit revenue growth in Air Distribution. At constant currency, our adjusted EBIT grew 10.2%, resulting from the 8.5% revenue evolution discussed on the previous slide and also was contributed by cost of revenue growth of 3.2%, fundamentally driven by an increase in transactions, such as in air distribution and hotel distribution bookings and in payments due to the B2B wallet expansion. Reported fixed cost growth of 6.5% mostly resulted from an increase in resources, particularly in our R&D activity, coupled with a higher unitary cost, higher cloud costs due to a combination of our own volume growth and also to our progressive migration of the solutions to the public cloud; and finally, to the Vision-Box consolidation impact in Q1. Ordinary D&A expense increased by 4.4% as a result of higher amortization of internally developed software, partly offset by lower depreciation expense at our data center, given the migration of our systems to the public cloud. At constant currency, adjusted EBIT margin was 28.8%, a 0.5 percentage point expansion versus the previous year. And adjusted EBIT growth accelerated in Q4 to 15.4% at constant currency, supported by faster group revenue growth and softer fixed cost evolution. So now let's review the performance of our operating segments, starting with our Air IT Solutions business. Air IT Solutions revenue increased strongly in the year by 8.7% at constant currency. Full year revenue growth was driven by Amadeus PBs increasing by 3.8% and a 4.7% higher revenue per PB, which fundamentally resulted from positive pricing dynamics, including upselling to our new Nevio customers as well as from strong performance of our airline professional services and our airport IT businesses. Amadeus' PB growth in the year was driven by global air traffic evolution and the PB contribution from Vietnam Airlines, which migrated to Altéa in April 2024. Revenue growth expanded by 10.9% in Q4 at constant currency. This revenue growth is due to stronger PB volumes due to improved global air traffic evolution and an expansion of revenue per PB of 6.6%, an acceleration relative to Q3, mainly due to improving price effects and stronger performance of airline professional services. In Q4, our leadership in Air IT Solutions continued. In addition to the Lufthansa Group planning to adopt Amadeus Nevio as well as Volotea and TUI Airlines selecting Navitaire Stratos, as Luis just mentioned, we continue to grow our customer base with Pan American World Airways choosing our technology as the backbone for its core passenger and operational capabilities. We also broadened the scope of solutions adopted by our customers, such as Thai Airways that selected our AI-powered air dynamic pricing amongst other solutions and Jeju Air that selected Navitaire Edge shopping service, an innovative solution designed to give airlines greater control over look-to-book ratios and improve response times. In Airport IT, several airports at Indonesia and the Philippines will adopt our AI-enabled biometric technologies and airports across Australia and Japan will adopt our self-service bag drop solutions. Air IT Solutions contribution increased by 8.4% at constant currency, resulting from the revenue evolution that I've just described, offset by cost growth of 9.4%, which was fundamentally driven by an increased R&D investment, variable cost growth driven by the Airport IT business expansion and the consolidation of Vision-Box. Contribution margin was 70.7%, 0.2 percentage points below the previous year due to the Vision-Box consolidation impact, excluding which margin would have expanded year-on-year. Hospitality and Other Solutions revenue grew by 9.6% at constant currency in 2025. Revenue growth was driven across both hospitality and payments due to customer implementations and increased transaction volumes. Within Hospitality, the main revenue contributors were Amadeus Central Reservation System, sales and event management, hotel distribution and business intelligence. In payments, both our merchant services and our payout services reported strong growth. Hospitality and Other Solutions revenue growth in Q4 improved to 13.9% at constant currency, driven by stronger performances of both hospitality and payments supported by new customer implementations and higher transactions. In Q4, our growing relevance in hospitality continued to expand across our extensive portfolio, the most comprehensive in the industry, amongst others with -- sorry, beg your pardon, I missed something. We signed new customer agreements spanning across multiple verticals, including, amongst others, with Radisson Hotel Group and Travel Seller, Alibtrip in hotel distribution and Massanutten Resort in Hotel IT. In payments, travel sellers such as Fareportal selected our Outpayce B2B wallet. We also partnered with UnionPay to enable the acceptance of its cards and expanded our agreement with Mastercard to become a full Mastercard scheme member with self-issuing capabilities. Hospitality and Other Solutions contribution was 13.8% above the previous year as a result of the revenue growth I've just previously described, offset by cost growth of 7.4%, which resulted from higher variable costs driven by the volume expansion in both hospitality and payments and increased R&D investment. Contribution margin was 35.8%, 1.3 percentage points above the previous year. Air Distribution revenue increased by 8% in 2025 at constant currency, driven by 2.8% increased booking volumes and a revenue per booking growth of 5% primarily resulting from positive pricing effects. Amadeus' booking growth in the year was supported by continued commercial gains across the regions. Air Distribution revenue in Q4 softened slightly relative to Q3, largely due to booking evolution, which was negatively impacted by an increase in flight cancellations in the U.S. Beyond introducing advanced airline profile, addressing one of the biggest hurdles in NDC adoption by enabling search traffic management at scale and enriching our low-cost carrier content offering, we secured new travel seller customer wins, including L’alianX Travel Network in the Americas and Direct Travel, one of the top 10 TMCs globally. We also successfully delivered professional services to BCD, one of the world's leading corporate travel management companies. Air Distribution's contribution grew by 13.3% at constant currency as a result of the revenue growth I've just described, offset by a 3.2% cost increase, which mainly resulted from the bookings evolution. The contribution margin of the segment expanded by 2.3 percentage points to 49.6%. So now let's move on to review our R&D investment and capital expenditure. We continue to prioritize investment in R&D to deliver our organic growth, maintaining our leadership position. As Luis mentioned previously, we are proud of the commitment that we've made to make remaining relevant for our customers, ensuring that emerging technologies such as AI continue to be embedded across our entire portfolio. In 2025, R&D investment amounted to EUR 1.4 billion, growing by 7.6% versus the previous year. Half of that investment was dedicated to the expansion of our portfolio and the evolution of our solutions and AI capabilities, including Amadeus Nevio, Navitaire Stratos for airlines, our hospitality platform, NDC technology for airlines, travel sellers and corporations and solutions for airports and payment services. 1/4 to 1/3 was dedicated to our customer implementations across the business, such as Marriott International and Accor for ACRS, new Nevio customers and airline portfolio upselling and customers implementing NDC technology as well as efforts related to bespoke professional services provided to our customers. And the remainder was dedicated to our migration to the cloud and our partnerships with Microsoft and Google as well as the development of our internal technology systems. In the year, our capital expenditure increased by 5.6%, mainly driven by our continued investment in software development to maintain our leadership position. Capital expenditure represented 12.5% of revenue, consistent with the previous year. In 2025, we generated EUR 1,302 million of free cash flow. Free cash flow was slightly below previous year by 2.4% due to nonrecurring tax-related inflows in 2024. Excluding these nonrecurring effects, free cash flow in 2025 was 6.9% higher than the previous year as a result of our EBITDA expansion, a higher change in working capital inflow and a reduction in interest payments, partially offset by an increase in our capital expenditure deployed to strengthen our value proposition as well as higher taxes paid. We had a pretax operating free cash flow conversion of 94% in the year. Net debt amounted to EUR 2,141 million at the end of December 2025, EUR 30 million higher than at the same time last year, largely due to the acquisition of treasury shares under the share repurchase programs as well as the dividend payment, which was partially offset by our free cash flow generation and the conversion of bonds into shares. And finally, our leverage is at 0.9x net debt to EBITDA as at the end of December. So now on to our short-term organic outlook, our expectations for 2026. IATA forecasts global air traffic growth of between 4% and 5% in 2026. Based on this assumption, we expect our group revenue to grow at constant currency at high single-digit, supported by strong evolutions across all of our segments. We expect a stable adjusted EBIT margin performance in 2026 at constant currency, impacted by our cloud migration ramp-up during 2025, one of our key strategic investments over the past few years. Excluding this effect, adjusted EBIT margin in 2026 would expand. Please note that this timing effect impacts 2026 only, and therefore, we expect adjusted EBIT margin expansion in the midterm. More on that from Luis later. With respect to free cash flow, we expect to generate between EUR 1.35 billion and EUR 1.45 billion in 2026, with capital expenditure as a percentage of revenue in the range between 10% and 12% of group revenue. Again, please note that we expect to see some short-term seasonality with negative free cash flow growth in Q1 due to the timing of payments. Finally, our shareholder remuneration expectation. Ultimately, we seek to create sustainable value for our shareholders. Over the last 12 months, we grew earnings per share by 8.6% at constant currency. In addition, we returned EUR 2 billion of capital to shareholders through the ordinary dividend and the share repurchase program. The size of the buyback and the dividend both reflected our strong free cash flow generation, confidence that we have in our future and a desire to offset the dilution from the very important capital increase we made in 2020. As I've previously mentioned, we aim to create value through strong and sustainable earnings growth, compounding that growth through disciplined allocation of our capital on both inorganic opportunities and increased shareholder returns. Our confidence in continuing to create sustainable value for our shareholders going forward remains strong as evidenced by the fact for the first time, we have included an EPS growth target in the near- and medium-term outlook. We have a track record in delivering growth through evolution in technology, and we have the critical assets to lead in Agentic AI and power the future of travel tech with AI-enabled innovation. We will continue to generate cash and expand margins, all whilst maintaining a strong balance sheet to provide us with the optionality and flexibility to continue to deliver for our customers, employees and ultimately for our shareholders. Today, we are committing to low double-digit adjusted diluted EPS growth for 2026, given our confidence in the future, coupled with our strong 2025 performance. In 2026, we will distribute to our shareholders a dividend at the top end of our dividend policy range, which will amount to almost EUR 700 million, and we will launch a new additional share repurchase program of EUR 500 million to be executed within 6 months. Additional specification on the expected dynamics by segment at constant currency is as follows. So Air IT Solutions, we expect to see high single-digit revenue growth supported by PB growing in line with global traffic -- global air traffic growth, coupled with a positive revenue per PB growth, enhanced by continued upselling, new Nevio revenues as well as higher airline professional services and Airport IT revenues. In terms of contribution, we expect the margin to be dilutive versus previous year, driven by high growth in our airline professional services and Airport IT mix. Hospitality and Other Solutions. We are expecting double-digit revenue growth in 2026, accelerating from 2025. This volume growth will be supported by volume expansion and new customer acquisitions across our hospitality and payments portfolios. We expect contribution margin in this segment to continue expanding as we continue to gain operating leverage. And finally, Air Distribution. We expect our bookings to grow -- to continue to grow steadily, potentially faster than last year, supported by customer success and market share gains. We continue to expect an expanding unitary revenue per booking evolution, although it's likely to be a little slower than last year due to the expected timing of commercial negotiations. In terms of contribution margin in this segment, we expect stable margins in 2026. So I'll now hand back to Luis, who will close with our AI positioning, midterm outlook and final remarks. Luis Camino: Little bit higher. Thanks, Carol. And we are extremely proud of our '25 results in a challenging macroeconomic environment. So now let's pivot to our expectations over the midterm. But firstly, let me remind you of our core strengths. We are a large-scale mission-critical technology leader. We develop, build and support an impressive service-oriented architecture with over 600 applications and more than 10,000 micro services running fully on the cloud. We are the technology backbone for travel, enabling safe and efficient global operations. We openly work with others, build strategic partnerships and proactively deploy leading technologies to deliver value to our customers. We have deep, long-standing customer relationships at global scale. We are a trusted partner, combining our industry-wide scale and expertise, coupled with our deep customer relations to serve many of the world's largest airlines, hotel groups and travel sellers. We are the end-to-end travel data and intelligence leader. We understand, aggregate and convert complex fragmented data into true intelligence for our customers. Our in-depth knowledge of the complex process in travel, coupled with our deep access to relevant data allows us to provide the broadest end-to-end view of travel activity from inspiration to post-trip. We have a robust financial framework and resilient business model. We have a strategically aligned financial and capital framework with a proven track record of generating high single-digit revenue growth, solid and stable margins, high cash generation and long-cycle investments demonstrating resilience through industry cycles. We have a unique and diverse talent base empowered by a cohesive team culture and we are very proud of our talented, diverse and long-tenured workforce led by an experienced leadership team and power to drive a customer-centric, high-performing collaborative culture. I would like to take the opportunity to share our AI positioning and why we believe that AI augments and reinforces our core platform. We are uniquely positioned to orchestrate the AI-enabled travel ecosystem. We have embedded a neutral execution layer for the travel industry, and this is based on 3 strategic pillars: our status as trusted system of record in the industry, the power of our integrated and deeply connected business logic and our global scale. Firstly, we are the trusted system of record in the industry since 1987. Travel is a mission-critical industry with near zero tolerance for error. Availability, pricing, ticketing, passenger identity and airport operations, all demand accuracy, security and resilience. As a trusted system of record, we provide a single source of truth. Our customers trust Amadeus with reliable data that underpins safety, security, compliance and customer experience. That trust has been earned over decades through operational performance, regulatory compliance and institutional reliability. Secondly, the power of our integrated and deeply connected business logic. Our technology is deeply integrated across airlines, airports, rail, hotels, payments, identity and distribution, connecting hundreds of systems, products and workflows that have been built up over decades. This integration is not cosmetic. It is operational, contractual and regulatory and sits deep in the value chain. Replacing this level of integration and domain expertise is not a simple technological decision. It will require reengineering core workflows, retaining staff, recertifying systems and accepting significant operational risk. Being displaced is harder in practice than it appears in theory. The reality of integration creates a structural stickiness. We hold authoritative, reliable data and power workflows that are hard to unpick or replace. AI does not change this. In fact, AI depends on this level of integration. With our deeply connected systems and trusted data, AI remains superficial. And with them, it becomes transformative. We see an opportunity for us to be the orchestrator that digital assistants will rely on for travel, and we are actively engaging with AI platforms. This week, we also announced an acquisition of Skylink. This is an AI-first company specializing in orchestration and conversational automation for corporate travel. Over time, Amadeus will be expanding this AI-driven conversational capabilities beyond corporate travel across airlines, airports and hospitality. And finally, global scale. Scale is not just about size. It is about reliability, resilience, insight and operational learning at volume. Amadeus operates at global scale, processing up to 150,000 transactions per second at peak times, powering millions of searches and bookings every day. We support hundreds of petabytes of data, thousands of services and a platform used across travel verticals and more than 190 markets globally. This scale has been built over nearly 4 decades where we have been evolving, applying and adapting technologies such as AI in our products and solutions. Scale give us several critical advantages. First, investment capability in travel. We continue to invest in infrastructure, in security and in innovation, maintaining our leading position as a key player in the travel industry. Second, data and insight velocity. We power the leading brands in travel. This critical mass of customers bring unparalleled data breadth and operational insight. And third, making AI industrial rather than experimental. AI models improve with volume, diversity and real-world usage. Our scale allow us to deploy AI at a production level, focus on real business outcomes, not pilots or demos. These pillars complemented with our prioritized investment in R&D allow us to ensure that AI is deeply embedded across our portfolio and the number of AI use cases we operate today is countless. Agentic AI unlocks additional opportunities. We have consolidated hundreds of use cases focusing on the following end user solutions. Amadeus travel companion for the traveler. This enables our customers to power their traveler experience with AI through a travel servicing assistant across the different verticals in travel. We have kicked off with airline call centers automation with a strong early interest from our airline customers and for the hotel industry with the Ascott Limited as launch partner to be powered by Amadeus and Salesforce. Amadeus First Officer for professionals -- for travel professionals, sorry. This enhances our products and solutions with an AI conversation layer to help our customers better leverage the full product features and achieve superior outcomes. We have multiple solutions spanning all our customer verticals, such as guard for airports, Amadeus Advisor for hospitality and many productivity boosting AI agents for travel sellers. And finally, internal efficiencies. For employees, solutions designed to enhance internal efficiencies across the organization and from which we are already generating productivity improvements. We believe that for new players in the industry to become relevant channels, they will need the Amadeus execution layer in travel. We, therefore, see AI augmenting and reinforcing our position on our core platform. Our core strengths have enabled a proven and consistent track record of delivering strong and sustained profitable growth and high cash flow generation, giving us confidence in our midterm outlook. Finally, our midterm outlook. Our expectations are to continue to build on our commercial momentum and relevance as market leaders, executing our clear strategy to deliver the following financial metrics period over the '26-'28 period. Group revenue growing at high single-digit CAGR growth rate at constant currency, supported by a strong evolution across all our business segments. Adjusted EBIT margin expansion over the period, supported by operating leverage, Carol mentioned before. We expect to deliver low double-digit adjusted diluted EPS CAGR growth and also to generate solid and consistent free cash flow over the period, growing at a high single-digit CAGR growth rate, coupled with continued and disciplined investment program, through the period with capital expenditure at low double-digit percentage of group revenue to maintain our market and customer relevance. We are excited by the growth opportunities for Amadeus. The sector continues to evolve and no doubt Agentic AI will play a part in this evolution. Our core strengths provide us with the platform to embrace the changes in our space, demonstrated by our proven and consistent track record. We remain confident about our strategy and our ability to execute against it. With this, we have now finished our presentation. Thank you. Cristina Fernandez: Thank you, Luis. Thank you, Carol. I'm going to invite the management team, please to join us on stage, so we can start our Q&A session. So we're going to address the questions in the room first. [Operator Instructions] So Michael. Thank you. Michael Briest: Great. Michael Briest, UBS. Two from me on AI predictably. I mean there's a concern out there that with the coding tools driving down the cost of software development, maybe some of your airline customers might look to expand organically rather than buy some of the many modules that you sell on top of the PSS. What are your discussions there like? What are you doing to sort of prevent that or reassure investors that is not happening? And the second one there, Luis, I think you mentioned at the end, appreciate you working with Microsoft and Google. But are you doing anything with open AI or Anthropic do you expect to? Or do you see them as someone to keep sort of at arm's length? Luis Camino: Let me start with the last one and then Decius, you can take the first one. I mean, of course, we are engaging with all the AI platforms. But as you know, we have been working with Google and Microsoft as part of our cloud migration, as part of different agreements that we have with them. So we'll say we are more engaged with them, but this does not mean we are not talking to the rest of the platforms. We are. But I would say Microsoft and Google are more advanced than the others. Decius, about the customers? Decius Valmorbida: Yes. So today, on my conversations with the providers, airlines, mostly -- when we talk to them, where do you see the biggest opportunity? Is it on the revenue side? Or is it on the cost side in terms of efficiency? And I think that there is a lot of excitement on the revenue side, which is what this is going to allow them to do in terms of personalization, in terms of evolving, what is the mix of what they're selling to customers. And that's what they are gearing up to. So then the question is, if you have an IT team today and they are developing new features, you're saying, what is my focus. And it is like the focus is working together with us on saying how can we leverage the Amadeus building blocks to deliver what, let's say, that upside is going to be on the new channels that are going to be created rather than using those resources to replace infrastructure that already exists today. So I think that's how I see the dynamic today. George Webb: It's George Webb from Morgan Stanley. Also thank you for hosting in person. I think it's a good thing to do and it's appreciated. Couple of questions. I mean investors are obviously in the weeds and trying to work out what's happening. But I think also, it's helpful to have a kind of a simplified view of a company's strategy around AI. So maybe -- and maybe take back the level of detail we've had, if you just simplify at a higher level, how would you kind of characterize the operational strategy that you're going through with AI would be a good starting point from my perspective? I think the second question maybe a more specific one. We have seen good momentum around Nevio, Lufthansa Group being one of those examples. Could you perhaps share how the pipeline for Nevio is looking as you look forward, that would be helpful? Luis Camino: Okay. With AI, I mean, we have been working with AI for more than 20 years, and I would like Niko to complement that. So it's not new to us. It's part of our road map. We are implementing the new features, the advanced things that we see in our portfolio. So that's part of our core strategy. On top of that, we are also aiming to orchestrate the needs that the platforms, AI platforms may need in terms of data and connectivity with travel. So we are acting in both sides, and I explained why we believe we are in a very good position to do so. And I would like my colleagues also to elaborate a bit more. Nikolaus Samberger: Okay. Maybe I'll start. As Luis was saying, I mean, you may not realize it, but we have been using AI for many years. I joined Amadeus 20 years ago, and the team I joined at the moment now, we are calling it traditional AI was doing operational research. Then as we moved out of what we call TPF at the time, and we went on open systems. This opened completely the new door for us to adopt machine learning techniques, and so it has been embedded in our solutions, in our infrastructure, in our culture, I would say, our engineers are used to use this tool to develop any of our solutions. So to give you a bit of color, as I speak to you today, if by the end of today, we would have generated EUR 2.5 billion inference of machine learning in our system just for flight search. And if you take it globally, I would estimate roughly today EUR 15 billion inference of machine learning. And therefore, this, I believe, put us really in a good position when we had the ChatGPT moment end of 2022 that will adopt generative AI. And you heard Luis talking about it. We already embraced it. It's already part of our engineering and global set of tools that they have access to, not only engineers across the company. So I mean, yes, for us, it's a big opportunity. I mean we can talk about it, but I think it's best if Decius talk about the opportunity on the business. Decius Valmorbida: So let me go on the business and then tie in to the Nevio question that you just did. So it's like if we go into this AI world, I think it makes it very explicit that today, you have an industry that -- it is organized around supply. So you have supply that is marketing their products, but all of you are travelers. So it's like if you think as your travelers is are you buying a single element or are you buying a trip? So it is like on the moment. So the industry is selling flights, hotels and car rentals, but customers are buying trips. So it's how are you going to do that translation between trips and to the supply. So it is like that is the position of an orchestration layer. That is the position where you sit in the middle when you make that translation. Why? Because a romantic trip to Paris can have many solutions to it, and it can be a flight or it can be a car with a hotel or it can be something else. So then I think that's where we need to position ourselves. This requires every provider today that is looking at it to participate in this new market that is emerging and investing in technology. So I feel it is a quite interesting opportunity because it is the moment that we are going to harvest a lot of the foundational work that we have done. It is moving to the cloud, give us the scale. The years of diversification through all of the pillars travel allow us to have the integration. Having Nevio as the new flexible machine that will allow you to participate in that market and do retailing because you're going to be marketing trips rather than marketing only your own product comes at a very meaningful time. So it's like, I think that's what I see is what you see after the major European players, major players in the U.S., in Asia and the Middle East coming out with RFIs and RFPs. So we really see the market moving, and we expect now a lot more movement than these foundational customers, let's say, this way. James Goodall: James Goodall from Rothschild & Co Redburn. Maybe just a break trend and ask some non-AI questions. You talked to airlines being excited about the higher revenue environment. And we've also heard from BA this morning who are very quite bullish on revenue benefit they're driving on their new platform. So with airlines generating more revenue, how much of that benefit do you think you can look to share in? I think there's a number in the market of about 15% higher revenue per PB currently between an offer order system and a PSS. Do you think that could be higher in the long term, if airlines start generating a lot more revenue from these new systems? Secondly, just on the buyback. Are there any reasons why you didn't look to do more than EUR 500 million, given the strong free cash generation of the business and the outlook? And then, I guess, very finally, just on the EPS guidance of low double digit in the medium term. Is there a buyback assumption within that, please? Luis Camino: You want to start with the buyback and then I go back to... Caroline Borg: Yes. Sure. I was waiting for the buyback question. So thanks, James. So again, let me just reiterate in terms of the share buyback. We are committed to driving shareholder value, as I mentioned previously. Earnings growth, we are now guiding on earnings growth guidance. And then we want to compound that growth through disciplined use of our balance sheet. And again, just to remind everyone, I think we've been very clear on what we're saying in terms of our capital allocation policy, primarily organic growth investment, which we want to preserve our dividend policy and then M&A and shareholder -- additional shareholder returns are considered equally, yes? So the question really was around, well, why not more? James, give us a chance, like that we have announced today a double-digit growth. We feel the EUR 500 million that we've announced today represents about 90% of our free cash flow generation last year. So in our perspective, we think that this share buyback represents a good and compelling business model in conjunction with the outlook. I think the other thing I would say is that in this world that we're in, I believe -- we believe prudency in maintaining optionality and flexibility of our balance sheet is really relevant. So we think that we'll be at the lower end of our leverage range for a little while. But yes, this share buybacks feature as part of our algorithm, if you like, to increase value. To your point about, well, is there more coming? Again, we're taking this step by step, let us execute this. We're getting on with it. We're delivering it within 6 months. And then we will always consider share buybacks, M&A, additional organic growth as part of our capital allocation discipline. And what we commit is that we will achieve double-digit EPS growth. I'll start on the Nevio and then you give you the commercial answer. Decius Valmorbida: Yes, yes. Caroline Borg: We agree the T2RL assessment of mid-teens, 14% to 15% evolution or revenue gain as a result of airlines transitioning from PSS to OOSD, but maybe what are we seeing with our customers, Decius. Decius Valmorbida: Yes. I would say our growth in Airline IT, we have the 2 components of the growth equation. One are the PBs. So then you say, more people travel because of AI. So I think that one is more related to supply and it is more related to more planes. But then you go into the other equation, which is how many more modules and how much more scope and how much more work can I do on behalf of an airline if they're going. So typically, on a moment of very big transformation, do you want to be orchestrating 50, 60 providers that are everyone doing their own stuff? Or do you want to go with one partner that has, let's say, a lot of skin in the game and it is able to deliver your transformation from A to Z? So it's like, I think that's where we position ourselves, and we see that with all of the customers that we have done, the scope has increased, and you see that translated into higher revenue per PB because we are able to do more and innovation. If you point out our agreement that we have -- I'm sorry, with the project that we have now with Lufthansa, it evolves into something that we call delivery. So every time we were discussing about offers and orders, we're adding a step there. We are adding a whole new step that is called delivery. So delivery is about if you're going to do all of these fantastic things for the traveler, how you're going to deliver that services if that is going to go beyond just an air flight ticket. So it's kind of how you're going to coordinate with your partners? What if you're going to have Uber in there? What if you're going to have to exchange information with an airport? So it's like all of that delivery makes that us, we're going to have more revenue opportunities on the moment that customers are within in trip because that is going to be a moment, that is not going to be only you checking in because the check-in is going to be done, but you're going to be able to buy more products and services on that stage. So I think that is the innovation that I see. Luis Camino: It's already -- I mean, if you see in our figures and in our projections, we are already assuming to capture part of this value. Of course, as the contracts are being implemented progressively, so it will be progressive, but we expect in the medium term, this to really generate additional revenues for us, definitely not just with the current customers, but also with the new customers coming in. Caroline Borg: And in our actuals, it's already represented. It's part of the revenue per PB uplift that we've seen in Q4. Toby Ogg: It's Toby Ogg from JPMorgan. Maybe just on the segmental guidance for air distribution, sort of mid- to high single-digit. You mentioned, I think their growth potentially faster on the bookings side in 2026 versus last year. Could you just help us understand what would drive that potential acceleration if it were to materialize, what would be the building blocks of that? And then just on the remaining pricing-driven growth. Could you just help us with the drivers of that across booking mix and pricing trends? And how we should think about any incremental NDC bookings as well that perhaps might be on a net model within that? Luis Camino: You want to take. I'll start or... Caroline Borg: You can start, and I'll jump in. Luis Camino: I mean, yes, all these figures. When we say we expect higher bookings is mainly coming from the fact that, yes, we are signing customers definitely. We are increasing all our NDC agreements, our agreements with airlines bringing new content. So all that is into the equation. And as far, of course, as the traffic stays in the range that we have defined because that's the variable we don't control. We expect the volumes to be ahead of what we have this year. It's based on customer success, on signatures of NDC bookings, pieces of some new content that is coming into the platform, some reintermediation. So we are optimistic about our volume during the full year of '26. And with regards to the pricing? Caroline Borg: I will complement. So we've also referenced the global air traffic assumptions that we're making, again, based on feedback from you guys. So we're increasing our transparency there. To complement Luis' point, I think the booking dynamics are similar to what we're seeing for our outlook in '26 similar to what we're seeing in '25, but our revenue per booking growth will soften slightly. It will continue growing, but it will soften slightly. And the reason for that is booking mix, as Luis just mentioned. So there's a combination of low-cost carrier content and where that's coming through. We're seeing some pricing tailwinds starting to lap, so that will affect it. And of course, then the timing of our customer negotiations. So all in all, I think a similar booking profile from '25 to '26 with a softening revenue per booking trajectory. Alexander Irving: Alex Irving from Bernstein. Two from me, please. The first one, something is not wholly making sense to me in the way that we're talking about AI is used internally within the business. I love your help in understanding that better. Approaching this from a view of, are you using new AI tools to meaningfully improve the productivity of your software developers. It sounds like the answer is yes. Then if yes, should we be then expecting R&D investment to plateau because we can get more output through higher efficiency rather than cash spend? And the answer sounds like it isn't because CapEx is still going to be a double digit or low double-digit share of revenue. So if that's right, then why not? How are you deciding the right level of development spend is? And how have AI tools changed the way that you think about that level of investment? Caroline Borg: I'll start with the numbers and then maybe Niko you jump on the technical stuff -- you have a point as well. We all want to talk about this one, Alex. So CapEx, yes, low double-digit growth, but a declining trend over the outlook period. So that's the first fact that we expect that our CapEx profile will drop. Secondly, not all productivity gains result in a direct kind of cash out. We might have increased efficiencies, deliver projects to market quicker. Based on the level and speed of sales than commercial momentum that Decius is doing definitely on that case. The third point I'd make on that as well is that we're also committing to margin expansion. So our R&D spend is partly expensed and partly capitalized. So we are expecting and AI efficiencies, productivity efficiencies, amongst other things, are contributing to that margin expansion. So that's on the numbers, but . Nikolaus Samberger: Okay. Maybe to give a bit of color on how we use AI internally. So yes, we've deployed it first like, I would say, most of the companies for engineering. So I don't want all our engineers have access to AI tools. And okay, I can name a few, Claude, Copilot, and et cetera and basically, we give them the choice to select, depending on the task that is at hand. So we already see productivity improvements. However, if you want my honest opinion, the real gains are ahead with what is coming with Agentic. So we have started to deploy some solutions, but having more autonomous agents being there doing some of the activity will then unlock even more productivity, we believe. Second, the point I want to highlight is the way we've approached it is not solely as a cost reduction. It's -- as Carol was saying, there is an aspect of force multiplication, if I may say so. whereby we can implement faster, we can deliver faster. It enables us to -- our team to accelerate their intent, their speed, their capacity. This is our primary goal concerning all the pipeline that Decius talked about, and this is where we see the opportunity. Last aspect I want to highlight is beyond just the tools, it's really a working methodology change that we are embracing. The fact that we've used AI quite a long time in Amadeus helps us because it's in our culture. And in the working methodology, what is very important is to remember that we keep the human in the loop. I think you heard Luis talking about mission-critical systems. So as we deploy those solutions, we are very wise, very careful to make sure that we privileged stability, security for the solution, knowing that we operate in a very critical industry. Decius Valmorbida: I'll let you ask your second question, otherwise. Cristina Fernandez: Quickly, we're running out of time. Alexander Irving: Okay. Second question. Probably -- I think probably might be for you, Decius. You asked the acquisition of Skylink yesterday, and my initial read of this, it takes some functionality away from the TMC in the booking flow in the travel management flow. Does that reflect your assessment of the way that the travel industry is going to evolve in the future? And if so, what does that mean for Amadeus' own business? Decius Valmorbida: Okay. So First thing on the productivity point is, remember that we have a very large addressable market that if we really have more productivity, there are a lot more travel areas that we can cover. So I think that we -- this debate that is always around this idea that I don't know, everything has been already invented, and it is like there's -- if we have a lot of free capacity of servers, of developers and so on and so forth, There's plenty of new things for us to invent and the travel industry has plenty of space for us to cover. On Skylink, I think what we want is to have that capability of conversational AI across the board. As we said, we would like to give that to our employees. We'd like to give that to the professional travel user that we will use to make that more productive. We want to have that to deflect, as you were saying, a lot of requests that are coming from travelers that we believe that they can be automated, no? So what can that mean for TMCs? It can mean, a, much more productive environment for TMC because it's like if today, they need 20,000 people to service X amount of volume it means that probably in the future, they do not need to have as many people or they can cover a lot more, let's say, number of customers with the same amount of people they have. I think that is one. So why do intermediaries exist? And that's what I was saying is, it is much more than processing the transaction. It's kind of -- that is the part that it is about curating the content. It is about creating the certainty. It is about doing all of the edge cases. It is about. So it means that by automating that, it means that you can add a lot more value on the other aspects of the business. So in fact, I don't see this world of black and white. I do see opportunities for both providers and intermediaries to thrive in this new environment. Cristina Fernandez: Okay. Thank you very much. We ran out of time, but we have the lunch outside. So if you can stay, we'll be happy to address your questions. To the people on the line, we're very respectful of the fact that you've sent us questions as well, but we haven't had the time. We will answer your questions through the Investor Relations team. Thank you very much to everybody that has connected and we'll see you again in Q1. Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to the International Airlines Group Full Year 2025 Results. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead, sir. Luis Martín: Thank you very much. Good morning, everyone, and welcome to the IAG 2025 Full Year Results. As usual, I'm joined today by Nicholas Cadbury, our CFO, as well as the other members of the IAG Management Committee. I'm pleased to be announcing a record set of results today, highlighting the excellence of IAG's performance in 2025. We are delivering for our customers as our investments in operational and customer-related performance have led to another year of improving punctuality and customer Net Promoter Scores. We are delivering record operating profit, operating margin and return on invested capital. And we are delivering for our shareholders through the increased dividend and the new excess cash returns of EUR 1.5 billion. This is a significant increase on the EUR 1 billion buyback we announced last year. We continue to see a supportive demand environment that encourage our positive outlook. And as a result, we are planning further excess cash returns in the future. And we look to the future with great confidence as we continue to leverage our business model and execute our strategy, which will create value for our shareholders in the long term. In 2025, we have delivered world-class financial performance in each of our key metrics, continuing our track record over the past few years. We continue to grow revenue with robust demand for travel in our markets. Our operating profit and operating margin are now both at record levels, and our earnings per share has increased by over 22% this year. Our balance sheet is now in a very strong position. This has benefited from the strong free cash flow that we are now consistently generating despite a big step-up in CapEx during the year. And for our shareholders, we are creating significant value by earning an excellent return on invested capital of 18.5%. The fact that we are delivering strong results is not an accident, starting with the fundamental premise of IAG. Our group structure promotes excellence and accountability whilst providing the group-level support and direction that individual businesses benefit from. Our portfolio contains a diversity of markets, brands and business models that continually increase the resilience and sustainability of our performance through the cycle. Bringing this together is the secret sauce of IAG and sets us apart from any other airline group. Moving on to our strategy and targets. We are sticking to what makes us best-in-class. Our 3 strategic imperatives are designed to make our business stronger, more resilient and less cyclical. We have set out margin and return on invested capital targets that are appropriate for the group through the cycle, and we believe support a more sustainable long-term future. We are pleased to be delivering results that are at or above the top of those ranges, and we will continue to target the full potential for all of our businesses through our transformation program and capital allocation process. Ultimately, we want to create value for shareholders by delivering sustainable profitability and accretive growth in the long term. Over the past couple of years, we have highlighted 3 major areas where we could create significant value, and we are delivering on our commitments. British Airways has already reached its 15% margin, but still has more to deliver on its transformation program, including the commercial platform and fleet deliveries. Iberia is well on the way to its EUR 1.4 billion profit target, with an exceptional margin last year of over 16%, and we will continue to grow profitably in its core markets. And we will tell you more about the Loyalty's exciting potential at our Investors Day in June, both as a business in its own right as a significant contributor of value to the overall group performance. And on that note, I will pass over to Nicholas. Nicholas Cadbury: Thanks, Luis, and hi, everybody. I'm pleased to share our full year results. This first slide shows our very strong operating profit and margin performance. We've delivered a record operating profit of EUR 5.024 billion, up EUR 581 million versus last year. This is driven by strong passenger revenue growth and also good other revenue growth from loyalty, maintenance and also sustainability incentives and supported by the lower fuel cost. Our cost performance was in line with expectations and with the guidance previously provided to the market. I'm pleased with our margin performance, which continues to rank among the best in the industry, at 15.1%. It sits at the top end of our target range at 1.3 points higher than last year. On the right side, you can see how our strong markets, hubs and brands drove this exceptional performance in all our businesses, which we will detail in the next slide. All our operating companies delivered excellent results this year, building on the strong performance also achieved last year. Aer Lingus delivered a strong improvement in 2025, increasing its operating margin to 11% with operating profits at its second best level on record. The airline was affected by industrial action in a base last year and managed to hold unit revenue flat while growing capacity. This was despite a very tough competitive environment in Dublin, particularly from U.S. carriers that is ongoing. Alongside this, Aer Lingus has delivered strong cost discipline, supported by its transformation program. British Airways delivered an excellent margin performance at the upper end of the group target range. This was supported by strong premium leisure and improving corporate demand with cost performance reflecting investments in the business alongside its transformation program. Iberia also had a tremendous year, reaching a record 16.2% operating margin. The airline made excellent progress against its Flight Plan 2030, delivering EUR 1.3 billion of operating profit this year towards its EUR 1.4 billion ambition, driven by the strong revenue performance, particularly in Latin America. Iberia's costs were particularly affected by engine availability on both long haul and short haul, extra disruption and resilience costs. The cost increase also includes the cost relating to its growing MRO business that was particularly strong in the first half of the year. Vueling delivered a robust set of results, generating an operating profit of EUR 393 million and a 12% margin, among the strongest in the European low-cost sector. Revenues reflected a softer summer travel environment in parts of Europe, particularly Northern Europe, partially offset by the continuing strength in the Spanish domestic market. What really stands out, however, is Vueling's strong cost performance that Luis will touch on later. And IAG Loyalty, including Holidays, continues to deliver high-quality, high-margin earnings. The business yet again delivered the 10% margin growth ambition we set for it, reporting GBP 469 million of profit and an 18% margin, excluding the impact of the VAT dispute with the HMRC, which is subject to ongoing litigation, and we -- and we still feel confident the operating profit would have reached over GBP 500 million. Turning now to our revenue performance in more detail. Overall demand for travel remains strong throughout the year, underpinned, as just mentioned, by the diversity of our network and of our strong brands. Capacity grew by 2.4%, in line with our guidance that we gave at Q3 results, and we delivered an increase of 1% in passenger unit revenue at constant currency and flat on a reported basis, a solid outcome against a record 2024. If we look at the performance by region, we are pleased with the North Atlantic performance, where we grew capacity by 1.4%, with unit revenues up 1.5% at constant currency and importantly, showed an improving trend as we went through the second half with Q4 unit revenues up 1.8% at constant currency. Underneath this trend, were consistent with what we highlighted throughout the year, with good premium demand, partially offset by some softness in U.S. point-of-sale economy leisure demand and continued impact from U.S. direct capacity growth into our hubs in Dublin and Madrid and secondary European markets. BA drove the Q4 performance with unit revenue at constant currency increasing strongly year-on-year, driven by strong premium cabin and business travel demand, particularly from the U.S. point of sale despite a tough comparator last year. Latin America and [ Caribbean ], strongest performer in the network. Our capacity increased 3.3%, with unit revenue at plus 3.3% as well at constant currency. Iberia delivered another excellent year and drove the Q4 performance with premium cabin, LatAm point of sale and business travel, all performing strongly. In Europe, we increased our capacity by 2.2% with unit revenue down 2.1% at constant currency. As mentioned earlier, this reflects the softer demand in parts of the summer and also the additional British Airways capacity. Domestic saw us growing capacity by 2.2% with unit revenues flat for the year, reflecting strong demand, particularly in the Canary and Balearic Islands. In Africa, Middle East and South Asia, we increased capacity by 2.7%, with unit revenue up 0.8% at constant currency. And finally, Asia Pacific delivered a strong recovery with capacity up 6.4% and unit revenue up 4.2%, supported by a refocus of the network towards stronger performing markets such as Bangkok and Kuala Lumpur and the full year impact of Iberia's relaunched routes to Tokyo. Just turning to this year, we're planning to continue to grow the business in a disciplined way with capacity up around 3% in 2026. And briefly touching on what we're seeing so far this year, we're seeing a strong Q4 -- Q1, sorry, including the North and South Atlantic and some additional benefits from the shift to an earlier Easter. At this point, I'd just like to highlight the FX has a major factor. Over 2025, we saw the pound weakened against the euro and the dollar weakened against the pound and euro. At these current rates, you will know that there will be a significant FX headwind on revenue this year, particularly in the first half of the year, which we will be reducing progressively into the second half. And of course, this will apply to our cost base in the reverse with a favorable FX impact. Total unit costs improved 0.4% and non-unit fuel unit costs increased by 2.8% year-on-year, actually in line with our guidance. This full year cost performance benefited from FX movements of 1.3%, although it's worth noting that the increase in costs relating to the growth of other revenue to the MRO also drove around 1.3% of uplift as well. So both the FX and the other revenue costs neutralized each other out. Employee cost unit costs increased 3.8%, driven by operating investments, operational investments and payments linked to strong financial performance. Supplier unit costs rose by 0.8%, with transformation initiatives helping to offset inflation pressures and support investments in our customer experience. Ownership costs increased 10%, reflecting the new aircraft, cabin retrofits, lounge upgrades and digital platforms, all of which are for the benefit of our customers. Those impacts were partly offset by a 9.1% reduction in fuel costs driven by lower prices and partly offset by an increase in carbon-related costs, both ETS and CORSIA. We remain confident that our transformation program will continue to underpin cost benefits -- cost efficiencies as we move forward. For 2026, we expect nonfuel costs to be down around 1%, and that includes a benefit of around about 2%. So in other words, they're up 1% on a constant currency basis. Fuel prices have been very volatile. On the 31st of December, our fuel bill based on the forward curve then was estimated to be EUR 7 billion, including a 62% hedge that we have in place. Since then, jet prices have increased following the recent escalations and tensions in the Middle East. So based on the current forward curve, we can see an increase to around about EUR 7.4 billion. We'll have to see how this plays out over the next few weeks and months. This fuel scenario also includes a year-on-year increase from ETS and CORSIA of roughly EUR 150 million. Adjusted EPS increased by 22.4%, reflecting both the strong performance with the growth in adjusted profit after tax of 17% to EUR 3.3 billion and the share buyback program that reduced our weighted average shares count by 4.3%. Overall, this performance underscores the continued momentum in our earnings and our focus on delivering sustained value for all of our shareholders. We achieved a free cash flow of EUR 3.1 billion after investing EUR 3.4 billion of capital in the business. This was supported by the positive working capital movement, partly driven by IAG's loyalty and the Amex contract renewal as well as interest paid benefit from the early debt repayment. These benefits more than offset higher purchase of carbon assets ahead of the changes to free ETS allowances and the payment to HMRC relating to the IAG Loyalty tax appeal that were not settled until the earliest of 2027. I'm pleased to report that our balance sheet continues to be very strong, with net debt leverage of 0.8x and liquidity over EUR 10 billion, positioning us well for the years ahead. Our gross debt benefited from a EUR 1.3 billion favorable FX impact related to the U.S. dollar-denominated debt from the weakening of the U.S. dollar. We aim to keep our gross debt leverage between 1.5x and 2x. To this aim, we finished the year at 1.9x, having repaid EUR 1.6 billion of non-aircraft debt and taking 2/3 of our 25 aircraft deliveries as unencumbered. We remain committed to investing in our fleet, enhancing customer experience and building resilience. We've shown on this slide the phasing of CapEx over the coming years, which will put our CapEx allocation and balance sheet decisions into context. In 2025, CapEx was slightly lower than planned due to the timing differences and the phasing of some customer-related investments. This year, 2026, we expect CapEx to be around about EUR 3.6 billion with 17 aircraft deliveries, continued cabin retrofits, including British Airways, A380s and 787-9s and ongoing investments in property, especially the improvement to our lounges. Looking forward, we've been saying for a while now that our CapEx will increase in the coming years as delayed aircraft from the manufacturers start to get delivered and make up for the lower CapEx numbers we've seen over the last few years. For the last 4 years, this increase has continuously pushed to the right. However, we expect to start seeing this increase materialize in the next few years. In 2027 and 2028, we expect CapEx to average EUR 4.9 billion, mainly reflecting the delivery of the Boeing 737s for Vueling and the start of the 777-9 deliveries for British Airways in 2028. CapEx is then expected to increase further to an average of EUR 5.6 billion for 2029 to 2031 as the 71 wide-body aircraft we've ordered in 2025 and the previously delayed wide-body aircraft deliveries start to materialize, with around about 70% of these deliveries being replacement aircraft. Beyond this period, we'll return to our normalized CapEx run rate of around about EUR 4.5 billion from 2032 onwards. We're able to do this as we're making good returns on capital and have high disciplined approach to capital allocation to support our ambition to deliver focused capacity growth by 2% to 4% over the medium term. With this increase in future capital spend, we will still be strong cash-positive throughout these years, and we'll continue strong shareholder cash returns with a higher CapEx delivering higher profits. Given this confidence in our cash generation, the current very strong balance sheet and in preparation for this CapEx trajectory, we've decided to widen our guidance on distributing excess cash returns to 1 to 1.5x net debt leverage. And finally, our disciplined approach to capital allocation and how we manage our balance sheet, investments and shareholder returns. Firstly, we remain focused on balance sheet strength. Across the cycle, we maintain our net leverage aim of less than 1.8x. This being a proxy for investment-grade rating, which we are with both Moody's and S&P. And as I mentioned earlier, in the near term, we want our gross debt to be 1.5 to 2x, which puts our balance sheet in an extremely strong position. Secondly, as I've just described, how we'll continue to invest in the business, and we'll be doing so at high rates of return on capital. Thirdly, we're committed to a sustainable dividend through the cycle. For 2025, this equates to a total dividend of EUR 448 million, and our intention is to grow this broadly in line with inflation, while dividend per share will grow faster as we buy back shares. And lastly, we'll continue to return excess cash to shareholders as we've just announced a further EUR 1.5 billion of excess cash returns over the next year. This represents around about 6.5% of today's market capital. And over the 3 years since 2024, we will have distributed just under EUR 3 billion of excess cash, around 13% of today's market cap. Given our financial framework and ambitions, will still allow us to continue significant excess shareholder returns over the coming years while also reinforcing the balance sheet in anticipation of higher CapEx. Overall, this disciplined approach ensures that our balance sheet remains a source of strength, supporting the business through the cycle, giving us the flexibility to allocate capital where it creates the most value and positioning us to continue investing for the long term while delivering attractive returns to our shareholders. Thank you. I'll now hand back to Luis to continue with the strategic update about our business. Luis Martín: Thank you, Nicholas. I will now spend a few moments going through the strategy, which has worked successfully for us for a long time now. This will demonstrate how we can sustain this level of performance. Firstly, the backdrop is compelling. Demand for travel is and has been a long-term secular trend, which, if anything, has increased in recent years. And as Nicholas indicated in his preview of our deliveries over the next 6 years, supply is constrained by the aircraft and engine manufacturers. We have strong positions in highly attractive markets, which are served by more than one airline brand in every market. This diversity is a key component of the group's resilience and helped to deliver such a strong performance in 2025, even whilst the macroeconomic backdrop is not particularly supportive. Nevertheless, we grew passenger revenue in each of our core markets, with all of our airlines contributing to that growth. We are investing in our brands, which is delivering a better experience for our customers, and you can see in our NPS improvement across the last 3 years. The investment is across the customer journey, so includes on the ground and in the air. We are currently excited about our partnership with Starlink, which will provide high-speed connectivity across the group on every one of our airlines and the first Starlink-enabled aircraft will be operated by British Airways in a few weeks' time. On this slide, we have highlighted some examples of how transformation underpins our margin delivery, supporting both revenues and cost control. At British Airways, the improvement in on-time performance has been a fundamental driver of margin improvement over the last couple of years. It drives productivity, increases revenue and reduce cost of disruption. It is also the biggest driver of customer satisfaction. In 2025, they delivered OTP of over 80%, the best performance since 2014 and a 20-point increase over 2023. In the meantime, Iberia remains as one of the most punctual airlines in the world. Also at Iberia, they have focused on transforming their proposition over the last few years, reflecting the more valuable demographic of their customer base, particularly in the South American market. As a result, they have grown the premium customer base, and this has helped to drive their yields in the premium cabins. Vueling has delivered the best cost control of any low-cost carrier in Europe since pre-COVID. In particular, they have driven lower supply unit cost, which includes both maintenance and airports, which is an exceptional situation in the current operating environment. I will also mention at this point that Aer Lingus delivered a record NPS score and their best OTP since 2016, highlighting their customer focus point of difference in Dublin. All these improvements have been supported by collaboration and sharing best practices across the group, one of the core benefits of our structure and business model. IAG Loyalty continues to grow strongly as a higher growth, higher margin and capital-light business. Based on the earn and burn model where we incentivized the awarding of Avios by also increasing opportunities to spend them, it increased revenue by issuing 200 billion Avios up to 30%. And at British Airways Holidays, they benefited significantly from the changes to the BA Club with revenue from elite members increasing more than 15x faster than other customers. As I mentioned earlier, Loyalty expects to grow earnings by at least 10% each year and grew profit by GBP 49 million to GBP 469 million in 2025. This profit growth was even higher growth if you put to one side the disputed HMRC tax treatment at over 20%. The second major strength to our capital-light development is through our airline partnerships, which deliver accretive value without the need for investment in aircraft. We access 3,000 additional aircraft through our partners, which then unlock 2,600 additional markets through a one-stop journey. This allows us to cover 97% of all passenger demand from our home markets, with loyalty scheme benefits, a key factor. This powerful network, the world's largest delivers significant partner-enabled revenue to the group every year. We made progress with our sustainability road map in 2025. We increased our SAF usage to 3.3% of our total fuel volumes, up from 1.9% in 2024. This also helped to deliver carbon intensity of 77.5 grams of CO2 per passenger kilometer ahead of our target alongside our investment in more than 15 aircraft. As always, this was all delivered by our people. We are committed to supporting our employees through their careers at IAG. We recruited over 10,000 people in 2025, continue to recruit and train pilots and our dedicated airline academies and continue to develop pay structures with all our collective groups that benefit both parties. This includes an agreement 2 weeks ago with Iberia's ground staff. I would like to take the opportunity at this point to thank all of our employees for their hard work during the year. Over the last 3 years, we have created significant value for shareholders. Firstly, we have a portfolio of markets and brands that is unrivaled anywhere in the world and is valued by our customers. This drives attractive revenue growth. Secondly, our execution every day is delivering best-in-class margins and earnings growth, significant free cash flow and high return on invested capital. And thirdly, this creates value for our shareholders through the dividend and our program of historical and prospective buybacks. This is world-class shareholder value creation. So in summary, the market remains compelling. We will continue to execute on our strategy and deliver world-class margins and return on capital. We are rewarding our shareholders with a strong earnings per share and dividend per share growth as well as EUR 1.5 billion in excess cash returns. We plan to continue to return more excess cash to shareholders. And we are confident that we will create significant value for our shareholders in the long term. And now we open the line to your questions. Operator: [Operator Instructions] Your first question comes from the line of Jaime Rowbotham of Deutsche Bank. Jaime Rowbotham: Two questions from me. Firstly, the transatlantic unit revenues at constant currency were negative 3-point-something percent in Q3 but back to positive. I think it was 1.8% in Q4. So very encouraging. Could you talk a bit about the outlook for the transatlantic in summer '26? It feels like there's quite a few moving parts. Those economy cabin weaker trends in '25 become a soft comp, but at the same time, I don't know if you anticipate any disruption from the Football World Cup. And to what extent do you expect the premium cabin trends to remain strong? Any comments, please, on summer transatlantic unit revenue progression in 2026? Second question, Slide 17, very helpful in terms of laying out the medium-term vision on the CapEx. Could you just help us in terms of actual aircraft deliveries? Is there a particular year, 2029, 2030, when you expect to be at peak deliveries? And could you just tell us roughly what that might look like? Is it 40, 50 aircraft? What's the split between narrow-body, wide-body in a sort of peak delivery year, please? Luis Martín: Thank you very much. So North Atlantic, as you said, since the third quarter last year, we saw a rebound. We had a positive increase of unit revenue in the last quarter of the year at constant currency. And now what we see is an improvement in the trend over the last few months, in particular, in the case of British Airways, where even the non-premium leisure revenue has been booking well, U.S. point of sale, in particular, strong. And this is in contrast with what we saw in the third quarter of 2025. Business demand is also booking really well, both U.S. and U.K. point of sale. And premium leisure continues strong. So in Iberia and Aer Lingus, we also expect demand to remain strong, but they are having more increased competition in their hubs. But maybe, Sean, you can add some comment about British Airways. Sean Doyle: Yes. I think we've got a couple of things which have been very encouraging in Q4 and in Q1 as well as the business demand. So we're seeing strong demand out of the U.S. point of sale and pretty robust demand out of U.K. point of sale. And I think we've seen recently as well the kind of market out of U.S. point of sale to Europe more broadly is resilient. Like one example, to be honest, was the Winter Olympics, where we saw really strong demand out of the U.S. into markets like Italy, and we were able to capitalize on that over our hubs. So we're seeing that in the fourth quarter, and we see it in the first quarter as well. Luis Martín: Marco, do you want to comment? Marco Sansavini: Well, in terms of the performance in Iberia, also, we have seen very strong business evolution there. And it's true that in terms of our yields in economy, we have seen some pressure related to the increased competition, but that has applied primarily in Q3 that you saw reflected in last year, that you saw reflected also in the overall performance of the group. But in Q4, that strong increase has softened. And as a result, also, we saw an improvement of performance. Nicholas Cadbury: Just on the CapEx numbers, we'll come back to Jamie at a later date and give you kind of more kind of precise kind of delivery time, what's been delivered by little bit later. I mean what I would say is, in 2027, we're, of course -- at the back end of this year and into next year, we're, of course, starting the refleeting of Vueling into the 737. So that starts ramping up from '27 onwards. And that takes around about 6 years to do as well. And then in '28, you get -- start getting the deliveries of the 777-9s into British Airways. And then you get -- the planes that we ordered in March, really start to get delivered from '29 onwards over those kind of 4, 5 years. So we'll come back and probably give you a bit more detail later. Operator: Your next question comes from the line of Alex Irving of Bernstein. Alexander Irving: Two for me, please. The first one is on distribution. Specifically, how are you approaching the decision about whether and how to sell through large language models? Would you plan to engage directly with LLMs through an API or to rely on existing structures, GDSs, travel agents, continue to pay commissions? When do you think you will sell your first trip and ticket through an LLM? Second question, also on tech, specifically for BA. You're about 2 years into the implementation of Nevio. We've seen Finnair suggesting they're seeing a 4% uplift in pricing, 10%, 15% uplift in ancillary sales from its implementation. Is that sort of result achievable at British Airways? Or more broadly, how do you see the RASK impact of your IT transformation from a move to a modern retailing platform? Luis Martín: You want to comment, Sean? Sean Doyle: Yes. We are seeing -- we are now selling the vast, vast majority of our direct sales through our new platform. In fact, 95% of our volume went through new ba.com in the January sale. And I think the numbers we're seeing are encouraging. One is CSAT is much higher. I think two, things like look-to-book conversion has improved and we've also seen better trade-up and better average unit revenues coming through. That's kind of the first real sort of significant test that we've put the volumes through, but the numbers are encouraging. I think Finnair may be a little bit more advanced in adoption of Nevio compared to where we are. So we work with them across the joint business, and we do see some significant improvements that they're demonstrating on ancillaries. And that would have been part of the kind of business case that we would have put together a couple of years ago when we embarked on this journey. So encouraging signs both on CSAT and revenue conversion trade-up and ancillaries. Operator: Moving on. Your next question comes from the line of Stephen Furlong of Davy. Stephen Furlong: I guess 2 questions. Can you just talk about why the -- again, the excess cash below net leverage target has been widened. Is it to do with just the delivery or the CapEx step-up? Or is it to do with one eye on TAP? That's the first question. And maybe for Sean, just on -- I mean, obviously, BA is performing well in terms of margins. But I know from the Insight Day, I thought it was 2027 maybe when some of the investments come through that the underlying business probably feel that the, let's say, more resilient by then, maybe just the market is good right now or the way the dollar has gone and stuff like that. So just talk about more the resilience of BA and when do you think it's kind of in full bloom, as a word, that would be great. Nicholas Cadbury: Just starting on the kind of guidance on the distribution of excess cash, we widened the guidance to 1x net leverage to 1.5x. We've had fantastic results last year, really strong cash generation, and that gives us real flexibility to both distribute what we think has been a good return on capital in a 9% yield this year in terms of what we're returning to shareholders at the same time and strengthen our balance sheet further and invest heavily in the business. I guess the main thing for that, though, is we've got our eye on the increase in CapEx that comes in the next kind of -- next few years overall. So it's really making sure that we lock in the benefit we've had of the really strong year this year to really make sure that, that continues and that we're in a strong place to make sure we continue to give good shareholder returns and distribute excess cash. So we've used this kind of really strong opportunity to set the balance sheet for the increasing cash and those future shareholder returns. Sean Doyle: If I pick up on the BA question, Stephen. Yes, look, I think we have delivered the 15% 2 years earlier than we set out about 14 months ago. I think, as you said, some of the dynamics have probably worked in our favor, but I think we are seeing the benefits of transformation already. I think Luis mentioned the operational performance transformation, the benefits that gives to Net Promoter Scores and CSAT, but also the benefits it gives in terms of reducing nonperformance-related costs such as disruption. So we expect that to kind of flow through and carry on. Number two, I suppose, is the investment we've made in technology and new platforms. I think we are very excited about the new digital capability. It's performing well, but we have more to come in the coming months as we roll out more of that functionality. We have a new revenue management system, again, which is showing encouraging results. We have a new payments platform, which is increasing optionality and also increasing conversion. So I think we will see more value accretion coming from those levers as we look into '26 and '27. I think the other angle, I suppose, which we're excited about is growth. Nicholas mentioned CapEx, but we will see more long-haul aircraft come back into BA. Today, we're still a bit smaller than we were in 2019, and we feel we have a lot of opportunities to grow long haul, which again helps with margin growth and also helps with things like seasonality because it works very well in winter with a number of markets that we could serve. And finally is the onboard product. We will complete the rollout of the club suite. We're about 76% now at Heathrow. The 789s are going in this year, the A380 start, and we see really strong commercial and customer performance on the back of completing those reconfigurations. So I think we've made a lot of progress on what we said we would deliver on 15 months ago. But I'd agree there is still a lot of transformation that we will unlock in the next couple of years. Operator: Your next question comes from the line of Savi Syth of Raymond James. Savanthi Syth: Two questions from me. Just first, I was wondering if you could give a bit more detail on what you're seeing on -- in terms of engine durability, maybe supply chain and cost escalation. Just wondering across those 3 things, are things improving or not much changing or getting worse? And then second, I know you mentioned it was strong, but I was wondering if you could give -- please give a little bit more color on like corporate and premium trends across the airlines. Luis Martín: Okay. The first question about the supply chain. I think we talk about aircraft, the plan is that we are going to receive 17 aircraft this year. And we are pretty sure that the manufacturers, they are going to comply with this plan. In any case, we'll have some buffers in case -- we could have some delay. We continue with the issue that everybody has with the engines. We are having problems with the GE engines, in particular, in Iberia, where they are suffering the lack of spare engines in the 330s. We are having the problems with the GTF in Vueling. As you know, they have on average like 16 aircraft grounded because of this situation. And also in the case of BA, they still have 787 grounded because of the growth issue. We hope that in the case of BA, this situation is going to be recovered in May, but that's the plan that we have right now that we continue working with the different OEMs to try to improve the situation. But I would say it's improving, but slowly. Nicholas Cadbury: Yes. The second question was about corporate demand. We're trying to move away from comparing ourselves to 2019. We think that's kind of ancient history now. So all we can just say is actually, we've seen corporate demand be strong in Q4, and in the first early days into Q1, it's been good as well. Of course, that helps the yield curve, which is -- so it's been good. It's been strong across all kind of sectors, not just finance. So been good so far. Marco Sansavini: And in particular, let's say, the Latin American premium market has evolved, came very, very strongly. For instance, comparing to last year, the business market has increased in revenue 7% versus last year. And it's a bit like what we have been sharing with you when presenting our Flight Plan 2030. So there is, Madrid converting into the new Miami, seems not only to indicate an increase in overall traffic, but particularly, premium traffic from Latin American countries. Operator: Your next question comes from the line of James Hollins of BNP Paribas. James Hollins: Nicholas, one for you. On the unit cost guidance of minus 1% in 2026. If we reference Slide 13, you give a little bit of detail on the puts and takes across employees, suppliers, ownership. I was wondering if you would be willing to flag maybe how you expect those to move in 2026, if there's anything particular that you would see nicely down? Obviously, FX is the big help. And seasonally, I assume H1 better than H2 because of FX. Any other seasonality you might want to flag? And secondly, on Vueling, please. I know that IAG obviously has a policy of asking CEOs to beg for growth. And clearly, Carolina has won the battle. I don't know if Carolina is on, but I'd love to hear a bit more about the planned 50% passenger growth over the next decade in Vueling, whether it's -- where it is outside Barcelona? If there is, I assume there must be. Clearly, what happened internally to secure that investment? And maybe a bit more detail on what I think is called Rumbo 2035? Nicholas Cadbury: Yes. So this last year, we finished with nonfuel unit cost up 2.8%. We've always said that, that would moderate. And actually under a constant currency, it's up 1%. So it's doing exactly what we said it'll do. It's moderating. We have got a benefit, though, as you say, of around about 2% benefit from FX. So that's why it's down 1% overall. I think if you just -- just for information for everyone, if you look at the FX impact through this year coming, you're going to get a benefit in nonfuel CASK and you're going to get a headwind on revenue of around about -- in Q4, of around about 4%; in Q2, about 3%; and in Q3, of about 1%, and that should be -- hopefully should be flat in Q4. So that's the kind of shape of it. If you look at the nonfuel CASK, just the way it's phasing, you'll see there's a bit more of a kind of headwind in Q1 and probably Q3 overall, if you go to phase it across the year on a constant currency basis. Carolina Martinoli: Vueling? Okay. On Vueling plan, what we have presented is a plan for the next 10 years, with 20 million passenger growth. So the geographical focus is clearly Barcelona, domestic Spain, where we are leaders, we have over 1/3 of the market of Spain domestic and connecting Europe with Spain fundamentally through the 11 bases we have, Barcelona and plus other 10. This plan is very linked to the refleeting, which will restructure our cost base. Also, it will give us more gauge, and this is extremely important, especially in the case of Barcelona. You know Barcelona is a constrained airport with expansion plans in '31 and '32, but we will have a 14% gauge increase with the new fleet in average. Operator: Your next question comes from the line of Jarrod Castle of UBS. Jarrod Castle: I just want to come back to AI, but now more on the opportunity for taking out costs because obviously, we're starting to see companies at least announce large job cuts, today, it was Block. But I'm just wondering what are your plans to achieve efficiencies through AI adoption? And kind of related to headcount, are there any staff negotiations outstanding as well? And then secondly, just on the 3% capacity deployment, obviously, very useful Slide 36. But can you give some just regional color in big pictures where that 3% gets deployed? Luis Martín: Okay. So artificial intelligence, you know that in our transformation, 80% of the projects are linked to technology and artificial intelligence for sure, is critical. So we have projects, for example, in the area of maintenance where artificial intelligence is going to help us to be much more efficient. We have developed some tools, for example, in order to improve the planning that we do with our engines or our fleet. Artificial intelligence is going to help and is helping us also in the customer experience. And also, we are analyzing ways to be more efficient, but the objective is not to reduce the headcount, it's more how we can use artificial intelligence to improve customer experience and to improve also the efficiency of all of our workforce. So again, all the plants are based in technology. Artificial intelligence opens a big range of opportunity, and we are exploring all of them. Nicholas Cadbury: Just on the capacity 3%, you've got -- we've given you in the appendix where it's going to be by airline overall, so you can take a view on that. But if you look at North America, it's roughly in line with that, better than 3% overall. It's a bit better that even again on Latin America, where we're looking at kind of 4.5% plus capacity on South Atlantic, and it's pretty flat across Europe. It's up in Asia Pacific and base, but of course, it's a low base so. Jarrod Castle: And labor negotiations? Sorry. Nicholas Cadbury: We're in a relatively good position on labor negotiations. Operator: Your next question comes from... Nicholas Cadbury: We're in a relatively good position on labor negotiations. Operator: Your next question comes from the line of... Nicholas Cadbury: Could you introduce the question again, please? Operator: Apologies. Your next question comes from the line of Harry Gowers of JPMorgan. Harry Gowers: First question... hello? Can you hear me? Nicholas Cadbury: Yes. Harry Gowers: Hello? Can you hear me? Nicholas Cadbury: Yes, we can hear you. Harry Gowers: Yes, yes. Okay. Sorry. So first question, I mean, you talked about strong bookings in the Q1 in your outlook. So maybe like a little bit more color on what that might mean in terms of booked revenue or pricing? I mean, can we see the same group ex-currency RASK in Q1 that we saw in Q4? And then just second question on EBIT margins by airline. Just wondering what's the full potential for some of these businesses? I mean when I look at your Slide 11, the margins are already very high. Aer Lingus is at 11%; BA, 15%; Iberia, 16%; and Vueling, 12%. So maybe where do you see the margin upside by individual airline going forward? Luis Martín: Okay. So I think what we see now for a year, I think we have a lot of visibility for the first quarter. We are, for the first half, in line with the plan. It's true that the first quarter, we are going to have the benefit of the Easter that is helping. But when we look at the summer, Q2 and Q3, we only have about 30% book. So what we see is, in general, positive. Business traffic is growing and is helping the near-term bookings. And when we look at the different geographies, we talked before about North Atlantic, but LatAm also remains strong for Iberia. And also, we see a healthy performance in the Caribbean for BA. Europe also booked well. We see also a strong business demand in the case of BA. And the only region where we see some softness is Africa and Middle East. So I think in general, we are on plan, and we are confident for this year. Nicholas Cadbury: Yes. Just in terms of kind of full potential, of course, if very strong demand, you get low fuel price, of course, you can maybe go higher. I guess where we're focused on is delivering in the range we've already set out, the 12% to 15%. Our view is if we can keep towards the top end of that range and keep delivering at 15%, grow at 2% to 4% ASK that is incredibly strong performance overall generates huge amounts of cash, great shareholder returns overall and allows us to invest in the business. So that's where we're going. If the benefits go move in our favor and we get above that, that's great. But that's our aim, is to be kind of keep delivering out at that top end of the range. Operator: Your next question comes from the line of Conor Dwyer of Citi. Conor Dwyer: First question is around that margin question. Obviously, last couple of years, you've been at the upper end of that 12% to 15% range. We're obviously still talking about more transformation at BA, Loyalty will be growing above the rest of the group, and obviously, the trends in Iberia are very strong. So just wondering is there any scope for that kind of 12% to 15% to be moved up or even the lower end of that to be moved up? And then on the second side, just around free cash. Obviously, at the moment, the outlook for that looks super strong, but CapEx is rising towards the end of the decade. And obviously, you'll be intending to grow your top line. I'm just kind of wondering, do you envisage a scenario that in that higher CapEx environment, free cash is still able to be in and around the current level. Obviously, some investors will be somewhat worried that we have a couple of years here of super strong free cash generation in the 5, 6 years out, maybe that kind of normalizes. Nicholas Cadbury: Just in terms of the margin targets, we've got -- we're very comfortable where our margin targets are through the cycle at the moment. As I said earlier, kind of if we keep growing at 2% to 4% ASKs and hit 15% margin, I can't think of any other airline that's going to be able to do that as well over time. So that's a really great performance overall. So we're very comfortable with that as well overall. Just in terms of the free cash flow, I mean, we kind of said -- I said in my script, actually that you've got the kind of CapEx going up over time. Higher CapEx when you're delivering good margins, means higher profits at good returns. So it should continue to be strong cash generation overall. So actually, with the higher CapEx, actually should give you, over the longer term, even more confidence in our cash generation. Operator: Your next question comes from the line of Muneeba Kayani of Bank of America. Muneeba Kayani: Actually, I just wanted to talk about your range again. Like maybe I don't understand how -- what do you really mean by through cycle? Like what's the definition of that? And ROIC is clearly well above your target at this point. So both on margin and ROIC, if you can talk about what you mean through cycle? And into your growth algorithm, which you touched on in the slide, historically has been strong, but how do you think about that growth algorithm into the medium term? That's the first question. And then secondly, just going back on Loyalty. You talked about the Amex contract renewal had a positive impact on working capital. Can you give a little bit more details on what this renewal was? And how do you think about getting to that 10% growth? Nicholas Cadbury: Yes. I'll start with the Loyalty-Amex question. Yes, we're really pleased that we've signed it [indiscernible], which really underpins the profitability of our Loyalty business overall, and that's been one of the great sources of growth, is our partnerships, particularly on the kind of financial partnerships. And we'll talk a little bit more about that on the 3rd of June overall. We've got -- it's commercially sensitive in terms of how much -- how much it benefited our working capital, but we just thought it was worth calling it out overall. Definitions of through the cycle, good question. I guess it mean -- through the cycle just means that we think with normal kind of cycles of ups and downs in the economies and GDPs, of course, it doesn't mean if you get another COVID event or something like that. But we just think through that kind of normal GDP fluctuations that you get over a kind of 10-year cycle. That's what we're trying to aim our targets to be. Muneeba Kayani: And the growth algorithm? Nicholas Cadbury: I didn't quite follow your question on the growth algorithm, sorry. Muneeba Kayani: So as you think about the growth algorithm in the medium term, so you talk about the 2% to 4% ASK growth and margins kind of remaining at that stable level. So that drives kind of 2% to 4% EBIT growth, is how to think about it? And then you get the strong cash generation and buybacks driving EPS growth of high single digits. Is that the way to think about it? Nicholas Cadbury: That's a nice way of thinking about it. Operator: Your next question comes from the line of Ruairi Cullinane of RBC Capital Markets. Ruairi Cullinane: Congrats on the strong year. So firstly, how do you view the capacity backdrop on IG routes this summer? It looks pretty constrained to me on the Atlantic overall, but I think Nicholas also commented on elevated capacity growth from Dublin. And then secondly, domestic RASK was up over 8% in Q4 after declining in Q3 on trimmed capacity. So what drove that? Luis Martín: So the plan that we have for this year is to increase capacity by 3%. When we look at the capacity that we are going to have in the different markets, for example, North Atlantic, the capacity that we see out of London is going to continue benign, and we are going to have a flat environment. Madrid is going to be different. We expect significant increases, although it's true that part of this is driven by Iberia because they are adding capacity in North Atlantic. Also, they have now the new 321 Extra Long Range, and they are putting capacity there. Dublin is going to be a competitive market also, and they are going to have a growth close to 10% during the summer. South Atlantic, a little different. Capacity out of Madrid, we expect growth between 5% and 6% for the summer. If we look at intra-Europe, for example, the capacity out of London on IAG route is expected to be down in the first quarter but up to between 2% and 3% in the second and third quarter. Barcelona is also a place where we see we are going to have growth in the summer, around 5%, 6%. And where we see more capacity is in places out of Madrid and Barcelona in Spain. But this is the global picture that we see. Marco Sansavini: And talking about the domestic and in particular, domestic Spain, it's true, it has been very strong along the past years. And it's true that you have seen in Q4, in particular, an additional increase which is relating to the fact that both with Iberia Express and with Vueling, we have strengthened our relative position into the islands in particular. And at the same time, Ryanair in the winter reduced capacity to the island. So the combination of these 2 factors made our position even stronger. And that will continue. You will see it continue in 2026. In Q1, for instance, is already producing itself with an additional element, which is that you have seen the very -- the tragedy of the train accident in Spain, and that has led some corporations, for instance, to change their travel policy in domestic traffic and in general, consumers to shift more to train -- to flights. Therefore, you will see an underlying very strong demand throughout 2026 in domestic. Operator: Next question comes from the line of Gerald Khoo of Panmure Liberum. Gerald Khoo: If I could start with the sustainability of margins and return on invested capital. How sustainable do you think they are at these levels? It sounds like you are very comfortable about that. But what pushes you towards the middle of that sort of through-the-cycle range? Is it just an economic downturn? Should we expect return on invested capital to moderate as the CapEx ramps up? What impact does that CapEx ramp-up have on margin? And Secondly, you talked about the strength of premium leisure. I was just wondering how does the booking profile of premium leisure differ to sort of the network average and to non-premium leisure in particular? Does it book earlier? Does it look later? Is the sort of duration of stay longer or shorter? Nicholas Cadbury: Yes. I mean the sustainability of the margin, good question. I think there's lots of areas. You could say the short-term downturn in the market. You can say if there's increasing tension across the Middle East, what happens then as well. I mean just the example we called out on the call though as well that I think most of you consensus at EUR 5.2 billion, and that includes a kind of EUR 7.1 billion of fuel in there, and the fuel has got up to EUR 7.4 billion in the last few weeks as well. Now hopefully, we can pass some of that on to investors. I think we'll still retain our strong margins, but you got lots of kind of external variables that kind of impact that overall. But I think we're focused on making sure we commit to our transformation, commit to our growth plan, our disciplined growth plan as well and that kind of all, whatever circumstance just towards the most competitive margins that we can get overall. Luis Martín: And the second question, premium leisure, usually, they book in advance. So as we said before that business traffic is recovering. So -- and the pattern of booking of business traffic, usually bookings are late. So in some cases, we are holding the nerve because we know that demand is coming. And in some way, we are trading between premium leisure and business. But maybe Sean, you can comment with the... Sean Doyle: Yes. I think what we have been seeing is strong late in business leisure or business bookings certainly in Q1, and we try and protect inventory to capitalize on that. I think we've done some analysis and interestingly enough, people from our executive who are traveling for premium leisure will be booking 60 days plus in terms of travel plans. Your business traveler will be more like 40 days. So there's kind of a 2- to 3-week difference in the booking profile between one segment and the other. But as Luis said, it's one of the things that we look into next year to try and optimize because we see that late booking business demand has been pretty robust in Q4, and we're seeing it in Q1 as well. Gerald Khoo: Sorry. How does premium leisure book relative to non-premium? Is it earlier or later? Sean Doyle: I think it has a similar profile actually. I think when people are planning a holiday and they're planning a hotel and planning an itinerary, they'll tend to plan further out. So we don't see that marked a difference between the premium leisure and the non-premium leisure side. We do see premium leisure actually tends to book more directly through our channels. We do work with sort of online travel agents more for the non-premium side. Operator: Next question for today comes from the line of Axel Stasse of Morgan Stanley. Axel Stasse: The first one is on the BA and Iberia cost improvement and efficiency program that you guys have announced in the last couple of years. Can you maybe quantify the improvements heading into 2026? What -- are the other improvements done? Is it just about efficiency and therefore, depend on the aircraft delivery? Or is there something else we should be aware of? So that's the first one. And then the second one, coming back to the working cap effect from the Loyalty, should we expect this to reverse heading into 2026? I understand you're about to tell us more specifics, but how should we model this going forward? Nicholas Cadbury: So I think your question -- just on the working capital one. So there were 2 things that happened on the cash flow this year to Loyalty. One is we did benefit from some Amex, the signing of the Amex. We can't quantify that over time. So that gets smoothed across the P&L over the next x years that we signed the contracts for. So it doesn't reverse. You just don't get it again. We did though pay kind of EUR 450 million to the HMRC for this VAT case that we've got with HMRC that we feel very confident on. Actually, that comes into court later this year, but it probably won't get settled until 2027 probably. So you should get a reversal, but it might take a number of years before it does reverse overall. So just -- I think hopefully that answers your question on that one overall. Just in terms of the cost improvements, we don't give kind of specific guidance on the kind of transformation savings that we're doing. And we only do that because there's lots of moving parts, both the kind of inflation, the investments we're making, the growth we're having and the kind of transformation. And so it's all moving parts. But you can see that actually, if we're growing our kind of constant currency nonfuel CASK by kind of 1% and if you think kind of inflation is well above that as well and we're making kind of good investments in the company at the same time, you can see there's a high level of transformational benefits that we're putting through the P&L at the same time. Marco Sansavini: And maybe to give a bit of color of what is to come still in our efficiency programs. Clearly, supplier cost is one where through the strength of the group purchasing, for instance, we are having a lot of value creation in the coming months and years in our transformation plans that you will see coming through. And another key area of value creation there and efficiency is utilization. As you see, we've been evolving a lot through the years in reaching very high utilizations, and we still see room for improvement there. For instance, now we're taking new fleet, we are progressively introducing them, and we could not, of course, maximize the utilization of the new fleet in the first year with all the XLRs. And in 2026, you will see a very significant improvement there in our utilization and productivity. Operator: Our last question comes from the line of Andrew Lobbenberg of Barclays. Andrew Lobbenberg: I have 2 questions. One on competition on the South Atlantic. Clearly, premium goes really well for Iberia. Can you talk about how competitive that is against the Latin American carriers who are emerging from Chapter 11 and getting their mojo and yet Air Europa is wherever Air Europa is. So how does that go? And actually, in Latin America, you don't have a very wide footprint of partnerships locally. So does that impact your -- the power of loyalty and your ability to attract LatAm Latin originating premium passengers? And then the second question, at the risk of lighting, an obvious blue touch paper, do you want to talk around the relations with the airports, Aena and their airport charges Heathrow in their third runway and Dublin and its cap, which is on/off, on/off, I struggle to keep up. Nicholas Cadbury: That was 3 questions there, Andrew, but -- Marco? Marco Sansavini: And starting from the first... Andrew Lobbenberg: I'm not very good with numbers. Nicholas Cadbury: No comment. Marco Sansavini: If you look at our Flight Plan 2030, you would see that our starting point is to have a structural and maintain and foster a structural competitive advantage in cost versus our European competitors. We indicated that we have a 30% almost unit cost advantage versus the Air France and KLM and Lufthansa in Europe. But at the same time, in LatAm, in fact, LatAm carriers are -- have a much more competitive cost position. They have a cost position that is similar to ours. In some cases, even some corridors slightly better than ours. But we have a structural revenue advantage over there. We are the only carrier to Latin America that has, for instance, business class with full-flat position and doors. So we are the only one having 4-Stars Skytrax, all the others are 3-Star Skytrax. And we have, therefore, a premium revenue advantage that is also reflected by the fact that we've been building that through network coverage. We are the largest operator to Latin America by far and the one that has the most spread network, 18 countries are covered. Therefore, that competitive advantage in product and network spread is reflected into a premium advantage that is remaining. And in fact, we're building -- or what we are sharing is that our RASK in premium, you saw the comparison of our RASK in premium in 2019 and today is 34% higher. So this is a competitive advantage that we are building, strengthening and making stronger in time. Now certainly, as you mentioned, the Loyalty program is a key driver of that. We have mentioned, for instance, how much our top tier customers have increased in the year. So maybe, Adam, you can give some color there. Adam Daniels: Yes, sure. I think it's interesting that South America is particularly strong in the Loyalty space in terms of Loyalty businesses, and we are seeing significant growth, not only in terms of the membership, both in British Airways and Iberia, but also in terms of the deals that we're doing now there on the currency side, with financial services and elsewhere. So definitely, South America is a very bright spot in terms of the loyalty business and in terms of the collection of the currency and the drive to deliver or achieve the tiers. So we're very pleased with what we're seeing down there. Luis Martín: And about your third question about airports. So in general, I think that the approach is the same with the different airports that -- where we operate. So Heathrow, I think we don't want to have a debate about the cost of the project. So what we are saying is that we need to look at the facts, and the facts are that Heathrow is the most expensive airport in the world. You need to pay 2x or 3x more than what you have to pay in other big European hubs. So Heathrow has announced, it's not our number, they have in their web page, an expansion plan of GBP 49 billion. And we think that if that plan goes ahead, the passengers are going to pay double of what they are paying today. So we have done our internal analysis of the maximum level of investment that we think with the right facing, we can afford, in order to have flat charges for the passenger, and we have reached GBP 30 billion, is our number. And we can be wrong, but that's a reduction of 40% in the investment they are proposing. But in any case, what we are saying is if Heathrow is sure about what they are proposing and the extra passengers that we are going to have, I'm sure they don't have any problem to put a cap in the passenger charges. That, at the end, is the objective that we have. We have a cap in what they are going to pay, and we don't increase what they are paying today. That I think is enough. Then we support any project. Aena. Aena, we are working with -- also with the DORA III and it's similar situation. So we support the investment, not at any price. And for sure, the investment brings associated more passengers and more revenues. We hope more efficiencies. And because of that, we are defending that the charges for the passengers cannot rise so much. And in the case of Dublin, good news that the cap has been removed. What we are waiting is for an urgent progress of the legislation. And that's all. And I think that was the last question? Carolina Martinoli: That was the question. Luis Martín: Okay. So thank you, everyone, for listening today. We are very pleased that we have delivered another great set of results, and we are looking forward in a very positive way for 2026. Thank you very much.
Operator: Good day, and thank you for standing by. Welcome to the PAR Technology Fiscal Year 2025 Fourth Quarter Financial Results Conference Call. [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, Chris Byrnes, Senior Vice President, Investor Relations and Business Development. Please go ahead. Chris Byrnes: Thank you, Stephen. Good afternoon, everyone, and thank you for joining us today for PAR Technology 2025 Fourth Quarter Financial Results Call. Earlier this afternoon, we released our financial results. The earnings release is available on the Investor Relations page of our website at partech.com, where you can also find the Q4 financials presentation as well as in our related Form 8-K furnished to the SEC. Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. Also, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measures in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this afternoon and the earnings presentation available on the Investor Relations section of our website. Joining me on the call today is PAR's CEO, Savneet Singh; and Bryan Menar, PAR's Chief Financial Officer. I'd now like to turn the call over to Savneet for the formal remarks portion of the call, which will be followed by general Q&A. Savneet. Savneet Singh: Good afternoon, everyone, and thank you for joining us. Before sharing details of a strong Q4 today, I want to reaffirm PAR's thesis. PAR is becoming an AI-driven hospitality platform company. Our 2 verticals, restaurants and retail are individually mid-teens ARR growers with significant white space, anchored by mission-critical systems of record with deep domain expertise. . The compounding nature of PAR's enterprise platform is driven by simultaneously allowing customers to play offense and defense via revenue generation and cost efficiency. This is especially true in times of underlying market instability, we're falling behind in digital adoption and its resulting margin loss is a formula for customer pain. Aggressive investment into our AI platform will deepen our performance and provide further customer expansion opportunities. We have never felt more confident about our positioning and the opportunity set in front of us. Now to review the numbers. In Q4, we delivered revenue of $120.1 million, up 14% year-over-year, driven primarily by continued strength in subscription services and an increase in hardware revenue. On a non-GAAP basis, we generated $2.6 million of net income, marking our third consecutive quarter of non-GAAP profitability. Adjusted EBITDA in the quarter was $7 million. Full year revenue reached $455.5 million, up $105 million year-over-year, including 21% organic growth with subscription services growing 40%. Most importantly, full year non-GAAP net income improved by over $30 million year-over-year, proving that our operating model is scaling. We continue to stress operating expense efficiency as we scale our business in Q4 was no different. As a percentage of subscription revenue, R&D came in at 25% and sales and marketing at a solid 13%, respectively, ahead of our targets -- respectively at or ahead of our targets. Turning to ARR. We exited Q4 with ARR of $315.4 million, representing 15% organic growth. Crucially, second half growth was more than double first half growth and was powered by cross-sell with over 80% of deals being multiproduct. Growth was broad-based, led by POS momentum and the resumed Burger King rollout, along with continued steady performance from Punchh and Plexure. The former continues to win new marquee brands, while the latter benefits from McDonald's international expansion, including a successful Japan launch. We also saw improving trends in ordering and payments. Now to review our business performance in Q4, starting with the operator solutions business. Q4 revalidated our platform strategy. We were selected by Papa Johns for a decade-long partnership and their 3,200 sites and we'll be rolling out PAR POS and PAR OPS to power their in-store tech stack. This win builds our momentum in the pizza category with TAM expansion already reflected in significant pizza pipeline for 2026. Further, we anticipate increasing our partnership with Papa Johns in the future with both expansion to select international markets and continued expansion within our platform. In addition to this marquee project, our bookings exceeded internal expectations and hit record highs with over $25 million booked for PAR POS alone. The mix skewed heavily towards enterprise, multiunit, multiproduct deployments. Enterprise customers are not buying point solutions, they're buying a unified platform with POS as a gateway into the broader PAR ecosystem. Our attach rates confirm this. Nearly 90% of Q4 operator deals were multiproduct in nature. Additionally, we continue to progress on our large Tier 1 opportunities. The world's largest brands continue to show more and more interest in the PAR platform, and we'll update investors as we convert these opportunities to bookings. We're hopeful that our intense focus on AI helps accelerate these opportunities as these brands are looking for ways to become AI-driven ahead of their peers. PAR OPS, our back office offering, is evolving from analytics to intelligence and even more importantly, product capability accelerated. Our first AI product, Coach AI is now being utilized by nearly 1,000 stores with roughly 1,000 active users, indicating high usability and market fit. Since launch, we've added enhancements and improved both usability and contextual awareness. The current version of Coach AI moves us into prescriptive operator recommendations, not just showing personnel what happened, but telling them what to do next. Crucially, we are embedding AI directly into daily workflows and are building towards a full self-driving product that is capable of direct and immediate store optimization. This is not incremental enhancement. This is marginal margin-driving capability for operators. The industry does not need more dashboards. It needs fewer decisions and better ones. Our goal is to embed intelligence into every operational layer such that actions drive outcomes. One of the most encouraging signals this quarter was the breadth and quality of momentum across our Engagement Cloud, both with new logos and existing customers. Starting with Punchh, we signed 2 new noteworthy brands, including Shake Shack, and also expanding meaningfully into the adjacent entertainment vertical with Lucky Strike Entertainment, which opens up a compelling new category for us. These wins reinforce Punchh's position as a category leader and validates our ability to extend the platform into new high-value segments. Ordering continued its strong momentum, adding 6 new brands in the quarter, including Savvy Sliders and Smokey Mo's. Importantly, these weren't stand-alone wins. They increasingly came as part of a broader multiproduct engagement, which speaks to how customers are buying the platform rather than the point solution. Across PAR engagement, co-sell and cross-sell momentum continues to build. More than 80% of new deals are now multiproduct consistent with last quarter and still trending higher. This quarter included the first large sale of PAR catering to Condado Tacos, where we successfully displaced a competitor. We also had the first major deployment of PAR Games with Smoothie King and the first significant sale of PAR Smart passes. Our retail delivered a strong quarter that demonstrated continued scale, engagement and execution across the platform, particularly with our largest enterprise customers. One of PAR Retail's newest and largest C-store customers is driving improved results as their program now exceeds 3.6 million members and continues to drive measurable changes in customer behavior. We are seeing higher visitor frequency, richer customer data and clear monetization benefits across categories. We continue to see broad adoption of PAR Retail as 3 new customers launched on the platform in Q4, but it gets better. I'm also excited to announce the launch of our newest AI product for C-stores and fuel retailers, PAR Drive AI, a fully integrated AI suite built directly into our unified platform. This isn't AI layered on top. It's intelligence embedded into the system's convenience and fuel retailers already use every single day. Not only making us AI native, but building AI and the workflow our customers run today alongside the security, data, and intelligence, our customers trust today. We also saw a strong performance in the quarter, driven by increased hardware demand by our restaurant customers and deployment activity across several of our large enterprise customers. Some of this acceleration is due to the switchover by restaurants to edge compute. Later this year, we'll be coming out with PAR's own portfolio to help support this move. We also saw strong momentum with new store openings and continued kiosk expansion, reinforcing the role of self-service and digital ordering within large QSR environments. In Q4, we experienced steady demand across large POS enterprise brands, including Dairy Queen and Burger King, where ongoing remodel activity, platform upgrades and new unit growth continue to drive consistent deployment volume. Even with the strong Q4, we saw significant cost pressures on key components, including solid-state drives, memory and processors being driven by significant demand from AI infrastructure build-outs, which is tightening availability and creating elevated pricing across the broader compute supply chain. We're moving early and aggressively with measures to protect our core hardware product lines, while also rationalizing configuration offerings based on component availability and evolving customer needs. As of today, we expect component cost pressures and constrained availability to persist until supply more fully catches up with demand, which we believe could extend into 2027. Importantly, we remain focused on mitigation through supplier diversification, product flexibility and the pricing discipline to ensure we can continue supporting customers. Before turning the call over to Bryan, I wanted to share a perspective on AI and its impact on software and even more specifically on PAR. The market fear around the durability of software in an AI-first world is palpable. I would be tone-deaf not to address this directly, PAR is suffering extreme sell down. We are at one of those rare moments where a technology shift is structural. For those of us in the restaurant technology space, we believe this moment represents an opportunity to lead. There are 2 key realities that guide us as we position PAR to be the leader in AI technology for restaurants. First, food service chains are among the most compelling environments for AI to create real measurable value. Brands compete on speed, consistency and quality, and their guests are already conditioned to engage digitally. At the same time, rising costs, structural labor challenge and tight margins mean AI isn't being evaluated as a future capability, but rather as a near-term operational imperative. We believe that among all physical businesses, restaurant AI adoption by end users will be among the fastest. And second, PAR is uniquely positioned to be the company that delivers it. PAR owns and is the ecosystem of record for tens of thousands of restaurants, every transaction, every labor input, every menu item, every guest interaction, every payment event, PAR is best positioned to be the provider that delivers an intelligent operating system, where POS captures the data, payments enriches the data, loyalty identifies the guests, PAR OPS structures the insight and PAR AI delivers prescriptive action. We believe that the winners of AI have 3 key components: a massive trove of industry-wide first- and third-party data; second, the complex integration into an end-to-end workflow; and third, customer trust, the least measurable and hardest to come by of the 3. For PAR, we have all 3. Our AI strategy isn't about adding a chatbot on top of our products. We are rethinking our entire product suite to deliver measurable outcomes autonomously. The vision stated plainly. We are building a platform that gives every restaurant brand, the firepower of the biggest brands in their segments. A single marketing manager at a 200-location chain should be able to execute with the precision, personalization and speed of the entire marketing department of the world's largest restaurant. We will empower them with a team of AI agents that actually do the work, strategize the new plan, build segmented audiences, configure campaigns, deploy one-to-one offers, optimizing in real time and reporting back what worked and what didn't, or imagine the regional OPS leader overseeing 150 stores, empowering them with the situational awareness of a Fortune 500 field organization through an AI layer that watches every location and flags what matters, recommends what to do and execute to fix before it becomes a problem. Now let zoom into the General Manager opening the store at 5:00 a.m. This lead should walk in with the preparedness of an executive chef running Eleven Madison, knowing exactly what to prep, who's coming in, what's trending and where yesterday's gaps were. A guest pulling into the drive-thru should experience something that feels like their favorite local spot remembers them and they're talking to a friend. The pattern is the same in every case. AI eliminates the gap between what small teams can do and what the best operators in the world actually do. Nobody needs another chat interface. What brands need is a system that advises you before you ask, assists while you execute and answers when you need it across every function at every location with the ultimate goal of driving profitable revenue. That level of scale and dependency makes PAR well situated in the deterministic orchestration layer of this new world. AI won't replace enterprise orchestration, but rather leverage it. We are seeing this firsthand with our customers today. Bryan? Bryan Menar: Thank you, Savneet. Good afternoon, everyone. We closed out 2025 with our most successful quarter in recent history. From our strong bookings, incremental ARR of $17 million and down through to our $7 million adjusted EBITDA. We continue to execute to our plan of driving organic growth across our products and the verticals we serve, while also driving profit improvement, all while ensuring the company has the right resourcing to execute with excellence on our growth trajectory and an aggressive AI transformation. Subscription Services continue to fuel our organic growth and represented 63% of total Q4 revenue. The growth from higher-margin revenue streams resulted in a consolidated non-GAAP gross margin of $61 million, an increase of $8 million or 16%, compared to Q4 prior year. We managed the growth while limiting operating expenses, which has enabled us to grow adjusted EBITDA for the third quarter in a row. Now to the financial details. Total revenues were $120 million for Q4 2025, an increase of 14% compared to the same period in 2024, driven by subscription service revenue growth of 18%. Net loss from continuing operations for the fourth quarter of 2025 was $21 million, a $0.51 loss per share, compared to a net loss from continuing operations of $25 million or $0.68 loss per share reported for the same period in 2024. Non-GAAP net income for the fourth quarter of 2025 was $2.6 million or $0.06 earnings per share, compared to a non-GAAP net loss of $37,000 or effectively $0.00 per share for the prior year. Adjusted EBITDA for the fourth quarter of 2025 was $7 million, an improvement of $1.2 million sequentially from Q3 and $1.3 million, compared to the same period in 2024, this positive movement is indicative of our ability to continue to drive growth with profitability. Now for more details on revenue. Subscription Service revenue was reported at $76 million, an increase of $12 million or 18% from the $64 million reported in the prior year and now represents 63% of total PAR revenue. Organic subscription service revenue grew 11%, compared to prior year when excluding revenue from our trailing 12-month acquisitions. ARR exiting the quarter was $315 million, an increase of 16% from last year's Q4, with Engagement Cloud up 19% and Operator Cloud up 12%. Total organic ARR was up 15% year-over-year. Incremental ARR growth accelerated in the second half of the year and we reported a record $17 million increase in Q4. This progression reflects strong underlying momentum in the business and positions us well entering 2026. Our growth is being driven by both site growth and increased ARPU, reflecting successful execution of our Better Together thesis, which is driving momentum in both multiproduct deals and cross-selling into our existing customer base. Hardware revenue in the quarter was $28 million, an increase of $2 million or 7% from the $26 million reported in the prior year. The increase was driven by continued penetration of hardware attachment into our expanding software customer base. Professional service revenue was reported at $16 million, relatively unchanged from the $15 million reported in the prior year. Now turning to margins. Gross margin was $49 million, an increase of $4 million or 10% from the $45 million reported in the prior year. The increase was driven by subscription services with gross margins of $39 million, an increase of $4 million or 13% from the $34 million reported in the prior year. Subscription service margin for the quarter was 51%, compared to 53% reported in Q4 of the prior year. The decrease in margin is due to an intangible impairment recorded in the current period related to the write-off of capitalized software development costs within our drive-thru business. Excluding the amortization of intangible assets, stock-based compensation, severance and the impairment loss. Non-GAAP subscription service margin for Q4 2025 was 65.8%, compared to 64.7% for Q4 2024 that margin includes the impact of a fixed product contract that we acquired from 1 of our 2024 acquisitions, excluding that contract, which is not reflective of core operational performance. Non-GAAP subscription service margin was 71% for the quarter, an improvement of 190 basis points versus prior year. The continued improvement is a strong sign of our ability to leverage economies at scale. Hardware margin for the quarter was 23% versus 26% in the prior year. The decrease in margin year-over-year was driven by increased supply chain costs, resulting from recently implemented U.S. tariff policies and supply chain constraints with memory components related to a significant increase in demand driven by the AI infrastructure industry. We continue to evaluate and implement pricing adjustments and modify procurement plans to mitigate the impact of supply chain cost movements on our hardware margins. We expect this environment to persist through 2026, and we'll continue to manage mitigation plans. Professional service margin for the quarter was 28%, unchanged from the 28% reported in the prior year. In regard to operating expenses, GAAP sales and marketing was $12 million, an increase of $2 million from the $10 million reported in the prior year. The increase was primarily driven by inorganic increases related to our acquisitions, while organic sales and marketing expenses increased a modest $700,000 year-over-year. GAAP G&A was $30 million, a decrease of $1 million from the $31 million reported in the prior year. The decrease was driven by a $1.5 million decrease of organic G&A expense year-over-year, partially offset by inorganic G&A expenses. GAAP R&D was $22 million, an increase of $4 million from the $17 million recorded in the prior year. The increase was substantially driven by a $3 million increase in development costs as we continue to invest to innovate our product and service offerings. Residual increase was driven by inorganic R&D expenses. Operating expenses, excluding non-GAAP adjustments was $54 million, an increase of $7 million or 15% versus Q4 2024. And when excluding inorganic growth, organic operating expenses increased a modest 8%, primarily driven by an increase in R&D investment during the quarter. Now to provide information on the company's cash flow and balance sheet position. As of December 31, 2025, we had cash and cash equivalents of $80 million. For the year ended December 31, cash used in operating activities from continuing operations was $27 million versus $21 million for the prior year. The increase in cash used in operating activities compared to the prior year was largely attributable to increased accounts receivable. We view the increase as an interim position and expect the days sales outstanding will stabilize and pull into historical levels during 2026. Cash used in investing activities was $13 million for the year ended December 31 versus $180 million for the prior year. Investing activities included $4 million of net cash consideration in connection with the tuck-in asset acquisition of GoSkip, capital expenditures of $3 million for fixed assets and capital expenditures of $6 million for developed technology costs associated with our software platforms. Cash provided by financing activities was $12 million for the year ended December 31, and versus $279 million for the prior year. Financing activities primarily consisted of the net proceeds from the 2030 notes of $111 million, of which $94 million was utilized to repay the credit facility in full. I'd now like to take a moment to reiterate and thank our PAR team and how they manage a successful strong second half of the year. We pride ourselves in making accretive capital allocation decisions and through our focus on operational execution, position PAR for sustained growth and success. We're proud of what we have been able to achieve, but we are, by no means, content on where we stand. We need to double down on executing to our strategy as we progress to 2026. We expect ARR to continue to grow in the mid-teens. And similar to last year, the net growth will be more muted in the first half of the year versus the second half, as Savneet mentioned. I will now turn the call back over to Savneet for closing remarks prior to moving to Q&A. Savneet Singh: Thanks, Bryan. 2025 is a strong year for PAR after a slow start, we added record ARR in Q3 and Q4, with a large swing in EBITDA and net income. We enhanced our platform functionality. We're first in our sector to commercialize an AI-native product in Coach AI. We won the industry's largest projects and drove multiproduct attachment across near 100% of our deals. In 2026, you should expect 3 things from us. First, continued growth momentum. We will sustain mid-teens organic ARR growth at scale, driven by multiproduct attachment, new logos and deeper partnerships with our existing customers. Similar to last year, we expect our second half will be stronger than our first half as we manage out some of our legacy low-margin customers in Q1. We preserve in-year upside from, one, commercialization of new market-to-market AI functionality and two, pipeline conversion of our large Tier 1 opportunities. Second, you should expect a step change in operational efficiency. We expect to eliminate roughly $15 million annualized OpEx through AI-driven automation and the natural synergies of operating at our scale by the end of Q1. Illustrative of this we've reached 100% adoption of AI across R&D teams with a meaningful shift towards agentic development. Most of our development is now happening via agents without human involvement in code. A year ago, developers were still touching almost 100% of code generated. That's driving real velocity, and we have doubled our road map commits into production in the last year. Third, you should expect for us to deploy parts of our operational expense savings into AI platform production. We will deliver code faster, bring to market new and commercializable AI-led products and demonstrably enhance our workflows with unified data. RAI investments are not a hedge for our existing business, but the all-out mandate. All of this is to set up 2027 for where we wanted to be, a leaner operating structure, a more powerful platform and a product road map that positions PAR to reaccelerate growth. PAR is only at the start of its growth runway. Our average customer uses just 1.8 PAR products from a list of 6 to 8 core software SKUs, meaning there is at least 3x organic upside within our base. Further, far from driving customer tech inertia, the ongoing restaurant value wars and implied margin pressures in the restaurant business favor consolidation behind a platform vendor like PAR and the move away from point solutions. Brands cannot afford to not compete across the entire operations frontier, and we are the only enterprise vendor that facilitates us near 100% of our deals are multiproduct for a reason. Additionally, AI platform investments will naturally drive ARPU expansion as customers are willing to pay for excess value. If technology unlocks a larger pie, it will be adopted with Coach AI as an early proof point. The food service technology market is being rewin now and the companies that win will be the ones with the data, the platform, the trust and the conviction to move decisively. PAR has all 4, along with a track record of execution and reinvention. We are quietly and confidently building our future. Operator, we can open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of George Sutton of Craig-Hallum. George Sutton: Savneet, you mentioned you never felt more confident about the opportunity set. You've not lacked for enthusiasm in the past. So I just want to put that into perspective. If you can give us a little bit more clarity what you mean there. Savneet Singh: Yes. I think that specifically, my excitement is really in the AI investments and the AI excitement from our customers. As I mentioned, we really do think, categorically, the restaurant and retail categories are 1 of the best places to adopt AI technology. These are businesses that are fighting extreme margin pressures, labor challenges, operational complexity and I think that AI is an operational imperative for them, a nice tool to try. And so when we see the end markets we serve, open to new products and then we look at our platform as truly the platform of choice, we really think it sets us up for an exciting opportunity to be the AI platform that our customers look to build their future on. George Sutton: Now speaking of AI, you mentioned these large enterprise deals that you are chasing, you are hoping that through using the AI components, you can speed up those deals. Can you just give us a sense of how that has accomplished many times, I know you're in pilot with these folks? Savneet Singh: Yes. My perspective is more that as restaurants in particular, look to adopt AI faster and faster, it should accelerate sales processes from vendors that can provide them those AI tools to become AI native. And so I think given how much time and investment and candidly, how far ahead we are of our peers, could potentially accelerate some of these deals that we are working really hard to get done. Operator: Our next question comes from the line of Mayank Tandon of Needham. Mayank Tandon: Savneet, could you speak to the state of the restaurant market? I asked because it seems like the traffic data is pretty mixed right now, but same-store sales have still been fairly healthy given some of the pricing leverage restaurant chains have. How does that square with what you're seeing on the ground in terms of demand for your products? Should we be looking at that as maybe a signal of how demand would impact you? Or is that maybe not that linear a tie-in or correlation rather? Savneet Singh: I don't think it's linear yet, but I think it is moving linear to the upside for us in the sense that this is a complicated environment for restaurants. You've got extensively flat to declining traffic for most you have a value war. You've got cost pressures from labor and your cost inputs through inflation across food stuffs and then you've got massive, massive challenge to win digital -- a new digital customer. And all that screams -- for you to make the investments to win in that environment, not to pull back and so we think it's a perfect environment to sell, and we think it's even a more perfect environment to use AI to bring these products together. Just imagine what I just described to you, how in the heck -- if you're running one of these great brands, do you expect to run a clean operation when you've got different tools running your online ordering, your loyalty, your drive-through, your digital exposure through loyalty and social media. It's really hard to do that. And I think this environment where there's extreme pressure on bringing guests in the door and extreme pressure on bringing costs down is a really, really great environment to be a vendor in, provided we can provide them the value to make their operations more profitable. So we think it's a great timing. As far as direct trends, we are seeing, I think, a stabilization. I think last -- the first half of last year was very painful for our restaurant customers. Q3 was a little bit better. In Q4, we saw stabilization, really good holiday traffic numbers. I think as you're seeing from some of the companies reporting, it's still mixed, but we're not seeing those extreme drop-offs we saw last year, which I think makes me hopeful that we're kind of past that period of time. Mayank Tandon: That's good to hear. For my follow-up, I wanted to just ask about how the ARR guidance, we can call it that, squares with what you would expect on the subscription growth side in terms of the trajectory over the course of the year? And the same question would be applicable to your margin aspirations for 2026. How should we expect that to trend? And can you provide a little bit more color maybe on sort of where you would look to exit the year, if you could share that? Savneet Singh: Yes. I think that we similar to last year, our first half will be lower than our second half. Our second half is looking to be extraordinarily strong right now from book deals that we have and so I feel very good about the second half. The first half will be a little bit slower in Q1, and a little bit of Q2, we are, as I mentioned, leaving legacy brands that are candidly not paying the value for the services that we have, which will lead to us having higher margins over time. And even with that, we feel really confident in getting to the mid-teens growth. And as I mentioned, I think we've got a couple of nice levers to expand beyond that with first some of these new AI product launches and second, the large Tier 1 opportunities. And so we guided to the mid-teens. And obviously, there's upside there, but we want to make sure we give you something we can hit. And the margin flow-through will come through very similar to last year's margin profile. So I expect the growth to be the driver of margin there. And again, upside there, dependent upon how we deploy the savings I mentioned on the OpEx side. As far as an exit, we expect the exit rate in Q4 to be meaningfully, meaningfully higher than Q1 or Q2. We are -- we haven't given guidance, but we expect that to be very, very significant, getting us pretty close to the run rate margins we want to get to as a company over time. Operator: Our next question comes from the line of Stephen Sheldon of William Blair. Stephen Sheldon: At a high level, I guess, what are you seeing in terms of restaurants [indiscernible] willing to make software changes and decisions right now? It seems like you have had a handful of encouraging wins with Papa Johns, Shake Shack [indiscernible] and obviously some others. So is it becoming a better environment for customers to make decisions on what to do with their front of house and back-of-house software, even with uncertainty around AI and dynamic consumer spending environment? And does that look any different in the mid-market versus enterprise? Savneet Singh: Good question. You're cutting a little bit in and out. So Steve, I'm going to take some liberties in guessing what you're saying. But I think that it's a great environment right now to be in our category. As I mentioned, we had record bookings last year ahead of our expectations. It was really, really exciting to see what was happening in Q4, and we expect that to continue. And we are definitely seeing that in the larger chains. We are continually surprised how many large chains are coming into the funnel. And I do think that is because some of the macro challenges that you mentioned, but the last caller mentioned as well, where brands really do need to figure out how to increase frequency, but also cut costs, and we're a great solution. I think the other core secular driver, though, is AI. I think there's not a brand in the world that is not exploring ways that they can leverage their data better. And we through luck or design are really the only platform that given that holistic view both front and back of house. And so to your question on where are we seeing in the front and back of house, we're seeing it everywhere. Both our engagement side and our operation side grew really strongly last year. We are seeing it a little bit more on the operations side of our business right now, where our brands are really going aggressive on upgrading the foundation of technology that back of house, if you will. But the front of house is not slowing, but we are seeing a little bit more there. In terms of are we seeing in the mid-market or the enterprise, I would say the -- we're seeing more pipeline created from the large enterprise, but the medium enterprise, call it the chains that are a couple of hundred up to 1,000 are moving as well. But I think there's a little bit of the larger change of the budget to make those investments. But we are seeing broad-based adoption. And I don't know if it's I'm comfortable saying it's more here or there. I just think we're seeing it everywhere at the moment. Stephen Sheldon: Very helpful. And hopefully, you can hear me. On the -- I think the other thing I wanted to ask about was in R&D, I think you talked about a $3 million increase in development costs. So can you give more detail on that? What drove that higher? And specifically, is that tied to some of the Tier 1 opportunities you're pursuing? Savneet Singh: Yes. So I think it kind of comes in a few buckets. So the first is we're making some pretty aggressive investments into AI. As you heard, we've already launched 2 products soon to be 3, and we'll continue to push that going forward. It is not whitewashing. It is not -- let's put an interface. These are real products that drive real value that we are charging for. These aren't, hey, we're now an AI product and it's the same price. And so there's a real investment going on there. A second part of it is when you're pushing into these large Tier 1 opportunities, there are -- there's more investment for us because these are categories that we have not been in before. For example, we were growing into pizza, and that is a new space for us. Entertainment is a new space for us. And at the same time, the configuration and changes needed to go after these new potential opportunities is important. And the good part is all that is reusable across others in that category. So that's the second part. And then the third part, we are making the investments to modernize every product at PAR. And so we built a really nice moat and a really nice lead, but we think the worst thing we can do is kind of sit here and do nothing. Now if you look collectively, our R&D expense is still 25% of sales, which we think is a very comfortable position to be in. But we really do have the reinvestment are going on, and it's only because we see so much opportunity in front of us today that candidly wasn't there 18 months ago, particularly as it related to AI. Operator: Our next question comes from the line of Samad Samana of Jefferies. Jeremy Sahler: This is Jeremy Sahler on for Samad. I guess first on the Papa Johns, you called out intra-quarter that you're expecting an ARPU of around $4,500 per store with price escalators. Are these stores below list price and the escalators are getting them back up the list? Or are the escalators to take you above the typical list price? And then I know you called out you have the opportunity to expand the deal with additional products. Should we expect something similar to the Burger King win where it can happen in same-store rollout? Or is this maybe -- are you just speaking of a future opportunity just kind of more greenfield? Savneet Singh: So it's market pricing for us. So I think it's great. We got really good pricing here. We're really happy with it. And I think the Papa Johns importantly is equally happy with it. It's PAR point-of-sale and PAR back office. So good high-quality deal for both of us. So market pricing. And our escalators are pretty normal now with any contract that we have. So very much in line with the brands we're signing today. As far as future opportunities, we sort of see 2 direct potential opportunities. The first is potentially upselling the brand on other products we have. That could be ordering, it could be payments. It could be all sorts of stuff that we've got, the AI products that I mentioned. And the second avenue for opportunity will be international expansion as we continue to internationalize core parts of our product, we want to -- and are pushing to try to win some of the international markets that they operate in. Jeremy Sahler: Great. That's great color. And if I think about the mid-teens ARR guidance, can you help us unpack how much of that is coming from new locations versus cross-seller products? And then I know you guys have some large renewals coming up -- legacy renewals coming up and there's an opportunity to take price there. How much is coming from that as well? Savneet Singh: Yes. I think we're probably 70-30 new logo versus existing customer. A lot of it will depend on some of the rollouts we have towards the year, but it's probably 70-30 from a new product to expansion, which is an incredible change for PAR, as you probably remember, for years, it was [indiscernible]. So clearly, the cross-sell and co-sell muscles really changed. Operator: Our next question comes from the line of Andrew Harte, BTIG. Andrew Harte: Congrats on the share buyback authorization. I guess maybe if you could just talk about maybe how you feel about the balance sheet, how do you plan to deploy that $100 million authorization? And I guess it also leads to what you're thinking about profitability and EBITDA margins continuing to scale for this year as well. Savneet Singh: Thanks Andrew. We want to have the optionality to return capital to our investors in every which way possible. And the prices that our shares are trading, we don't think make a ton of sense given the opportunity set, the white space and the long-term growth we see in front of us and obviously, the margin profile we want to get to. And so we want to make sure that we have that tool to operate and ensure that our shareholders are getting the best return. And so as we look to allocate capital, we sort of first look at what are the organic opportunities in front of us because those are the ones that we have tons of control and data to look back at. We'll look at the inorganic opportunities in front of us, and then we'll look at buying back shares. And so we want to make sure that we have the ability to do all 3 and figure out where we can get the highest return. We expect a strong year this year. As I mentioned, the second half, we're going to have a very, very strong year cash generation. And so we want to make sure we're prepared to be in the market when and if we see these disruptions that we've been seeing because we don't think it makes a lot of sense and completely understand a lot of the AI fears. But as a company, we truly expect to be a net winner in this AI market. We think it's important that we eat our own cooking. Andrew Harte: And then kind of a 2-part question on growth. You said in the fourth quarter, the PAR POS kind of results significantly exceeded your internal expectations. So I would like to kind of hear where that came out of or what it was that drove that? And then when you think about 2026 growth to, let's just call it, mid-teens, so call it 15% and it's a bit slower in the first half and then faster in the back half. I guess, how much of that, call it, 15% for the entire year is stuff that you feel really good about versus how much do you need some wins that you're tracking on to come across the finish line? Savneet Singh: I would say the majority of our plan for the year is pretty much there. We don't -- there's not a lot of go-get for us in our model right now, which is why I mentioned sort of the upside to our model is to get incremental adoption of our new AI products and potentially the bookings of large Tier 1 opportunities we're working on. So a good portion of it is booked and planned. Now listen, things can change, we could screw up, so on and so forth, but we feel pretty good about the visibility that we have there. Operator: Our next question comes from the line of Charles Nabhan of Stephens. Charles Nabhan: Savneet, appreciate the comments around the supply chain and hardware, given some of the price inflation in the chip market. But my question there is, are you seeing any impact on RFP activity from higher hardware costs? Or are you seeing restaurants and operators still willing to upgrade their software while maintaining their hardware? Savneet Singh: Great question, Chuck. So short answer is, we're not seeing any impact yet on the revenue side. In fact, as you can see, we've had a really good revenue year last year for hardware, and I hope that continues this year. So it is not slowing down refresh cycles whether those refresh cycles are tied to software upgrades or to net new just refreshing hardware, not refreshing software. But we are seeing on the cost side, where our margins were mid-20s, I think we expect margins will be 20%, 21% from a hardware perspective. So not the end of the world, but the increased volume has helped us offset the gross dollars. If prices continue to spike very, very meaningfully, it could potentially have an impact on our customers wanting to maybe hold off until they saw pricing come down. But we have not seen that, and these pricing pressures have started since April since -- the tariff started April of last year. And so we've had a pretty strong demand year even with that in place. But we're monitoring it very carefully. And it's just so hard to predict month-to-month, even week to week. And so as we mentioned, as Bryan mentioned, we're putting a lot of mitigation activities in place from reconfiguration to accelerated buying to ensure that we don't have any disruptions. And the reason we're not -- we're focused on disruption is we haven't seen a slowdown in demand. Bryan Menar: And I would just add to it as well, too, right, is mitigating plans are not only to manage the margin on the hardware. We're also making sure, too, as part of the plans that we have optionality to make sure that there is no impact in regards to our software growth and roll out, right? So we do have -- we are still hardware agnostic, but a lot of our customers want the attachment because they want the one vendor because we could service everything, right? But we do also have that optionality to give them what they need from a software standpoint and still have flexibility as to what how they're using. And so that may play into it as we go forward. And so we're managing both of those, and we're making sure it does not impact the software side of the house. Charles Nabhan: Got it. And as a follow-up, I wanted to ask about profitability as we think about our EBITDA estimates for the next couple of years. I know not all the ARR from this year is going to flow through to EBITDA. But in the past, you've talked about roughly a 70% to 75% flow-through to the EBITDA line from ARR based on roughly flattish OpEx. Is there any reason to expect a deviation from that framework? Or is that still a fair way of thinking about it? Savneet Singh: Certainly, we sort of talked about subscription services ARR at around 70% gross margins. Bryan mentioned, I think it was 71% when you exclude the 1 business unit. And then in incremental, we've always said -- we expect $0.20 of incremental or 20% incremental cost, although we haven't had that because the OpEx has been relatively flat. I don't think those trends change meaningfully, although we will see some investment in R&D this year. Again, not game-changing amounts, but we really do want to continue that AI investment. And so I think the subscription services margins will continue to hold, and you'll continue to see the gross profit dollars be there to support EBITDA growth and to cover any investment that we're looking at. Operator: Our final question comes from the line of Maxwell Michaelis of Lake Street Capital Markets. Maxwell Michaelis: Just one for me. If we look at -- actually, I got 2. If we look at the Bridg technology acquisition you guys made last month, I know you guys are -- you guys are going to see around $15 million of OpEx savings in 2026. Are you guys looking to invest in that platform at all? Savneet Singh: Of course, we're going to invest in it, but I don't -- that is not going to be a cash burn within Bridg. We've kind of budgeted for it to be profitable within PAR. Now if we see a ton of opportunity and we see -- ton of opportunity, we will. But we budgeted for it to be profitable within PAR and think it will. And the early customer feedback has been really excellent. Bryan Menar: Yes. And I think we'll be able to speak more to it when we get through the next quarter's earnings call, right, as we're closing on that in the near future. So we are definitely excited about how we can leverage that platform within our existing... Maxwell Michaelis: And then I guess if we just stay on the M&A trend, I mean, is that -- I mean, how -- if you were to rank it in terms of capital allocation in 2026, I mean, how does M&A rank in 2026 versus the share buyback and other areas of investment? Savneet Singh: It's always at a point in time. Today, we are disappointed with our stock price. And so I think it's very -- the PAR for M&A is very, very high. Bridg was a special opportunity for us. We bought it for roughly 2x ARR and ARR that we expect to grow, that's profitable. And so in the end, kind of really helping us complete a product suite of having both loyalty and nonloyal guest data in one platform that allows us to build a CDP and do a lot more going forward. So it was very strategic from a product perspective and then a good price. We're always looking at stuff, but I think M&A is lower on the priority list given where our stock price is. Operator: All right. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Chris Byrnes for closing remarks. . Chris Byrnes: Thank you, Stephen, and we want to thank everyone for joining us today on the call. We do look forward to updating you further in the coming weeks. Please have a nice evening. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Welcome to Laurentian Bank Financial Results Call. Please note that this call is being recorded. I would now like to turn the meeting over to Raphael Ambeault, Vice President, Finance and Investor Relations. Please go ahead, Raphael. Raphael Ambeault: [Foreign Language] Good morning, and thank you for joining us. Today's opening remarks will be delivered by Eric Provost, President and CEO, and the review of the first quarter financial results will be presented by Yvan Deschamps, Executive Vice President and CFO, after which we'll invite questions from the phone. Also joining us for the question period is Christian De Broux, Executive Vice President and CRO. All documents pertaining to the quarter can be found on our website in the Investor Relations section. I'd like to remind you that during this conference call, forward-looking statements may be made, and it is possible that actual results may differ materially from those projected in such statements. For the complete cautionary note regarding forward-looking statements, please refer to our press release or to Slide 2 of the presentation. I would also like to remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Eric and Yvan will be referring to adjusted results in their remarks unless otherwise noted as reported. I will now turn the call over to Eric. Eric Provost: [Foreign Language] Good morning, and thank you for being with us today. For the first quarter of 2026, we're pleased with the progress we've made on our key priorities. Our core commercial businesses showed solid underlying momentum with a total loan growth of 4% in the first quarter, which is right in line with our transformation plan. I want to take a moment to recognize our employees. Their commitment and professionalism stand out. They continue to navigate this period of change with resilience, integrity and a strong focus on serving our customers. This quarter, we recorded after-tax adjusting items of $54.7 million, reflecting charges related to the transactions announced in December. At the same time, the team has also established high momentum as it relates to the transaction. On that front, we reached an important milestone. As announced on February 5, our shareholders voted 98.8% in favor of the resolution approving the acquisition transaction. This vote confirms strong support for a future in which the bank can accelerate its strategic growth plan. Another milestone came on February 17 when we completed the sale of our syndication portfolio to National Bank. The process went smoothly, and we will continue to monitor the transition to ensure everything remains seamless for the clients. While several steps remain to complete the transaction, including obtaining regulatory approvals, we are progressing steadily. We remain confident that we have the right team in place to successfully execute. Our mix of commercial loans continued to move in the right direction, increasing by 1% to reach 51% of total loan portfolio. As mentioned earlier, our commercial teams delivered a strong first quarter with notable momentum in key areas. Inventory financing grew 7% quarter-over-quarter and utilization improved by 5 percentage points sequentially, reaching 45%. In commercial real estate, both the portfolio and the pipeline continued to show steady progress, each increasing by 5%. In essence, our commercial specialization demonstrated solid underlying growth, consistent with our transformation plan. In terms of provision for credit losses, the ratio decreased to 18 bps, reflecting the strength of our specialized underwriting, consistent education practices and disciplined portfolio management. We also saw an improvement in asset quality with gross impaired loans decreasing by 19% to 96 bps. We remain confident that our current level of provisions is prudent and appropriate given the overall quality and performance of our portfolio. Finally, our solid capital and liquidity positions allows us to move forward with confidence. I would now like to turn the call over to Yvan to review our financial performance. Yvan Deschamps: [Foreign Language]. I would like to begin by turning to Slide 6, which has been added to provide details on the adjusting items for the first quarter of 2026, which totaled $54.7 million after tax or $1.23 per share. We recorded the following charges stemming from the transactions announced in December, totaling $53.1 million after tax, including impairment of premises and equipment for $15.8 million, charges related to onerous contracts, leases and other for $10.8 million, severance and employee benefits for $8.4 million, accelerated amortization of software and other intangible assets for $5.2 million, impairment of software and other intangible assets for $4.8 million, transaction and conversion costs were $8.1 million. During the quarter, we also announced the purchase of group annuity contracts from a Canadian insurer that transfers approximately $60 million in obligations of our 2 registered defined benefit pension plans, which resulted in a net settlement loss of $1.6 million after tax. Quarterly comparison is available on Slide 21 and in the first quarter report to shareholders. Turning to Slide 7. It highlights the bank's financial performance for the first quarter of 2026. Total revenue for the quarter was $251.6 million, up 1% compared to last year and up 3% quarter-over-quarter. On a reported basis, net loss and diluted loss per share were $20.5 million and $0.58, respectively. The remainder of my comments will be on an adjusted basis and also be on a total loans and total deposits basis as the balance sheet outlined separately for Q1, the assets held for sale and the liabilities directly associated with them. The diluted EPS of $0.65 decreased by 17% year-over-year and 11% quarter-over-quarter. Net income of 34.2%, $24.2 million was down by 13% compared to last year and stable sequentially. The bank's efficiency ratio increased by 240 basis points compared to last year due to our strategic investments and by 110 basis points sequentially, mainly from the regular annual salary increases and seasonally higher employee benefits. Our ROE for the quarter stood at 4.5%, down 80 basis points year-over-year and 50 basis points quarter-over-quarter. Slide 8 shows net interest income, up by $8.7 million or 5% year-over-year from the growth of average earning assets and higher commercial loan concentration as well as favorable loan repayments. On a sequential basis, net interest income was up by $12.2 million or 7% for the same reasons in addition to the impact from favorable loan repricing lags due to the reduction of the U.S. Federal Reserve rate last December. Our net interest margin at 1.89% was up 4 basis points year-over-year and up 10 basis points sequentially, including about half from nonrecurring elements. Slide 9 highlights the bank's funding position. On a sequential basis, total funding was stable. The bank maintained a healthy liquidity coverage ratio through the quarter, which remained at the high end of the industry. For the remainder of the year, the level of liquidity will remain very high, considering the proceeds of the sale of the syndicated loan portfolio closed on February 17. Slide 10 presents other income of $56.7 million, which was lower by 9% compared to last year and compared to last quarter. The decrease mostly came from income from financial instruments. Slide 11 shows noninterest expenses of $192.9 million, up 4% year-over-year and sequentially, mainly from the seasonal higher employee benefits and vacation accruals. On Slide 12, you'll see that our CET1 ratio decreased by 40 basis points to 10.9% due to the charges stemming from the transactions announced in December and commercial loan portfolio growth. Slide 13 highlights our total commercial loan portfolio, which grew by about $1.4 billion year-over-year and by about $700 million sequentially. This quarter, the seasonal dealers' inventory restocking was positive and fueled the loan growth to 7% quarter-over-quarter. Also, commercial real estate delivered 5% loan and pipeline growth. Slide 14 provides details of our inventory financing portfolio. This quarter, utilization rate was 45%, an increase of 5% quarter-over-quarter. Slide 15 illustrates that 2/3 of our commercial real estate portfolio is residential with most of it in multi-residential housing. The LTV on the uninsured multi-residential portfolio stood prudently at 61%. Slide 16 presents the bank's total residential mortgage portfolio. Total residential mortgage loans were down 3% year-over-year and down 2% on a sequential basis. We adhere to cautious underwriting standards and are confident in the quality of our portfolio. This is reflected in our 65% proportion of insured mortgages and a low loan-to-value ratio of 51% on the uninsured portion. Total allowances for credit losses on Slide 17 totaled $192.6 million, up $3.8 million compared to last quarter, mostly from higher allowances on commercial loans. Turning to Slide 18. The provision for credit losses was $16.5 million, an increase of $1.3 million from a year ago from higher provisions on performing loans, partly offset by lower provisions on impaired loans. Sequentially, PCLs were down $1.5 million from lower provisions on impaired commercial loans, partly offset by lower releases of provisions on performing loans. As a percentage of average loans, PCLs increased by 1 basis point year-over-year and decreased by 2 basis points quarter-over-quarter to 18 bps. Slide 19 provides an overview of impaired loans. Gross impaired loans decreased by $49 million year-over-year and $75.1 million sequentially, driven by changes in commercial loans. Thanks to our prudent underwriting standards and the strong credit quality of our loan portfolio by about 95% of which is collateralized, we're able to manage credit migration effectively with minimal impact on our ACL and PCL outcomes. As we look ahead to the second quarter of 2026, I would like to provide some remarks. We will incur additional transaction-related charges in Q2 in the $40 million range post tax, including from the loss due to the discount on the sale of the syndicated loan portfolio to National Bank concluded on February 17. The expected Q2 impact from the sale of the syndicated loan portfolio is a loss of about $0.04 on adjusted EPS. We expect loans to decline by roughly 2% to 3%, mainly due to the syndicated loan portfolio sale. Excluding this transaction, the loans should remain relatively stable. The NIM is expected to be slightly lower due to some nonrecurring items in Q1. Regarding the adjusted efficiency ratio, Q2 should be relatively in line with Q1. We expect PCLs to remain in the high teens. Our tax rate is also expected to be in the high teens. Capital and liquidity levels are solid and expected to remain strong for Q2. I will now turn the call back to the operator. Operator: [Operator Instructions] And your first question will be from Stephen Boland at Raymond James. Stephen Boland: Just -- I know you said you still need regulatory approval. Could you just -- is that just OSFI and Minister approval? Is that the only 2 that are left at this point? Eric Provost: Stephen, it's Eric. Actually, we're -- the main ones we're waiting for is OSFI as well as the Competition Bureau. And after that would follow the Minister approval. Stephen Boland: Okay. And the timing is, I think, in the disclosure, it is late 2026. That's the -- is there any more specific timing? I know dealing with OSFI and the Minister is always a bit of a crapshoot. So late 2026 is still the guidance? Eric Provost: Yes, yes. We're still aiming for that. Stephen Boland: Okay. Second question is continued good growth in inventory finance. You talked a little bit about utilization. But what's driving that growth? Is it more dealers utilization? Is it Canada, U.S.? Maybe you could just flesh that out a bit, please? Eric Provost: Yes, Stephen. It's really a mix. Like we definitely continue our success track record in terms of onboarding. The newest program we actually won is Arctic Cat, which is an exclusivity, generating good traction again and will fuel future growth and continue on that side. But also the dealers have been restocking prudently, but still a good momentum there. So I think they anticipate, again, an okay season for 2026, and we're benefiting from that sentiment. Stephen Boland: Okay. And I mean, obviously, I presume the people in the field are letting the clients know that there is a change in ownership with you potentially. What's the feedback? Is there -- is it positive? Do they care? I'm just curious what the message was to your salespeople, to top clients? Eric Provost: Well, actually, I had a great opportunity to be out there in the field with our people, meeting customers and the reaction is quite good. They understand the rationale of the transaction, and they're quite supportive. So far, we've seen that in additional volume and then good pipeline for future growth. So we're in good shape there. Operator: [Operator Instructions] Seeing there's no further questions registered. This concludes the Q&A session. I will now hand the meeting over to Eric Provost for closing remarks. Eric Provost: Thank you. We're making steady progress towards closing the agreements with Fairstone and National Bank, all while keeping our customers and employees' best interest at the forefront. This is still work ahead of us, but I'm confident that we will achieve our objectives. Thank you, and have a great rest of the day. Operator: Thank you. Ladies and gentlemen, this concludes the conference call for today. We thank you for joining and ask that you please disconnect your lines. Thank you.
Operator: Greetings, and welcome to the Baldwin Group Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Bonnie Bishop, Executive Director, Investor Relations. Please go ahead. Bonnie Bishop: Thank you. Welcome to the Baldwin Group's Fourth Quarter 2025 Earnings Call. Today's call is being recorded. Fourth quarter and full year financial results, supplemental information and Form 10-K were issued earlier this afternoon and are available on the company's website at ir.baldwin.com. Please note that remarks made today may include forward-looking statements subject to various assumptions, risks and uncertainties. The company's actual results may differ materially from those contemplated by such statements. For a more detailed discussion, please refer to the note regarding forward-looking statements in the company's earnings release and our most recent Form 10-K, both of which are available on the Baldwin website. During the call today, the company may also discuss certain non-GAAP financial measures. For a more detailed discussion of these non-GAAP financial measures and historical reconciliation to the most closely comparable GAAP measures, please refer to the company's earnings release and supplemental information, both of which have been posted on the company's website at ir.baldwin.com. I will now turn the call over to Trevor Baldwin, Chief Executive Officer of the Baldwin Group. Trevor Baldwin: Good afternoon, and thank you for joining us to discuss our fourth quarter and full year 2025 results. I'm joined by Brad Hale, Chief Financial Officer; and Bonnie Bishop, Executive Director of Investor Relations. Earlier this month, our industry experienced one of the most dramatic sell-offs in nearly 2 decades after the launch of AI-powered insurance applications and ChatGPT triggered fears of widespread broker disintermediation, eviscerating nearly $40 billion of market capitalization across our public broker peers in a matter of days. I wanted to start with a few direct thoughts on this as moments like these are exactly the kinds of moments that reveal the difference between businesses that are built for the future and those that are not. The critical question being debated today is whether AI will be a true competitor to brokers or an enabler for them. I believe the answer is both. AI will almost certainly drive a divergence of fortunes and success for talent and firms alike. Firms operating as transactional middlemen and commoditized insurance product lines should be concerned. At the Baldwin Group, based on our end markets, intentional go-to-market strategies and the overall complexion of our business, AI is a step function multiplier, enabling significant gains in productivity and enhancing our organizational speed and agility. I'll spend a few minutes addressing how we think about this and why at the Baldwin Group, we have been purpose-built for this era. In Personal Lines, which comprises approximately 38% of our total pro forma revenue, roughly 80% of that revenue emanates from embedded insurance distribution platforms, which we believe represent one of the ultimate moats in this environment. While the market is worrying about consumers asking a chatbot for insurance in our embedded businesses, we are focused on being the insurance solution of convenience sold through a trusted partner alongside a primary transaction such as buying a home, securing a mortgage or renting an apartment. We don't wait for our clients to search. We are already there. Our Westwood platform, which inclusive of the Hippo business we acquired, generated $190 million in pro forma revenue in 2025. seamlessly embeds directly into the home buying experience for 20 of the top 25 homebuilders in the United States who in aggregate sold 57% of all new homes sold in the U.S. in 2024. When a consumer buys a new home through one of our builder partners, Westwood binds a policy roughly 55% of the time and over 85% of those bound policies are escrowed in the consumer's mortgage payment. That is a deeply embedded, highly persistent revenue stream. Our national mortgage and real estate platform serves as an extension of our mortgage and real estate partners' client experiences, bringing protection directly into the consumer's moment of home purchase and financing through our proprietary technology platform, Coverage Navigator. In 2025, we onboarded 12 new partners, including New American Funding, a top 20 mortgage originator in the U.S. who moved to our platform from a competitor and has seen dramatic increases in conversion rates. I'm thrilled to announce that yesterday, we signed a 10-year exclusive agreement with Fairway Independent Mortgage Corporation, the sixth largest independent mortgage lender in the U.S. with over 67,000 loans originated in 2024. We currently expect to go live with Fairway on our Coverage Navigator platform in the second quarter. The growing momentum here is palpable and will drive deeper moats around our embedded business. Our renters insurance platform, which wrote over $280 million of premium in 2025, embeds directly into property management software, allowing a renter to purchase an insurance policy at point of lease in under 60 seconds. 100% of the premium flowing through this channel is into our own proprietary products built and managed by our MGA platform, MSI. Overall, these embedded solutions are easier, more intuitive and more seamless than initiating a separate process with a stand-alone AI agent. We've been investing heavily in embedded solutions as a direct strategy to transform how personal insurance is bought and sold because we foresaw the risk of disintermediation through technology. We are the disruptor in this marketplace. And importantly, since early 2024, we've been building AI into these platforms and are seeing real productivity gains, including digital agents taking phone calls and binding policies when coverage discussions are not required. Now shifting gears to Small Commercial. This is an area where we do believe AI can positively transform the insurance buying experience given the traditional brokerage economics for these small accounts are broken. High labor costs and low retention often result in low to negative margins. Fortunately, we have been proactively disrupting ourselves here via our Founder Shield digital platform, migrating small business clients to a digitally guided experience. The results have been significant. On average, for clients who have migrated to this platform, retention increased from 82% to 92%. Margins swung positively by approximately 40 percentage points and growth accelerated to 25% annually as the digitally guided buying experience led to cross-sell and upsell. We ended 2025 with $17 million of retail brokerage revenue on this digital platform and are in the process of migrating the remaining roughly $30 million of small business revenue onto this platform. While small relative to our overall business, we believe this platform will be a growth driver for us over time. Importantly, we are not waiting for an AI agent to disintermediate this business, but rather are leveraging our digital-first platform to serve it better and more profitably than any human-intensive model could. Turning to our IAS segment. We've intentionally constructed a business that skews toward clients with both scale and complexity, where deep product and sector experience are critical factors in the choice of an insurance adviser. The addition of CAC amplifies that strategy, bringing substantial expertise in complex industry sectors and risk products. Of our roughly $1 billion of pro forma IAS revenues, inclusive of CAC, approximately 70% is commercial insurance for midsized to large clients, 20% is employee benefits brokerage and consulting and 10% is personal insurance for high net worth families. Approximately 80% of IAS revenue comes from clients generating at least $50,000 of revenue for Baldwin, meaning they are generally spending more than $500,000 in insurance premiums across complex and sophisticated insurance program structures. We have organized the business around industry and product specialties. And one example I'm particularly excited about is our cross-functional team of experts from construction, natural resources, real estate, and complex property that is serving clients involved in data center development across all phases of the life cycle from project sponsors to developers of solar, wind, geothermal, natural gas, nuclear and energy storage projects to power producers and energy offtakers. This convergence of traditionally siloed practices allows us to move at speed with rapidly changing markets and is exactly the kind of advisory work that AI augments rather than replaces. Lastly, our UCTS segment wraps a strategic moat around the broader Baldwin platform. In this business, we build and manage proprietary insurance products. We price and analyze risk, adjudicate claims and facilitate the formation and management of third-party risk capital. AI will only enhance and accelerate our capabilities and productivity across all these domains. We have long held the view that the broker of the future, the broker for an AI world integrates across the value chain end to end, owning the client relationship, building and managing risk transfer products and arranging for the formation and management of risk capital. The proprietary product flowing through our embedded channels further insulates us from perceived risks of disintermediation as they are only available through us. It is our product and access runs through our platform exclusively. We are incredibly excited for this moment. We are structurally set up to quickly take advantage of the operational gains afforded by AI. Quite simply, the Baldwin Group was built to this era. With that, I will now turn to our results. Fourth quarter organic revenue growth of 3% was below our historical performance and reflects several headwinds we've previously discussed, including a 22% decline in profit sharing revenue that is largely timing related. Core commissions and fees organic growth was 5%. On a full year basis, we delivered core commission and fee organic revenue growth of 8%. Total organic revenue growth of 7%, adjusted EBITDA growth of 9%, 20 basis points of margin expansion and adjusted diluted earnings per share growth of 11%. These full year results place us at the top end of organic growth across our peer set. Normalizing for the onetime impacts from transitioning our QBE builder book to our reciprocal and the procedural change impacting the timing of revenue recognition in IAS, commission and fee organic growth would have been 8% in the fourth quarter and 10% for the full year 2025. Overall, organic growth would have normalized to 5% in the fourth quarter and 9% for the full year 2025. Additionally, the disruption in the Medicare marketplace impacting our Medicare business was a 100 basis point headwind to organic growth in the fourth quarter and a 70 basis point headwind for the full year 2025. Despite the revenue headwinds in the fourth quarter, profitability pulled through. Adjusted EBITDA margin expanded 100 basis points in the quarter to 20.1% and adjusted diluted earnings per share grew 15% to $0.31 per share. This was driven by the structural margin opportunity inherent across our platform as well as core operating leverage and was in the face of the $7 million decline in contingent commissions, which have a 100% flow-through to EBITDA. At the segment level, UCTS once again delivered outstanding results in the quarter with 16% organic growth and adjusted EBITDA margin expansion of approximately 330 basis points. Strong performance was powered by continued growth in multifamily, better-than-expected results in our commercial umbrella portfolio and builder product and contributions from Juniper Re. In Main Street, our core commission and fees organic revenue growth was 2%, while total organic growth was negative 4%, reflecting some pressure and timing of contingents. The quarter was negatively impacted by the continued QBE transition headwind at Westwood and Medicare retention challenges. As a reminder, the year-over-year QBE commission headwind should subside in May of this year, and we expect tailwinds over time related to the economics associated with managing the reciprocal. Normalizing for the impact of the QBE transition, total organic revenue growth would have been 2% for the quarter and 6% for the year. Further isolating out the impact of the disruption in the Medicare industry, organic revenue growth would have been 6% in the quarter and 8% for the year. Despite the top line headwinds, adjusted EBITDA margin expanded 460 basis points to 31.8%, an exceptional profitability result, showcasing the immense operating leverage we have as our investments in building our embedded mortgage business earn in. In IAS, fourth quarter core commission and fee organic revenue growth was flat, while total organic revenue growth was negative 2%, reflecting timing pressure on contingents and rate and exposure headwinds of nearly 10%, inclusive of the procedural accounting change we have previously discussed. Removing the impact of the procedural accounting change, total organic revenue growth would have been negative 1% for the quarter and 4% for the year. Underlying business momentum remains strong. Sales velocity was 19%, top decile for our industry and client retention improved by nearly 300 basis points in the fourth quarter. We increased our investment in frontline revenue-generating talent by 44% in the year, taking our net unvalidated producer pay from 1.6% to 2.3% of commission and fee revenue. Our client franchise, new business pipeline and overall business momentum is incredibly strong. We entered 2026 with optimism and excitement for our building momentum. On January 1, we closed our partnerships with CAC Group, OBE and Capstone. On a combined basis, these 3 partnerships delivered approximately $350 million of 2025 pro forma revenue, and we expect them to deliver roughly $400 million of revenue and approximately $110 million of adjusted EBITDA post synergies in 2026. Given the market's understandable skepticism around synergy achievement, the Baldwin and CAC teams worked diligently to action all headcount-related changes last week, which represent the largest quantum of expected expense synergies. Today, our integration efforts are ahead of schedule. New business momentum and collaboration across our collective teams is incredibly strong, and the strategic rationale for the wisdom of this business combination is playing out faster and stronger than anticipated. As of yesterday, the CAC team has $32 million of closed one new business in 2026 as compared to $20 million in the prior year period and is already actively working on $11 million of combined cross-sell opportunities with their new Baldwin colleagues, highlighting the momentum we have started the year with. Our theme for 2026 is Accelerate. The Goldilocks era for insurance intermediaries is behind us. The conditions that once lifted all boats have given way to a market that rewards only those with true capability, discipline and cohesion. At Baldwin, that shift plays directly into the strategy we have been executing for years. We have been thoughtfully assembling piece by piece, a diversified, vertically integrated platform designed to thrive in any market cycle, not just the easy ones. Central to this acceleration is our 3B30 Catalyst program, which we launched in the third quarter of 2025. In 2026, Catalyst becomes operational in earnest. We are executing the first phase of role transformation within IAS consolidating core technology platforms to improve connectivity and data clarity across the firm and infusing AI and automation into workflows to elevate colleague impact and enhance the client experience. We expect $3 million to $5 million of Catalyst-related savings this year, ramping meaningfully in 2027 and beyond. This is how we translate AI into a tangible competitive advantage. We remain anchored to our aspirational North Star of $3 billion in revenue and a 30% adjusted EBITDA margin over the intermediate term. And with that, I'll turn it over to Brad to detail our financial results. Bradford Hale: Thanks, Trevor, and good afternoon, everyone. For the fourth quarter, we generated core commission and fee organic revenue growth of 5%, total organic revenue growth of 3% and total revenue of $347.3 million. Looking at the segment level on a core commissions and fees basis, organic revenue growth was flat in IAS, 2% in MIS and 17% in UCTS. Total organic revenue growth was negative 2% in IAS, negative 4% in MIS and 16% in UCTS. For the full year, total revenue was $1.5 billion. Core commission and fee organic revenue growth was 8%, while total organic revenue growth was 7%. You heard Trevor speak to several idiosyncratic and market-related headwinds that impacted our 2025 financial results. To support digestion of those comments, I would point everyone to 2 new slides in our investor supplement, specifically Slides 6 and 7 that describe and quantify these impacts and bridge to a view of what normalized organic growth would have been for the consolidated business absent the idiosyncratic headwinds we've discussed. We recorded a GAAP net loss for the fourth quarter of $43.7 million or GAAP diluted loss per share of $0.37. GAAP net loss for the full year was $54.2 million or $0.50 per fully diluted share. Adjusted net income for the fourth quarter, which excludes share-based compensation, amortization and other onetime expenses, was $36.3 million or $0.31 per fully diluted share, reflecting 15% growth. For the full year, adjusted net income was $198.9 million or $1.67 per fully diluted share, growth of 11%. A table reconciling GAAP net income to adjusted net income can be found in our earnings release and our 10-K filed with the SEC. Adjusted EBITDA for the fourth quarter rose 10% to $69.6 million compared to $63.2 million in the prior year period. Adjusted EBITDA margin expanded approximately 100 basis points year-over-year to 20.1% for the quarter compared to 19.1% in the prior year period. Adjusted EBITDA for the full year grew 9% over the prior year to $341.5 million. Adjusted EBITDA margin for the full year was 22.7%, an expansion of 20 basis points year-over-year. Adjusted free cash flow for the fourth quarter was $11 million, an 85% increase year-over-year. Adjusted free cash flow for the full year was $87.2 million, a decrease of 5% from the prior year, driven by onetime partnership-related costs of approximately $15 million in Q4 that were largely tied to the CAC Group merger and were unplanned at the time of our last call based on the timing and execution uncertainty that still existed around the CAC merger. Net leverage remained flat in the quarter at 4.1x as a result of those onetime partnership-related cash uses. We took advantage of favorable market conditions in December, increasing our term loan facility by $600 million to fund the closings of CAC, OBE and Capstone, while maintaining our pricing of SOFR plus 250 basis points. Turning to capital allocation. I would first direct investors to the updated partnership scorecards in our earnings supplement, which highlights the meaningful value we've created through capital deployed to partnership activity. As we sit here today, the all-in blended multiple paid for all partnerships completed from 2020 to 2022, inclusive of earn-outs is 8.7x adjusted EBITDA. Specifically, I would call out Westwood, the sole partnership in the 2022 cohort and prior to CAC, the largest partnership in the firm's history. In addition to giving us an incredibly strategic foothold in the new homebuilder channel, the financial aspects of the transaction speak for themselves, with the purchase price, including earn-outs, now representing an adjusted EBITDA multiple of 5.6x. All of this highlights and validates our ability to attract high-quality businesses, integrate them effectively and deliver compelling post-earn-out returns for shareholders despite the overhang that earn-out payments have had on our free cash flow and deleveraging trajectory. Wrapping up on capital allocation, as previewed on our last earnings call and now given the dislocation that we believe exists in our share price today, the Board of Directors has accelerated and expanded its authorization of a $250 million share repurchase plan. We believe it is in the long-term best interest of our shareholders to take advantage of this opportunity by acquiring shares of the business we know best, our own, funded through excess free cash flow and if deemed prudent, periodic use of our revolver. Moving to guidance, which we are updating to reflect the CAC Group merger. For the full year, we expect total revenue between $2.01 billion and $2.05 billion and organic growth of mid-single digits or higher. As we've discussed, we expect organic revenue growth to ramp throughout the year, reaching double digits by the fourth quarter as we lap both the QBE commission headwind in MIS and the procedural accounting change in IAS. We expect adjusted EBITDA between $460 million and $480 million, representing adjusted EBITDA margin expansion of 20 to 70 basis points. We expect double-digit growth in adjusted free cash flow before onetime transformation and integration costs and adjusted diluted earnings per share between $2 and $2.10. One housekeeping note. I would point everyone to Slide 24 of our investor supplement, which lays out historical timing of CAC Group revenue and should help inform model updates. For the first quarter of 2026, we expect revenue between $520 million and $530 million and organic revenue growth in the low single digits. We anticipate adjusted EBITDA between $130 million and $140 million and adjusted diluted EPS between $0.61 and $0.65 per share. 2025 was a year of meaningful progress for the Baldwin Group. We delivered our sixth consecutive year of top-of-industry organic growth, expanded margins and grew adjusted EPS by double digits. The actions we are taking to execute on CAC synergies, advance our Catalyst transformation program, scale our embedded and MGA platforms and grow investments in frontline revenue-generating talent reflect our conviction in the durability and value of this platform. We sincerely thank our clients for placing their trust in us, our colleagues for their tireless dedication and our shareholders for their continued support and patience. I will now hand it back to Trevor. Trevor Baldwin: Thank you, Brad. In closing, against the backdrop of relatively strong consolidated results in the wake of many idiosyncratic and market-driven headwinds, I want to acknowledge to our shareholders what has been a year of uneven financial performance, one that does not ultimately measure up to our own high expectations. Despite this, our business is entering 2026 well positioned to accelerate performance with strong underlying momentum across all 3 of our segments, incredibly encouraging early wins and synergy realization at CAC, innovation taking place across the value chain as we continue to bring clients and risk capital closer together and investments we have been making in automation and AI that we expect to drive meaningful gains in productivity and accelerated client value and impact. In many ways, our growth story is entering its most consequential chapter. Our business was purpose-built for this era, and we're excited about our ability to demonstrate that to all of our stakeholders. To wrap up with our prepared remarks, I want to share how proud I am of the way our colleagues navigated a complex environment in 2025. I want to thank our clients and insurance company partners for their trust, our colleagues for their resilience and commitment and our shareholders for their support in what has been a bruising year. With significant colleague ownership, our alignment is deep and enduring as we build long-term value together. We'll now take questions. Operator? Operator: [Operator Instructions] Your first question comes from Tommy McJoynt with KBW. Thomas Mcjoynt-Griffith: First one here is -- I appreciate all your comments there at the beginning about what's happening with AI and the threat of disruption there and your competitive positioning. Maybe I just want to ask you to expand a little bit on that. If I think about, for instance, like an embedded solution like renters, to the extent that it does become easier for somebody to build some software or some program in an automated fashion, like how do you think about your moat, your defensive positioning to maintain your structure with clients that would prevent you from being disrupted in a product like that? Trevor Baldwin: Tommy, this is Trevor. Great question. I think, look, the narrative that AI replaces brokers is just far too simple. I think what AI actually does is it accelerates the divergence that was frankly already underway between platforms that own distribution, that manufacture risk products that source and manage risk capital and that ultimately embed themselves in the customers' workflows and ecosystems from those intermediaries that are simply in the middle and take a toll. The toll collectors are clearly in trouble. The platforms are not. And in fact, I believe the platforms are about to enter a true golden age. At Baldwin, we have been laser-focused not on building a brokerage, but on building an insurance platform. And we think about our platform through 3 lenses that I think directly map to the framework of why we believe there's a lack of fragility around this overall business model and ecosystem that we've created. The first is embedded distribution. Specific to renters, we are at point of lease through our property management software partners embedded and built natively into the workflow in their system. And then 100% of the premium throughput through the various renters products that is purchased via that channel is our own proprietary product. You can't get it anywhere else. And so if you want our product, you have to come through our platform. In addition to that, we're arranging and managing the risk capital that sits behind that product. So we control the entire value chain associated with how those renters insurance solutions are ultimately brought to bear, priced, adjudicated and how those renters customers are taken care of. So that's one example. It's a similar dynamic across our builder and mortgage channels with proprietary product, proprietary technology. And I would tell you, none of these areas are the core business functions of our channel ecosystem partners. What they're looking for is a high-quality partner that gives them certainty around execution and confidence that we're going to be able to uphold and deliver an ultimate client experience that's consistent with their overall experiential goals. So when you think about our broader platform, it's embedded distribution, it's advisory complexity. I talked earlier in my prepared remarks around both the scale and complexity of the type of clients that we serve and the end markets that we're serving them in. And then it's vertical integration. We don't just distribute products. We do. We own the customers. We are the retailer but we also build and manufacture the proprietary product, and then we source, arrange and manage the risk capital that sits behind them. And I think that's a central theme to why the platforms will not only survive but thrive in the world of AI and all of its impacts on knowledge work. Thomas Mcjoynt-Griffith: Great. And then I appreciate on Slide 7, your quantification of the idiosyncratic end market headwinds. I just want to ask you to unpack your expectations in terms of what's embedded in your guidance for the fourth one there, the market headwinds. Are you contemplating any deceleration in casualty rates? Is it a matter of property rates stabilizing at midyear? What's embedded in that? Trevor Baldwin: Yes. I mean we're expecting continued headwinds through most of 2026 from a overall market impact standpoint with that fading through the year to more of a neutral impact by the time the year wraps up. And that's less a function of the absolute rate, which we believe will continue to decrease and be competitive in property. We do believe rates will continue to ebb in casualty, and it's more a function of rate of change. And so what you saw in the fourth quarter is a rate of change of 1,500 basis points of total market impact because we swung from positive 500 basis point tailwind in the fourth quarter of '24 to a 10% headwind in the fourth quarter of '25. There's some nuances to that headwind, predominantly around our benefits business, which drove most of that, where we saw another quarter of pretty meaningful exposure compression. So that's not a rate dynamic. That's an exposure dynamic in our benefits business. But I would also tell you, we now have visibility into January 1/1 renewals where we renew about 40% of our overall employee benefits revenue for the year, and we saw a combined rate and exposure increase in January. So I think the back 2 quarters of '25, we saw a pretty meaningful exposure compression across our benefits clients, which I believe is reflective of some of the structural workforce transformation that's occurring as a result of AI across white collar, knowledge-based businesses, technology companies, a big cohort of which exist across our client base. So I think while I called a floor in the third quarter of '25, I clearly got that wrong. I feel really good about the fact that the headwinds will slowly subside through the year. We've got finite hard end dates around the QBE builder transition and the IAS revenue recognition procedural change. We've got pretty good visibility into the Medicare disruption that occurred in 2025, largely stabilizing, not expecting that business to go back to meaningful growth anytime soon, but I think the headwinds we face should largely subside there. And that's all what informs that mid-single-digit or higher organic guide that ultimately culminates into double-digit organic growth on a run rate basis by the fourth quarter. Operator: Charlie Lederer with BMO Capital Markets. Charles Lederer: You mentioned the growth in unvalidated producers. Can you provide color about how much your hiring strategy in IAS has been adding to sales velocity and how we should think about how that strategy plays in a softer market environment? Trevor Baldwin: Yes. So we increased our investment in frontline revenue-generating talent by about 70 basis points in the IAS business, Charlie. And I wouldn't think about that as having a material impact in year on sales velocity just because of the typical ramp time period associated with a lot of that talent. So the sales velocity for the year of around 19%, which, by the way, compares to an industry median of about 11% and a 75th percentile of about 15.5%. So continuing to perform at top decile results from a new business generation standpoint is largely from risk advisers that have been on the platform for more than 12 months. The folks in that -- the investment ramp that occurred through 2025 should begin building into new business and sales velocity results into '26 and fully into '27. Charles Lederer: And then maybe on the MIS side, I guess, how should we think about the cadence there? Obviously, you lapped the QBE impacts, I think, in May. On the homebuilder side, I guess, how is the underlying momentum there? Are you still ramping new partners there? And on the -- maybe you can talk about the same thing on the mortgage side. I know you announced a new partnership. Trevor Baldwin: Yes. So look, normalizing for the impact of QBE transition, Westwood's organic growth for the year was 9.5%. So that business continues to perform quite well despite what has become a little bit of a softer overall builder market. We feel really good about our position with 20 of the top 25 homebuilders in the country who accounted for more than 57% of all homes built in the U.S. is our partners. And we continue to take share, win new builders. And I'd say that the integration with Hippo and the builder partners that came over from that transaction has gone incredibly well. We're already through the TSA. They're fully on our proprietary tech Advantage+ and that business is humming along. So I think there's an expectation for builder volumes to be down somewhat in 2026. But I'd remind everyone that 90-plus percent of the revenue in the Westwood platform comes from renewals. And so the impact of builder volumes does not have a straight pull-through impact to the overall momentum in the Westwood business. That business continues to perform exceptionally well. Our mortgage business is doing fantastic. You saw most likely yesterday, the announcement around our new partnership with Fairway Mortgage Corporation, the sixth largest independent mortgage lender in the country, just a huge validation of the value of our technology platform and how that can enhance and accelerate the insurance buying experience of point of mortgage origination. In fact, Fairway already had its own sub-agency they were operating, and they ultimately came to the conclusion that they would be better off partnering with us because of the power of our technology rather than continuing to go it alone with their own insurance agency. So in conjunction with that partnership, we will be acquiring their small agency. It's about $1 million of revenue, so not substantial and continuing and plugging them into our coverage Navigator tech platform to accelerate momentum. The pipeline we have in the mortgage and real estate sector is quite large, over 45 providers that, in theory, would generate over $90 million of first year new business revenue. So we're actively working that pipeline, showcasing the value of our tech and how it truly enhances and elevates the overall mortgage origination process and experience. Operator: Gregory Peters with Raymond James. Charles Peters: Trevor, you mentioned in your comments a couple of times about the precipitous decline of your stock price. You highlighted the fact that so many of the employees at the company are also shareholders. So I guess I have 2 questions for you considering what's happened. First, can you talk about retention? I think your highest level producers are the Vanguard producers. I think that's what you call them. Anyways, but can you talk about retention? And then the second part of the stock price question is, I'm sure this goes all the way up to the Board. Is there any perspective of what you can do differently going forward other than just simple execution that will help restore confidence in the stock price? Or is there a shift in strategy that you're contemplating? Obviously, the share repurchase is a significant step. But I'm just curious about what's going on in the mindset in the company there right now. Trevor Baldwin: Yes. Greg, great question. So let's hit retention first. Look, none of our colleagues are happy or excited about share price performance over the past 12 months, and there's definitely frustration around that, but it's not impacting retention. Vanguard colleague retention was 94%. So it continues to be exceptionally high. We have not had any regrettable production talent losses over the past 12 months. I know there's been a lot of headlines around some pretty kind of broad-based talent defections across various industries. I would just say, one, we don't think very highly of some of the tactics that are being employed by many of these newer entrants who seem to be somewhat disregarding the type of approach that I think good self-respecting and competitive businesses take to winning talent. We're full believers in portability of talent. And I think the power of our platform, the strength of our culture and ultimately, the realization for our industry's very best professionals that they can build the most rewarding impactful careers here at Baldwin speaks through in the strength of our retention. But ultimately, we need our results to translate into share price performance over time. I think we can point to a number of examples of incredibly successful public companies who have gone through periods of dislocation and misunderstanding that's impacted their share price performance, but it feels like we've been there longer than most now over the past few years. To speak directly to some of what's ultimately driven some of that share price performance, we've got to manage expectations better. We came out and we've had to reset expectations for a variety of reasons, some specific to us, some market-driven. That obviously does not create confidence. And so what you're seeing and the expectations that we've laid out are a set of financial targets that we believe are quite achievable. I think when you look at the overall performance of our business through most any financial lens over the past 6 years since we went public, it's pretty remarkable. We've taken a business from $135 million of revenue to what is today on a pro forma run rate basis over $2 billion. We've grown earnings on a per share basis nearly at a 40% CAGR and free cash flow at a 45% CAGR. But we know there's things we've got to do to improve the overall financial profile of the business. We've got to continue to stay focused and disciplined around delevering. We've got to drive a realization of better free cash flow conversion. And ultimately, we've got to continue to deliver the outsized organic growth that has been a hallmark of our success over the years. I today am as confident as I've ever been, Greg, about the unique competitive position we're in and how purpose-built we are for this era and the impact of AI. As I mentioned earlier, we haven't been focused on building a brokerage. We've been focused on building an insurance platform that enables us to play across the ecosystem in a way that uniquely positions us to solve challenges and to ultimately build enduring moats around our competitive advantages. So our business is well positioned coming into 2026. The quality and the strength of our talent has never been better. The addition of CAC just continues to add to that as you think about the level of expertise we have in complex upmarket risk and insurance opportunities and the momentum is palpable. I mean you heard some of the remarks I shared around the new business success that CAC has come into the year with, closed new business, up over 50%, $11 million of active cross-sell business being worked on collaboratively between the Baldwin and CAC teams. It's incredibly exciting. But we're not close eye to the reality that there's some things around our financial profile that we've got to make real progress on, and we're committed to doing that. Charles Peters: So I appreciate your comments there. And I want to focus on 2 pieces of your answer at the end that I think are important, and it's the deleveraging and the free cash flow component. And I guess what I'm struggling with is how you're going to deliver on those 2 metrics while at the same time, aspiring to grow to $3 billion of revenue because I feel like -- based on your original vision that, that was going to require some more acquisitions. So maybe speak to just sort of how you're thinking about the deleveraging free cash flow components of that answer. Trevor Baldwin: Yes, Greg, we've got to drive meaningful margin accretion in the business through -- and we're actively doing that. If you look at the CAC integration, we outlined $43 million of cost synergies to be achieved over 3 years, and we've already actioned $25 million of that. We're 2 months in, 60% of expected cost synergies are actioned. And of the $17 million of revenue synergies that we had identified, we're already working on $11 million worth, 60 days in. So it's about continuing to transform our business, which is what 3B30 Catalyst is all about, which is repositioning the way in which work is done across our business to leverage the advantages of artificial intelligence, and we're doing that. We, over the past 90 days, built our own proprietary orchestration layer, GATOR that enables us to have synchronous and asynchronous coordination of workflows that are fully automated to be able to truly elevate and enhance the type of work that our professionals are doing while driving more seamless, more effective and more real-time interactions for our colleagues through the advantages of AI. What we're seeing in the early kind of days of some of these tools that we're rolling out is productivity gains upwards of 80%. Like to say that AI is going to have an impact or even transform businesses in our industry is probably the understatement of the day. The opportunity we have ahead of us here is immense, and we're going to unlock meaningful margin opportunity while accelerating organic growth. And that will put us in a position to be able to both delever the business through scale while also have it being in the position over time to be thoughtful around M&A. Bradford Hale: Greg, I just want to add, look, in the last 2 quarters, we've actually had quite a strong trend in the growth in adjusted free cash flow. In Q3, adjusted free cash flow from operations was up 26%. In Q4, it was up 85%. And Q4 was in the face of approximately $15 million of partnership-related expenses for the January 2026 deals, which was unplanned. As we delever the business, as Trevor articulated, we would expect our free cash flow conversion to migrate to the peer levels. With respect to leverage, I want to be clear in how we think about the balance sheet. Our long-term target leverage remains 3 to 4x. Nothing about today's announcement around buybacks changes that destination. What we're saying is that the path to that destination should be optimized for total shareholder value, not optimized for arriving at the lowest leverage ratio in the shortest possible time. We have no near-term maturities of consequence. In this context, mechanically deleveraging from 4.1x to 3.5x, 6 months faster, while our equity trades at a material discount to where we believe intrinsic value sits would be, in our view, a destruction of shareholder value and not a creation of it. So we're looking at this the same way we've always looked at it on a long-term basis and are committed to that path. Operator: Next question, Elyse Greenspan with Wells Fargo. Elyse Greenspan: My first question on organic growth. I guess, with the mid-single-digit guidance for '26, I was just hoping that you can give some color on the -- what the outlook is by business? And then a second part, keeping with organic growth. Obviously, you guys did highlight it, right, some specific headwinds, and I know they were called out on the slides. But within your organic growth guidance for '26, are you assuming any of the businesses start off the year in negative territory, right, just because obviously, the cadence is organic improving during the year. Trevor Baldwin: Yes. Elyse, we're not going to get into segment-specific outlooks here. What I would tell you is the headwinds, which all have finite end dates over the course of '26 are incorporated into that mid-single-digit or higher guidance, wasn't just mid-single. I would point that out. We expect OG to return to double digits by the fourth quarter. And we would not expect negative OG in any of the segments going forward. Elyse Greenspan: That's helpful. And then for the share repurchase program, the $250 million in that -- in the slides, right, this is opportunistic share repurchases. So within the EPS guidance that you've outlined, what is that assuming of the $250 million that is bought back during the year? Trevor Baldwin: We're not assuming share repurchases right now, Elyse. We are -- our appetite is going to be opportunistic based on where the shares trade. As share price goes up, our capital allocation priorities will shift. I think if you assume we deployed $125 million of capital into a share repurchase program over the year, that would result in about a 3% accretion. Elyse Greenspan: And then from -- we're almost 2 months into the Q1. So what have you seen from a market impact, so rate and exposure impact, I guess, quarter-to-date? And has there been any change in what you observed quarter-to-date relative to the fourth quarter? Trevor Baldwin: Yes. As I mentioned earlier, we've got pretty good visibility into 1/1 employee benefit renewals now, and we did not see the same exposure weakness in those 1/1 renewals that we had seen in the third and fourth quarters. Bradford Hale: And Elyse, just to clarify one comment, we wouldn't expect negative organic across any of the segments for the full year. We do expect MIS to continue to be pressured in Q1 before the transition date on QBE at 4/30. So just wanted to note that. Operator: Next question, Pablo Singzon with JPMorgan. Pablo Singzon: I think it's clear from your comments that you're something bearish about personalized that's more open market rather than embedded. So is your view here what the market seems to be assuming like something like digital AI agents will be able to quote and buy on their own, insurers are willing to provide them and buy more codes. I appreciate the sort of what's happening in some way in embedded, right, but in a more controlled environment where you own the platform. But I guess, do you think that's you what happens in the open market as well? Trevor Baldwin: Pablo, I don't know that I would go so far as to say that. I'd say there's already about 35% of the personal lines insurance market that proactively price shops today and goes direct. And so do those proactive price shoppers end up on an AI-driven comparison platform rather than going direct into a GEICO or Progressive website, like maybe. At the same time, I'm not sure insurance companies are going to be super excited to open up their quoting algorithms and APIs to a bunch of AI-driven chatbots, like there's real risk and concern around the channels to which business comes and the impact it has on loss ratios. There's real cost to quoting business. You have to run credit. There's data feeds and data pulls -- and so these insurance companies are very sensitive to quote-to-buying ratios. And if you hooked up an AI engine to one of these companies and just started redlining on quotes, they'd shut you down in less than 24 hours. So I think undoubtedly, the way in which personal insurance is going to be bought and sold is going to evolve and AI is going to have a huge impact on that. I believe quite strongly, and we've got some real proof points as recently as yesterday with Fairway Mortgage that embedded distribution is a big part of the future. It's not going to be the entire future, but it's going to be a big part of it. And different people have different buying habits and proclivities. Some people prefer a buying experience that's fully embedded inside the trusted partners ecosystem and the natural workflow that they're going through. And so long as they're presented with choice, they're done so quickly, and they're provided with a buying or shopping experience that gives them confidence that the market has been adequately shopped to give them the right coverage at the most competitive price, then they're not going to feel compelled to go out to a third-party chatbot-driven insurance platform or Google or whatever pick your direct-to-consumer platform is. So we believe embedded is one of the biggest net winners here, and that's why we've been so focused on building out that channel for the last 4 to 5 years. Operator: Next question, Josh Shanker with Bank of America. Joshua Shanker: A couple of years ago, the stock was soft. You did a lot of M&A. You argue it was the right M&A to do and it's paid dividends, but the market didn't like it. And you said, look, we are going to show you how much cash flow this company generates, and we're going to forestall future M&A to show that to you and along came the CAC deal, and you could not resist such a deal. It was a great deal for you, and the stock did the same thing. That may not be the only reason why the stock did the same thing. But I understand in your view that you couldn't pass up the opportunity. Right now, your stock is at $18 a share. You've announced a share repurchase program, but you're not making any real commitments about how you're going to actively execute that program. If buying CAC was such an emergency that couldn't be helped even though it sort of pushed on what you had told investors you wanted to do, -- how does that apply to the stock today and how you think about share repurchase? Is there not an emergency right now that you need to act? Trevor Baldwin: Josh, at 8x EBITDA, there is not a better use of capital than buying our own shares. And that's why the share repurchase program has been authorized. And at 8x EBITDA, we will be actively buying our stock. Joshua Shanker: And when you say that's for the next 12 months, should we expect if the stock is not going in that direction, you will fully exhaust that buyback this year? Trevor Baldwin: I'm not going to opine on exactly how much or how quickly we're going to deploy. But from a capital allocation standpoint, Josh, there is no better use of capital than acquiring in our own shares of the business we know best of all at a significant discount to what I can buy a far smaller, far lower quality insurance brokerage business for in the open market. It's not even a question. Operator: Next question, Andrew Kligerman with TD Securities. Andrew Kligerman: Thanks for that clarification around Josh's question. It sounds like you have a real interest in repurchase. I just -- I personally as well wasn't as sure because you said that you've not modeled any buyback into your leverage going forward. So thanks for that clarification. Trevor, you mentioned at the beginning of the call that it's important to set expectations and I believe, execute on those expectations. And I kind of look at this quarter and you did the CAC deal, you had a call in December. And your organic growth objective was mid-single digit for the quarter. It came in at 3%. The organic growth for this year now was mid- to high. Now it's mid or higher -- or no, it was high, now it's mid- to higher. So part of that -- and I think the quarter was super high quality. It's just -- this is sort of like missing a part. But at the same time, I'd like to know how confident are you in this new organic guidance of mid- to high. And by the way, you hit all the numbers on EBITDA and overall revenue. So again, I don't think it was a big deal, but I'd like to know that what's your degree of confidence now that you've set the guidance at the beginning of the year? Trevor Baldwin: Yes, Andrew, I mean, if we look at fourth quarter specifically, the driver of the gap in organic was the severity of rate and exposure headwinds we faced in IAS. That was more than we were anticipating, and that was predominantly driven by weakness in exposure in our employee benefits business. We believe where we have set expectations for 2026 is imminently achievable, and that's what we're focused on executing on. Andrew Kligerman: Got it. And then as I look at the IAS and the fourth quarter rate, that 1,530 basis point swing, as you kind of model out in IAS for the year, what -- I mean, kind of starting at a very high drop-off. What are you overall modeling in terms of a number for year-over- rate change or decrease? Trevor Baldwin: Yes. We still expect rate and exposures to be a net headwind for the year, but we expect that headwind to dissipate as the year goes on, particularly as we get into what will be some relatively friendly comps, particularly in the fourth quarter. So I would expect it to be a headwind in the first couple of quarters before becoming more neutral. And overall, I would characterize it as a slight headwind for the year. Andrew Kligerman: And I see. So a slight headwind being like single for the year, but maybe double digits in the first half. Does that seem... Trevor Baldwin: I wouldn't expect rate and exposure to be double-digit headwind. Remember, like the rate of change is so severe in '25 because it was going from positive to negative. But when you're going from negative to negative, you're not going to see the same rate of change. Operator: I would like to turn the floor over to Trevor Baldwin for closing remarks. Trevor Baldwin: Thank you all for joining us on the call this evening. We are excited for the growing momentum we have across our business in 2026. In closing, I want to thank our colleagues for their hard work and dedication to delivering innovative solutions and exceptional results for our clients. I also want to thank our clients for their continued trust and confidence in our teams. Thank you all very much, and we look forward to speaking to you again next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.
Unknown Executive: Hi. Good morning, everyone, and welcome to TR's Full Year 2025 Results Presentation. It's going to be conducted, as usual, by our Chairman, Juan Llado; and our CEO, Eduardo San Miguel. It will last approximately 25 minutes, and you will be able to post your questions after our final -- Chairman's final remarks. I now leave the floor to our Chairman, Juan Llado. Juan Arburua: Hi. Hello, everyone. As usual, as Antonio has said, Eduardo San Miguel and I will guide you through these most relevant points that we're going to be covering in the presentation today. I will first walk you through the main financial and commercial milestones that we have achieved by this 2025 year. And all of this will be very much enhanced by Eduardo with much further detail and color. Eduardo also will continue with the financial section of the presentation. And finally, I will conclude with some financial remarks. Thank you. Here, this is different than other presentations. Let's start, which I think is a real highlight, with the financial performance of TR. Financial performance in 2025, which has been extremely solid and has definitely exceeded all initial expectations from the very beginning of the year. As shown in this slide, 2025 sales reached EUR 6.5 billion, representing 45% increase compared with the 2024 and therefore, exceeding the guidance set for the year. If we move to the EBIT level, 2025 reached EUR 291 million, which is 61% above 2024, which results in an EBIT margin of 4.5%, very much complying with the guidance established for the year. Nevertheless, that's important to note as well, we gained, in nominal terms, EUR 57 million above our initial goal, which is due to the sales increase. And finally, net profit amounted to EUR 156 million, reflecting an increase of 75% compared to the previous year. After these results, this performance, it has resulted, as you all were well known, in early repayment of our SEPI loan, which finally took place last December 1. This repayment of the loan has given us the financial flexibility to return to the shareholder remuneration policy with dividend payments resuming again this 2026 year results. And this is new as we never start with guidance. But with the solid financial foundations, I'd like to anticipate our guidance for 2026. We do expect sales to exceed EUR 6.5 billion with an EBIT margin above 5%, which translates into more than EUR 325 million. Our guidance for net profit is projected to reach the neighborhood of EUR 200 million. But it is important to note that the EBIT grows by more than 10% from EUR 291 million to more than EUR 325 million. And it is also important to see that net profit increases as well by more than 20%. However, this 2025 has not only been a year of outstanding financial results and very good execution and performance. But probably, I think it's more important that 2025, it's important to say and to explain to all of you, has been a year of quality, of positioning and has been a year of a real inflection point. In 2025, we have managed to place TR where we wanted TR to be. And let me go through why. First, we've positioned TR as a much stronger company in the Middle East. Second, with the leadership in the power business. Third, confirming TR as a trusted engineer service partner. And fourth, and this is very important, a very strong foundation in North America. And before Eduardo gets into details, let me give you some examples. On March 25, it was very well announced. We got the award of the Lower Zakum project for EUR 3.1 billion. We have been present for more than 20 years in the Middle East. But now today, I can confirm that we are positioned better than ever. We have strengthened this year our leadership in the power business. We have a strong backlog. And with the expansion of the combined cycle in Saudi Arabia, together with the new job for RWE in Germany, we talk in Saudi Arabia and we talk in Germany, that confirms that we are in this business well positioned to grow. Our engineering service has closed in 2025 with awards of EUR 333 million. And this is remarkable. This is a remarkable milestone that was defined only 2 years ago. But most important and very important is that of this EUR 333 million, more than EUR 70 million have taken place in North America which confirms our quality and definitely our growth potential. So all I wanted to do, this introduction of financials, our guidance and our positioning. And now I pass the floor to Eduardo, who will continue with the presentation. Eduardo San Miguel Gonzalez De Heredia: Okay. Thank you, Juan. Good morning, everyone. As Juan has explained, year 2025 has been a year plenty of solid achievements, repayment of SEPI, best ever EBIT. We're filling the backlog with a strategic new project. But there is also a deep transformation process inside TR moving forward that supports these achievements and is slowly reshaping the future of Tecnicas Reunidas. There are a number of drivers for this transformation, but I want to focus on 4 of them. First, expansion of our services business line. Second, our new strategy for the Power division. Third, the leadership we are settling in digital, artificial intelligence and robotics. And fourth, our presence in the geographical areas with the highest concentration of future investment. I will cover in the next slides where we are in those 4 drivers, but let me first devote this slide to explain to you why it is a real game changer. Expansion of the services business line obviously delivers a volume of profitable and less risky projects, but it is also the way to enter into the U.S. market and to keep on working in the world of energy transition. The new strategy for power that has to do with the spin-off of our Power unit that we expect to be completed before summer. Well, it has a purpose and its purpose is to maximize the opportunities for this sector based on more resources devoted and more focus. Through investing in artificial intelligence, digitalization and robotics, we will get cost efficiencies. We will increase our competitiveness, and we will generate opportunities to deliver digital services. And most importantly, it will contribute to redefine how our clients perceive us. And eventually, to complete our footprint with a solid presence in the U.S. was a must last year if we wanted to capture immediate future investments. And we have succeeded in consolidating our presence in the States. Together with the Middle East, we are where we want to be. So let's go one by one. First, the engineering services business line. 2025 figures are good and also promising. EUR 333 million in awards, more than 40 new contracts signed, a total of 11 frame agreements signed with major clients, 23 new clients we have started to work with through this business line. And the revenues amounted to EUR 254 million, halfway to our 2028 ambition of EUR 500 million of revenues and margins are in the range from 25% to 30%. So it has finally been a very, very good year. Second, artificial intelligence, digitalization and robotics. We launched a month ago a project called Reimagine TR. And our conclusion is we can fully transform the way of doing projects. It will take time. But in the meantime, it's an unlimited source of cost efficiencies. What is clear to us now is it is time to invest, and we will do it. That is why we have decided to increase our investment up to EUR 35 million per year from 2026 and onwards. And that is why we are planning to more than double the staff devoted to develop our programs. More than 400 people will be involved in digitalization and robotics by the end of 2026. And also, this investment will be partially paid by the clients because digitalization is becoming a source of services contracts with our clients. In fact, we have already contracts amounting EUR 65 million and another EUR 50 million under negotiation. And regardless if it is paid or not by the clients, digitalization and robotics are definitely a game changer in our sector. From civil works, structures, electromechanics, procurement, site and project control, everything can be digitalized. In fact, around 60% of the man hours in our sector can be automated with today's technology. Our internal estimation is we can capture EUR 200 million per year in cost efficiencies that will be translated into better margins or more competitiveness depending on the market situation. In any case, we will invest. We have to be ready for the future. The third driver is the power sector. $100 billion is expected to be invested annually by our clients next decade. And we have a business unit that has installed 25 gigawatts in the last 20 years, creating a unique relationship with the 4 existing turbine suppliers, GE, Mitsubishi, Siemens and Ansaldo. In our October Investor Day, we fixed our target of revenues being EUR 1 billion per year. It is not a major challenge considering the size of the market. But to secure the achievement of this target last December, we launched the spin-off of this business unit, and we have created TR Power. The new logo is up there in the slide. We have more resources. With the sole focus in constructing combined cycles moved by gas turbines, with fully separated financial accounts, with an identity distinct from TR that allows clients to better identify TR Power management team, we firmly believe the achievement of our target is closer. And eventually, the fourth driver is to consolidate our presence in the most promising markets. You have some numbers in the slide. They have been provided by McKinsey in its Global Energy Perspective. They may be slightly obsolete because they come from 2024, but it is an undisputed fact that a very relevant portion of the global investment will take place in North America, mainly in the U.S. and in the Middle East. Regarding the Middle East, TR has strengthened in the last 2 years a position that was already important in itself. We are developing local engineering services. We acquire equipment that is exported all around the world. We construct workshops to build robotic solutions, and we use it just to construct modules used in other geographies. On top of that, we are executing massive projects in terms of size and the most advanced projects in the world of the energy transition. So all those are very good reasons to be optimistic in the Middle East. A vast pipeline amounting EUR 35 billion is ahead of us in the next 18 months. And for North America, 2025 has been a year of consolidation. The strategic framework agreements with the different energy players are already leading to significant results with more than EUR 70 million in services awards in 2025. Furthermore, these engineering services will allow us to access to EPCs where the pipeline of opportunities in the next 18 months stands at more than EUR 24 billion. Without any doubt, the recent alliance signed with Zachry will enable us to grow faster and solidly. And obviously, the volume of investment in power generation driven by the artificial intelligence will provide us a number of good opportunities this year. So these are the 4 main drivers. Now let me elaborate about the financial figures of the year although Juan has already given a glance of them. We closed this last quarter of the year with sales of EUR 1.9 billion. This represents a 52% increase compared to the fourth quarter of 2024. This strong sales performance reflects a healthy delivery of our backlog, the acceleration plans currently being implemented across our Middle East projects and the continued growth of the power business. EBIT for the last quarter reached EUR 86.6 million. This represents a 74% increase versus the fourth quarter of 2024. EBIT margin reached 4.6%, making the 13th consecutive quarter of margin expansion. EBIT margin obviously is being driven both by the healthy backlog I mentioned before and the expansion of our services business line. And finally, let's now take a quick look at 2 key figures of our balance sheet. The net cash position at the end of 2025 amounted to EUR 332 million, reflecting the impact of the early repayment to SEPI. Without this repayment, the year-end net cash position would have totaled EUR 507 million compared to EUR 427 million we had the year before. Regarding equity levels, we ended 2025 with EUR 564 million, a very, very robust figure. This is why and after repaying SEPI loans, TR will resume its remuneration policy, committing to a 30% dividend payout against fiscal year 2026 results. And the final decision about a potential interim dividend will be made after summer. And now let me give back the floor to Juan for his final remarks. Juan Arburua: Thank you, Eduardo. Let's now finish, say that 2025 has been definitely a very strong year. But a year, our transformation has reached, as we have both said, Eduardo and I, a true inflection point. We have set the foundations for growth and profitability. Today, we have product, we do have quality and we have strengthened very much in regions and markets and very important, very talented resources. In this sense, and that is what I said before, for 2026, we can forecast revenues over EUR 6.5 billion and, as I said before, EBIT to exceed EUR 325 million with a margin above 5%. But I'd also like to note that it should not be a great challenge to end 2026 with EUR 6 billion of new awards. It's not a great challenge, but it is a challenge. But it's not a great challenge. EUR 7 billion of new awards. Eduardo San Miguel Gonzalez De Heredia: You said EUR 6 billion. Juan Arburua: I said EUR 6 billion? Eduardo San Miguel Gonzalez De Heredia: Yes. Juan Arburua: Well, that was a Freudian slip. EUR 6 billion. No, EUR 7 billion, EUR 7 billion, EUR 7 billion. That might give you the hint that EUR 6 billion is very, very easy. But I mean, we target for EUR 7 billion, and we -- usually, we always have that question. And before you ask us that question, we decided to tell you. We are targeting for EUR 7 billion of new awards. So let me finish by saying that TR transformation is really moving forward. I am optimistic, very optimistic because our future has never been and has never looked more promising. So thank you very much. And now we are here and ready to answer any questions that you may want to pose. Operator: [Operator Instructions] And your first question comes from the line of Ignacio Domenech with JB Capital. Ignacio Doménech: Congratulations on the results. I have 2 questions. The first one is on the EUR 7 billion awards expected in 2026. I guess you have a high degree of visibility on this. So I was wondering if you could give us some color on the split of these awards, maybe what would be the weight on services versus EPC. And based on the performance that we've seen in 2025 with some of your clients requesting to accelerate some of these projects and given this EUR 7 billion of awards, you think that 2026 could follow a bit the same path, the same trajectory we've seen in 2025 and potentially the outlook that you have guided for 2026 could end up being revised throughout the year? And the second question that I have is related with Teesside. I noticed on the annual report that the final decision is expected in 2026. So I was wondering if you have some visibility there or any detail that you could provide, okay? Eduardo San Miguel Gonzalez De Heredia: It's good to know that you have realized it's EUR 7 billion after the confusion. I have to be honest with you. I think it's -- we have quite good clear visibility about those EUR 7 billion first because everything that has to do with power is booming. We are involved in a number of projects. We have already, in fact, been awarded with some projects that has to be converted now into EPCs, and it will happen probably by the end of the year, early 2027. So a relevant part of this EUR 7 billion will come from the Power division, and there is no major doubt about doing that -- achieving that target. And regarding the traditional businesses, oil, gas, petchem, LNG, again, I think the visibility is quite high. We are already involved. In fact, we are already bidding for very relevant large projects, mainly in the Middle East. And the perspectives are very good. We do really believe we are offering competitive prices. We are doing the kind of projects we are experts in. We have the recognition of the clients. So to be honest, it's always a challenge to convert all our expectations into reality. But being honest, we believe that the visibility is very clear for those EUR 7 billion. But it has to be done, obviously. Regarding 2025, that guidance is low. Yes, I have to accept that this year, we may look a bit conservative providing guidance because we have beaten 3 times in a row our previous guidance. But we are trying to be fair with the figure we are offering you for next year. I think to reach this EUR 6.5 billion of revenues, but -- we may be slightly above if everything goes right. But I think for your estimations, your numbers, EUR 6.5 billion is a correct number. And we have missed the last question because we believe you are thinking about dividend. Is this correct? Ignacio Doménech: No, it's on the decision on Teesside, on the litigation, but I think the date is on the first semester in 2026. So just wondering if there's any -- you have any visibility there or anything that you could share, okay? Any potential upside there or... Eduardo San Miguel Gonzalez De Heredia: We are positive about the final outcome of this arbitration. That's how we have been giving that message to the market for a long time. But the only visibility we have now is it is expected to have a final outcome next April -- end of March. That's very confidential. I cannot enter into more details. Operator: And your next question comes from the line of Kevin Roger with Kepler. Kevin Roger: I'm very sorry, you're going to tell me that I'm a bit pushy, but I wanted to get your sense on the post-2026 linked to 2 elements. The first one is that you have a backlog today of more than EUR 10 billion that provides you a lot of visibility for '26, but you're going to use a lot of volumes from those -- from this backlog, EUR 6.5 billion on the EUR 10 billion something. You're going to get a lot of volumes that will materialize as soon as this year. So I was wondering if you can share a bit with us how do you see really the order intake trend for the next, let's say, maybe 6 months and that can contribute to the '27 top line and then the chance and the rationale to keep the '27 top line flat or you do see maybe some risk on a slightly lower top line in '27 because '25 and '26 have been at the end very, let's say, well above your expectations. So just to understand a bit the phasing of the order intake and how it can contribute to the '27 top line. And then the second one, it's maybe focusing on the power generation business. So you have announced the spin-off of the entity. You do announce that the commercial pipeline is relatively huge in that space. So if you can share also a bit with us the kind of region, I guess, probably U.S. that matter and the typical size of the project that you are chasing there. Eduardo San Miguel Gonzalez De Heredia: Thank you for the question. Well, it is math. I mean, we know the volume of backlog we currently have, and we know how we are going to deliver it throughout 2026, 2027. So give or take, around 85% to 90% of the revenues coming -- expected in 2026 will be coming from the existing backlog, but there is still something to be done with the projects to be awarded within this year. So when we say EUR 6.5 billion, again, please don't believe I am being conservative. It is really what we believe it will happen. The good news is that we will be delivering a small part of all the awards of the year 2026 within 2026. This means that most of the revenues will come in 2027 and onwards. So I think we are well balanced, right? Well balanced. When we talk about the pipeline of power, yes, the pipeline of power is massive. But basically, I think we are focusing in 3 geographies, and I'm not going to tell you nothing extraordinary. In Middle East, we see still new relevant opportunities, not only in the Middle East, but not only in Saudi, but also in the Emirates. So we are bidding there, and we believe we have a real chance of being awarded with big, large projects. The United States, well, it's what we expect. And it's clear, there are many opportunities this year. We've had a solid alliance with Zachry. Zachry is specialized between all their specialty they have. We are specialized in constructing combined cycles. So if the market is booming, our partner is a good constructor of combined cycles, not only a constructor because they are also engineers. Obviously, we should be having a very good opportunity this year in that market. In the Investor Day, we told you that we expect the project to be awarded before year-end or early 2027. So we believe the first project, the first EPC, and probably it will be a power unit, is coming soon. And also there are opportunities in Europe. We are bidding in Europe. And -- well, there are many, many, many opportunities. And that's why we needed to create a devoted team exclusively focused in this sector because we don't want to miss any opportunity. Kevin Roger: Okay. And one follow-up, if I may. Services, so frankly, you are quite very successful with EUR 250 million generated this year. What kind of growth do you target this year? Sorry if I missed that during the presentation. But when you argue that you have an order intake of EUR 333 million in '25, is it fair to assume that it will be the kind of top line that you're going to get in '26? Eduardo San Miguel Gonzalez De Heredia: Kevin, it's not as easy because in the services business line we have little experience. We've been involved here for 3 years, no more than that. We will definitely grow. So the starting point is EUR 333 million. We are expecting to pass EUR 500 million by 2028. I think this year, we should be finishing close to EUR 400 million, but below EUR 400 million. That's -- I have to be honest. That's what we expect. It's difficult for me to give you a more accurate figure because this is not 2 big projects. It's maybe 50 projects of very different sizes. And when they are going to be awarded, end of the year, early 2027, it's very difficult for me to predict. But slightly below EUR 400 million should be the target of awards. Operator: And the next question comes from the line of Mick Pickup with Barclays. Mick Pickup: A couple of questions, if I may. So I'll ask them one by one. Can I just talk about the new bids you started talking about? So obviously, the digitalization, the robotics was a big one. And you talked about 60% of hours in our sector suitable for automation and that EUR 200 million saving, obviously, big, big numbers. Can you just talk to what's in that? Is that your man hours? Are you talking subcontractor man hours as well? So robot welders, automated deliveries, how extreme have you gone to get to that EUR 200 million? And on the cash side of it, the investment plan, EUR 25 million to EUR 30 million a year, is that expensed? Or is that going to be CapEx going up? Eduardo San Miguel Gonzalez De Heredia: Well, Mick, I have to be honest with you, when I was talking about EUR 200 million, I was conservative. The figure can go beyond that, okay? When we were talking about Reimagine TR, we were thinking about let's change everything. And when we talk about change everything, we were talking about the construction as well. So there are -- when I'm talking about saving 60% of man hours, I'm talking about everything, both engineering services, procurement services and construction man hours. So yes, the future is going to be very different to what we see today. So for me to say this EUR 200 million are directly linked to the engineering or the procurement it's a bit complicated because it's not EUR 200 million. It's more than that. But there are potential savings in the whole chain. That's a fact. Antonio is in front of me and he's telling me to insist that cost efficiency doesn't mean savings over profit. It can be converted into being more competitive. So we have to be very careful when throwing these figures because you may believe that, well, those guys are going to multiply its EBITDA by 3 in the forthcoming years, and it's not the case. But we have those savings and we have to invest on it. And regarding if it's going to be CapEx or OpEx, I have to be honest with you, there are very clear accounting rules. And not everything can be CapEx. I mean there will be lots of expenses that has to be -- has to do with internal hours we will devote that probably will not be converted into CapEx. So for me, it's difficult to predict what percentage of this EUR 35 million will be CapEx. My purpose is not to create a big ball of fixed asset called digitalization investments. No. The idea is, well, let's try to find a way to balance it. And it's absolutely impossible for me to tell you today which percentage will be expense and what percentage will be CapEx. But it will be a mix of both. Mick Pickup: Okay. And then a second question on power. Clearly, you talk about opportunity sets on power and having good relationships with all the big OEMs for the turbines. But all I hear from my cap goods analyst is that if you want a turbine, get in the queue and you can have that turbine in 2030. So how does TR get in that queue? Eduardo San Miguel Gonzalez De Heredia: Sorry, there has been a little debate inside about how to answer you. But I think what makes a difference is we are extremely reliable for the [ EOMs ]. They know us very well. And when they have an opportunity, they ask us to be in the project. I mean they call us. They want to be partners of them. Obviously, this is -- there is a competition. But when you are with General Electric and you are constructing simultaneously 4 projects with them, it is obvious that once they have awarded a turbine to any specific client and if we are partners of them, for us, it's easier to be awarded with the construction of the plant. So sometimes clients are asking us, do you have a turbine for me? No, we don't have a turbine for you. That's something you have to talk with the supplier of the turbine. But it's how the [ EOMs ] are pushing us and they are offering us good opportunities all around the world. That's why we believe this good relationship with them is so critical. We are not opportunistic. There are many local companies constructing combined cycles around the world, but it's just one project. We have a track record of 25 projects in the last 10 years. And also, it's important the services division that also works in power is involved in the very early stages in the construction of combined cycles. So when you start early, it's easier for you to be the final company that will construct the plant. So there are many reasons to understand that being close to the [ EOMs ], you are in a better position to be awarded with the project. Operator: [Operator Instructions] Your next question comes from the line of Filipe Leite with CaixaBank. Filipe Leite: I have 2 questions, if I may. First one related with service activity and if you can give us the amount of EBITDA or the gross margin of service-related activity in full year '25. Second one on the artificial intelligence trend, just to confirm if you are involved or have any data center-related projects in your pipeline. Eduardo San Miguel Gonzalez De Heredia: Filipe, yes -- well, I don't want to say anything different to what I said in my presentation, from 25% to 30% is what we are currently doing, and that's what we expect for next year as well. And regarding data centers, not in the data center itself, but in the power units that should generate the electricity for the data centers we are currently involved. It would be a good source of business, mainly in the States from now on. Operator: [Operator Instructions] And we have no further questions at this time. I would like to turn it back to our speakers for closing remarks. Juan Arburua: Okay. Thank you very much. It's been a good year, and it has also been shorter than expected. So thank you very much for listening to us. Thank you very much for posing questions, which clarifies many other things we have presented to you and looking forward to talk and see you over the coming months. Thanks a lot. Bye-bye. Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Unknown Executive: Hi. Good morning, everyone, and welcome to TR's Full Year 2025 Results Presentation. It's going to be conducted, as usual, by our Chairman, Juan Llado; and our CEO, Eduardo San Miguel. It will last approximately 25 minutes, and you will be able to post your questions after our final -- Chairman's final remarks. I now leave the floor to our Chairman, Juan Llado. Juan Arburua: Hi. Hello, everyone. As usual, as Antonio has said, Eduardo San Miguel and I will guide you through these most relevant points that we're going to be covering in the presentation today. I will first walk you through the main financial and commercial milestones that we have achieved by this 2025 year. And all of this will be very much enhanced by Eduardo with much further detail and color. Eduardo also will continue with the financial section of the presentation. And finally, I will conclude with some financial remarks. Thank you. Here, this is different than other presentations. Let's start, which I think is a real highlight, with the financial performance of TR. Financial performance in 2025, which has been extremely solid and has definitely exceeded all initial expectations from the very beginning of the year. As shown in this slide, 2025 sales reached EUR 6.5 billion, representing 45% increase compared with the 2024 and therefore, exceeding the guidance set for the year. If we move to the EBIT level, 2025 reached EUR 291 million, which is 61% above 2024, which results in an EBIT margin of 4.5%, very much complying with the guidance established for the year. Nevertheless, that's important to note as well, we gained, in nominal terms, EUR 57 million above our initial goal, which is due to the sales increase. And finally, net profit amounted to EUR 156 million, reflecting an increase of 75% compared to the previous year. After these results, this performance, it has resulted, as you all were well known, in early repayment of our SEPI loan, which finally took place last December 1. This repayment of the loan has given us the financial flexibility to return to the shareholder remuneration policy with dividend payments resuming again this 2026 year results. And this is new as we never start with guidance. But with the solid financial foundations, I'd like to anticipate our guidance for 2026. We do expect sales to exceed EUR 6.5 billion with an EBIT margin above 5%, which translates into more than EUR 325 million. Our guidance for net profit is projected to reach the neighborhood of EUR 200 million. But it is important to note that the EBIT grows by more than 10% from EUR 291 million to more than EUR 325 million. And it is also important to see that net profit increases as well by more than 20%. However, this 2025 has not only been a year of outstanding financial results and very good execution and performance. But probably, I think it's more important that 2025, it's important to say and to explain to all of you, has been a year of quality, of positioning and has been a year of a real inflection point. In 2025, we have managed to place TR where we wanted TR to be. And let me go through why. First, we've positioned TR as a much stronger company in the Middle East. Second, with the leadership in the power business. Third, confirming TR as a trusted engineer service partner. And fourth, and this is very important, a very strong foundation in North America. And before Eduardo gets into details, let me give you some examples. On March 25, it was very well announced. We got the award of the Lower Zakum project for EUR 3.1 billion. We have been present for more than 20 years in the Middle East. But now today, I can confirm that we are positioned better than ever. We have strengthened this year our leadership in the power business. We have a strong backlog. And with the expansion of the combined cycle in Saudi Arabia, together with the new job for RWE in Germany, we talk in Saudi Arabia and we talk in Germany, that confirms that we are in this business well positioned to grow. Our engineering service has closed in 2025 with awards of EUR 333 million. And this is remarkable. This is a remarkable milestone that was defined only 2 years ago. But most important and very important is that of this EUR 333 million, more than EUR 70 million have taken place in North America which confirms our quality and definitely our growth potential. So all I wanted to do, this introduction of financials, our guidance and our positioning. And now I pass the floor to Eduardo, who will continue with the presentation. Eduardo San Miguel Gonzalez De Heredia: Okay. Thank you, Juan. Good morning, everyone. As Juan has explained, year 2025 has been a year plenty of solid achievements, repayment of SEPI, best ever EBIT. We're filling the backlog with a strategic new project. But there is also a deep transformation process inside TR moving forward that supports these achievements and is slowly reshaping the future of Tecnicas Reunidas. There are a number of drivers for this transformation, but I want to focus on 4 of them. First, expansion of our services business line. Second, our new strategy for the Power division. Third, the leadership we are settling in digital, artificial intelligence and robotics. And fourth, our presence in the geographical areas with the highest concentration of future investment. I will cover in the next slides where we are in those 4 drivers, but let me first devote this slide to explain to you why it is a real game changer. Expansion of the services business line obviously delivers a volume of profitable and less risky projects, but it is also the way to enter into the U.S. market and to keep on working in the world of energy transition. The new strategy for power that has to do with the spin-off of our Power unit that we expect to be completed before summer. Well, it has a purpose and its purpose is to maximize the opportunities for this sector based on more resources devoted and more focus. Through investing in artificial intelligence, digitalization and robotics, we will get cost efficiencies. We will increase our competitiveness, and we will generate opportunities to deliver digital services. And most importantly, it will contribute to redefine how our clients perceive us. And eventually, to complete our footprint with a solid presence in the U.S. was a must last year if we wanted to capture immediate future investments. And we have succeeded in consolidating our presence in the States. Together with the Middle East, we are where we want to be. So let's go one by one. First, the engineering services business line. 2025 figures are good and also promising. EUR 333 million in awards, more than 40 new contracts signed, a total of 11 frame agreements signed with major clients, 23 new clients we have started to work with through this business line. And the revenues amounted to EUR 254 million, halfway to our 2028 ambition of EUR 500 million of revenues and margins are in the range from 25% to 30%. So it has finally been a very, very good year. Second, artificial intelligence, digitalization and robotics. We launched a month ago a project called Reimagine TR. And our conclusion is we can fully transform the way of doing projects. It will take time. But in the meantime, it's an unlimited source of cost efficiencies. What is clear to us now is it is time to invest, and we will do it. That is why we have decided to increase our investment up to EUR 35 million per year from 2026 and onwards. And that is why we are planning to more than double the staff devoted to develop our programs. More than 400 people will be involved in digitalization and robotics by the end of 2026. And also, this investment will be partially paid by the clients because digitalization is becoming a source of services contracts with our clients. In fact, we have already contracts amounting EUR 65 million and another EUR 50 million under negotiation. And regardless if it is paid or not by the clients, digitalization and robotics are definitely a game changer in our sector. From civil works, structures, electromechanics, procurement, site and project control, everything can be digitalized. In fact, around 60% of the man hours in our sector can be automated with today's technology. Our internal estimation is we can capture EUR 200 million per year in cost efficiencies that will be translated into better margins or more competitiveness depending on the market situation. In any case, we will invest. We have to be ready for the future. The third driver is the power sector. $100 billion is expected to be invested annually by our clients next decade. And we have a business unit that has installed 25 gigawatts in the last 20 years, creating a unique relationship with the 4 existing turbine suppliers, GE, Mitsubishi, Siemens and Ansaldo. In our October Investor Day, we fixed our target of revenues being EUR 1 billion per year. It is not a major challenge considering the size of the market. But to secure the achievement of this target last December, we launched the spin-off of this business unit, and we have created TR Power. The new logo is up there in the slide. We have more resources. With the sole focus in constructing combined cycles moved by gas turbines, with fully separated financial accounts, with an identity distinct from TR that allows clients to better identify TR Power management team, we firmly believe the achievement of our target is closer. And eventually, the fourth driver is to consolidate our presence in the most promising markets. You have some numbers in the slide. They have been provided by McKinsey in its Global Energy Perspective. They may be slightly obsolete because they come from 2024, but it is an undisputed fact that a very relevant portion of the global investment will take place in North America, mainly in the U.S. and in the Middle East. Regarding the Middle East, TR has strengthened in the last 2 years a position that was already important in itself. We are developing local engineering services. We acquire equipment that is exported all around the world. We construct workshops to build robotic solutions, and we use it just to construct modules used in other geographies. On top of that, we are executing massive projects in terms of size and the most advanced projects in the world of the energy transition. So all those are very good reasons to be optimistic in the Middle East. A vast pipeline amounting EUR 35 billion is ahead of us in the next 18 months. And for North America, 2025 has been a year of consolidation. The strategic framework agreements with the different energy players are already leading to significant results with more than EUR 70 million in services awards in 2025. Furthermore, these engineering services will allow us to access to EPCs where the pipeline of opportunities in the next 18 months stands at more than EUR 24 billion. Without any doubt, the recent alliance signed with Zachry will enable us to grow faster and solidly. And obviously, the volume of investment in power generation driven by the artificial intelligence will provide us a number of good opportunities this year. So these are the 4 main drivers. Now let me elaborate about the financial figures of the year although Juan has already given a glance of them. We closed this last quarter of the year with sales of EUR 1.9 billion. This represents a 52% increase compared to the fourth quarter of 2024. This strong sales performance reflects a healthy delivery of our backlog, the acceleration plans currently being implemented across our Middle East projects and the continued growth of the power business. EBIT for the last quarter reached EUR 86.6 million. This represents a 74% increase versus the fourth quarter of 2024. EBIT margin reached 4.6%, making the 13th consecutive quarter of margin expansion. EBIT margin obviously is being driven both by the healthy backlog I mentioned before and the expansion of our services business line. And finally, let's now take a quick look at 2 key figures of our balance sheet. The net cash position at the end of 2025 amounted to EUR 332 million, reflecting the impact of the early repayment to SEPI. Without this repayment, the year-end net cash position would have totaled EUR 507 million compared to EUR 427 million we had the year before. Regarding equity levels, we ended 2025 with EUR 564 million, a very, very robust figure. This is why and after repaying SEPI loans, TR will resume its remuneration policy, committing to a 30% dividend payout against fiscal year 2026 results. And the final decision about a potential interim dividend will be made after summer. And now let me give back the floor to Juan for his final remarks. Juan Arburua: Thank you, Eduardo. Let's now finish, say that 2025 has been definitely a very strong year. But a year, our transformation has reached, as we have both said, Eduardo and I, a true inflection point. We have set the foundations for growth and profitability. Today, we have product, we do have quality and we have strengthened very much in regions and markets and very important, very talented resources. In this sense, and that is what I said before, for 2026, we can forecast revenues over EUR 6.5 billion and, as I said before, EBIT to exceed EUR 325 million with a margin above 5%. But I'd also like to note that it should not be a great challenge to end 2026 with EUR 6 billion of new awards. It's not a great challenge, but it is a challenge. But it's not a great challenge. EUR 7 billion of new awards. Eduardo San Miguel Gonzalez De Heredia: You said EUR 6 billion. Juan Arburua: I said EUR 6 billion? Eduardo San Miguel Gonzalez De Heredia: Yes. Juan Arburua: Well, that was a Freudian slip. EUR 6 billion. No, EUR 7 billion, EUR 7 billion, EUR 7 billion. That might give you the hint that EUR 6 billion is very, very easy. But I mean, we target for EUR 7 billion, and we -- usually, we always have that question. And before you ask us that question, we decided to tell you. We are targeting for EUR 7 billion of new awards. So let me finish by saying that TR transformation is really moving forward. I am optimistic, very optimistic because our future has never been and has never looked more promising. So thank you very much. And now we are here and ready to answer any questions that you may want to pose. Operator: [Operator Instructions] And your first question comes from the line of Ignacio Domenech with JB Capital. Ignacio Doménech: Congratulations on the results. I have 2 questions. The first one is on the EUR 7 billion awards expected in 2026. I guess you have a high degree of visibility on this. So I was wondering if you could give us some color on the split of these awards, maybe what would be the weight on services versus EPC. And based on the performance that we've seen in 2025 with some of your clients requesting to accelerate some of these projects and given this EUR 7 billion of awards, you think that 2026 could follow a bit the same path, the same trajectory we've seen in 2025 and potentially the outlook that you have guided for 2026 could end up being revised throughout the year? And the second question that I have is related with Teesside. I noticed on the annual report that the final decision is expected in 2026. So I was wondering if you have some visibility there or any detail that you could provide, okay? Eduardo San Miguel Gonzalez De Heredia: It's good to know that you have realized it's EUR 7 billion after the confusion. I have to be honest with you. I think it's -- we have quite good clear visibility about those EUR 7 billion first because everything that has to do with power is booming. We are involved in a number of projects. We have already, in fact, been awarded with some projects that has to be converted now into EPCs, and it will happen probably by the end of the year, early 2027. So a relevant part of this EUR 7 billion will come from the Power division, and there is no major doubt about doing that -- achieving that target. And regarding the traditional businesses, oil, gas, petchem, LNG, again, I think the visibility is quite high. We are already involved. In fact, we are already bidding for very relevant large projects, mainly in the Middle East. And the perspectives are very good. We do really believe we are offering competitive prices. We are doing the kind of projects we are experts in. We have the recognition of the clients. So to be honest, it's always a challenge to convert all our expectations into reality. But being honest, we believe that the visibility is very clear for those EUR 7 billion. But it has to be done, obviously. Regarding 2025, that guidance is low. Yes, I have to accept that this year, we may look a bit conservative providing guidance because we have beaten 3 times in a row our previous guidance. But we are trying to be fair with the figure we are offering you for next year. I think to reach this EUR 6.5 billion of revenues, but -- we may be slightly above if everything goes right. But I think for your estimations, your numbers, EUR 6.5 billion is a correct number. And we have missed the last question because we believe you are thinking about dividend. Is this correct? Ignacio Doménech: No, it's on the decision on Teesside, on the litigation, but I think the date is on the first semester in 2026. So just wondering if there's any -- you have any visibility there or anything that you could share, okay? Any potential upside there or... Eduardo San Miguel Gonzalez De Heredia: We are positive about the final outcome of this arbitration. That's how we have been giving that message to the market for a long time. But the only visibility we have now is it is expected to have a final outcome next April -- end of March. That's very confidential. I cannot enter into more details. Operator: And your next question comes from the line of Kevin Roger with Kepler. Kevin Roger: I'm very sorry, you're going to tell me that I'm a bit pushy, but I wanted to get your sense on the post-2026 linked to 2 elements. The first one is that you have a backlog today of more than EUR 10 billion that provides you a lot of visibility for '26, but you're going to use a lot of volumes from those -- from this backlog, EUR 6.5 billion on the EUR 10 billion something. You're going to get a lot of volumes that will materialize as soon as this year. So I was wondering if you can share a bit with us how do you see really the order intake trend for the next, let's say, maybe 6 months and that can contribute to the '27 top line and then the chance and the rationale to keep the '27 top line flat or you do see maybe some risk on a slightly lower top line in '27 because '25 and '26 have been at the end very, let's say, well above your expectations. So just to understand a bit the phasing of the order intake and how it can contribute to the '27 top line. And then the second one, it's maybe focusing on the power generation business. So you have announced the spin-off of the entity. You do announce that the commercial pipeline is relatively huge in that space. So if you can share also a bit with us the kind of region, I guess, probably U.S. that matter and the typical size of the project that you are chasing there. Eduardo San Miguel Gonzalez De Heredia: Thank you for the question. Well, it is math. I mean, we know the volume of backlog we currently have, and we know how we are going to deliver it throughout 2026, 2027. So give or take, around 85% to 90% of the revenues coming -- expected in 2026 will be coming from the existing backlog, but there is still something to be done with the projects to be awarded within this year. So when we say EUR 6.5 billion, again, please don't believe I am being conservative. It is really what we believe it will happen. The good news is that we will be delivering a small part of all the awards of the year 2026 within 2026. This means that most of the revenues will come in 2027 and onwards. So I think we are well balanced, right? Well balanced. When we talk about the pipeline of power, yes, the pipeline of power is massive. But basically, I think we are focusing in 3 geographies, and I'm not going to tell you nothing extraordinary. In Middle East, we see still new relevant opportunities, not only in the Middle East, but not only in Saudi, but also in the Emirates. So we are bidding there, and we believe we have a real chance of being awarded with big, large projects. The United States, well, it's what we expect. And it's clear, there are many opportunities this year. We've had a solid alliance with Zachry. Zachry is specialized between all their specialty they have. We are specialized in constructing combined cycles. So if the market is booming, our partner is a good constructor of combined cycles, not only a constructor because they are also engineers. Obviously, we should be having a very good opportunity this year in that market. In the Investor Day, we told you that we expect the project to be awarded before year-end or early 2027. So we believe the first project, the first EPC, and probably it will be a power unit, is coming soon. And also there are opportunities in Europe. We are bidding in Europe. And -- well, there are many, many, many opportunities. And that's why we needed to create a devoted team exclusively focused in this sector because we don't want to miss any opportunity. Kevin Roger: Okay. And one follow-up, if I may. Services, so frankly, you are quite very successful with EUR 250 million generated this year. What kind of growth do you target this year? Sorry if I missed that during the presentation. But when you argue that you have an order intake of EUR 333 million in '25, is it fair to assume that it will be the kind of top line that you're going to get in '26? Eduardo San Miguel Gonzalez De Heredia: Kevin, it's not as easy because in the services business line we have little experience. We've been involved here for 3 years, no more than that. We will definitely grow. So the starting point is EUR 333 million. We are expecting to pass EUR 500 million by 2028. I think this year, we should be finishing close to EUR 400 million, but below EUR 400 million. That's -- I have to be honest. That's what we expect. It's difficult for me to give you a more accurate figure because this is not 2 big projects. It's maybe 50 projects of very different sizes. And when they are going to be awarded, end of the year, early 2027, it's very difficult for me to predict. But slightly below EUR 400 million should be the target of awards. Operator: And the next question comes from the line of Mick Pickup with Barclays. Mick Pickup: A couple of questions, if I may. So I'll ask them one by one. Can I just talk about the new bids you started talking about? So obviously, the digitalization, the robotics was a big one. And you talked about 60% of hours in our sector suitable for automation and that EUR 200 million saving, obviously, big, big numbers. Can you just talk to what's in that? Is that your man hours? Are you talking subcontractor man hours as well? So robot welders, automated deliveries, how extreme have you gone to get to that EUR 200 million? And on the cash side of it, the investment plan, EUR 25 million to EUR 30 million a year, is that expensed? Or is that going to be CapEx going up? Eduardo San Miguel Gonzalez De Heredia: Well, Mick, I have to be honest with you, when I was talking about EUR 200 million, I was conservative. The figure can go beyond that, okay? When we were talking about Reimagine TR, we were thinking about let's change everything. And when we talk about change everything, we were talking about the construction as well. So there are -- when I'm talking about saving 60% of man hours, I'm talking about everything, both engineering services, procurement services and construction man hours. So yes, the future is going to be very different to what we see today. So for me to say this EUR 200 million are directly linked to the engineering or the procurement it's a bit complicated because it's not EUR 200 million. It's more than that. But there are potential savings in the whole chain. That's a fact. Antonio is in front of me and he's telling me to insist that cost efficiency doesn't mean savings over profit. It can be converted into being more competitive. So we have to be very careful when throwing these figures because you may believe that, well, those guys are going to multiply its EBITDA by 3 in the forthcoming years, and it's not the case. But we have those savings and we have to invest on it. And regarding if it's going to be CapEx or OpEx, I have to be honest with you, there are very clear accounting rules. And not everything can be CapEx. I mean there will be lots of expenses that has to be -- has to do with internal hours we will devote that probably will not be converted into CapEx. So for me, it's difficult to predict what percentage of this EUR 35 million will be CapEx. My purpose is not to create a big ball of fixed asset called digitalization investments. No. The idea is, well, let's try to find a way to balance it. And it's absolutely impossible for me to tell you today which percentage will be expense and what percentage will be CapEx. But it will be a mix of both. Mick Pickup: Okay. And then a second question on power. Clearly, you talk about opportunity sets on power and having good relationships with all the big OEMs for the turbines. But all I hear from my cap goods analyst is that if you want a turbine, get in the queue and you can have that turbine in 2030. So how does TR get in that queue? Eduardo San Miguel Gonzalez De Heredia: Sorry, there has been a little debate inside about how to answer you. But I think what makes a difference is we are extremely reliable for the [ EOMs ]. They know us very well. And when they have an opportunity, they ask us to be in the project. I mean they call us. They want to be partners of them. Obviously, this is -- there is a competition. But when you are with General Electric and you are constructing simultaneously 4 projects with them, it is obvious that once they have awarded a turbine to any specific client and if we are partners of them, for us, it's easier to be awarded with the construction of the plant. So sometimes clients are asking us, do you have a turbine for me? No, we don't have a turbine for you. That's something you have to talk with the supplier of the turbine. But it's how the [ EOMs ] are pushing us and they are offering us good opportunities all around the world. That's why we believe this good relationship with them is so critical. We are not opportunistic. There are many local companies constructing combined cycles around the world, but it's just one project. We have a track record of 25 projects in the last 10 years. And also, it's important the services division that also works in power is involved in the very early stages in the construction of combined cycles. So when you start early, it's easier for you to be the final company that will construct the plant. So there are many reasons to understand that being close to the [ EOMs ], you are in a better position to be awarded with the project. Operator: [Operator Instructions] Your next question comes from the line of Filipe Leite with CaixaBank. Filipe Leite: I have 2 questions, if I may. First one related with service activity and if you can give us the amount of EBITDA or the gross margin of service-related activity in full year '25. Second one on the artificial intelligence trend, just to confirm if you are involved or have any data center-related projects in your pipeline. Eduardo San Miguel Gonzalez De Heredia: Filipe, yes -- well, I don't want to say anything different to what I said in my presentation, from 25% to 30% is what we are currently doing, and that's what we expect for next year as well. And regarding data centers, not in the data center itself, but in the power units that should generate the electricity for the data centers we are currently involved. It would be a good source of business, mainly in the States from now on. Operator: [Operator Instructions] And we have no further questions at this time. I would like to turn it back to our speakers for closing remarks. Juan Arburua: Okay. Thank you very much. It's been a good year, and it has also been shorter than expected. So thank you very much for listening to us. Thank you very much for posing questions, which clarifies many other things we have presented to you and looking forward to talk and see you over the coming months. Thanks a lot. Bye-bye. Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Kurt Mueffelmann: All right. Great. Well, good morning, everybody. Welcome to archTIS's first half of fiscal '26 update for the period ending December 2025. I'm Kurt Mueffelmann, and I'm joined by our CEO and Managing Director, Daniel Lai. We generally don't have these types of updates on the first half results, however, given the level of excitement around kind of the defense sales pipeline and technology motion, we thought it would be a good opportunity to kind of address the market and really create more excitement about where we see the market opportunity and the business going today. So during today's session, we'll update you on the half year performance, provide an in-depth financial review, update the U.S. DoD opportunity, somewhat of a resurgence that we're seeing in the Australian defense and a big military alliance win. We'll also discuss the go-forward strategy around market focus and growth, surrounding a really exciting topic around AI and the effects in the markets, product and sales opportunities. Why don't I kick it over to Dan for a quick minute or 2 overview on the first half of the year and just kind of overall thoughts? Chun Leung Lai: Yes. Thanks very much, Kurt, and welcome, everybody, to our half year update. Look, it's been a very productive first half of the year. And I think that, obviously, with the acquisition of Spirion has been very active, but I think the most pleasing aspect of all of this is that we've completed that integration. We've identified synergies in terms of savings, and we're seeing the pipeline grow. But most importantly, we're seeing active deals come out of this process and the execution. So the activity in the marketplace has certainly increased as well, which is giving us a lot of confidence. And of course, our execution in that defense and intelligence marketplace is very, very promising for the rest of this year. Kurt Mueffelmann: Great. So why don't we go through -- so the first half of fiscal '26 we really saw scalable changes, obviously, with archTIS with the inclusion of Spirion and its successful completion, as Dan said. ARR reached $16.3 million, while the prior comparative period for revenue grew 120%, to $6.1 million. We've really seen strong gross margins where it's increased 124%, to $4.6 million, which shows the operating leverage we've continued to talk about quarter after quarter, really driving that scalable higher-margin software. Operation expenses was $7.6 million, excluding acquisition-related items. This included, and we'll look at this in the appendix, an additional $2.9 million of nonrecurring transactional expenses from the acquisition. Again, we really detailed that and broke that out below the line from the acquisition costs and where we see the business going. And additionally, as we mentioned at the end of our quarterly 4C, we've created integration synergies that are expected to be close to $4.5 million in cost savings during 2026. So I think we've done a really good job at not only managing where the business goes from an integration standpoint, but also really managing that cost and looking for those synergies across the business. And as we announced yesterday, we also strengthened our balance sheet with another $8 million through a CBA facility, providing nondilutive capital to execute our growth strategy. So these results position us really for that accelerated ARR expansion, improved margins, and continued scalable growth. So Dan, any comments on the actual quarter from a financial standpoint? Chun Leung Lai: No, no. I think that we -- had a strong performance there. And obviously, now it's about accelerating the growth moving forward. Kurt Mueffelmann: Yes. I think -- I'd urge shareholders to really look at that appendix around the $7.6 million of acquisition-related items. I think there's some really strong work that was done there by our CFO, Andrew Burns, and the integration teams and really how we're driving that forward. So we feel like we're really in good shape from a cash as well as from an operating expense standpoint heading into the second half of the year. But at the end of the day, we know expenses don't drive business. I think I've been caught on making a statement or 2 about sales previously. So Dan, why don't we update everybody on a little bit about the sales opportunities that are out there, and really, the exciting one, I think, that we have on the right side of the slide here that's just closed earlier this week? Chun Leung Lai: Yes. Obviously, we've just made the announcement 24 hours ago. But a global military alliance or what we've described in the announcement as the U.S.-European military alliance. I guess, there's not too many of those, so I think we can work it out pretty quickly. But NC Protect, to be able to do the policy enforce data-centric security, and it is with that organization and obviously has a lot of member states, and we see a potential growth opportunity inside that. But it is a strong win. It has followed a life cycle of a proof of concept, engagement, competitive process, of course, which we have announced that we are the winners of. So I think that is -- one of the foundation building blocks of this year moving forward is this conversation about how we become the preferred provider of data-centric security for military alliances across the globe. And we're seeing how important that is with the activity that's going on around us constantly and the amount of money that's being increased in terms of the spending. What I'm happy about seeing now is the urgency from some of these clients to get these things completed. And that's certainly something that's been out of our control. We've been saying to shareholders for a period of time now it's coming, it's coming, believe us. And we're starting to see that action on the defense side now globally. So that's really, really important win. And of course, a massive, massive client to be successful with. So that's good. Obviously, everybody else wants to know about what's going on with this U.S. DoD deal. What's exciting for us is, again, I keep saying this, we are in constant contact with them, and we are confident about this deal coming to completion. Timing, yes, still working through that. Sometimes they get distracted with things like activities in Iran and discussions that are going on there. But that also gives you an indication of where this is really being deployed and being tested. It's at the cutting edge here, and get this right and it's going to definitely explode in terms of growth across that department if it's successful. So we're very excited by that. We know the tranche is still out there for the 125,000 users. We are making progress. It has been deployed, and we're just waiting for feedback on how those activities are going. But I think in the short-term, we will see something happen there. And finally, the Australian government in terms of their Department of Defense, I'm really pleased to say that we've completed a TDI, trusted data integration, which is really the foundation of what we discussed at the last 4C webinar of becoming a platform. This was off the back of that Direktiv acquisition in February. And of course, we've done a trial there. It is the foundation of the NEC deal in Japan as well. So we're seeing real traction with this, and we're really kind of excited about where this is heading and the interest from departments, military organizations on this product as well. Kojensi has also come very active. We've got signed up recently a couple of different resellers, one in the U.K. and one here in Australia that want to attack that defense industrial base and make it an offering to the market. So the activity there is strong. Spirion data protector, that's another defense industrial base, but it's for shipbuilding activities. You can guess there's a couple of major programs being highly invested in Australia currently, one in Adelaide and one in Perth, and they're looking at deployment of this and how do they secure their data across that. So we're very excited about the current opportunities in the pipeline. Again, all of these nuggets promote us as the #1 option for data-centric security across defense and defense industrial base. And I'm very happy that we're seeing that execution across that strategy. Kurt Mueffelmann: Yes. I think one of the highlights I'm personally seeing being on a lot of the calls across the enterprise as well as with the defense coalitions is really the interest in the model that we brought to bear on the kind of Spirion and NC Protect integration where we're going from identifying to labeling to enforcing to governing. That methodology is really catching on. So you see it with the shipbuilding infrastructure. I'm up in D.C. next week talking to Microsoft about that and how our Microsoft message with SDP, which is Spirion data protector. And Purview is a better together story. And we're going to be talking to about half a dozen different devs that are out there currently. That latest global military alliance win, that next step could be Spirion opportunity that we're looking at, because again, everybody needs to identify the data before they can do anything with it. You can't do anything with it unless you know what it is. So we're really seeing that traction out there. So I'm really pleased to see that. And I know, just from a pipeline standpoint, that we continue to have constant demos, consistent pipeline building on it. And I think there's even one or 2 different webinars that may be online if our investors would like to check that out. So really exciting stuff there with Spirion that's going on. So I think one of the things that's really -- we're seeing hard, and we want to spend a little bit of time on this within the markets. We're doing some work with a number of investment bankers in the U.S. And so -- you see what we're doing with the U.S. DoD. You see what we're doing with Spirion. You see the level of investment that we're making in the U.S. itself. So we're getting some really good professional feedbacks from people that have feet on the ground here and have really looked through where the business has gone. And you saw the market take a crash a couple of weeks ago, and it was really around this, hey, can AI replace the whole SaaS ERP, security, what have you. And so it's going that structural reset where software companies based on AI readiness and system-level importance rather than this traditional SaaS growth. And we're seeing the model shifting a little bit to what can AI do across the business? and so when you look at autonomous agents and how they work. So we look at this chart, and I thought this is a really big chart. And it's pretty complicated. So if you're into the quants like I am and into where valuations are about the industry and competitors, really look at this because I think what we're seeing, and my personal belief is you're seeing a decoupling of where traditional SaaS companies go and where AI agents and where AI as a valuation within a business come into play. And that's something -- Dan and I were on a call. Boy, it must have been 2 days ago at my 2:00 a.m. in the morning. It's one of those 2:00 a.m. you can't sleep type things. And we're talking about AI and the strategy that we're bringing to bear. And so we want to talk about this as it relates to the market, but I think it's also more important how we present AI across the business. So Dan, from a strategic standpoint, let's talk about the kind of the 3 stages that we see as a business and then how we bring that into play from a revenue and scalability standpoint? Chun Leung Lai: Yes. Look, AI means different things to different people, and there's a lot of, I guess, hype around it and what it's going to do and people are still feeling their way through it. But in the areas that we target from a market perspective, where it's classified information or sensitive information, there's a real concern about how AI is introduced into those highly regulated industries. So -- but overall, there's also the promise of productivity gains for the archTIS themselves and how -- and also product enhancement. So we've taken a 3-activity approach. These things will run in parallel. So first, of course, is how do we make our teams more productive and deliver product faster to the market? How do we accelerate? What we're doing in every aspect of the business from marketing to finance to product development, to testing, all of those things? That's the first activity. And we have got a strategy of how to implement that. And obviously, we are trialing our own different use cases for AI. Activity 2 is product innovations. How do we embed AI into our product offerings? And a good example of that is, when we have to write policy rules which match against compliance frameworks, can we automate that process, have a lot of those things out of the boxes and have that translated into plain English? Can we test those things before they get deployed and inform the user and make it much more friendly from that perspective? And the activity 3 is, what can our products do to make organizations feel more secure about adopting AI and how it gets implemented across their enterprises? And I think that's really the big, big opportunity. We previously discussed that we're going from best-of-breed to a platform offering. And one of the things that we really saw early on with the Direktiv acquisition and the launching of trusted data integration is its ability to manage AI and where it gets published and what information and services it transacts on. And that ability was -- we identified very early as part of the foundation of building out the platform so that we've got an offering to help highly classified areas or sensitive IP or manufacturing or help understand how they control and adopt AI into their organizations securely and having it governed. Do you want to add anything to that, Kurt? Kurt Mueffelmann: Talking on staff, I think it's -- the fun part is, I think the first one is we're getting people coming into the business, all employees and contractors coming in and saying, how can we help, how can we deploy AI and make us more efficient, more productive, whether it's support being more proactive to customer needs, whether it's sales going through pipeline and looking at each opportunity and really going in and digging, whether it's IT or operations, everybody across the business is looking at that, and we're promoting that very heavily across the business. It's really creating a culture of participation and a culture of real drive to really look at how do you peel the onion back to see how can we create and maybe lower things such as operating costs, how can we become more effective, how can we do more with less, which is something we always see in microcap companies. And that will obviously drip through -- all the way through how we're doing that development. As Dan said, the AI market readiness is where we are today. And we're seeing kind of a number of kind of Open AI issues that not a lot of people are dealing with. And so Dan, we've talked about this. We've talked to, I would say, half a dozen different customers and prospects about their challenges. So why don't we talk a little bit about the challenges that those customers are seeing? Chun Leung Lai: Yes. Look, it's very, very true that it's very easy to talk about the benefits. It's very difficult to implement it and get those benefits, measurable outcomes for the business. So one -- the first one is, obviously, when you have an AI which can make calls for services and to data resources, how do I know I'm getting the right data exposures and I'm not creating data leaks? That's very important to the customer base that we deal with. So uncontrolled data exposure is a big issue, and it's something that they fear a lot. Compliance. How do they make sure that they're adhering to the compliance requirements? Again, defense industrial base, which we deal with, they're regulated a lot by information, trade and arms regulation controls. How do they know that, that information is still being adhered to in terms of the compliance requirements, which have massive penalties for them to do? Data boundaries. They just don't exist anymore. We've talked about this before, about customers operating in hybrid environments. They're using SaaS platforms. They've got information in the cloud. They're using cloud services. They've got legacy systems, this sort of thing as well. And how do I know what the AI and the MCP can actually call in terms of services and data? We've looked at all of these issues. We have to look at this also for ourselves, which is also helping us look at how we design our responses as well. And most importantly, I think when you integrate AI across the organization and start to add agentic agents, it's the nonhuman identities which become so problematic because they expand exponentially. So how do I also identify what services I'm calling? Where this information is going? So it's becoming quite a problem. And obviously, there's a very sweet spot. Therefore, if I can resolve that issue, there's a massive marketplace for products such as TDI. Kurt Mueffelmann: Yes. I mean you look at that, right? We were on with an investor the other day, and they're like, "Oh, you're making a shift from data-centric security over to AI." And I said, "Well, they're really coupled together" because I think as organizations scale towards AI, the requirement is really shifting from that visibility to real-time policy enforcement. So we're going from data-centric or data security policy orchestration and leveraging that into AI. We're ensuring the right data is used by the right user, the right model, the right agent, and we're doing that by design. So I think it's a nice segue into, again, as we talk about valuations within business and we talk about that kind of the chart about decoupling where AI can go and coupling back -- that back into the archTIS message around data-centric or data security policy orchestration and how we leverage across AI. So if we start to look -- sorry, I double hit there by mistake. As we start to look about that, Dan, where do you see that? Because we talked that last time a little bit around the control plane where archTIS enables organizations to scale safely by delivering that single policy? Chun Leung Lai: Well, again, it all comes down to context, and that's the biggest issue that people are trying to solve today. And it comes down to, as I mentioned before, that hybrid environment and having transparency about being able to govern all of those components together. AI cannot work in isolation to the rest of the organization, to the people that have to interface with it, to the other machines that have to interface to it. Having a single place that you can control and govern that information and put your rules in about how that information will be retrieved and in what context it will be released and how it will be released, how it can be used, becomes very much an incentive for all organizations to know that they've got a single point where they can control that. And again, we've talked about this. We're not here to compete against everybody. We're here to enable that to happen through security and governance of those services and of that data. And really, that becomes something where we have an opportunity to do that. And one of the early use cases, I might just add, for when we looked at Direktiv was -- and I think I've mentioned this use case before, was Viasat, which have all the U.S. deployments for satellite contracts. Now a young fellow there at Viasat puts some coding to be checked by ChatGPT and caused a data spill. So how do I use -- get the benefits of that AI and -- but also not publish -- know where that information gets published? I want to control where that information gets published. And in that particular case, Direktiv was used to intercept that and transfer that information to a secure place that it wasn't publicly available or be able to be reused by other users on that ChatGPT tool. And that's really where we're heading. As this gets adopted and Agentic AI really comes into it, we're going to see this -- the environments become more and more complex, which means they need a central place, which can interface into all of those aspects and be controlled through a single policy. That is what the purpose of the control plan is. Kurt Mueffelmann: Yes. I mean we're providing that execution level control, ensuring that every interaction, output, everything that is going through is critically related to the governance guidelines of an organization. So we're not actually being the AI, but we're being that layer above. So we don't have to tie into specific engines. We're actually being that layer across all models and providers, really providing that security across that multimodal AI adoption, which we're really looking to play. So we really become that additional layer from a governance or that control plane that we drive. And that starts to lead us into kind of where we see the strategic differences and next steps where we think we can be that competitive differentiation around preventive control versus post-event, that data level enforcement, not just at the app layer that Dan talked about, become that neutral aspect or become Switzerland of where we can go from that neutrality standpoint. And Dan, talk a little bit about where we see the market opportunity through the growth vectors themselves? Chun Leung Lai: Yes. Look, really, this is part of that land and expand. Customers already have made heavy investments in things like DLP management, data loss prevention, in this case, identities, Microsoft. And it's about connecting those things together so that they get full transparency in a single point of control. Large-scale defense programs out there, they're also trying to integrate and do interoperability. We've seen declarations from -- recently from the Japanese Ministry of Defense about deploying air service missiles on islands and these sort of things, but they can't work in isolation. They have to work with their allies and share that information. NATO is an excellent example of that, what they're trying to achieve and the U.S. DoD through the Five Eyes and AUKUS are 2 other examples of how do they do that. And then, of course, the supply chain for nuclear submarines, et cetera, they're all perfect examples of how we're doing this. But all of them are trying to adopt AI in all of these different areas to, again, increase productivity, do more with less, get more accurate results. And the thing that's stopping them is how do we do that securely. And that's where we see the opportunities really in this space. It's about integration and solving the integration and interoperability problem and playing that layer. And I think that, that's a niche where out of the 4,500 vendors, we are certainly in the lead on, we're certainly getting acknowledged, and we're certainly getting referenceability, and I think that that's what's really exciting. It doesn't change what we have to do today in the short-term. We have to win with the products we've got and win big awards and grow them from expanding to solve that strategic problem with them as we develop the platform out. And that brings us to our 3 horizons of growth, and you can talk through that, Kurt. Kurt Mueffelmann: Yes. [indiscernible] The AI doesn't change the model, right? We still have the strategy that we're going forward with. It just adds another layer of what we believe we can differentiate and bring them to market. And so when we talk about the 3 horizons over the 6 to 18-month time line that we look at, where we have to deliver today. We have to deliver consistent earnings through stronger ARR, controlled operating expenses and what have you, right? And so we've talked already about the left-hand side of [ EU ], where are we updating across the U.S. DoD. We talked about the recent win for 2,500 users, which is just a small component of a major U.S.-European military alliance. That reassurance of -- kind of resurgence, I should say, of Australian DoD that we're seeing with a number of real pipeline opportunities, and we know pipeline opportunities in Australia are generally seasonality, which is Q3, Q4, which is now until June. That's where they've always fallen historically. Again, we're going up to see Microsoft on Monday. And Spirion we're seeing some really strong cross-sell opportunities, not only in defense, but we're actually seeing it the other way where the Spirion enterprises are actually coming to us and saying, "All right, now that we've identified our data for Spirion, how do we push NC Protect and how do we enforce that data?" And so really trying to defend and extend that base across where we are today and drive that. And that carries us into -- Dan, take us through horizons 2 and 3? Chun Leung Lai: Horizon 2 and 3 are really about having that TDI function, all of those other services such as Spirion. When do I go out and do the discovery now? What do I do with it? I'll automate NC Protect coming in and protecting that. I'll take that and I need to set up an instant in Teams where only certain people can access that and I need to validate who's accessing that. It starts to become very automated, very machine-driven. And I might need some AI technology in there that's going to be doing certain services or repositioning captured data and regenerating that into a different view, context. Who can see that? Why can they see that? Where can they see that? And suddenly, you're starting to see that full picture. Finally, when we get all of that integrated completely, and we are building in other people's services such as BigID, Varonis, Microsoft, AWSs, when we can start to link all of those things together, you've got a platform which we're calling DSPO, and that can completely disrupt the market because what we then do is have all of those other providers' customer list is our potential customers. And that's where you get that real hyper growth based off the credibility that you've done in Horizon 1, the expansion of that strategic opportunity through the platform development in Horizon 2 and complete disruption in Horizon 3, where you start to own a particular niche market, which is being supported by all of the big guns out there. So that's really the nuts and bolts of that strategy. And I think you're starting to see now why we've done what we've done in terms of those acquisitions, why we see that data-centric security life cycle is being so important, and how that fits in and that IA isn't a threat. It's a genuine opportunity. Kurt Mueffelmann: Great. Why don't we -- and as we look at a couple of questions, I know that -- a couple of questions already in here are around kind of, with the market consolidating, are you likely to generate takeover offers? And what are your thoughts around that in the business itself? Chun Leung Lai: Great question. We're a publicly listed company. Obviously, if there's takeover offers, we have to consider them all and what's in the best interest of shareholders. Look, there is a huge amount of consolidation activity going on. We're not blind to that. We watch it very carefully. We obviously have plans, and we obviously have models that we look at where we think we're going to maximize shareholder value, but also what we think our potential is in the marketplace. But we need the offers. We will look at that forward to getting those offers, but I think that will be off the back more announcements of success and demonstrating a few more validation points in our strategy that we're executing. And if we do that, I have no doubts that we will be an attractive target to other large providers out there. Is that what's best for the company? We'll make those calls when we actually get those offers, but any offers, we may have to take seriously. Kurt Mueffelmann: Yes. Listen, the market is consolidating out there very aggressively, right? We have to do what's right for the shareholders. But as we've shown through the acquisition of Direktiv as well as Spirion, we're not afraid to go and punch above our weight and go make further acquisitions if it fits what we need to do and it fits in the best interest of the shareholders going forward. Listen, Direktiv has brought us TDI, which we think is going to be really driving where the AI next stage goes. And Spirion is bringing us some fabulous ARR, which is scalability. It's bringing us that U.S. presence. Now that we're tearing the cost through it a little bit and blowing out the operating expenses, it's going to start to drive cash that will drive us into more investment in other areas within the business, whether it's additional product, whether it's additional marketing or what have you. So I think we're pushing the right buttons, and we're not afraid to make those acquisition decisions on both sides of the fence. Dan, so the next question -- I love this one because it's -- we talk about this all the time. With the DoD opportunity -- I'll boil it down -- is the delay technical, budget or bureaucratic? Chun Leung Lai: Technical, budget or bureaucratic. It's a great question. Kurt Mueffelmann: How's D, all of the above? Chun Leung Lai: All of the above. Look, let me put some some of these aside. It's not budget. I think we've confirmed that the budget is there and it's -- that they've already budgeted for this, which is a definite sign of intent, isn't it? It is bureaucratic. It's not so much technical, but we do keep coming across some technical things. And again, that's because the different -- there are different environments where this is being tested. When we talk about co-command is that co-command is very different to the central agency, which we're putting in and there's tweaks and those sorts of things. But I don't think there's any major technical obstacles. In fact, I think we've resolved most of those things through that piece of work that we did in terms of software configuration development and interoperability. It's really now just going through the hoops, getting through the process, and that's what's exciting to us. Kurt Mueffelmann: Great. There's a couple of questions on the CBA credit facility and a little bit of, I guess, confusion around where that relates to the Regal that we announced at the end of last quarter as well and what the relationship between that is? Chun Leung Lai: Obviously, with some of these delays, we want to make sure that we can continue to execute the strategy that we -- and with the momentum and accelerate that momentum. So we need to make sure that the business is well financed. We looked at the share price. We looked at -- we have other options to go-to-market to raise capital. We thought it was in the best interest of shareholders not to do that, that we should look at some debt facilities to get out of those bumps and little hurdles and delays. So we looked at debt facilities instead of going out to the market to raise capital, which was the objective of all of this. We looked at Regal. We already had established fund with CBA. We've got both available to us at this point in time. Now that we've actually completed and signed the CBA, we'll relook at the Regal facility as to whether or not we still need it. But at this point in time, we still have a terms of agreement signed. And if there's any changes to that, we'll make those announcements when they happen. Kurt Mueffelmann: Great. Yes. Why don't we grab one more? How does Varonis on-premise transition impact your bottom line? And how are we dealing with that as we move forward? Chun Leung Lai: Do you want to take that one? Kurt Mueffelmann: Yes, I think so. So we always look at Varonis, right? Varonis, we look at as -- we look at a couple of companies as the North Star companies, want to emulate, fabulous growth, fabulous story. They've done a nice job in the data security posture management. And they are looking to go towards an all-cloud offering. And so that leaves them with the on-premise of a major significant share point market, file shares, on-prem, kind of [indiscernible]. And so we've taken a proactive stance. We've gone and done some competitive positioning against them from a webinar standpoint, going out there, playing the -- these -- the keyword search and really trying to drive SEO and pushing that. So we're seeing some opportunities where people come to us and say, "Hey, we feel abandoned." That's fine. If that's their strategy to go 100% cloud, listen, great companies are going in that direction, and I applaud them for that. But we really look at being the ability to grab all types of data in a hybrid environment, whether it's on-prem, whether it's in Azure, whether it's on AWS, Google or what have you. So we want to really keep that flexibility around those technology formats and bases that we have. So I think we're positioning ourselves well. The NC Protect, the Spirion do really well in those on-prem, off-prem environments and in the cloud. So we feel we can handle all those opportunities that are out there today. So we feel really... Chun Leung Lai: I think it just validates our strategy. As these big companies move to consolidate their cost base and target on their markets with cloud-only solutions, it proves the point that the customers still exist in a hybrid world. And that opens up opportunities for us to do that value-add and extension from Varonis to working with their on-prem problems because they can't get off them quickly. They've got legacy systems. But it proves the point of the strategy that we're taking is a very viable strategy. Kurt Mueffelmann: Yes. Dan, why don't we hit one last question, and then I'll pick you up with some closing comments. Spirion, how is that delivering new opportunities for the business? And where do you see that going in the near and mid-term future? Chun Leung Lai: Yes. Look, Spirion is -- no, we acquired Spirion as a strategic acquisition to reposition the business into the U.S. Let me be frank about that. We see the opportunities with the U.S. DoD. We see that is creating not only accelerated revenue and increase in ARR, but also a reference point to also move into the commercial markets, to extend our relationships with Microsoft into other military alliances partners, et cetera, et cetera. So we need to have a base there which can execute that and is in the U.S. to support that. That's really where the desire for taking on a data-centric security company in the U.S. came from. The software that, that [indiscernible] is an added bonus. We've talked about the discover, classify, enforced life cycle and [ governed ] life cycle of data-centric security. They give us that ability to do that discovery. So that's a beautiful segue. And a good example of that is, one of those opportunities we put up there about the shipbuilding yards is that they've got 44 terabytes of data that they don't know how they should protect it. Spirion is a perfect play to take into that organization and do that data discovery. So it fits in terms of the model of the customer problem that we're solving. The other thing that's really good about Spirion is they can do on-prem as well as in the cloud, and that's something we've just discussed in that Varonis example. So I think they're going to add a lot to us. And of course, the final statement there is they've got 150 customers that are already investing in data-centric security, which we can cross and upsell to. And we are providing incentives to those customers to do that as quickly as possible. And we are discovering opportunities that -- not opportunities that are going to turnover in 6 weeks. So there's a bit of work there to get that machine humming. But I think we can do that, and I think we can successfully do that. We've done the cultural integration. We've done the systems integration. Now we need to get into that sales and really start to drive that pipeline growth. So I'm excited by the opportunity. It's an important acquisition, and I think it will pay its dividends, but it's just a matter of time to make sure that we get it right. Kurt Mueffelmann: Yes. I would just add, I was up in Tampa earlier today meeting with Kevin Coppins and the team from Spirion. And you're starting to really see how it fits in. You're starting to see the adoption by the reps and bringing it into their sales pitch in the way that they can bring a fully integrated solution to market. It's just not a, hey, let's sell NC Protect or hey, let's sell Spirion. It's becoming this more integrated platform, which we talked about before. And you hear it on the sales calls. You hear it on the sales recordings that we listen to, for that. You hear it in the pipeline reports and what we're doing with forecast every week and where it goes. So I think you'll see more and more of that. And we're not going to be able to announce every deal, obviously, from the space we're in, but we're seeing good traction as we build the business through that. And I think it's a really good add of what we're doing. So Dan, with that, why don't we spend 2 or 3 minutes just wrapping up and summarizing up again the quarter? Chun Leung Lai: Yes. Look, to me, I think it's been a exciting half year. I think we're reasonably happy with the results. You can always do better, you can always do worse. But I think we are in a solid position to push the business growth forward over the next 6 months. And I think -- and I often say this, but I'm expecting a good 6 months ahead of us in terms of the business and the execution. There are a number of deals just hanging out there ready to drop. And I think that, that's going to really change the perspective of the company to our investment base. I think there's a lot of people out there waiting and watching. And I think when -- if we can execute a couple of strong deals, which -- more validation points in our strategic direction and our strategic plan, I think people will start to truly believe, and I think that we'll see that reflected in activity in the marketplace supporting the company. Kurt Mueffelmann: Excellent. Great. Well, thank you very much. And I'd like to thank everybody for your time. Enjoy the weekend. If there are further questions as you move forward through the financials and through the half year results, please feel free to hit us up at investor@archtis.com, and we'll do our best to answer as many questions as possibly as we can within the parameters set by the ASX. So enjoy the weekend, and thank you very much for your time. Take care. Chun Leung Lai: Thank you, everyone.
Francoise Dixon: And welcome to Mach7 First Half FY '26 Results Briefing. My name is Francoise Debelak, and I'm Head of Investor Relations for Mach7. Today, our CEO, Teri Thomas; and our CFO, Daniel Lee, will provide an overview of the first half results. We will then open it up for questions. [Operator Instructions] I'll now hand over to Teri. Teri Thomas: Thank you, Francoise. And hello, everybody, and thank you for joining us for the first half fiscal year 2026 results. Let me start with something that I think we can all align on. Sales matters. Sales fuels growth. It funds innovation and innovation fuels more growth. And ultimately, sales drives shareholder value. Now I happen to love sales. I've spent more time in sales than any other role in my career, and I believe it makes the business world go around. But more importantly, I know that sustainable, disciplined sales growth is what you want to see from Mach7, and I do too. Good news is we now have an enhanced, growing and focused team driving progress, strengthening pipeline quality, improving conversion discipline and aligning our commercial engine with our strategy. You'll hear more about that shortly, including a guest appearance later in the presentation. So let's begin. On our vision, before getting into performance, I really want to ground us into who Mach7 is and where we're going. Our vision is simple, but it's ambitious, to be the global imaging EMR. We win by completing the patient picture with the patient's pictures, and we do it better than anyone else. We -- health care has done a strong job organizing text-based and numerical clinical data, but imaging remains fragmented. It's locked in silos across departments, different formats, and that fragmentation creates friction for clinicians and inefficiency for health systems. Mach7 exists to solve that. Our move from archive to architecture is about making imaging accessible, usable and a core layer of the patient record, AI-ready and truly vendor neutral. That vision sets the destination, so let's talk about how we're getting there. Now this slide gives you a road map for our next 20 to 30 minutes, and I'll begin with a business overview, what we've done strategically and operationally in the first half. Dan will then walk you through the financial performance in detail. And after that, as I mentioned, we'll have a special guest appearance from our Executive Vice President of Sales, Todd Stallard, who will share his perspective on our commercial reset and how we are turbocharging our revenue engine. I'll then close with our outlook for the second half, and we'll open for questions. So let's move into the business progress. First half reflects a deliberate execution of the reset we outlined late last year. Now I know a slide like this, with the word reset, front and center can feel a bit unsettling. It can sound like disruption because it is. Meaningful progress rarely happens without disruption. And to me, reset spells opportunity. It means we sum in our courage to evaluate ourselves honestly and make the necessary changes to unlock Mach7's full potential. This has been a true top to bottom review. Our people, our structure, our technology, our office locations, our commercial models, our pricing, our cost base and our culture. Nothing has been off the table. We've now sharpened our road map. We've rebuilt the commercial engine. We've disciplined our cost base. We've clarified how we operate. This was comprehensive and it was intentional. We are not here to preserve the status quo. We are here to compete. We're here to win. So when I say we're here to win, well, winning requires follow-through. We are now largely through the reset phase and the scale of change has been significant, evolving leadership team members and roles, refining the product road map, reshaping our organization, intentionally shifting our culture toward performance and accountability. In our industry where sales cycles run 12 to 24 months, commercial impact also takes some time to fully materialize, but that doesn't mean our progress is slow. We secured our first new logo this half in quite a while, and it was a Flamingo customer. We did it quickly, and we did it differently. We listened more deeply. We aligned more directly to the customers' most challenging problems, and we positioned Flamingo exactly as it was designed, not just as another commodity product, but as a smarter way to solve complex imaging challenges. In that case, our image data orchestration on top of another vendor's radiology system. We think this customer may buy more modules from us in the future, and we're delighted to have helped solve their problems with the new product. Now that shift in engagement reflects our development of far stronger commercial muscles. We'll address that in more depth as I give Todd the opportunity to speak to our commercial evolution well underway. Operationally, we've made some difficult but necessary headcount reductions as part of our reset. That said, this isn't contraction for contraction's sake. We fully intend to grow headcount over time, but deliberately and strategically with high standards, leveraging lower-cost innovation hubs to increase our development velocity while maintaining strong cost discipline. On the customer side, our dedicated implementation support and customer success engagement team, our Flight Crew, was initiated in August. We are leaning into a culture of continuous improvement. What was working well in eUnity support as evidenced by our class scores is being extended into deeper and more proactive engagement with our VNA customers as the next phase. We're building institutional knowledge about our customers' environments and their needs, and we're using that knowledge to improve responsiveness, reliability and long-term relationships. And finally, while the slide references continued progress towards CE Mark in the first half, I am proud to share in January, we officially received our CE Mark for medical device eUnity under the EU Medical Device Regulations. That is a meaningful accomplishment. The CE Mark confirms our regulated software meets the EU safety, performance and clinical evaluation as well as post-market surveillance requirements. It is a rigorous and detailed process. And this milestone ensures access to Europe and Middle East and reinforces the strength and the quality of our product. Our execution is in motion. Now as I mentioned earlier, Mach7 completes the patient picture with the patient's pictures, and that is not just a tagline, it's real. Each day, clinicians use our software to access critical diagnostic images, but also patients themselves are logging in to view their own images with our eUnity Viewer. It's powerful. And we're not just supporting workflows, we are enabling improved health care experiences. Now delivering on that requires more than strong products. It requires a strong operating model. So as part of this reset, we're improving how we design our software, how we deliver it, how we sell it and how we support it. And those functions are aligning around a continuous customer-centered loop rather than operating as independent and segregated functions. Customer success generates insight, insight informs our marketing. Marketing strengthens the pipeline and sales conversions. Sales funds innovations and innovation increases our differentiation, including our new Flamingo modules. This creates more opportunity to win and to grow revenue. That loop, it is intentional. We overlay that with a more disciplined ROI-focused cost base, and overhauled commercial engine and a road map that's grounded in real customer needs and market demand, then you have a company positioned to grow and grow with purpose. This is growth by design and designed to be profitable. Now if my last slide described the system, this slide is about the engine. We rebuilt the sales organization with defined ownership across new customer acquisition, expansion within our installed base, strategic partner development, services alignment to support long-term value and that clarity improves speed, discipline and conversion quality. We've streamlined operations, not simply to reduce cost, but to redeploy resources toward growth positive capabilities and improve our communication, coordination and ultimately, our efficiency. We are investing where we see a return, pipeline quality, partner leverage, marketing, execution excellence. It connects directly back to the loop I just described, customer insight, feeding opportunity, opportunity funding innovation, innovation strengthening differentiation. Todd will speak more specifically about how this plays out in the field. But at a high level, the commercial engine is aligned with the strategy and profitable growth. We are no longer operating in different tracks. We are pulling in one direction. Now we have an industry-defined defining VNA and a well-loved zero-footprint viewer. It's fast, and these have been part of Mach7 for years. But I want to talk again about Flamingo. And I'm going to go a bit off-road here and depart from this slide for a minute. Think of where Flamingo fits in by picturing a sandwich. At the top of the sandwich, you might have a beautiful piece of multigrain bread. It's what you see first looking down at it. It's appealing, it's sliced well, really great texture, and there's some immediate value that you can see. Now that's our eUnity. It's our zero-footprint diagnostic quality viewer. At the base of your imaging strategy, you have sturdy bread, holds everything together. That's the foundation, the VNA, necessary, predictable. Think of a thick piece of sour dough bread, reliable. But on its own, maybe not all that exciting. What makes the sandwich compelling is what you add in between. Maybe you got some cheese and it's hot. That's AI enablement. It gives customers a practical path to explore and operationalize AI within their existing ecosystems. It's where the sandwich starts to feel a little different. Maybe you put in a layer of meatballs, our dynamic policy engine, intelligent routing and orchestration. That's what our first Flamingo customer needed, solved a very specific, very real workflow challenge, and it did so elegantly. Maybe you put in some spinach for a customer trying to go healthy, lighter, intelligent cloud migration, reduce infrastructure burden, increase agility, maintain control. Different customers have different appetites, different constraints, different needs, different priorities. And just like we don't all want to eat the same sandwich, our customers don't all need the same solutions. Flamingo is modular by its design. Customers choose the components that solve their specific problems, whether it's layered on our products or on others. And that's the power of our true vendor neutrality. We are not forcing a fixed menu. We are enabling choices. That flexibility creates opportunity and potential for rapid differentiation and opens new revenue pathways, including as a stand-alone entry point. So Flamingo is now available for sales within our customer base as well as to new customers. We signed our first customer in the second quarter and have been in discussions with several others, including addressing EMR integration challenges, AI wants and needs, cloud strategies and how to help customers mitigate risks related to other vendor lock-ins. Driven by real customer needs, we're prioritizing the next Flamingo modules to develop. Our pipeline is progressing, and we're being disciplined about quality over quantity as well as ensuring good product customer fit. We expect Flamingo-related support of growth in our ARR from this half onward. It won't be overnight, but it is strategic for our customer-focused growth strategy. Now RSNA. It was a strong event for Mach7. It added some great momentum to our transformation. Our team had some deep high-quality conversations rather than just quick booth interactions. We engaged with numerous existing customers, strong prospects and numerous partners as well. It was an efficient way to strengthen our pipeline and clearly articulate the Mach7 Flamingo story as we continue our shift from archive to a broader architectural offering. And our message, it resonated. Our booth was often full. Our team engaged in problem-solving discussions about AI, interoperability, workflow orchestration and cloud strategies. We presented in the AWS booth, and we also hosted a customer event that was well attended. It created space for relationship building and deeper exploration of the challenges our customers are facing. RSNA reinforced Mach7 has a credible and differentiated story to tell. And next will be HIMSS and SiiM, 2 relevant conferences to strengthen our market presence as well as our pipeline. Now one of the reasons I took this job is the size and scope of imaging as an industry. It's a big space. It's a growing space. And as a nurse, I love that we have the opportunity to make a positive impact on health care. The total addressable market here is significantly larger than what I worked in previously, and the macro trends support what we are building. Health care is structurally resilient. People keep getting sick and imaging demand does not disappear even in down economic cycles. Diagnostic imaging continues to grow, not just for diagnosing illness, but increasingly for wellness monitoring and even guiding treatment. Imaging volumes are rising and data complexity is rising with the addition of digital pathology, an area of high innovation for Mach7 and also an emerging area for our industry as a whole. And health systems need smarter ways to manage and activate that data, including some very, very large data sets, especially in digital pathology. AI and medical imaging is expanding rapidly, but AI only provides value if it's accessible. So we are positioned well at the intersection of imaging, AI enablement and data independence, helping health systems unlock the value of their broader imaging ecosystems. Now I believe the key to success is focus. You need to speak to someone. And if you try to address everyone, in the end, you speak to no one. Our ideal customer profile centers on academic medical centers, large integrated delivery networks and teleradiology groups. We know these customers. We already serve many of them, including some very well-respected names in our industry. I personally do love to speak to customers, which I try to do weekly, and I even get out and visit customers, real face-to-face interactions. And I'm delighted to have personally visit 2 of the organizations on the screen over the past month, and I heard firsthand how our software is stable, improving access and supporting complex clinical workflows. They value data independence, AI readiness, a lower cost of ownership and fast image access. Smaller sites, veterinary clinics, those kind of non-focused customers, we still serve, but through partnerships versus directly, which then supports our focus and our profitability. Now one of the most important lessons I've learned in sales is this. Knowing your customer is essential, but it is not enough. You must clearly understand your value-add points of difference, defend them and continuously expand them. That's how you avoid commoditization. That's how you protect margin and it's how you win. So for Mach7, differentiation starts with true vendor neutrality. We give customers control over their data without forcing replacement of their existing niche or specialty imaging systems. We layer that with AI enablement and intelligent orchestration, our Flamingo dynamic policy engine, supporting complex routing and workflow automation. Now security is another key advantage for Mach7. Health care is one of the most targeted industries for cyber threats. Our BitSight Security Rating of 750, which is categorized as advanced, sits above industry average. BitSight is an independent third-party cybersecurity rating platform used by large enterprises, government agencies and people like our big target customers. This isn't self-reported marketing language, it's externally measured and validated performance. That credibility strengthens trust and supports enterprise sales conversations. You add subsecond image access speed and strong price to performance value and you have a differentiated rating that resonates. So knowing our differences, step one, extending and defending them through flamingo modules, a solid dedicated customer engagement with the Flight Crew and disciplined execution. That's where things start to hum and it's where focus turns into competitive advantage. So let's turn to execution in the second half and our main priorities. First, sales momentum. We are focused on bringing in new customers, increasing proactive engagement within our installed base and accelerating opportunities in Asia and the Middle East. We're doing this with pipeline discipline by prioritizing quality, conversion and alignment with our ICP, not pursuing revenue at the expense of long-term margin. Second, execution. Our Flight Crew model is now operational, and we've organized our teams into structured pods based on customer archetypes like full suite customers, partner-led accounts, VNA-only customers, allowing us to build deeper expertise and deliver more consistent outcomes. We've also introduced company-wide week plans to increase visibility, accountability and predictability. And execution is becoming measurable and repeatable, not variable and personality driven. Third, leadership and organizational readiness. We've refreshed over half of our leadership team, and we'll be onboarding an experienced CTO to strengthen platform scalability and engineering discipline. And finally, cost discipline and structural leverage. We're investing in growth critical capabilities where the ROI is clear. We are optimizing our location strategy, including transitioning from a large, underutilized headquarters to a smaller, more nimble, cost-efficient, technology-enabled hub that can flex in size and foster collaboration and ongoing innovation. Our objective is disciplined profitable growth, sustainable expansion and execution that compounds. We've taken on some hard actions. We've aligned the organization, and now we begin to drive results. And with that overview, I'll hand over to Dan to walk you through the detailed first half financial results. Daniel Lee: Thank you, Teri. I'm pleased to walk everyone through Mach7's first half fiscal year 2026 results. This half was a period of intentional transformation for the business, strengthening our foundations, sharpening our commercial execution and positioning Mach7 for future growth. The first half reflected lower capital license activity as we undertook a strategic commercial and organizational reset. While this impacted reported revenue, the underlying fundamentals of the business remains strong. Recurring revenue was resilient at 85% of total revenue, representing a strong and stable base. We maintained excellent gross margins of 92%, demonstrating the scalability of our platform and services model. Operating expenses decreased by 6% as our disciplined reset efforts began delivering early efficiencies. And critically, Mach7 remains in a very strong financial position with $18.5 million in cash and 0 debt, giving us the flexibility we need to execute on our strategy. Revenue for the first half was $13.7 million, down 23% on PCP. This reflects lower capital license sales during this reset period. Recurring revenue of $11.6 million declined 8% from PCP and now comprises 85% of total revenue. Total CARR of $26.1 million and ARR run rate of $23 million were down just 8% (sic) [ 12% ] and 2%, respectively, on a constant currency basis. While EBITDA and net profit after tax were impacted by the revenue mix shift, our cost reduction initiatives and high-margin profile support improving operating leverage as activity rebuilds in the second half of fiscal year 2026. Our revenue mix continues to evolve towards subscription and the maintenance and support model. Professional services and capital licenses were lower, which we anticipated during this transformation phase. Our ARR run rate remained stable at $23 million, supported by our installed base and renewal performance. Product revenue remains balanced with a 55-45 split between VNA and the eUnity Viewer. Sales orders for the half came in at $10 million in total contract value. While lower than PCP, we saw a significant shift toward high-quality recurring revenue, which again represented 85% of sales orders. Capital software sales came primarily from expansions within our existing customer base, a positive indication of customer satisfaction and platform value. Professional services orders were lower as expected during this reset, but we anticipate an uptick as new deployments come online. Our foundational book of business remains strong and provides a solid platform for future growth. Despite the revenue decline, gross margin remained strong at 92%, reinforcing the scalability of our model. Operating expenses improved by 6% as our recent initiatives took effect. Adjusted EBITDA tracked lower in line with revenue, but we are seeing early evidence that the cost base realignment will create meaningful leverage as we move forward. Cash receipts were $12.5 million, and we ended the half with $18.5 million in cash and 0 debt. We continue to operate with financial discipline, and our balance sheet provides the capacity to execute our go-to-market and product strategies without compromising stability. We expect improved momentum in the second half as sales execution benefits from our reset, partner alignment continues to strengthen and customers progress into deployment and expansion cycles. Thank you. And back to you, Teri. Teri Thomas: Thank you, Dan. All right. Those financials, they reflect transition. And now let's talk about acceleration. Commercial excellence is about discipline, hard work, rigor and scale. We are modernizing marketing, research-backed messaging, full funnel activation and omnichannel execution. And to lead this next chapter, we appointed Todd Stallard in September. Todd brings deep experience across commercial growth, partnerships, enterprise technology and product-led environments. Todd, I welcome you to introduce yourself and share a little bit about our commercial reset. Todd Stallard: Thanks, Teri. Hello, everyone. I'm Todd Staller. I'm the VP of Sales and Marketing at Mach7. I joined 5 months ago, as Teri just said. When I joined, I was coming on to build an organization, not maintain a revenue organization that had been struggling, if you will, for some time. The ability for me to come in, see this company and take the opportunity is considered by myself as a blessing. My mandate covers the full commercial engine, direct enterprise sales, a global channel partner program, marketing function to reposition Mach7 around what we believe is a category-defining opportunity, and that is the world's first real imaging EMR. Health care imaging infrastructure is where electronic medical records were around 15 years ago, pretty fragmented, siloed by department, locked into proprietary systems. Hospitals running 3, 4, sometimes 5 different PACS systems across radiology and cardiology. It was never supposed to be that way, and it's not unusual today to still see that. That is the problem that exists that we at Mach7 can continue to build our product and our offerings to clear that fragmentation. That fragmentation costs health systems millions in redundant infrastructure. It slows clinical decision-making. It blocks the adoption of AI tools that can transform patient outcomes and assist doctors that are overworked. Mach7 exists to solve that problem, as Teri said earlier. Our platform provides the vendor-neutral data layer, the archive, the routing intelligence, the integration fabric that allows health systems to consolidate all imaging into a single source of truth. And that way, they can also choose the best-of-breed viewer, which is eUnity. With our Flamingo architecture, we're moving beyond storage and routing into more imaging operations, data management and AI analytics. That is something that the customers are demanding. On the commercial side, I'm focused on 3 things. Converting our improving pipeline into closed revenue, building a partner leverage go-to-market that scales with linear headcount growth and driving the brand position that earns us a seat at the table every enterprise imaging decision that comes about. Our net new CARR pipeline for new logos has grown 30% over the last 3 months. We've worked hard. We've cleaned up our pipeline. We're trying to provide clear tracking and information to Teri so that the management organization at the company understands what our opportunities are. We're looking at driving more marketing lead conversions and partner co-sell and co-marketing activities. I base this on basically 3 strategies, and those strategies are pretty simple. Strategy 1 is pipeline discipline. We've got to qualify every opportunity against 6 factors: quantifiable customer outcomes, budget authority, evaluation criteria, buying process, identified paying internal champions. We've done a good job of cleaning the pipeline up. When we first came in, it was a little maligned, stale, not necessarily the sense of truth, and we've moved forward now and we're building those stale leads have been removed. Those true opportunities and the probabilities have been shifted into building a weighted ARR forecast. Those numbers reflect reality. And in the future, that will help us begin to build more trust and belief in what Mach7 delivers. Strategy 2, partner at scale. 4-pillar programs. We need to enable our partners and recruit new partners in by training and onboarding them, getting them into the Mach7 world, understanding the community that we service and understanding how we service them with our technology. We need to engage through joint planning and QBRs with those partners. We will hold their feet to the fire. We're going to be held accountable. We're going to execute through co-sell and co-marketing with them. We will invest with them. We will drive. We will push for leads. We will bring them on to help drive the business. And those types of partners that include hyperscalers, VARs, health care MSPs, a variety of partners that are out there that are chomping at the bit to have a good company like Mach7 offer our opportunities to them. The model scales revenue without scaling headcount necessarily. We will build our sales team out, but we can get a lot more reach by leveraging our partners. Strategy 3, market position. Launching the imaging EMR brand in this coming March across all demand gen, thought leadership and the customer marketing. As Teri mentioned, Mach7 is the picture of the patient's picture -- it's a tongue twister for me. The patient's picture completing the patient's picture, right? We're going to drive on that. And that is where the imaging EMR brand comes across and will be pushed through in our strategy of how we reach out marketing-wise. And we've restarted recently the engine, right? We've put gas back into it. We started launching socially. We've been pushing out a variety of information, and we'll continue to do that as we ramp towards those events that Teri talked about that are revenue generators for us from a standpoint of marketing qualified leads to sales qualified leads, HIMSS, SiiM and RSNA. Underneath all of this sits the revenue operations team. We have an outstanding resource that I call my right brain. She is phenomenal, and she helps drive the pipeline velocity, our partner attribution, our lead conversion and our scenario-based forecasting. We are getting much cleaner on that. And that will show promise down the line that we're converting more of our leads and we're engaging with our customers faster. And hopefully, we'll be able to cut down our time frame for closing, which is right now averaging between 12 to 24 months depending upon what the solution is. There is a market tailwind with us. The shift from proprietary packs to vendor-neutral platforms has been converting over the last couple of years, but it's starting to accelerate. And due to the AI momentum, I will say, that's starting to build up in the medical environment. The Flamingo architecture will allow us to do a lot of things with AI integration as we move down the line, that will offer some specific opportunities for different areas that we haven't necessarily explored before. But I want to reiterate, we're early in this, right, on the sales and marketing side. That doesn't mean things slow down. It doesn't mean that we don't drive hard on the number. It doesn't mean that we don't avoid hitting the goals. We're going for the goals. We are pressing on the goals. My job is to convert everything that comes into this as closed revenue, and that's exactly what we're going to do. But I want you to know it's early in the build. I'm not going to pretend, but the market opportunity is massive. The technology we have is a differentiated component. The team that I have and the team at Mach7 now is executing. That's different than was in the past. So the mission matters to me, and the commercial organization is focused to drive growth and new logo capture. I'm glad to be here. I'm happy to have the opportunity. I look forward to working closely with Teri and Dan as we move forward. Teri Thomas: Thank you so much, Todd. I appreciate that. I love about Todd. He brings a lot of energy to the role. He tells it like it is. He's my BS detector. He's a great partner. So thank you. Now on our outlook, as we move into the second half, we've got a solid strategy. We've got stronger operational foundations. We are improving our commercial momentum. We've got some early Flamingo traction. We've exhibited disciplined cost management, which will be ongoing. We are selectively investing where ROI supports it, sales execution, partnerships, product development, Flamingo, overall platform scalability. It's controlled growth. It's not reckless expansion, and we remain confident in our strategy and focused on our execution. So I want to thank our Board, our employees who've been working hard in this transformation and our shareholders. And we'll now open it up for questions. Francoise Dixon: Thank you, Teri. We received a couple of questions in advance via e-mail from [ Matt Hale ]. So I'll start with those. Can you comment on the customer response to the Flamingo solutions? Teri Thomas: Absolutely. One of my favorite conversations, and this is with a -- in the middle of our bull's eye ideal customer. They came by at RSNA. And I heard that they'd considered us previously and never looked at us. And I requested, come by, you're going to see something different from what you've seen with Mach7 before. And I said, I actually want to test out with you, does this resonate? And I just laid out for him the Flamingo architecture, the different directions, the modularity, the capabilities, the problems that we're solving. And he said, you are speaking directly and taking off almost every single box of what we're trying to do, but more importantly, what we've been struggling to find solutions to fit. And that's key. It's not chase after what everybody else does. It's fill the gaps that nobody else does. That's differentiation, that's power, and that's what Flamingo is all about. So I could not have heard a better validation for a customer to say, am I your ideal customer and you are speaking to me and you are addressing unique challenges. So the biggest challenge for us now, get the word out. Our marketing was underdeveloped, and a lot of people don't know who Mach7 is. So as Todd mentioned, we've done a significant overhaul in our marketing engagement strategy, everything. And our velocity has picked up in marketing messaging starting actually this month in the last few weeks, but there's going to be more and more of that as we launch some changes to our brand and get that word out so that people know there now are solutions to these problems with Flamingo. Francoise Dixon: Thanks, Teri. Matt sent through a second question, which was, can you provide an update on the CTO hire? Teri Thomas: We're so close. I was actually hoping we might be able to say we've hired our CTO by now, but we're in our final discussions. We had a very strong response when we started looking far more strong candidates than I anticipated. I think that does relate in our industry, it's actually a great time for our transformation, whether it's executive roles, support roles, developer roles because a lot of organizations have implemented return to work policies. There are a lot of people on the market and some top skills. So we are very close. I expect that we will have a new CTO committed within the next couple of weeks, likely starting in the next month or 2. Francoise Dixon: Thanks, Teri. I'll now turn to the live chat. And our first question comes from [ Jesse Livermore ] who asks, how long should we expect the reset in brackets declining revenues to continue. Are we back to growth in the first half of '27? Teri Thomas: Our guidance related to revenue is we anticipate to be somewhere around even from what we did last year. Now I've put the caveat. This does rely on some capital deals likely out of Asia. There are also opportunities out of our services part of the organization, which you bring new customers in, you get services. So we expect to stay pretty flat this year. I do expect next year to be a year of growth. That should be when a lot of the commercial momentum starts to really hit. Francoise Dixon: Great. Thank you, Teri. Look, we have now -- we've got now questions come through from Ian Wilkie. How quickly do you expect Flamingo to shift from an early adopter product to a material driver of ARR expansion? And what are the leading indicators that you look for internally that tell you Flamingo is becoming the default architect of choice for new deals? Teri Thomas: It's an interesting question because Flamingo is an umbrella of a lot of modular purchasable options. And it's something that I expect will not have an end, but will continue to grow. So shifting from early adopter product will happen all the time because we'll have new products and new capabilities and new modules that people can add. Now our first Flamingo offering which is what the customer I profiled bought is something that's been around, but wasn't really packaged up in the right way that was meeting customer needs. It was simply a part of our VNA, required the VNA, and we were actually losing that sale because we were telling them they needed to buy more than they needed to buy. So the first thing that we are doing is analyzing how many solutions have we actually built in as niche solutions that are just part of the VNA that don't apply to everyone and could be modularized. So I expect the process of building out Flamingo as a broader architecture and an offering that drives significant revenue to increase roughly on a quarterly basis over the next 2 years. And at that point, we expect our differentiation to be very solid. We expect this to be the key in terms of us owning the imaging EMR. Now leading indicators are very easy when you look at using CRM with any rigor. How many deals do we have Flamingo elements in and what's our win rate? So easy for us to track. The part that's fascinating, though, is so much of Flamingo strategy prioritizing what we're packaging is related to deep customer engagements within our current base. So it's easier to get traction when you have clear alignment with the problems that you're solving and you don't put that into just the hands of the customer support team or the product team or the development team. So we are unifying our teams around deep engagement with our customers and letting them shape priorities and have a say as we're taking some of these components of our VNA and packaging them up to be sold stand-alone as part of Flamingo. So expect it to be ongoing. Francoise Dixon: Thanks, Teri. Our next question comes from [ Max ]. Please talk about the threats and opportunities you are seeing in relation to AI. Teri Thomas: I see very few threats in our industry. It is almost all opportunity from my perspective. There's, of course, operational opportunity that we all see to accelerate our ability to deliver software, but I don't see AI coming in and replacing the software that we deliver. Imaging is extremely complicated. Health care is -- even though imaging is one of the areas of health care that uses AI most with over 1,300 FDA-approved AI algorithms, it's alphabet soup out there. So lots of opportunity for us as a company to provide a platform and help customers determine how to best leverage the huge world of AI opportunities out there to improve diagnosis. We also -- instead of fighting with AI, we open the door and we embrace it internally, but also with our customers and on behalf of our customers. For example, our partnership with Strings enables our customers to better manage their Mach7 archive using AI-enabled tools. So creating those partnerships, opening those doors, embracing and guiding our customers through our Flight Crew and close engagement with them only opens up more opportunities. We have seen nothing that has given us pause or any threats based on AI to our commercial activities thus far. Francoise Dixon: Thanks, Teri. Our next question comes from [ Andrew ]. Have we had any sales of UnityVue? And is that still a focus? Teri Thomas: Yes and no. We haven't sold eUnity View directly ourselves, but we have proceeded in an engagement with a customer that has Nuview and our technology, and we've been working through enabling how that works together in order to ensure that UnityVue is tried and true and available and referenceable. So it is part of our go-forward strategy. However, we, ourselves have not sold it yet. Ask me again in the future, I think the answer will be different. Francoise Dixon: We have no further questions on the chat. I'm just going to pause a minute in case any come through. We have no further questions at this time. Teri, I'll hand back to you for closing remarks. Teri Thomas: All right. Thank you so much. So as those of you who know me would know, I do believe in setting clear expectations, but then delivering on those. So we are driving a meaningful shift in our culture and our operating model and execution and transformations like this take time. Sales cycles are long. We're working to accelerate them, but there's only so far you can go. These relationships have to be built. The architecture can be complex, and our solutions rely on an understanding of a number of different systems in the ecosystem. The class momentum builds steadily and is a lagging indicator. And our revenue acceleration really follows our disciplined execution. That said, the foundation is now really, it's in place. The strategy is clear. The opportunity is significant and our balance sheet is strong. So I know it's about delivery, and we are building Mach7 to realize its full potential. I firmly believe the opportunity ahead of us is greater than our current results reflect. My commitment is to lead with clarity, work with intensity and execute with the discipline required to deliver the growth that I believe this company is well capable of. So I thank you, my Board, the team, our investors for your faith, and I look forward to giving you an update again in a few months.
Operator: Good morning, ladies and gentlemen, and welcome to B3's Earnings Results Presentation for the Fourth Quarter of 2025, where Andre Milanez, B3's CFO, will discuss the results; along Fernando Campos, Investor Relations Associate Director. [Operator Instructions] As a reminder, this conference is being broadcasted live via webcast. The replay will be available after the event is concluded. Fernando Tavares de Campos: This is Fernando Campos from B3's Investor Relations team, and I'm here with our CFO, Andre Milanez, to discuss the results for the fourth quarter of 2025. To start, I'll ask Andre to comment on the extraordinary tax effects that mark the quarter and then provide a more general view of the revenues. Andre Milanez: Thank you, Fernando. Starting with the nonrecurring tax effect that impacted the company's net income for the quarter. First, we had the increase -- with the increase of the social contribution announced at the end of last year, we recognized during the fourth quarter, a negative accounting impact from the update of the deferred taxes. Related to the tax amortization of goodwill an impact totaling approximately BRL 1 billion. It is important to emphasize that the fiscal benefit has already been fully used and therefore, we will not have any other impact on the company's cash generation in the future as a result of this adjustment. This is solely a one-off and extraordinary accounting adjustment that we had during the quarter. On the other hand, we distributed BRL 1.5 billion in nonrecurring interest on capital as well, which was -- which helped to partially offset the negative impact from the deferred tax adjustment that I mentioned before. It is also worth to highlight that we still have around BRL 4 billion in nonrecurring IoC interest on capital to be distributed over the next years, which this will have a positive effect on the company's cash generation. If we were to exclude those two effects in the quarter, net income would have reached BRL 1.4 billion, which represented an increase of 22% in relation to last year. Speaking about performance, the quarter delivered solid results with an 11% increase in total revenues and growth across all segments. I would like to highlight the rise that we saw in ADTV throughout the quarter, which ended December at a level significantly higher than in September, showing a consistent recovery trend, which has been reinforced by the volumes that we have been observing in January and more recently during February as well. Fernando will now provide a bit more detail on the operational performance. Fernando? Fernando Tavares de Campos: Thank You, Andre. In the derivatives market, even with a slight annual decrease in total ADV, we observed a relevant sequential recovery with increases in mainly all contract groups during the quarter. Indexes and interest rates in Brazillian Reals, products continued to show strong momentum supporting the segment's performance, which was negatively impacted by FX and crypto products due to the devaluation of the USD against the BRL that impacted the RPCs of those contracts. In equities, ADTV reached 26.2 billion, an increase of 2% compared to fourth quarter 2024 and 20% compared to 3Q '25. ETFs, BDRs and listed funds continue to gain relevance, representing more than 17% of the total volume reinforcing the trend of investor diversification and the importance of the company's product diversification strategy. Fixed income remains one of the Big 3 key growth pillars. The corporate debt market continues to show strong progress with issuances and outstanding balances growing consistently. Treasury Direct also had another strong quarter with increases in both the number of investors and outstanding balance. Data, analytics and in technology, we delivered another quarter of solid results. data analytics solutions grew nearly 20%, reflecting strong demand from the credit, loss prevention and insurance vertical. In technology, we expanded the number of clients in the monthly utilization service and observed robust growth in market support services. It's worth noting that starting this quarter, we are including Shipay in this line, which contributed with BRL 5 million in revenue from November to the end of the quarter and added new capabilities to the ecosystem. Now Andre will comment on the remainder of the financial performance. Andre Milanez: Well, on the expense side, we remained with our cost discipline. Total expenses grew only 1.5% year-over-year with our adjusted expenses up by 4.7%, which was in line with the inflation for the period. We saw some stability in information technology expenses and a decrease in third-party services, which helped to offset increases related to the annual bargaining agreement and the structures that were merged into B3 in the beginning of the year. As a result of that, our recurring EBITDA reached BRL 1.83 billion, an increase of 15%, with a margin of 69%, consolidating another quarter of high operational efficiency. Our recurring earnings per share reached BRL 0.29 per share, a growth of almost 30% when compared to the fourth quarter of last year. Regarding new products, in November and December, we brought to the market new weekly option expiries for the Ibovespa global financial event contracts and the family of products linked to the S&P B3 Ibovespa VIX Index, reinforcing our strategy to broaden our portfolio and offer new hedging and exposure alternatives to investors. Still in the product pipeline, we received very recently authorization from CVM to launch the digital options on interest rates, FX, bitcoin inflation and GDP for professional investors at this moment. Our goal is to continue to work to offer this type of products to more investors and to expand also the products across other asset classes. Another important milestone was the launch in February of this year of the new positioning of B3's data and applied intelligence business under the new brand called Trillia which brings together Neoway, Neurotech, the infrastructure for financing unit, PDtec and DataStock reinforcing the construction of a new culture and strengthening our data and analytics offering. Thank you very much, see you soon. Operator: [Operator Instructions] Our first question comes from Renato Meloni from Autonomous Research. Renato Meloni: Just two quick questions. Wondering if you can just give some perspectives for ADTV for the rest of first Q here, really solid numbers on 4Q, and I think we're seeing similar trends here, but I'm just wondering if you have a more informed view to share with us? And then secondly, I'm curious on AI here, if -- how you're discussing potentially with partners or internally any opportunities that you could capture by integrating like data that you have with AI offerings? And how are those discussions there going? Andre Milanez: In relation to the ADTV, we saw improvements as you've seen in the numbers during the last quarter. January has continued that trend we already released the operational data on January and the average volume in January was around BRL 33 million, BRL 34 billion. February is still showing a good trend with volumes until now going over that mark. So far, it has been a positive trend that continued throughout January and February. As we discussed mainly so far, driven by international investors that have been allocating in equities. Regarding artificial intelligence, we have been exploring opportunities in terms of efficiency in software development and activities that can be -- can benefit from the use of AI. Last year, I think it was a year where there was a lot of knowledge building throughout the organization on the tools and how to use it. And we started to see an increase in the usage of those tools in daily activities in several areas throughout the company. But there is also a lot of opportunities particularly on the data side. Some of our offerings already have the use of artificial intelligence with machine learning and stuff, but we do see room for continue to improve that with Gen AI, with developing solutions that can be sold through agents and these kind of things. So this is going to be also an area of focus on the revenue side on how can we improve or increase our offering in terms of data solutions with the use of Gen AI. Operator: Our next question comes from William Barranjard from Itaú BBA. William Buonsanti Barranjard: I have two questions. The first one regarding the ADTV, right, you told us it's going strong in the first quarter. I would like to understand how the margins charged here is faring. If it's similar to what we saw in the fourth quarter if it's going down due to volumes and higher discounts to those volumes or not? And I have a second question regarding predictive markets. Last year, December, we've heard an interview from [ Juan ] from [ Kalshi ] that they were willing to come to Brazil. I would like to understand how you see B3 going forward acting in this market if this eventual [ Kalshi ] operation here in Brazil is something that you worry about or is a different business that you don't want to go to? Those are the two ones. Andre Milanez: I'll start with the second question, and then Fernando can comment on margins. As we discussed during the presentation here, we are moving towards this agenda of prediction markets, digital options. We just received approval from the Securities Commission to launch the first digital options with certain financial indicators, bitcoin, FX, the Ibovespa index, GDP and inflation, those at this stage are going to be only allowed or for professional investors. We are working towards expanding the access to these products to other types of investors and expanding the asset classes. So this is something that we will be exploring with the market over the course of this year which is not necessarily slightly different from what you've seen in other markets in terms of volumes. They are more concentrated towards other things such as sports and et cetera. This is not something that we will be pursuing at this stage. So it's going to be focused digital options or prediction contracts, whatever you want to call it, focused on financial indicators, which we believe could be very interesting and helpful to the market to investors. Fernando Tavares de Campos: So regarding margins, equities margins, given how our pricing scheme is structured, there are two main components that you have to think about it. So the first one is volumes. So when you think about volumes, this is something that probably is making our prices and our margins in the first quarter to be a little lower. But on the other hand, you have the mix. And the mix when you have more real money on the market, and that's what we've been seeing in the first 2 months for in flows, mainly from real money and massive managers and not HFTs, so this brings prices up a little. So all in all, we are seeing margins flat compared to the fourth quarter, given those two different dynamics. For the year, it's super hard to predict given that those two components, although the market is optimistic about our volumes, the mix is something that we do not have. It's super hard to predict. So hoping that answers your question. Operator: Our next question comes from Tito Labarta from Goldman Sachs. Daer Labarta: A couple of questions also. Just a follow-up on the margins, right? Because last time we saw volumes spiked significantly, like in '21, '22 margin reached 80%. I'm not saying margins are going to go back to those levels. But just at least in the short term, should we see some benefits to margins just given this spike that we're seeing in volumes and then that sort of normalizes over time, which is what we saw some what happened last time, just to try to think about how much room there is for maybe some short-term margin expansion as volumes sort of pick up immediately. Any color on that would be helpful. And then second question, you still have BRL 4 billion in IoC benefits that you can realize. Just any color on the time line for realizing that? And then also not how can we think about the underlying factory, particularly over the next few years as you have to incorporate a higher tax rate. Andre Milanez: Thanks for the question, Tito. So in relation to your point about margins our -- in general terms, our schedule of prices share some of the operational leverage with clients as we reach high volumes. Having said that, not all of that operational leverage is shared. So on average, prices can be -- average prices can be lower. But that's the benefit of having a business model that has this high degree of operational leverage. So we pretty much need the same cost structure, the same setup to deal with volumes of BRL 20 billion or volumes over BRL 30 billion. So pretty much all of that increase that we see on revenues will flow straight to the EBITDA to the bottom line. So directly to your point, it is possible that we see some margin expansion as a result of that benefit of the operational leverage that our business model has. Regarding the IoC question, so yes, we still have a balance of around BRL 4 billion to be distributed in terms of IoC that was identified not used in the past. This was only possible because of a judicial measure that we took plus the fact that, that was rule as part of a leading case by the superior court. We -- the time line for you to use that will depend a lot on the limits that we will have to deduct that interest on capital, which is the higher of half of our reserves or half of our net income in general terms. So if we have one of those limits allowing us to deduct or to use more of the IoC, we will do that. So as a result of that, this is probably something that we will be discussing and announcing more towards the second half of the year where we will have more visibility as to the level of those limits to maximize how much we can distribute in '26. Daer Labarta: Great. And just -- excluding that, how should we think about the tax rates, particularly as it's going to be going up a bit? Andre Milanez: Well, as from the first of April, we will start to see an increase in our social contribution by 3%. That will then be increased by another 3% starting in '28. For the -- as we discussed for the short term, this IoC from prior years will help to more than offset that impact. I think there are things that we have been working on to try to reduce the tax burden that this increase will have in the company. But we will be somehow affected by that increase. I think there are ways, as I said, to reduce the impact of those measures, but this is something that we are still working on. Operator: Our next question comes from Yuri Fernandes from JPMorgan. Yuri Fernandes: I have one on operating leverage. Given we are seeing an acceleration on revenues, especially on ADTV and all those questions about margins and how they should track. My question is on the OpEx and CapEx lines. We know you have a guidance right for this year. But just checking given you have new products, new investments, modernization, AI, all those things combined, any chance that in the case you are positively surprised by revenues? We could see maybe a little bit of more higher expenses. I know the business model is its pre-leverage, right? So more revenues not necessarily meaning more expenses, but just checking if we see better revenues, you could kind of anticipate some cost. And then I would like to ask also on data analytics and technology. I think these lines, they have been pretty good lately. There is a little bit of price component, but we also see new products or new verticals doing fine. And this quarter, Trademate that I don't remember if you had a number for revenues, you start disclosing like a number for revenues. So if you can comment on in general terms on those lines data and technology, how should we think how much growth could we expect for this year? Andre Milanez: So the first one about expenses or operational leverage. Look, I think we have been trying to continuously find efficiencies in our, let's say, more mature activities in order to finance investments that we will continue to do in new products and new services expanding our portfolio modernizing our infrastructure. So at the moment, we do believe that the current level allows us to do that, so we can have a more controlled growth in terms of our expenses and CapEx without having to compromise investments in modernization and expansion of portfolio, et cetera. And that also imposes us a challenge to continuously find those efficiencies. So I don't think the positive trend in revenues changes that dynamic. I think the only variable that we have here is in relation to the what we call the revenue-linked expenses, which we have less control, right, so which are almost a consequence of a positive performance in revenues. If that happens, those should grow. But as a direct -- almost a direct impact of the growth that we will see on revenue. So I think that remains being the case. In relation to the data and technology, I'll pass it on to Fernando to give you a little bit more color, but I can come back at the end as well. Fernando Tavares de Campos: Regarding data, I think, like you said, we -- it's been a sequential -- we have been seeing sequential good quarters, good growth and it's a quality growth. We have been seeing in 2025 of the growth in data and technology, mainly on the analytics close to 70% was in recurring revenues, which gives us confidence for the future. So like I said, it's been in all the verticals, credit, insurance, even sales and marketing, loss prevention, and it's been mainly with recurring revenues. Although in the fourth quarter, we have more what we say here, one shot revenues, which is common. You guys saw that on the last few years, but it's a quality growth on data. In technology, it's like it's super stable as well. We do have all the access to our platforms and we have inflation adjustment for prices, and we have new initiatives. Regarding Trademate, it's something that you know we've been talking about it for a few in the past. It's something that excites us. In the year, the revenue was almost BRL 20 million. It's basically concentrated still on govies on the trading of government bonds. And we do have plans this year to increase and expand that to the revenues in corporate bonds as well. I don't know if Andre wants to complement. Andre Milanez: Yes, I think the revenues are on Trademate are still being -- the prices there are still being subsidized at this stage. We are more focused now in increasing liquidity, increasing volumes that are being traded electronically. There's still a lot of room for further electronification in that market, but we are so far happy with the results that we have been achieving, but that can be going forward a more relevant revenue stream for the company besides all the benefits that the market will have as a result of that increasing electronification. I think the only thing I would add is that with the merger that from the companies that we have last year, we are more and more working with all these companies together that was, let's say, marked by the launch of a new identity and brand for this data initiative and the idea is to work more and more closely combining all the skills and capabilities of these companies or the businesses that we had. And in our view, this will help to maximize and accelerate the potential that we have in terms of new products and solutions within that segment. So yes, we are very excited with the potential here and the results that we have been achieving so far. Operator: Our next question comes from Kaio Prato from UBS. Kaio Penso Da Prato: I just have a quick follow-up from this question from Yuri, but basically expanded a little bit. You're talking about data and technology, but we have been seeing like really good growth in all of these revenues lines, excluding the volume-linked such as equities and derivatives. So if you look to the rest of the business, the noncyclical part, just wondering if you can share probably this is a little bit more predictable what could be, say, targets of revenue growth going forward for 2026 or even further? Just to understand if you can maintain this double-digit pace or so, if this is a base effect. We are also seeing quite strong growth on the vehicle real estate, the OTC business as a whole. If you can share a little bit more about your thoughts on that would be good. Andre Milanez: Look, as you said, I think that was part of our strategy. The diversification provides us with different sources of revenue, sources of revenues that are less dependent on the cycles without necessarily raising the benefits of having those also cyclical business that can grow a lot in more favorable moments such as the one we have been seeing or a brief moment that we have been seeing now in the beginning of this year. That's why we also wanted to reinforce or bring -- call the attention of investors and analysts to that point during our Investor Day last year. I think we do believe with the without going into the detail of every line, and I think Fernando can provide more color here, but we do believe that those businesses can continue to grow double digits, some products with maybe high double digits, others low double digits. But we do believe that these businesses have -- we have the ability to continue to grow them at that pace. A lot of that will come from further penetration of existing products, cross-selling of solutions, et cetera, but a lot of that also coming from new products that we have on the pipeline to launch and bring to the market. So at least for the -- for this year and next year, I think this is -- and part of that growth already in some cases, already guaranteed given the nature of recurrency that we have in certain revenue streams. Operator: Our next question comes from Maria Guedes from Safra. Maria Guedes: Congrats on the results. So you have been heard for lines that have been performing really well recently, have equities, fixed income data and technology. But derivatives has been some kind of a laggard during last year. And we saw some acceleration in the fourth quarter. But I just wanted to understand what are the expectations for 2026. I mean you have some potential catalysts. You have new products to be launched. You have some moves in interest rates once Central Bank starts to cut SELIC. So do we -- should we expect to see some growth acceleration in the line? Just wanted to hear from you. Andre Milanez: Look, I think when you talk about derivatives and looking to what we saw last year, right? First, I think we had a very high comparison base, '24 was a very strong year for certain asset classes, particularly for derivatives on interest rates. We have to remember that there was a lot of volatility in the interest rate curve. We saw -- we started with the Central Bank cutting rates and then very suddenly changing hands and starting increase rates, again, that helped or triggered a lot of volatility and therefore, a lot of trading activity on derivatives last year. So that made the comparison more difficult. We also had the event that we discussed previously in terms of the increasing margin requirements that have had an impact on the volumes for the crypto derivatives. But in general terms, I think with the agenda of continuously launching new products with an expectation that given that this is an election year, that we will have more volatility and also with, as you said, expectation that we might get in closer and closer to the beginning of an easing cycle, I think all of those factors will benefit that business segment, and therefore, we can expect a better performance here than we saw last year. But again, not all of that is under our control. But the perspective is definitely more positive for that segment for those reasons that I described. Operator: [Operator Instructions] This does conclude today's Q&A section. I would now like to invite Andre Milanez to proceed with his closing statements. Andre Milanez: I just wanted to thank you all for your support for joining the call and listening to us. I think '25 was a very positive year for the company, a year where we were able to see the results of our strategy, playing an important role in delivering growth A lot of initiatives that were launched and worked on doing '25 that are going to also be important to the future growth of the company. And we entered '26 very optimistic and very excited with the opportunities that we have ahead of us and hope to continue to count on your support. Thank you very much. Have a nice day. Operator: That does conclude B3's presentation for today. Thank you very much for your participation, and have a wonderful day.
Operator: Ladies and gentlemen, thank you for standing by. I am Yoda, your Chorus Call operator. Welcome, and thank you for joining the Alpha Bank conference call to present and discuss the full year 2025 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Alpha Bank management. Gentlemen, you may now proceed. Iason Kepaptsoglou: Hello, everyone. This is Iason Kepaptsoglou, Alpha Bank's Head of IR. Welcome to the presentation of our full year results. Vassilios Psaltis, our CEO, will lead the call as ever with a short summary, and then it's over to Vassilios Kosmas, our CFO, for the numbers. Q&A will come at the end of the call, and we should wrap up within the hour. Vassili, over to you. Vasilis Psaltis: Good morning, everyone, and thank you for joining our call. Let's start with an overview of 2025 on Slide 4, please. For 2025, we recorded EUR 943 million profit. This is up 44% versus last year. On a normalized basis, profit stood at EUR 907 million, up 5% year-on-year. Post AT1 coupon payments, earnings came at EUR 0.36 per share, and this is up 3%. We're proud of the growth we have been able to deliver. On the one hand, we have defended against the fall of interest rates due to our prudent positioning of the balance sheet. On top, we have leveled up our fee generation capacity enhancing our product factories. But at the same time, we have kept costs well contained as we continue to optimize the way we work and we have managed to instigate a lower recurring cost of risk through management actions and the overlays taken at the end of the second quarter. Growth has come with solid commercial trends. As you can see, net credit expansion reached EUR 3.5 billion for the year, and this is driven by corporates. Deposits were up EUR 4 billion for the year, and we have generated EUR 1.3 billion in net sales of assets under management. Thus by asset quality was stable. Return on tangible equity stood at 11.9% on a reported basis and 13.8% based on a normalized profits, while organic capital generation reached 206 basis points. We continue to position the business to maximize the recurring value we can create for our stakeholders in a sustainable way. And that value is increasingly distributed back to shareholders, as you can see on Slide 5. Here, you can depict that we intend to pay 55% of 2025 reported profits as an ordinary distribution, always subject to AGM and regulatory approval. That equates to EUR 519 million in distributions, which is a 6.1% yield on our current market cap. Since the reinitiation of dividends out of 2023 profits, we have been able to increase the payout ratio from 20% to 43% and now 55% with ordinary distributions up fourfold in euro million terms. We intend to split the 2025 ordinary payout equally between a cash dividend and a buyback. At EUR 259 million, this means that total cash distributions for 2025 profits will be more than 3x those of last year. Given the EUR 111 million interim dividend paid in December, the final dividend should be EUR 148 million or approximately EUR 0.065 per share. At EUR 259 million, the size of the proposed buyback is proportional to the one conducted out of 2024 earnings. It is also in line with feedback we have received from a wide range of shareholders. In 2025, we have also built a demonstrable track record of disciplined capital deployment in inorganic transactions, as you can see on Slide 6. AstroBank added scale to our separate presence, instantly positioning us as a top 3 bank in the country with a circa 10% market share and doubling local profitability while remaining in being neutral and CET1 right. Flexfin enhanced our data-driven factoring platform, unlocking access to small businesses and lower tier SMEs with a strong risk-adjusted returns and EPS accretion from year 1. AXIA forms the backbone of our new regional investment banking and capital markets platform, bringing market-leading advisory capabilities and immediate scale in Greece and Cyprus. All of the above transactions have now been closed, and we are progressing swiftly with full integration. We finished the year announcing 1 more deal which we can look at in more detail on Slide 7. Alpha Bank has reached an agreement on the key commercial and legal terms for a transformational combination of insurance activities in Cyprus, bringing together Universal Life and Altius Insurance. The agreement comprises of 2 parallel steps. The acquisition of 100% of our Altius Insurance and the merger of Universal Life and Altius into a single combined entity in which Alpha Bank Group will acquire a majority stake. To support execution and ensure continuity, we are forming a long-term strategic partnership with the Photos Photiades Group, Universal's Cornerstone shareholder. The Altius management team, which has delivered an impressive turnaround in the recent years, remains fully committed, and this is materially reducing any integration risk. Completion is expected towards the end of 2026, subject to regulatory approvals. We will keep investors updated as the process progresses in line with all legal requirements. This transaction will create one of the top insurance group in the country with a leadership position in accident and health and a clear path to long-term growth. The combination creates a platform with over 400 agents and more than 100,000 clients more than doubling our cross-selling potential for banking products and boosting our asset management revenues. It also allows us to actively shape the separate insurance market, building a powerful diversified insurance platform with strong positions across life, non-life and health. Universal brings an impeccable brand and deep expertise in life and health, whilst Altius contributes strong non-life capabilities, Bancassurance expertise and a high-performing sales force. The combined strength of the 2 franchises unlock a clear winning proposition, a broader, more competitive product suite, a more extensive distribution network, a stronger ability to serve households and businesses and an enhance customer experience and digital capabilities. These partnerships offers a rare opportunity to build the best quality insurance group in Cyprus, supported by exceptional talent from both Universal and Altius. It positions us as a major player in financial services with a scalable insurance platform, complementing our lending and wealth positions. It reinforces Alpha Bank's enduring commitment to Cyprus, a market where we already hold a strong banking presence and see attractive macro prospects. From a financial perspective, the transaction is fully aligned with our disciplined capital allocation framework and exceeds all group level M&A criteria. It delivers an EPS accretion of circa 2%, reflecting a strong profit uplift from Cyprus, a return on tangible equity accretion above 30 basis points and a minimal cost for equity Tier 1 impact of just 23 basis points consistent with our commitments. This is exactly the type of capital-light fee-based growth we aim to prioritize, scalable, accretive, resilient and consistent with our long-term strategy. Let's now turn to Slide 8, please. For yet another year, we have delivered on our promises. Results for 2025 have surpassed our original expectations. Revenues have come in line with guidance, and we have been able to counteract exogenous headwinds to our net interest income through a significant outperformance in fees. Costs have also come in line with guidance, showing our disciplined approach to cost management and cost of risk has been better than expected, as during the second quarter, we were able to reduce management overlays on provisions, releasing future cost of risk. The bottom line is that on EPS, on returns, on tangible book value and capital generation, we have been able to surpass expectations. At the same time, capital has been invested through value-accretive M&A to boost future revenues. Let's now turn to Slide 9, please. As you can understand, we're going to be a bit frugal with guidance this time around as our Investor Day is just around the corner. Vassilios, our CFO, will give you more details on the numbers in a minute, but I would like to highlight 1 or 2 things. First, 2025 was a fantastic year for us. We have been fortunate to produce more than EUR 940 million profits for our shareholders. But admittedly, our recurring profitability stood closer to EUR 907 million. Secondly, we have -- we need to be cognizant of the fact that 2026 is a transitional year for us. We are razor focused on integrating the acquired entities, but quite reasonably, we will not see the full benefit of the effect of synergies from year 1. The bottom line is that we expect to deliver 11% growth on normalized earnings. Credible recurring earnings growth is the natural outcome of our strategy and what we believe will continue to differentiate us going forward. The rest I'm afraid we'll have to wait until our Investor Day. And with that, Vassili, over to you. Vassilios Kosmas: Thank you, Vassili, and hello from my side. I'll start from where you left and talk about the guidance for 2026, and then we can move to results. Starting with the bottom line, we expect EPS to reach circa EUR 0.40 in 2026. Remember that this is on a normalized basis post 81 coupons. To make things easier, this translates into profit of circa EUR 950 million or circa EUR 0.39 of reported EPS, in line with current consensus expectations. Before we look at the recurring side, let's keep in mind of some one-offs to take into account. We have a voluntary separation scheme that we expect will cost us about EUR 30 million and we also need to take into account a EUR 20 million restructuring charge for AstroBank. So underlying profits are close to the EUR 1 billion mark. Just to be clear, it is before the full phasing of synergies from our positions. In terms of individual components, NII is expected to surpass EUR 1.7 billion. We're cautiously assuming a 3-month Euribor of 1.9. Clearly, volumes will be a tailwind. We expect mid- to high single-digit growth in loans with circa 90% of credit expansion coming from corporates. We expect this growth to be funded by deposits with no real change in the mix between time and core. We also aim to grow the securities book closer to the 25% mark of the asset base. The other, with EUR 1.5 billion of yield accretive reinvestments we have, the securities book will provide an additional tailwind. The stock of time deposits will also continue to reprice towards front book levels with a benefit of circa EUR 20 million from Q4. All in, the cumulative benefit of the above equates to circa EUR 120 million versus Q4 annualized NII levels after we adjust for AstroBank. There are, however, 2 clear headwinds. The first is the cost of increased wholesale funding issuance as we grow the balance sheet. The second and equally important is that we expect loan spreads to drift lower for the stock by another 10 basis points on account of competitive tension. Fees should land close to EUR 600 million mark versus EUR 510 million we reported for 2025. There are a couple of important things to note here. In organic growth, mainly coming from AstroBank and AXIA should bring in about EUR 30 million more year-on-year. So the pro forma starting base closer to EUR 540 million, we expect to grow that at a double-digit rate. Growth in real estate income previously in other income should bring in more -- should bring in more than EUR 10 million year-on-year on account of recent investments. The remaining EUR 50 million is split between lending and transaction banking, circa EUR 20 million on account of increased penetration and corporate-related fees as we continue to leverage our relationship with UniCredit. Growth in asset management with EUR 1 billion of expected net sales and higher year-end balances, bringing together an additional EUR 20 million; and finally, international business and expansion capabilities as well account for the rest. Based on the above, fees should reach to above 25% of revenues. While revenues should land above EUR 2.4 billion, growing by just under 10%. First, we expect to extract some synergies from the AstroBank acquisition. Those are more likely going to materialize in 2027. As anticipated last year, we don't expect a repeat of admittedly stellar performance for 2025. So underlying cost growth should revert to 3% or 4%, with a cost-to-income ratio edging towards 40%. No news on cost of risk. We still expect 45 basis points going forward. Income from associates would increase to EUR 50 million and that brings the pretax of slightly above EUR 1.3 billion. Last, in terms of tax rate, we expect 26% going forward. Moving to results on Slide 11. Nothing notable to report in terms of one-off items other than some tails, et cetera NPE transactions. Reported normalized profits at EUR 237 million and EUR 225 million, respectively, inching towards the EUR 250 million mark. In terms of full year numbers, as Vassilios mentioned, we have EUR 943 million of reported profits and EUR 907 million on a reported basis. This gives us a normalized EPS of EUR 0.36. With that, let's move to next slide and talk about the underlying results and the main P&L items. Operating income was up 12% quarter-on-quarter, largely driven by more normal quarter for trading as well as the addition of AstroBank for 2 months. If you exclude the effect of these 2 items, growth was still respectable 5% in the quarter on the back of solid performance for fees and I will get into that a bit. Overall revenues in line with our above EUR 2.2 billion guidance. At EUR 233 million costs saw a significant uptick versus third quarter due to the anticipated seasonal effects as well as the inclusion of AstroBank. Overall, we still landed well within our EUR 870 million guidance for the year. Not sure one can find many banks in Europe who have achieved a decrease in absolute OpEx during 2025. Impairments came in at EUR 62 million for the quarter, bringing the cost of risk to 58 basis points for the quarter and 48 basis points for the year versus our 45 bp guidance. I've already talked about profit. So let's move to the next slide on the balance sheet. On Slide 13, strong finish for the year for performing loans, up 5% Q-on-Q, including AstroBank or 3% if we exclude it. Year-on-year, that same figure came in at 8.3%, better than the original guidance. Customer funds were also up 4% in the quarter or 1.4%, excluding the AstroBank with a year-on-year increase at 8.4%. Tangible book value down in the quarter, but if we had the interim dividend in the amount spend of buyback, it's actually up 2.1% and then on capital, we stand at 15% in terms of fully loaded CET1 down versus Q3 on account of the completed acquisitions. On Slide 15, we show the 2 main components of revenues. NII was up for another quarter, continuing the upward trajectory. Most of the increase is attributable to consolidation of AstroBank. On the remainder, we continue to have good tailwinds from volumes on the loan side, while loan spreads continued to be a headwind. Most of the increase in contribution of the securities book came from AstroBank this quarter. Deposits continue to be a tailwind on account of repricing. And then in funding, we have average balances for debt outstanding, where this is counterbalanced by lower cost. On the fee and commission side, I should first highlight that we have introduced a new accounting policy that looks at income from real estate separately, given it has now gained more significance in our footprint. On quarterly basis, and again, excluding AstroBank, fees were up 19%. In Euro million terms, the biggest delta was business credit-related fees, but we've also seen a very strong result in both asset management as well as real estate income. Moving on to Slide 15 and take a look at loans and customer funds. Performing loan balances reached EUR 37.5 billion. This is up 5% on a headline basis or 3% including AstroBank with EUR 1.25 billion net credit expansion in the quarter. Another strong quarter with EUR 4.2 billion of disbursements and similar partners before with corporates, including SME, driving growth evenly spread out across sectors. Year-to-date, net credit expansion has reached EUR 3.5 billion, clearly outperforming our guidance. Spreads continue to be under pressure, but we remain disciplined in our underwriting criteria. As such, we will avoid deals or refinancings that do not meet our own credit criteria and are not accretive to our shareholders. Turning to customer funds, another quarter of solid growth, bringing the total for the year to EUR 4 billion, half of that attributable to AstroBank. Note that most of the outlook for corporates relates to bond placements we led at the end of the previous quarter, something that we have flagged at the time. On AUMs, we continue to see good underlying net sales, EUR 300 million this quarter, brings the total for the year to EUR 1.3 billion and AUM growth to 21% once we include valuation effects. On asset quality, Slide 16. With the NPE ratio flat of 3.6%. Coverage ratio has edged higher to 58%. The underlying picture remains solid, and we have no particular delinquency with flows as should be evident by the underlying cost of risk that stood at 40 basis points this quarter. We don't expect any meaningful surprises in the coming quarters. And at 48 basis points for the year, we feel comfortable with a guidance of 45 going forward. Then on Slide 17 on capital to finish it up. This quarter, we had 52 basis points for capital generation organically, and this includes everything, P&L, DPAs, the usual BDC amortization and RWA growth. This brings the total for the year to 206 basis points. As I mentioned, we have increased the payout to 55%. So the impact this quarter also takes into account the increase for the preceding 9 months, with a total for the year amounting to 213 basis points, including BBC acceleration. All in, CET1 ratio stands at 15% on a fully loaded basis or 15.4% on transitional. We're also showing here on the right-hand side, the main components that bridge the 130 basis point gap to our original guidance of 16.3%, 70 basis points attributable to acquisitions, 50 coming from management actions we took in Q2 on provisions, taking advantage of the positive one-offs we had and 20 basis points as a result of a higher payout. FYI, we have also provided you with a separate slide covering the main impact on the P&L and balance sheet from the 2 bigger acquisitions. With now, let's now open the floor for questions. Operator: [Operator Instructions] The first question comes from the line of Kevin Roberts with Goldman Sachs. Unknown Analyst: Just 2 questions from me, please. First, on fees. And then secondly, on costs. So on the fees, clearly, a strong print in Q4. Could you elaborate a bit, please, on the key drivers that you see looking ahead through into 2026 and where you're particularly focused as a management team? And then secondly, on costs, could you just discuss how you anticipate that mix of costs evolving over 2026, in particular, where you're directing that investment, whether it's in tech, personnel, other strategic builds? Vassilios Kosmas: Thank you. Let me start with fees first. I think fees -- on the fee side, there's, I would say, 3 engines that have driven growth in 2025, and we expect this to continue in 2026. This have to do with assets under management. The very fact that we continue exploiting the relationship with UniCredit along with the franchise means that more and more people trust us with their investments. We expect this trend to continue in 2026. Secondly, on transaction banking, we had a mix effect in 2025, a stress, if you like, a headwind on retail transaction fees from the government managers, which we do not expect in 2026, as this has been already absorbed and a headwind on corporate transaction fee, the very fact that we are able to offer solutions to our clients, which are unique, accessing all the 13 plus 1 UniCredit markets, which we expect to grow -- to continue growing in 2026. Last but not least, real estate. This is something that we have invested heavily during 2025. As I mentioned, there's another EUR 10 million coming out from this line even on the investments that we have already been completed in the 2026 numbers. Going to the cost side, I think we mentioned quite a few times in the past that Greek banks do face service inflation, both in staff costs and G&A that have to do with main suppliers. The -- this inflation is somewhere in the tune of 6% to 7%. I think this is very similar to what our peers have been showing. In our case, we have been managing to drive this down to 0 this year or, let's call it, 3% to 4%, our guidance for next year. The way we do that is we actively manage the refreshing of personnel through voluntary exit schemes, a reminder we're already underway for 1 month ago. And secondly, on the technology side, we're investing in new applications. But at the same time, we're very active in discontinuing the legacy applications, hence, not carry the burden of maintaining the old applications. These are the drivers who we feel will keep containing this line to 3% to 4% over the planning horizon. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Vasilis Psaltis: Great. Thank you. Short and sweet, as I would prefer it on a Friday. Everybody enjoy the weekends. I know it's been a long reporting season for everyone, and we're going to come back to you soon with the dates on the Investor Day. Thank you very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect the telephone. Thank you for calling, and have a pleasant evening.
Operator: Good morning. Before we begin, for those who need translation, the tool is available on the platform. [Operator Instructions]. Good morning, and welcome to Localiza & Co. webinar on the results for the fourth quarter and full year 2025. Joining us today are Bruno Lasansky, our CEO; Rodrigo Tavares, CFO; and Nora Lanari, Head of Investor Relations. Please note that this webinar is being recorded and will be available at ri.localiza.com where the full earnings materials are also available. The presentation is available for download on the IR website. [Operator Instructions]. We inform you that the figures in this presentation are stated in millions of reais and IFRS. We emphasize that the information contained in this presentation as well as any statements that may be made during the video conference regarding Localiza's business outlook, projections and operational and financial targets consists of the company's measurements, beliefs and assumptions as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Now I turn the call over to Bruno Lasansky, CEO, to begin the presentation. Bruno Sebastian Lasansky: Good morning, everyone, and thank you for joining our earnings call. The year of 2025 was marked by a consistent execution of our strategic priorities with significant progress on all fronts. The decisions made throughout the period reinforce our ability to adapt and generate value. highlighting the company's discipline in execution and the strength of our business model. In rentals, we continue to adjust the average daily rate throughout the year with an increase of 8.4% in car rental and 9.6% in fleet rental on a year-over-year basis. As a result, rental revenue reached BRL 19.6 billion, BRL 1.5 billion higher than 2024. Both business divisions recorded an increase in fleet utilization rates and a reduction in cost lines, especially in maintenance and theft, driven by greater scale in parts procurement and advances in fraud prevention and asset recovery capabilities. As a result, we closed the year with an EBITDA margin of 67% in car rental compared to 62% in 2024 and 72.6% in fleet rental compared to 66.8% in 2024. In Q4 2025, we reported a margin of 68.6% in rental car and 76.2% in fleet rental. In 2025, we continue to optimize capital allocation in fleet rental, significantly reducing our exposure to severe used vehicles from 31,000 to 18,000 assets and improving the profitability of the remaining contracts. We will maintain this trajectory throughout 2026, expecting to end the year with fewer than 10,000 units of this profile and ROIC spread within the company's target range. A relevant portion of the capital released was allocated to the priority segments of light vehicles and car subscription, which recorded a 17% increase in revenue in 2025. In Seminovos, more than 296,000 cars were sold during the year, an increase of 5.9% year-over-year, contributing to net revenue of BRL 22.2 billion, 15.6% higher than in 2024. Throughout the year, we expanded the Seminovos network with the opening of 21 stores and focused effort on improving the productivity of both the retail and wholesale teams, which resulted in acceleration of sales in the last quarter of the year. We ended the fourth quarter of 2025 with sales of over 77,000 cars, up 7.8% versus the prior year, setting a quarterly record and reaching an annualized pace of approximately 310,000 cars. This performance demonstrates the consistent progress of Seminovos even in a context of declining retail new vehicle sales, which fell 2.4% in 2025. The beginning of 2026 maintained a positive trajectory. In 2026, so far, the company has maintained a sales pace of approximately 59,000 vehicles sold in the first 2 months of the year, representing a growth of around 15% compared to the same period of 2025. We continue to consistently lead in innovation in our customer experience through convenience, digitalization and operational excellence. further strengthening our differentiation in customer satisfaction. To highlight a few advancements in Rent-a-Car, we expanded the fleet and number of branches offering digital pickups, surpassing 1.1 million fast contracts in the year. In addition, we intensified the use of artificial intelligence across the entire platform with special emphasis on Liza, our virtual assistant that guides customers through the reservation journey through chat, deliver higher productivity, agility and resolution rates with an NPS above 85%. In Fleet Rental and Localiza Meoo, we continue to enhance physical and digital journeys to provide a superior experience with more convenience and higher operational efficiency. In Localiza Meoo, the use of AI solutions enhanced the quality and performance of the sales and aftersales teams, positively impacting NPS and strengthening the customer experience. In addition, we further improved the Localiza Meoo app by introducing new features such as maintenance, scheduling tools, real-time mileage consumption monitoring and payment management. Additionally, we expanded the PitStop network, an innovation introduced by Localiza in 2019 and broadened its portfolio of services, increasing speed, predictability and convenience in preventive and corrective maintenance processes. In operations, we enhanced the processes and scale of the fleet preparation centers, ensuring greater speed, control and quality while also reducing the preparation cost of vehicles for Seminovos. In 2025, we also completed the system integration in fleet rental, consolidating operations, standardizing processes and enabling the capture of additional synergies. The system integration allowed the incorporation of Locamerica and the start of goodwill amortization arising from the merger with a positive impact on cash taxes in the quarter and in the coming years. Finally, in November 2025, the company announced the sale of its stake in Voll, a corporate travel and expense management platform. The transaction concluded in January 2026 represented approximately 5x return on Localiza's investment. We started 2026 with a solid competitive position and well prepared to capture the opportunities of this new cycle. Our priority remains completing the process of restoring returns to the target levels. To that end, we will keep our focus on Seminovos with the goal of reaching still in 2026, the quarterly sales pace necessary to return to the 15-month cycle in car rental. As we progress in reducing the average age and mileage of cars sold, we expect to capture additional efficiencies gains in the rental operation with a positive impact on the division ROIC and potential favorable effects on rental pricing. Additionally, with fleet rental and subscription return levels within the target, we will invest in developing more customized solutions for our clients, expanding our addressable market. Lastly, in 2026, we will increase investments in brand, branch and store network and technology, reinforcing our leadership in competitive advantages, always with a long-term value creation mindset. We thank our employees, customers, partners and shareholders for their trust and commitment throughout the year, and we remain determined and dedicated to building the Localiza of the future. Now I'll turn it over to our CFO, Rodrigo Tavares, for overview of the results. Rodrigo Tavares Goncalves de Sousa: Thank you, Bruno, and good morning, everyone. The strong progress across the 6 priorities defined for the year, as previously highlighted by Bruno, supported the delivery of solid results. We ended 2025 with consolidated net revenue of BRL 41.8 billion, up 12.1% year-over-year. EBITDA reached BRL 13.8 billion, an increase of 15.4% versus 2024, reflecting the recomposition of rental pricing as well as productivity gains and efficiency cost management. Adjusted net income totaled BRL 3.4 billion for the year when annualized ROIC for the last quarter of 2025 reached 15.5% with a spread of 5.5 percentage points above the cost of debt, even with the higher effective tax rate impacted by the write-down of deferred income taxes from Locamerica in about 3 percentage points. This performance marked the company returned to its historical value creation spread range and paves the way for further progress through 2026. These results were accompanied by a significant increase in cash generation from rental activities, which combined with the reduction in renewal CapEx resulting from improvement in the mix and average mileage of the car sold totaled BRL 6.3 billion before interest payments in 2025, nearly doubling compared to 2024. Thus, we maintain a balanced capital structure with a near debt-to-fleet ratio at 0.57x. -- reinforce the robustness of our balance sheet and enhancing the company's financial flexibility. With return levels moving back to the historical range, the need for price -- our price pass-through in the car rental and fleet rental becomes more moderate. We will remain diligent on cost and efficiency and continue to scale Seminovos to rejuvenate the rent-a-car fleet. These improvements, together with goodwill amortization from the merger, which reduces cash taxes, will continue to support cash generation and deleverage. Supported by adequate capital structure and the expectation of solid results throughout 2026, we are committed to completing the process of restoring the ROIC spread. I'll now hand over to the Head of IR, Nora Lanari, to present the details for the last quarter of 2025. Nora Lanari: Thank you, Rodrigo. Turning to the details of the results on Page 2, we begin with the Car Rental division in Brazil. In Q4 '25, net revenue of the Car Rental division reached BRL 2.8 billion, an increase of 8.8% compared to Q4 '24, driven by a 1.8% rise in volumes and by the increase in the average daily rates. In 2025, revenue totaled BRL 10.4 billion, an 8.1% increase over the prior year, mainly reflecting the expansion of the average daily rate supported by stable volumes. Moving to Page 3. We present another quarter of average daily rate expansion, closing the period at BRL 156.8, a 6.3% year-over-year increase. The utilization rate reached 80.3% in the quarter. This performance reflects our continued focus on productivity and the recomposition of return levels. We ended '25 with an average daily rate of BRL 150.8, up 8.4% year-over-year and a utilization rate of 79.7% -- turning to Page 4. We highlight the Fleet Rental division, which posted net revenue of BRL 2.3 billion in Q4 '25, a 5.3% increase compared to Q4 '24. The reduction in volume versus the same period of last year reflects the continued decrease in exposure to severe usage vehicles from 31,000 cars in December 2024 to fewer than 18,000 in December '25. This trend will continue in 2026 with a smaller impact on our annual volumes. We expect to end the year with fewer than 10,000 cars severe usage and the return levels within the company's target range. For the full year, we ended with BRL 9.1 billion in revenue, an 8.6% increase compared to 2024. Moving on to Page 5. We present the average daily rate of BRL 106 in the quarter, an 8.4% increase compared to the same period of the prior year. We ended the year with an average daily rate of BRL 103.3, up 9.6% compared to 2024 and with higher utilization rate. On Page 6, we present the evolution of Seminovos sales in Brazil. In Q4 '25, we reached a new record for used car sales with 77,358 vehicles sold despite the seasonally slower quarter. Net revenues in the quarter was BRL 5.8 billion, up 15.6% versus Q4 '24. For the full year, we sold 296,452 cars, totaling BRL 22.1 billion in net revenue, a 15.1% increase year-over-year in Brazil. The quarter was marked by important advances in sales force productivity, lead generation and conversion as well as the optimization of the wholesale channel, all essential levers for achieving the sale pace required to complete the fleet rejuvenation process in the Rent-a-Car. On Page 7, we present the evolution of the average mileage of cars sold. The company continues to reduce the average mileage at sale, especially in the wholesale, which has supported higher selling prices and lower maintenance and preparation costs. Moving on to Page 8, we present the car purchase and sales volume. In the quarter, 101,067 cars were purchased, of which 73,683 were from the Car Rental division and 27,384 for the Fleet Rental division. Total sales reached 77,358 cars, a historical record for the company with 50,294 coming from the Rent-a-Car and 27,064 from the Fleet Rental. As a result, net investment in the quarter totaled BRL 3.4 billion. During the year, 286,347 cars were purchased and 296,452 were sold, resulting in a reduction of 105, 000 vehicles. This reflects the optimization of the fleet with productivity gains in car rental and the reduction of severe usage vehicle portfolio in the Fleet Rental division. Continue on Page 9, we present the average purchase and sales prices. In the Car Rental division, the average purchase price was BRL 84,700 and the average selling price reached BRL 73,100 in Q4 '25. For the year, the renewal investment was BRL 11,100 per car, substantially lower than the BRL 16,500 recorded in 2024 and reflecting the gradual process -- progress on the fleet rejuvenation process. In the fleet rental, the average purchase price reached BRL 102,200 in Q4 '25, reflecting a mix with higher participation of SUVs and executive models. The average selling price was BRL 80,400, resulting in a renewal investment of BRL 21,800 in the quarter. In '25, net renewal CapEx per car was BRL 20,900, a 9.9% reduction compared to 2024. On Page 10, we show the evolution of the end of the year period, fleet. The company ended 2025 with 655,716 cars in its fleet, a slight decrease compared to 2024, mainly explained by the portfolio optimization strategy in the Fleet Rental division, reducing our exposure to severe usage vehicles. Turning to Page 11. Considering our operations in Brazil and Mexico, consolidated revenues in the quarter was BRL 11 billion, an 11.7% increase compared to the same period last year. Rental revenues grew 7.2%, totaling BRL 5.1 billion, while Seminovos revenue reached BRL 5.9 billion, up 16.1% year-over-year. In 2025, consolidated revenue totaled BRL 41.8 billion, a 12.1% increase with Seminovos advancing 15.6% and rentals growing 8.4% year-over-year. On Page 12, we present consolidated EBITDA. For the year, EBITDA was BRL 13.8 billion, a 15.4% increase year-over-year. In the quarter, consolidated EBITDA totaled BRL 3.7 billion, up 12.1% versus Q4 '24. In the Car Rental, the quarter's EBITDA margin reached 68.6%, a 3 percentage point increase versus Q4 '24, driven by rental pricing recovery, efficient cost management and productivity gains. In the period, rental revenues increased BRL 225 million, while costs and expenses increased BRL 7.4 million, reflecting higher fleet utilization, lower preparation costs and higher tax credits. In Fleet Rental, the EBITDA margin of 76.2% in Q4 '25 represents a 6.4 percentage points increase compared to the same period of 2024. In the quarter, a new useful life review appraisal report was issued for severe usage vehicle, resulting in the recognition of BRL 49 million in additional tax credits referring to the 9 months ' 25 and aligning the pace of PIS/COFINS credits with the vehicle volume. In addition to the tax credit effects, maintenance and allowance for doubtful account lines showed meaningful improvement. As a result, year-over-year, we recorded an increase of BRL 116 million in revenues and a reduction of BRL 112 million in costs and expenses. Seminovos posted a margin of 1.7%. The quarter saw higher advertising investment and early launch of the IPVA free campaign. In addition, 16 stores were opened during the quarter with costs that will be diluted as stores reach maturity. On Page 13, we show the evolution of annualized average depreciation per car. In RAC, average depreciation for the year was BRL 7,771. And in the fleet rental, it reached BRL 8,730 in the quarter, both in line with the company expectations. After the effects of the IPI reduction on new cars in Q3 '25, which affected Seminovos selling prices, we began observing greater price stability throughout Q4 '25. Turning to Page 14. Consolidated EBIT for Q4 '25 reached BRL 2.4 billion, a 17.8% increase versus the prior year. For the year, EBIT totaled BRL 7.8 billion, a significant increase compared to the BRL 5.8 billion recorded in 2024. On Page 15, we present the net income of the company. In 2025, we reported a net income of BRL 1.9 billion, affected by the green IPI totaling BRL 929 million or BRL 613 million after tax and the write-off of Locamerica tax loss carryforwards totaling BRL 937 million noncash. Adjusted for those effects, net income would total BRL 3.4 billion for the year. In the quarter, Net income totaled BRL 939 million, an increase of 12.1% compared to the same period of last year. To discuss cash flow leverage and ROIC, I would like to hand it back to Rodrigo. Rodrigo Tavares Goncalves de Sousa: Thank you, Nora. On Page 16, we present the free cash flow. In 2025, efficient revenue and cost management supported EBITDA growth, increasing cash generation in the rental business, even with the advance of payments to automakers of approximately BRL 2.2 billion in the last quarter of 2025. Rental activities generated BRL 11.5 billion in cash, of which BRL 4.1 billion were allocated to car CapEx, BRL 633 million to reducing accounts payables to automakers and BRL 437 million to investment in other fixed assets. Thus, free cash flow before interest and other effects totaled BRL 6.3 billion, an increase of BRL 3 billion compared to 2024. On Page 17, we present the evolution of the debt. We ended the year with net debt of BRL 31.1 billion, an increase of 3% to the end of 2024, mainly explained by the advanced payment of approximately BRL 2.2 billion to automakers in the last quarter of 2025 at a rate of 115% of the CDR. Moving to Page 18, we present the company's debt profile and cash position. The company closed the quarter with BRL 11.8 billion in cash, enough to cover short-term debt and obligations with automakers. Considering the funding and repayment carryout in January 2026, the cash position would be BRL 11.1 billion. We'll continue to active our active liability management, seeking opportunities to extend duration and reduce funding costs. On Slide 19, we present solid debt ratios. We closed the year with debt ratios at comfortable level, evidenced mainly by the net debt to the fleet value indicator even with the advanced payments to automakers. Lastly, on Page 20, in 2025, the company posted an improvement in adjusted ROIC, which ended the year at 14.6%, resulting in 4.7 percentage point spread over the cost of debt post tax despite the 1.4 percentage points increase in the cost of debt itself. The annualized ROIC for the last quarter of 2025 reached 15.5% with a spread of 5.5 percentage points, returning to the historical 5 to 9 points above cost of debt. We now are available to take your questions. Nora Lanari: We have the first question, a written one from Lucas Barbosa from Santander and then the operator will open the mic for the remainder questions. Lucas asked about Seminovos. If we could comment on what we are seeing in the dynamics of the wholesale, whether we are seeing the wholesale demand on a consistently manner or any indicative of the level of stocks in the wholesalers? Bruno Sebastian Lasansky: Thank you, Lucas, for the question. Typically, what happens is that in December, the wholesalers reduced their inventory, right? They do that exactly not to pay for IPVA taxes in the beginning of the year. When we start January, they start to -- it's a very strong purchase exactly to get back to the normal levels of inventory here. In the first 2 months of this year, we saw a strong demand for wholesalers in general with price stability. Operator: Our next question comes from Lucas Marquiori from BTG Pactual. Lucas Marquiori: Two questions on my side as well. First one on the -- it's still on the Seminovos discussions, right? And when we look at the margin performance for the Seminovos in the 4Q, you had the 1.7%. And my question here is more to try to understand what were the, let's say, the campaigning costs, the opening of new stores costs, all of these kind of incentivizing campaigns that you guys had, just to try to understand what were the effective kind of a margin regardless of those kind of campaigning costs? And also if you could comment already on the 2 months performance if we're seeing kind of a margin trend upwards versus the Q4? So this is the first question on the Seminovos margin. The second one is more on the strategic topic, right? Exactly out of the results is actually on the BYD's contracts you guys were set to have announced, right, on these 10,000 cars we're supposed to be buying from the Chinese. Just rough thoughts there. What's the goal? What's the strategy? If you could comment if there's room for that to improve, if there's any kind of a reading on the early performance of that contract, if that's kind of performing well in terms of depreciation that used to be kind of a concern of ours. So just kind of a general thought on this contract. Rodrigo Tavares Goncalves de Sousa: Thank you, Lucas. I'll take the Seminovos part, and then Bruno can comment on the BYD contract here. In the last quarter is typically starting by mid of November, you start these campaigns of IPVA, right? Because that's something that's usual, okay? That's not something that just Localiza does. It's general for the whole market. Otherwise, most of the wholesalers and retailers would postpone their purchase and not to pay those taxes. If you combine these effects that we had with more marketing expenses, we can give or take something close to 0.7% impact of the margin. So if you account for those effects, you should see in the first quarter a margin that is closer to the third quarter rather than the last quarter of the year, okay? But once again, those impacts were close to 0.7 percentage points in the margin of Seminovos. We started this -- the first 2 months and it was a solid result. Of course, that January is a very strong month. I explained that most of the wholesalers tried to buy to get their inventories to the regular level. But we've seen here a maturation of a lot of the actions that we are taking here in the past. And there are a few sales force management, some of the incentives maturation of new stores. So these first 2 months reflect the work that we have been doing in the last year, and it was a solid 2 months performance here. So to comment on the BYD, I'll pass to Bruno. Bruno Sebastian Lasansky: Thank you, Lucas, for the question. And I think that the BYD deal actually, it's a confirmation of what management has been talking about. When you start seeing these new players coming into the market and considering the significant CapEx and OpEx level that they have in the local manufacturing facilities, then Localiza becomes a strategic partner so that they get scale to dilute their fixed cost. They get a lot of predictability in a very long value chain and also they get association with the #1 and one of the leading brands in the country. And for us, this is additional supply and also continue to have the most modern and broader portfolio for our customers in Rent-a-Car, in subscription, in fleet and so on. So this is a pretty significant milestone for us. Of course, this is -- we announced 10,000 cars for a fleet of over 650,000 cars. So it's a first step, but an important one. And also, I'd like to comment that it's more geared towards hybrid vehicles. Actually, if you see what happened last year, hybrid vehicles grew 77% year-over-year, whereas electric vehicles grew 33%, which shows that for every electric vehicles sold last year, 2.5 hybrid vehicles were sold in the market, and I'm speaking about brand-new cars. So it's a positive milestone for us, additional supply for Localiza, better products for our customers. And before engaging into this agreement, we have been testing the cars to see customer acceptance, spare parts behavior and also how residuals were behaving. Of course, we don't have large volumes yet, but we see that those models that are scaled behave within our expectations so far. So that's what I can share at the moment. Operator: Our next question comes from Filipe Nielsen with Citi. Filipe Ferreira Nielsen: Congrats on the results. So my 2 questions here, I think the first color you gave on Seminovos was very helpful. Just trying to reconcile that with the depreciation trends. How do you see this conversating with how you're expecting depreciation going forward this year? Do you still see it stable? Or if Seminovos trends continue evolving in this direction, should we expect potential drops going forward this year? And my second question relates to ROC spread. The annualized number now back to historical levels if -- and your comments regarding the need to pass through prices a little bit lower. So just wanted to understand if we're probably getting closer to Localiza that resumes growth expectations? Or should we still see the company more stable in size and still seeking even higher ROIC spread before we get to this new growth phase? Rodrigo Tavares Goncalves de Sousa: Thank you, Filipe. First of all, the depreciation, the trend should continue the same as we are seeing right now. We still have to see solid results from Seminovos or upward trend in Seminovos margin before we have any discussion about changing the level of depreciation. So the trend, at least in the short and the medium term, should be the same as the one that we are seeing at this moment, okay? In the terms of ROIC spread, you're right, we are closer here to our targets. And so we don't need to pass-through as much pricing as we had in the past. But this year is still the year that we deliver the ROIC spread target of the corporation. So ROIC spread continues to be our main goal here. And -- but at the same time, we start to look for some opportunities for a new cycle of growth that probably will happen in 2027. So 2026 is still a year that we focus on optimizing our portfolio in our efficiency in passing through some pricing, not as much as we did in the past, so we can have our profitability levels close to what it was pre-pandemic. Operator: Our next question comes from Andre Ferreira with Bradesco BBI. Andre Ferreira: I have 2. So first, when we look at the first 2 months of used car sales growing 15% since we're looking at year-over-year, correct me if I'm wrong, but last year, you also had the IPVA discounts. And last year, Carnival was in March and this year is in February, which should play against, right? So are you optimistic for year-over-year growth in sales in March and could total quarter sales then exceed 80,000 units? And my second question is regarding maintenance and preparation costs. It's been a good surprise. In the fourth quarter, we see that down 2% year-over-year in the previous quarter, even more, but you also had more Seminovo sales in the fourth quarter, so more preparation. Any -- is there any color you can give regarding how much, if so, or at least a direction this maintenance line can go down in 2026? That's it from my side. Bruno Sebastian Lasansky: Thank you, Andre, for the question. I'll answer -- I'll take the first part, and then I'll hand it over to Rodrigo. As for this year, Rodrigo mentioned, and I agree fully that we started to see the fruition of the initiatives that we've been sharing with you and implementing. In particular, we see an increase -- a continued increase of the productivity per sales team member -- and that is a positive thing because we can potentially get more cars per FTE. That's also tied not only to training and development, but also incentives. And finally, we start seeing that the stores that we opened in the past cycle start maturing as well. We're not at the point where we're going to share our expectations for March, but it's -- you're right in that February includes the Carnival, which usually tends to be a slower week of sales. So we are excited about these 2 months, and we will continue to work so that we resume the 15-month cycle for Rent-a-Car by growing Seminovos. Rodrigo? Rodrigo Tavares Goncalves de Sousa: Yes. Andre, regarding preparation and maintenance costs, like the trend is positive. In preparation, of course, that you may have some variation depending on the quantity of the cars that we prepare, right? And since we're selling more cars in Seminovos, it is expected that we are preparing more cars and increase the turnover of the whole fleet of Localiza. Having said that, what we are seeing right now is the cost per car prepared dropping. So the efficiency is coming as part of the scale and part because we are rejuvenating the fleet as well. And the same can be said for maintenance. So for both costs in maintenance and preparation, once again, when you look at per car rented in maintenance or per car prepared in terms of preparation, the trends are positive here. Nora Lanari: Just to build on the fleet rental side, Andre, also there, as we reduce the exposure to severe usage car, we also expect a positive trend here, which in both cases, takes off the pressure from the pricing, as mentioned before. Rodrigo Tavares Goncalves de Sousa: Thank you, Nora, for complementing that. Operator: Our next question comes from Guilherme Mendes with JPMorgan. Guilherme Mendes: Yes. Two questions as well. The first one is regarding the automakers market. We continue to see increasing news about new OEMs coming to Brazil, especially Chinese ones. and a lot of discussions if this could continue to pressure vehicle prices. So I was just wondering how much of that you already incorporate on your depreciation rate? How much of that do you still see as a risk for vehicle prices going forward? And the second question is on the competitive environment for the Rent-a-Car and fleet management business. If you can share some details of how competition has been behaving in these 2 segments. Rodrigo Tavares Goncalves de Sousa: Thank you, Guilherme. You're right. There is a lot of new entrants in the automaker segments, and it's a positive in the midterm at least because the more suppliers we have, the more oversupply we have, the more leverage we have in terms of the negotiation here. Having said that, our assumptions for depreciation are not expecting any kind of increase in residual values are not expecting any kind of inflation Actually, we are already embedding in the way that we price our vehicles a deflation of price. So we are somewhat taking into consideration this new market dynamic. So the depreciation and our pricing already reflects that dynamic that you described, okay? In terms of the competitive environment for both Rent-a-Car and fleet rental, in Rent-a-Car, we see a benign environment with players being disciplined about prices in general. In fleet rental, it's a little bit -- depending on the player, you can see some irrational pricing. But in general, the competitive environment has been positive. Operator: Our next question comes from Daniel Gasparete with Itau BBA. Daniel Gasparete: I would like to follow up on 2 questions that were already made regarding Seminovos and also appreciation, if I may. The first one is still on the Seminovos part. I mean, I apologize for exploring more about that because I think that is one of the most important information about the release. This January and February performance was very strong, even though even more so considering that, again, there was Carnival and you still have Selic of 15%. So I would like to explore more about your views about how do you think that will unfold throughout the year. Bruno commented on the beginning of the call that he's on track to delivering the amount of sales enough to reduce the fleet to 15 months, correct if I'm wrong. And you already mentioned in the last call that -- that should be around 350,000 cars. So I would like to confirm that if you guys are positive on that. I mean, if we're on track to deliver this 350,000 for the year, if it makes sense, if there's upside to that considering that we have lower selic and everything that you already did in terms of increasing productivity. So that will be the first question. I apologize if it's too long to understand more about how guys you are -- how you guys are positive about Seminovos. And secondly, if I may, on depreciation, I mean, Rodrigo was very clear right now regarding that he doesn't see room for a decrease in depreciation right now. But I'd like to understand more what you need to see? I mean you mentioned in the last call that you need to see margins remain at the high level for a couple of quarters. So I'd like to confirm that if we should see, for example, first quarter is rebound, so we're going to see first quarter and then second quarter, if you're going to wait until elections pass, so we know what's going to happen in the macro environment. What exactly do you need in terms of macro information or dynamics so you can feel comfortable about saying that, well, we have reached the peak. Perhaps we can think about lower depreciation rates looking forward since Seminovos is doing well. We are selling more cars, so on and so forth. And I apologize for stressing those questions again. Rodrigo Tavares Goncalves de Sousa: All right. Thank you, Daniel. Let me start with the second one, and then we can come back to the first one. In terms of depreciation, once again, as we were describing, we are still seeing new entrants. We're still seeing, as you say, high interest rates. So we want to be somewhat conservative here before we start reducing the pace of the depreciation. The Seminovos margin is the lead indicator, right? When we start to see robust Seminovos margin that is consistent quarter-over-quarter over-quarter, we can start thinking if you need to adjust our depreciation and maybe reduce. At the same time, we're always monitoring other variables such as the price of the market, as we said, the new entrants, models that are coming in and coming out. So there are a lot of variables here that we look. But the main one, the lead indicator is a consistency and the level of Seminovos margin that we have to see across a few quarters here before thinking about changing the levels of the depreciation. So that is one. Regarding the Seminovos and then Bruno can complement, I just want to clarify that the 350,000 is the pace that we need to get to the car the 15 months. Not necessarily, you're going to get to the 15 months by the end of this year. So when we start to sell at that pace, then it takes 15 months for you to get to the car to the 15 months. But so we are very close by the performance of these 2 first months to get to the pace that we need to get the cars to the 15 months. Then after we do that, it's a matter of time to rejuvenate the fleet itself. Daniel Gasparete: Great. I'm not sure if Bruno wants to complement something on productivity, how is going to see the productivity throughout the year? If not... Bruno Sebastian Lasansky: No. I think that Rodrigo covered well, Daniel. Thank you for the question. Operator: Our next question comes from Rogerio Araujo with Bank of America. Rogério Araújo: I have a couple here made on costs. The first one on tax credit, it has been somewhat higher than the tax rate of 9.25% for a couple of quarters now. Is this related to Unidas Incorporation, which is a one-off impact or maybe the concentration of technical reports or could it already be a strategic plan looking ahead into the beginning of a tax reform that is beginning, and we think it's going to keep the depreciation benefits of the assets purchased until the end of this year? Therefore, would remain seeing a higher tax credits than the 9.25% rate in the upcoming quarters? That's the first one on costs. And the second one on the other lines that called our attention on the ITR reports, there is bad debt costs and also the line of other costs in the breakdown. Is this a new level of net debt provisions in the fourth Q that we see, we should expect this level going forward or is there any kind of provision reversion? Also on other cost line, if you could address what enters there? And if this reduction is sustainable as well? Rodrigo Tavares Goncalves de Sousa: Rogerio, in terms of the PIS/COFINS, we are actually catching up right? Before the incorporation of we're not doing the appraisal reports. And after now, we were doing them regularly. So you have this catch-up effect that temporarily leads to a credit that is slightly above the debit, as you mentioned here. In this quarter, particularly, we had the appraisal reports of the severe usage business unit here, which led to increase physical fees credit, okay? We should see going forward a more normalized level. So this is something that we were supposed to taking those credits if you were doing this appraisal records before the incorporation. And now, as I said, we are catching up. And then you have 2 strong quarters in that sense. In the first quarter, you should see somewhat more normalized level here close to the 9.25%, which is the debit. In terms of the cost and bad debt, thank you for the question. Throughout this year and by the end of 2024, we experienced some challenges, especially on the truck vehicles and in some specific areas here. So we were much more conservative in the way that we have credit. And now when I see the vintage, I see an improvement month after month. So when I look at this vintage, it's a very, very healthy vintage. So I think this level of bad debt is sustainable. Of course, that you may have some reversion of provision here in 1 quarter or another. But when I look at the whole quality of the credit that Localiza is giving, it's a much healthier 1 and we should see a much more normalized level of bad debt going forward as well. Nora Lanari: And Rogerio, on the other line, it is explained by the sublease of cars from Localiza to Locamerica and vice versa. After the merger, once we merge the 2 companies, the number declined, and we anticipate the number at a lower level. So the decline is sustainable, okay? Operator: Our next question comes from Joao Frizo with Goldman Sachs. João Francisco Frizo: I have just a quick follow-up on the used car sales, right? When we look at first 2 months data, it's a strong level. March is even stronger on a historical seasonal as-adjusted basis. So just wanted to hear from you guys your thoughts on the balance between accelerating sales, rejuvenating the fleet versus the spread between the new and used car prices. How should this evolve going forward? Rodrigo Tavares Goncalves de Sousa: Thank you. Regarding the spread between new and used car prices, we see stability. We just had access to a couple of days ago regarding March, and the trend is positive. It's even better than what we saw. So we see this somewhat stable here going forward. At the current levels of prices at this trend, we will continue to accelerate our sales. We are happy with the prices that we're selling right now. So if you have the chance to sell additional volumes, we will do so. Nora Lanari: Joao, just building up because I believe your question relates to the spread of buying and selling within the quarter that we report in the earnings release. We usually don't assume a specific quarter as a trend because the mix of cars we buy and sell might vary within a quarter per quarter. So we'd like to look on a moving average, usually the 12 months makes more sense. We saw specifically the higher mix of SUVs and intermediary cars impacting the purchase price of the cars, whereas in the Seminovos prices were affected by the campaign that reduces the selling price of the car with a slight increase in the spread between buying and selling in the quarter versus Q3, but not relevant on a year context, okay? Rodrigo Tavares Goncalves de Sousa: In that sense, if I can complement, in the first quarter, usually in January, you have a greater sales of economic cars as well. As I said, wholesalers tend to increase their inventory, most of their focus in economic cars. So that can affect the mix of sales. But in general, the trend in terms of buying and selling differences is positive. João Francisco Frizo: Okay. So if we look on a moving 12 months average, the dispatch will remain the same roughly, right? Is the best way to think about it? Nora Lanari: I would say, in the rental car, we still have room to improve the spread as we renew the fleet, but it's going to be more a function of the fleet renewal than anything else. Operator: Our next question comes from Jens Spiess with Morgan Stanley. Jens Spiess: Yes, so I mean the main questions have been answered. I just wanted to delve into the EV incorporation. I know it's -- it's obviously a small amount of cars within -- well, it will be a small amount, of course, within your fleet. But I think it could maybe give us some insight into the future and how things will evolve. So just trying to understand like the broader economics of what you're assuming. So first of all, how discounts versus traditional OEMs compare? What's the depreciation that you're assuming? Is it closer to 1% per month or how can we think about it? Because at the end of the day, lower discounts, higher depreciation, potentially lower utilization, you will have to price it accordingly and prices will probably be much higher. Rental rates will be much higher than with equivalent traditional OEM. So just trying to understand what are your expectations, what you're assuming and so on? Bruno Sebastian Lasansky: Jens, thank you very much for your question. I think that the reason why it's taken some time for piloting and testing for us before getting into this agreement that we just announced has to do with the fact that we were engaging with the OEMs in showing them these new OEMs in the country in showing them the value of the Localiza platform as I mentioned, in terms of brand awareness, in terms of scale, predictability selling to a AAA rated company. And after time piloting and testing, they actually came to appreciate the value Localiza has in the automotive industry. And the main focus is hybrid vehicles, less so on EVs, pure electric -- battery electric vehicles. We see that the electric vehicle are more for those use cases that run a lot of miles. So Uber drivers, last mile delivery and also some of the higher, higher-end luxury cars, but that's not kind of the large part of the market. We see that the EVs will have more adoption in big cities, but less so in the remainder of the country. So our purchase program is more catered to hybrid vehicles, which behave more similar to ice vehicles. We've been vocal over the last few years that we saw the future moving first into hybrid and longer term, potentially full electric out of the fact that the charging infrastructure is very small in Brazil, which is a continental large country and so on. And as for the unit economics, one would reckon that we would enter into such agreement once we get the terms that the company needs for an attractive ROIC spread scenario. So we piloted this vehicle on operational and residual value point of view, and we got to the terms and conditions that we deem necessary to get attractive returns for these new supply that is coming into the market. Operator: Our next question comes from Alberto Valerio with UBS. Alberto Valerio: I would like to back on that spreads subject about the same car when you buy and sell this car. I remember in 2024, you were talking about a recurring level of minus 2%, minus 4%, it was positive in the past, plus 5 plus 7. And current depreciation, I think, is tagging the minus 4 for 50 months. But if you -- we have more than 15 months would be a little bit higher than minus 4. How is your view going forward if this might change or not? Rodrigo Tavares Goncalves de Sousa: Alberto, thank you for the question. I think your assumptions are in line like when we still need to rejuvenate the fleet in order to get to the spreads for our assumptions here in the depreciation, right? So today, we're selling a car that's 20 months old. So when you start selling a car that it's 15, 14 months old, you're going to sell a car with a much more higher proportion in retail and with a much higher price, which will reduce the spread. So once again, this is aligned with our assumptions here. Alberto Valerio: Perfect. And if I may, Rodrigo, we have seen the beginning of this year some new models of and also this week, with coming at lower price from -- than the old models of 2025. Do you guys have any protection against this on the contract with the discounts or this might be a risk for this year? Rodrigo Tavares Goncalves de Sousa: We do not comment particular conditions that we have with the OEMs or these types of eventual protections. But this is something that happens, right? So sometimes you change the model, sometimes you do a face lift or you change completely the car. So it's not something that is unusual here for our industry. We usually try to compensate for with a higher discount or we buy less of those cars and something like that. But this is something that is regular to our market dynamics. Operator: Our next question comes from Pedro Bruno from XP. Pedro Bruno: I would like to go back to the growth discussion, especially in the Rent-a-Car and not the growth itself, but to the dynamics or to the, let's say, the -- how you are looking at the potential revenue growth, let's say, for this year and even a bit further than that? We have been hearing from, let's say, the industry, let's say, relatively optimistic scenario, which I think we see in a positive way thinking of discipline, as you already mentioned, et cetera. But I would like to -- if you can give us a little bit further details of how -- on how you're seeing the revenue management between eventually pricing versus volumes? And an embedded question there that how do you see, let's say, the limit to growth? If you right now see a limit more coming from, let's say, the revenue management in the rental side itself or if you have also it limited by Seminovos as you were still, let's say, tackling the challenge of reducing average age of the fleet, et cetera? So a bit more detail on that side, please. Nora Lanari: Pedro, thank you for the questions here. On the growth side, let me state again that the main focus of 2026 remain on the recovery of the ROIC spread. So probably the balance between price and volume growth will be taking towards a bit more pricing than volume per se, okay? We believe that by the end of the year, we should be in a good pace of ROIC spread and then we can resume a bit more of the growth of the company in 2027. The good news is that we will start paving or seeding for some of the growth during 2026, okay? But for now, is we don't need to pass through too much prices as we did. Rodrigo mentioned that in his comments. So it's going to be a mild passing through with a mild volume growth in the year. Revenues should post a decent pace of growth in the Rent-a-Car. In Fleet Rental, the focus is going to be on launching new products and more customized products, especially So we will see the growth 2026, but we are still decommissioning the severe usage, which still impacts the volume on a lower scale. And of course, in the meantime, we are continuing to be scaling up Seminovos so it won't be a bottleneck for the growth of the company in the future, okay? We've been constructive on the Seminovos, big topic of this call. We started the year with a strong pace of growth. And we do have, of course, interest rates moving down. It takes pressure not only in the pricing requirements for the Rent-a-Car, both fleet rental as well, but also accelerate or tend to help on the Seminovos side, which is very dependent on okay? So we are constructive. But this year is still a year of accomplished the mission of ROIC spread. Bruno Sebastian Lasansky: Thank you all for joining us today, and our IR team remains available for any additional clarifications. Thank you very much.
Operator: Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pason Systems, Inc.'s Fourth Quarter 2025 Earnings Call. [Operator Instructions] The contents of today's call are protected by copyright and may not be reproduced without the prior written consent of Pason Systems, Inc. Please note the advisories located at the end of the press release issued by Pason Systems yesterday, which describe forward-looking information. Certain information about the company that is discussed on today's call may constitute forward-looking information. Additional information about Pason Systems, including the risk factors relevant to the company, can be found in its annual information form. Celine Boston, CFO, you may begin your conference. Celine Boston: Thanks, Joanna, and good morning, everyone. Thanks for attending Pason's 2025 Fourth Quarter Conference Call. I'm joined on today's call by Jon Faber, our President and CEO. I'll start today's call with an overview of our financial performance in the fourth quarter and for the full year 2025. Jon will then provide a brief perspective on the outlook for the industry and for Pason, and we'll then take questions. Pason's results in 2025 demonstrate the resilience of our business model through lower industry activity. In 2025, Pason generated $419 million in consolidated revenue 1% higher than revenue generated in 2024, even through -- even though there were declines in industry activity in both drilling and completions markets. Despite a 6% decline in North American drilling activity, our North American Drilling segment generated $275 million of revenue and achieved a record annual revenue per industry day of $1.053 up 3% year-over-year. In Completions, Pason generated $59 million in revenue, a 12% increase from revenue generated in the segment 2024 despite a 24% decline in active frac spreads in the U.S. during that time. Our International drilling segment also saw challenging industry conditions and a strategic shift by a large customer in Argentina impacted revenue generated of $52 million in 2025, which was down from $60 million in 2024. Based on solar and energy storage segment grew 87% year-over-year to $33.7 million in revenue generated driven by increased control system sales, particularly in the fourth quarter. Adjusted EBITDA was $153.4 million in 2025 or 37% of revenue compared to $161.8 million or 39% of revenue in 2024, reflecting lower activity levels in Pason's drilling segments as well as more revenue generated in 2025 from earlier stage segments at lower margins. The company reported net income attributable to Pason of $53.2 million or $0.68 per share in 2025 compared to $121.5 million or $1.53 per share recorded in the prior year period. This primarily reflects the nonrecurring noncash gain recorded in 2024 related to the revaluation of our previously held equity interest in IWS. Pason generated $117.7 million in cash from operations in 2025, only a 4% decline from $123.2 million generated in 2024 benefiting from strong working capital management through more challenging industry conditions. In 2025, Pason invested $54.3 million in net capital expenditures compared to $69.1 million in 2024. Resulting free cash flow in 2025 was $63.3 million, a 17% increase from $54.1 million generated in 2024. With this free cash flow, Pason returned $62.7 million to shareholders through the quarterly dividend of $40.7 million and $22 million of share repurchases, while ending the year with a strong balance sheet and $77 million in total cash as of December 31, 2025. Now turning to the fourth quarter. Pason generated consolidated revenue of $109 million and adjusted EBITDA of $38.1 million or 35% of revenue in the fourth quarter of 2025. Pason's fourth quarter results include a record quarterly results for the company's solar and energy storage segment with $16.2 million generated in revenue by Energy Toolbase. As a reminder, revenue in this segment will fluctuate based on the timing of control system deliveries. The North American drilling industry continued to be challenging in Q4 of 2025 with reductions in both U.S. and Canadian land rig counts when compared to the prior year period. North American land drilling activity fell by 6% from the fourth quarter of 2024 to the fourth quarter of 2025. During that time, Pason held revenue for Industry Day consistent at $1,044. Industry conditions for Completions activity in North America also continued to be challenging in the fourth quarter of 2025 with active frac spreads in the U.S. declining by 23% from this prior year comparative period. Against this backdrop, the company's completion segment generated $13 million of revenue, which represents only a 5% decrease from $13.6 million generated in the fourth quarter of 2024, significantly outpacing industry conditions. Within our Solar and Energy Storage segment, operating expenses increased with the record level of sales given the variable cost nature of the segments. While within our drilling and Completion segment, operating expenses remain mostly fixed in nature, and the company continued to focus on disciplined cost management in the context of lower industry activity. Pason generated $38 million in adjusted EBITDA or 35% of revenue in the fourth quarter of 2025 compared to $42 million or 39% of revenue in the fourth quarter of 2024. Current quarter adjusted EBITDA reflects the impact of more challenging industry conditions on the company's drilling and completions revenue over a mostly fixed cost base. And further, a comparison of adjusted EBITDA margins year-over-year reflects higher levels of revenue generated by the company's Solar and Energy Storage segment at lower margins. We continue to maintain a strong balance sheet, ending the quarter with total cash, including short-term investments of $77 million and no interest-bearing debt. In the fourth quarter of 2025, net capital expenditures were $12 million, which includes investments in building out our [ valve ] management and automation technology within completion and the ongoing investments in our drilling-related technology platform. Free cash flow in the fourth quarter of 2025 was $16.1 million, only slightly down from $17.6 million generated in the same quarter in 2024 despite lower industry activity levels. With this free cash flow, we returned $13.1 million to shareholders, $10.1 million through our quarterly dividend and $3 million through our share repurchase program. In summary, 2025 was defined by challenging industry conditions across both drilling and Completions markets. Through this environment, though, we achieved record annual revenue per Industry Day in our North American drilling segment. We significantly outperformed industry conditions in our earlier stage completion segment. We increased free cash flow year-over-year, all of which was returned to shareholders through dividends and share repurchases, and we maintained a strong balance sheet. We remain very well positioned as we enter 2026. I'll now turn over the call to Jon. Jon Faber: Thank you Celine. Pason's 2025 financial results represented the eighth consecutive year for Pason's consolidated revenue growth outpace change in North American land drilling activity. Over that time period, we have strengthened our competitive position in North America, grown our international business and entered the completions in solar and energy storage markets. . This demonstrates that our growth prospects are not solely reliant on increases in North American land drilling activity. In 2025, consolidated revenue grew by 1% despite North American drilling declining by 6%. Notably, more than 20% of consolidated revenue for the year was contributed from our nondrilling segments, namely Completions and Solar and Energy Storage. The higher revenue contribution from these earlier-stage segments impacts consolidated margins in the short term, and we anticipate margins will improve as revenue grows in these segments. The compound effect of continued outperformance has been significant. Over the past 10 years, Pason's consolidated revenue has increased by 47% despite a 35% decline in the North American land rig count. Notwithstanding the margin effects of the revenue contribution from earlier-stage segments, our 2025 adjusted EBITDA margins of 37% were higher than 2015 margins and over the 10-year period, we have reduced our share count by 7%, returned over 560 million to shareholders through share -- dividends and share repurchases. And we completed the acquisition of Intelligent Wellhead Systems with no dilution to shareholders. In our drilling-related business where North American revenue per Industry Day of $1,053 represented the highest annual result in Pason's history, we continue to focus on delivering innovative products, best-in-class service and exceptional support to our customers. We look to increase both product adoption and price realization over time through delivering expanded features and functionality in both existing and new products. In our Completions segment, we were able to offset activity reductions among larger incumbent customers through the addition of new customers, resulting in a 12% revenue growth annually as compared to a 24% reduction in the average number of active U.S. frac spreads during the year. We have narrowed our focus in the market by shifting away from jobs, which utilize only a small number of ancillary products. This results in a reduction in active or IWS active jobs. At the same time, revenue per IWS state increases as we focus on larger jobs, which are more closely aligned with our unique equipment and capabilities and more profitable. In our International Drilling segment, a 14% revenue decrease in the year was largely the result of an operational shift of a large customer in Argentina away from conventional drilling toward more unconventional development. As unconventional drilling becomes a focus in international markets, we anticipate opportunities to achieve greater adoption of our more advanced technology, including those for the Completions market. Our Solar and Energy Storage segment posted an 87% increase in revenue from 2025 -- in 2025 to $33.7 million as a result of a record number of deliveries of energy storage control systems. With pending changes in the regulatory environment for renewable energy project developers, we have maintained a strong pipeline of new project opportunities. As a reminder, revenue from our solar and energy storage segment can vary significantly based on the timing of deliveries of energy storage control systems. We expect industry conditions to remain relatively flat over the next few quarters, driven by ongoing macroeconomic uncertainty and concerns about the potential for oversupplied oil markets. Increasing adoption of existing products and rolling out new products are both significantly more difficult in the current environment. We see, however, several supportive industry trends that should provide tailwinds to our efforts over the medium to longer term. Artificial intelligence benefits Pason as a result of increased demand for both high-quality data and power. Our position as the leading provider of drilling data and our efforts to expand our data management capabilities to the completions market, serves us well as AI technologies drive increasing demand for data as inputs to the artificial intelligence models being deployed. The anticipated growth in demand for natural gas as a source for baseload power for data centers is expected to result in increases in natural gas-directed drilling activity. Technology has played an essential role in driving efficiency improvements in drilling and completions operations, and we expect customers will look for further efficiency gains, driving greater demand for data and technology. We also anticipate that over time, the efficiency gains from technology will see diminishing returns, while geological degradation will accelerate as top-tier locations are drilled resulting in additional drilling and Completions activity to see in production. Pason also benefits from the additional data and technology requirements associated with increasing complexity of drilling and completions operations. Over time, we anticipate that overall decline rates for global oil and gas production will increase, driving higher levels of drilling and completions activity as a result of more natural gas-directed drilling, more offshore development and unconventional drilling, which have higher decline rates than oil-directed, onshore and conventional drilling. Our capital allocation priorities are unchanged and are driven by a focus on return on invested capital. We are making investments in areas where we can generate high returns on capital, which are not directly available to shareholders in the market, and we are returning excess capital to shareholders in a disciplined and flexible manner. Our highest expected returns on capital continue to come from the organic investments we are making to generate additional free cash flow in our existing businesses. Our experience through previous cycles has been that maintaining investments focused on technology development and service quality through periods of uncertainty provides the greatest opportunity to enhance our competitive position. 2025 capital expenditures of $54.3 million came in below the low end of our previously provided range of $55 million to $60 million and we anticipate our 2026 capital program will be broadly in line with 2025 levels at between $55 million and $60 million. We evaluate our capital program with a focus on increasing revenue, generating free cash flow and creating value for shareholders over time rather than simply in response to prevailing near-term industry conditions. We will continue to pursue shareholder returns over time through our regular quarterly dividend, which we are maintaining a $0.13 per share and share repurchases. This combination of shareholder returns provides disciplined returns to shareholders over time while retaining flexibility to adjust our capital allocation during times of changing industry conditions. Our priorities in navigating the current environment of uncertainty are centered on expanding our service and technology advantages, maintaining a strong balance sheet and returning capital to shareholders in a disciplined and flexible manner. And we would now be happy to take any questions you might have. Operator: Ladies and gentlemen, we will now begin the question-and-answer session [Operator Instructions]. The first question comes from Aaron MacNeil with TD Cowen. Aaron MacNeil: In the North America -- in the North American drilling market, you mentioned the revenue per Industry Day outperformance over the last 8 years. Based on the granular data that you see, has the outperformance in 2025 been a function of rig mix as the rig count declines, you get sort of higher quality revenue per Industry Day -- or are same-store sales basically growing based on new product adoption. I'm sure it's a bit of both. But I guess I'm wondering if the rig count either stabilizes in 2026 or increases, is it possible that you could see or be negatively impacted as maybe incremental rigs don't have the same kit that some of the ones do today? Jon Faber: Yes. Good question, Aaron. To your earlier or to your comment, it is always a mix of both. But I would say more of it would be, as you categorized it same-store sales and increased adoption of products. And that's true on both some of the new product side, but also on the existing product side. And so I think our expectation would be that we had a flattish environment that, that metric would be probably the same to slightly up this year based on how we would see it today. Aaron MacNeil: Okay. And just to maybe as my follow-up, a bit more details on that. Like -- is this the Mud Analyzer or is it other products? Like what's sort of driving that growth? Jon Faber: Well, I think the Mud Analyzer is the one that probably gets the most attention, right from ourselves and investors candidly. But it's not the only one. There's always a portfolio of products. There are some things that we have done that I would classify as kind of lower revenue per unit, but a lot more units going out. Mud Analyzer would be a higher dollar per unit with less units going out. But it's been a combination of a few things on the new product side and then adoption on the existing as well. Aaron MacNeil: Fair enough. Maybe I'll sneak one more in. Obviously, I got asked a question about the solar business this quarter, given the strength big picture, how are you thinking about that business in the context of the Pason portfolio? And what's sort of the end game for you with it? Jon Faber: Sure. So that business is a really good business as evidenced by the performance it's had. There's been a couple of things that have been pretty helpful for that business in the last year in particular, but even the last couple of years. I would say the competitive landscape in that industry has shifted in a way that would be to the positive for Energy Toolbase. And there's been some changes on the regulatory environment and some coming changes in the regulatory environment for renewable projects, which has caused people to probably accelerate some things on the project side to sort of remain captured under the existing regulations. So that's all been positive. But longer term, we think it's a great business. The question will become over time, how much is it consistent with our focus to say, look, at the end of the day, what we are best at is providing data that helps people make decisions around well construction activities in the oil and gas market. And so that becomes less clear over time, Aaron. And so we like the business a lot. We think it's excellent what it does. The question is whether it fits with a different set of capabilities than what the existing and core Pason business does. Operator: [Operator Instructions] We have no further questions in queue. I will turn the call back over to Jon Faber for closing remarks. Jon Faber: Thanks very much, Joanna. We do appreciate the time. Those of you taken on a Friday morning to join today's call. This is not a unique opportunity to ask questions to the management team. If you have questions, certainly don't hesitate to reach out to Celine or myself at any point, and we'd be happy to discuss further. And otherwise, we look forward to talking to you following the release of our first quarter results, which will happen in May. So take care, and we'll talk to you in a few months. Operator: This concludes the conference. Thank you, everyone. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Black Diamond Fourth Quarter and Year-End 2025 Results Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Emma Covenden, Vice President, Investor and Stakeholder Relations. Emma, please go ahead. Emma Covenden: Thank you. Good morning, and welcome to Black Diamond Group's Fourth Quarter and Full Year 2025 Results Conference Call. With me this morning, we have Chief Executive Officer, Trevor Haynes; Chief Financial Officer, Toby LaBrie; Chief Operating Officer of Modular Space Solutions, Ted Redmond; Chief Operating Officer of Workforce Solutions, Mike Ridley; and President of Royal Camp Services, Jon Warren. Please be reminded that our discussions today may include forward-looking statements regarding Black Diamond's future results and that such statements are subject to a number of risks and uncertainties. Actual financial and operational results may differ materially from these forward-looking expectations. Management may also make reference to various non-GAAP financial measures in today's call such as adjusted EBITDA or net debt. For more information on these terms and others, please review the sections of Black Diamond's Fourth Quarter 2025 Management Discussion and Analysis entitled Forward-Looking Statements, Risks and Uncertainties and non-GAAP financial measures. This quarter's MD&A, financial statements and press release may be found on the company's website at www.blackdiamondgroup.com, and also on the SEDAR+ website at www.sedarplus.ca. Dollar amounts discussed in today's call are expressed in Canadian dollars, unless noted otherwise and may be rounded. The format for today will be similar to prior conference calls. Trevor will start with a high-level overview of the company's performance and highlights from the full year, including our view of the current and forward-looking operating environment. Trevor will then pass the call over to Toby for a more in-depth summary of the financials including details from the quarter, and then we'll open the line for Q&A. With that, I'll turn the call over to Trevor. Trevor Haynes: Thank you, Emma. We appreciate everyone joining this morning for our fourth quarter and full year 2025 results conference call. First and foremost, I'd like to thank and recognize the exceptional team here at Black Diamond Group for delivering another highly successful year and continuing an impressive track record of performance. Before turning to the results, I want to acknowledge the team's unwavering commitment and focus to safety across the business, which resulted in a year-end TRIF of 0.47 and 0 lost time claims. Safety is a non-negotiable here at Black Diamond and everything we do, comes second to ensuring our employees and all those in our network return home safely at the end of each day. 2025 was another strong year for Black Diamond marked by the completion of 2 strategic acquisitions and oversubscribed equity financing, the expansion and extension of our asset-based credit facility and disciplined execution resulting in compounding growth across the company. Our annual consolidated revenue of $456.9 million increased by 13% and consolidated rental revenue reaching $162.2 million, up 10% from the prior year. Full year adjusted EBITDA of $126.4 million also increased by 12%. This performance has resulted in strong 5-year compound annual growth rates of 20% for consolidated revenue, 20% for consolidated rental revenue and 26% for adjusted EBITDA. Our growth strategies are backed by disciplined capital allocation, and we continue to prudently allocate capital informed by long-term asset return data and customer demand to maximize returns over the life cycle of our fleets. 2025 capital expenditures of $105 million was generally in line with the prior year, with the majority of capital going to contract-backed assets and strategic growth initiatives. So far this year, capital commitments are approximately $31 million, further underscoring the depth of opportunities across the business for continued investment and compounding growth. As of December 31, the company had $149.3 million of future contracted rental revenue, a modest decrease of 6% from the prior year, yet still robust and a leading indicator informing our stable outlook for the business over the coming quarters. All areas of the business produced strong results in 2025. MSS, again, generated record rental revenue of $107 million, up 14% from the prior year, contributing to adjusted EBITDA of $82.9 million, up 7% from the prior year, and average rental rates increased by 7%. WFS delivered total revenue of $233.1 million, up 30% from the prior year, contributing to adjusted EBITDA of $67.4 million, up 16%, which includes approximately 1.5 months of contribution from Royal Camp services, with that transaction having closed November 12, 2025. And LodgeLink progressed through its year of transformation and continue to scale as total trade value of $114.9 million, increased 21% from the prior year, generating record net revenue of $14.2 million, up 25% from the prior year. Looking back over a longer time frame, the performance from each area of the business is just as impressive with 5-year compound annual growth rates or CAGRs of 22% for MSS consolidated rental revenue, 22% for WFS consolidated revenue and 45% for LodgeLink Total Trade Value or TTV. These results highlight the effectiveness of our long-term growth strategies, best-in-class operational excellence practices and underscores the resilience in our platform given our distinct business units, comprehensive product and service offerings, diversified end markets and broad geographic footprint. While these metrics indeed showcase the success from last year, an immense amount of hard work took place across the business to bring these numbers to fruition. And it's this, I'd like to spend a bit of time on next. In 2025, there were several big wins that moved the business forward in a meaningful way. For the first time in over 8 years, Black Diamond completed an oversubscribed bought deal public offering of shares in late June, issuing approximately 4.7 million common shares at $9.10 for gross proceeds of approximately $42 million. We also completed the extension and expansion of our asset-based credit facility from $325 million to $425 million for 5 years at attractive terms and attractive borrowing costs. Both the bought deal and ABL expansion enabled us to later acquire Royal Camp Services for $165 million. The acquisition brings additional scale and enhanced service offering with integrated hospitality and catering and many long-term indigenous partnerships that complement our many partnerships across Canada. Since then, we have been working at integrating this high-quality business that's proving to have both values and cultural alignment with Black Diamond, perhaps even more so than initially thought. Our commercial and operations teams are collaborating closely on the breadth of bid opportunities in the pipeline and projects on the horizon. And we've begun the process of replacing third-party catering providers with Royal Camp's quality catering and hospitality services as it makes sense to do so, which has been well received by our customers so far. And we also complement -- we also completed a small tuck-in acquisition with Spencer Corporate Travel in Australia that's positioned us well to serve customers in that region and expand our offering into the Greater Asia Pacific. By nearly every measure, Black Diamond had a brilliant year, progressing our growth and operational strategies, serving our customers, collaborating with our partners, making a positive impact in the communities where we live and work and ultimately delivering significant value to our shareholders. As we look ahead to the first half of 2026, we'll continue to build on this foundation with steady operating conditions and supportive macro tailwinds anticipated in core end markets across North America and Australia. While correlating stable demand is expected across the platform, a degree of near-term variability exists when narrowing in on certain areas of the business. MSS will continue showing rental revenue stability with moderate growth in concert with organic fleet additions and modest average rev rate increases in line with inflation. Fleet utilization remains within our optimal range underpinned by stable customer activity across our diversified end markets including strength in construction and major infrastructure verticals, slightly offset by delays in the education pipeline, which we believe is as a result of shifts in public sector funding. Overall, the fundamentals of this area of the business remain healthy and the current demand we're seeing is conducive to further disciplined capital allocation to expand the fleet and our operations. Turning to WFS. Recent strong performance highlights the somewhat episodic nature of this area of the business. Given several onetime occurrences within the fourth quarter, including rental revenue from an early contract termination for a U.S. project and high sales revenue. In the near-term performance of WFS is expected to be steady, although the contract termination will impact rental run rate and utilization in the region as assets are gradually redeployed on new projects. Q1 2026 will be the first full quarter of contribution from Royal to the WFS division, which will form the new baseline for the combined entity. Over the next several quarters, we expect results for the base business to remain reasonably consistent, excluding periodic project and sales revenues, which remain hard to predict in terms of timing and opportunities. While elevated bidding activity and customer project planning associated with prospective nation building projects in Canada continues, this activity won't translate into meaningful growth or step changes that would materially increase utilization until late in 2026 or early 2027, as sales cycles in this area of the business are inherently long. That said, the outlook for WFS is brighter than it has been in several years, with significant catalysts on the horizon, which we are very well positioned to respond to. LodgeLink is set for accelerated growth as the completion of a substantial new suite of software Tools and Services is set to become available to the market later this year, which in turn will help to expand our customer base, increase wallet share among current customers and drive travel segment volumes, particularly in the U.S. and Australia, Asia Pacific. We continue to advance our software functionality to complement existing capabilities, providing customers with increased efficiencies, further differentiating our offerings to the market. Overall, we are pleased with our performance in 2025 and are confident in the company's stability in the near term. Our core rental platform and the recurring aspects of the WFS business are running well. Yet project-oriented or variable revenue streams related to sales is expected to be uneven in the first few quarters. When we look ahead at the full year, we are confident in our growth expectations, strength in the fundamentals of the business, including high-margin rental revenue growth, attractive returns on capital, consistent free cash flow generation and healthy operating leverage inform this view. Black Diamond has all the tool -- all the necessary tools required to continue to compound long-term growth and shareholder value. With that, I'll now turn the call over to Toby. Toby Labrie: Thanks, Trevor, and good morning. I'm pleased to provide additional context on the results. Building on what Trevor covered, I'll provide some specifics around our fourth quarter, fleet utilization and performance, our balance sheet position and then open the line for questions and answers. With respect to the fourth quarter results, consolidated revenue of $144 million grew 9% and adjusted EBITDA of $38.9 million, increased 5% from the comparative quarter. Consolidated rental revenue of $44.5 million increased 16% from the comparative quarter due to increasing fleet size and rental rates, partially offset by a decrease in utilization by 460 basis points to 72.2% for the quarter. While MSS total revenue for the quarter of $53.7 million was down 26% from the comparative quarter, this is primarily driven by the typical variability seen in sales revenue, which decreased by 50% to $14.3 million. This was because of the unusually high levels in Q4 2024 as sales that had delayed earlier in the year were recognized within that quarter. Non-rental revenue in MSS was $12.4 million, down 32%, primarily due to lower installation revenue from reduced sales activity. Q4 MSS utilization of 77.6% was down 480 basis points. Despite this decline, the core of the MSS business, which we consider the stable recurring rental revenue increased by 4% to $27 million, driven by a 4% increase in fleet and a 3% increase in average monthly rental rate. The MSS business continues to focus on growing VAPS revenue to increase the value of our product and service offering to our customers and to improve the overall return on assets. VAPS revenue increased substantially from the comparative quarter by 30% to $2.6 million. WFS had a robust quarter, driven by stability in the base business, contribution from Royal and several onetime occurrences. WFS revenue of $90.3 million increased 51% from the comparative quarter, driven by increases in non-rental, large services and rental revenue of 122%, 108% and 39%, respectively. Rental revenue was impacted by the previously mentioned early contract termination in the U.S., contribution from Royal and modest growth in Canada and Australia. Sales revenue during the quarter was $23.8 million, down 3% or $0.8 million from the comparative quarter due to lower custom sales in Australia and the U.S. but still at relatively high levels due to custom sales in Canada. WFS utilization of 56.8% was down 630 basis points, leaving ample spare capacity for us to deploy assets as projects materialize from our very active bid pipeline. In 2025, net profit for the company increased 35% to $34.8 million. While increasing profit in the year is indeed indicative of our commitment to profitable growth, it must be noted that a portion of the profits in 2025 are from the receipt of insurance proceeds earlier in the year. Our year-end net debt was $328 million, up from $223.6 million at the end of 2024, largely due to the acquisition of Royal Camp that was funded by $150 million of cash drawn against the company's credit facility. With liquidity of over $96 million, we remain well positioned to fund growth opportunities, organic and inorganic as they arise. Currently, our net debt to trailing 12-month adjusted leverage EBITDA ratio is at 2.0x, which is at the low end of our target range of 2 to 3x. This provides us with significant flexibility given the continued strength of our balance sheet following the acquisition. The average interest rate paid on debt during the quarter was 4.35%, which was 101 basis points lower than the comparative quarter as benchmark interest rates continue to decline. Business' ability to generate stable and growing free cash flow supported by a strong balance sheet remains a defining characteristic of Black Diamond. In the fourth quarter, we generated $28.9 million of free cash flow, representing a modest 12% decline from the comparative quarter due to changes in noncash working capital. For the full year, free cash flow totaled $88 million, an increase of 10% from the prior year. Finally, we continue to progress through the ERP upgrade, which is expected to improve operational efficiency and support the company's long-term growth objectives. We are nearing the completion of this long and complex project and because of the continued efforts of our dedicated and skilled project team, it remains on schedule and on budget. To date, we have invested approximately $7.7 million with roughly $4.2 million remaining from the original budget. We anticipate the current phase from MSS and corporate will go live in Q2 2026. To reiterate Trevor's commentary, we remain confident in the performance of the business and the resulting continuation of our annual growth trends. The near-term outlook is balanced with a likely positive inflection point in later 2026, in line with progress around major nation building, infrastructure and resource projects in Canada. Our teams remain committed to rigorous safety and operating standards, and we'll continue delivering innovative solutions that meet and exceed our customers' expectations, which is ultimately how we sustain our aggressive growth trajectory. With that, operator, please open the call for questions. Operator: [Operator Instructions] And your first question comes from Kyle McPhee with ATB. Hamzah Faris: This is Hamzah on for Kyle. Starting off with MSS. For the modular space side of your business, your commentary suggests ongoing growth CapEx will be sunk into modular space fleet expansion. Can you help us understand budget levels. Will the growth CapEx for the segment be similar to the approximate $60 million in 2025? Or is the budget falling based on what you see with demand trends? Trevor Haynes: A little bit of trouble hearing you, but I think you're asking growth capital within MSS, if it will be -- how it would compare with last year's roughly $65 million. What we're seeing right now, and keep in mind, our CapEx for capital allocation is continuous. We don't work on an annual budget. So we're responding to demand through our system on a quarterly basis. So currently, we're at the end of December, we had over $30 million of committed capital. The majority of that is for organic fleet additions through our manufacturers. And with that visibility, I would suggest, Ted, that we're seeing steady demand, and so the absorption rate would be in line or perhaps slightly higher based on our larger footprint this year. Edward Redmond: Yes, I think that's right. We're seeing similar demand to last year. We look at our asset classes that are highly utilized and have good return on assets, and that's where we allocate our capital. So -- we're always purposing those opportunities. And I think the cadence that we're seeing this year is similar to last year. Hamzah Faris: Okay. Got it. And can you help me understand the optics around modular space fleet utilization, which has been directionally falling in recent quarters versus your messaging that you'll continue to spend on modular space fleet expansion, maybe your utilization is not actually falling in terms of units on rent versus the book value-based utilization metrics you report in your financials? Trevor Haynes: Yes. So a little bit more color on MSS utilization vis-a-vis the continued fleet additions. It really comes down to product line and region. But Ted, some color to what's happening there. Edward Redmond: Yes. So we did have a few large construction and education projects come off rent in Q4. So that's what drove that decline. We expect those units are going to go back on rent over the next few quarters on both education and construction projects. We -- a lot of our capital is allocated, what we call bid set projects. So up on projects that we're quoting on. And if we win the quote, it's -- we're buying the capital to fulfill a specific contract, so it's not on spec. And we only do spec CapEx where we have a high demand, high utilization asset that we have excess demand for. So that's how we manage our utilization. Hamzah Faris: Okay. Got it. And then last one for me. On the WFS segment. For the workforce side of your business, can you provide more color on the reason for the early contract termination you called out? And also when was the original contract maturity? What was the expected maturity on this contract? It would also help if you could quantify how much rental revenue or large services revenue will disappear in Q1 on the back of this contract termination before we see the next big demand wave start to materialize later in this year? Trevor Haynes: Yes. The nature of our projects is not uncommon for a client to complete a project before the contracted term is up, and they'll pay us out remaining rent, which is the terms of how our contracts work. But Mike, in this situation provide a bit of color on how we feel about the ability to reabsorb and... Michael Ridley: You bet, and in fact, in this particular case, this contract was actually renewed a couple of times over the better part of the last 5 years. So it's been a really nice contract for us. The fact that we had contracted on the extension to get basically rent paid is really good. The ability to get these assets out to work over the course of the year, I think, is really, really solid. Our pipeline is very active in the U.S. be it construction, oil and gas, mining, gold at $5,000 an ounce at Gold for Canada for that matter as well. So data centers are a big thing now that probably an industry we didn't talk much about a year ago. And all of a sudden, they're sprouting up everywhere. So there's opportunities unquestionably to get these assets back to work over the course of the year. Trevor Haynes: Important to point out the quantum of this acceleration of rent is not material in the terms of Black Diamond, but it did bolster the Q4 modestly. And then correspondingly, we don't have the run rate going into '26. That being said, Mike, that contract was coming to termination within about 6 months, within '26 anyways. Operator: Your next question comes from the line of Matthew Lee with Canaccord Genuity. Matthew Lee: Maybe another one on the Workforce Solutions side. U.S. utilization now is above 50%. Can you just talk about how you're going to deploy those units? Is there an opportunity to start selling a couple of those in the U.S. market? Can they be brought to Canada? Like what can we do with that capacity? Trevor Haynes: Good question. Mike? Michael Ridley: Yes, again, quite confident that we'll be able to get our utilization growing over the course of the year with the pipelines. Very active. There's lots of major projects, data centers, as I've noted. Oil and gas sector is fairly healthy as well. So we'll be deploying a lot of into Texas. As it pertains to the ability to bring those into Canada, they're coated for the U.S., so not really suited for the Canadian market. But conversely to that, sometimes there is the ability to send Canadian assets down to the U.S. market, but you can get variations from local municipalities and states, et cetera. So -- but -- and confident that these will get out over the course of the year. Trevor Haynes: Generally speaking, Matt, our view is we're not interested in selling our rental assets, and that's informed by what we're seeing in the activity in our active bid pipelines, et cetera. So we're much more confident that we're going to see our fleet going to work and generating cash for us, which we're more interested in right now than selling the assets. Matthew Lee: Right. I totally agree with that. If I'm thinking about a successful year in 2026, what would Workforce Solutions utilization look like by the end of the year? Trevor Haynes: That's a good question. With the combination of Royal, we've got about 6,000 -- we've got 12,000 rooms of capacity and somewhere around 6,000 of spare capacity, which positions us exceptionally well when you think about the number of projects, variety of projects and the scale of projects that we're looking at in North America and in particular, in Canada. What becomes difficult even though we're very active with these projects, they're complicated in terms of timing, permitting, contracting, et cetera, et cetera, which is why we caution that we've got visibility and demand, but what's difficult to forecast is the exact timing. And at the outset of these projects, there is a requirement to move assets into place or even before that, preparing the site, where the camp is going to go, mobilizing the assets, assembling them. And then we usually see sort of a ramp-up curve as the projects begin populating their complement of trades, et cetera. So we could very well or just ask what success looks like? Success would be translating a very active bid pipeline with highly prospective and being able to show that that's converted into some limited notice to proceed, some early works in preparation of sites and then beginning to show that operational revenue coming in and having visibility that there will be occupancy-related full turnkey rental and catering revenue under contract as we exit '26 into '27 on some of these larger projects. And so we don't look for sort of an incremental 1% of utilization at a time. This is going to move in chunks. We could be 15% step changes as larger TAMs get contracted and start mobilizing. So I'm not giving you an exact number because it's not an exact science, but that's what we anticipate happening over the next 6 to 9 months. And Mike, Jon, feel free to make additional. Michael Ridley: Yes. When I look at our base of business in Eastern Canada, we're expecting to see utilization growth in the East. There's a lot of mining activity, as I mentioned, $5,000 gold, mining companies are wanting to move real quickly to get to work and most of those projects have a camp requirement. So you have that, you have construction, you have data centers, like the pipeline is fairly active. And again, I'll go back 5, 6 years ago to our strategy of diversification. And while maybe some of these nation building projects may be a little bit slow off the hop, our strategy is -- continues to be very, very sound. And confident that we'll see utilization improvement over the course of the year. Matthew Lee: That's really helpful. 4 projects, 10 percentage points each at 95% utilization. So I'll just use that. Kidding. Operator: Your next question comes from the line of Frederic Bastien with Raymond James. Frederic Bastien: Question on balance sheet strength and your capacity and willingness to deploy that capital on future M&A? I think fair to say that before the excitement around workforce accommodation, we were really focusing or paying a lot of attention to what you might be doing on the space rental side. How do you feel about your capacity or your ability to deploy capital this year versus where you were maybe 12, 18 months ago? Trevor Haynes: I would say, if anything, we've got more firepower. We've got very strong free cash flow. The growth that we anticipate on the workforce platform will not require incremental capital in the near term because of the operating leverage of the current unutilized fleet capacity. And that leaves us strategically able to focus inorganic growth around our MSS platform. We love the fact that there's a lot of interest in the camp business again. I think it's a fantastic business. We've added, in our view, the best piece in the industry with Royal Camp as far as full turnkey catering goes. But our strategy has not changed. The core recurring stable revenue streams that we can generate with high returns on asset, on the MSS platform and what it does in terms of stabilizing our overall platform is super important to us, and we've got the balance sheet, Toby, to support pursuit in a very disciplined way, but looking to continue to organically grow MSS. And then if the opportunities present themselves to pursue inorganic growth to continue two things: One, building our business and showing how great this asset class is for long-term value creation. But also looking at the overall portfolio balance of Black Diamond, we would like all of our businesses to grow, but we need to accelerate our MSS business here. So I think we've got all the tools, Toby. Toby Labrie: Yes. And I think with our free cash flow of $88 million in 2025, expecting that to continue to grow in 2026. It gives us a lot of free cash from the business that we expect to be able to redeploy into the -- into growth of the business through organic and potentially inorganic growth. And as needed as well, we've shown that with strategic acquisitions in the past, we've been able to increase our facility sizes with those acquisitions as needed. So I think that ability is still there. So we're confident in our ability to continue to grow pursuing our strategy of organic and inorganic growth. Trevor Haynes: Net cash flow -- free cash flow from last year, you need to augment that with Royal. And so when we think about the cash we'll be generating to invest in the business, there is a step change there that occurred with the acquisition of Royal, which doesn't consume capital so much as it produces free cash flow. And Ted, we think there's a lot of white space for BOXX Modular in the U.S. There are some areas in Canada. We're still trying to get to economic size in those markets like Quebec and Eastern Canada, but the U.S. is a big focus, and we see great opportunity there. Edward Redmond: Yes. Our market share in the U.S. is still relatively low. So there's opportunities in the markets we're already in. And then there's lots of adjacent markets to our existing markets where the fairly low risk we can open up satellite yards, hire salespeople to cover additional adjacent markets. So on the organic side, there's definitely opportunities for growth there. And Trevor is always on the outlook for acquisitions. Frederic Bastien: You're definitely open for business on the M&A side, but -- do you have a feel for how your potential targets are -- is there an appetite for that now? Are they -- are the prices coming down? Just want to -- hoping to get some color on that, please. Trevor Haynes: Yes and no. I mean there's been a lot of consolidation in the MSS space in North America. And you could look at the other large public U.S. platforms, and you can see the evidence of that. We think multiples have perhaps come off because the public platforms of the traded platforms have come off their peak multiples. And that plus some other factors from a U.S. perspective with regard to concentration for competitive purposes from a regulatory perspective, also open up room for the smaller third or fourth market share platform, which we would be -- to grow more quickly with little resistant or less resistance. So then what you're pointing to is, and we find these platforms that are complementary and meet our quality expectations and come to a reasonable valuation, which would be accretive for us. I'm confident we can, but I wouldn't mislead anybody to suggest that it's easy. But I think you can look at our track record. I think we're pretty disciplined and we're well known in our industry. So the opportunities are there for sure. Very hard to predict when and what. So that's the difficulty in giving any sort of outlook or guidance with regard to M&A. Operator: And that concludes our question-and-answer session. I will now turn it back to Trevor for closing comments. Trevor Haynes: Thank you. Thank you all for joining and listening today and your interest in Black Diamond. And in closing, I once again thank our fantastic team across all of the Black Diamond platform for their good work and keeping each other safe. Thank you. Have a great day. Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good morning. Before we begin, for those who need translation, the tool is available on the platform. [Operator Instructions]. Good morning, and welcome to Localiza & Co. webinar on the results for the fourth quarter and full year 2025. Joining us today are Bruno Lasansky, our CEO; Rodrigo Tavares, CFO; and Nora Lanari, Head of Investor Relations. Please note that this webinar is being recorded and will be available at ri.localiza.com where the full earnings materials are also available. The presentation is available for download on the IR website. [Operator Instructions]. We inform you that the figures in this presentation are stated in millions of reais and IFRS. We emphasize that the information contained in this presentation as well as any statements that may be made during the video conference regarding Localiza's business outlook, projections and operational and financial targets consists of the company's measurements, beliefs and assumptions as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Now I turn the call over to Bruno Lasansky, CEO, to begin the presentation. Bruno Sebastian Lasansky: Good morning, everyone, and thank you for joining our earnings call. The year of 2025 was marked by a consistent execution of our strategic priorities with significant progress on all fronts. The decisions made throughout the period reinforce our ability to adapt and generate value. highlighting the company's discipline in execution and the strength of our business model. In rentals, we continue to adjust the average daily rate throughout the year with an increase of 8.4% in car rental and 9.6% in fleet rental on a year-over-year basis. As a result, rental revenue reached BRL 19.6 billion, BRL 1.5 billion higher than 2024. Both business divisions recorded an increase in fleet utilization rates and a reduction in cost lines, especially in maintenance and theft, driven by greater scale in parts procurement and advances in fraud prevention and asset recovery capabilities. As a result, we closed the year with an EBITDA margin of 67% in car rental compared to 62% in 2024 and 72.6% in fleet rental compared to 66.8% in 2024. In Q4 2025, we reported a margin of 68.6% in rental car and 76.2% in fleet rental. In 2025, we continue to optimize capital allocation in fleet rental, significantly reducing our exposure to severe used vehicles from 31,000 to 18,000 assets and improving the profitability of the remaining contracts. We will maintain this trajectory throughout 2026, expecting to end the year with fewer than 10,000 units of this profile and ROIC spread within the company's target range. A relevant portion of the capital released was allocated to the priority segments of light vehicles and car subscription, which recorded a 17% increase in revenue in 2025. In Seminovos, more than 296,000 cars were sold during the year, an increase of 5.9% year-over-year, contributing to net revenue of BRL 22.2 billion, 15.6% higher than in 2024. Throughout the year, we expanded the Seminovos network with the opening of 21 stores and focused effort on improving the productivity of both the retail and wholesale teams, which resulted in acceleration of sales in the last quarter of the year. We ended the fourth quarter of 2025 with sales of over 77,000 cars, up 7.8% versus the prior year, setting a quarterly record and reaching an annualized pace of approximately 310,000 cars. This performance demonstrates the consistent progress of Seminovos even in a context of declining retail new vehicle sales, which fell 2.4% in 2025. The beginning of 2026 maintained a positive trajectory. In 2026, so far, the company has maintained a sales pace of approximately 59,000 vehicles sold in the first 2 months of the year, representing a growth of around 15% compared to the same period of 2025. We continue to consistently lead in innovation in our customer experience through convenience, digitalization and operational excellence. further strengthening our differentiation in customer satisfaction. To highlight a few advancements in Rent-a-Car, we expanded the fleet and number of branches offering digital pickups, surpassing 1.1 million fast contracts in the year. In addition, we intensified the use of artificial intelligence across the entire platform with special emphasis on Liza, our virtual assistant that guides customers through the reservation journey through chat, deliver higher productivity, agility and resolution rates with an NPS above 85%. In Fleet Rental and Localiza Meoo, we continue to enhance physical and digital journeys to provide a superior experience with more convenience and higher operational efficiency. In Localiza Meoo, the use of AI solutions enhanced the quality and performance of the sales and aftersales teams, positively impacting NPS and strengthening the customer experience. In addition, we further improved the Localiza Meoo app by introducing new features such as maintenance, scheduling tools, real-time mileage consumption monitoring and payment management. Additionally, we expanded the PitStop network, an innovation introduced by Localiza in 2019 and broadened its portfolio of services, increasing speed, predictability and convenience in preventive and corrective maintenance processes. In operations, we enhanced the processes and scale of the fleet preparation centers, ensuring greater speed, control and quality while also reducing the preparation cost of vehicles for Seminovos. In 2025, we also completed the system integration in fleet rental, consolidating operations, standardizing processes and enabling the capture of additional synergies. The system integration allowed the incorporation of Locamerica and the start of goodwill amortization arising from the merger with a positive impact on cash taxes in the quarter and in the coming years. Finally, in November 2025, the company announced the sale of its stake in Voll, a corporate travel and expense management platform. The transaction concluded in January 2026 represented approximately 5x return on Localiza's investment. We started 2026 with a solid competitive position and well prepared to capture the opportunities of this new cycle. Our priority remains completing the process of restoring returns to the target levels. To that end, we will keep our focus on Seminovos with the goal of reaching still in 2026, the quarterly sales pace necessary to return to the 15-month cycle in car rental. As we progress in reducing the average age and mileage of cars sold, we expect to capture additional efficiencies gains in the rental operation with a positive impact on the division ROIC and potential favorable effects on rental pricing. Additionally, with fleet rental and subscription return levels within the target, we will invest in developing more customized solutions for our clients, expanding our addressable market. Lastly, in 2026, we will increase investments in brand, branch and store network and technology, reinforcing our leadership in competitive advantages, always with a long-term value creation mindset. We thank our employees, customers, partners and shareholders for their trust and commitment throughout the year, and we remain determined and dedicated to building the Localiza of the future. Now I'll turn it over to our CFO, Rodrigo Tavares, for overview of the results. Rodrigo Tavares Goncalves de Sousa: Thank you, Bruno, and good morning, everyone. The strong progress across the 6 priorities defined for the year, as previously highlighted by Bruno, supported the delivery of solid results. We ended 2025 with consolidated net revenue of BRL 41.8 billion, up 12.1% year-over-year. EBITDA reached BRL 13.8 billion, an increase of 15.4% versus 2024, reflecting the recomposition of rental pricing as well as productivity gains and efficiency cost management. Adjusted net income totaled BRL 3.4 billion for the year when annualized ROIC for the last quarter of 2025 reached 15.5% with a spread of 5.5 percentage points above the cost of debt, even with the higher effective tax rate impacted by the write-down of deferred income taxes from Locamerica in about 3 percentage points. This performance marked the company returned to its historical value creation spread range and paves the way for further progress through 2026. These results were accompanied by a significant increase in cash generation from rental activities, which combined with the reduction in renewal CapEx resulting from improvement in the mix and average mileage of the car sold totaled BRL 6.3 billion before interest payments in 2025, nearly doubling compared to 2024. Thus, we maintain a balanced capital structure with a near debt-to-fleet ratio at 0.57x. -- reinforce the robustness of our balance sheet and enhancing the company's financial flexibility. With return levels moving back to the historical range, the need for price -- our price pass-through in the car rental and fleet rental becomes more moderate. We will remain diligent on cost and efficiency and continue to scale Seminovos to rejuvenate the rent-a-car fleet. These improvements, together with goodwill amortization from the merger, which reduces cash taxes, will continue to support cash generation and deleverage. Supported by adequate capital structure and the expectation of solid results throughout 2026, we are committed to completing the process of restoring the ROIC spread. I'll now hand over to the Head of IR, Nora Lanari, to present the details for the last quarter of 2025. Nora Lanari: Thank you, Rodrigo. Turning to the details of the results on Page 2, we begin with the Car Rental division in Brazil. In Q4 '25, net revenue of the Car Rental division reached BRL 2.8 billion, an increase of 8.8% compared to Q4 '24, driven by a 1.8% rise in volumes and by the increase in the average daily rates. In 2025, revenue totaled BRL 10.4 billion, an 8.1% increase over the prior year, mainly reflecting the expansion of the average daily rate supported by stable volumes. Moving to Page 3. We present another quarter of average daily rate expansion, closing the period at BRL 156.8, a 6.3% year-over-year increase. The utilization rate reached 80.3% in the quarter. This performance reflects our continued focus on productivity and the recomposition of return levels. We ended '25 with an average daily rate of BRL 150.8, up 8.4% year-over-year and a utilization rate of 79.7% -- turning to Page 4. We highlight the Fleet Rental division, which posted net revenue of BRL 2.3 billion in Q4 '25, a 5.3% increase compared to Q4 '24. The reduction in volume versus the same period of last year reflects the continued decrease in exposure to severe usage vehicles from 31,000 cars in December 2024 to fewer than 18,000 in December '25. This trend will continue in 2026 with a smaller impact on our annual volumes. We expect to end the year with fewer than 10,000 cars severe usage and the return levels within the company's target range. For the full year, we ended with BRL 9.1 billion in revenue, an 8.6% increase compared to 2024. Moving on to Page 5. We present the average daily rate of BRL 106 in the quarter, an 8.4% increase compared to the same period of the prior year. We ended the year with an average daily rate of BRL 103.3, up 9.6% compared to 2024 and with higher utilization rate. On Page 6, we present the evolution of Seminovos sales in Brazil. In Q4 '25, we reached a new record for used car sales with 77,358 vehicles sold despite the seasonally slower quarter. Net revenues in the quarter was BRL 5.8 billion, up 15.6% versus Q4 '24. For the full year, we sold 296,452 cars, totaling BRL 22.1 billion in net revenue, a 15.1% increase year-over-year in Brazil. The quarter was marked by important advances in sales force productivity, lead generation and conversion as well as the optimization of the wholesale channel, all essential levers for achieving the sale pace required to complete the fleet rejuvenation process in the Rent-a-Car. On Page 7, we present the evolution of the average mileage of cars sold. The company continues to reduce the average mileage at sale, especially in the wholesale, which has supported higher selling prices and lower maintenance and preparation costs. Moving on to Page 8, we present the car purchase and sales volume. In the quarter, 101,067 cars were purchased, of which 73,683 were from the Car Rental division and 27,384 for the Fleet Rental division. Total sales reached 77,358 cars, a historical record for the company with 50,294 coming from the Rent-a-Car and 27,064 from the Fleet Rental. As a result, net investment in the quarter totaled BRL 3.4 billion. During the year, 286,347 cars were purchased and 296,452 were sold, resulting in a reduction of 105, 000 vehicles. This reflects the optimization of the fleet with productivity gains in car rental and the reduction of severe usage vehicle portfolio in the Fleet Rental division. Continue on Page 9, we present the average purchase and sales prices. In the Car Rental division, the average purchase price was BRL 84,700 and the average selling price reached BRL 73,100 in Q4 '25. For the year, the renewal investment was BRL 11,100 per car, substantially lower than the BRL 16,500 recorded in 2024 and reflecting the gradual process -- progress on the fleet rejuvenation process. In the fleet rental, the average purchase price reached BRL 102,200 in Q4 '25, reflecting a mix with higher participation of SUVs and executive models. The average selling price was BRL 80,400, resulting in a renewal investment of BRL 21,800 in the quarter. In '25, net renewal CapEx per car was BRL 20,900, a 9.9% reduction compared to 2024. On Page 10, we show the evolution of the end of the year period, fleet. The company ended 2025 with 655,716 cars in its fleet, a slight decrease compared to 2024, mainly explained by the portfolio optimization strategy in the Fleet Rental division, reducing our exposure to severe usage vehicles. Turning to Page 11. Considering our operations in Brazil and Mexico, consolidated revenues in the quarter was BRL 11 billion, an 11.7% increase compared to the same period last year. Rental revenues grew 7.2%, totaling BRL 5.1 billion, while Seminovos revenue reached BRL 5.9 billion, up 16.1% year-over-year. In 2025, consolidated revenue totaled BRL 41.8 billion, a 12.1% increase with Seminovos advancing 15.6% and rentals growing 8.4% year-over-year. On Page 12, we present consolidated EBITDA. For the year, EBITDA was BRL 13.8 billion, a 15.4% increase year-over-year. In the quarter, consolidated EBITDA totaled BRL 3.7 billion, up 12.1% versus Q4 '24. In the Car Rental, the quarter's EBITDA margin reached 68.6%, a 3 percentage point increase versus Q4 '24, driven by rental pricing recovery, efficient cost management and productivity gains. In the period, rental revenues increased BRL 225 million, while costs and expenses increased BRL 7.4 million, reflecting higher fleet utilization, lower preparation costs and higher tax credits. In Fleet Rental, the EBITDA margin of 76.2% in Q4 '25 represents a 6.4 percentage points increase compared to the same period of 2024. In the quarter, a new useful life review appraisal report was issued for severe usage vehicle, resulting in the recognition of BRL 49 million in additional tax credits referring to the 9 months ' 25 and aligning the pace of PIS/COFINS credits with the vehicle volume. In addition to the tax credit effects, maintenance and allowance for doubtful account lines showed meaningful improvement. As a result, year-over-year, we recorded an increase of BRL 116 million in revenues and a reduction of BRL 112 million in costs and expenses. Seminovos posted a margin of 1.7%. The quarter saw higher advertising investment and early launch of the IPVA free campaign. In addition, 16 stores were opened during the quarter with costs that will be diluted as stores reach maturity. On Page 13, we show the evolution of annualized average depreciation per car. In RAC, average depreciation for the year was BRL 7,771. And in the fleet rental, it reached BRL 8,730 in the quarter, both in line with the company expectations. After the effects of the IPI reduction on new cars in Q3 '25, which affected Seminovos selling prices, we began observing greater price stability throughout Q4 '25. Turning to Page 14. Consolidated EBIT for Q4 '25 reached BRL 2.4 billion, a 17.8% increase versus the prior year. For the year, EBIT totaled BRL 7.8 billion, a significant increase compared to the BRL 5.8 billion recorded in 2024. On Page 15, we present the net income of the company. In 2025, we reported a net income of BRL 1.9 billion, affected by the green IPI totaling BRL 929 million or BRL 613 million after tax and the write-off of Locamerica tax loss carryforwards totaling BRL 937 million noncash. Adjusted for those effects, net income would total BRL 3.4 billion for the year. In the quarter, Net income totaled BRL 939 million, an increase of 12.1% compared to the same period of last year. To discuss cash flow leverage and ROIC, I would like to hand it back to Rodrigo. Rodrigo Tavares Goncalves de Sousa: Thank you, Nora. On Page 16, we present the free cash flow. In 2025, efficient revenue and cost management supported EBITDA growth, increasing cash generation in the rental business, even with the advance of payments to automakers of approximately BRL 2.2 billion in the last quarter of 2025. Rental activities generated BRL 11.5 billion in cash, of which BRL 4.1 billion were allocated to car CapEx, BRL 633 million to reducing accounts payables to automakers and BRL 437 million to investment in other fixed assets. Thus, free cash flow before interest and other effects totaled BRL 6.3 billion, an increase of BRL 3 billion compared to 2024. On Page 17, we present the evolution of the debt. We ended the year with net debt of BRL 31.1 billion, an increase of 3% to the end of 2024, mainly explained by the advanced payment of approximately BRL 2.2 billion to automakers in the last quarter of 2025 at a rate of 115% of the CDR. Moving to Page 18, we present the company's debt profile and cash position. The company closed the quarter with BRL 11.8 billion in cash, enough to cover short-term debt and obligations with automakers. Considering the funding and repayment carryout in January 2026, the cash position would be BRL 11.1 billion. We'll continue to active our active liability management, seeking opportunities to extend duration and reduce funding costs. On Slide 19, we present solid debt ratios. We closed the year with debt ratios at comfortable level, evidenced mainly by the net debt to the fleet value indicator even with the advanced payments to automakers. Lastly, on Page 20, in 2025, the company posted an improvement in adjusted ROIC, which ended the year at 14.6%, resulting in 4.7 percentage point spread over the cost of debt post tax despite the 1.4 percentage points increase in the cost of debt itself. The annualized ROIC for the last quarter of 2025 reached 15.5% with a spread of 5.5 percentage points, returning to the historical 5 to 9 points above cost of debt. We now are available to take your questions. Nora Lanari: We have the first question, a written one from Lucas Barbosa from Santander and then the operator will open the mic for the remainder questions. Lucas asked about Seminovos. If we could comment on what we are seeing in the dynamics of the wholesale, whether we are seeing the wholesale demand on a consistently manner or any indicative of the level of stocks in the wholesalers? Bruno Sebastian Lasansky: Thank you, Lucas, for the question. Typically, what happens is that in December, the wholesalers reduced their inventory, right? They do that exactly not to pay for IPVA taxes in the beginning of the year. When we start January, they start to -- it's a very strong purchase exactly to get back to the normal levels of inventory here. In the first 2 months of this year, we saw a strong demand for wholesalers in general with price stability. Operator: Our next question comes from Lucas Marquiori from BTG Pactual. Lucas Marquiori: Two questions on my side as well. First one on the -- it's still on the Seminovos discussions, right? And when we look at the margin performance for the Seminovos in the 4Q, you had the 1.7%. And my question here is more to try to understand what were the, let's say, the campaigning costs, the opening of new stores costs, all of these kind of incentivizing campaigns that you guys had, just to try to understand what were the effective kind of a margin regardless of those kind of campaigning costs? And also if you could comment already on the 2 months performance if we're seeing kind of a margin trend upwards versus the Q4? So this is the first question on the Seminovos margin. The second one is more on the strategic topic, right? Exactly out of the results is actually on the BYD's contracts you guys were set to have announced, right, on these 10,000 cars we're supposed to be buying from the Chinese. Just rough thoughts there. What's the goal? What's the strategy? If you could comment if there's room for that to improve, if there's any kind of a reading on the early performance of that contract, if that's kind of performing well in terms of depreciation that used to be kind of a concern of ours. So just kind of a general thought on this contract. Rodrigo Tavares Goncalves de Sousa: Thank you, Lucas. I'll take the Seminovos part, and then Bruno can comment on the BYD contract here. In the last quarter is typically starting by mid of November, you start these campaigns of IPVA, right? Because that's something that's usual, okay? That's not something that just Localiza does. It's general for the whole market. Otherwise, most of the wholesalers and retailers would postpone their purchase and not to pay those taxes. If you combine these effects that we had with more marketing expenses, we can give or take something close to 0.7% impact of the margin. So if you account for those effects, you should see in the first quarter a margin that is closer to the third quarter rather than the last quarter of the year, okay? But once again, those impacts were close to 0.7 percentage points in the margin of Seminovos. We started this -- the first 2 months and it was a solid result. Of course, that January is a very strong month. I explained that most of the wholesalers tried to buy to get their inventories to the regular level. But we've seen here a maturation of a lot of the actions that we are taking here in the past. And there are a few sales force management, some of the incentives maturation of new stores. So these first 2 months reflect the work that we have been doing in the last year, and it was a solid 2 months performance here. So to comment on the BYD, I'll pass to Bruno. Bruno Sebastian Lasansky: Thank you, Lucas, for the question. And I think that the BYD deal actually, it's a confirmation of what management has been talking about. When you start seeing these new players coming into the market and considering the significant CapEx and OpEx level that they have in the local manufacturing facilities, then Localiza becomes a strategic partner so that they get scale to dilute their fixed cost. They get a lot of predictability in a very long value chain and also they get association with the #1 and one of the leading brands in the country. And for us, this is additional supply and also continue to have the most modern and broader portfolio for our customers in Rent-a-Car, in subscription, in fleet and so on. So this is a pretty significant milestone for us. Of course, this is -- we announced 10,000 cars for a fleet of over 650,000 cars. So it's a first step, but an important one. And also, I'd like to comment that it's more geared towards hybrid vehicles. Actually, if you see what happened last year, hybrid vehicles grew 77% year-over-year, whereas electric vehicles grew 33%, which shows that for every electric vehicles sold last year, 2.5 hybrid vehicles were sold in the market, and I'm speaking about brand-new cars. So it's a positive milestone for us, additional supply for Localiza, better products for our customers. And before engaging into this agreement, we have been testing the cars to see customer acceptance, spare parts behavior and also how residuals were behaving. Of course, we don't have large volumes yet, but we see that those models that are scaled behave within our expectations so far. So that's what I can share at the moment. Operator: Our next question comes from Filipe Nielsen with Citi. Filipe Ferreira Nielsen: Congrats on the results. So my 2 questions here, I think the first color you gave on Seminovos was very helpful. Just trying to reconcile that with the depreciation trends. How do you see this conversating with how you're expecting depreciation going forward this year? Do you still see it stable? Or if Seminovos trends continue evolving in this direction, should we expect potential drops going forward this year? And my second question relates to ROC spread. The annualized number now back to historical levels if -- and your comments regarding the need to pass through prices a little bit lower. So just wanted to understand if we're probably getting closer to Localiza that resumes growth expectations? Or should we still see the company more stable in size and still seeking even higher ROIC spread before we get to this new growth phase? Rodrigo Tavares Goncalves de Sousa: Thank you, Filipe. First of all, the depreciation, the trend should continue the same as we are seeing right now. We still have to see solid results from Seminovos or upward trend in Seminovos margin before we have any discussion about changing the level of depreciation. So the trend, at least in the short and the medium term, should be the same as the one that we are seeing at this moment, okay? In the terms of ROIC spread, you're right, we are closer here to our targets. And so we don't need to pass-through as much pricing as we had in the past. But this year is still the year that we deliver the ROIC spread target of the corporation. So ROIC spread continues to be our main goal here. And -- but at the same time, we start to look for some opportunities for a new cycle of growth that probably will happen in 2027. So 2026 is still a year that we focus on optimizing our portfolio in our efficiency in passing through some pricing, not as much as we did in the past, so we can have our profitability levels close to what it was pre-pandemic. Operator: Our next question comes from Andre Ferreira with Bradesco BBI. Andre Ferreira: I have 2. So first, when we look at the first 2 months of used car sales growing 15% since we're looking at year-over-year, correct me if I'm wrong, but last year, you also had the IPVA discounts. And last year, Carnival was in March and this year is in February, which should play against, right? So are you optimistic for year-over-year growth in sales in March and could total quarter sales then exceed 80,000 units? And my second question is regarding maintenance and preparation costs. It's been a good surprise. In the fourth quarter, we see that down 2% year-over-year in the previous quarter, even more, but you also had more Seminovo sales in the fourth quarter, so more preparation. Any -- is there any color you can give regarding how much, if so, or at least a direction this maintenance line can go down in 2026? That's it from my side. Bruno Sebastian Lasansky: Thank you, Andre, for the question. I'll answer -- I'll take the first part, and then I'll hand it over to Rodrigo. As for this year, Rodrigo mentioned, and I agree fully that we started to see the fruition of the initiatives that we've been sharing with you and implementing. In particular, we see an increase -- a continued increase of the productivity per sales team member -- and that is a positive thing because we can potentially get more cars per FTE. That's also tied not only to training and development, but also incentives. And finally, we start seeing that the stores that we opened in the past cycle start maturing as well. We're not at the point where we're going to share our expectations for March, but it's -- you're right in that February includes the Carnival, which usually tends to be a slower week of sales. So we are excited about these 2 months, and we will continue to work so that we resume the 15-month cycle for Rent-a-Car by growing Seminovos. Rodrigo? Rodrigo Tavares Goncalves de Sousa: Yes. Andre, regarding preparation and maintenance costs, like the trend is positive. In preparation, of course, that you may have some variation depending on the quantity of the cars that we prepare, right? And since we're selling more cars in Seminovos, it is expected that we are preparing more cars and increase the turnover of the whole fleet of Localiza. Having said that, what we are seeing right now is the cost per car prepared dropping. So the efficiency is coming as part of the scale and part because we are rejuvenating the fleet as well. And the same can be said for maintenance. So for both costs in maintenance and preparation, once again, when you look at per car rented in maintenance or per car prepared in terms of preparation, the trends are positive here. Nora Lanari: Just to build on the fleet rental side, Andre, also there, as we reduce the exposure to severe usage car, we also expect a positive trend here, which in both cases, takes off the pressure from the pricing, as mentioned before. Rodrigo Tavares Goncalves de Sousa: Thank you, Nora, for complementing that. Operator: Our next question comes from Guilherme Mendes with JPMorgan. Guilherme Mendes: Yes. Two questions as well. The first one is regarding the automakers market. We continue to see increasing news about new OEMs coming to Brazil, especially Chinese ones. and a lot of discussions if this could continue to pressure vehicle prices. So I was just wondering how much of that you already incorporate on your depreciation rate? How much of that do you still see as a risk for vehicle prices going forward? And the second question is on the competitive environment for the Rent-a-Car and fleet management business. If you can share some details of how competition has been behaving in these 2 segments. Rodrigo Tavares Goncalves de Sousa: Thank you, Guilherme. You're right. There is a lot of new entrants in the automaker segments, and it's a positive in the midterm at least because the more suppliers we have, the more oversupply we have, the more leverage we have in terms of the negotiation here. Having said that, our assumptions for depreciation are not expecting any kind of increase in residual values are not expecting any kind of inflation Actually, we are already embedding in the way that we price our vehicles a deflation of price. So we are somewhat taking into consideration this new market dynamic. So the depreciation and our pricing already reflects that dynamic that you described, okay? In terms of the competitive environment for both Rent-a-Car and fleet rental, in Rent-a-Car, we see a benign environment with players being disciplined about prices in general. In fleet rental, it's a little bit -- depending on the player, you can see some irrational pricing. But in general, the competitive environment has been positive. Operator: Our next question comes from Daniel Gasparete with Itau BBA. Daniel Gasparete: I would like to follow up on 2 questions that were already made regarding Seminovos and also appreciation, if I may. The first one is still on the Seminovos part. I mean, I apologize for exploring more about that because I think that is one of the most important information about the release. This January and February performance was very strong, even though even more so considering that, again, there was Carnival and you still have Selic of 15%. So I would like to explore more about your views about how do you think that will unfold throughout the year. Bruno commented on the beginning of the call that he's on track to delivering the amount of sales enough to reduce the fleet to 15 months, correct if I'm wrong. And you already mentioned in the last call that -- that should be around 350,000 cars. So I would like to confirm that if you guys are positive on that. I mean, if we're on track to deliver this 350,000 for the year, if it makes sense, if there's upside to that considering that we have lower selic and everything that you already did in terms of increasing productivity. So that will be the first question. I apologize if it's too long to understand more about how guys you are -- how you guys are positive about Seminovos. And secondly, if I may, on depreciation, I mean, Rodrigo was very clear right now regarding that he doesn't see room for a decrease in depreciation right now. But I'd like to understand more what you need to see? I mean you mentioned in the last call that you need to see margins remain at the high level for a couple of quarters. So I'd like to confirm that if we should see, for example, first quarter is rebound, so we're going to see first quarter and then second quarter, if you're going to wait until elections pass, so we know what's going to happen in the macro environment. What exactly do you need in terms of macro information or dynamics so you can feel comfortable about saying that, well, we have reached the peak. Perhaps we can think about lower depreciation rates looking forward since Seminovos is doing well. We are selling more cars, so on and so forth. And I apologize for stressing those questions again. Rodrigo Tavares Goncalves de Sousa: All right. Thank you, Daniel. Let me start with the second one, and then we can come back to the first one. In terms of depreciation, once again, as we were describing, we are still seeing new entrants. We're still seeing, as you say, high interest rates. So we want to be somewhat conservative here before we start reducing the pace of the depreciation. The Seminovos margin is the lead indicator, right? When we start to see robust Seminovos margin that is consistent quarter-over-quarter over-quarter, we can start thinking if you need to adjust our depreciation and maybe reduce. At the same time, we're always monitoring other variables such as the price of the market, as we said, the new entrants, models that are coming in and coming out. So there are a lot of variables here that we look. But the main one, the lead indicator is a consistency and the level of Seminovos margin that we have to see across a few quarters here before thinking about changing the levels of the depreciation. So that is one. Regarding the Seminovos and then Bruno can complement, I just want to clarify that the 350,000 is the pace that we need to get to the car the 15 months. Not necessarily, you're going to get to the 15 months by the end of this year. So when we start to sell at that pace, then it takes 15 months for you to get to the car to the 15 months. But so we are very close by the performance of these 2 first months to get to the pace that we need to get the cars to the 15 months. Then after we do that, it's a matter of time to rejuvenate the fleet itself. Daniel Gasparete: Great. I'm not sure if Bruno wants to complement something on productivity, how is going to see the productivity throughout the year? If not... Bruno Sebastian Lasansky: No. I think that Rodrigo covered well, Daniel. Thank you for the question. Operator: Our next question comes from Rogerio Araujo with Bank of America. Rogério Araújo: I have a couple here made on costs. The first one on tax credit, it has been somewhat higher than the tax rate of 9.25% for a couple of quarters now. Is this related to Unidas Incorporation, which is a one-off impact or maybe the concentration of technical reports or could it already be a strategic plan looking ahead into the beginning of a tax reform that is beginning, and we think it's going to keep the depreciation benefits of the assets purchased until the end of this year? Therefore, would remain seeing a higher tax credits than the 9.25% rate in the upcoming quarters? That's the first one on costs. And the second one on the other lines that called our attention on the ITR reports, there is bad debt costs and also the line of other costs in the breakdown. Is this a new level of net debt provisions in the fourth Q that we see, we should expect this level going forward or is there any kind of provision reversion? Also on other cost line, if you could address what enters there? And if this reduction is sustainable as well? Rodrigo Tavares Goncalves de Sousa: Rogerio, in terms of the PIS/COFINS, we are actually catching up right? Before the incorporation of we're not doing the appraisal reports. And after now, we were doing them regularly. So you have this catch-up effect that temporarily leads to a credit that is slightly above the debit, as you mentioned here. In this quarter, particularly, we had the appraisal reports of the severe usage business unit here, which led to increase physical fees credit, okay? We should see going forward a more normalized level. So this is something that we were supposed to taking those credits if you were doing this appraisal records before the incorporation. And now, as I said, we are catching up. And then you have 2 strong quarters in that sense. In the first quarter, you should see somewhat more normalized level here close to the 9.25%, which is the debit. In terms of the cost and bad debt, thank you for the question. Throughout this year and by the end of 2024, we experienced some challenges, especially on the truck vehicles and in some specific areas here. So we were much more conservative in the way that we have credit. And now when I see the vintage, I see an improvement month after month. So when I look at this vintage, it's a very, very healthy vintage. So I think this level of bad debt is sustainable. Of course, that you may have some reversion of provision here in 1 quarter or another. But when I look at the whole quality of the credit that Localiza is giving, it's a much healthier 1 and we should see a much more normalized level of bad debt going forward as well. Nora Lanari: And Rogerio, on the other line, it is explained by the sublease of cars from Localiza to Locamerica and vice versa. After the merger, once we merge the 2 companies, the number declined, and we anticipate the number at a lower level. So the decline is sustainable, okay? Operator: Our next question comes from Joao Frizo with Goldman Sachs. João Francisco Frizo: I have just a quick follow-up on the used car sales, right? When we look at first 2 months data, it's a strong level. March is even stronger on a historical seasonal as-adjusted basis. So just wanted to hear from you guys your thoughts on the balance between accelerating sales, rejuvenating the fleet versus the spread between the new and used car prices. How should this evolve going forward? Rodrigo Tavares Goncalves de Sousa: Thank you. Regarding the spread between new and used car prices, we see stability. We just had access to a couple of days ago regarding March, and the trend is positive. It's even better than what we saw. So we see this somewhat stable here going forward. At the current levels of prices at this trend, we will continue to accelerate our sales. We are happy with the prices that we're selling right now. So if you have the chance to sell additional volumes, we will do so. Nora Lanari: Joao, just building up because I believe your question relates to the spread of buying and selling within the quarter that we report in the earnings release. We usually don't assume a specific quarter as a trend because the mix of cars we buy and sell might vary within a quarter per quarter. So we'd like to look on a moving average, usually the 12 months makes more sense. We saw specifically the higher mix of SUVs and intermediary cars impacting the purchase price of the cars, whereas in the Seminovos prices were affected by the campaign that reduces the selling price of the car with a slight increase in the spread between buying and selling in the quarter versus Q3, but not relevant on a year context, okay? Rodrigo Tavares Goncalves de Sousa: In that sense, if I can complement, in the first quarter, usually in January, you have a greater sales of economic cars as well. As I said, wholesalers tend to increase their inventory, most of their focus in economic cars. So that can affect the mix of sales. But in general, the trend in terms of buying and selling differences is positive. João Francisco Frizo: Okay. So if we look on a moving 12 months average, the dispatch will remain the same roughly, right? Is the best way to think about it? Nora Lanari: I would say, in the rental car, we still have room to improve the spread as we renew the fleet, but it's going to be more a function of the fleet renewal than anything else. Operator: Our next question comes from Jens Spiess with Morgan Stanley. Jens Spiess: Yes, so I mean the main questions have been answered. I just wanted to delve into the EV incorporation. I know it's -- it's obviously a small amount of cars within -- well, it will be a small amount, of course, within your fleet. But I think it could maybe give us some insight into the future and how things will evolve. So just trying to understand like the broader economics of what you're assuming. So first of all, how discounts versus traditional OEMs compare? What's the depreciation that you're assuming? Is it closer to 1% per month or how can we think about it? Because at the end of the day, lower discounts, higher depreciation, potentially lower utilization, you will have to price it accordingly and prices will probably be much higher. Rental rates will be much higher than with equivalent traditional OEM. So just trying to understand what are your expectations, what you're assuming and so on? Bruno Sebastian Lasansky: Jens, thank you very much for your question. I think that the reason why it's taken some time for piloting and testing for us before getting into this agreement that we just announced has to do with the fact that we were engaging with the OEMs in showing them these new OEMs in the country in showing them the value of the Localiza platform as I mentioned, in terms of brand awareness, in terms of scale, predictability selling to a AAA rated company. And after time piloting and testing, they actually came to appreciate the value Localiza has in the automotive industry. And the main focus is hybrid vehicles, less so on EVs, pure electric -- battery electric vehicles. We see that the electric vehicle are more for those use cases that run a lot of miles. So Uber drivers, last mile delivery and also some of the higher, higher-end luxury cars, but that's not kind of the large part of the market. We see that the EVs will have more adoption in big cities, but less so in the remainder of the country. So our purchase program is more catered to hybrid vehicles, which behave more similar to ice vehicles. We've been vocal over the last few years that we saw the future moving first into hybrid and longer term, potentially full electric out of the fact that the charging infrastructure is very small in Brazil, which is a continental large country and so on. And as for the unit economics, one would reckon that we would enter into such agreement once we get the terms that the company needs for an attractive ROIC spread scenario. So we piloted this vehicle on operational and residual value point of view, and we got to the terms and conditions that we deem necessary to get attractive returns for these new supply that is coming into the market. Operator: Our next question comes from Alberto Valerio with UBS. Alberto Valerio: I would like to back on that spreads subject about the same car when you buy and sell this car. I remember in 2024, you were talking about a recurring level of minus 2%, minus 4%, it was positive in the past, plus 5 plus 7. And current depreciation, I think, is tagging the minus 4 for 50 months. But if you -- we have more than 15 months would be a little bit higher than minus 4. How is your view going forward if this might change or not? Rodrigo Tavares Goncalves de Sousa: Alberto, thank you for the question. I think your assumptions are in line like when we still need to rejuvenate the fleet in order to get to the spreads for our assumptions here in the depreciation, right? So today, we're selling a car that's 20 months old. So when you start selling a car that it's 15, 14 months old, you're going to sell a car with a much more higher proportion in retail and with a much higher price, which will reduce the spread. So once again, this is aligned with our assumptions here. Alberto Valerio: Perfect. And if I may, Rodrigo, we have seen the beginning of this year some new models of and also this week, with coming at lower price from -- than the old models of 2025. Do you guys have any protection against this on the contract with the discounts or this might be a risk for this year? Rodrigo Tavares Goncalves de Sousa: We do not comment particular conditions that we have with the OEMs or these types of eventual protections. But this is something that happens, right? So sometimes you change the model, sometimes you do a face lift or you change completely the car. So it's not something that is unusual here for our industry. We usually try to compensate for with a higher discount or we buy less of those cars and something like that. But this is something that is regular to our market dynamics. Operator: Our next question comes from Pedro Bruno from XP. Pedro Bruno: I would like to go back to the growth discussion, especially in the Rent-a-Car and not the growth itself, but to the dynamics or to the, let's say, the -- how you are looking at the potential revenue growth, let's say, for this year and even a bit further than that? We have been hearing from, let's say, the industry, let's say, relatively optimistic scenario, which I think we see in a positive way thinking of discipline, as you already mentioned, et cetera. But I would like to -- if you can give us a little bit further details of how -- on how you're seeing the revenue management between eventually pricing versus volumes? And an embedded question there that how do you see, let's say, the limit to growth? If you right now see a limit more coming from, let's say, the revenue management in the rental side itself or if you have also it limited by Seminovos as you were still, let's say, tackling the challenge of reducing average age of the fleet, et cetera? So a bit more detail on that side, please. Nora Lanari: Pedro, thank you for the questions here. On the growth side, let me state again that the main focus of 2026 remain on the recovery of the ROIC spread. So probably the balance between price and volume growth will be taking towards a bit more pricing than volume per se, okay? We believe that by the end of the year, we should be in a good pace of ROIC spread and then we can resume a bit more of the growth of the company in 2027. The good news is that we will start paving or seeding for some of the growth during 2026, okay? But for now, is we don't need to pass through too much prices as we did. Rodrigo mentioned that in his comments. So it's going to be a mild passing through with a mild volume growth in the year. Revenues should post a decent pace of growth in the Rent-a-Car. In Fleet Rental, the focus is going to be on launching new products and more customized products, especially So we will see the growth 2026, but we are still decommissioning the severe usage, which still impacts the volume on a lower scale. And of course, in the meantime, we are continuing to be scaling up Seminovos so it won't be a bottleneck for the growth of the company in the future, okay? We've been constructive on the Seminovos, big topic of this call. We started the year with a strong pace of growth. And we do have, of course, interest rates moving down. It takes pressure not only in the pricing requirements for the Rent-a-Car, both fleet rental as well, but also accelerate or tend to help on the Seminovos side, which is very dependent on okay? So we are constructive. But this year is still a year of accomplished the mission of ROIC spread. Bruno Sebastian Lasansky: Thank you all for joining us today, and our IR team remains available for any additional clarifications. Thank you very much.
Operator: Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia, COPEL Video Conference Call to discuss the results for the fourth quarter and full year 2025. This video conference is being recorded. The replay will be available on the company's website at ri.copel.com. The presentation is also available for download. [Operator Instructions]. Before proceeding, I'd like to stress that forward-looking statements are based on the beliefs and assumptions of COPEL's management and on information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, should be treated as forecasts dependent on the macroeconomic environment, the country's economic situation, the performance and regulation of the electricity sector in addition to other variables and are therefore subject to change. This video conference is presented by Mr. Daniel Slaviero and Mr. Felipe Gutterres, respectively, CEO and CFO of COPEL as well as general managers and officers of the subsidiaries who will be available for the question-and-answer session. Now I would like to give the floor to the company's CEO, who will begin the presentation. Please, Mr. Slaviero, you may proceed. Daniel Slaviero: Good morning to all. Thank you all for participating in our video conference call. We ended 2025 with another quarter of consistent operating performance and significant value deliveries for our COPEL. Even in the face of challenging conditions such as a GSF of 67% and curtailment of 34%, we recorded recurring EBITDA of nearly BRL 1.4 billion, up 16% year-on-year in addition to recurring net income of close to BRL 700 million, an increase of 30% year-on-year. These figures reinforce the company's robustness and the maturity of the integrated model even in adverse scenarios. It is worth noting that we recorded a nonrecurring event related to curtailment offsets, which had a positive impact of BRL 266 million on EBITDA and BRL 8 million on financial revenue. In terms of investments, we ended the quarter with CapEx of BRL 768 million, totaling BRL 3.4 billion for the full year, excluding the unbundling of assets with Axia. This amount was directed to network modernization, continuous quality improvement, infrastructure expansion and strengthening operational safety. We also ended the year with leverage of 2.7x, fully in line with our optimal capital structure, preserving financial strength and the ability to sustain our growth plan. Finally, I would like to reinforce a very important pillar in the beginning of the call, which is shareholder remuneration. Adding up the amounts paid in the form of dividend distributions, interest and capital and the Novo Mercado migration premium, we reached a record of BRL 3.8 billion throughout 2025, we can consider an "aggregate payout" of 144% and an equivalent dividend yield of 14%. This reinforces our belief that dividend distribution is also an efficient way to create value. But 2025 was also a year of many, many achievements. We made important advances on several fronts of the company. At our last COPEL Day in November of last year, we presented our strategic plan, Vision 2035 and the multiyear investment plan totaling a record BRL 18 billion over the next 5 years. We also announced the optimal capital structure pursued by the company and the new dividend policy with the highest minimum payout in the sector. We also received prestigious recognition from Standard & Poor's in corporate sustainability. However, I would like to highlight what I consider to be the most significant achievement of the year, i.e., the migration to Novo Mercado. In addition to placing us at the highest level of governance on B3, the migration increases the liquidity of the stock and helps attract new foreign and Brazilian investors to the company. We are already seeing this in practice. This achievement is in the legacy category and goes way beyond a mere change in listing. It reaffirms our strategic commitment to transparency, fairness and sustainable value creation. All these achievements were only possible because we work with clear planning, disciplined execution and an ever-increasing alignment between culture, strategy and results. Looking at the agenda of short-term opportunities, I would like to provide an update on a recurring theme in our conversations with the market, which is the DISCO Tariff Review scheduled to happen in June of 2026. We are on schedule with our activities. And last Tuesday, February 24, we delivered the assessment report to ANEEL. Throughout March, there will be a public consultation where all data will be available. But I can say in advance that once again, we will fulfill the promise we made to the market on COPEL Day. In fact, we expect to slightly exceed the level or the mark of BRL 18.5 billion for the new net remuneration base of COPEL. For us, this review is another concrete opportunity to capture value and recognition for the technical and judicious work we have done over the last few years. Another important front for COPEL is the LRCAP, the Reserve Capacity Auction. Both in Foz do Areia and Segredo, Copel is fully prepared for the auction that will take place on March 18. We already have the installation license issued, a precontract with the EPC contractors and a margin for both projects -- flow margin for both projects. Now the most important thing is to highlight the attributes and the advantages of the water front. First and foremost, it is the cheapest source for the system and will result in lower costs for consumers and consequently for the tariff. Secondly, it is a renewable source and with equipment produced mostly in Brazil, which results in job and revenue creation for the country. Hydroelectric power plants have greater unique operational flexibility. And as they operate synchronously when activated by the ONS, they reach their maximum power in a few seconds in moments when we have our changes, which is expected by ONS in the coming years and the water sources are very strategic and they offer great efficiency at a lower cost. Finally, the 2026 LRCAP will be an auction with high contracting with experts estimating that there will be total amounts to be defined by the Ministry of Mines & Energy for the reasons already listed. We believe that the best thing for the SIN is to have a relevant offer for hydroelectric products for 2030 and 2031. We are convinced that the MME or the Ministry of Mines & Energy is sensitive to this issue. For COPEL, LRCAP is an opportunity to create value. It will drive our strategy, will be one of the levers for the 2035 strategy. Before handing over to Felipe to detail the results and earnings of the quarter, I would like to make a special announcement and express my gratitude to this person on my left. This morning, Rogerio Jorge took office as General Officer of the GenCo, of the Generation and Transmission company, and he is with us on this video conference. He's a professional with over 25 -- almost 30 years of experience in this sector, solid training and a background in several companies. He joins the other members of this management with great challenges ahead. I'd like to welcome you, Rogerio. And a very special recognition goes to our Board of Directors member, Moacir Carlos Bertol, who had already held this position from 2019 to the end of 2024. He went to our Board of Directors, and he has been once again serving on an interim basis for the last 6 months. Bertol, your experience, knowledge of the electricity sector, work ethic in respect for the Brazilian electricity sector over the last few decades are very valuable to us. We will count on your ongoing work at the Board of Directors. Thank you very much. Bertol will be with us for the Q&A session. And Rogerio is also joining us. And now I give the floor to Felipe to detail the results of the call. At the end, all of us will be available for the Q&A session. Thank you very much. Felipe Gutterres: Thank you, Daniel. Good morning to all. I will begin by highlighting the performance of consolidated recurring EBITDA of the company, which was BRL 1.4 billion in Q4 '25, up 16% compared to Q4 '24. This performance reflects the company's operational resilience and the balanced contribution of its businesses. COPEL DISCO accounted for approximately 54% of the total, while the GenCo and the TradeCo accounted for the remaining 46%. Performance was particularly robust at the GenCo, which grew 24%, supported by the increased incorporation of the Mata de Santa Genebra transmission company and an increase in the APR of transmission companies, which contributed an additional BRL 103 million. In addition, we had a more favorable result in transactions carried out in the short-term market and a significant reduction in the PMSO. In distribution, we saw a 1.8% increase sustained by the annual tariff adjustment and the stability of the built grid market. In the TradeCo, there was a complete reversal of the loss recorded in Q4 '24 with an increase of BRL 18.8 million in recurring EBITDA, driven by an increase of approximately 70% in the volume of bilateral contracts negotiated in the period. It is important to note that nonrecurring effects, especially curtailment results were isolated, allowing for better comparison between periods. Moving on to the slide of COPEL Generation and Transmission, the GeTCo segment posted recurring EBITDA of BRL 654 million, a significant increase of 24% compared to the fourth quarter of 2024. This performance reflects a combination of greater efficiency and sound operational decisions between the periods analyzed. Availability revenue increased by BRL 102.7 million, a result directly linked to the consolidation of Mata de Santa Genebra and the average 2.2% adjustment in APR for the 2025, '26 cycle. On the expense side, we saw significant reduction in manageable costs. The 73% decrease in PMSO influenced by the higher write-off of assets at the GenCo in Q4 '24. In addition, the short-term market contributed significantly, adding BRL 35 million to the bottom line as a result of the efficient modulation of hydroelectric generation during a period of a higher spot market. Sales in bilateral contracts also grew generating an additional effect of BRL 8.4 million in the annual comparison. On the other hand, we faced pressures that cannot be ignored. The cost of purchased energy increased by BRL 104.7 million, reflecting a GSF of 67.4% and an average PLD of BRL 265 million megawatt hour in the quarter and the deviation in wind generation, which resulted in a result by BRL 37 million associated with the impact of curtailment, which rose from 15.7% in Q4 '24 to 34.2% in Q4 '25. Despite these effects, the GenCo ended 2025 with BRL 2.9 billion in recurring EBITDA, an increase of 15% year-on-year, demonstrating resilience and consistent operational execution in a more challenging hydrological scenario. Moving to COPEL DISCO. We recorded a recurring EBITDA of BRL 728.4 million in the fourth quarter, up 1.8% over the same period last year. Although more moderate, this result brings important structural advances. The gross distribution margin grew 8.4%, driven by annual tariff adjustment of 1.3%, a significant increase of BRL 668 million in CVA, higher supply revenue with 663 gigawatt hours settled in the MCP and 0.3% growth in the [indiscernible] grid market. On the other hand, PMSO recorded 31.5% increase equivalent to an additional BRL 127 million, driven by losses in asset decommissioning and higher maintenance volumes and increased operational demands related to cycle building initiatives. When we look only at personnel costs, if we exclude the effect of programs such as PLR, PPD and ILP, we see an 8.1% decrease in Q4 '25 versus Q4 '24. Energy purchased for resale also increased significantly, up BRL 338.5 million, influenced by the expansion of MMGD and the increase in purchases via auctions in CCEE. In 2025, DISCO delivered BRL 2.6 billion in recurring EBITDA, up 5.4% year-on-year. Moving on to the next slide. COPEL TradeCo, while recurring EBITDA was BRL 3.5 million, reversing the loss of BRL 15.4 million recorded in the same quarter of the previous year. This performance was sustained by a 70% growth in the volume traded in bilateral contracts, reaching 3,824 gigawatt hour and by the mitigation of the impacts of intermittent contracts, which have reduced the result by approximately BRL 18 million in Q4 '24. Analyzing the energy balance, hydro and wind assets together, we see exactly what we have always shared with you. In the long term, we operate with a higher level of uncontracted capacity, which gives us the flexibility to capture market opportunities more efficiently. In the short term, looking exclusively at water sources, hydro, our energy availability for 2026 is approximately 20% to 22%, which puts us in a comfortable position in relation to possible impacts from the GSF. Consolidated PMSO totaled BRL 779 million, a reduction of approximately 2% in the quarter, isolating the effect of inflation and variable compensation, the reduction is around 5%. This movement mainly reflects the 16% reduction in personnel expenses, not considering the programs I mentioned, performance bonus, long-term incentives, et cetera, and a 20% reduction in the item other costs and expenses, mainly due to net losses on the decommissioning of assets in Q4 '24. These effects were partially offset in particular by a 14% increase or BRL 42.3 million in third-party services resulting from the intensification of maintenance activities in distribution, which is essential to maintaining the quality and reliability of the network. Moving on to recurring net income. We delivered growth of nearly 30% compared to Q4 '24, driven by a 16.1% increase in EBITDA. In addition, we saw a significant reduction in our tax burden, reflecting the efficient use of IOC concentrated in the last quarter of 2025 as an instrument for tax optimization. On the other hand, increased leverage close to the optimal capital structure target, the rise in CDI, the reduction in the average cash balance year-on-year had a negative impact on the financial result line item. Even in a challenging environment, we delivered solid recurring net income, BRL 683 million in fourth quarter '25, which reinforces the company's ability to continuously create value and maintain its consistent track record of operating and financial efficiency. Consolidated CapEx totaled BRL 768 million in Q4, totaling BRL 3.4 billion in the full year. Of the amount invested in Q4 '25, 84% was allocated to distribution with emphasis on the progress of Parana 3 phase and the smart grid, which surpassed the mark of 2 million smart meters installed. The remaining of the CapEx was basically invested in generation and transmission, of which we focused mainly on modernizing hydroelectric power plants, wind farms and reinforcing and expanding transmission lines, consolidating the reliability and safety of the electricity system. Moving on to the next slide, closing with debt. COPEL ended the year with BRL 20 billion in total debt and BRL 16 billion in net debt. Leverage ended the period at 2.7x, in line with our optimal capital structure. The average nominal cost of debt was equivalent to 87.74% of the CDI, significant improvement over the 98.46% observed at the end of 2024. This evolution is the result of the strategic debt management and the efficiency of the recurring funding process as well as a more favorable market scenario in 2025. We ended the year with an average amortization term of 4.9 years compared to 4.2 years in 2024, maintaining a balanced profile between trends, indexes and market instruments. In a nutshell, we had a quarter marked by operational progress, financial discipline, greater efficiency and recurring growth in virtually all segments. We combined EBITDA expansion, active portfolio management and financial balance, which are fundamental elements for us to continue sustaining robust investments and competitive returns to shareholders. With that, I conclude my presentation, and we now move on to the question-and-answer session. Thank you very much. Operator: [Operator Instructions] Our first question is from Ms. Maria Carolina Carneiro with Safra. Maria Carolina Carneiro: I would like to elaborate -- I'd like you to elaborate more on LRCAP. At the beginning of the presentation, you mentioned the 2 projects that you want to include in the competition. And recently, we had the cap price mentioned and some details on the bidding process. Could you elaborate on what you're thinking about the document and the adequacy of the cap price? And how this can change your strategy? We know that Foz do Areia seems to be a project that is kind of more ready to participate in the auction. Is there any visibility of how the cap price will influence your ability to participate? And also Segredo, if you can start with that, we would appreciate it? Unknown Executive: Thank you, Maria. I think that regarding the strategy and how we are going to position ourselves, I think that we are very close to the auction itself. And we're being very cautious because it's a competitive process, which is very, very strong, considering the hydro companies in these 2 products for 2030, 2031 and for the general context. So in terms of the cap price for the hydros, we believe that it's tight. It's a cap price that is kind of tight for the hydros that have more unique characteristics. In our expectation, some projects in general terms will be very tight with these cap prices because they were in line with what we expected, with what we imagined. As for the cap price for the other sources, I haven't got any elements to give you an opinion. What I can say from what we saw is that the hydro product will be the one with the lowest cost, and this will be the most beneficial for consumers for low tariffs. This has been our advocacy with granting authority with ANEEL. And this, in our view, justifies that we should contract as much as possible for the hydro products. So you mentioned the parameters, the capacities. They are more advanced, but there's always a discussion regarding the supply, the offering, the size of every product. We advocate that we will have the highest offer possible. The ministry is not making this public before the auction. But that's what we advocate given all of the advantages, all of the elements. But in normal conditions of temperature and pressure, we are sure, given the work that COPEL has been doing, not just now, but over the last few years, preparing these 2 projects. As you know, as I said in the presentation, we have the IL, the installation license already authorized. We already have a very in-depth knowledge of these projects. So we see this as a create -- a good opportunity to create value for the company. Maria Carolina Carneiro: One last question from me. Changing gears to energy balance. We noted a slight evolution in the average sales for the coming years. Other companies in the sector continued placing more contracts, but apparently with a little less liquidity and obviously, with still attractive prices. Could you comment on how the market is behaving given a kind of bullish pressure that we saw in the end of the year -- in the beginning of this year? Daniel Slaviero: Rodolfo, perhaps you can give us the context, and then I will complement Felipe Gutterres as well can add. Rodolfo Lima: Perfect. Good morning. [indiscernible] tough contracting in a more accelerated pace is a strategic view more than a liquidity issue. Even with high prices, we still have a lot of liquidity for the next 5 years. So this is much more strategic decision to decelerate given this increase that we see in this humid period rather than a difficulty in executing the strategy. So this doesn't entail lack of liquidity in the 2 products. This was the company's option to hold on to this power for some time longer. Daniel Slaviero: [Carol] and everyone, this is in line with our review. The prices we're seeing today are a reflection of the circumstance. We still see a gap with the prices generated and operated by the sector. In other words, there is an expectation of structural higher prices in the coming years. And in our view, this volatility, which is ever present in the last few months is a trend that is maintained. So our view is to keep more energy when we have [A+1] during the current year because as you have seen, even in liquidations of the spot price in a very, very short term, this was the case in February and January. This is very advantageous for the company. So as Rodolfo mentioned, this is kind of our strategy. We want to take advantage of this volatility. For this, we need to have more short-term trading possibilities. So we are very comfortable, very at ease that this is a strategy that will generate more value for the company. And to end, I think that this is a beauty, and we've been saying this for a while. This is the beauty of an integrated company. When we have a robust and solid arm as was the DISCO with an EBITDA of almost BRL 800 million in generation and transmission. In transmission, we have an APR that is very high in the year. We have comfort. We have the right elements to be able to better enjoy the opportunities that arise from this price volatility. Operator: [Operator Instructions] Next question from Mr. [indiscernible], an investor. Unknown Attendee: I'd like to congratulate you on the excellent work. I'd like to know whether COPEL is considering paying dividends in installments with the amount to be distributed over 3 months. For example, as ISA ENERGIA does to help shareholders not pay the income tax of 10% when they receive more than BRL 50,000 from the same company in the same month. Daniel Slaviero: Felipe? Felipe Gutterres: As part of our policy, we have a minimum policy of paying twice a year, which gives us flexibility to consider payments with different intervals, perhaps more than 2x. So this has not been defined. But yes, we can consider that considering the cash flow of the company and dividend declarations. Daniel Slaviero: Well, thank you for your concern. It is a legitimate one, particularly considering the new context of taxes leverage on income over BRL 50,000. Well, it is not in our short-term plans to have quarterly payments. I think that the policy is very robust with at least 2 dividend payouts. If there are extraordinary events, we can reassess that. That would be the frequency. And our company likes to be predictable. I think that this is one of COPEL's characteristics. You see this in our quarterly earnings. And there is little variability between market expectations, what we report and operational data. And I think that this is all about predictability. And this is one of the greatest outputs of our capital structure and our dividend policy. And this is for individual investors like ourselves and for the big investment funds. Everyone wants to have a COPEL that is very consistent, operational, excellent and predictable. Operator: Next question from Bruno Amorim with Goldman Sachs. Bruno Amorim: Congratulations on the deliveries over the last few years. I have a follow-up question regarding capital allocation. I think that your position is clear regarding LRCAP, the Capacity Reserve Auction. It would be interesting if you could comment on other priority areas. Would you consider M&As in distribution, in the area of distribution outside Parana state? Anything you're considering? And a follow-up question regarding the discussion of power prices. Perhaps a question to Rodolfo. Unknown Executive: I understand that from the structural standpoint, there's still a constructive view for the coming years. On the other hand, we're living a year of weaker hydrology. In parallel with this more positive structural dynamics, there's also a higher price than what would be sustainable given everything else constant because the hydrology is favorable for the price of energy. My provocation is, wouldn't it make sense in such a moment to take more advantage of this moment because it's very hard to predict rainfall in the coming years. I think we should assume a more normal rainfall in the coming years, it's the best we can say. Bruno Amorim: So how are you thinking about the cyclical versus the structural because I tend to agree, it's positive? Unknown Executive: Excellent, Bruno. Well, let's talk about capital allocation first, and then Rodolfo can complement talking about power prices and trading strategy because we don't want to put all of the eggs in the same basket, of course. We always try to have attractive average prices. But Bruno, I think that for starters, our planning has shown that we are agnostic with the segments as long as they are in hydroelectric, electricity, generation, transmission, distribution and trading of energy. So in these 4 segments, our view is agnostic. And we are always paying attention to the opportunities. Today, we didn't learn about any opportunities in the distribution market. If that opportunity arises, we will. Of course, we are diligent. We will look into that and consider that. It doesn't mean we will go forward with it. But after the LRCAP auction, after the third wave of structuring measures that started in 2024, 2025 and are ending and all of the transformational changes we implemented for the next cycles in the 2035 view, it became clear that we intend to assess the opportunities and grow in these 4 segments as opportunities arise, and it is our diligent duty to consider them, but always being very disciplined in capital allocation, which is the essence of your question. We have to be very cautious and careful about these opportunities because capital allocation can destroy value. And we have seen consistency in the deliveries by COPEL and our actions in our TSR. And all of us, shareholders and employees of the company are committed to create sustainable value. This is an agenda, this is a topic that will be in our agenda in the coming years. Rodolfo? Rodolfo Lima: Speaking about the long-term price view, we maintain what we presented at COPEL Day -- on COPEL Day. There are scenarios that may vary a little, but we really believe in this increasing trend. That's number one. Number two, speaking about the strategy, how do we have a mix between short term and long term in the effects of hydrology? I think that a very important point that we saw over 2025 and in 2026 as well is the dissociation between short term and long term. This is very common in the past, and we saw a lot of price volatility in the short-term prices, not impacting so much the long term. So that's the first point. We see kind of stability, prices kind of converging to the long-term view. We haven't gotten there yet. But short-term volatility is not impacting the long term so much. And speaking about the short term, the most relevant is the strategy of contracting at the beginning of the year. The first big premise is not to be short because as you put it yourself, volatility is great, and the strategy has proven to be very resilient. Q4 was very strict about GSF, and we continue to perform. Even with the rainfall taking longer to happen, we still captured price increases. In terms of contracting, we have a very dynamic analysis always done by Felipe's team, balancing EBITDA and risk. These price windows in the short term may impact the long term a little bit. So we combine this with volatility in EBITDA. So we have an optimal strategy of how much we want to be contracted and at what price. The idea is to pros that with the market. It's a living process. Every month, we sit together to assess what the next steps should be and the pace, always trying to balance well these 2 worlds. Operator: Next question came in writing by Mr. Thiago Borges, an investor. He says, congrats on the results. I would like to learn more about how you're seeing energy prices for 2026 and how COPEL can benefit from this scenario? Unknown Executive: Thiago, I think that Rodolfo kind of touched on that. 2026 prices are way above the historical average. So considering the strategy, I think that the first step is always, as Rodolfo mentioned, not to be short. You saw in the aggregate chart. But when we look specifically at the hydro product where we have more than 85% of our power, we are at 20% to 22% to be able to face the more challenging moments of the sector. And I think that this is the first big message. We want to be long and to be long over the year 2026. There might be a month when we are not long, but in the aggregate for the year will be long. And this puts us in a very advantageous position compared to the rest of the market. And it is what Rodolfo said. There are moments when we have a price that we see as a long-term structural price. Of course, there are many elements impacting that, the marginal cost of expansion, other factors that make up the foundation of our long-term price formation. And as we get close to that or exceed that, we will have phased sales in batches so that we can achieve average prices. What we saw 2, 3 years ago in the market, we had an outlook that the prices in the long term would be close to BRL 140, BRL 150. Today, no one talks about a long-term price below BRL 200 because that's the reality. And this is for companies with our generation profile. This is an opportunity for us, but it leads us to evolve as the facts unfold. And to -- we had prices above BRL 250 in February. And to us, this was good news. Operator: [Operator Instructions] The Q&A session is now closed. We would like to turn the floor back to Mr. Daniel Slaviero for his final statements. Daniel Slaviero: We are in a very positive phase for COPEL. I think that our consistent deliveries, as we have mentioned here, consistent disciplined deliveries matched with value creation and coupled with a clear strategy and plan communicated to the market. This is one of our main virtues. I would like to end this video conference call by thanking all COPELians who contributed to these extraordinary results. I would like to thank the management, the Vice Presidents, the officers and the whole team for the exceptional work they did. And I would like to reinforce our commitment of excellent deliveries and operation of our assets providing better and better service to our customers. In 2025, we ended with some of the best quality indicators in the recent history of COPEL. And above all, discipline and a very robust analysis in any capital allocation. And we're seeing very, very positive and unique opportunities in COPEL's trajectory. Thank you very much. Have a great day. Have a great day to all. Operator: COPEL's video conference call is now coming to an end. Thank you very much, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, ladies and gentlemen. Welcome to AXIA Energia's conference for the discussion of the results of the fourth quarter of 2025. Present here today are Mr. Ivan de Souza Monteiro, President of AXIA Energia; Mr. Eduardo Haiama, Executive Vice President of Finance and Investor Relations; Mr. Antonio Varejão de Godoy, Executive Vice President of Operations and Security; Ms. Camila Araujo, Executive Vice President of Governance and Sustainability; Mr. Elio Wolff, Executive Vice President of Strategy and Business Development; Mr. Italo Freitas, Executive Vice President of Commercialization and Energy Solutions; Mr. Juliano Dantas, Executive VP of Technology and Innovation; Mr. Marcelo de Siqueira Freitas, Executive VP of Legal Affairs; Mr. Renato Carreira, Executive VP of Learning People and Services; Mr. Robson Pinheiro De Campos, Executive VP of Expansion Engineering; and Mr. Rodrigo Limp, Executive VP of Regulation, Institutional and Markets. We would like to inform you that this event is being recorded and will be made available on the company's Investor Relations website along with the presentation being shared today, both in Portuguese and English. To view the presentation of the slides in your preferred language, select the corresponding tab located in the upper left corner of the screen, Portuguese screen for Portuguese or English screen for the English version. For those who require simultaneous translation, a tool is available via the globe icon labeled interpretation located at the bottom center of your screen. Upon selecting it, please choose your preferred language. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking mute original audio. [Operator Instructions] Before we proceed, we would like to clarify that any statements made during this conference call regarding the company's business outlook, projections, operational and financial targets, constitute the beliefs and assumptions of AXIA Energia's executive management as well as on information currently available to the company. Forward-looking statements are not guarantee of performance as they involve risks and uncertainties and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions and other operational factors may affect the results expressed in such forward-looking statements. We now invite Mr. Ivan Monteiro, President of AXIA Energia to begin the presentation. Please, you may proceed. Ivan de Souza Monteiro: Good morning, everyone, and thank you for attending AXIA's conference call for the fourth quarter of 2025 and the year 2025. This was a year marked by a series of accomplishments and the construction of what we call a base for the company's sustained growth. In the executive Board, the feeling is that the turnaround, the traditional turnaround is concluded. The budget for 2026 already reflects the conclusion of this turnaround. So let's talk a little bit about the deliveries during 2025. There was a consistent reduction of liabilities and the trajectory of the reduction of the compulsory loans and the liabilities related to that as well as PMSO. And here, I'd like to make the first comment about PMSO. The contribution we have today in the use of artificial intelligence in the reduction of PMSO is still small, but there's a huge potential to be tapped into in the coming years. We also began to change the level of investments, the company that invested around BRL 2.3 -- BRL 2.5 million to BRL 3 million per year 5 years ago has a growth trajectory, consolidating at a level above BRL 10 million, BRL 9.6 million in 2025 and now more than BRL 10 million in the projection for the coming years that we released earlier this morning. Another landmark in this consistent deliveries was the agreement with the government and the sale of our stake at Eletronuclear. Those were the 2 important moves in what we call the reduction of risk perceived by our investors when they decide to acquire assets, both by buying shares or fixed income assets by AXIA. Another important evolution relates to energy allocation and portfolio management and our relationship with the customers. Those are the highlights. In capital allocation and growth, I'd like to point to the volume of dividends paid out this year related to the result of 2025, BRL 8.3 billion. Just to give you an idea, BRL 8.3 billion was the nominal value or the nominal market value of the previous known Eletrobras in 2016. Another important challenge in this acceleration of investment is the formation of a pipeline that is robust in which we express low -- very low inorganic growth, but that also becomes part of our vision for the future and a growth in the assets that we know very well, our own assets that we already have environmental licenses for. We know the behavior of those assets, bringing modernization through the reinforcement and improvement investments that we're making as a consequence of the win in the transmission auction. We continue to seek the incorporation of new technologies available to improve the management, not only of the assets, but all of the set and the future production in our relationship with customers and the management of our energy portfolio, where I highlight the small contribution in the PMSO reduction through the use of AI. Going to the stage that takes a little bit longer, that's the cultural transformation phase. I'd like to point that this change that we promoted in the name now the company, AXIA, it's not a change of name only. It's not only transforming and having a new logo. It's a change in posture. It's a ownership culture, management that is fully focused on generating value, creating value. Finally, maximizing and reaffirming our commitment to governance, we have a proposal to migrate to Novo Mercado with the meetings expected to take place where the shareholders will discuss the directors' proposal. I thank all of the company's employees and the market trust and the performance of the company's shares in 2025 and the beginning of 2026. And I now turn the floor to our Financial Director, our CFO, Eduardo Haiama. Thank you. Eduardo Haiama: Thank you, Ivan. Good morning, everyone. Before we begin the presentation on Slide 7, I would like to point, as Ivan just mentioned, that for us, it's the conclusion of the turnaround and a step moving forward reflects in the publication of the annual results. I think it must have been the first time that the company was able to publish with quality, the results in the month of February. So when our results have always been published at the end of March or by mid-March, of course, this is not only an accounting -- a work of the accounting department, but it's a huge work done by the entire company, generating controls, processes, getting things to flow more smoothly, and that results in this publication and this release in the month of February. Now getting into Slide 7 and the key highlights. Part was already mentioned, the allocation of the energy portfolio and the execution of the capital allocation methodology. with record dividends of BRL 8.3 billion, but also the consistent increase in investments, winning again a series of lots in the transmission auction in 2025 and reaching the highest investment level since 2015 in the company. In terms of portfolio management, we completed the sale of the thermal power plant and executed the sale of our stake at Eletronuclear in efficiency, in addition to PMSO that Ivan already discussed, we are developing supplier chains that are international. And we are certain that we'll be a lot more resilient when this investment level grows further as we foresee. And in people and culture, something we're very proud of, and I'll talk more about later, was the launch of the first stock purchase program with a very high participation of our employees, showing their confidence in the path that the company is following. And finally, today, 100% of our managers already have goals aligned with our strategy, thinking always in the medium and long term. On Slide 8, getting into the financial highlights, investments in the quarter reached almost BRL 4 billion, a growth of almost 30% year-on-year. In generation margin, there was growth again, reaching BRL 101 per megawatt hour, in line with our strategy that we talked about in the first quarter of 2025 that was by protecting a potential drop in prices because of rains that we were approaching at that time. Starting in March, the scenario changed. And at that time, we said that we would then be able to reach -- reap the optimum results in the second and the fourth quarter that consolidated what we talked about in the first quarter. This quarter, we recognized BRL 12 Billion in -- BRL 12 million in the activation of tax assets. Everything with the conclusion of the turnaround phase and a more constructive view that we have in the Generation segment shows our view in terms of future profitability and the use of these assets of this tax credit over the year according -- as the company's profitability increases. The transmission auction that I mentioned, we won some lots with the investment and the investments. And now the numbers are BRL 1.6 billion. And once that's concluded, that the RAP of BRL 140 million per year. And finally, our adjusted income reached BRL 1.2 billion, up 141% compared to the fourth quarter of '24. On Slide 9, talking a little bit about our revenue. It grew in transmission. Part of it is a reflection of the adjustment portions that were lower, but also an increase in the reinforcement and improvement revenues. In generation, there was a decrease, but it's more due to the sale of the thermal plants that were still in operation in 2024. In 2025, in the month of October, there was one single thermal plant still operating. In terms of our EBITDA, we present here an increase, and this is a result of the increase in contribution margin in generation, excluding thermal plants of almost BRL 400 million as well as the reduction of our PMSO costs. On Slide 10, we show the same EBITDA of BRL 5.70 million (sic) [ BRL 5.70 billion ] showing basically 4 items that we did not adjust in the results, but generated a lot of questions previously. So basically, the lower revenue with the reimbursement of wind farms in the fourth quarter, that's basically when the wind plants that have contracts with distributors, they produce less. So we end up having to pay back the larger -- higher revenue that you made. So that's BRL 250 million in the fourth quarter of 2025. There is a variation of BRL 225 million in transmission revenue from the third to the fourth quarter of '25. But these are revenues that are temporary. They come in and out. So we receive more. But then when we get to the following adjustments, it goes back. So it's kind of transient. As for cost, to align it even further, -- with the company's workforce and work to seek exceptional performance, we expanded the potential range of the profit sharing payment and the long-term incentive program for the company. And considering the targets that was a very good year for the company, that resulted in an increase of BRL 108 million in this line compared to, for example, 2024 with the old previous metrics. And finally, with our change in brand, our rebranding in the quarter, when we implemented this rebranding, we spent BRL 60 million. So if we excluded these events, we would have achieved a regulatory EBITDA of almost BRL 6.4 billion. On Slide 11, talking about income. I think the main highlight here is the recognition of the deferred tax asset that I mentioned of BRL 2 billion. And considering this effect, our income growth would have been 140%. Slide 12. we show, as Ivan discussed, the evolution of investments over the years and look at how interesting this is. In 2022, we invested BRL 5.4 billion in reinforcement and improvement, improvement of the grid or the network, the transmission grid. And the investments we're making now at the plants exceed that amount already. So we invested BRL 9.6 billion, and we are expecting for 2026 and '27 to reach an annual level between BRL 12 billion and BRL 14 billion as a result of the beginning of the works of the auctions we have won in recent years and the growth that should continue in the line of reinforcement and improvements in transmission. Now moving to trading on Slide 14. We demonstrated we have our resources in each of the submarkets, and this is interesting to understand how the seasonality behaved in all of these over the quarters already, including purchases and subtracting those long-term contracted sales, the ACR sales, and that reflects when we look at Slide 15 in the evolution of our generation margin. Generation margin, when we look at the fourth quarter of '24, excluding this aspect of the reimbursement of wind plants that in the comparison is not -- it's apples and oranges, of BRL 250 million, we would have had an increase of 25% in our generation margin and that we have to exclude thermal power plants in the fourth quarter of '24 in January on the fourth quarter of '25, showing here that it's a very well thought out and executed strategy to trade or sell our generation portfolio. On Slide 16, I won't get into details of the chart on the left. I think it's a reflection of what we discussed in the previous slide. But to show you a little bit for 2026, considering our plans and the physical guarantees that we have with them using GSF, the expected GSF according to [ CCEE ] expectations and the physical guarantees in seasonality based on MRE. So as you can see in the first quarter, we have basically almost 14 gigawatts of energy of going to a valley in the third quarter of '26 to 8. This is mainly due to the expected GSF for the second half and starting to grow again in the fourth quarter to 11 gigawatts. Now moving on to Slide 18 with the culture and ESG agenda. As I had talked about, we launched the first share purchase program where we had 1,644 employees becoming new shareholders of the company, and that represents 22% of our total employees. And what's interesting when we look into it, these people, 54% of them more or less of the people who bought shares only have AXIA shares. They only own AXIA shares. And this 1,600, it's the first time almost 40% -- so it's the first time almost 40% of them bought shares. So that shows a strong element of our employees' confidence in the company's long-term strategy. And these shares remain restricted during a period of 3 years, okay? So it's not a short-term version. It's a long-term view. As for the compensation program, as was already discussed, we've updated this program to reinforce the alignment between performance, value generation, prioritizing the company's strategy in both this and the previous -- our opinion reinforces that what we're seeking is the sense of ownership from each person. On Slide 19, talk a little bit about the ESG agenda. We've proposed the migration to Novo Mercado, and we'll talk a little bit about this in the next slide. And with that, I think we'll improve greatly our governance, which was already good. It's going to get even better. We launched a calculator available for anyone to measure their GHG emissions, also providing solutions to help reduce or neutralize them. I'm very proud to say that we are now on the A list of the CDP, which is a global benchmark for corporate environmental assessment, very much in line with our net zero 2030 trajectory. And again, we also made it in the Global Sustainability Yearbook 2026 of S&P. On Slide 20, finally, just to detail that we are going to have our meeting in the 1st of April this year to discuss the entry -- the migration to Novo Mercado, the highest governance level at the Brazilian stock market B3. With that, the shareholders will have a right to vote all the same political rights and the same economic rights and dividends with no distinction. And in our opinion, by doing that, we improve our optimization to reach the capital allocation, improve attraction for potential new investors with better ESG and ratings as well. And by combining the different share classes, we improved liquidity and the overall risk perception. And I believe with this, we can move on to the questions-and-answer session. Thank you. Operator: [Operator Instructions] Our first question, Daniel Travitzky Safra. Daniel Travitzky: I have 2 questions on my side. The first about the very high income that you reported this quarter. I'd like to ask how this result may reflect in future dividend payout and capital allocation for the company? That would be my first question. And the second question, looking at the auction pipeline that we have this year, both in generation [ LR caps ] in March and in the future for batteries and the transmission auctions that will be very relevant this year, I'd like to understand how the company sees these opportunities. If you can give us some color on how you see that. Ivan de Souza Monteiro: Thank you, Daniel. So to begin, in terms of capital allocation and dividends, we worked a lot in the company's structural results and its predictability. And that makes us very comfortable with what we may come to capture and what we did capture in terms of energy price. So those conditions that were under the management's -- the directors' management were worked on and the prediction for the future don't give a lot of highlights for the net income of the fourth quarter. But I would like to mention the company's consistent results since it was privatized -- with a cap an intense work to reduce liabilities, reduce PMSO, adjust the strategy and also a change in culture that was a lot -- detailed a lot by Haiama. But I'll turn the floor to him, and then Elio to talk a little bit about our strategy in the future auctions, both on battery and capacity auctions and transmission. Haiama, please. Eduardo Haiama: Thank you, Daniel. As for dividends, considering what happened with the activation and what was acquired, it doesn't change with our capital allocation methodology. We have that capital allocation in dividends and buyback or new investments, we always look at a 5-year horizon based on a prediction of cash flow leverage, always using conservative prices for the uncontracted energy part. And with that, we check whether or not we have room for that to allocate more capital, paying more dividends or buybacks or more investments. So the income itself that was due to this IR activation is just a constructive view on the very long term for the company, not on the short term. On the short term, this methodology is what goes. I mean, as Ivan talked about, we have a lot of things that help in our risk perception, but profit or income alone is not the driver to pay out more or less. That's our view. It's always from the 5-year view. Elio de Meirelles Wolff: Thank you, Daniel. Good morning, everyone. We mentioned in the past that the transmission auction activity is a continuous activity that we do. Since 2023, we've been actively participating in the auctions. If you have an order of magnitude, we offered about 39 lots transmission since 2023. The group, the AXIA Group participates and always being competitive with a lot of responsibility and a strong focus on value generation. We participated in 34 of these 39. We study all of them, if not all, we may not participate in some, but we always do that based on technical objective factors. In the 34 that we participate, we succeeded in 9. So that's the recent history. Of course, that this background, the future is not based on that. But that shows how competitive we are. And we've been growing our capacity to be competitive, especially in terms of engineering and supply. That's essential. The company's DNA with its engineering capacity. And that is something we bring to 2026, of course. And in '26, we generate in a more organized way, at least 3 auctions, maybe even 4, 5. In March, there are 2 already we counted right. The first one is the capacity auction where we are able to participate on the hydropower plant. We see that we're very good -- in a very good line. And Ivan mentioned that about the pipeline. In the hydropower capacity alone, we look at the potential income in the medium, long term, maybe even exceeding 6 gigawatts. And a portion of that, of course, will participate and try to enable these projects in the auction of March 18. Transmission, it's the same line, as we mentioned. We always study all of the lots. There's an auction now March 27 and another prescheduled for October. And there may be a sub auction or something with a different player that may occur in April or May, and we may look at it as well. But this is a continued activity. We're always looking into it and studying. And once we get close to the auction, we decide how we're going to participate or which lots we're going to actively bid on. We always say that very comfortable, always focused on value generation. And finally, without a date yet, but already expected, there will be the battery auction that we're also looking -- we have been studying it since the pipeline, we already exceeded with 4 gigawatts of pipeline in batteries. We want to see the rules and understand how much of these 4 gigawatts we are actually able to offer. But the group has been increasing its pipeline progressively to be able to enable this with disciplined value generation and the auctions are a wonderful opportunity to materialize those investments. I think that's it. Operator: Next question, Bruno Amorim from GS. Bruno Amorim: Congratulations on the results I have 2 questions. The first one about the energy price dynamics. I understand that there is a view that structurally, the energy price is going up and it may continue to increase. But on the other hand, we are having a drier year in the cyclic point of view that puts prices at a higher level. So my question is, how have you been operating in this environment? Are you making the most of the cyclic dynamics when it's more favorable? Or is the strategy still to wait for a materialization of higher prices looking forward? So how do you think about the cycle in the short term and the long term? And the second question is to understand as you can open this, but how do you see the opportunities coming from data centers, if you see -- if you want to have discussions going on or if you understand this as an opportunity for the country and the industry, the demand of electricity over the next 3 to 5 years? Or is it too soon to tell? Ivan de Souza Monteiro: Thank you for your question. I'll turn the floor to Pedro to talk about this view. And then LPSMG, I'd like to hear from Italo as well, and he can complement to our strategy for data centers, but thank you for your question. Rodrigo Nascimento: Thank you, Bruno. Actually, we have been facing in recent years a change in the dynamics of price in the energy market. In some period in '22, '23 until mid-'24 price -- a vision of prices very close to the lowest levels, including longer-term view. And starting in the second half of 2024, we saw a big change and something that didn't exist so much in our industry as the volatility in the same day in terms of reliability, flexibility, the prices ended up not reflecting that. There was no our metering. But even in the first few years, we didn't have this perception. I also think that the move to reduce subsidies going in the right decision to have a better signaling of prices have also contributed to this change of perception in the market. We came from a very different level that the industry saw in '23 and '24 for coming years compared to what we have today. And we see that not only in this current year, but 1, 2, 3 -- and naturally, for this year, as you said, we are a little bit more pressured in terms of price because of the hydrology. Until January, we had a weak rain season. In February, we had an increase that I think brought some break for the industry, more reliability for the year, but nothing so far that brings any structural transformation in terms of prices throughout the year. And on our side, in portfolio management, we do consider all of these scenarios. It's a fact that now we have a lot more volatility than we had in the past. And that means that prices in the next 1, 2 months may shift up and down strongly. And a point that we consider with a lot of attention in our portfolio management is the submarket that you know in our portfolio, we have it very well distributed in the submarkets with part of our energy in the North and Northeast. So we do pay a lot of attention in January, February, having higher prices. It was very much similar to the submarkets, but March is a month where we will probably see more of a distance of higher than BRL 100, and we adopt a position that protects us from this volatility, from this submarket risk. In the long term, we do see a bigger price perception. So we're always open to discuss with customers and long-term proposals and long-term prices. And as we integrate and the negotiations make sense, we move forward. Thank you. Pedro, please. Pedro de Oliveira Jatobá: Thank you, Bruno. Just to add to what Limp said, in terms of prices, I think Brazil now is entering a new phase in the electricity sector with this volatility, a lot due to a lack of capacity to meet or make up for the flexibility of the system with the intermittent, for example, especially in distributed generation. And this tends to grow naturally is a technology that has been permeating this new electrical system in Brazil. So it's a structural aspect that we see a price increase until there is the exception of technology that may stabilize the system. So you will naturally see a price trajectory, especially considering Brazil with hydrology-dependent matrix as Limp clarified. And in a year like that, where January was tight, already puts some price pressure. In this sense as well, of course, we see this curtailment problem, especially in the Northeast. And in this condition, the need for the power is huge in that region. And that makes it an interesting environment for those data centers that you mentioned, Bruno. We are talking to some data center players, large major players the question is today, all of the infrastructure challenge that Brazil needs to adapt in order to be able to receive this big load data center, a large data center, hyperscale, more than 500 mega or 1 gigawatt or 1.5 giga brings operational challenges to the system, especially in the application, if it's a training application or inference or if it's training, it may simply stop overnight and the frequency of the system may go down and [ ONS ] is not prepared for that. So that -- there is a structural challenge that must be adjusted to receive these big loads. But naturally, Brazil, especially the Northeast, it's a region that will help a lot to have a large load. So we are talking to some players and looking at all of these points, the operational points that need to be adjusted. Operator: [Operator Instructions] Next question, Fillipe Andrade, Itau BBA. Filipe Andrade: I'm here with the AXIA team. I'd like to address 2 topics, if I may. First, talking about trading. The company presented a contribution market on the ACL, the short-term market, close to BRL 300 per megawatt hour in our view that is closer to BRL 30 per megawatt hour. So considering the price level that we're seeing in the first quarter of '26, what is the level that the company sees in terms of modulation, the same level or any change? And how do you see the impact of El Nino in the prices in the second half of the year? And finally, also, if you can talk about the best expectation of the management for a potential conclusion of the Novo Mercado migration process. Ivan de Souza Monteiro: Fillipe, as relating to trading, I will ask Limp's, I'm sorry, Haiama's participation for Novo Mercado migration. Haiama, Camila, please feel free. Eduardo Haiama: Fillipe, first, you were asking about modulation. In the fourth quarter, we even have in our presentation in the attachment that the fourth quarter generated close to BRL 15 per megawatt hour for the hydropower plant. And when you sell that to energy that we have allocated, it will run at around BRL 300 million, maybe a little bit less in the quarter. And the trend going forward, obviously, as the system is have more insertion as Itau said, with more intermittent sources and demands that may have peaks due to heat waves and it may grow over time. But going forward, I'd like to ask the expert to talk about this a little bit more. Yes, even as I mentioned earlier, today, we have an increasing presence of this daily modulation, the price volatility at different hours of the day. For example, in February 4, that was a very atypical time. At this time, it got to BRL 1,600 and modulation exceeded BRL 40. And today, we're looking on average BRL 15 to BRL 20, a slight increase in this first quarter compared to the fourth quarter. And the trend is for it to grow in the next few years. Of course, that new technologies, capacity auctions, storage systems in the future end up maybe attenuating or mitigating this in a relevant way. But today, the price indication and the daily PLD results bring this effect in modulation. That's always positive for hydropower plants because of the role they play and the characteristics of that source that is the only one and in fact that provides this flexibility that the system requires so much and this must be valued. Now talking about Novo Mercado, Fillipe. Our expectation in April 1 is to have the general meeting with the Class A B preferred shares and common shares. I think the market showed a little bit of what the meeting should be. I think it was very well received. The share prices went up. And I think even you and the analysts present here, I think everybody understood this movement, but it's part of the normal natural move in the company's current stage. So we are relatively confident with this process, expecting to be able to unify these, but only with the future agenda going forward. Camila, if you'd like to add. Camila Gualdo Araújo: I think Haiama mentioned it well. We believe in the model that we are using for the approval. The meeting in April 1. It's not -- it's April fool, but it's a real deal. We're going to hold the 3 meetings with a positive expectation considering the results we're seeing and the comments we're receiving about this move. Thank you. Operator: Our next question, Raul Cavendish from XP. Raul Cavendish: Can you hear me well? Operator: Yes, we do. Raul Cavendish: I have a question here. Thinking about the energy allocations that you disclosed in your materials and considering GSF and so on. I've been noticing difficulty to reconciliate the volume of energy sold in the quarter versus the allocations that you published ahead of time. Is there any element that is not captured in the disclosure of allocation that impacts the energy sale volume, and we're not able to model, for example, trading activities or something like that to help us be more accurate in our modeling over the quarters, even if the annual view doesn't really change that much. Ivan de Souza Monteiro: Thank you, Raul. I'll turn to Haiama. Eduardo Haiama: Thank you, Raul. There's an information here that's very confidential that's our assured energy. When we disclose the information, we disclose what's in the MRE. That's what we've included in the slide even. So from physical assurances allocated with the projected GSF. So that's a difference that occurs. As of '27, this difference won't be there anymore. So that's going to be easier. But in addition, and we have to look at how you're modeling it. Remember that our contracts that are on the ACR, the long-term contracts with the distributors all of them have the GSF, some 92%, others 100%. And that, of course, has an impact when we do this calculation. So that may be generating some desreption when you make your projections compared to what's realized. But without that, everything that we release in liquidation and sales is what's, in fact happening, but there may be these differences here from the projection to what we see. I don't know if it's clear, Raul. Raul Cavendish: Yes, it is Excellent. And then I think, finally, an additional question. So in addition to the LR cap of the hydro products, we have the storage, maybe I'd like to take Elio's and his team's perspective. And the group's mindset about the storage auction, if it makes sense and if this recent discussions about the battery, if it's on this range of [ 1.2 ] to [ 1.7 ]. If you think it's adherent or do you see any discrepancy considering the CapEx of batteries anyway, to hear a little bit of your view. Ivan de Souza Monteiro: Thank you, Raul. Please, Elio. Elio de Meirelles Wolff: Okay. So Raul, so this is a topic about this auction, this capacity auction. But what we see is that the system needs more and more power. So that's the first auction to be objective. It's not the end of it. There will be others -- other opportunities to sell our capacity and our potential -- our pipeline here. Batteries, it's still too soon to fine-tune what we may or may not consider. It's different. There's a lot of suppliers. We've been working alongside a lot of them for a year or two trying to develop this, and we will evolve the way we participate and, of course, as long as it makes sense for the group. But it's still too soon to discuss this on the battery. Operator: The questions-and-answer session is concluded. We would like to turn the floor to Mr. Ivan Monteiro to deliver the company's closing remarks. Ivan de Souza Monteiro: I would like to thank you all for your participation. Any additional doubts, please contact AXIA'S IR department. Thank you. Operator: AXIA Energia conference is now closed. We thank everyone for their participation, and wish you all a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning. My name is Josh, and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation Fourth Quarter 2025 and Full Year Results Conference Call. [Operator Instructions] Thank you. Ms. Paris, you may begin your conference. Stephanie Paris: Thank you, Josh. Good morning, everyone. My name is Stephanie Paris, and I am the Vice President of Investor Relations and Corporate Strategy of TransAlta. Welcome to TransAlta's Fourth Quarter and Full Year 2025 Conference Call. With me today are John Kousinioris, President and Chief Executive Officer; Joel Hunter, EVP, Finance and Chief Financial Officer; and Nancy Brennan, EVP, Legal and External Affairs. Today's call is being webcast, and I invite those listening on the phone lines to view the supporting slides that are posted on our website. A replay of the call will be available later today, and the transcript will be posted to our website shortly thereafter. All information provided during this conference call is subject to the forward-looking statement qualification set out here on Slide 2, detailed further in our MD&A and incorporated in full for the purposes of today's call. All amounts referenced are in Canadian dollars, unless otherwise noted. The non-IFRS terminology used, including adjusted EBITDA and free cash flow are reconciled in the MD&A for your reference. On today's call, John and Joel will provide an overview of TransAlta's quarterly results. After these remarks, we will open the call for questions. With that, I will turn the call over to John. John Kousinioris: Thank you, Stephanie. Good morning, everyone, and thank you for joining our fourth quarter and full year conference call for 2025. TransAlta delivered strong performance during 2025 while meaningfully advancing our business and strategic priorities. During 2025, we delivered adjusted EBITDA of $1.1 billion, free cash flow of $415 million or $1.73 per share and average fleet availability of 92.3%. Lower power pricing in Alberta, subdued market volatility and lower wind resources impacted our operating environment during the year. As a result, adjusted EBITDA came in at the lower end of the range of our expectations, while free cash flow came in slightly above the midpoint of our 2025 guidance. In 2025, we had record safety performance with a total recordable injury frequency rate of 0.12 compared to 0.56 in 2024 and our target of 0.37. We entered into a tolling agreement with Puget Sound Energy for the redevelopment of our Centralia facility. We amended and extended our committed credit facilities totaling $2.1 billion with our syndicate of lenders, significantly improving our financial flexibility and ability to execute project financing, which was a strategic priority. We acquired Far North Power, adding 315 megawatts of dispatchable generation in our core market of Ontario. We optimized our Alberta portfolio with a strategic decision to mothball Sundance 6 and Sheerness 1, thereby maintaining the long-term optionality of the units while minimizing costs in the near term. We fully integrated Heartland, which we acquired late in 2024 into our company, providing additional contracted cash flows and realized synergies. We successfully completed our ERP system. on time and on budget, and we significantly advanced three natural gas generation projects in Alberta to provide us with optionality to support data centers and grid reliability in the province for decades to come, which we will speak to at our upcoming Investor Day on March 23. Today, we're also very pleased to announce that we have entered into a memorandum of understanding with CPP Investments in Brookfield to advance our data center opportunity at Keephills, which Joel will be speaking to in more detail shortly. And our Board of Directors has approved an 8% increase to our common share dividend to $0.28 per share on an annualized basis, which represents our seventh consecutive annual dividend increase, affirming our company's commitment to returning value to our shareholders. Before turning the call over to Joel, I'd like to acknowledge that this will be my last quarterly conference call with all of you. It has been a privilege and an honor to lead TransAlta since 2021, working with such a committed and talented team. I would also like to thank all of you for your partnership as we work to advance our company for the benefit of our shareholders. I fully support Joel as the next President and CEO of TransAlta, and I'm confident that he is the right person to advance its strategy during this exciting time of opportunity. Joel, I'll now turn it over to you to talk about our financial performance in 2025 and our strategic priorities for 2026. Joel Hunter: Thanks, John, and good morning, everyone. I'd like to start by offering congratulations to John on his upcoming retirement and thank him for his leadership, guidance and strategic vision for TransAlta as well as his active support of my appointment. I look forward to working with the team to continue executing our strategic priorities, and I will announce the CFO successor in coming months. As John mentioned, today, we are pleased to announce that we've entered into an MOU with CPP Investments and Brookfield to advance the data center development in Alberta for which TransAlta will be the exclusive site and power provider. The MOU establishes a framework for phase development at our Keephills site in Parkland County, including initial long-term power purchase agreement for approximately 230 megawatts and the evaluation of additional phases aggregating up to 1 gigawatt of demand. Our Keephills site provides a strategic platform that leverages its large zone land position, existing transmission, natural gas and water infrastructure and on-site generation to support long-term project scale. We are pleased to be working with CPP Investments in Brookfield and to serve as the exclusive site and power provider for the project. As experienced global infrastructure investors, they have the capability to deliver projects of this size and complexity. We look forward to advancing digital infrastructure capacity and unlocking future investments in Alberta. In December, we announced the signing of a long-term tolling agreement with Puget Sound Energy, or PSC, to convert Centralia Unit 2 from coal to natural gas-fired generation. The agreement provides a fixed price capacity payment, giving PSC the exclusive right to the capacity, energy and ancillary service attributes and dispatch rights to the 700-megawatt facility. Once converted, the unit will be fully contracted until 2044, providing continued reliable power to the region long beyond its original retirement date and with a lower emissions profile of about 50%. Approximately USD 600 million of capital expenditures will be required to extend the useful life of the facility and convert it from coal to natural gas-fired generation, delivering an anticipated build multiple of 5.5x. The target commercial operation date is late 2028, and we anticipate declaring a final investment decision after receipt of all required approvals currently targeted for early 2027. In December 2025, the U.S. Department of Energy issued a temporary order requiring that the Centralia Unit 2 facility remain available if called upon to operate for a period of 90 days through March 16, 2026. As required, TransAlta is complying with the order and continues to advance the conversion in alignment with PSC in order to achieve the targeted commercial operation date. In November, we announced the acquisition of Far North Power Corporation, and I'm pleased to share that the transaction closed earlier this month. Far North's portfolio consists of four natural gas-fired generation facilities totaling 310 megawatts, including the 120-megawatt Aqua Falls, 110-megawatt Kingston, 40-megawatt North Bay and 40-megawatt Campus casing facilities. The assets, which were acquired for $95 million are expected to add approximately $30 million of average adjusted EBITDA per year with approximately 68% of the portfolio's gross margin contracted to 2031. Beyond the contract period, these assets are attractively positioned for recontracting opportunities and add to our reliable and increasingly diversified portfolio. This acquisition demonstrates progress towards our priority of pursuing strategic M&A. During the quarter, we generated $247 million of adjusted EBITDA, which was $35 million lower than the fourth quarter 2024, primarily due to lower Alberta and Mid-C power prices as well as subdued market volatility impacting energy marketing results. Hydro segment adjusted EBITDA decreased to $39 million compared to $57 million last year due to lower spot power and ancillary prices in Alberta as well as lower merchant volumes. The wind and solar segment produced adjusted EBITDA of $102 million, which was higher quarter-over-quarter due to higher wind resource and availability across the fleet. In the Gas segment, adjusted EBITDA decreased to $96 million from $116 million in 2024, mostly due to lower realized power prices in Alberta, along with higher carbon pricing, partially offset by the addition of the Heartland assets, higher production from Sarnia and favorable hedge positions settled. The Energy Transition segment delivered adjusted EBITDA of $16 million, a $10 million decrease year-over-year due to lower mid market prices, partially offset by lower purchase power costs and the settlement of favorable hedge positions. Energy Marketing adjusted EBITDA decreased by $5 million to $21 million, primarily due to comparatively subdued market volatility across North American natural gas and power markets. Corporate costs were lower than last year at $27 million, primarily due to lower incentive costs. Free cash flow was $93 million, which was $47 million higher than the same period last year due to the items noted previously as well as lower overall sustaining capital expenditures. Shifting now to our full year 2025 results. The Hydro segment generated adjusted EBITDA of $285 million, in line with our expectations. The decline year-over-year was driven by lower spot ancillary power prices, partially mitigated by positive contributions from hedging, higher production and higher environmental and tax attributes being utilized against the Alberta gas fleet's carbon obligation. The wind and solar segment delivered adjusted EBITDA of $338 million, a 7% increase compared to 2024, primarily due to the full year contribution of the Oklahoma wind assets, higher environmental and tax attributes revenues and higher wind resource in Eastern Canada and the U.S. The Gas segment continued to have solid availability and delivered adjusted EBITDA of $438 million. The year-over-year decline was largely due to lower power prices in Alberta, higher fuel and operating costs and increased dispatch optimization from our Alberta gas fleet, partially offset by the addition of Heartland and our favorable hedge position in Alberta. The Energy Transition segment delivered $100 million of adjusted EBITDA, which increased year-over-year due to lower purchase power costs and higher availability at Centralia. Our Energy Marketing segment delivered performance in line with our 2025 guidance range for gross margin, contributing adjusted EBITDA of $85 million. Energy Marketing results were impacted year-over-year by subdued market volatility across North American natural gas and power markets. And finally, corporate costs marginally increased year-over-year, primarily due to increased spending to support our strategic growth initiatives and associated costs with the Heartland acquisition, which was partially offset by cost-saving initiatives. In aggregate, adjusted EBITDA was $1.1 billion and free cash flow was $514 million or $1.73 per share, which is above the midpoint of our guidance. Turning to our Alberta portfolio. The spot price averaged $44 per megawatt hour in 2025, which was notably lower than the average price of $63 per megawatt hour in 2024. The decline year-over-year was primarily due to incremental generation from the addition of new gas, wind and solar supply in the province as well as the impact of milder weather throughout the year. The gas fleet exceeded our expectations by capturing an average price of $66 per megawatt hour, a 50% premium to the average spot price. Our hydro fleet also captured significant merchant upside, delivering an average realized price of $58 per megawatt hour, a 32% premium to the average spot price. Our merchant wind fleet realized an average price of $24 per megawatt hour, which was impacted by increased intermittent wind and solar generation in the Alberta merchant power market. Despite relatively benign weather last year, which resulted in lower power prices on average, we captured additional margins by fulfilling a portion of our higher priced hedges with purchased power when prices were below our variable cost of production. We realized the benefit from approximately 8,600 gigawatt hours of hedges at an average price of $70 per megawatt hour, representing a 59% premium to the average spot price. Last year, we also delivered approximately 3,900 gigawatt hours of ancillary service volumes at a modest 14% discount to the average spot price. By optimizing our fleet throughout the year and fulfilling hedges with purchase power, we were able to respond to higher demand from the AESO and delivered an increase of 9% in ancillary service volumes from our Alberta portfolio compared to the prior year. Turning now to the fourth quarter. Spot prices averaged $43 per megawatt hour, which was lower than average price of $52 per megawatt hour in 2025. Our hedge position was strong with an average price of $73 per megawatt hour, a 70% premium to the average spot price. Our hydro fleet delivered an average realized merchant price of $53 per megawatt hour, a $0.23 premium to the average spot price, while the gas fleet realized an average merchant price of $65 per megawatt hour, a 51% premium to the average spot price. Our merchant wind fleet, which cannot be dispatched and is subject to wind resource, realized an average price of $26 per megawatt hour. In the quarter, our average realized price for hydro ancillary service pricing settled at $35 per megawatt hour, a 19% discount to the average spot price. Looking at this year, we have approximately 8,500 gigawatt hours of our Alberta generation hedged at an average price of $65 per megawatt hour, well above the current forward curve of $44 per megawatt hour. Going forward, we expect to continue to optimize our fleet and reduce production in low-priced, high supply hours by fulfilling our financial hedges and customer requirements with open market purchases. For 2027, our team has increased our hedge position to approximately 4,000 gigawatt hours at an average price of $71 per megawatt hour, which remains significantly above current forward pricing levels. We believe the forward price does not fully factor the impact of the REM or 1.2 gigawatts of data center load that will be coming online. We expect the anticipated increase in load will rebalance the current oversupply of generation in the province later in the decade and drive opportunities for growth in the long term. Our dispatchable thermal and hydro fleet has existing capacity to provide reliability and serve the expected load growth, which we'll speak further to at our upcoming Investor Day. Turning now to our 2026 outlook. We expect adjusted EBITDA to be in the range of $950 million to $1.1 billion and free cash flow to be in the range of $350 million to $450 million or $1.18 to $1.51 per share. Now there are a number of factors influencing our 2026 outlook. First, Centralia ceased to operate at the end of 2025, which will have a sizable impact to our adjusted EBITDA and free cash flow until the plant comes back online post conversion to natural gas. Our outlook does not include any impact from the 202(c) order as we expect to recover related costs. Second, we expect Alberta spot power price to remain under pressure with a range of $40 to $60 per megawatt hour, impacting our Alberta merchant portfolio. Third, although we are well hedged both financially and through our commercial and industrial business, the average hedge price has decreased from 2025 levels. And finally, we'll have lower contributions from Sarnia due to a step-down in contracted pricing as well as the expiry of the contract and decommissioning of our Ada facility in Michigan. We'll have higher contributions to our Alberta portfolio through the expected realization of carbon credits against in-year carbon compliance costs in addition to the 2025 carbon compliance costs in Alberta. The confidence in our EBITDA and free cash flow guidance is supported by the performance of the contracted fleet as well as our hedging and optimization strategies, which represents approximately 80% of our expected revenue from our generating facilities. Given that we've now signed our MOU for data centers in Alberta and a definitive tolling agreement at Centralia, we are pleased to announce that we will hold our Investor Day in Toronto on March -- on Monday, March 23. The presentation will commence at 9:00 a.m. Eastern Time. We will provide an overview of the company's strategic priorities, long-term plan, financial outlook and growth opportunities. Our Investor Day is open to the investment community and will be hosted in a hybrid format with in-person and live webcast attendance options available. For 2026, our priorities are the following: improving our leading and lagging safety performance indicators while achieving strong fleet availability. delivering adjusted EBITDA and free cash flow within our 2026 guidance ranges that at midpoint of $1 billion and $400 million, respectively. maximizing the value of our legacy thermal sites by advancing our Alberta data center project as well as advancing our coal-to-gas conversion at Centralia toward FID, pursuing strategic M&A opportunities and maintaining our financial strength and flexibility. Stepping in as CEO next quarter, I believe TransAlta offers a compelling investment opportunity. We are a safe and reliable operator with resilient cash flows underpinned by a diversified hydro, wind, solar and thermal generation portfolio located across three countries, complemented by our leading asset optimization and energy marketing capabilities. There is significant and growing value in our legacy thermal sites, which our team is actively working on this year to repurpose to meet the growing need for reliable generation in the jurisdictions in which we operate. We also remain a leader across diverse technologies focused on responsible generation. We meaningfully reduced our greenhouse gas emissions, achieving our 2026 emissions reductions target ahead of schedule. We remain disciplined in our approach to growth, focused on delivering value to our shareholders, and we work to diversify our portfolio within our core geographies and increase the stability and contractiveness of our earnings and cash flows. And our company has a sound financial foundation. Our balance sheet is flexible, and we have ample liquidity to pursue and deliver multiple growth opportunities, along with the ability to return capital to our shareholders. Finally and most importantly, we have our people. Our people are our greatest asset, and I want to thank all of our employees and contractors for their commitment and setting the company up for success this year and beyond. Thank you. And I'll now turn the call back over to Stephanie. Stephanie Paris: Thank you, John and Joel. Josh, would you please open the call for questions from the analysts? Operator: [Operator Instructions] And our first question comes from Mark Jarvi with CIBC. Mark Jarvi: I wanted to see if you could share some more details around the data center opportunity, just does say, 2027 plus. Just is the expectation that the load will start to ramp in 2027, how long before the 230 megawatts would reach full capacity? John Kousinioris: Mark. Look, it's difficult for us to give you a lot more detail on the MOU just because based on the terms of that, we're really quite restricted on what we can actually say. What I can say is that speed to power does remain a priority for our two customers there. We're excited about the partnership that we have with them. Our focus right now, and I know their focus is to get our definitive documents done. And as soon as those documents are completed, which we expect to happen in the year, I think they'll proceed to start making the kinds of investments that they need to up at our Keephills site and get us moving forward. And it will be a gradual ramping up. Mark Jarvi: Can you mention anything about terms of risk sharing, like who takes the gas price risk and carbon pricing risk and sort of like the structure net back to TransAlta if it's kind of like more capacity or tolling structure for you? John Kousinioris: Yes. I wish -- again, I don't think I can give you those kind of terms based on the arrangements that we have. What I can tell you, though, is that we think the commercial framework that we've developed with CPPIB and also Brookfield is an appropriate one. And I think it is reflective of the value of the Keephills unit that we have there. So we're pleased with the overall arrangement that we have and think it's a really sound one from a commercial perspective. Joel Hunter: And I would just add to that, too, that the arrangement does include a long-term PPA, which really contracts merchant cash flows as well. Mark Jarvi: And is that the rough terms of the PPA been settled at this point, even if you can't disclose anything about it? John Kousinioris: I would say that the key elements of the PPA are laid out in the MOU. Mark Jarvi: Okay. And then it talks about ramping up over time. And just curious where you are in discussions. We've seen some of the engagement feedback on the Phase 2 with the AESO. Just bridging opportunities there to use your coal-to-gas assets as you go beyond 230 megawatts before you'd be able to kind of facilitate a large repowering potentially? John Kousinioris: Yes. Look, the AESO and the provincial government continue to do their deliberations on Phase 2. As you can imagine, we're actively involved in that process. I can tell you that our view is that it will be critically important for the province to be able to rely on underutilized generation in essence, as a form of bring your own power, which has been one of the hallmarks of what the government has been talking about to permit a data center industry to develop in a meaningful way in the province of Alberta. I think we've been heard on that. And I think we're in a unique position to be able to ramp up given the sort of breadth of generation that we have in the province of Alberta to actually meet that need. And candidly, with both Sundance 6 and Sheerness I being mothballed, just those two units alone provide a pretty clear path where we could certainly be able to ramp up and meet the up to 1 gigawatt that we're contemplating under the terms of the MOU that we've done with our two partners. Mark Jarvi: And any sense of when you might get some clarity from the AESO on that? John Kousinioris: Yes, we do expect to get it I would expect in the first half of this year. I'm not sure that we're going to get it by the end of this quarter, but I do think they're very mindful about giving clarity to the marketplace. They've got a lot going on, as you can imagine, with the REM and the work that is being done between Alberta and the federal government on the MOU that the two have signed. So there is a lot going on, but I know there is work being done, and we're fully engaged in that. Operator: Our next question comes from Robert Hope with Scotiabank. Robert Hope: I want to go back to the MOU. So, along with Q3, you had kind of highlighted that you wanted a bunch of the key items to be largely ironed out, which could accelerate the path from an MOU to the contractual signing. As we look forward, is it just ironing out the details that is the key gating factor on the -- moving the MOU to a firm contract? Or are there a number of parallel paths with your customers on the data center side, which kind of will also weigh into the time line and the process there? John Kousinioris: What I can tell you is that the MOU is an extensive one. There was a lot of discussion and a lot of settlement of terms around essential commercial elements of the arrangement that we have both for the first phase on the 230 megawatts that we've been allocated and the pathways that we could get to an aggregate of gigawatt going forward. As you can imagine, there are a number of definitive agreements that need to be finalized and settled in order for us to be able to move forward and they arrange everything from a definitive PPA with all of the terms to even just lease arrangements related to the actual land that is there. That takes time to be able to do. We're motivated to move that quickly, and our team is ready. They are too. And I think we'll move that, I think, in a very orderly way going forward. The two proponents also have work that they're doing behind the scenes in terms of who their offtakers are and just finalizing their offtake strategy, which continues to proceed. And our view is that given their capabilities and the scope of reach that they have, that they're going to be really successful around that, too. So there's a lot of work that we need to do and they need to do as well, but I think it will all be executable in a normal sort of way. We remain really confident. I can't tell you how pleased we are that we were able to announce it today. Robert Hope: Excellent. And I'll ask you a non-data center question. Can you give us an update on the M&A market and your views on gas assets as well as renewable assets and M&A as a potential form of growth? John Kousinioris: Sure, Robert. Joel, why don't you start? Joel Hunter: Yes, I'll start. Robert, it's -- the M&A market, I would say, remains very active. We're looking at a lot of various opportunities in various scale, if you will. I'd say that we see both a complement of renewable assets that are coming to market, both wind and solar. And similarly, we're seeing a lot of opportunities in thermal generation as well. So again, we remain very active and very focused with the eye on adding shareholder value. It has to be obviously aligned with our strategic priorities going forward here. A good example, again, is the Far North acquisition that we just closed here earlier in the month that we are very happy with, but we continue to see a lot of opportunities both in Canada and the United States and even some opportunities in Western Australia as well. John Kousinioris: And the only other I would add to that would be it is -- and you know this, it is significantly cheaper to buy than it is to build right now, particularly if you factor in sort of the time frames for being able to get a project up and running. Robert Hope: Congrats on the MOU and the pending retirement. Operator: Our next question comes from John Mould with TD Cowen. John Mould: Just to apologies, go back to the data center MOU quickly. I just want to see if there's anything you can share in terms of like key gating items to get from MOU to binding agreement? And could you give potential timing for when we might see a binding agreement? Apologies if I missed it. And if not, can you give us a sense of what you're targeting broadly for a mining agreement in terms of time line? John Kousinioris: So we can't actually give you specific dates, John. But what I can tell you is that we do expect definitive agreements to be completed in year and frankly, to begin pretty immediately in terms of our engagement. Our team is ready to do that. And we're hopeful that in the coming few months, we'll be able to get those put in place and then be in a position to be able to share with the market more detailed terms once those definitive agreements are in place. John Mould: Okay. No, that's helpful. And then I'd just like to ask about on the development side for gas or I should say, brownfield development, you've brought back the Keephills 1 and Sundance 6 repowerings, at least from a regulatory perspective. You've also got the Flipi project. And you made the comment earlier around the buy versus build cost differential. Can you maybe just prioritize some of those repowering opportunities in terms of attractiveness versus what you're seeing in the M&A market? And under what conditions we could potentially see you make an FID on one or more of those repowering opportunities? John Kousinioris: Yes. Why don't I start and then Joel, you can jump in. So you're right. We have advanced both Keephills 1 and a Sundance 6 repowering and also the Flipi project. And it was critical from our perspective to do that certainly from a regulatory and permitting perspective before the end of last year because our goal was to be able to qualify all three projects under the existing framework for new gas-fired generation that would be able to run in an unabated way before the end of the year. And from our perspective, we've achieved that objective. So uniquely, I think, certainly in the context of Alberta, we have options now to be able to actually build flexible gas-fired generation in the province to meet the needs of the province going forward in the 2030s and beyond. Candidly, right to 2050 before the terms of the CER would impact that new build generation. It may be that we're successful under the terms of the federal and provincial MOU and the CER goes away, but we certainly didn't want to take that chance and we work through to make sure that regardless of the regulatory regime, we had those options ready. I think to answer your question in terms of new build, it is really hard given the existing suite of generation that we have in the province to utilize or acquire kind of legacy assets to meet incremental load growth. So it is our view that the 2030s will require new build to meet the needs and frankly, to replace some of the retiring generation. our preference as a company, I would say, Joel, would be to see contracted generation. We're not certainly building merchant gas-fired generation is much tougher for our company to get its head around here in the province of Alberta. But we think we can make the math work on those projects. We're beginning to ramp up our supply chain arrangements in respect of executing them. And there is development and design work that goes on to meet kind of the maximum optionality that we can get under those. So hopefully, that gives you a sense. Joel, I don't know if you want to add anything to that. Joel Hunter: The only thing I would add is that we use our existing generation as a bridge to new generation, whether it's for Phase 2 of a data center or some other opportunities that we might see here in the province. Just given the time it takes for new build, the cost of new build in this environment. And to the extent that we do, do new build later this decade, early next decade, it would have to be underpinned by long-term contracts to ensure that we earn a full return of and on capital within the contract. John Kousinioris: And the reality, John, is, I mean, the supply chain is such that you wouldn't be able to get turbines, the power island and the like for probably five years out. So you kind of need to begin doing the work to be able to get something that would be in place and get to a COD in the early 2030s. Operator: Our next question comes from Maurice Choy with RBC Capital Markets. Maurice Choy: Just picking up on these three natural gas generation projects that you're working on. If I'm not mistaken, the total capacities of these are obviously greater than the 1 gig Phase 2 and MOU, not to mention that two other sites are probably not even at Keephills. So is the idea here for you to help deliver solutions for the two counterparties beyond just Keephills? Or are there other data center customers that you may be looking to serve and secure? John Kousinioris: Yes. Maurice, I think the answer to your question is all of the above, to be honest. Look, we're looking at our partners at Keephills are looking at making a significant investment in that part of the world that's going to require us to provide them with reliable generation for a long, long time. It's not just 2030s. It's something that's going to require us to help them into the 2040s and beyond. So we need to think about how do we get newer efficient generation given the time frame for our existing generation to actually meet those particular needs. Our discussions on other potential opportunities have not stopped. So we continue to receive inbounds and we continue to do other work to bring other opportunities for load growth in the province, other data center opportunities as well. And that's something that we're mindful of. And in advancing the three projects, we're just trying to maximize our flexibility. And remember, with K1 and we would be utilizing existing infrastructure with the idea to kind of get a build cost for that new generation to be lower than it would be if we would be doing a pure greenfield site. Maurice Choy: And maybe just as a quick follow-up to all this discussion about MOU. I recognize that MOUs are generally not legally binding. Is there a termination fee if the project doesn't proceed? John Kousinioris: Yes. We're -- again, I can't get into what the terms are. But I would say this. We view this MOU as a real expression of the intentions, very definitive intentions of the parties to move forward. We have absolute confidence in CPP Investments and Brookfield to be able to move it forward. I mean they're incredibly experienced global infrastructure players. They have proven capabilities to be able to move this forward. And frankly, I think they, too, like we are excited about developing a nascent Canadian data center industry in the country. So although the terms of the MOU were critically important and they took weeks and weeks and months of discussion to get done, we have absolute confidence and faith in the parties that we're dealing with to be able to move forward. Maurice Choy: That makes sense. If I could just finish off with a question on funding. Given that you do have a number of funding needs for Centralia, Keephills, Phase 1 and perhaps Phase 2 as well. Can you speak to what you see as being your remaining investment capacity, say, through the end of the decade after you factor in some of these projects on an equity self-funded basis? John Kousinioris: Sure. What I would say, Maurice, look, I'm going to turn it over to Joel, but we have a lot of levers that we can pull as a company to meet the funding requirements of our growth going forward. But Joel, maybe you can give your perspective. Joel Hunter: Yes. And I would just say, Maurice, that, first of all, with Phase 1, there isn't really a big funding requirement for us for Phase Certainly, as we look to Phase 2, there could be. But again, there thinking about using our existing generation as a bridge to new generation shouldn't require a lot of significant capital spending for that as well. As it relates to Centralia, it's smoothed out over a couple of years based on us getting to an FID sometime early next year. So think of that as spend in '27 and '28 with an in-service kind of later in 2028 that would be very manageable with our existing free cash flow generation along with kind of incremental debt capacity that we have today. So we remain very kind of confident in our ability to fund these opportunities, whether it's data centers here in Alberta, along with Centralia. And we do have a number of levers available to us, including asset rotation and the like here to the extent that we see additional opportunities come our way. So again, we remain very confident in our ability to fund this growth going forward. Maurice Choy: I remember in the past, Joel, you mentioned your expectation that the Brookfield debt and hybrids will convert to hydro equity. Is that still your existing assumption? Joel Hunter: Yes. So the way it works, Maurice, just for everybody's benefit is that, that option is convertible up until the end of 2028. And so again, it's at the discretion of Brookfield to exercise that option. To the extent that they want to increase the ownership in the hydro assets, they can go up to 49%. But there are certain things that are required for that to occur. And if that were to happen, then certainly, there would be additional cash injection into the company as a result of that. So it's an option that remains open to the end of '28, as I mentioned, but it's the option of Brookfield. Maurice Choy: Congrats to both of you, Joe and Joel from RBC. Operator: Our next question comes from Benjamin Pham with BMO. Benjamin Pham: A lot of questions asked so far. Maybe just to continue the topic on Keephills. You mentioned Phase 1, you don't expect the funding need for that. But can you confirm, do you potentially need to spend capital on that as part of the MOU? John Kousinioris: We can't really -- so first of all, Ben, sorry, I should have started with that. We can't really get into the -- what I would say is the capital investment required to sort of execute Phase 1 from a TransAlta perspective is negligible, I think, is the right way to kind of describe it. Remember, it will be grid connected. So there is a little bit of capital that is required to ensure that the data center will be connected to the grid. So there is a substation and some transmission that needs to be built out. But it's very proximate to the site that we have and the interconnection already that we have with the transmission line. So I would say it's very, very modest. When we think of the opportunity, we tend to think of K3 as effectively being the facility that is sort of tied to the opportunity. And K3 itself is in very good shape from an operational perspective. We maintained that facility very well. We're very pleased with its reliability and have very manageable sort of sustaining capital requirements for that going forward. So it's not at all a burdensome requirement. And I would say, even when we think of bridging generation, Joel, to the point in time where we get to potentially having new generation build, which is really in the 2030s, relatively modest capital expenditures from a TransAlta perspective going forward. Benjamin Pham: Okay. I got it. And I'm wondering to provide -- I know you've been advancing negotiations with customers in the last two years. You arrived at Brookfield CPP ultimately, which are well-established customers and counterparties. Can you maybe just walk through maybe, I don't know, qualitatively, the process, the level of demand in the last couple of years you experienced, the puts and takes you're facing ultimately by choosing the counterparty? And then do you also consider just going direct with the hyperscaler as part of those negotiations? John Kousinioris: Yes. So we did run actually a pretty comprehensive process with respect to the data center opportunities. And one of the things that always, I would say, shaped our approach or our strategy on the data center was sort of the realization that at least initially, there would be a limited amount of new data center capacity that would come into the province, whether that would be a gigawatt or 2, like somewhere in that kind of space. And as you saw with Phase 1, the AESO and the province landed at 1.2 gigawatts kind of a gradual, I think, feathering in is it to use sort of a TransAlta kind of mindset of the data centers going forward. So that actually kind of colored our approach in terms of what was the scale that was available to be able to meet the demands of the individuals that we were speaking to. So our view was that it would be great to get to have hyperscalers, and we certainly do expect and hope that they end up coming into the jurisdiction. When we began our conversations, it was great to enter into discussions with CPP Investments and Brookfield. They had the kind of ramping profile and sort of load expectations that we thought were reasonable and kind of met the envelope that we thought that we were going to get. So it really aligned. And look, you've alluded to it. They're both outstanding infrastructure investors, not just in Canada, but globally. They both have a very good understanding of the Alberta market. They have extensive experience, not just experience, but relationships from a digital infrastructure perspective globally. And we absolutely knew that they had both the expertise and capital depth and execution capability to be able to get this done. So although we cast our net, I would say, fairly wide, initially, we were very pleased that we were able to be -- to have them as partners because their expectations kind of aligned with sort of the reality of what we thought the pathway was going to be to development in the province. So we consider ourselves quite fortunate to be working with them for them. Benjamin Pham: That's really a good context. See you in about a month or so. Operator: Our next question comes from Julien Dumoulin-Smith with Jefferies. Tanner James: It's Tanner on for Julien. Congrats on the announcements and congratulations to you, John. A lot of my questions have been asked and answered here, but I did want to see if maybe you would frame expectations for what's in play on the long-term financial plan to be provided next month. Are you going to be looking to provide guidance assuming base business as currently integrated in the portfolio? Or is baseline guidance likely to presume some execution of the MOU or other items? And also, how would you expect to handle or caveat AESO process uncertainties? Joel Hunter: Yes. So it's Joel here. Yes, our intention here is to have probably a bit of an outlook out to 2029 that's reflective of kind of our assumptions around power prices in Alberta, the impact that will have, obviously, on our merchant portfolio, obviously, also factoring in some of the -- what we see from Phase 1 along with Centralia coming into service sometime later in 2028. So our intention is to provide some building blocks for you to see what that could look like here going forward at our Investor Day on March 23. John Kousinioris: And expectations just around pricing generally and how we see the market evolving in the province for sure. Operator: Our next question comes from Patrick Kenny with NBCM. Patrick Kenny: We're hearing more and more about Alberta's desire to beef up its interties with neighboring power markets. I was just curious your thoughts on how that might influence your outlook for the Alberta power market over time and also how TransAlta might be able to participate either directly or indirectly in those changing dynamics? John Kousinioris: I would say that we are fairly optimistic about it, to be honest. I think we're still at an early stage of having some of those discussions, but we actually think it creates a considerable amount of opportunity for certainly our company and candidly, for the province as a whole. What we are seeing -- and when I think of the opportunity, I'm thinking of it, to be honest, less east-west, more north-south, to be candid. We think that load growth requirements in the Pacific Northwest into the Rocky Mountain states, frankly, all the way down to the Desert Southwest and even California will remain high. We think that reliability will continue to be a real priority in that part of the world. I think the ability to build new firming generation kind of in the western part of the continent will remain challenged, I think, at times, as will transmission generally to move it around. So we actually see an opportunity in Alberta, not just to kind of meet the ongoing needs for data center demand, certainly from a Canadian perspective, but also to be a bit of a reliability agent, if I can use that term, for kind of the WEC ideally as kind of an opportunity set that we're seeing. So look, it's going to take work and investment to be able to see that come through. But I know I'm excited about it. And I think, Joel, that it weighs heavily on the three new plants even that we're working to develop. So maybe your thoughts. Joel Hunter: Yes. No, Pat, I agree with John. It's an exciting opportunity for us here that we can use existing generation in interim and then a real possibility here for new generation going forward, whether it's east-west or North-South, what we see in our neighboring jurisdictions, again, is a need for firming power. a growing one, actually. growing one. And what I really like here, too, is that you've got strong policy support here within the province to be kind of an energy superpower where we could see additional gas generation being developed in the province for export to neighboring markets. So we see it as a very exciting opportunity. I'd say as a bridge though, again, using our existing generation will be very important to that to the extent that we see opportunities in the future. John Kousinioris: Yes, it's an important thrust, I think, Patrick. Patrick Kenny: Okay. That's great color, guys. I appreciate that. And then maybe just a follow-up on Centralia. I know it's a fluid situation, but just wanted to confirm if you had any more clarity on the 90-day order or if you had any recourse if things are extended and perhaps push back your FID decision on the conversion? John Kousinioris: Yes. Why don't I start and then maybe I'll turn it over to Nancy to see if there was anything I didn't really cover off. So, look, the initial 90-day order expires mid-March. And we are fully in compliance with the order in the sense of being available should we be asked to run. We don't expect that given kind of how flush the hydro situation is in Washington state right now. I think our primary focus is more on getting clarity on the existing order, and we do have the ability to recoup our expenses, which is why we're not particularly concerned about that from a 2026 perspective. But certainly, Nancy and her team and our commercial team are focused on getting clarity around the mechanics of that going forward. With respect to the coal-to-gas conversion at Centralia, we continue to work that through in a very uninterrupted sort of way. Our general sense is that the conversion -- not our general sense, but the reality is the conversion is supported by Washington State. They need it. They're accepting of that facility being converted, and they see that the need for that facility to provide reliability into the mid-2040s is critically important. And in tandem, so does the U.S. Department of Energy, the federal government in the United States is also supportive of what we're trying to do there and understands it. So I don't regardless of kind of the trajectory of 202(c) on the facility, it is our expectation that it won't impede the work that we're trying to do from a coal to gas conversion. And like I can tell you, it's full steam ahead from a regulatory and planning perspective for us and for Puget candidly, as they look to get the rate base. Nancy, I don't know if you have any additional perspectives on that. Nancy Brennan: Thanks, John. I think John has covered it well. I think the only thing I would add to maybe sort of bit of a fine point on some of his comments is we've had very good communication and collaboration, both at the state and federal levels. And I think in respect of -- we can't predict whether or not we will receive another order. But at the same time, should that occur, sort of the building blocks, I think, are in place in respect of the work we're doing now to continue to progress through and to continue to proceed with the conversion. And again, as we stated at the outset, working very, very closely with our customer, PSC also. So I don't think at this time, we foresee any obstacles should that occur. Operator: There are no further questions at this time. I would now like to turn the call back over to Stephanie Paris for any closing remarks. Stephanie Paris: Thank you, everyone. That concludes our call for today. If you have any further questions, please contact the TransAlta Investor Relations team. Operator: Thank you. This concludes today's conference. You may now disconnect.
Operator: Good day, and welcome to the AtkinsRealis Fourth Quarter 2025 Conference Call [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Denis Jasmin, Vice President, Investor Relations. Please go ahead. Denis Jasmin: Thank you, Michele. Good morning, everyone, and thank you for joining us today. For those dialing in, we invite you to view the slide presentation that we have posted in the Investors section of our website, which we will refer to during this call. Today's call is also webcast. With me today are Ian Edwards, Chief Executive Officer; and Jeff Bell, Chief Financial Officer. Before we begin, I would like to ask everyone to limit themselves to 1 or 2 questions to ensure that all analysts have an opportunity to participate. You are welcome to return to the queue for any followup questions. I would like to draw your attention to Slide 2. Comments made on today's call may contain forward-looking information. This information, by its nature, is subject to assumptions, risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these assumptions, risks and uncertainties, please consult the company's relevant filings on SEDAR+. These documents are also available on our website. Also during the call, we may refer to certain non-IFRS financial measures. Reconciliation of these amounts to the corresponding IFRS financial measures are reflected in our earnings release and MD&A, which can be found on SEDAR+ and our website. And now I'll pass the call over to Ian Edwards. Ian? Ian Edwards: Thank you, Denis. Good morning, everyone, and thanks for joining us today. I'm going to begin today's call by providing an overview of our performance for the fourth quarter and the full year before I pass it to Jeff to provide more detail on our financial results and our 2026 outlook. We will then open it up for questions. But before getting started, I wanted to highlight just how far we have come over the last several years. We set out in 2019 to transform AtkinsRealis into a world-class engineering services and nuclear-focused company. We have now achieved that. We did this because we fundamentally believe that our capabilities and competitive advantage in these 2 areas will create the most value for shareholders. And just as importantly, we've built a world-class culture and have attracted and retained exceptional talent that is vital for the long-term growth of the company. 2025 was a pivotal year for AtkinsRealis, and I'm proud of what we've accomplished and excited to share those highlights with you today. So let's get started on Slide 3. We concluded the first year of our delivering excellence and driving growth strategy with strong results. We remain focused on delivering for our clients and expanding our foothold in key growth markets, both organically and through strategic acquisitions. This resulted in strong revenue growth, continued progress on our margin enhancement program and a record-breaking backlog. Our diversified portfolio enables us consistent performance across our primary business segments and regions through the economic cycle. This year, for AtkinsRealis Services, we generated a record high revenue of $11 billion, representing 16% organic growth and close to 10% segment adjusted EBIT to segment revenue ratio. Our record-breaking backlog for AtkinsRealis Services now sits at $21 billion as at the end of 2025, which represents growth of 23% versus the end of 2024. It was an excellent first year of our 3-year strategy and the progress we made in '25 is setting us up for continued growth across our regions and end markets for the foreseeable future. On Slide 4, we outlined our success against our 2025 financial outlook and related strategic accomplishments. We completed the sale of our remaining interest in Highway 407 for $2.6 billion, which enabled debt repayment and ultimately led to achieving an investment-grade credit rating. We generated $461 million in net cash from operating activities, well above our target, highlighting the cash-generating nature of AtkinsRealis. We deployed our advantaged financial position to return significant capital to shareholders via accretive share repurchases and accelerated our strategy with 3 acquisitions. We won several major nuclear contracts, including the Pickering refurbishment and the Darlington SMR execution phase, leading to an end-of-year record-breaking backlog for our nuclear business. And we continue to focus on building our culture. We achieved a top quartile benchmark employee engagement score of 86%, while increasing our headcount by 1,800 employees. 2025 also marks the completion of the transformation of our business, focused on being a world-class engineering services and nuclear business, and our financial reporting will be adjusted to reflect this. Our fourth quarter performance on Slide 5 highlights our ability to both grow and operate more efficiently across the business. We delivered another strong quarter of AtkinsRealis Services revenue growth, up 17% year-over-year or 11% on an organic basis. Engineering Services regions revenue reached a quarterly record high of approximately $2 billion, while Nuclear revenue organically grew 28% to a quarterly record high of $600 million. We also improved our Engineering Services regions EBITDA margin, highlighting the work we have done across the business, including leveraging technology and innovative delivery models such as artificial intelligence to improve productivity, safety, quality and predictability. These new productivity enhancement technologies enabled us to find more innovative solutions and deliver more work for our clients. Our total backlog reached a new record high this quarter as our expertise across engineering services and nuclear continues to be in demand. We announced the acquisition of C2AE, which advances our land and expand strategy in the U.S. and is in line with our stated capital allocation priorities. Our pipeline of potential bolt-on acquisitions remains robust, and we would expect to announce further acquisitions in the coming quarters. We did all this while maintaining a robust balance sheet, underpinned by strong and growing free cash flow. We are extremely proud of our accomplishments this quarter, generating record revenues and backlog while improving margins and utilizing our strong operating cash flow for buybacks and to invest in M&A opportunities. Our Delivering Excellence driving growth strategy is creating value for our shareholders. Turning to Slide 6. Fourth quarter revenue in our Engineering Services regions business increased 16% year-over-year. On an organic revenue basis, Engineering Services regions grew 9% year-over-year. Segment adjusted EBITDA over net revenue margin was strong at 17.3% for the fourth quarter, up 100 basis points versus the prior year period. The operating margin improvement initiatives continue to bear fruit through continued cost optimization improved backlog gross margin and delivering projects more efficiently. Notably, backlogs in all regions have increased for a total increase of 12% to $13.2 billion versus our backlog as at December 31, 2024. Beginning on Slide 7, we provide an overview of each of our 4 regions and their performance this quarter. In Canada, revenue in the fourth quarter increased organically 14% year-over-year, while segment adjusted EBITDA grew $35 million with a 17.6% margin, a 410 basis points increase, highlighting our continued efforts on our margin improvement plan. Backlog grew 9% year-over-year and now stands at $7.9 billion. Last quarter, we emphasized an increased focus on growing our presence in the buildings and places, transportation, industrials, power and renewables and defense end markets as we believe these areas offer compelling near-term opportunities for our unique capabilities. Fourth quarter performance proves the merits of that strategy as our revenue growth was fueled by key wins in transportation and power and renewables market. Key wins this quarter include the selection of Hydro One Networks for a multiyear owner's engineer mandate for the expansion of their Bowmanville switching station. Our power and renewables experts will provide engineering and project program management services for the expansion of the substation, which is situated across from the Darlington Nuclear Generating Station. This win comes on the back of additional contracts we've secured in several major power and renewable initiatives that are important to the future of Canada. In the U.K. and Ireland, fourth quarter revenue grew 15% and organically grew 12% year-over-year, driven primarily by continued strong demand in aviation, water and defense projects in the U.K. Segment adjusted EBITDA grew to $103 million in the quarter, representing an 18.4% EBITDA margin. Our concentration in the region enables us the flexibility to position our people in areas with the highest demand, which augments operating margin leverage. Backlog grew 16% year-on-year to $2 billion, driven mainly by wins in transportation, rail, water and aviation markets. Our successful history working to improve Heathrow Airport resulted in contracts for expansion work and technology services, while we continue to obtain key wins on the network rail infrastructure project. As an example, we secured the Havant resignalling contract, a major program management commission on the TransPennine route within the Network Rail infrastructure project. And as mentioned on prior calls, there have been several commitments by the U.K. government to increase funding for defense and infrastructure spending over the next decade. Demand in Power and Renewables is rising with early-stage activity in grid investments, while the established long-term U.K. industrial investment strategy will yield enhanced opportunities in the industrials end market. Fourth quarter USLA revenue increased 23%. However, excluding recent acquisitions and a favorable FX impact, organic revenue growth was flat year-over-year as softness within our global minerals and metals sector continued to weigh on the results of our fourth quarter. If we exclude Minerals and Metals business, the underlying engineering services business in the U.S. grew organically in the low single-digit percentages. Segment adjusted EBITDA was $55 million, which translates to a 13.8% operating margin, an improvement of 120 basis points from the previous year. Margin improvement was driven by sustained project execution and overhead control. The region's backlog rose 15% year-over-year to $1.8 billion, reflecting our continued focus on client engagement and the strength of our integrated end-to-end capabilities. As we are deepening our relationship with David Evans and C2AE, we are seeing opportunities to strengthen our capabilities in transportation projects across the country, including highway and aviation work. Looking out, we anticipate continued growth across various end markets in the U.S. where we're expanding our presence. The federal government is funding transportation growth by increasing investment budgets of the Department of Transportation. Additionally, various water infrastructure programs are being allocated billions of dollars annually to sustain multiyear project pipelines. Our success in water infrastructure projects in other markets positions us well to capture our fair share of these projects. While in the U.S. -- while the U.S. continues to evolve, we remain focused on execution. We are strengthening our pipeline, aligning our talent and capabilities and deliberately landing and expanding into unpenetrated high-growth regions across the country. In EMEA, revenue organically by 9%, while segment adjusted EBITDA rose to $40 million, representing a 21% adjusted EBITDA margin over net revenue. In the fourth quarter, we acquired ADG Capital, expanding our scale in Australia by adding approximately 250 professionals to the team. This also strengthens our ability to capture major infrastructure investment opportunities and grow in end markets such as defense and power and renewables. Total backlog in EMEA was approximately $1.5 billion, up 18% versus December 31, 2024, mainly driven by new bookings in the Buildings and places and industrial end markets. And as highlighted last quarter, while Buildings and places opportunity in the Middle East continues at pace, we're seeing increased demand for our services in large-scale transportation projects. For example, we were recently contracted to support the development of the Metro Blue Line in Dubai. In Asia, we're seeing growing opportunities for our services in the infrastructure market. In Australia, we are focusing on capturing revenue synergies following our acquisition of ADG, while also continuing to pursue opportunities that arise in the defense sector and ahead of the 2032 Summer Olympics in Brisbane. I'd like to now move to Slide 11 and discuss our fourth quarter results for our Nuclear business. The business continues to demonstrate exceptional growth, achieving an organic revenue increase of 28% compared to the fourth quarter of 2024. This creating a new baseline for future growth. Our nuclear backlog totaled $5 billion, 56% higher than our backlog as at December 31, 2024. Segment adjusted EBIT grew 17% to $66 million and segment adjusted EBIT margin was 11%. Segment adjusted EBITDA grew 16% year-over-year with a 24% margin. On Slide 12, we highlight some achievements across our nuclear CANDU and services portfolios. In our CANDU business, our work on the final reactor at Darlington's refurbishment has been completed, and the reactor was handed back to OPG to reconnect to the grid ahead of schedule and under budget. We also have several projects ramping up in Canada and abroad, while we continue excellent progress on life extension programs that give us excitement about our near-term revenues. In Canada, Prime Minister Carney announced a major federal investment to accelerate Canada's clean energy future with the Darlington new SMR nuclear project as a cornerstone initiatives where we are part of the core delivery team. This project will expand electricity generation, strengthen national energy security and position Canada as a global leader in nuclear innovation. The Ontario government has approved Ontario Power Generation's plan to refurbish 4 CANDU nuclear reactors at Pickering, clearing the way for a start to the execution phase of the project and where our scope of work continues to expand. For services, we secured a 15-year framework at Sellafield for nuclear decommissioning and waste management. Additionally, we signed a multiyear contract with Rolls-Royce to deliver nuclear propulsion and engineering capabilities to support the U.K.'s growing submarines program under the U.K. Defense Nuclear Expertise Enterprise. Turning to Slide 13. You can see our pictorial reminder of these near-term CANDU revenue opportunities within our nuclear business. We've been working hard to bolster our backlog with high-quality wins, which reinforces the bright future we have ahead. As you can see on the slide, we're seeing increased opportunities to sign CANDU MONARK or EC6 newbuilds across Canada and abroad and have commenced the licensing process for CANDU in the U.S. During my time at Davos, I had highly productive conversations amid a surge of global headlines, highlighting the renewed interest in nuclear power development. These discussions reinforce the strong momentum behind nuclear as a vital clean energy solution and underscored the significant growth opportunities ahead for our business. Now moving to Slide 14 and our Linxon, LSTK projects and capital businesses. Moving forward in '26, we are combining these segments into one reporting segment referred to as all other segments. This is a strategic streamlining financial disclosure that will allow our financial reporting to focus on the robust engineering services and nuclear capabilities of the business, the key drivers of long-term growth for AtkinsRealis. In our Linxon segment, revenue in the quarter grew 2% and realized 60 basis points of EBIT margin expansion year-over-year. We generated a record adjusted EBIT and backlog grew 33% to $2.8 billion, reflecting Linxon's continued growth and strong market position. On LSTK projects, we've now substantially completed 2 of the 3 remaining light rail transit systems. The Eglinton project was substantially completed in the fourth quarter and then opened for operation by the client in February this year. Our fourth quarter results include additional costs to close out these projects. So before turning the call over to Jeff, I'd like to touch on AI and how we think about it at AtkinsRealis. We see AI as a strong enabler in our business. We do not see it as a disruptor. The demand for engineering in infrastructure and nuclear is at an all-time high, and this will continue. Engineering is a judgment-based profession that uses data and design to apply it to the built environment and in our case, on nuclear power plants and complex structures. It is a highly regulated industry where engineers are liable and held accountable for the safety, quality, sustainability and performance of assets like roads, bridges, buildings and nuclear power plants. Engineering is the creative application of math, science and empirical evidence to design, build and maintain infrastructure and nuclear power assets. We have a strong commitment to make our business more efficient, and we think of AI as essential to meet growth demands ahead in nuclear and engineering services. For design work done at the conceptual level, we see several areas of application of AI that deliver real improvement, and we are already deploying a suite of tools to aid design, modeling, surveying and even safety. In bidding and work winning, we have new tools to look for data, people, track record in order to win. Like most companies, we've also introduced AI in functional support test and data collection to make processes cheaper, quicker, better. We also implemented specific tools to certain tasks like HR, safety, inspections, taxes, finance and many others. Cost savings will be made, and this will and should lead to margin expansion. We do not see AI affecting our medium- and long-term growth as demand on our engineering services and nuclear capabilities continues to grow. So with that, I'll now turn over to Jeff to discuss the financial highlights and the 2026 outlook. Jeffrey Bell: Thank you, Ian, and good morning, everyone. Turning to Slide 16. Total revenues in the quarter increased 13% year-over-year to $2.9 billion, which included revenue increases of 16% in PS&PM, comprised of increases of 16% in Engineering Services, 29% in Nuclear and 2% in Linxon. These higher revenues were the primary driver in a total segment adjusted EBIT increase of 10% to $238 million. Total corporate SG&A expenses totaled $35 million in the quarter, a decrease of 38%. Acquisitions-related and integration costs were $24 million in the quarter, mainly due to the acquisitions completed in the year and to a change in the fair value of the contingent consideration payable related to the Linxon acquisition in 2018. Net financial expenses for the quarter were lower at $11 million compared to $41 million in Q4 2024, mainly due to the repayment of all outstanding borrowings under the La Caisse loan and the company's term loan in the second quarter and higher financial income due to higher cash balances. The IFRS diluted EPS this quarter increased by 90% to $0.57 compared to $0.30 in Q4 2024, while the adjusted EPS from PS&PM increased 273% to $0.97 per diluted share compared to $0.26 in the fourth quarter last year. On Slide 17, you can see the selected financial metrics for the full year. Total revenues for the year increased by 14% to $11 billion compared to 2024, while total segment adjusted EBIT increased by 15% to $973 million, which was comprised of $1 billion for AtkinsRealis Services, $46 million for capital and negative $112 million for LSTK projects. Total corporate SG&A expenses decreased to $145 million, in line with our expectations. We anticipate that these expenses will decrease again in 2026 to between $125 million and $135 million. Restructuring and transformation costs totaled $112 million, higher than last year, mainly due to efforts relating to operating margin improvement initiatives, including the rollout of the company's global ERP system and workforce optimization as part of ongoing operational improvement initiatives. Net financial expenses for the year were $110 million compared to $163 million in 2024, mainly due to a lower level of recourse debt and lower interest rates. The income tax expense amount was higher than 2024, mainly due to the tax on the gain of the sale of our interest in Highway 407. The effective tax rate was approximately 13% in 2025, lower than the company's Canadian statutory income tax rate, mainly due to revised estimates on certain tax liabilities, the recognition of previously unrecognized deferred income tax assets on loss carryforwards and geographic mix. For 2026, we would expect the company's effective tax rate to be closer to our statutory tax rate and to be between 25% and 30%. Net income totaled $2.6 billion or $15.41 per diluted share, which included the gain on disposal of the company's interest in the Highway 407. But on an adjusted EPS from PS&PM, a better reflection of the company's underlying performance, EPS increased 88% to $3.36 per diluted share compared to $1.79 last year. And as Ian mentioned earlier, backlog ended the year at a record high of $21.2 billion, 21% higher than at the end of 2024 with strong book-to-bill ratios in all businesses, Engineering Services regions, Nuclear and Linxon. Let's now move on to Slide 18 and free cash flow. Net cash generated from operating activities was very strong in the fourth quarter, resulting in $461 million of operating cash for the year, driven by stronger AtkinsRealis Services EBITDA delivery and tight working capital management. LSTK Projects net cash was positive $81 million in the fourth quarter, mainly due to the collection of money owed for a completed project, resulting in a negative net cash of $25 million for the full year. We expect LSTK projects cash flows to be approximately negative $100 million to $150 million in 2026 as we complete the last light rail transit system legacy construction contract, settle out final accounts and pursue claims outstanding. After CapEx of $177 million, which included approximately $64 million for the development of MONARK and the payment of lease liabilities of $86 million, our free cash flow stood at positive $199 million for the year. We expect the CapEx to be in the range of $175 million to $200 million for the full year of 2026. In 2026, we expect to generate approximately $500 million of net cash from operating activities. I'd like to now turn to Slide 19 and our 2026 outlook. Given our increased backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate of between 5% and 7% compared to 2025 for the Engineering Services regions with an anticipated segment adjusted EBITDA to net revenue margin of between 16.5% and 17.5%. As for the Nuclear segment, despite very strong growth in 2025, we expect revenues to continue to grow and reach approximately $2.5 billion for the full year 2026. Adjusted EBIT to gross revenue margin is expected to be similar to 2025 and be in the range of 11% to 12%, which we expect will equate to a segment adjusted EBITDA to net revenue margin in the mid-20%. As we've seen in previous years, our Engineering Services regions business profitability is affected by some seasonality, and we would expect the company's adjusted EBITDA to be more weighted to the second half of 2026, as shown on the right -- on the bottom right-hand side of the slide. Turning to Slide 20. Following a lower-than-expected organic revenue growth in the Engineering Services regions business in 2025, but considering the continued backlog increase and strong global demand for the company's capabilities, we are adjusting the Engineering Services region's organic revenue growth CAGR for 2025 to 2027 to between 5% and 7%. On the other hand, as a result of the strong financial and operating performance of the Nuclear segment during 2025, the significant increase in the nuclear backlog and the company's positive outlook regarding the global demand for our services, we are raising the nuclear annual revenue target to between $2.6 billion and $3 billion by 2027. The company is also adjusting its Nuclear segment adjusted EBIT to segment revenue ratio to between 11% and 13% from the previous range of between 12% and 14%, reflective of the expected business mix over the next 2 years. We continue to believe that the long-term profitability of the nuclear business will be between 12% and 14%. I'd like to now turn to my final slide, Slide 21. As Ian mentioned, we have accomplished a lot over the last several years to transform the business. And therefore, in 2026, we will be streamlining our financial disclosure. The company has, effective January 1, 2026, combined its Linxon, LSTK projects and Capital operating segments into a single reportable segment referred to as -- all Other segments, as Ian mentioned earlier. The reportable segments of the company that are part of the Engineering Services regions, Canada, the U.K. and Ireland, U.S. and Latin America and Asia, the Middle East and Australia and the Nuclear segment will remain unchanged. At the same time, taking into account the fact that the Capital segment will no longer be presented on a stand-alone basis, the company will cease to report financial information separately from capital and from PS&PM activities. Slide 21 has been prepared to give a view on what the 2025 quarterly comparable numbers will look like. And with that, I'll now hand the presentation back to Ian. Ian Edwards: Okay. Thank you, Jeff. Our fourth quarter performance concluded a great year as sustained demand for our Engineering Services and Nuclear capabilities drove strong revenue growth for the company. 2025 was a pivotal year as it marked the completion of the transformation of our business. We are now very much focused on being a world-class engineering services and nuclear company, and we fundamentally believe that our capabilities and competitive advantages, focus in these areas will create the most value for shareholders. Global energy transition and infrastructure redevelopment are fueling our growth markets. We are focusing where AtkinsRealis has clear competitive advantages and strengthening by building on our strong foundation or landing and expanding. We are optimizing our business, accelerating value creation where demand is strongest and exploring untapped potential through technology and innovative delivery models. In 2026, we will continue to lean into artificial intelligence as an enabler of productivity, safety, quality and predictability. Our innovative tools have given us the upper hand in attracting and retaining high-quality clients and talent. While this has been successful, we can continue to develop and utilize advanced technologies to deliver products and projects and operate more efficiently to lower total costs. Our advantaged balance sheet puts us in a distinctive position to capitalize on inorganic and organic opportunities in a continuously evolving macroeconomic landscape. Finally, I want to thank our 40,000 colleagues for their hard work and dedication as we continue positioning the company to capture real revenue across our engineering services and nuclear businesses in 2026 and beyond. So with that, let's open it up for your questions. Operator: [Operator Instructions] Our first question comes from Sabahat Khan with RBC Capital Markets. Sabahat Khan: Ian, maybe just on some of the commentary you shared around your conversations on nuclear. I was wondering if you can maybe give us an update on where the 2 large potential newbuilds in Ontario maybe stand? And then maybe some of the specific opportunities outside of Canada that you think could start to materialize over the next 3- to 5-year period. Ian Edwards: Yes, for sure. I mean no definitive news in Ontario. But we are working very, very hard with the 2 generating organizations of Bruce and OPG to ensure that CANDU and our CANDU MONARK is the chosen technology for those 2 sites. As AtkinsRealis and as CANDU, we know that the right answer for Canada, for Canadian supply chain and for the efficiency of the product that our CANDU MONARK is the answer. When you think about jobs and economic development in Canada, over 90% of all of the CANDU MONARK that would be deployed there is Canadian content, which is Canadian jobs, Canadian companies. We are convinced that our product is the most efficient with world-class productivity and performance ratings of the EC6 that's been built around the world. And as a reminder, it uses natural uranium, which we have an abundance of in Canada. And I think the last thing that I would say, all the operating nuclear power plants in Canada are CANDU. So it makes an awful lot of sense to continue to deploy CANDU across Canada and obviously, being the indigenous technology. So we are hoping for a read on the technology selection this year. I don't think it will be before H2, but we're optimistic and we're optimistic it's CANDU. I mean across the rest of the world, it's been interesting. I mean, I've spent an awful lot of time in 2025 and even the start of this year, marketing to energy ministers across the world and to try and understand where the opportunities are for CANDU. And I would say having done that, and it's not exclusive, but having done that, I think our nearest term and most firm opportunities would be in Eastern Europe. And having a foothold there in Romania with an EC6 reactor, which has EU approval and has a track record of a relationship with Romania over 50 years. When we're dealing with Eastern European countries and clients, we point to that. And specifically in Poland, you may have seen our -- the Minister Hodgson's visit to Poland to support our efforts in Poland. They're advancing, I would say, quite well. I mean there's nothing to announce today, but we're into a process there where we're going through a technology evaluation. And then in Q2, we're into a commercial evaluation. And I would hope that we'll get a read on that towards the end of this year as well. We have great support from the Canadian government. I think we have a lot to offer is Canada. Eastern Europe would be top of the pile, but then Asia, there's numerous opportunities in Asia. And not to mention, obviously, the very significant potential opportunity in the U.S., which we're in early days for. So a really good outlook, I think, for the long term of CANDU. Sabahat Khan: Okay. Great. And then just the follow-up question, I guess, on the engineering side, obviously, M&A is an increasing focus. You shared a little bit of color earlier on it. But maybe if you can talk about, as you look into the U.S., are you looking at maybe getting into some medium and a bit larger transactions as sort of '26 and '27 come through? And also, if you can just update us on -- as this is sort of a scale you're revisiting, where the integration team, some of the integration capabilities stand today in terms of just aligning with the M&A getting larger. Ian Edwards: Yes. I mean I think that's a good question. We've always said that we're going to take a disciplined approach to M&A. We actually started 18 months ago, but you only saw some acquisitions coming through last year. We are really committed to landing and expanding in the U.S., and there are numerous targets. And we're really prioritizing quality targets that got a cultural fit that we can really use as platforms for revenue synergies to build out the business in the U.S. such that we can be in the top 5 ultimately. That's the goal and to have scale. I think for the majority of this year, we're going to stay within our lane of about 1,000 people, acquisitions like David Evans. That integration is going well. We're building out a very strong team on M&A and a very strong team of integration under Louis Veronneau that joined us last year. I'm really pleased with the strength of that team and the strength both in the U.S. and here in Montreal. But as we get towards the end of the year and moving into next year, we will be looking at deals potentially with 2,000 or 3,000 people, not transformational, but certainly at a bigger scale to get us this capacity and scale that we want in the U.S. So that's kind of the journey, disciplined, methodical, but ambitious. Is that okay? Operator: Our next question comes from Chris Murray with ATB Cormark Capital Markets. Chris Murray: So maybe turning to just the outlook for Engineering Services and the revenue growth. You're talking about organic growth between 5% and 7%, which seems reasonable. But just wondering about how you think that, that is going to evolve over the coming year. I know you had some puts and takes this year, so that number was well below plan. But how do we see that evolving? Is it just a function of what you've got in backlog? Or there are some other things that will convert? So any color on the pace of revenue growth organically would be appreciated. Ian Edwards: Yes. Yes, for sure. I mean -- and clearly, we've done a lot of analysis on this and a lot of analysis of things that happened last year. I mean, just to reflect on last year, I think there were 2 specific areas that had an effect on our business, reprioritization in Saudi and some headwinds seen at the early part of the year in the U.S., mainly because of not a lack of funding, probably a lack of confidence, I'd say, by the states. And if you remember, we also had some year-over-year issues because of 3 specific projects. So when we take all that into consideration, we've obviously had a good Q4. Things have turned back to very strong growth. which is one of the indicators. But also, we ended the year on a very strong backlog in every region actually, which has given us confidence that what we have in backlog and what we see in pipeline across the 4 regions will enable us to deliver the 5% to 7% in every region actually. So we've got a high degree of confidence that this is the right kind of range for 2026. Chris Murray: Okay. That's great. And then maybe turning to how you're going to I guess, realign the other segments of the business. So I guess a couple of questions of this. One, maybe any commentary or color around LSTK. You did note that this was a bit of a closeout quarter, but how do we think about what's left to go to wind that up? And I guess the other piece of this is, should we be thinking of this almost as a, call it, a divestiture segment or a runoff segment now, and that's part of the rationale for separating it out? Or is there any sort of other interpretation we should have on how you've set this up for next year? Ian Edwards: Yes. Sure. Jeff, do you want to take that? Jeffrey Bell: Yes. I mean let me start with the last question there, Chris. I think what you've seen in us moving to this reportable segment structure is actually this continued simplification, making it easier and easier for investors in the capital markets to see the results and the performance of our Engineering Services regions and nuclear. And I think that's really the driver for this. The reality is the elements of -- that are in the all other segments. LSTK is obviously almost completely wrapped up. Capital is significantly smaller without the 407. And as we've talked about previously, ultimately, we'll see where we get to with our links on investment. And together, there are no more currently than 10% of our revenue, but on a kind of EBITDA basis, virtually all of the business is in Engineering Services and nuclear. And we think this kind of reporting segment disclosure really helps investors from that perspective. Chris Murray: Okay. And just any color on the LSTK? Jeffrey Bell: Oh yes, sorry. Yes. So as Ian said earlier, really pleased now that we've got the second of the 3 light rail transit systems here in Canada into operation. That's great to see, frankly, for the people in the city of Toronto. We've got 2 of the 3 legs of REM in operation. I think that's kind of 50 of the 67 or 69 kilometers, so well over half with the case saying that they would expect to have the third one in towards the spring, middle of the year. So I think we're very much in a position where in 2026, we should see all 3 in operation and operating well. Operator: Our next question comes from Krista Friesen with CIBC. Krista Friesen: Maybe just a follow-up on the M&A conversation. You've talked previously about getting to the bottom end of your 1 to 2x range by the end of this year. Do you still feel confident in that trajectory based on what you're seeing in the pipeline for M&A? Ian Edwards: Yes. And maybe Jeff can talk to the sort of balance sheet aspect of that. But we -- our strategy is U.S. land and expand, as I mentioned in the other question. But in addition to that, we are very keen to continue to inorganically and organically grow Australia. We really see Australia as a market where we've historically had virtually no business. But the expertise that's really needed there now is energy, power and renewables and defense. And we're very strong in both of those markets. So we need people on the ground, and we need capacity on the ground. Obviously, ADG was a great acquisition, but that's not the end of it. And we're clearly engaged with numerous targets. In addition to that, across all engineering services regions, we're looking for capability build-out where we see strong end markets. So I'll give you an example. For example, transmission. Obviously, we are a very strong electrical transmission distribution engineering organization built from the work that we've done in Canada. But if we can find more resources and more capability through acquisitions globally, we would do that. Another example would be water, very strong water business in the U.K., very strong markets around the world for water. We need more capability. So there's kind of 3 things here: U.S., Australia and end market. With all those things together and our ambition later in the year to do some larger acquisitions, not transformational, but larger, I think that's probably realistic. But Jeff, do you want to just add? Jeffrey Bell: Yes. I mean I think from a capital allocation perspective, as you've heard us say before, Krista, we have a framework that would look now that the balance sheet is in a really good position and in fact, looking ultimately to get back to that lower end of our 1 to 2x range over the next 12 months or so, we would look to be deploying capital into M&A but also into returns to shareholders. And you saw us do that in 2025. And we would expect to continue to do that in 2026. Our demeanor is weighted towards M&A at this point. We think there's a lot of opportunity, as Ian has talked about, about creating long-term value and accelerating our strategy. But we also see good opportunity because of that to return funds to shareholders, likely using the -- or continuing to use the share buyback process to do that. Krista Friesen: That's helpful. And then just my last one on defense, obviously, very topical. Can you speak to what you're seeing here in Canada in terms of opportunities there and what you think the time line is before we start to see that sort of meaningfully show up in spending for you? Ian Edwards: Yes, for sure. I mean, obviously, Prime Minister Carney's announcement last week, I think it was, is very, very good news. It's good news for the defense market and good news for AtkinsRealis. Where we play is obviously in the supporting infrastructure and that supporting infrastructure both needs to be built to develop assets, whether they're air assets or sea assets, submarines, ships, aircraft and land assets such as barracks and the like. So we design and we deploy and we maintain those assets. And in actual fact, the capital cost of these assets and the OpEx that goes with them for the life of, say, a submarine is actually more than the purchase price of the submarine. I mean, because obviously, they're multiyear programs and contracts. So this is where we're very strong in the U.K. This is what we've been doing for a very long time in the U.K. There's 2 routes to market. One is directly to the government. And the second is to the OEMs, such as Rolls-Royce, BAE in the U.K. And obviously, when assets are chosen, we would have a route to market directly to the OEM of that asset. So actually, some work has already been flowing through. We're seeing definitely some advanced feasibility work. We're seeing some delivery partner work. I would expect that by the end of this year, we could see quite a few revenues. Obviously, we're looking and following the OEM technology selection or asset selection very closely. But we're excited about the market. And I think we have a lot to offer. Operator: Our next question comes from Michael Tupholme with TD Cowen. Michael Tupholme: Just on nuclear, you're obviously looking for continued revenue growth momentum in that segment over the next few years, given the new 2027 guidance or revenue guidance you provided. As we look at and think about that guidance, can you provide a bit of a refresher on what you have and haven't baked into that 2027 nuclear revenue guidance? And as part of that, just trying to understand if everything that you have in there is based on work that's already under contract or in hand? And if not, what sort of prospective work has been built into that 2027 number? Ian Edwards: Yes. No, for sure. And I think Slide 13 is a good place to kind of use for me to explain this. The 2027 outlook is really based on everything we already have secured. So for example, the refurbishment at Bruce, the refurbishment at Pickering, Cernavoda 1, the refurbishment in Qinshan and then Cernavoda 3 and 4 newbuild. And the revenues providing those Phase 2 elements that you see on the slide are awarded are secure. And clearly, there's a high likelihood that those Phase 2 elements will be awarded because the commitment is already made in Phase 1. So the way I think about it, there's a high degree of certainty around the outlook we've put there. What's not included in that outlook is anything additive to that, which would be new builds. And when you think about the new build kind of sequence of events, let's say that we were selected for the 2 sites in Ontario and let's say, we were selected for Poland. There would be a 2- to 3-year period of engineering. And that's revenue, and that is additive. But then once you follow through and get towards the end of the engineering, you're into real procurement and real execution where the revenues would significantly increase. So what I see ahead of us is absolutely delivering against the '27. Potentially, if we do secure new builds, we would add to that. But as we work towards the end of the decade, we could see further revenue coming through at scale. Michael Tupholme: That's all very helpful, and I appreciate all the detail. Just one sort of clarification as it relates to the new build piece in Romania, the 2 reactors. To what extent is that contributing in 2027? I know you mentioned it, but just is it meaningful? Ian Edwards: Yes, it is. Yes, it is. So what we're into now is what they call a limited notice to proceed, which is basically the feed, the feasibility, making sure that all the product the project is defined and the budget is finalized and the regulatory environment is underway. What we would expect towards the end of this year, early next year is the full contract. And that will just continue through to '27 and beyond towards the end of the decade. And some of the revenue that we're seeing in '27 will come from that second Phase II contract. The bulk of it, though, will be beyond '27 actually. Operator: Our next question comes from Maxim Sytchev with NBCM. Maxim Sytchev: Maybe the first question on EMEA. Nice to see, obviously that you turned the corner in the Middle East. I was just wondering in terms of what potential commercial changes you had to adopt in order to make the pivot. Can you maybe talk a little bit about that sort of handoff from Saudi to other markets, et cetera? Ian Edwards: Yes, yes. So the EMEA region has been interesting over the last year or so. And obviously, we've developed a strategy for growth. I mean we intend and formed the EMEA region so that it would grow at or better than the rest of the regions because we see opportunity there. The reprioritization in Saudi did affect us. I mean, projects like NEOM, some other large projects, the funding has been withdrawn. However, Riyadh-based projects and projects that are going to support the Expo and the World Cup are still ongoing, and it's still a very good market. It's just not as good as we would have expected it to be in 2025. But coincident with that, the UAE is really stepping up. And the UAE is providing us good buildings and property opportunities. We won the Sphere. So they're building a Sophia exactly like the Vegas Sphere, we won that. But they're also investing in transport. And there's numerous transport lines that are out for bid right now that we're looking to bid. And historically, in the region, we've been really successful in transport. We've designed out a lot of the Riyadh network, designed out a lot of the Dubai network. So I think we're pretty well positioned for that. But in addition to that, Australia in the sort of medium term to longer term is our growth engine of EMEA as well. And that's why it's important for us to build out Australia and get ready for this new wave of power, renewables, energy work and defense work. So when we think about our strategy now and put all of those things together -- sorry, plus Hong Kong, which has obviously been through a fairly tough time over the last decade, but now it's coming back with the development of the Northern Metropolis, which is road, rail and city. We think that we're feeling pretty optimistic about EMEA. But we've had to pivot a bit, and we've had to kind of adjust our strategy a bit to develop that. Maxim Sytchev: Yes. No, absolutely and good to see. And then maybe just one quick one for Jeff, if I may. Jeff, when we think about sort of the FCF or EBITDA to FCF conversion, can you maybe point to some of the levers that could potentially help that metric, especially as we lap LSTK, et cetera, even though LSTK was less of a drag in 2025 on kind of an absolute basis. But maybe can you talk about sort of strategies there overall, that would be super helpful. Jeffrey Bell: Yes. No, good question, Max. And we're seeing further good progress here in 2026. And I think what I would say is ex the kind of LSTK cash drag that I talked about here in 2026, which we would largely see complete by the end of the year from that perspective, I think that moves us into a position in 2027 where the free cash flow to net income conversion that we've laid out in our Investor Day, we think we're very much in line with that conversion of 80% to 90%. So I think that's the major lever that we would see or the major change that we would see as we get to the end of this year and into next year. But we'll see good cash flow growth here in 2026 as well over '25. Operator: Our next question comes from Benoit Poirier with Desjardins. Benoit Poirier: Could you maybe provide an update on the development of the MONARK reactor and also maybe an update on the potential to sell the CANDU technology in the U.S. where you are right now given the discussion that you've hosted in the past? Ian Edwards: Yes, for sure, for sure. So MONARK development is going well, very well. And we've got a great deal of help, frankly, from the utilities. We have been very careful in the MONARK development to upgrade existing technologies such that it's not first of a kind, first of a kind brings inherent risks around the feasibility of regulatory approval, and it brings risk around the cost and development. We have not done that. We've taken an existing Darlington reactor, and we are upgrading that with the latest safety cases, obviously, digitization and latest control systems to make it state-of-the-art and approvable from the regulatory environment. Now clearly, going through that regulatory process takes time, but we have a high degree of confidence. This is a good product based on really successfully operating units. So it's going well. The commitment from ourselves in terms of our investment is pretty much on track. So we're very, very pleased with progress. Now in the U.S., it's early days. It's obviously a market that we can't ignore. I mean there's a strong commitment to nuclear power in the U.S. And that commitment is both from government and utilities, but it's also from the hyperscalers to feed their AI demand -- data center demand from AI. We are in what we would call the pre-licensing discussion phase and in Q2, we go to the formal submission stage of licensing, and we would expect to get a readout from that next year. So these things take a bit of time. But that does not stop us marketing both the EC6, which is tried and tested technology built 35 times around the world or the MONARK. So like I say, it's early days, but it's a market that we don't want to miss, and it's a market that I think CANDU has the opportunity to prevail in a very strong demand market with few choices on technology that exists today. Benoit Poirier: That's great, Ian. And maybe the follow-up question related to the LSTK. Jeff, you mentioned that it will provide a drag of about $100 million to $150 million in 2026. Could you maybe mention whether if it's all related to the REM project? And what about the risk of seeing greater losses from LSTK in 2026 and potentially to flow in 2027? Jeffrey Bell: Yes. No, the cash flow is not solely related to REM. It has to do with settling out final accounts on things like Eglinton. It has to do with a bit of kind of final cleanup, for instance, on Trillium. So it's a combination of a number of the different projects. Also doesn't include any settlements of sort of claims or anything else. So as ever, and we saw some benefit of that in 2025. If we're able to settle out some of the claims, then that would be upside to that. As a result, we would expect to resolve all -- virtually all of that on those 3 projects over the course of 2026. It's possible a little into 2027. But at this point, we see very little of that. I think in terms of where we would expect to be for this year, there will clearly be some costs related to continuing to just kind of finalize out the projects, some costs related to risk management on that, some costs related to pursuing our claims. But going back to the conversation around that all other segment, that will continue to reduce on LSTK in 2026 versus 2025. And when you look at that segment overall with capital, with Linxon, we would expect, as you can kind of see on that slide outside of Q4 that the net of all of those together on a quarterly basis is going to be kind of a handful of millions of dollars. So not material. Operator: Our next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: Maybe just looking at the '25 to '27 revised targets, specifically in Engineering Services, you're calling for organic growth CAGR over the period of 5% to 7%. But if we take '25 results in the midpoint of the '26 guide, that implies a pretty significant reacceleration in '27, probably in the double-digit percentage range. So I know '27 is a long way off, but what visibility do you have in getting to that level of growth in the other years? Jeffrey Bell: Yes. I mean, obviously, with the range, we'll see where we kind of land in '26. We do see an opportunity, and we do see continued growth off the back of record backlog. We see markets [indiscernible] in terms of, as Ian talked about, the shift, for instance, in the Middle East, growth in Australia as well as underlying growth in the U.K., the U.S. and Canada. So I think at this point, we're comfortable with that range with what we see not only in '26, but also what we see heading into '27. Jonathan Goldman: Okay. And maybe circling back to capital allocation. Ian, you did talk about kind of the M&A strategy here. But if we kind of tie it together with defense, is there any opportunity to grow that sort of vertical strategically as opposed to organically mainly? Ian Edwards: Defense? Jonathan Goldman: Yes. Ian Edwards: Yes, for sure. Yes, absolutely. And we have got some defense capability targets in view. Now obviously, we need to go through the process. We need to make sure that they've got the right capabilities, got the right culture, got the right kind of positioning. But yes, I mean, that would be definitely part of particularly the capture of defense work in Canada and Australia, where we see us being able to get to the same sort of level that we're at in the U.K. Yes, I would not rule that out at all. Operator: Our next question comes from Ian Gillies with Stifel. Ian Gillies: With respect to the nuclear EBIT margins and then moving down a little bit, I'm wondering if you could provide a bit of an update on the dynamic that's happening there. And perhaps if we look out later into the decade and if there is a heavy procurement phase, should we be thinking about the lower end of the range while that's going on, that would be helpful. Jeffrey Bell: Yes, Jeff, why don't I take that? As I said in my comments, with a kind of normalized business mix, which is what we would expect over the course of the life of refurbishments and indeed new builds, we very much see a 12% to 14% operating margin. I think what we're seeing as we saw in '25, and we expect to see in '26 and into '27 is that while that heavier mix of procurement, we expect to moderate somewhat. I don't think it gets us all the way back to 12% to 14%, but we definitely think we would be in the 11% to 13% range because of that, which implies some growth in that margin over the next couple of years. I think as we move out from there, as I think we've said before, there's always -- depending on that mix, there could be particular years where it moves around. And frankly, it could be higher than that range as well as we've seen now at the lower end of that range. But as we move out beyond '27, we very much see in the medium to long term, a lot of confidence in that 12% to 14% range. Ian Gillies: Understood. And then there's been a lot of focus on the CANDU side and rightfully so. But -- could you maybe provide a bit of an update on what's happening on the growth side as it pertains to the services side of the nuclear business, whether it's dramatically different than the CANDU side at this period of time? Ian Edwards: It is, it is. And in some ways, it isn't because of the just the nuclear renaissance and the amount of activity across the planet in the demand for nuclear for electrical energy. I mean our services business is also a global business. And it's probably 2 things, I would say. One is the waste remediation business where we just won a very significant set of mandates at Sellafield in the U.K. And there are opportunities globally. I mean, we have a very strong business in the U.S. working for the DOE in that waste remediation also. So I see that as a growth market. There is -- from historical weapons programs that there is a lot of work to do to remediate that. But very excitingly is the assistance that we give other OEMs. And if you take the French technology, EDF, where clearly, in some countries we compete, in some countries, we are their key engineering supplier at Hinkley and Sizewell in the U.K. We would have potentially about 1,000 engineers assisting EDF in the nonnuclear deployment of integration of engineering with the conventional side of a power plant, not the reactor side of a power plant. And that will grow as Sizewell starts to really becoming developed. We also actually assist them in France, and we have an office in France that helps them with the development of their business going forward in France. We support SMR technologies. As I said in my script, we're the first real SMR development in North America is in Ontario at the Darlington plant, and we're the proud architect engineer on there of a very significant role to help deliver that. But we also are supporting SMR technologies in the U.K., Rolls-Royce and X-energy and others in the U.S. So that's a growth market because, obviously, the demand on those technologies are significant. And we deliberately did not develop an SMR technology. We decided to stay with large nuclear, and we're agnostic to helping on SMR technologies across the world. So you're right. I mean it's something we don't talk about as much as can do, but it is a growth market, and it is a significant part of our capability. And sorry, I missed one thing out, which is Fusion. We're very much involved with Fusion so that the long-term positioning of AtkinsRealis as a nuclear world leader is not made irrelevant by the potential of Fusion Power. My own view is that's going to be the late 30s into the 40s. But at least we're very relevant in that space also. Operator: And we have time for one last question, and that question comes from Frederic Bastien with Raymond James. Frederic Bastien: Ian, you've got it pretty easy today. No one is asking about the elephant in the room. So I'm going to ask one. In your opinion, does AI accelerate consolidation in the engineering sector? Ian Edwards: Consolidation in the engineering sector. That's a good question. And obviously, we see AI as a real advantage to enable our business to grow and to enable our business to have a lower cost base. We're a clear advocate of that, and we're deploying at scale tools that will enable those 2 things. And our approach right now is we want it to win us more work, and we want it to lower our cost base. And I won't -- there's many questions about is it a disruptor? I won't go into a lot of detail, but our position and my position as an engineer is no, it's not a disruptor. Will it help consolidation in the industry? Yes, because I believe that as smaller companies try to invest in AI, they will find that increasingly difficult. And companies that have scale and balance sheet like ourselves who are able to deploy AI at scale will clearly have an ultimate advantage from a cost base perspective. I don't see this in the next 1 to 2 years, maybe having a significant effect. But the way this would play out would be, yes. I mean, it will give an advantage to companies like ourselves, and we intend to use it to do that. So I think the short answer is yes. Operator: That concludes the question-and-answer session. I'd like to turn the call back over to Denis Jasmin for closing remarks. Denis Jasmin: Thank you very much, everyone, for joining us today. If you have any further questions, please don't hesitate to contact me directly. Thank you. Have a good day, and have a good weekend. Bye-bye. Operator: Thank you for your participation. You may now disconnect.